MAY 24/GLD loses 3.86 tonnes of gold from its inventory/At the comex, the front May delivery month once again increases the amount of gold standing to 6.8874 tonnes/Last night Moody’s downgrades Deutsche bank to 2 notches above junk/Richmond Mfg Fed index shows biggest contraction ever/

Good evening Ladies and Gentlemen:

Gold:  $1,228.10 DOWN $22.90    (comex closing time)

Silver 16.24  DOWN 17 cents

In the access market 5:15 pm

Gold $1227.20

silver:  16.22

 

i) the May gold contract is a non active contract.  Yet we started the month with 5.67 tonnes of gold standing and it has increased every single day and today sits at 6.68 tonnes of gold standing:

The amount standing for gold at the comex in May is simply outstanding at 6.8740 tonnes. The previous May 2015, we had only .08 tonnes standing so you can certainly witness the difference as the demand for gold by investors/sovereigns is on a torrid pace. This makes the excitement for June gold that much more intense as more players are refusing fiat and demanding only physical metal. I will be reporting daily as to how which is standing for delivery through the active month of June.  June is the second largest delivery month after December.

Let us have a look at the data for today

.

At the gold comex today we had a GOOD delivery day, registering 44 notices for 4400 ounces for gold,and for silver we had 0 notices for nil 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 240.41 tonnes for a loss of 63 tonnes over that period

.

In silver, the open interest ROSE by 1,339 contracts UP to 203,581 as the price was silver was DOWN by  7 cents with respect to YESTERDAY’S trading..In ounces, the OI is still represented by just over 1 BILLION oz i.e. .1.018 BILLION TO BE EXACT or 145% of annual global silver production (ex Russia &ex China)

In silver we had 12 notices served upon for 60,000 oz.

In gold, the total comex gold OI fell by a CONSIDERABLE 5,076 contracts down to 551,561 as the price of gold was DOWN $1.30 with yesterday’s trading(at comex closing). They certainly got the liquidation in gold but not silver.

 

We had  a huge withdrawal (and no doubt this is paper gold)  in gold inventory at the GLD to the tune of 3.86 tonnes. The inventory rests at 868.66 tonnes. .We had a good sized deposit  in silver inventory at the SLV to the tune of 951,000 oz . Inventory rests at 336.024 million oz.

.

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

1. Today, we had the open interest in silver RISE by 1339 contracts UP to 203,581 as the price of silver was DOWN by 7 cents with YESTERDAY’S trading. The gold open interest FELL by 5,076 contracts as  gold was down $1.30 yesterday. Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.I also believe that for the first time we are witnessing players wishing to stand for real physical in gold.  Gold investors, in the May contract month are refusing the tempting fiat offer as they want only physical.

(report Harvey).

 

2 a) Gold trading overnight, Goldcore

(Mark OByrne/off today

2b)  Gold trading earlier this morning;

(Mark O’byrne)

3. ASIAN AFFAIRS

i)Late  SUNDAY night/ MONDAY morning: Shanghai closed UP  BY 18.14 PTS OR 0.64%  /  Hang Sang closed DOWN 43.17 OR 0.22%. The Nikkei closed DOWN 81,85 POINTS OR 0.49% . Australia’s all ordinaires  CLOSED DOWN 0.60% Chinese yuan (ONSHORE) closed DOWN at 6.5542 .  Oil FELL to 47.81 dollars per barrel for WTI and 48.14 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.5627 yuan to the dollar vs 6.5542 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS.

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

none today

b) REPORT ON CHINA

none today

4.EUROPEAN AFFAIRS

i)The following is big news:  Moody’s downgrades Deutsche bank’s debt to two notches above junk.  I guess all of those derivative players who play with DB are getting quite nervous.

( zero hedge)

 

ii)The CEO of DB is very disappointed by the decision of Moody’s to downgrade.The two big problems are the lowering of interest rates in Europe which is killing the banks over there and the ongoing litigation of rigging just about every market there is!

(courtesy zero hedge)

iii)The French government is getting quite tough on the powerful French unions. Last week all 8 huge French refiners have been on strike due to the government’s seeking move of bypassing parliament to enact tougher union laws.

Shortages intensify!

( zero hedge)

5.RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

I am not sure who is more a buffoon: Obama or Dennis Gartman

 

Iran’s Ayatollah: “The US Can’t Do A Damn Thing About Our Missile Program”

(courtesy zero hedge)

6.GLOBAL ISSUES

none today

7.OIL ISSUES

Crude spikes to over 49.00 per barrel on biggest inventory draw:

( zero hedge)

8.EMERGING MARKETS

none today

9. PHYSICAL MARKETS

i)The CME admits that under their old system, future trading was rigged by the  HFT boys:

( zero hedge)

ii)Gold is moving up in a rising channel.  When gold is whacked, new buyers are waiting in the wings to purchase, not wishing to be left out.

 (James Turk/Kingworldnews)/

iii)The Banks now must defend Libor lawsuits after the judges warn of impact of treble damages.  And it is this very fact that has our banks worried about their manipulation in gold/silver.( Bloomberg)

 

USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD AND SILVER

i)It looks like Google is going to have a visit from tax authorities all over Europe as early this morning there was a raid on their Paris office, probing tax evasion:

( zero hedge)

 

ii)Richmond Fed crashes by the biggest margin ever and lands into contraction mode:

( zero hedge)

iii) “Guccifer” to plead guilty for hacking into prominent USA authorities and then will fully cooperate with the ongoing email investigation.

Lot so fun for Hillary
( zero hedge)

iv)Now it is New York’s turn to raise the premiums for Health Insurance next year:

Individuals: 17.3% and small groups 12.0%
( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL to an OI level of 551,561 for a CONSIDERABLE LOSS of 5,076 contracts AS  THE PRICE OF GOLD WAS DOWN $1.30 with respect to YESTERDAY’S TRADING.  We are now entering the NON active delivery month of MAY. For the past two years, we have strangely witnessed two interesting developments and we have generally seen two phenomena happen respect to the gold open interest:  1) total gold comex collapses in OI as we enter any delivery month  and 2) a continual drop in the amount of gold standing in that month as that month progresses. IT SURE SEEMS THAT THE LATER HAS STOPPED. ACTUALLY WE HAVE WITNESSING A GRADUAL RISE IN AMOUNT STANDING THROUGH THE MONTH.  THE MONTH OF May saw its OI fall by only 17 contracts DOWN to 120. We had 44 notices filed YESTERDAY so we GAINED ANOTHER 27 gold contract or an additional 2700 oz will stand for delivery.We have started the month with 5.6 tones and gained in ounces standing everyday but one which remained neutral. The next big active gold contract is June and here the OI FELL by 46,496 contracts DOWN to 185,746 as those paper players that wished to stay in the game rolled to August AND THE REST EITHER STAYED PUT FOR NOW OR LEFT PERMANENTLY. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was excellent at 4541,907. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was EXCELLENT at 315,156 contracts. The comex is not in backwardation. We are ONE week away from first day notice for the huge June contract/May 31.2016.

(NEXT MONDAY IS MEMORIAL DAY AND THERE WILL BE NO USA TRADING.  THUS ONLY 5 TRADING DAYS REMAIN.

Today we had 50 notices filed for 5,000 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by A CONSIDERABLE 1,339 contracts from 202,242 UP to 203,581 as the price of silver was DOWN BY only 7 cents with YESTERDAY’S TRADING. For the first time in over 2 years, we have not witnessed a liquidation of open interest as we ENTERED first day notice .  The next active contract month is May and here the OI FELL by 1 contract DOWN to 600. We had 0 notices filed yesterday so we LOST 1 contract or an additional 5,000 oz of silver will NOT  stand in this non-active delivery month of May. The next non active month of June saw its OI ROSE by 6 contracts UP to 657 OI. The next big delivery month is July and here the OI ROSE by 253 contracts UP to 134,175. The volume on the comex today (just comex) came in at 34,890 which is  GOOD. The confirmed volume YESTERDAY (comex + globex) was VERY GOOD at 42,248. Silver is  in backwardation up to June. London is in backwardation for several months.
 
We had 12 notices filed for 60,000 oz.
 

MAY contract month:

INITIAL standings for MAY

May 24.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  70,412.998 OZ

BRINKS, HSBC

1  KILOBAR

Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz    163,166.25 oz

5,075 kilobars

Brinks, hsbc??

No of oz served (contracts) today 50 contracts
(5,000 oz)
No of oz to be served (notices) 70 CONTRACTS

70000 OZ

Total monthly oz gold served (contracts) so far this month 2140 contracts (214,000 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month  352,910.0 OZ

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 2 customer deposit:

i) Into BRINKS:  2411.25 oz or 75 kilobars

ii) Into HSBC: 160,755.000 oz ?? a touch over  5,000 kilobars???

Total customer deposits;   163,166.25 OZ  5075 kilobars

Today we had 2 customer withdrawals:

i) Out of Brinks:  32.15 oz  1 KILOBAR
ii) Out of HSBC: a real withdrawal:  70,412.998 oz

total customer withdrawals: 70,412.998 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 44 contracts of which 3 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 (2140) x 100 oz  or 214,000 oz , to which we  add the difference between the open interest for the front month of MAY (120 CONTRACTS) minus the number of notices served upon today (50) x 100 oz   x 100 oz per contract equals 221,000 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 (2140) x 100 oz  or ounces + {OI for the front month (120) minus the number of  notices served upon today (50) x 100 oz which equals 221,000 oz standing in this non  active delivery month of MAY(6.8740 tonnes).
WE  gained 27 contracts or an additional 2700 oz will stand for delivery in this non non active month of May.  It is this continual increase in gold ounces standing that is driving our bankers crazy and the reason today for another raid on gold/silver TODAY.
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 6.8740 tonnes of gold standing for MAY and 20.477 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 6.8740 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- May 18: 1.5635 tonnes-May 19/   2.535 tonnes  = 17.222 tonnes still standing against 20.477 tonnes available.
 
Total dealer inventor 658,361.132 tonnes or 20.477 tonnes
Total gold inventory (dealer and customer) =7,854,091.190 or 244.29 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 244.29 tonnes for a loss of 59 tonnes over that period. 
 
JPMorgan has only 22.79 tonnes of gold total (both dealer and customer)
JPMorgan now has only .900 tonnes left in its dealer account.
May is not a very good delivery month and yet 6.8740 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 24.2016

Silver
Ounces
Withdrawals from Dealers Inventory nl oz
Withdrawals from Customer Inventory  1,217,214.135 oz

CNT,JPM

 

Deposits to the Dealer Inventory nil oz
Deposits to the Customer Inventory  583,783.140 oz

scotia

No of oz served today (contracts) 12 CONTRACTS 

60,000 OZ

No of oz to be served (notices) 588 contracts

2,940,000 oz

Total monthly oz silver served (contracts) 2140 contracts (10,700,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil oz
Total accumulative withdrawal  of silver from the Customer inventory this month  9,758,734.8 oz

today we had 0 deposit into the dealer account

total dealer deposit:nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

 

we had 1 customer deposits:

i) Into Scotia: 583,783.140  oz

Total customer deposits: 583,783.140 oz.

We had 2 customer withdrawals

i) out of CNT: 617,214.035 oz

ii) Out of JPM:  600,000,100

:

total customer withdrawals:  1,217,214.135  oz

 
 

 

 we had 1 adjustment

i) Out of CNT:

55,278.400 oz was adjusted out of the customer and this landed into the dealer account of CNT

The total number of notices filed today for the MAY contract month is represented by 0 contracts for NIL 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 (2140) x 5,000 oz  = 10,700000 oz to which we add the difference between the open interest for the front month of MAY (600) and the number of notices served upon today (12) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the MAY contract month:  2140 (notices served so far)x 5000 oz +{600 OI for front month of MAY ) -number of notices served upon today (12)x 5000 oz  equals 13,640,000 oz of silver standing for the MAY contract month.
WE LOST 1  SILVER CONTRACTS TODAY OR AN ADDITIONAL  5,000 OZ WILL NOT STAND FOR DELIVERY IN THIS ACTIVE MONTH OF MAY.
 
Total dealer silver:  30.089 million
Total number of dealer and customer silver:   153.665 million oz
The open interest on silver is NOW AT CLOSE an all time high with the record of 207,394 being set May 18.2016. 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.
The reason for the raid today in both gold and silver is probably for the following 4 reasons:
1. The beginning of options expiry week
2. the stranglehold on the May front gold contract month
2. the continued drama in high silver OI
4. potential problem for the bankers in June gold.
end
And now the Gold inventory at the GLD
MAY 24/ a good sized withdrawal of 3.86 tonnes of paper gold from the GLD/Inventory rests at 868.66 tonnes
May 23./this is rather impossible: another huge deposit of 3.26 tonnes into the GLD with the price of gold down again today?/inventory rests at 872.52 tonnes
May 20/what!!!A MONSTER DEPOSIT OF :8.92 TONNES OF GOLD INTO THE GLD INVENTORY/AND WITH GOLD DOWN $2.80??/INVENTORY RESTS AT 869.26
May 19/ANOTHER HUGE DEPOSIT OF 4.46 TONNES OF GOLD INTO THE GLD/iNVENTORY RESTS AT 860.34 TONNES
May 18 /no changes in inventory at the GLD/Inventory rests at 855.89 tonnes.
May 17/ we had a huge deposit of 4.76 tonnes of gold into the GLD/Inventory rests tonight at 855.89 tonnes/in the last two and 1/2 weeks we have added 50 tonnes of gold and this most likely was all paper gold addition..
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 GLD/Inventory rests at 804.14
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

May 24.:  inventory rests tonight at 868.52 tonnes

end

 

Now the SLV Inventory
MAY 24/no change in inventory at the SLV/Inventory rests at 335.739 million oz
May 23./we had a small withdrawal of 285,000 oz and that generally means payment of fees.Inventory rests at 335.739 million oz
May 20/WE HAD A GOOD SIZED DEPOSIT OF 951,000 OZ INTO THE SLV/INVENTORY RESTS AT 336.024 MILLION OZ
May 19/no changes in silver inventory at the SLV/Inventory rests at 335.073 million oz
May 18/no changes in silver inventory at the SLV/Inventory rests at 335.073 million oz/
May 17/no change in silver inventory at the SLV/Inventory rests at 335.073 million oz/
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
.
May 24.2016: Inventory 335.739 million oz
end

NPV for Sprott and Central Fund of Canada

will update on this site later tonight/

1. Central Fund of Canada: traded at Negative 5.0 percent to NAV usa funds and Negative 4.7% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.8%
Percentage of fund in silver:36.8%
cash .+1.4%( May 24/2016). Cdn holiday /no data
2. Sprott silver fund (PSLV): Premium falls  to -0.64%!!!! NAV (MAY 24.2016) 
3. Sprott gold fund (PHYS): premium to NAV  FALLS TO -0.04% to NAV  ( MAY 24.2016)
Note: Sprott silver trust back  into NEGATIVE territory at -0.64% /Sprott physical gold trust is back into negative territory at -0.04%/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 -0.64%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.
 
 
 

END

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

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

World’s Largest Asset Manager Blackrock: “Perfect Time and Place” For Gold

The world’s largest asset manager, Blackrock Inc., has written a note about gold in which it suggests that this is the “perfect time and place” for gold due to “low and even negative yields, slow growth and potential signs of rising inflation.”

blackrock_blog_gold

BlackRock has over $4.6 trillion in assets under management and provides guidance to individuals, financial professionals and institutions and the note was written by Russ Koesterich, the Head of Asset Allocation for a leading Blackrock fund.

The blog, ‘Are these the golden days for gold?’ published by Blackrock last week, points out that “gold may continue to shine”:

“Given slow growth, a cautious Federal Reserve and the proliferation of negative sovereign yields in Japan and Europe, U.S. real rates are likely to remain low for the foreseeable future. At the same time, both core inflation and wages have been firming while the inflation drag from last year’s strong dollar and collapse in oil is beginning to fade. This is exactly the type of environment that has historically been most favorable to gold.”

Blackrock believe that the “unusually low level of  real interest rates (i.e. after inflation)” now make the asset class of gold a potential remedy:

“All told, this is a serious problem for yield starved investors. Ironically, one potential remedy is to take a second look at an asset class that provides no income: gold.”

In March, BlackRock joined Pacific Investment Management Co. (PIMCO) in recommending inflation linked bonds and gold, warning costs are poised to pick up and there is a growing risk of inflation. “We like inflation-linked bonds and gold as diversifiers” said New York-based BlackRock.

“The strategy tactically invests in multiple inflation-sensitive asset classes, allocating across a broad opportunity set of real assets, including global inflation-linked bonds, commodities, real estate, currencies and gold …

Gold has characteristics of both a commodity that is easily stored for a long period of time and a currency whose supply is limited.”

 

Recent Market Updates
Buy Gold As “Extremely Low-Risk Asset” – Rogoff Advises Creditor Nations
Silver – “Best Precious Metals Trade”
Bank Bail-Ins Pose Risks To Depositors, Investors & Economies
Take Delivery of Gold and Silver Coins, Store Gold Bars – Hobbs
George Soros Buying Gold ETF And Gold Shares In Q1
Hedge Funds Take Record Long Silver Position As Silver Bullion Deficit Surges

Gold and Silver News
Gold holds near 3-1/2 week low on Fed rate hike prospects – Reuters
Gold Holds Four-Day Drop as Fed ‘Procession’ Signals Rate Rise – Bloomberg
European Shares Rise as Investors Weigh Implications of Fed Talk – Bloomberg
Lacking new ideas, G7 to agree on ‘go-your-own-way’ approach – Reuters
Banks Must Defend Libor Lawsuits After Judges Warn of Impact – Bloomberg

Gold Rally is Here to Stay says Lombard Odier (Video) – Morning Star
Silver Shortage Or No Shortage? Renowned Silver Expert David Morgan – Youtube
First Soros… Now Jim Rogers Predicts Trillion-Dollar ‘Biblical’ Crash – Dollar Vigilante
High priest of helicopter money speaks (Daily Reckoning)
A Debt Agenda for the G7 (Project Syndicate)
Read More Here

Gold Prices (LBMA AM)
24 May: USD 1,242.65, EUR 1,111.18 and GBP 852.71 per ounce
23 May: USD 1,250.40, EUR 1,115.84 and GBP 860.89 per ounce
20 May: USD 1,256.50, EUR 1,120.18 and GBP 862.75 per ounce
19 May: USD 1,253.75, EUR 1,117.74 and GBP 857.37 per ounce
18 May: USD 1,270.90, EUR 1,127.21 and GBP 882.05 per ounce

Silver Prices (LBMA)
24 May: USD 16.27, EUR 14.55 and GBP 11.14 per ounce
23 May: USD 16.31, EUR 14.55 and GBP 11.27 per ounce
20 May: USD 16.56, EUR 14.76 and GBP 11.35 per ounce
19 May: USD 16.60, EUR 14.81 and GBP 11.35 per ounce
18 May: USD 17.05, EUR 15.13 and GBP 11.77 per ounce

 

 

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

Read Our Most Popular Guides in Recent Months

Mark O’Byrne
Executive Director

END

 

European Close Triggers Precious Metals Plunge

Because nothing says ‘fiduciary’ duty like waiting until Europe closes to dump $850 million notional of gold…

To the tick 1130ET – when European stocks close – gold started to be dumped…

 

And Silver…

 

As The USD was suddenly bid…

 

Charts: Bloomberg

 

end

 

The CME admits that under their old system, future trading was rigged by the  HFT boys:

(courtesy zero hedge)

 

The CME Admits Futures Trading Was Rigged Under Old System

Ask any trader what they believe to be the hallmark feature of any “rigged market” and the most frequent response(in addition to flagrant crime of the type supposedly demonstrated every day by Deutsche Bank and which should not exist in a regulated market) will be an institutionally bifurcated and legitimized playing field, one in which those who can afford faster, bigger, more effective data pipes, collocated servers and response times – and thus riskless trades – outperform everyone else who may or may not know that the market is legallyrigged against them.

Think of it as baseball game for those who take steroids vs a ‘roid free game, only here the steroids are perfectly legal for those who can afford them. Or like a casino where the house, or in this case the HFTs, always win.

However, as it turned out, the vast majority of the public had no idea that a small subset of the market was juicing, despite our constant reports on the topic since 2009, until the arrival of Michael Lewis’ book Flash Boys, which explained the secret sauce that made all those HFT prop shops into unbeatable “trading titans“: frontrunning.

That’s really all one had to know about the mystical inner working of the modern market. All Reg NMS did was legitimize and legalize frontrunning at a massive scale for those who could afford (and hide) it, all the while the technology race ran in the background making it increasingly more expensive to stay at the top: fiber optics, microwaves, lasers, FPGAs, PCI-Express and so on.

And, as we have also discovered in recent years especially since the advent of IEX, for many exchanges providing a two-tiered marketplace was the lifeblood of the business model: the bulk of the revenues for “exchanges” such as BATS and Nasdaq would come from selling non-HFT retail and institutional orderflow to HFT clients. Since the HFTs made far more than the invested cost in permitting such perfectly legal frontrunning, they were happy, the exchanges were happy too as they betrayed only those clients who didn’t pay up the “extra fee”, and only the true outsiders lost. And any time they complained how rigged the system was against them, the HFTs would scream that “they provide liquidity” as they are the real modern-day market makers.

Except that’s not true: the only time HFTs provide liquidity it when it is not needed. When liquidity is truly scarce and required in the market, such as on days like the May 2010 flash crash, or August 2015…  they disappear.

Meanwhile, nothing changes, because the regulators are just as corrupt as the exchanges and the HFTs, and their role is not to bring transparency to a broken, manipulated market, but to keep retail investors in the dark about just how rigged everything is.

It appears that the CME was doing just that as well.

According to Bloomberg, the CME Group – the world’s largest exchange operator – just completed an “upgrade” traders said would eliminate a shortcoming that gave some participants an advantage.

Under the old system, data connections that linked customers to CME – where key products like Treasury futures and contracts tied to the Standard & Poor’s 500 Index trade – had noticeably different speeds, opening up the potential for gaming, according to traders and other experts. Those who knew how to gain faster access could increase their odds of being first in line to trade.

The new design supposedly stamps that out.

Oh, so it was a design glitch that allowed those who “knew” how to frontrun everyone else to do so. That’s the first time we have heard of the particular excuse. Usually the scapegoat is a “glitch”, only in this case the CME didn’t even bother.

“It’s an excellent step forward,” said Matthew Andresen, co-owner of Headlands Technologies LLC, a quantitative trading firm. “The new architecture is flat and fair, a great improvement,” said Andresen, whose knowledge of market infrastructure goes back to the 1990s, when he worked for electronic trading pioneer Island ECN.

But, wait… if it is an “excellent step” that some traders can no longer frontrun other traders on the CME, why is it not a “poor step” that virtually every other exchange still enables precisely this kind of tiered marketplace, which is neither flat nor fair?

Actually, scratch that: that’s precisely what IEX is trying to resolve. The reaction? An exchange which explicitly profits from providing a two-tiered market and charging an arm and a leg for those who can afford it (and thus frontrun everyone else) namely the Nasdaq, has threatened to sue the SEC if it permits IEX to become a full-fledged stock exchange.

As Bloomberg adds, the situation involving CME’s data connections highlights a fresh set of difficulties ensuring a level playing field in the era of light-speed markets, in which even the smallest bits of a second matter. The race to shave off milliseconds has spurred efforts to carve through mountains, span continents with microwave networks and prompted a backlash championed by the likes of IEX Group Inc., the upstart stock market that delays trading to impose fairness.

Unlike some of today’s state of the art means of being faster than everyone else, frontrunning orderflow on the CME was more of a “brute force” mechanism: CME customers are allotted data connections to the exchange. Some have more, some have less. Given that their speeds varied noticeably under the old architecture, the more lines a trading firm had, the better odds it could find a faster one. Trading firms with a lot of links had the chance to fish around for the fastest way to get trades done. Other firms that didn’t have as many connections or the computer programming resources to test around and find the quickest, most efficient way in were at the mercy of the connections they had.

“The performance could vary widely” with data connections under the former CME architecture, Andresen said. By which he meant that those who could afford to pay much more than everyone else, would also be able to frontrun almost everyone else.

But no more. The new system “is an important innovation that will set a new standard for fair and efficient access to the futures markets,” said Benjamin Blander, managing member of Radix Trading, a Chicago-based trading firm.

CME declined to comment on claims the old system was unfair, Bloomberg adds. “We are continuously enhancing our infrastructure in order to provide the latest and best technology architecture for our clients,” said Michael Shore, a spokesman for CME.

CME has been installing the new architecture since February. The last group of futures and options became available on the new system last week, according to CME. Traders aren’t required to switch over to the new system and can keep trading the old way if they want.

This isn’t the first time CME revamped its systems to stamp out an imperfection. Before an upgrade more than two years ago, traders were notified that their own orders were completed before everyone else found out, potentially giving initiators of transactions time to buy or sell on other exchanges with knowledge of their executions.

We expect more violations of “accidentally” rigged markets to be uncovered in time, both on the CME and elsewhere, although we wonder at this time does it even matter: besides central banks trading with other central banks (especially courtesy of the CME’s own Central Bank Incentive Program), does anyone else even bother? If judging by the total collapse in trading volumes over the past decade in virtually every product class, the answer is clear.

end
Gold is moving up in a rising channel.  When gold is whacked, new buyers are waiting in the wings to purchase, not wishing to be left out.
(courtesy James Turk/Kingworldnews)/

Gold is having an unusual rising correction, Turk tells KWN

Section:

6:49p ET Monday, May 23, 2016

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk tells King World News today that gold is going through an unusual rising correction. Either many buyers are awfully eager to buy the dips, Turk says, or investors fear that something nasty is imminent for the world financial system and figure that gold is necessary insurance. An excerpt from Turk’s interview is posted at KWN here:

http://kingworldnews.com/james-turk-this-is-why-gold-is-headed-much-high…

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

 

END

 

The Banks now must defend Libor lawsuits after the judges warn of impact of treble damages.  And it is this very fact that has our banks worried about their manipulation in gold/silver.

(courtesy Bloomberg)

 

Banks must defend Libor lawsuits after judges warn of impact

Section:

By Bob Van Voris
Bloomberg News
Monday, May 23, 2016

Sixteen of the world’s largest banks, including JPMorgan Chase & Co. and Citigroup Inc., must face antitrust lawsuits accusing them of hurting investors who bought securities tied to Libor by rigging an interest-rate benchmark, a ruling that an appeals court warned could devastate them.

The appellate judges reversed a lower-court ruling on one issue — whether the investors had adequately claimed in their complaints to have been harmed — while sending the cases back for the judge to consider another issue: whether the plaintiffs are the proper parties to sue, in part because their claims, if successful, provide for triple damages that could overwhelm the banks.

“Requiring the banks to pay treble damages to every plaintiff who ended up on the wrong side of an independent Libor‐denominated derivative swap would, if appellants’ allegations were proved at trial, not only bankrupt 16 of the world’s most important financial institutions, but also vastly extend the potential scope of antitrust liability in myriad markets where derivative instruments have proliferated,” the U.S. Court of Appeals in New York said in the ruling.

Bank of America Corp., HSBC Holdings Plc, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Royal Bank of Canada, and Royal Bank of Scotland Group Plc are also among the banks sued in Manhattan. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2016-05-23/banks-are-ordered-by-c…

 

 

END

 

Bill Holter’s interview with SGT:

 

 

How Will America Trade With WORTHLESS DOLLARS & NO GOLD? — Bill Holter

Bill Holter from JS Mineset is back to help us document the collapse for the fourth week of

end

 

Your early TUESDAY 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 6.5554 ( DEVALUATION AGAIN BUT TINY/CHINA STILL FIRES SHOT ACROSS THE USA BOW ) / Shanghai bourse  CLOSED DOWN 21.98 OR 0.77%  / HANG SANG CLOSED UP 21.40 OR 0.11%

2 Nikkei closed DOWN 155.84 OR 0.94% /USA: YEN FALLS TO 109.62

3. Europe stocks opened ALL IN THE GREEN  /USA dollar index UP to 95.40/Euro DOWN to 1.1181

3b Japan 10 year bond yield: FALLS   TO -.102%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 110.35

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  47.88  and Brent: 48.12

3f Gold DOWN  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to 0.167%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 8.24%/: 

3j Greek 10 year bond yield FALL to  : 7.25%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1241.80/silver $16.29(7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 21 in  roubles/dollar) 66.91-

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 .9921 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1087 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 IN LAST LEG OF ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .167%

/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 1.839% early this morning. Thirty year rate  at 2.632% /POLICY ERROR)

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

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

end

Stronger Dollar Sends Futures Higher, Oil Lower, Asian Stocks To Two Month Lows

Yesterday’s weak dollar headfake has ended and overnight the USD rallied, while Asian stocks dropped to the lowest level in 7 weeks and crude oil fell as speculation returned that the Federal Reserve will raise interest rates as early as next month. The pound jumped and European stocks gained thanks to a weaker EUR.

Philadelphia Fed President Patrick Harker said on Monday that a hike in June is appropriate unless data weakens, while St. Louis Fed President James Bullard said holding rates too low for too long could cause financial instability. “The market seems to be taking a cautious stance ahead of the Fed Chair Janet Yellen’s speech later this week,” said Jung Sung-yoon, a foreign exchange analyst at Hyundai Futures.

“A rise in the dollar would be a big help for European stocks” Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank told Bloomberg. “People are testing whether the market has found a bottom, and there’s plenty of money sitting on the sidelines. We’ve had pretty calm, sideways trading this month even with another Fed rate hike looking more likely.” What Sonnenschein probably did not have in mind is such a drastic rise in the dollar that every other currency has to plunge, leading to the January EM puke which in turn sent all stocks, including European, reeling.

Others were less optimistic: Yang Hai, analyst at Kaiyuan Securities, said trading will likely remain dull for a while as economic sluggishness discourages investor participation. “The current economic environment doesn’t justify a sustainable rebound. In addition, regulators are reducing leverage in the asset management industry so money is not flowing in.”

In any event, the USD touched its strongest level in eight weeks against the euro, sending all 19 Stoxx 600 sectors higher with basic resources, banks outperforming and tech, financial services underperforming. Australia’s dollar and the Malaysia’s ringgit were among the biggest losers, as the prospect of higher interest rates boosted demand for the greenback. The stronger dollar also weighed on commodities, as gold headed for its longest losing streak since November and Brent crude oil declined for a fifth day. Sterling was boosted by a poll showing support for staying in the European Union is solidifying, while the Turkish lira gained after a cabinet reshuffle.

According to Bloomberg, Fed Funds futures are indicating for the first time since March a better-than-even chance that the U.S. central bank will raise interest rates by its July meeting. The speculation is driving a dollar rally that’s reminiscent of early January, when a global equities selloff wiped out about $7 trillion of market value following a December rate hike by the Fed. Unlike back then, oil and China’s yuan are showing signs of stability. Federal Reserve Bank of Philadelphia President Patrick Harker said he could see two to three rate hikes in 2016.

“Markets remain fragile as talks of a U.S. interest- rate hike in June puts some fear on whether global growth will remain resilient,” said Niv Dagan, Melbourne-based executive director at Peak Asset Management LLC. Williams and Bullard “both struck hawkish tones. The timing of future Fed rate hikes in the face of a sluggish economy is a major focus among stock investors who have benefited from historically low borrowing costs since the 2008 financial crisis.”

The Stoxx Europe 600 Index added 0.9 percent, led by miners and banks. S&P 500 futures gained 0.2 percent, signaling that the main index will recover after falling 0.2 percent Monday. The MSCI Emerging Markets Index of stocks dropped 0.6 percent. The measure is down 1.2 percent this year and trades at 11.2 times its projected 12-month earnings, data compiled by Bloomberg show. The Borsa Istanbul 100 Index jumped 1.9 percent.

Market Wrap

  • S&P 500 futures up 0.3% to 2052
  • Stoxx 600 up 0.9% to 341
  • FTSE 100 up 0.5% to 6168
  • DAX up 0.6% to 9899
  • S&P GSCI Index down 0.4% to 363.5
  • MSCI Asia Pacific down 0.9% to 125
  • Nikkei 225 down 0.9% to 16499
  • Hang Seng up 0.1% to 19830
  • Shanghai Composite down 0.8% to 2822
  • S&P/ASX 200 down 0.4% to 5296
  • US 10-yr yield unchanged at 1.84%
  • German 10Yr yield down 1bp to 0.17%
  • Italian 10Yr yield down 3bps to 1.45%
  • Spanish 10Yr yield down 2bps to 1.56%
  • Dollar Index up 0.19% to 95.41
  • WTI Crude futures down 0.5% to $47.86
  • Brent Futures down 0.7% to $48.03
  • Gold spot down 0.4% to $1,244
  • Silver spot down 0.6% to $16.29

Top Global News

  • Snapchat Said to Raise Funds at ~$20b Valuation: TechCrunch: Snapchat’s new fundraising round is about $200m; follow-on to $175m Series F round led by Fidelity
  • Cryan Says Deutsche Bank ‘Disappointed’ as Moody’s Cuts Rating: Unsecured debt rating lowered to Baa2, two levels above junk. ‘They face some pretty challenging headwinds,’ analyst says
  • Viacom CEO Dauman Sues to Block Removal From Redstone Trust: Complaint says Redstone’s daughter Shari is manipulating him. Move to replace them upends decades of planning, suit says
  • Worst-Performing U.S. Notes Go On Sale Under Threat of Fed Hike: Two-year notes stagnate in 2016 as 30-year bonds surge 8.9%. Odds of Fed rate increase this year rise to 76%, futures show
  • Facebook Changing Guidelines for Trending Topics After Probe: Will no longer require stories to appear on sites considered news leaders, including the New York Times and Buzzfeed, as that requirement could lead to bias
  • Tudor Cuts Fees on Biggest Fund to Keep Investors on Board: Firm’s charges are among the hedge fund industry’s highest. Macro hedge fund declined 2.6% this year as of May 13
  • Brexit Drama Scares Off Biggest Nordic Private Equity Fund EQT: EQT’s von Koch says Europe’s potential is underestimated
  • Morgan Stanley’s Gorman Says ‘Stay Tuned’ for Better Returns: Markets becoming more normal after tough quarter

Looking at Regional Markets, Asia traded lower across the board following the poor close on Wall Street in which Fed rate hike concerns and light trade dampened risk-appetite. Nikkei 225 (-0.9%) and ASX 200 (-0.4%) were pressured from the open with energy and basic materials weighed after oil fell below USD 48/bbl and iron ore prices continued to slump. Chinese bourses have conformed to the negative picture with the Hang Seng (+0.1%) and Shanghai Comp (-0.8%) impacted by the commodity weakness in which Dalian iron ore futures fell around 4% in early trade. Finally, 10yr JGBs traded higher amid risk-averse sentiment, while today’s enhanced liquidity auction for 10yr, 20yr, and 30yr JGBs was better received with b/c increasing to 4.03 from 3.67.

Top Asian News

  • Singapore Orders BSI Bank to Shut Down Amid 1MDB Probe: BSI’s Group CEO Stefano Coduri resigns
  • Google, Temasek See S.E. Asia Web Economy Reaching $200 Billion: Region attracts a fraction of VC funding received by India
  • Yuan Watchers See Decline Without Disorder as PBOC Learns Lesson: Top forecaster sees use of intervention, fixing to steady rate
  • Xiaomi Said to Plan First Drone at $610 in Challenge to DJI: Drone with 4K video said to be priced at ~4,000 yuan
  • Sony’s Profit Forecast Misses Estimates on Earthquake Damage: Sees net income down 46% to 80b yen for current fiscal year vs 196.4b yen analyst est.
  • Billionaire Jindal Family’s JSW Seeks More Distressed Assets: Group targets power, steel, iron ore and coal mine deals

In Europe, choppy price action has once again been at the fore of early European trade, with equities paring early losses to trade back in positive territory (Euro Stoxx 50: +0.8%). Italian banks are among the best performers on the continent today as they continue their recent volatile trend, in what has otherwise been a relatively quiet morning thus far in terms of stock specific newsflow. In terms of fixed income, Bunds have spent the morning in a particularly tight range (28 ticks), having opened higher after risk-off sentiment during Asian hours. Ultimately prices have failed to react to the upside in equities with any move to the downside potentially capped by the notable lack of supply from the Eurozone this week.

Top European News

  • Greek Debt Relief 2.0 Is Coming as IMF Rips Euro-Area Proposal
  • Plummeting Lira Threatens Plan to Spur Growth With Rate Cuts
  • Italy Top Female CEO Targets Growth of De Benedetti Empire
  • Monsanto Trading Below Bayer Offer Shows Regulatory Anxiety

In FX, the Bloomberg Dollar Spot Index, a gauge of dollar strength against 10 major peers, rose 0.2% in early trade. It advanced 0.4% to $1.1181 per euro, after being as strong as $1.1169. The Aussie dropped 0.8% after Reserve Bank of Australia Governor Glenn Stevens said inflation is too low. The ringgit slid 0.9 percent as the drop in oil prices dimmed prospects for Malaysia, Asia’s only major net exporter of crude. The MSCI Emerging Markets Currency Index dropped 0.2 percent. Sterling jumped 0.9 percent versus the euro and was 0.7 percent stronger at $1.4580, its first advance versus the greenback in three days. An ORB survey for the Daily Telegraph newspaper found older voters, previously found to back leaving the EU, are switching sides. The yuan was the most resilient of 31 major currencies, gaining 0.02 percent versus the dollar and trimming this year’s loss to 0.9 percent. China’s central bank scrapped a market-based mechanism for managing the currency on Jan. 4, returning to a system whereby the exchange rate is based on what suits authorities the best, the Wall Street Journal reported, citing unidentified people close to the People’s Bank of China.

Perhaps most notably, Turkey’s lira rebounded, climbing 0.6% after Mehmet Simsek, seen by many as the last pillar of stability in the Turkish government, was named deputy prime minister in a cabinet announced by prime-minister designate Binali Yildirim. The former Merrill Lynch strategist is credited by investors for maintaining fiscal discipline and acting as a buffer to President Recep Tayyip Erdogan’s push against orthodox monetary policy.

In commodities, Crude declined as Canadian oil-sands producers prepared to restart operations and cooler weather helped contain wildfires. Brent crude futures decreased 0.6 percent, after declining 1.9 percent over the previous four sessions. Inventories slid by 2 million barrels last week, according to a Bloomberg survey before Energy Information Administration data Wednesday. Supplies are near the highest in eight decades. West Texas Intermediate slid 0.4 percent to $47.89 a barrel Zinc in London dropped 1.4 percent to $1,815 a metric ton, the lowest in six weeks, while nickel rose 0.2 percent as Chinese import data signaled a diverging demand picture for the two metals. Copper rose 0.9 percent. Gold fell for a fifth day, with bullion for immediate delivery slipping 0.4 percent to $1,244.01 an ounce.

Bulletin Headline Summary From Bloomberg and RanSquawk

  • European equities have once again pared opening losses amid no direct fundamental catalysts to instigate price action and alongside a steady energy market
  • GBP continues to remain at the forefront of investor sentiment with the latest ORB/Telegraph poll further emphasising the lead of the ‘remain’ campaign
  • Looking ahead, highlights include US New Home Sales and API Inventories
  • Treasuries little changed in overnight trading; GBP/USD rallies as BOE’s Carney speaks before Parliament, says BOE has an obligation to assess risks related to Brexit; Treasury to sell $26b 2Y notes, WI 0.92%; last sold at 0.842% vs 0.840% WI yield at bidding deadline, first 2Y auction to tail since May 2014.
  • “My personal view is that the next rate move is more likely to be up than down in a Remain vote,” BOE Governor Mark Carney said at a hearing before U.K. lawmakers in London
  • Charlene Chu, a banking analyst who made her name warning of the risks from China’s credit binge, said a bailout in the trillions of dollars is needed to tackle the bad-debt burden dragging down the nation’s economy
  • Responding to a credit-rating cut by Moody’s Investors Service, Deutsche Bank AG Chief Executive Officer John Cryan said his bank has never had more capital and could easily repay its debt many times over
  • HSBC Holdings Plc, the U.K.’s biggest lender, is selling the riskiest type of bank debt about a month before a referendum that could lead to the country leaving the European Union
  • The world’s biggest banks have shed about one in three bond traders since 2011 as rules that make some businesses less profitable dovetail with volatile markets that are spooking investors
  • A surge in investment propelled German economic growth to its fastest pace in two years in the first quarter as mild winter weather encouraged construction

DB’s Jim Reid concludes the overnight wrap

Over in markets, a new week seemed to bring with it a bit of a pause for breath for investors for the most part yesterday. Indeed low volumes and choppy moves characterised much of the afternoon session in the US where the S&P 500 (-0.21%) eventually ended with a small loss. That said volumes were 16% below the average while the high to low range (of 0.41%) was the second smallest daily range of the year. Bourses in Europe were down a little more (Stoxx 600 -0.39%) not helped by a near 6% slide for Bayer after the terms of it $62bn mega offer for Monsanto was disclosed.

The economic data and specifically the release of the PMI’s yesterday didn’t lend much of a supporting hand to improving sentiment. In the US the flash manufacturing PMI for May was down a disappointing 0.3pts to 50.5 (vs. 51.0 expected) which is the lowest reading since September 2009 and backs up those soft regional readings of late. The details weren’t much better with output (49.1 from 50.3) falling below 50 to the lowest since August 2009, while new orders is at the lowest this year.

Meanwhile in Europe we saw the Euro area composite nudge down from 53.0 in April to 52.9 in the flash May reading which went against the consensus estimate for a rise to 53.2. The weakness came from the manufacturing sector where the PMI edged down to 51.5 (vs. 51.9 expected) from 51.7, while the services reading was unchanged at 53.1 (vs. 53.2 expected). Regionally however, the data pointed at some potential warning signs for the periphery. The composite readings for Germany (+1.1pts to 54.7; 53.9 expected) and France (+0.9pts to 51.1; 50.4 expected) actually rose more than expected and as a result, our European economists noted yesterday that this implies a contraction of 1.7pts on average in the composite PMI of Italy, Spain and Ireland. Overall yesterday’s data was in line with our colleague’s projected temporary slowdown in Euro area GDP growth to +0.3% qoq in Q2.

Switching our focus over to the latest in Asia where a weak last 24 hours for commodity markets, as well as the relatively soft price action in the US last night has seen most markets in Asia dip lower this morning. Losses are being led out of China where the Shanghai Comp is currently -0.90%, while elsewhere the Nikkei (-0.67%), Hang Seng (-0.14%), Kospi (-0.63%) and ASX (-0.16%) are all in the red. WTI has fallen below $48/bbl this morning ahead of the US inventory data today, while a near 7% fall for iron ore yesterday followed by further declines in the futures market this morning to the lowest level since early March appears to be weighing on miners.

Moving on. There was a bit more Fedspeak for us to note yesterday, although none of which particularly moved the dial giving it largely replicated much of what we’ve heard in the last week or so. Speaking after the US close, the Philadelphia Fed President Harker, usually of a hawkish leaning (and a non-voter this year), said that while he would not commit to a definitive path of how the Fed’s policy should evolve, did highlight that ‘I can easily see the possibility of two or three rate hikes over the remainder of the year’ while also suggesting that should the data come in as expected, then he would also see a June increase as appropriate. Prior to this we’d heard similar comments from San Francisco Fed President Williams, also a slightly more hawkish non-voter this year, who said that two to three rate increases this year are still about right. This echoes comments Williams made last month so was nothing new. The other comments yesterday came from St Louis Fed President Bullard who tends to be slightly more hawkish than that of his aforementioned colleagues (and is a voter this year), who said that he does not see the upcoming risk of Brexit as affecting the Fed’s decision making progress. The USD was actually a touch weaker yesterday (Dollar index -0.11%) although 2y Treasury yields have crept up above 0.900% again (from 0.878% on Friday) and the probability of a hike in June is now back at 32% from 28%, while July is up at 54% from 48%.

Away from this, with a month to go to June 23rd, The House View team have published a special report on the Brexit referendum. They look at the latest polls and bookmaker odds and explore the implications for either scenario. The negotiation period under an out vote is likely to take longer than the two years envisaged in the EU Treaty: it took three years for Greenland in the 1980s. During the negotiations the EU would have to strike a balance between preserving links with the UK and avoiding dissolution, a process that will be made more difficult given the different agendas, exposures and sensitivities to the UK of the other 27 EU countries. The report also looks at the potential macro and markets impacts of the different outcomes.

Staying with the political theme, over in Austria a super tight Presidential vote eventually concluded with the announcement that Van der Bellen will be the next President after taking 50.3% of the vote. Of significance was that he defeated Freedom Party candidate Norben Hofer who took 49.7% of the vote, meaning the first election of a far right-wing populist head of state since WWII was avoided. The close result laid out the huge division in the nation over issues such as the migration crisis as well as the domestic issues facing the Austrian economy presently.

Looking at today’s calendar, this morning the early focus is on Germany where shortly after we go to print the final revisions to Q1 GDP will be due out (no change from the +0.7% qoq reading expected) along with the associated growth components. Shortly after that we’ll get various confidence indicators out of France followed then by the April public sector net borrowing data for the UK. Later this morning we’ll also get the May ZEW survey report for Germany where some modest improvement in both the current situation (+1.3pts to 49.0 expected) and expectations (+0.8pts to 12.0 expected) components are expected. This afternoon we’ll get some data out of China with the Conference Board’s leading index, while across the pond this afternoon the Richmond Fed manufacturing index is due out (expected to deteriorate) as well as April new home sales data. Away from the data there’s no Fedspeak due although it’ll be worth keeping an eye on comments from the BoE’s Carney this afternoon when he is due to appear before the Treasury Committee (along with Broadbent, Weale and Vlieghe) to answer questions on the 2016 May Inflation Report. The ECB’s Praet is also due to speak today while Euro area finance ministers will be meeting in Brussels today with all things Greece on the agenda.

END

ASIAN AFFAIRS

i)Late  MONDAY night/ TUESDAY morning: Shanghai closed DOWN  BY 21.98 PTS OR 0.77%  /  Hang Sang closed UP 21.40 OR 0.94%. The Nikkei closed DOWN 155.84 POINTS OR 0.94% . Australia’s all ordinaires  CLOSED DOWN 0.44% Chinese yuan (ONSHORE) closed DOWN at 6.5554 .  Oil FELL to 47.88 dollars per barrel for WTI and 48.12 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.5653 yuan to the dollar vs 6.5554 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS.

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

none today/also no China stories

EUROPEAN AFFAIRS

The following is big news:  Moody’s downgrades Deutsche bank’s debt to two notches above junk.  I guess all of those derivative players who play with DB are getting quite nervous.

(courtesy zero hedge)

 

Moody’s Downgrades Deutsche Bank’s Debt Two Notches Above Junk

While not quite on the level of last week’s Berenberg downgrade (to Sell) which warned that DB’s problems are now “insurmountable“, shortly after the close Moody’s surprised the market with a downgrade that may have substantial repercussions on the funding costs (and perhaps viability) of the largest German, and European, lender.

Shortly after the market close, the rating agency decided to pile some more pain on the misery that has befallen Germany’s largest lender (who just today admitted it had rigged stocks in addition to seeing yet another MBS probe unveiled against it), when it downgraded the bank’s credit ratings across the board as follows: Senior debt to Baa2, or just two notches above junk, Long term deposits to A3 and counterparty risk assessment to A3.

Moody’s also downgraded Deutsche Bank’s short-term ratings and short-term counterparty risk assessments were also downgraded to Prime-2 from Prime-1 and to Prime-2(cr) and Prime-1(cr).

Moody’s downgrades Deutsche Bank’s ratings (senior debt to Baa2, long term deposits to A3 and counterparty risk assessment to A3(cr)); outlook stable

The full release:

Moody’s Investors Service has today downgraded the ratings of Deutsche Bank AG and affiliates, including the bank’s long-term deposit rating, to A3 from A2, its senior unsecured debt rating to Baa2 from Baa1, its standalone baseline credit assessment (BCA) to ba1 from baa3, and its counterparty risk assessment to A3(cr) from A2(cr). Deutsche Bank’s short-term ratings and short-term counterparty risk assessments were also downgraded to Prime-2 from Prime-1 and to Prime-2(cr) and Prime-1(cr), respectively. Today’s rating action reflects the increased execution challenges Deutsche Bank faces in achieving its strategic plan.

Moody’s also downgraded the ratings of US–based Deutsche Bank Trust Corporation and its trust company affiliates. These trust companies’
long-term deposit ratings were downgraded to A2 from A1, their long-term issuer ratings were downgraded to Baa2 from Baa1, their standalone baseline credit assessment was downgraded to baa1 from a3; their long-term and short-term counterparty risk assessments were downgraded to A3(cr) from A2(cr) and to Prime-2(cr) and Prime-1(cr) respectively. The Prime-1 short-term deposit ratings of these trust companies were affirmed.

The outlook on the ratings is now stable, reflecting the potential long-term benefits to creditors of Deutsche Bank’s five-year strategy plan through 2020 once achieved. It also reflects actions taken by the management team to preserve capital and liquidity during the restructuring process. This rating action concludes Moody’s review for downgrade of Deutsche Bank and its subsidiaries which began on 21 March 2016.

RATIONALE FOR RATINGS DOWNGRADE

Deutsche Bank is engaged in a multi-year undertaking to simplify its businesses, fortify its controls, strengthen its balance sheet and stabilize its earnings. Once substantial progress has been made, Deutsche Bank will have a reduced risk profile, more balanced earnings and operate with more conservative levels of leverage. Accomplishing these objectives will be positive for Deutsche Bank’s creditors, and the newly appointed management team is diligently attempting to execute this plan.

However, the rating downgrade reflects increased risks to Deutsche Bank’s ability to successfully execute this ambitious, creditor-friendly plan.Deutsche Bank’s performance over the last several quarters has been weak, and substantial operating headwinds, including continuing low interest rates and macroeconomic uncertainty, will challenge the firm. These forces will likely result in periods of subdued customer volumes and revenues within Deutsche Bank’s retail, asset management and institutional franchises, in Moody’s view. Moody’s expects that such revenue weakness could hinder or delay Deutsche Bank’s ability to make progress on its plan, as this would be contingent on the firm’s ability to balance the impact of plan-related expenses on its internal capital generation against the firm’s growing regulatory capital requirements.

“Deutsche Bank’s new management team is executing in a disciplined way, but the headwinds have stiffened, reducing the firm’s operating flexibility”, said Peter Nerby, a Moody’s Senior Vice President.

These challenges have been evident in revenue pressures facing Deutsche Bank over the past two quarters. Looking ahead, continuing headwinds could limit management’s ability to address one of the bank’s key credit challenges – to improve its structurally weak profitability and internal capital generation by 2018. Moody’s estimates that the firm is unlikely to achieve its targeted profitability improvements unless there is a material and sustained improvement in the operating environment.

RATIONALE FOR STABLE OUTLOOK

At the same time, the outlooks on Deutsche Bank’s ratings are stable, reflecting the potential long-term benefits to creditors of the five-year plan through 2020. Deutsche Bank maintains a sound liquidity position which is supportive of the bank’s credit fundamentals while management is deploying many operating and financial tools to execute this multi-faceted re-engineering. Recent actions include the implementation of a more comprehensive account opening process, the decommissioning of many legacy systems and the closure of onshore
operations in Russia.

The stable outlooks also reflect actions taken by the management team to preserve capital and liquidity during the restructuring process, such as suspending the dividend on its common stock and accelerating asset sales. These are important actions to maintain prudent cushions above regulatory minimums, if profit generation is limited in 2016 and 2017.

The downgrades to Deutsche Bank Trust Corporation and its trust company affiliates reflect the close linkages of the franchise value and client base of these operations to those of the parent Deutsche Bank. At the same time, the baa1 baseline credit assessments of the trust companies remain three notches above those of Deutsche Bank, reflecting strong regulatory ring-fencing, which preserves the capital and liquidity position of these entities as well as a lower risk profile focused on operational and wealth management services within these entities.

What Could Change the Rating – Up?

Steady progress toward improving profitability and reducing tail risks in the form of outstanding litigation and the run-off of legacy
positions as well as material progress in rebuilding the information technology environment of the bank, could lead to a rating upgrade.

What Could Change the Rating – Down?

The current ratings incorporate the possibility for a modest loss and substantial litigation costs in 2016 and the potential for limited profitability in 2017. Further downward pressure could occur if capital ratios weaken substantially or if liquidity declines sharply.

* * *

Remember that Deutsche Bank – Lehman analog?

With every additional downgrade by the likes of Berenberg or Moody’s, the two lines will converge ever closer.

 END
The CEO is very disappointed by the decision of Moody’s to downgrade DB.
The two big problems are the lowering of interest rates in Europe which is killing the banks over there and the ongoing litigation of rigging just about every market there is!
(courtesy zero hedge)

Deutsche Bank CEO “Very Disappointed” By Moody’s Downgrade

As reported yesterday, adding insult to injury to a bank that just hours earlier admitted that in addition to rigging everything else it has also been caught engaging in “stock fraud” at the same time as a new mortgage probe was launched against it, Deutsche Bank’s senior debt rating was downgraded by Moody’s to Baa2, just two notches above junk. For the bank with the tens of trillions in derivatives, being seen as an increasingly more distressed counterparty was not good news and explains why the CEO took the unexpected step of having to defend his firm following the downgrade.

As Bloomberg reports, DB’s CEO John Cryan said he was not happy with the Moody’s decision, his bank has never had more capital and could easily repay its debt many times over.:

We are very disappointed,” Cryan said in an interview on the sidelines of the Institute of International Finance’s conference in Madrid. “We have enough capital to repay all of our debt four-times over.”

It is unclear if under debt he also included the bank’s gross notional derivative liabilities which are several tens of trillions worth.

As we reported last night, Moody’s said that Deutsche faces mounting challenges in carrying out its turnaround, and cut the bank’s senior unsecured debt metric one level to Baa2, two grades above junk. The firm’s long-term deposit rating fell to A3 from A2.

The reason why DB has been singled out is because Cryan’s planned overhaul of the bank, laid out in October, has run into an industrywide slump in trading and investment banking, as well as a continued decline in interest rates in Europe and Asia, which is squeezing margins, but most troubling is the bank’s ongoing disclosures of legal non-compliance and outright fraud, leading to billions in settlements, legal fees and other increasingly more recurring charges. Net income fell 61% in the first quarter, leaving the company at risk of a second straight annual loss this year as it tries to resolve legal cases.

Moody’s tried to be diplomatic about its unexpected puke on what may be the world’s most important – and troubled – bank: “The plan they’re trying to execute is a good plan for the bondholder in the long run, but they face some pretty challenging headwinds when you look at the current operating environment,” Peter Nerby, a senior vice president at Moody’s, said in a phone interview. “They’re working on it, but it’s tougher than it was.”

However, one could read between the lines. Meanwhile, Deustche doth protested some more: “All key ratings remain investment grade,” Deutsche Bank Chief Financial Officer Marcus Schenck said in a separate statement on Monday. “And they remain in ‘A’ territory in our counterparty risk assessment and long-term deposit rating, which are most important for our clients.”

For now the market is buying it, literally, and the stock was up 1% in early Frankfurt trading

 

end

 

The French government is getting quite tough on the powerful French unions. Last week all 8 huge French refiners have been on strike due to the government’s seeking move of bypassing parliament to enact tougher union laws.

Shortages intensify!

(courtesy zero hedge)

French Government Promises To Deal With Unions “Extremely Firmly” As Fuel Shortages Intensify

French police used water cannons and tear gas to break up a picket that was blocking access to a large oil refinery in the southern port area of Marseille, as Prime Minister Manuel Valls told the unions that“enough is enough.” Valls went on to say that if labor unions continue to picket and disrupt fuel supplies, that they would be dealt with “extremely firmly.”

 

Valls has changed his tone on the matter, as the unions have exhibited that they can in fact disrupt fuel supplies around the country. Unions have been striking and blocking fuel supplies from being delivered ever since the government bypassed parliament and enacted unpopular labor reforms earlier this month. Rationing at many of the roughly 12,000 gas stations nationwide has already begun as the pickets have started to create significant fuel shortages in the country.

 

The government has said that there are enough emergency fuel reserves if necessary, but has taken a firm approach to breaking up the pickets as now all 8 French refineries have gone on strike, and Exxon’s Gravenchon refinery reports being down 50%, as it states that the plant isn’t halted but no petroleum is being delivered.

CGT union boss Philippe Martinez said that the strikes will continue until the labor law is withdrawn, and that the government was “playing a dangerous game” by refusing to back down on the reforms.

“We’ll see this through to the finish, to withdrawl of the labor law. This government which has turned its back on its promises and we are now seeing the consequences.

40 busloads of riot police took part in breaking up the strike outside of the Fos-sur-Mer refineries, which CGT union member Emmanuel Lepine called “unprecedented violence.”, also noting that the plan to disrupt fuel supplies is working “output is going to fall by at least 50 percent.”

As if the disruption in fuel supplies wasn’t enough, the CGT has also called weekly strikes on the SNCF state railways and an open-ended strike on the Paris underground and suburban commuter train networks from June 2, a week befor ethe Euro 2016 soccer tournament opens.

Bloomberg has more:

  • *Prime Minister pledges further state intervention after Fos, near Marseille, unblocked by force
  • *CGT: ALL 8 FRENCH REFINERIES ARE ON STRIKE
  • *Exxon’s Gravenchon in Normandy down by >50%
  • *Plant’s units not halted but it’s not delivering petroleum

Alas, contrary to what Prime Minister Valls would like everyone to believe, it appears that he does not have the situation “fully under control.

end

RUSSIAN AND MIDDLE EASTERN AFFAIRS

I am not sure who is more a buffoon: Obama or Dennis Gartman

(courtesy zero hedge)

 

Iran’s Ayatollah: “The US Can’t Do A Damn Thing About Our Missile Program”

Over the weekend we reported that in the latest unspoken mockery of the Obama administration, the Iranian military had successfully carried out another two launches of short-range ballistic missiles – the Nazeat and the Fajr-5 – during ground forces exercises. As a reminder, Iran is technically not permitted (even if the prohibition is not enforced) to engage in such drills, because following the adoption of the JCPOA, the UN Security Council passed Resolution 2231, which prohibits Iran from engaging in activities related to ballistic missiles capable of delivering nuclear weapons.

Which, as we wrote, is precisely why Iran keeps doing just that in its ongoing attempts to mock the Obama administration as one which no longer has any leverage over what Iran does, something Trump, who has repeatedly said he would immediately cancel the deal if he is elected president, will use to his full advantage in the coming months.

Well, what until now was an “unspoken mockery” of the US just became very spoken, because as Iran’s semi-official Fars News Agency reported, cited by TOI, Iran’s supreme leader Ali Khamenei on Monday said the United States cannot “do a damn thing” about the Islamic Republic’s ballistic missile program, making it explicit that every preceding and future ballistic missile test is about one thing only: to humiliate the Obama administration.

Referring to the US, Khamenei said that “they have engaged in a lot of hue and cry over Iran’s missile capabilities, but they should know that this ballyhoo does not have any influence and they cannot do a damn thing.”

The US and other powers are extremely sad at this issue and they have no other option; that is why they made huge efforts in order to bring the country’s decision-making and decision-taking centers under their control, but they failed and God willing, they will continue to fail,” Khamanei added.

The supreme leader, who has final say on state matters, slammed “arrogant” Western powers, arguing that efforts to shut down its nuclear program and missile tests were a pretext to meddle in Iran’s affairs. “The nuclear issue and missiles are excuses and of course excuses are useless and they can do no damn thing,” Khamenei said. “The point is Iran doesn’t follow arrogant powers.”

In this war, willpowers are fighting. The stronger willpower will win,” Khamenei added.

Unless willpower is measured by the size of one’s gold handicap, we doubt Obama would disagree.

Elsewhere, the leader of the Iranian Revolutionary Guards, general Qassem Soleimani, maintained that without the Islamic Republic, the Islamic State would now control all of Syria. The United States has been forced to back down in the region, he said, according to Iranian reports.

Iran also pivoted to its historic nemesis Israel. Last week, a senior Iranian military commander boasted that the Islamic Republic could “raze the Zionist regime in less than eight minutes.” Ahmad Karimpour, a senior adviser to the Iranian Revolutionary Guards’ elite unit al-Quds Force, said if Khamenei gave the order to destroy Israel, the Iranian military had the capacity to do so quickly.

“If the Supreme Leader’s orders [are] to be executed, with the abilities and the equipment at our disposal, we will raze the Zionist regime in less than eight minutes,” Karimpour said Thursday, according to the semi-official Fars News Agency.

A senior Iranian general on May 9 announced that the country’s armed forces successfully tested a precision-guided, medium-range ballistic missile two weeks earlier that could reach Israel, the state-run Tasnim agency reported.

“We test-fired a missile with a range of 2,000 kilometers and a margin of error of eight meters,” Brigadier General Ali Abdollahi was quoted as saying at a Tehran science conference. The eight-meter margin means the “missile enjoys zero error,” he told conference participants.

He was referring to a potential Israeli strike, something which has not escaped the Israelis, who also realize that Khamenei is absolutely right that the US “can’t do a damn thing” about the Iranian program, which may in turn lead to a return of the same concerns which emerged for the first time in 2010 and 2011 that Israel would launch a preemptive strike against Iran just to make sure Iran does not do the same.

For now, however, ISIS is providing a sufficient distraction to the much deeper and ongoing tensions in the middle east.

 

END

 

Crude spikes to over 49.00 per barrel on biggest inventory draw:

(courtesy zero hedge)

 

Crude Spikes Above $49 After Biggest Inventory Draw Since 2015

Following last week’s surprise draw (from the DOE data), API reported a huge 5.14mm draw (against expectations of a 2mm barrel draw) – the biggest since Dec 2015. Bear in mind that last week API reported a large build only to se a major draw in DOE data so perhaps this is catch down from the Canada interruption. Cushing saw its first draw in 4 weeks but Gasoline inventories rose dramatically (+3.06mm vs -1.5mm exp). Crude prices are exuberantly looking to run last week’s high stops on the news, breaking above $49 again.

 

API

  • Crude -5.137mm (-2mm exp)
  • Cushing -189k (-400k exp)
  • Gasoline +3.06mm (-1.5mm)
  • Distillates -2.92mm (-750k exp)

This is the biggest inventory draw since Dec 18th…

Bear in mind, seasonally, the trend is for a draw in May. In fact May of 2015 saw one of the biggest draws of all time at -16.4 million. How did 2015 end?

 

The reaction, understandably, a surge in oil prices – breaking above $49…

 

Charts: Bloomberg

 

end

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

Euro/USA   1.1181 DOWN .0032 ( STILL REACTING TO USA FAILED POLICY

USA/JAPAN YEN 109.62  UP.247 (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 1.4611 UP.0133 (LESS OF A THREAT OF BREXIT)

USA/CAN 1.3159 UP .0013

Early THIS TUESDAY morning in Europe, the Euro FELL by 32 basis points, trading now WELL above the important 1.08 level FALLING to 1.1367; Europe is still reacting to deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED DOWN BY 21.98 PTS OR 0.77% / Hang Sang CLOSED UP 21.40 OR  0.11%   / AUSTRALIA IS LOWER BY 0.44%(RESOURCE STOCKS DOING POORLY / ALL EUROPEAN BOURSES ARE ALL IN THE GREEN   as they start their morning/

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

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

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

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

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

The NIKKEI: this TUESDAY morning: closed DOWN 155.84 OR 0.94% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 21.40 PTS OR 0.11% . ,Shanghai CLOSED  DOWN 21.98 OR 0.77%/ Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED IN THE RED /India’s Sensex IN THE GREEN

Gold very early morning trading: $1242.00

silver:$16.29

Early TUESDAY morning USA 10 year bond yield: 1.839% !!! UP 1 in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.632 UP 1 in basis points from MONDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early TUESDAY morning: 95.40 UP 15 CENTS from MONDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers TUESDAY MORNING

END

 

And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  3.02% DOWN 5 in basis points from MONDAY

JAPANESE BOND YIELD: -.104% DOWN 2 in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.54%  DOWN 3 IN basis points from MONDAY

ITALIAN 10 YR BOND YIELD: 1.42  DOWN 6 IN basis points from MONDAY

the Italian 10 yr bond yield is trading 12 points lower than Spain.

GERMAN 10 YR BOND YIELD: .176% UP 1  IN BASIS POINTS ON THE DAY

 

END

 

IMPORTANT CURRENCY CLOSES FOR TUESDAY

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

 

Euro/USA 1.1141 down .0072 (Euro =DOWN 72 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 109.98 UP 0.604 (Yen DOWN 64 basis points )

Great Britain/USA 1.4629 UP.0151 Pound UP 151 basis points/

USA/Canada 1.3141 UP 0.0006 (Canadian dollar DOWN 6 basis points with OIL RISING a BIT(WTI AT $48.69).

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 72 basis points to trade at 1.1141

The Yen FELL to 109.98 for a LOSS of 61 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was UP 151 basis points, trading at 1.4629 (LESS BREXIT FEARS)

The Canadian dollar FELL by 6 basis points to 1.3141, WITH WTI OIL AT:  $48.68

The USA/Yuan closed at 6.5460

the 10 yr Japanese bond yield closed at -.104% UP 2 IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 3  IN basis points from MONDAY at 1.859% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.645 UP 3 in basis points on the day ( HUGE POLICY ERROR)

BANKS NEED THE LONGER BOND HIGHER IN YIELD: INSTEAD THE SPREAD LESSENS.

Your closing USA dollar index, 95.58 UP 36 IN 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 TUESDAY

London:  CLOSED UP 82.83 OR 1.35%
German Dax :CLOSED UP 215.02 OR 2.18%
Paris Cac  CLOSED UP 106.42  OR 2.46%
Spain IBEX CLOSED UP 204.10 OR 2.34%
Italian MIB: CLOSED UP 578.89.27 OR 3.34%

The Dow was UP 213.12  points or 1.22%

NASDAQ UP 95.27 points or 2.00%
WTI Oil price; 48.70 at 4:30 pm;

Brent Oil: 48.70

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  66.55 (ROUBLE UP 57/100 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT ROSE AND WTI ROSE

TODAY THE GERMAN YIELD ROSE TO .177  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:49.20

BRENT: 49.12

USA 10 YR BOND YIELD: 1.863%

USA DOLLAR INDEX: 95.60 up 35 cents

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

 

It looks like Google is going to have a visit from tax authorities all over Europe as early this morning there was a raid on their Paris office, probing tax evasion:

(courtesy zero hedge)

Google’s Paris Office Raided In Tax Evasion Probe

Europe’s crackdown on both individual and corporate tax evaders hit a new high this morning when according to French daily Le Parisien, French tax officials raided the Paris offices of Google early Tuesday in a probe into possible tax evasion.

The raids follows a complaint by the French finance ministry, paper says. Acccording to Bloomberg, prosecutors and Al Verney, a spokesman for Google in Brussels, didn’t immediately respond to requests for comment.

Reuters adds that investigators have been probing Google’s offices in central Paris since 0500 am (0300 GMT). It notes that France is seeking €1.6 billion ($1.79 billion) in back taxes from the U.S. Internet giant Google, criticized for its use of aggressive tax optimization techniques, another source at the finance ministry had said in February.

Here is the original report, Google translated:

According to our information, a search is underway on Tuesday at Google headquarters in Paris in the ninth district. From five in the morning, following a complaint Bercy suspect that the US giant digital tax evasion, hundreds of tax officials and law enforcement brigade of the great financial crime (BRGDF) are on the premises, with the reinforcement of five judges of the national financial parquet.

“The operation was top secret, says a source. It was conducted without using the financial parquet courier to avoid leaks.”

Since European tax crackdowns are rarely state-specific, we expect imminent such crackdowns in other Google offices across Europe.

More as we get it.

END
Richmond Fed crashes by the biggest margin ever and lands into contraction mode:
(courtesy zero hedge)

Richmond Fed Crashes Into Contraction From 6 Year Highs, Biggest Drop In History

Having spiked mysteriously to 6 year highs in March (from 4 year lows in Feb), Richmond Fed’s manufacturing survey crashed back into contraction in May (printing -1 against =14 prior and +8 expectations).

 

Weakness was broad-based across the entire set of subcomponents with New Orders plunging, shipments crashing, employees and workweek tumbling, and worse still future employment and capex expectations dropped precipitously.  

The drop in the last 2 months is the largest in the 23 year history of the survey.

 

So WTF was that spike in March?

 

Charts: Bloomberg

end
Guccifer to plead guilty for hacking into prominent USA authorities and then will fully cooperate with the ongoing email investigation.
Lot so fun for Hillary!
(courtesy zero hedge)

Hacker Who Got Inside Hillary Clinton’s Server Said To Cooperate Fully With Ongoing Email Investigation

As we reported three weeks ago, the notorious Romanian hacker Marcel Lazar known also as Guccifer who first exposed Hillary Clinton’s private email address made a bombshell claim when he claimed that he also gained access to the former Secretary of State’s “completely unsecured” server. “It was like an open orchid on the Internet,” Lazar told NBC News. “There were hundreds of folders.”

This took place shortly after Lazar was extradited from Romania to the US to face hacking charges.

In the latest twist, Politico reports, Lazar is now expected to plead guilty this week, clearing the way for his unfettered cooperation with federal prosecutors, suggesting that all of his heretofore unverified claims about hacking into Hillary’s server will be duly investigated. If confirmed, this could open a new chapter in the FBI’s criminal probe into Hillary’s email use and/or abuse.

As Politico adds, Lazar is scheduled to appear in federal court in Alexandria, Va. Wednesday morning for a change of plea hearing, according to court records. A prosecution spokesman did not immediately respond to a message seeking confirmation that the guilty plea is part of a plea bargain with prosecutors. A defense attorney declined to comment. Such plea deals usually oblige a defendant to assist authorities in all ongoing investigations.

Lazar was indicted in 2014 on nine felony charges stemming from his alleged hack into the emails of several prominent Americans, including former Secretary of State Colin Powell, a relative of former President George W. Bush and George H.W. Bush, and former Clinton adviser Sidney Blumenthal. A set of Blumenthal’s emails were published online in 2013, disclosing a private email address Clinton used. She later changed the address.

Allegedly, Hillary’s personal email server was also among those hacked.

Clinton’s email arrangement is the subject of an ongoing FBI investigation, believed to be focused on how email messages deemed classified wound up on her server. Some reports have speculated that Lazar could demonstrate how vulnerable Clinton’s unusual email set-up was to foreign hackers, but it’s unclear how significant that fact would be to a decision about whether to seek criminal charges against Clinton or others involved in creating or using the unofficial email system.

If the DOJ’s ongoing “effort” to squash the probe – often in direct confronation with the FBI – is any indication, even full data dump by the Romanian may not spur any action, unless of course it is Obama’s intention to thaw the DOJ out of its deep freeze slumber right before the Democratic convention and somehow insert Joe Biden as the presumptive presidentical candidate.

end
Now it is New York’s turn to raise the premiums for Health Insurance next year:
Individuals: 17.3% and small groups 12.0%
(courtesy zero hedge)

Next Up For Exploding Health Insurance Premiums: New York

When we warned recently that thanks to Obamacare, insurance companies would be unveiling significant price shocks one week before the presidential elections, we knew it was only a matter of time before the 2017 proposals would start to be released and double digit increases would be unveiled to the public.

 

Sure enough, we were proven right when the first two states to release proposals, Oregon and Virginia, showed that insurers were indeed asking for significant double digit increases.

Now, another state has made the 2017 proposals public, and the results aren’t any better. InNew York, health insurers have proposed an average 17.3 percent increase for individuals, and an average 12 percent increase for small groups. In the individual market there is a wide range of increases, from MVP Health asking for a 6.1 percent increase, to Crystal Run Health Plan asking for a whopping 89.1 percent increase. For small groups, Healthfirst Health Plan has proposed a 5 percent increase on the low end, while Crystal Run has proposed a 61.9 percent increase on the high end.

The 2017 rate submissions reflect increases that are the direct result of the underlying cost of care and marketplace changes that continue to impact health plans’ operations,” said Paul Macielak, president of the New York Health Plan Association.

Other proposed rate increases for individuals include 45.6 percent increase by United Healthcare of New York, 29.2 percent increase by North Shore-LiJ CareConnect, and 15.9 percent by Excellus.

While on average a 17.3 percent increase has been proposed for individuals, it’s important to note that in 2015 the Department of Financial Services only approved an increase of 5.7 percent even as the companies proposed a 12.5 percent increase.

Obamacare now finds itself at an interesting crossroads. On one hand, as evident in the proposed increases, very few companies can make a profit while participating in Obamacare with rates at current levels. Companies set up specifically under the Affordable Care Act have started to shut their doors (losing taxpayers billions) because there is simply no profit to be made, and now the government is even walking back promises to compensate firms that agreed to participate for their losses. Indeed, if the higher rates are not approved, firms will continue to exit the healthcare exchanges. However, if rate increases are approved, another problem is presented. Increased costs would put further pressure on already financially strained individuals and small business owners who would have to come up with ways to absorb the additional costs.

Ironically, the guy primarily responsible for creating such a mess won’t have to deal with any of this come January 20, 2017.

What Rate Hike: Only 4 Regional Feds Support Discount Rate Increase Compared To 9 Back In November

Moments ago, the Fed’s discount rate minutes for the months of March/April suggested that a rate hike may be indeed closer than some expect, because after just two regional Feds – those of Richmond Fed and Kansas City – requested an increase in the rate charged on direct loans from the central bank to 1.25% from 1% in the Feb/March meeting, this number doubled to four, with the inclusion of the San Fran and Cleveland Feds joining the group of regional Feds pushing for a 25 bps rate hike to the discount rate.

The four regional Feds, however, were overriden by the balance of the 12 regional Feds, including the Boston, New York, Chicago, Minneapolis, Dallas, Philadelphia, Atlanta, St. Louis Feds, all of whom recommended keeping the discount rate unchanged.

From the minutes:

Subject to review and determination by the Board of Governors, the directors of the Federal Reserve Banks of Chicago, Minneapolis, and Dallas had voted on April 14, 2016, and the directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Atlanta, and St. Louis had voted on April 21, to reestablish the existing rate for discounts and advances (1 percent) under the primary credit program (primary credit rate). The directors of the Federal Reserve Banks of Cleveland, Richmond, Kansas City, and San Francisco had voted on April 14 to establish a rate of 1-1/4 percent (an increase from 1 percent). At its meeting on April 11, the Board had taken no action on requests by the Richmond and Kansas City Reserve Banks to increase the primary credit rate.

 

Federal Reserve Bank directors cited continued improvement in labor markets, including significant payroll gains and increases in labor force participation.Although many directors noted a recent slowdown in economic growth, they were generally positive about the prospects for moderate increases in economic activity going forward. Directors provided mixed reports on consumer spending, including some easing in the growth of auto sales. Several directors noted steady-to-increasing housing-sector activity, but others cited ongoing weakness in the agriculture and energy sectors. Some directors noted the potential implications of global economic and financial developments for export-related activity. Some directors reported moderate wage pressures for certain jobs, as well as difficulty hiring  and retaining some types of skilled and unskilled workers. Inflation remained below the Federal Reserve’s 2 percent objective.

 

Against this backdrop, most Federal Reserve Bank directors recommended that the current primary credit rate be maintained. Other Federal Reserve Bank directors recommended increasing the primary credit rate to 1-1/4 percent, in light of current and anticipated economic conditions, improvements in the labor market, and expectations that inflation would rise toward the Federal Reserve’s 2 percent objective over the medium term.

 

Today, Board members considered the primary credit rate and discussed, on a preliminary basis, their individual assessments of the appropriate rate and its communication, which would be discussed at the meeting of the Federal Open Market Committee this week. No sentiment was expressed for changing the primary credit rate before the Committee’s meeting, and the existing rate was maintained. Thereafter, a discussion of economic and financial developments and issues related to possible policy actions took place.

Is this enough? Recall that on November 24, one month before the Fed did hike rates by 25 bps, a whopping 9 regional Fed requested a Discount Rate hike With only four regional Feds on the same page as of this moment, it is very unlikely that June is when the Fed’s rate hike will take place, and with July missing a press conference, it remains to be seen just how the Fed can proceed with the much touted rate hike in the coming 2 months, without some major surprises.

 

end

Well that is all for today

I will see you tomorrow night

H

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