June 15/Janet Yellen goes dovish in latest FOMC which causes gold and silver to rise/China massive deleveraging its social spending: no wonder we have contracting global demand/Nigera’s Nira collapses setting the stage for hyperinflation/

Good evening Ladies and Gentlemen:

Gold:  $1,285.80 UP $0.80    (comex closing time)

Silver 17.49 UP 8 cents

In the access market 5:15 pm

Gold $1292.50

silver:  17.52

i) the June gold contract is an active contract. Last  night we had a good sized 297 notices filed for 29,700 oz to be served upon today.  The total number of notices filed in the first 11 days is enormous at 14,997 for 1,499,700 oz.  (46.647 tonnes)

ii) in silver we had 0 notices filed.  total number of notices served  in the 10 days:  202 for 1,010,000 oz

Let us have a look at the data for today


Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 274.09 tonnes for a loss of 29 tonnes over that period

In silver, the total open interest ROSE by 1259 contracts UP to 197,852 DESPITE THE FACT THAT THE PRICE OF SILVER WAS  DOWN by  2 cents with respect to YESTERDAY’S trading. In ounces, the OI is still represented by just under 1 BILLION oz i.e. 0.995 BILLION TO BE EXACT or 142% of annual global silver production (ex Russia &ex China)

In silver we had 0 notices served upon for nil oz.

In gold, the total comex gold OI ROSE by a CONSIDERABLE 6,182 contracts UP to 545,357 as the price of gold was UP $1.10 with YESTERDAY’S trading (at comex closing).


With respect to our two criminal funds, the GLD and the SLV:


We had A HUGE change  in inventory, A DEPOSIT OF 2.08 TONNES into the GLD/Inventory rests at  900.75 tonnes.


We had another huge change in inventory, a deposit of 2.376 million oz of silver into the SLV Inventory/Tonight it rests  at 342.765 million oz.


Both the GLD and SLV are massive frauds as they have no metal behind them!


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

1. Today, we had the open interest in silver ROSE by 1259 contracts up to 199,111 despite the fact that the price of silver was DOWN by  2 cents with YESTERDAY’S trading. The gold open interest ROSE by 6,182 contracts UP to 545,357 as the price of gold was up $1.10 on YESTERDAY.

(report Harvey).


2 a) Gold trading overnight Europe, Goldcore

(Mark OByrne/


i)Late  TUESDAY night/ WEDNESDAY morning: Shanghai closed UP 45.02 POINTS OR 1.58% / /Hang Sang closed UP 79.99 OR 0.39%. The Nikkei closed UP 60.58 POINTS OR 0.38% Australia’s all ordinaires  CLOSED DOWN 1.08% Chinese yuan (ONSHORE) closed UP at 6.5813 /Oil FELL to 48.05 dollars per barrel for WTI and 49.19 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.5956 yuan to the dollar vs 6.5813 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AS DOLLARS LEAVE THE COUNTRY



none today


i) China sends a clear message to Janet Yellen of the Fed and tells her that she had better not raise rates nor stoke fears that she is going to raise the rates in the near future.  China devalues the yuan to 6.6010 the weakest since Jan 2011.After China send its signal the yuan strengthened back to 6.5825.  The last time we had the yuan at this level we had global turmoil:

( zero hedge)

ii)We have been highlighting this to you on many occasions:  China is deleveraging its money growth and that is the major cause of the world’s growth hemorrhaging. China is the world’s growth.

 ( zero hedge)


i)Looks like we are going to have another hung parliament in Spain.  However the Euroskeptic party Podemos is gaining in strength and if they join with the socialists, we may have a repeat of a BREXIT in Spain or a Spain-ex .

( Mish Shedlock)


ii)Deutsche bank describes the negative 10 yr bund as a simple indicator of a broken financial system.  What Deutsche bank really wants is an end to NIRP and more QE so threat they can get out of their mess. Also 57 MP’s will vote against the huge QE that Osborne announced if a BREXIT occurs.

( zero hedge/Jim Reid/Deutsche bank)

iii)The Institute of International Finance in Washington states that BREXIT is a bigger threat to the Global Economy than Lehman. Also 57 MPs have warned that they would vote against an emergency budget post BREXIT

( zero hedge)

iv)And here are “peaceful” scenes from yesterday’s massive protests in Paris.

( zero hedge)


The central bank of Nigeria throws in the towel and lets the Nira collapse. Expect hyperinflation similar to Venezuela to grip this nation:

( zero hedge)


i) Oil spikes higher after the DOE inventories drop refuting the API data for the 3rd week in a row .  Production drops!

( DOE/zero hedge)


ii)Why Goldman Sachs strongly believes that oil is heading southbound:


ii)This is a good one!:  Argentina’s former public works secretary is caught burying 8.5 million dollars equivalent in the ground.  I believe former President Kirchner has got some problems

( zero hedge)


i)Craig Hemke outlines the huge manipulation of gold with the latest Banking  Participation report:

(Craig Hemke/GATA/Chris Powell)

ii)John Embry states that the authorities are trying to prop up the stock market but gold and silver are gaining strength.

iii)Technical analysis is useless in a violent manipulative scheme.  And that is what we have with respect to gold and silver

( Chris Powell/Steve Savillle)


iv) Bill Holter’s interview with Greg Hunter of USA Watchdog

(Bill Holter/Greg Hunter)


i)The all important industrial production plunges for the 9th straight month.  This is the longest non recession streak in 100 years:

zero hedge)


ii)In a surprise reading, the NY mfg index (Empire Fed) jumps on new orders. However employment conditions deteriorate:!!

( NY Empire Mfg Index/zero hedge)


iii)Today was FOMC day and many predicted it would be a non event and it sure looks that way with the Fed slashing guidance for that illusive rate hike:

( zero hedge)

iv)And the initial reaction on Wall Street:USD plummets, bonds up, gold up!

( zero hedge)

v) Janet states that the economy is improving.  Guess again Janet, as Bank of America is set to fire another 8,000 bankers:

( Bank of America/zero hedge)


And Goldman Sachs’ take on the FOMC meeting just concluded: more dovish that anticipated!

(courtesy Goldman Sachs/zero hedge)


Let us head over to the comex:

The total gold comex open interest ROSE to an OI level of 545,357 for a  gain of 6,182 contracts AS THE PRICE OF GOLD WAS UP $1.10 with respect to YESTERDAY’S TRADING. . WE HAVE ENTERED THE SECOND BIGGEST DELIVERY MONTH OF THE YEAR THAT IS JUNE, A VERY ACTIVE MONTH. 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. IN THE MONTH OF MAY THE LATER HAD STOPPED. DURING THE MAY WE DID WITNESS A GRADUAL RISE IN AMOUNT STANDING AND THE AMOUNT STANDING AT THE CONCLUSION OF THE MONTH FINISHED AT ITS ZENITH..  IN JUNE, ON FIRST DAY NOTICE WE HAVE CERTAINLY WITNESSED THE FORMER, A HUGE LOSS OF TOTAL OPEN INTEREST CONTRACTS FOR THE ENTIRE GOLD COMEX COMPLEX . HOWEVER WE HAVE MORE THAN MADE UP FOR THE LOSS AS MORE INVESTORS ENTER THE ARENA TO TAKE ON THE CRIMINAL BANKERS. WE HAD ANOTHER GAIN IN JUNE OI TODAY FOR GOLD OZ STANDING IN THIS ACTIVE JUNE CONTRACT.

The FRONT gold contract month of June saw it’s OI fall to 1205 for a loss of 346 contracts. We had 348 notices filed yesterday, so we gained 2 contracts or 200 additional oz  WILL STAND FOR METAL. The next active contract month is July and here we saw it’s OI fall by only 64 contracts down to 3043.This may  be troublesome for our bankers as the front July contract month is extremely high for a non active month and it also refuses to shrivel. The next big active contract month is August and here the OI ROSE by 6,131 contracts UP to 402,371. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was FAIR at 173,401. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was good at 202,890 contracts. The comex is not in backwardation.

Today we had 297 notices filed for 29700 oz in gold.


And now for the wild silver comex results. Silver OI ROSE by 1259 contracts from 197,852 UP to 199,111 despite the fact that the price of silver was DOWN BY 2 cents with YESTERDAY’S TRADING. The front month of June saw it’s OI FALL by 0 contracts REMAINING AT 339. We had 0 notices filed yesterday, so we NEITHER GAINED NOR LOST ANY SILVER OUNCES STANDING. The next big delivery month is July and here the OI fell by 2,248 contracts DOWN to 90,474. The volume on the comex today (just comex) came in at 48,257 which IS VERY GOOD. The confirmed volume FRIDAY (comex + globex) was huge at 63,099. Silver is not in backwardation . London is in backwardation for several months.
We had 0 notices filed for nil oz.

JUNE contract month:

INITIAL standings for JUNE

June 15.
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil  596.709 OZ


Deposits to the Dealer Inventory in oz 8,680.500 OZ



Deposits to the Customer Inventory, in oz   NIL


No of oz served (contracts) today 297 contracts
(34,800 oz)
No of oz to be served (notices) 908 contracts

90,800 oz

Total monthly oz gold served (contracts) so far this month 14,997 contracts (1,499,700 oz)

(46.647 TONNES SO FAR)

Total accumulative withdrawals  of gold from the Dealers inventory this month   1400.01 OZ
Total accumulative withdrawal of gold from the Customer inventory this month  149,885.6 OZ

Today we had 1 dealer DEPOSIT

i) Into Brinks:  8680.500 oz

total dealer deposit:  8680.500  0z

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz


Today we had 0 customer deposit:


Total customer deposits; NIL   OZ

Today we had 1 customer withdrawal:


total customer withdrawals:  596.709 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 297 contracts of which 101 notices was stopped (received) by JPMorgan dealer and 151 notices was stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the JUNE contract month, we take the total number of notices filed so far for the month (14,997) x 100 oz  or 1,499,700 oz , to which we  add the difference between the open interest for the front month of JUNE (1205 CONTRACTS) minus the number of notices served upon today (297) x 100 oz   x 100 oz per contract equals 1,590,500 oz, the number of ounces standing in this active month.  This number is EXTREMELY huge for JUNE.  THE AMOUNT STANDING FOR GOLD IN MAY HELD THROUGHOUT THE MONTH AND ACTUALLY INCREASED AS THE MONTH PROCEEDED. AND IT SURE LOOKS LIKE IT WILL HAPPEN AGAIN IN JUNE. 
Thus the INITIAL standings for gold for the JUNE. contract month:
No of notices served so far (14,997) x 100 oz  or ounces + {OI for the front month (1205) minus the number of  notices served upon today (297) x 100 oz which equals 1,590,500 oz standing in this   active delivery month of JUNE (49.471 tonnes).
WE  gained 2 contracts or an additional 200 oz will  stand for GOLD
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 49.471 tonnes of gold standing for JUNE and 52.05 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 6.889 TONNES FOR MAY + 49.471 TONNES FOR JUNE + 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-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008  = 66.199 tonnes still standing against 51.04 tonnes available.
 Total dealer inventor 1,673,512.39 tonnes or 52.05 tonnes
Total gold inventory (dealer and customer) =8,812,135.971 or 274.09 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 274.09 tonnes for a loss of 29 tonnes over that period. 
JPMorgan has only 25.70 tonnes of gold total (both dealer and customer)
JPMorgan now has only .900 tonnes left in its dealer account.
And now for silver

June initial standings

 June 15.2016

Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory  1,239,490.65 OZ oz






Deposits to the Dealer Inventory NIL
Deposits to the Customer Inventory   595,749.900  oz


No of oz served today (contracts) 0 CONTRACTS 

nil OZ

No of oz to be served (notices) 339 contracts

1,695,000 oz

Total monthly oz silver served (contracts) 202 contracts (1,010,000 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  18,144,968.9 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 deposit:


i) Into JPMorgan:  595,749.900 oz

Total customer deposits: 595,749.900  oz.

We had 3 customer withdrawals

i) Out of BRINKS:  595,749.700 oz*

*Obviously Brinks removed this from their vault and JPMorgan recorded 595,749.900 oz so

somehow the weight increased!

ii) Out of CNT: 606,691.530 oz

iii) Out of Scotia: 37,049.420 oz



total customer withdrawals:  1,239,490.65 oz



 we had 0 adjustment

The total number of notices filed today for the JUNE contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in JUNE., we take the total number of notices filed for the month so far at (202) x 5,000 oz  = 1,010,000 oz to which we add the difference between the open interest for the front month of JUNE (339) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the JUNE contract month:  202 (notices served so far)x 5000 oz +{339 OI for front month of JUNE ) -number of notices served upon today (0)x 5000 oz  equals  2,705,000 of silver standing for the JUNE contract month.
We neither lost nor gained any silver ounces standing today.
Total dealer silver:  22.482 million  (RECORD LOW INVENTORY)
Total number of dealer and customer silver:   150.412 million oz
The total open interest on silver is NOW moving closer to its all time high with the record of 207,394 being set May 18.2016. The registered silver (dealer silver) is NOW AT  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.
And now the Gold inventory at the GLD
June 15/the farce continues:  another paper deposit of 2.08 tonnes into the GLD/Inventory rests at 900.75 tonnes. Wait until you see tomorrow’s level!!
June 10/a huge “paper” deposit of 6.54 tonnes of gold into the GLD/Inventory rests at 893.92 tonnes
JUNE 9. a huge deposit of 6.23 tonnes of gold into the GLD/Inventory rests at 887.38 tones
June 8/no change in inventory at the GLD/Inventory rests at 881.15 tonnes
june 7/ a tiny withdrawal of .29 tonnes of inventory/probably to pay for fees/Inventory rests at 881.15 tonnes
June 6/no change in gold inventory at the GLD/Inventory rests at 881.44 tonnes
June 3/ We had two big  sized deposits of 4.46 tonnes early this morning and then another 6.24 tonnes late tonight/ new GLD total: 881.44 tonnes  (total: 10.7 tonnes)
June 2/no change in gold inventory at the GLD.Inventory rests at 870.74 tonnes
June 1.2016/ a good sized deposit of 2.08 tonnes/Inventory rests at 870.74 tonnes
May 27/no change in gold inventory at the GLD/Inventory rests at 868.66 tonnes
May 26./no change at the GLD/Inventory rests at 868.66 tonnes
May 25./no change in gold inventory at the GLD/Inventory rests at 868.66 tonnes
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 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..

June 15.:  inventory rests tonight at 900.75 tonnes


Now the SLV Inventory
June 15and the dfarce continues for the SLV/we had a massive 2.376 million oz of a paper deposit into the SLV/Inventory rests at 342.765 million oz
June 10/no change in silver inventory at the SLV/Inventory rests at 338.725 million oz
JUNE 9/no change in silver inventory at the SLV/Inventory rests at 338.725 million oz.
June 8/no change in silver inventory at the SLV/Inventory rests at 338.725 million oz
june 7/ we had a huge addition (deposit) of 1.456 million oz into the SLV/Inventory rests at 338.725 million oz/
June 6/no change at the SLV/Inventory rests at 337.299 million oz/
June 3/ a huge deposit of 1.56 million oz was added to the SLV inventory/new inventory rests at 337.299 million oz
June 2/no change in silver inventory at the SLV/Inventory rests at 335.739 million oz
June 1/no change in silver inventory at hte SLV/inventory rests at 335.739  million oz
May 27/no change in silver inventory at the SLV/Inventory rests at 335.739 million oz/
May 26./ no change in silver inventory at the SLV/Inventory rests at 335.739 million oz
May 25./no change in silver inventory at the SLV/Inventory rests at 335.739
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 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/
June 15.2016: Inventory 342.765 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 2.2 percent to NAV usa funds and Negative 2.2% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.2%
Percentage of fund in silver:37.5%
cash .+1.3%( June 15/2016). /
2. Sprott silver fund (PSLV): Premium RISES  to +0.11%!!!! NAV (June 15.2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES TO +1.95% to NAV  ( June 15.2016)
Note: Sprott silver trust back  into POSITIVE territory at +11% /Sprott physical gold trust is back into positive territory at +1.95%/Central fund of Canada’s is still in jail.


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

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

Gold Price Higher For 5th Session On BREXIT and FED

Gold and Silver News and Commentary
Gold hits near six-week highs ahead of Fed, Brexit vote (GoldCore via Reuters)

Gold gains ground for 5th straight session (GoldCore via Marketwatch)
Gold Holds Near Five-Week High as Brexit Concerns Spur Demand (Bloomberg)
Exclusive – ECB would pledge to backstop markets after a Brexit (Reuters)
NATO to send troops to deter Russia, Putin orders snap checks (Reuters)

Watch Gold Jump To $1,400 If U.K. Votes To Brexit (Marketwatch)
The Case for Gold Is Stronger Than Ever (Ron Paul via Daily Reckoning)
Gold Futures – Market Manipulation or Legitimate Selling? (TF Metals Report)
Global Financial Stress Soars Most Since 2011 European Crisis (Zero Hedge)
Why Brexit May Be the Straw that Breaks the Camel’s Back (Financial Sense)
Read More Here

Recent Market Updates
– If BREXIT Happens – “Gold Will Be The World’s Strongest Currency”
UK Gold Demand Rises On BREXIT “Nerves”
 Pensions Timebomb in “Slow Motion Detonation” In UK, EU, U.S.
 Silver – Perfect Storm Brewing in the Market
– Martin Wolf: There Will Be Another “Huge” Financial Crisis

– Silver Price To Surge 800% on Global Industrial and Technological Demand

 BREXIT Gold Diversification As Vote Fuels Market Uncertainty
 Gold Forecasts Revised Higher – Citi Says “Buy the Dip”
– World’s Largest Asset Manager Suggests “Perfect Time” For Gold

Gold Prices (LBMA AM)
15 June: USD 1,282.00, EUR 1,141.49 and GBP 903.04 per ounce
14 June: USD 1,279.40, EUR 1,140.84 and GBP 904.79 per ounce
13 June: USD 1,284.10, EUR 1,139.25 and GBP 909.27 per ounce
10 June: USD 1,266.60, EUR 1,121.07 and GBP 876.87 per ounce
09 June: USD 1,258.35, EUR 1,107.98 and GBP 870.53 per ounce
08 June: USD 1,252.40, EUR 1,101.61 and GBP 851.65 per ounce
07 June: USD 1,241.10, EUR 1,091.42 and GBP 851.02 per ounce

Silver Prices (LBMA)
15 June: USD 17.41, EUR 15.51 and GBP 12.26 per ounce
14 June: USD 17.25, EUR 15.37 and GBP 12.17 per ounce
13 June: USD 17.32, EUR 15.37 and GBP 12.23 per ounce
10 June: USD 17.32, EUR 15.33 and GBP 12.01 per ounce
09 June: USD 17.05, EUR 15.03 and GBP 11.79 per ounce
08 June: USD 16.75, EUR 14.73 and GBP 11.50 per ounce
07 June: USD 16.31, EUR 14.36 and GBP 11.18 per ounce



Mark O’Byrne
Executive Directo

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




2 Nikkei closed UP 60.58 OR 0.38% /USA: YEN RISES  TO 106.24

3. Europe stocks opened ALL IN THE GREEN  /USA dollar index DOWN to 94.76/Euro UP to 1.1231

3b Japan 10 year bond yield: FALLS  TO -.175%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.24

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  48.05  and Brent: 49.19

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 +.005%   German bunds in negative yields from BASICALLY 10 years out

 Greece  sees its 2 year rate FALL to 11.34%/: 

3j Greek 10 year bond yield RISE to  : 8.16%   (YIELD CURVE NOW COMPLETELY INVERTED)

3k Gold at $1280.00/silver $17.41(7:45 am est)   SILVER RESISTANCE AT 16.52 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 37 in  roubles/dollar) 65.68-

3m oil into the 48 dollar handle for WTI and 49 handle for Brent/

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9634 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0822 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now BARELY IN POSITIVE territory with the 10 year RISES to  + .005%

/German 10 year rate BASICALLY  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 1.628% early this morning. Thirty year rate  at 2.435% /POLICY ERROR)

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

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

All Eyes On Yellen As Global Stocks Rebound Despite Brexit Fears, Record Low Yields

Following MSCI’s second Chinese snub in as many years, when yesterday the indexer again decided not to include China in its EM index due to concerns over Chinese “market integrity”, there was some concern that Chinese stocks would tumble now that China’s market manipulation is the primary topic preventing the country from being integrated into the financial community. That was ironic because after Chinese equities opened down around a percent they promptly spiked with Shanghai closing 1.6% higher, despite the global risk off yesterday, on – you guessed it – more manipulation and government intervention, which pushed not only Chinese equities higher but the USDCNY which after rising to the highest in 5 years, dipped just fractionally below the key resistance level of 6.60.

“It’s a sharp [equities] reversal so there has to be some government intervention,” said Francis Lun, CEO at Geo Securities in Hong Kong. “The Chinese government never wants to see the market falling too much.”  Dear Francis, no government ever wants to see that.

Aside from China, the story has been more of the same: Brexit and today’s Fed meeting (to be followed by tomorrow’s BOJ decision), and after several days of muted of concentrated selling, European stocks rallied, helping end the steepest selloff in global equities since January, as the British pound rebounded ahead of the Federal Reserve’s policy review on stronger than expected UK employment data (Feb-April Unemployment 5.0%, Exp. 5.1%).

The Stoxx Europe 600 Index climbed for the first time in six days and most shares rose on the MSCI Asia Pacific Index. As noted above, Shanghai equities reversed initial losses, which according to Bloomberg spurred speculation state-backed funds were supporting prices: surely to be expected on Xi Jinping’s birtday. The British pound strengthened, after sliding more than 1 percent in two of the last three trading sessions, and the yen retreated from its strongest level since 2014. Futures on the S&P 500 Index were up 0.2%, after the U.S. benchmark ended the last session at a three-week low. The MSCI Asia Pacific Index rose 0.1 percent, after sliding 4.4 percent over the last four trading days. Japan’s Topix rebounded from a two-month low as the yen snapped a three-day advance and Hong Kong’s Hang Seng Index gained 0.2 percent. Toshiba Corp. surged more than 7 percent in Tokyo as brokerages including CLSA Ltd. turned more positive on the stock.

On the face of this modest global rebound in assets, crude continued to suffer and sank
to about $48 a barrel after a report showed U.S. stockpiles increased; it will be interesting if today’s DOE report once again violently disagrees with the API data.

Over in the wacky world of bonds, yields on Japan’s benchmark government bonds hit record lows across tenors from two to 40 years. The rate on the 10Y JGB fell to an unprecedented minus 0.195%, while 20-year and 30-year yields touched historic lows of 0.135% and 0.21%, respectively. At least they are still positive.  Ten-year U.S. Treasuries yielded 1.62 percent, after ending the last two sessions at 1.61 percent, the lowest closing level since 2012. The rate on similar-maturity German debt held near zero, after sliding into negative territory for the first time on Tuesday as the U.K.’s potential exit from the EU fueled demand for haven assets. In an auction conducted earlier today, Germany sold €3.259BN in 10Y Bunds (less than the €4.0BN expected) at an average yield of just 0.01%.

Today’s key event will be the Fed’s interest rate decision at 2pm when however, the probability of the Fed doing nothing, according to the market, is 100%. The Fed is expected to keep the benchmark lending rate unchanged when its two-day policy meeting concludes in Washington, though the central bank’s statement and Chair Janet Yellen’s comments at a press briefing will be scrutinized for clues on the likely timing of the next increase. Futures indicate the odds of a move by July tumbled to 16 percent from 53 percent since the start of this month, damped by weak U.S. payrolls data and turbulence in global financial markets.

Meanwhile pessimism persists: “While we get a bounce following the huge knockdown across markets, investors should probably sell into the strength ahead of the Brexit vote,” said Nicholas Teo, a trading strategist at KGI Fraser Securities Pte in Singapore. “There’s a lot of uncertainties out there. A statement from the Fed tonight may help calm the market, but concerns remain on the timing of the rate hike.”

Market Snapshot

  • S&P 500 futures up 0.3% to 2071
  • Stoxx 600 up 1.5% to 325
  • FTSE 100 up 1.1% to 5986
  • DAX up 1.3% to 9648
  • German 10Yr yield up 1bp to 0.01%
  • Italian 10Yr yield down 3bps to 1.48%
  • Spanish 10Yr yield down 3bps to 1.54%
  • S&P GSCI Index down 0.6% to 377.1
  • MSCI Asia Pacific up 0.1% to 127
  • Nikkei 225 up 0.4% to 15920
  • Hang Seng up 0.4% to 20468
  • Shanghai Composite up 1.6% to 2887
  • S&P/ASX 200 down 1.1% to 5147
  • US 10-yr yield up 2bps to 1.63%
  • Dollar Index down 0.13% to 94.81
  • WTI Crude futures down 1.2% to $47.92
  • Brent Futures down 1.4% to $49.12
  • Gold spot down 0.3% to $1,282
  • Silver spot up less than 0.1% to $17.41

Looking at regional markets, we traditionally start in Japan where equity markets were resilient and shrugged off the weak lead from the US to trade mostly higher, although still lingers on Brexit concerns and the looming FOMC capped upside. Nikkei 225 (+0.4%) was initially pressured at the open but then recovered as USD/JPY found support at the 106.00 level, while ASX 200 (-0.5%) was led lower by commodity names after iron ore fell over 4% and crude prices declined for the 4th consecutive day with WTI below USD 48/bbl following an API Inventory build. Elsewhere, Hang Seng (+0.4%) and Shanghai Comp (+1.6%) recovered despite the initial disappointment from the MSCI decision to delay China inclusion in the EM index, with the rebound led by outperformance in Shenzhen markets on hopes of action for future MSCI inclusion. Finally, 10yr JGBs lead futures rose to record highs as yields continued to slump with the 5yr, 10yr, 20yr and 30yr yields all printing record lows, while the BoJ entered the market to purchase JPY 1.15trl of government debt and also kick-started its 2-day policy meeting.

Top Asian News

  • MSCI Rebuffs Chinese Shares for Third Time in Blow to Xi’s Goals:Measures on trading halts, quotas failed to sway index firm
  • China Cracks Down on $1.5 Trillion Dark Corner of Fund Industry: CSRC regulations target funds’ role as shadow banking channel
  • China Coal Firm Flags Bond Default Risks as Debt Woes Spread: Sichuan Coal Industry unsure it can repay 1.057b yuan
  • Ultra-Low Japan Yields Go Global as Hedged Yen Buying U.S. Bonds: Japanese investors bought record amount of Treasuries in March
  • Carry Trade Success Convinces Funds Rupee Will Ride Coming Storm: Rupee Sharpe ratio is second highest among developing nations

It has been a relatively quiet start to the session in terms of newsflow after the recent volatility seen and ahead of the key risk event of the FOMC rate decision later today, the DAX has made a slow start to the session but has ticked slightly higher in a retracement from the lows seen yesterday. So far in the session, financial names have outperformed in a corrective move after the sharp selloff yesterday. Despite also being in positive territory, the energy sector is the worst performing and the larger than expected build in API inventory levels may be a catalyst for the sectors underperformance. Bund yields are back in positive territory today after slipping below 0 for the first time on record yesterday. In terms of price action, the upside in equities has seen Bunds come off their best levels and firmly back below 165.50, however still remaining above the 165 level. Additionally, the latest Bund auction was technically uncovered with yields continuing to hover between negative and positive territory.

Top European News

  • Osborne Warns of Brexit Tax Toll as ‘Leave’ Gains in Polls: Says that reduced trade, investment would leave GBP30b “black hole.”; Rising Brexit Angst Drives Weaker-Pound Wagers to $35b
  • VW Said to Plan Merging Components Units, Weigh Asset Sale: CEO to present sweeping strategy update to public on Thursday
  • U.K. Unemployment Falls to Lowest Rate in Almost 11 Years: Jobless rate declined to 5% in 3 months through April, the lowest since 2005.
  • Steinhoff Mulls Poundland Bid in Latest European Retail Push: Announcement made without Poundland’s consent, Steinhoff said.
  • Schneider’s Second Attempt to Acquire Aveva Ends Abruptly: Cos. had sought to resurrect earlier talks that snagged on concern that integration costs would be too high.

In FX, the yuan fell as much as 0.1 percent to a five-year low of 6.6047 a dollar in Shanghai, before trading little changed at 6.5933. The pound strengthened 0.4 percent to $1.4166. It slid 1.1 percent on Tuesday after five opinion polls in two days put the ‘Leave’ campaign ahead of ‘Remain’ in the run-up to the EU vote and as Britain’s best-selling newspaper, The Sun, backed a withdrawal. The amount wagered on the currency falling to $1.35 or lower — levels last seen in the 1980s — after the referendum has more than doubled during the past three months. The yen weakened 0.2 percent to 106.28 per dollar, after rallying almost 1 percent over the past three sessions. It touched 105.55 on May 3, the strongest level since October 2014. New Zealand’s dollar rose 0.5 percent, the best performance among 16 major currencies tracked by Bloomberg. It recovered from earlier weakness as shares rallied in China, the country’s biggest export market.

In commodities, West Texas Intermediate crude slipped 1.1 percent to $47.95 a barrel, falling for a fifth day. Concern over a global glut in the commodity reemerged with the American Petroleum Institute reporting a 1.16 million-barrel increase in U.S. oil inventories for last week. Nigerian militants, whose attacks on oil infrastructure have sent the country’s output plunging to its lowest level in 27 years, also said for the first time they are considering peace talks. Copper rose 1.5 percent in London and nickel gained 1 percent, advancing for the first time in a week. Gold was little changed, after surging 3.4 percent over the last five days.

On today’s US event calendar, highlights Include the Producer Price Index and Empire Fed reports, Industrial Production, the DoE crude inventory report, as well as the latest TIC data, however the main event will be the June FOMC rate decision at 2pm  and subsequent comments from Fed Chair Yellen.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Risk on sentiment across European equities amid upside in financial names ahead of the FOMC meeting.
  • GBP regains its footing against major counterparts with early Brexit fears subsiding.
  • Highlights Include, FOMC rate decision, US PPI Final Demand, DoE crude inventory report and comments from Fed Chair Yellen.
  • Treasuries lower in overnight trading as global equities rally, oil and precious metal drop; FOMC rate decision and SEP at 2pm ET followed by presser at 2:30pm; Fed will skip rate move at meeting and is likely to retain its forecast for 2 hikes this year, based on published research by economists and others; next possible move seen in 3Q or 4Q
  • Fed fund futures fully pricing next rate hike around June 2017, implied rate 62bp, near midpoint of 50-75bp target range
  • The campaign to keep the U.K. in the European Union is seeking to regain momentum with a warning from Chancellor of the Exchequer George Osborne that a vote to leave could create a fiscal crisis
  • Over in Canada, a $7 billion fund manager is loading up on cash in an attempt to profit if the U.K. votes to leave the European Union
  • The U.K. jobless rate declined to 5% in the three months through April, the lowest since 2005, as labor market showed signs of resilience in the face of the referendum on European Union membership
  • China’s stocks jumped the most in two weeks, reversing an earlier loss and spurring speculation that state-backed funds may be supporting the market after MSCI Inc. refused to add the nation’s domestic equities to benchmark indexes
  • China’s overall growth numbers are stabilizing. However, beneath the surface, signs of increasing weakness in hiring and private-sector investment are ringing alarm bells
  • As well as a surging yen, non-existent inflation and a weak economy, Bank of Japan Governor Haruhiko Kuroda has something else to think about when deciding monetary policy this week: unhappy banks

DB’s Jim Reid concludes the overnight wrap

Asian markets have stabilised though despite the risk off yesterday and despite the news last night that MSCI has decided to delay the inclusion of Chinese equities into their global benchmark. Chinese equities opened down around a percent but the Shanghai and Shenzhen are up around 1.5% and 3% as we type. Bloomberg is reporting speculation that perhaps the Chinese government is intervening to soften the blow. The Nikkei is 0.55% higher ahead of the BoJ tomorrow. GBPUSD is at $1.414 up from around $1.410 at the time of the ComRes poll.

The slightly better Asian risk sentiment followed another day of risk off globally. European equities extended their losses to a fifth consecutive day, dropping by -1.92% yesterday. UK equities were also hit hard as the FTSE also posted its fourth consecutive day in the red with losses amounting to -2.01%. Both indices saw broad based declines across all sectors, with every company but one declining in the latter index. Credit markets were also caught in the crossfire with both iTraxx Main and Crossover spiking off yesterday’s three month highs as spreads widened further by +5.5bps and +22.8bps respectively on the day. US equities yet again outperformed and impressively only closed down -0.18%. The VIX also stabilised after Monday’s outsized move. Decent US data (see below) perhaps helped.

As we discussed at the top, Germany 10Y yields turned negative for the first time in recorded history, hitting -.004% (-2.7bps). The demand for safe haven assets also caused US 10Y treasuries to rally for the sixth consecutive day as yields dropped to 1.6% (-1.2bps) – although we’re back above 1.62% this morning.

Trading the possible Brexit outcomes saw another layer of complexity yesterday as a widely read Reuters article suggested that the ECB will soon release a public statement pledging that they will backstop financial markets alongside the Bank of England if the UK does vote to leave the EU. The ECB’s pledge is expected to involve opening swap lines with the Bank of England to provide unlimited funding to banks in Euro and Sterling in hopes of preventing a liquidity crunch and subsequent economic fallout.

As a final word on the EU referendum for today, yesterday my team published a report “Brexit Risk in GBP and EUR Credit”. Firstly, we provide a performance overview of GBP vs. EUR and USD credit in terms of both cash bond spreads and currency-adjusted spreads. Secondly, we compare the performance of UK issuers’ bonds vs. Eurozone and US issuers’ bonds across currencies. We find that GBP bonds have underperformed EUR and USD bonds, especially in the non-financial sector. There has also been some underperformance of UK issuer credit recently, particularly in the GBP space. However, it seems that Brexit risk mainly manifests itself via the currency channel rather than credit risk here. See your emails at 1525 BST yesterday from Michal Jezek for the report or contact him (Michal.Jezek@db.com) if you haven’t got it.

A few weeks ago when Fed rate hike expectations started to build it would have been hard to imagine that the preview of today’s FOMC would be relegated to the 9th paragraph but that reflects how events have changed. DB’s Joe Lavorgna expects the Fed to remain on hold tonight (along with everyone else) and the tone of the statement to be mixed. While the Fed is unlikely to signal a July hike with risks of a possible labor market slowdown following the May employment report, it will likely leave the growth, employment and inflation forecasts largely intact with only minor tweaks to the Summary of Economic Projections (SEP). In particular he does not expect the Fed’s 2016 and 2017 median rate forecasts as per the ‘dot plot’ to fall, thus allowing the Fed the option to raise rates in the coming months should the data improve. The Fed should also address the fact that its five-year forward breakeven inflation rate has moved substantially downward. Yellen’s post-meeting Press conference will likely focus on many of the themes of her speech last week, with an emphasis on the uncertainty associated with the Fed’s forecasts and the data dependent nature of the monetary policy action. Brexit will also likely feature as a risk to their outlook.

Data took an understandable back seat yesterday but for completeness let’s look at what we saw. Starting off in the UK, we saw May inflation numbers which largely came in softer than expected. CPI (+0.2% mom vs. +0.3% expected) and PPI (+0.1% mom vs. +0.3% expected) both came in lower than expected, and while RPI was in line with expectations on a monthly basis (+0.3% mom) but disappointed in annual terms (+1.4% YoY vs. +1.5% expected). We also saw the final May CPI numbers for Italy (-0.3% YoY) and Spain (+0.5% mom; -1.1% YoY), both of which were in line with expectations. One major positive data point was the April industrial production data out of the Eurozone, which clocked in at the very upper end of the forecast range and well above expectations (+1.1% mom vs. +0.8% expected).

Heading over to the US, the data was positive across the board. The NFIB Small Business Optimism index for May surprised on the upside to hit its highest level since January (93.8 vs. 93.6). Despite May’s weak payrolls report, the uptick was largely supported by a better labour market outlook among small business owners, with both a moderate improvement in plans to hire (12% vs. 11% previous) as well as raise worker compensation (26% vs. 24% previous). Although expectations for the economy remained negative, the sub index improved on the month (-13% vs. -18% previous).

Thereafter we saw the closely watched US retail sales also beat expectations, posting an increase of +0.5% mom in May (vs. +0.3% expected). The uptick was a general broad-based gain, as nine out of 13 categories demonstrated increases in demand with online merchants and clothing stores leading the way. We also saw the import price index for May beat estimates (+1.4% vs. +0.7% expected), primarily driven by the rising cost of oil. Both the improved retail sales data and the rising import prices could have sparked a more interesting debate ahead of the FOMC meeting had it not been for last month’s weak unemployment numbers.

After a relatively quiet start to the week, today is certainly a busy day in terms of data. We start off in Europe where we’ll get final May CPI numbers for France, which is expected to come in at +0.3% mom without any revisions. Thereafter we’ll get the employment report from the UK, where the April unemployment rate is expected to hold steady at 5.1% (5.1% previous). Average weekly earnings are expected to have grown at a slower rate (expected +1.7% 3M/YoY vs. 2.0% previous), while jobless claims for May are expected to be unchanged (vs. -2.4k previous). We will also see the Eurozone trade balance for April (expected 21.5b vs. 22.3b previous).

It’s even busier day over in the US. First off we’ll get PPI numbers for May, which are expected to clock in at +0.3% mom (+0.1% ex-Food and Energy). DB’s Joe Lavorgna notes that the PPI data will be important for market participants and Fed policymakers because they should provide clues as to the near-term direction of the core PCE deflator. The PPI series on selected healthcare industries, a direct input into estimating the medical care component of the core PCE deflator (the Fed’s preferred measure of inflation), should be closely watched. It should also be noted that the PPI data will be the last inflation data point that the Fed’s policymakers will see before the conclusion of the FOMC meeting.

Thereafter we’ll get a forward and backward looking perspective on the health of the US factory sector with the NY Fed’s Empire State Manufacturing Survey (expected -4.50 vs. -9.02 previous) and the industrial production numbers for May (expected -0.2% vs. +0.7% previous) respectively, both of which are expected to indicate weakness in the industrial sector.



i)Late  TUESDAY night/ WEDNESDAY morning: Shanghai closed UP 45.02 POINTS OR 1.58% / /Hang Sang closed UP 79.99 OR 0.39%. The Nikkei closed UP 60.58 POINTS OR 0.38% Australia’s all ordinaires  CLOSED DOWN 1.08% Chinese yuan (ONSHORE) closed UP at 6.5813 /Oil FELL to 48.05 dollars per barrel for WTI and 49.19 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.5956 yuan to the dollar vs 6.5813 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AS DOLLARS LEAVE THE COUNTRY




China sends a clear message to Janet Yellen of the Fed and tells her that she had better not raise rates nor stoke fears that she is going to raise the rates in the near future.  China devalues the yuan to 6.6010 the weakest since Jan 2011.After China send its signal the yuan strengthened back to 6.5825.  The last time we had the yuan at this level we had global turmoil:

(courtesy zero hedge)

Dear Janet, “No Surprises!” – China Devalues Yuan To Weakest Since Jan 2011

Just in case The Fed had any ideas of surprising markets with a “confidence-inspiring” rate-hike tomorrow, The PBOC just sent a message loud and clear to Janet as they devalued the Yuan fix by over 2 handles, above 6.60 for the first time since January 2011.

This is the 3rd major devaluation step in the last 10 months (remember when China said August was a “one off”?)

Bear in mind this kind of currency turmoil has not ended well for US equities in the past…

Which may help explain why funding market stress is starting to appear in Libor/OIS and basis-swaps (demand for USDollars), and why US and European banks are tumbling…

Charts: Bloomberg

We have been highlighting this to you on many occasions:  China is deleveraging its money growth and that is the major cause of the world’s growth hemorrhaging. China is the world’s growth.
(courtesy zero hedge)

Something Unexpected Emerges In China’s Latest Money And Credit Data


Looks like we are going to have another hung parliament in Spain.  However the Euroskeptic party Podemos is gaining in strength and if they join with the socialists, we may have a repeat of a BREXIT in Spain or a Spain-ex .

(courtesy Mish Shedlock)

Time To Kiss EU Puppet Mariano Rajoy Goodbye?

Deutsche bank describes the negative 10 yr bund as a simple indicator of a broken financial system.  What Deutsche bank really wants is an end to NIRP and more QE so threat they can get out of their mess. Also 57 MP’s will vote against the huge QE that Osborne announced if a BREXIT occurs.
(courtesy zero hedge/Jim Reid/Deutsche bank)

Deutsche Bank: “If One Wanted A Simple Indicator Of A Broken Financial System, Then This Is It”

The Institute of International Finance in Washington states that BREXIT is a bigger threat to the Global Economy than Lehman. Also 57 MPs have warned that they would vote against an emergency budget post BREXIT
(courtesy zero hedge)

IIF Chief Warns “Brexit Bigger Threat To Global Economy Than Lehman”

As Brexit appears to gathering pace among British voters, Bloomberg Briefs interviews Hung Tan, executive managing director at the Institute of International Finance in Washington, DC., to understand the global impact of a decision by Britain to leave The EU…

Q: What would happen if Britain voted to leave the EU?
A: It is not Lehman in the short term in terms of markets being in a panic or chaotic mood, because the central banks will try to pacify that. But it is more significant than Lehman in its longer-term impact on global growth. Through trade and investment channels, there will be a downward impact on growth.

Q: Isn’t it just a European issue?
A: It’s not just a vote for the U.K. exiting Europe, it is a symptom of the discontent and unhappiness of citizens with the status quo. They want change, but nobody can articulate what is it that they want. The impact in an exit vote of “leave” winning would be very far-reaching and impact long-term events. Near term there would be significant adjustment in financial markets.

Q: How much could markets move?
A: The Bank of England, ECB and others have said they are prepared to supply a significant amount of liquidity just to calm the volatility. Over a week’s time [after the vote], I think it would reach some kind of lower equilibrium.

Q: What would central banks buy?
A: The Bank of England so far has bought U.K. gilts and they may want to look at high-grade corporate bonds. If they feel they may have exhausted buying in a certain asset class, they may want to widen the list of assets that they are able to buy.

Q: Which countries would suffer most if the U.K. voted to exit?
A: First the U.K. and Europe, but then emanating from there to trading partners of Europe, and then to emerging market countries through the decline in world trade. Large economies able to rely on domestic consumption and the services sector should be able to generate a measure of growth and cope with it better than others. More open economies that have been reliant on world trade as a growth model will suffer more.

Q: What happens to the U.K. after exit?
A: Whatever new arrangement the U.K. may manage to have — the Norway model, the Switzerland model, or relying on the WTO to manage its relationship with the EU — is very problematic. All of those still require U.K. firms to observe and respect EU rules if they want to do business in the EU.  Most important for the City of London, financial services passporting will be either not available or significantly curtailed.

Q: What’s the U.K. economic impact?
A: The true problem is uncertainty causing loss of business confidence and further decline in capital expenditures and investment. That would reinforce the collapse in productivity — which is very pronounced in the U.K. — and make for an even worse outcome in terms of potential growth.

Q: How does it affect the EU?
A: If you put the Brexit vote against a very clear decline in trust and confidence of the citizens of Europe in the EU and its institutions, and the rise in populism and anti-Brussels, anti-EU, anti-integration sentiment, the contagion risk of a successful Brexit vote will be quite
. Periphery countries have undergone a lot of adjustment after the crisis. The cost of fiscal consolidation is perceived to be quite significant and unfairly distributed, so there could be a lot of discontent, and that will support the further rise of populist poltical movements.

Q: What does Brexit mean for trade?
A: The mood is anti-immigration and anti-free trade. In the past year, more than 500 trade protectionist measures have been implemented by governments worldwide, more than twice the number of such measures two years ago. Against ths anti-immigration, anti-free trade public mood — even here in the U.S. — the risk of a further increase in trade protectionism is high. That would continue to depress the growth of world trade, which actually fell in volume terms by 1.6 percent, year-over-year in the first quarter.

Q: How significant was that?
A: There has been some small decline, particularly after 2008-2009, but this is one of the rare instances of outright decline.

Q: Do you expect Britain to exit?
A: I’m an Anglophile, so I believe in their basic reasonableness. I think that reason will prevail — that’s the hope.Everything we have seen in the past 10 days seems to be suggesting that the momentum for “leave” is really accelerating, so that is worrisome. Another lesson we learned in elections is that big momentum is what tends to carry the day.

*  *  *

Just more proxy-scaremongery? Unclear at the moment but markets are certainly acting like this is the case.

But in a new and improved way to scare people, UK Chancellor George Osborne ‘warned’ that taxes would have to rise if Britons voted to leave The EU… (via Bloomberg)

Reduced trade and investment would leave a 30 billion pound ($42 billion) “black hole” that would have to be plugged by increased taxes and cuts to spending on health, education and defense,Osborne is set to say in a speech on Wednesday. The increasingly confident “Leave” campaign will meanwhile be talking about its agenda should it win, pledging legislation to restrict free movement and reduce the influence of EU judges, with the goal of negotiating a so-called Brexit by 2019.


While they’re talking about the next four years, the focus of both sides is the eight days until the June 23 vote. The goal of “Leave” is to reassure voters that departure from the EU would be swift but controlled. Osborne’s aim is to convince waverers that it will hurt.



“Far from freeing up money to spend on public services as the ‘Leave’ campaign would like you to believe, quitting the EU would mean less money, billions less,” the chancellor will say, according to his office. That would mean “an emergency budget where we would have to increase taxes and cut spending.”

But we leave it to Nigel Farage to sum up the response as 57 Tory MPs signed a statement that said they would vote against George Osborne’s proposed post-Brexit emergency budget

Ignore Mr. Osborne’s fantasy budget. Post-Brexit he won’t be the Chancellor for very long.


And here are “peaceful” scenes from yesterday’s massive protests in Paris.
(courtesy zero hedge)

Violent, Bloody Scenes From Tuesday’s Massive Protests In Paris

One item we noted when we reported the fact that France was buried in garbage on Monday, was that CGT leader Philippe Martinez said that the strikes would continue, and the demonstration being called for the next day would be“enormous.”

Martinez was correct. On Tuesday, police used dozens of rounds of teargas and rolled out the water cannons in order to disburse the massive crowds that gathered to protest labor reforms. Police said the turnout was 75,000 – 80,000 just in Paris alone according to Reuters. Predictably, the protests quickly turned violent, as gangs of masked youths threw stones and makeshift firebombs at police, ransacked store fronts, and caused other general chaos in the streets. The protests led to a reported 58 arrests, with 24 police and 17 protesters injured.

The violence was so bad that protesters even smashed windows of operating rooms at a children’s hospital, leading to French PM Manuel Valls to sayenough is enough. I am calling on the CGT to hold no further demonstrations in Paris“, accusing the union of having an “ambiguous” attitude toward the ultra-violent youths.

President Hollande even told ministers that the rallies would not be permitted unless the union provided better security guarantees.

The union, however, doesn’t seem to be phased by this tone and will keep protesting. In addition to saying that it’s up to the state to guarantee order, Martinez said “this is not the end. The struggle is far from over.”

As France tries to minimize protester violence, clean up garbage lined streets, and keep transportation disruptions to a minimum for Euro 2016, the nation also had to wake up a few days ago to the news that another terrorist act had taken the lives of two policemen (a man and his wife). Things are anything but under control for President Hollande.

Here are some scenes from Tuesday’s massive protests.




The central bank of Nigeria throws in the towel and lets the Nira collapse. Expect hyperinflation similar to Venezuela to grip this nation:

(courtesy zero hedge)


Nigeria Hyperinflation Looms As Central Bank Throws In The Towel, Devalues Currency

Less than a month ago, when looking at Nigeria’s deplorable economic and reserve situation, made far worse by the collapse in Nigerian oil exports courtesy of the Niger Delta Avengers, we predicted that “Nigeria Currency Devaluation Looms As FX Forwards Crash To Record Lows.” Specifically we warned that “having urged investors “not to panic” last year, and seeing dollar reserves drying up rapidly earlier this year, recent “lies” about the nation’s statistics have raised fears of a looming devaluation as FX forwards have crashed to 291 Naira to the dollar (current peg is 199).”

Specifically, the chart we were looking at was the one showing the dramatic divergence between the Naira spot rate and the 3M forwards which had blown out to record wides:

Ealier today this prediction came true when Nigeria’s central bank finally threw in the towel when it announced thatthe it will allow the Naira exchange rate to be market-driven, setting the stage for a devaluation of the currency when the new system comes into effect June 20.

Instead of depleting its much needed (and virtually non-existent) foreign reserves, the Central Bank of Nigeria will select a group of around 10 primary dealers through which the naira will be traded. There will only be one exchange rate and the bank will intervene in the market “as the need arises,” Governor Godwin Emefiele told reporters in Abuja, the capital, Wednesday.

Cited by Bloomberg, Emefiele said that “we’re talking about an open, transparent two-way system. It’s intended we don’t have speculators and rent-seekers. I don’t expect that any other exchange rate will be recognized.”

As Bloomberg adds, Emefiele has faced calls for more than a year to devalue the currency, as other oil exporters from Russia to Kazakhstan and Angola have done, amid a rout in crude prices since mid-2014 to around $50 a barrel. Investment into Nigeria has shriveled as foreigners are put off by capital controls needed to defend the currency’s peg of 197-199 per dollar, while local businesses have struggled to import raw materials and equipment. Emefiele said last month the central bank would implement a “flexible” exchange-rate policy to help alleviate a dollar shortage that has strangled the economy. Nigeria’s GDP contracted in the three months through March for the first time since 2004 and inflation accelerated to 15.6% in May, the highest rate in more than six years. It is about to explode much higher.

To be sure, the market reaction was instant: three-month non-deliverable naira forward contracts, already trading at a high premium to spot, surged as much as 9.5% to a record 333 per dollar after the announcement, suggesting traders expect the currency to trade around that level in the market, compared with the current official rate of 199.

For now it remains to be seen just how the devaluation will take place: “It is something the market will want to see in operation to fully be able to take decisions concerning future investment, especially foreign investors,” Kunle Ezun, an analyst at Ecobank Transnational Inc., said by phone from Lagos. “The takeaway is that the central bank has not committed to any exchange rate.”

To some this was a favorable outcome: “It’s probably the best that the markets could have hoped for,” Ridle Markus, a Johannesburg-based analyst at Barclays’ Africa unit, said by phone. “It certainly seems like it will be a normal, free-floating currency. That would be positive.”

To others, such as Nigeria’s 175 million-strong population, this means that Nigeria is about become the next Venezuela, with imminent hyperinflation on deck, as prices soar to keep up with the collapse in the spot rate.  The naira will probably trade in a range of 280 to 350 against the dollar after the central bank implements its decision, analysts at Johannesburg-based Rand Merchant Bank said in a note on Wednesday before the announcement.

Of course, what is bad news for the population is great news for capital markets, and since the central bank will have more reserves left now that primary dealers will be left holding the bag on FX trading (and thus devaluing the naira with double digit precision), it means that Nigeria will have more dollars left to pay off its liabilities. Immediately Nigeria’s 2023 dollar bonds gained most since 2014, with the yield falling 55 basis points to 7.1 percent, and stocks surged 3.1 percent.

The devaluation as a bullish case was best described by Old Mutual Global Investors, who said they would look to buy Nigerian bonds denominated in USD after Nigerian central bank said it will allow the naira exchange rate to be market-driven, John Peta, head of emerging market debt, says in interview.  It added that with a free float, “the central bank can service the external debt without using USD reserves.” It cautioned however that is would wait for future developments before getting involved in new market-driven regime for naira, and concluded that the decision to allow naira rate to be market-driven may play in favor of an inclusion of Nigeria in JP Morgan index again; which may explain why stocks surged today.

On the other hand, stocks always surge as a country is about to tumble into the hyperinflationary abyss. The question is whether the nominal price increase will keep up with the all too real collapse in the Naira’s purchasing power which is about to slam Nigeria. If Venezuela is any indication, the answer is no.

Finally, for those wondering how to trade here, the answer may once again revolve around the Niger Delta Advisors: if Nigeria is unable to export more oil due to supply disruptions and thus inject much needed dollars into its Treasury, the country’s financial situation wil get even more dire, leading to an acceleration in the naira’s devaluation.  On the other hand should Nigeria’s government be successful in taming its offshore funded militants, the naira may be a buy, however that trade would be offset by a short in oil as the world’s most acute crude supply disruption comes to an end.

In any case, watch out for unsolicited Nigerian emails from financially erudite locals asking you to buy stocks, bonds, or any other asset class. Those will result in guaranteed losses.




Now we see Venezuela’s oil production tumbling as their economic crisis worsens:
( Ulmer/Reuters/

This is a good one!:  Argentina’s former public works secretary is caught burying 8.5 million dollars equivalent in the ground.  I believe former President Kirchner has got some problems

(courtesy zero hedge)

Argentina’s Former Public Works Secretary Caught Burying $8.5 Million

Back in April, an Argentine prosecutor requested that former President Cristina Fernandez de Kirchner be investigated in a wide-ranging money laundering probe that allegedly involved a prominent government contractor and associate.

Members of Kirchner’s Victory Front party claimed the request had no legal basis, with Congressman Hector Recalde saying “This move has no legal basis, it was rushed and we don’t have any details because the investigation is sealed.”

However, things started to get a bit dicey for Kirchner when a prominent businessman named Lazaro Baez was arrested. Baez was the owner of leading construction firms and partner of hotel and property businesses with Kirchner and her late husband the WSJ reported at the time. In a further tangled web of potential corruption, an imprisoned former associate of Baez named Leonardo Farina implicated Kirchner, her late husband, and Baez as part of a plea bargain. According to reports, Farina testified to the laundering of hundreds of millions of dollars out of Argentina through offshore companies in Panama, Belize and the Seychelles to a Swiss bank.

Prosecutors allege that Baez, who set up his construction company just days before Kirchner took office in 2003 and has made millions through public projects, was the one who transferred the money abroad through an intricate network of shell companies.

The Judge in the case labeled Baez a flight risk and a “suspect in a conspiracy to launder $5.1 million using bags filled with cash.

We provide the background above because it brings us to more recent news. On Tuesday, the former public works secretary under Kirchner, Jose Lopez, was arrested after he was caught burying bags containing an estimated $8.5 million in cash in the grounds of a convent near Buenos Aires.

Police were tipped off by a neighbor who saw Lopez taking bags out of his car in the middle of the night. Lopez, who currently serves as a lawmaker in the Mercosur parliament, was found with an assault rifle and six bags containing dollars, euros, yen, and Qatari riyal Bloomberg reports.

During an interview in April, Lopez said that he had overseen more than 40,000 infrastructure projects during his tenure, ironically adding “we never gave any benefits to any businessmen and all the projects were done through public tender and were awarded at the lowest cost.”

Being transparent will move us away from embarrassing situations like the one we woke up to today, an event we are all embarrassed by. We are changing and it’s good that we uncover everything we want to change in Argentina” President Mauricio Macri said upon learning of the arrest on Tuesday.

* * *

It’s safe to say that this arrest probably won’t help matters for Kirchner as the former President battles the money laundering charges. Ah the webs the corrupt powerful elites weave for themselves – in the end, the truth will eventually find its way out.



Oil spikes higher after the DOE inventories drop refuting the API data for the 3rd week in a row .  Production drops!


(courtesy DOE/zero hedge)

Oil Spikes After DOE Inventories Data Refutes API For 3rd Week In A Row, Production Drops

Following last night’s across the board inventory builds reported by API, oil prices have bounced modestly but remain lower (below $48) ahead of DOE’s data. However, for the 3rd week running, DOE data refuted API showing asmaller than expected 933k draw in crude inventories and a large draw in gasoline (-2.62mm vs API’s +2.25mm). Distillates inventories rose for the 2nd week in a row and Cushing saw its biggest build in 5 weeks. However, oil prices are rising on the data as well as the fact that US production resumed its decline after last week’s brief increase.



  • Crude +1.16mm (-2.33mm exp)
  • Cushing +664k (-600k exp, +234k Genscape)
  • Gasoline +2.254mm
  • Distillates +3.725mm


  • Crude -933k (-2.33mm exp)
  • Cushing +904k (-600k exp, +234k Genscape)
  • Gasoline -2.62mm
  • Distillates +786k

Once again DOE data opposes API data…though we note Cushing saw a large build…


Production resumed its decline to fresh multi-year lows after last week’s brief rise…


And the reaction in crude is to erase the API losses…


As Goldman explains, supply may be on the rise…

We further believe that at current prices, we can see a pick up in brownfield investment, consistent with our conversations with producers looking to maximize cash flow while limiting incremental spending. Importantly, this is a short-cycle investment which can drive large production rebounds, as was the case in 2009. Further, our European and US Energy equity analysts recently commented on how producers are guiding to even faster and larger cost declines than they had expected. Companies also appear ready to start sanctioning projects again after an 18-month hiatus, aggressively competing for capital and helped by governments ready to reduce tax take or local content requirements to attract investment.


Several US producers have also become explicit on reducing their drilled but uncompleted well backlog. Our estimate of the US oil backlog (in excess of normal drilling activity) suggests that it represents 0.5 mb/d of additional production over the next 18 months if brought online by year-end. Further, a few producers have been able to issue high-yield debt for the first time since last October, with the explicit target of increasing drilling, and we have seen over the past two weeks several producers raising guidance as well.


The oil rig count has also now increased for two consecutive weeks, the largest such recovery since last August. And while we don’t believe that current prices allow for all producers to ramp up, better capitalized producers can at the forward curve. Admittedly, the rig recovery remains limited so far with a sustained 10 rig increase in the Permian only adding 25 kb/d of production in 2H16 on our estimates of the average Permian type curve.

Charts: Bloomberg

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




USA/CAN 1.2839 UP .0023

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 20 basis points, trading now WELL above the important 1.08 level FALLING to 1.1231; Europe is still reacting to deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED UP 45.02 POINTS OR 1.58   / Hang Sang CLOSED UP 79.99 OR 0.39%   AUSTRALIA IS LOWER BY 1.08%/ 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 WEDNESDAY morning: closed UP 60.58 POINTS OR 0.38% 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 79.99 POINTS OR 0.39% . ,Shanghai CLOSED UP 45.02 POINTS OR 1.58% / Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED IN THE GREEN /India’s Sensex IN THE GREEN

Gold very early morning trading: $1281.80


Early WEDNESDAY morning USA 10 year bond yield: 1.628% !!! UP 1 in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.435 UP 1 in basis points from TUESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early WEDNESDAY morning: 94.76 DOWN 17 CENTS from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING


And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield:  3.35% DOWN 4 in basis points from TUESDAY

JAPANESE BOND YIELD: -0.179% DOWN 2  in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD:1.57%  UP  1 IN basis points from TUESDAY

ITALIAN 10 YR BOND YIELD: 1.50  PAR IN basis points from TUESDAY

the Italian 10 yr bond yield is trading 7 points lower than Spain.






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

Euro/USA 1.1267 UP .0057 (Euro =UP 57 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 105.97 DOWN .113 (Yen UP 11 basis points )

Great Britain/USA 1.4178 UP.0062 ( Pound UP 62 basis points/(HUGE BREXIT CONCERN)

USA/Canada 1.2911- UP 0.0051 (Canadian dollar DOWN 51 basis points  AS OIL FELL  (WTI AT $47.83).


This afternoon, the Euro was UP by 57 basis points to trade at 1.1204

The Yen ROSE to 105.97 for a GAIN of 11 basis points as NIRP is STILL a big failure for the Japanese central bank/

The POUND was UP 62 basis points, trading at 1.4178( BREXIT FEARS STILL LURKING )

The Canadian dollar FELL by 51 basis points to 1.2911, WITH WTI OIL AT:  $47.85

The USA/Yuan closed at 6.5785/

the 10 yr Japanese bond yield closed at -.179% DOWN 2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 2 IN basis points from TUESDAY at 1.594% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.425 DOWN 1/5 in basis points on the day ( HUGE POLICY ERROR)


Your closing USA dollar index, 94.53 DOWN 40 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 WEDNESDAY

London:  CLOSED UP 43.27 OR 0.73%
German Dax :CLOSED UP 87.51 OR  0.92%
Paris Cac  CLOSED UP 41.25  OR 1.00%
Spain IBEX CLOSED UP 124.10 OR 1.53%
Italian MIB: CLOSED UP 242.62 OR 1.49%

The Dow was DOWN 34.65  points or 0.20%

NASDAQ DOWN 8.62 points or 0.18%
WTI Oil price; 47.86 at 4:30 pm;

Brent Oil: 48.85




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

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


BRENT: 48.64

USA 10 YR BOND YIELD: 1.572%

USA DOLLAR INDEX: 94.59 down 35 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.191 up .0076  or 76 basis pts.

German 10 yr bond yield at 5 pm: -.01%



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


Gold Jumps, Crude Dumps As Fed Credibility Crashes With Stocks

For everyone who listened to Yellen today, we suspect this is how you feel…


So, first things first, Fed rate-hike-odds plunged further as they implicitly admitted they are clueless… July rate hike odds have collapsed to just 11% and September just 16%…


While bonds and stocks seemed relatively unmoved post-Fed, Gold gained most and crude dumped


On the week, Trannies are worst…


On the week, Futures show the overnight hype/hope ramp…


Trannies underperformed post-Fed (as did Small Caps) as Dow, S&P, Nasdaq managed to scramble back to unch before a late-day plunge


Interestingly 30Y TSYs actually underperformed initially post-Fed with 10Y outperforming…but as the close approached the entire bond complex was bid…


VIX jerked back above 20 as the late-day tumble hit…


As stocks catch down to VIX…


The US Dollar Index fell today. It was drifting lower all night after China devalued, but then jerked lower on The Fed curfuffle, only to bounce back into the close…to end unchanged on the week…


Overall rates fell today (though the long-end underperformed) but on the week, the belly is worst…


Crude tumbled as PMs rallied post Fed but copper’s overnight gains dominated…


Crude managed to scramble back above API cliff highs on DOE data, before The Fed blew it all up…


Charts: Bloomberg

Bonus Chart: Stocks are back in the red since The Fed hiked rates in December…





The all important industrial production plunges for the 9th straight month.  This is the longest non recession streak in 100 years:

(courtesy zero hedge)

Industrial Production Plunges For 9th Straight Month – Longest Non-Recession Streak In 100 Years

For the 9th month in a row, US Industrial Production declined YoY – down by 1.4% – with 0.4% monthly drop twice as bad as expected. Every subcomponent of the data also declined markedly. Most worryingly, and despite near record highs in stocks, this is the longest streak of IP weakness without a broad economic recession in US history… it’s different this time?

Every segment is in decline…


Leaving this the longest streak of industrial production weakness in US history without an ‘official’ recession…


We are sure this doesn’t matter – just transitory…


Charts: Bloomberg




In a surprise reading, the NY mfg index (Empire Fed) jumps on new orders. However employment conditions deteriorate:!!

(courtesy NY Empire Mfg Index/zero hedge)


Today was FOMC day and many predicted it would be a non event and it sure looks that way with the Fed slashing guidance for that illusive rate hike:
(courtesy zero hedge)

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