June 21Yellen speaks and thus the signal to whack gold and silver/Surprisingly despite increase margins, the silver open interest skyrockets to its highest ever OI at 201,266 contracts/Brexit vote up in the air with conflicting polls/Japan’s exports fall by 11% as the iMF tries to convince Japan to force labour rates up/Large Brazilian Telecom OI goes bust and now in bankruptcy protection/

Good evening Ladies and Gentlemen:

Gold:  $1,270.50 DOWN $19.50    (comex closing time)

Silver 17.31  down 19 cents

In the access market 5:15 pm

Gold: 1268.50

Silver: 1731

.

The June gold contract is an active contract. Last  night we had a good sized 64 notices filed last night, for 6400 oz to be served upon today.  The total number of notices filed in the first 14 days is enormous at 15,220 for 1,522,000 oz.  (47.34 tonnes)

ii) in silver we had 0 notices filed for nil oz..  Total number of notices served  in the 14 days: 489 for 2,445,000 oz

Today, both gold and silver could not withstand another vicious attack. Generally when Yellen speaks they always whack.  Yesterday,the bankers called on their broker friends to raise margin levels on gold and silver contracts and their excuse was the volatile conditions because of the British vote on whether to leave the EU or not. The gold/silver equity shares held up pretty good.

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 274.57 tonnes for a loss of 28 tonnes over that period

In silver, the total open interest ROSE by 4924 contracts UP to 210,266 DESPITE THE FACT THAT THE PRICE OF SILVER WAS up by only 10 cents with respect to YESTERDAY’S trading.We have now a new all time silver oi record and a low price to boot. In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.051 BILLION TO BE EXACT or 150% 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 fell by a tiny 774 contracts down to 581,190 even though the price of gold was DOWN $2.50 with YESTERDAY’S trading (at comex closing) 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

Fascinating!! on a huge whack job the GLD has a huge deposit!

We had one deposit:

this afternoon: 3.56 tonnes were added into the GLD

Total gold inventory: 912.33 tonnes

 SLV

THIS MAKES NO SENSE!!

We had A HUGE WITHDRAWAL FROM  inventory  to the tune of 1.426 million oz; silver inventory tonight  rests  at 333.069 million oz.  If they did have some physical silver that inventory was used to ship to China which has been massively importing silver..

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 4,924 contracts up to 210,266 despite the fact that the price of silver was DOWN by only 10 cents with YESTERDAY’S trading. The gold open interest FELL by a TINY 774 contracts DOWN to 581,190 despite the fact that the price of gold was DOWN $2.60  ON YESTERDAY.

(report Harvey).

 

2 a) Gold trading overnight Europe, Goldcore

(Mark OByrne/

3. ASIAN AFFAIRS

i)Late  MONDAY night/ TUESDAY morning: Shanghai closed DOWN 10.25 POINTS OR 0.35% / /Hang Sang closed UP 158.74 OR 0.77%. The Nikkei closed UP 203.81 POINTS OR 1.28% Australia’s all ordinaires  CLOSED UP 0.33% Chinese yuan (ONSHORE) closed DOWN at 6.5832 /Oil ROSE to 48.85 dollars per barrel for WTI and 50.03 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.5900 yuan to the dollar vs 6.5832 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS A BIT 

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

Japan’s exports fell again at 11.3% year over year. Exports to the USA fell 1.07% and Exports to its largest trading partner China fell 14.9%.  The higher yen has certainly killed off Japan’s exports.  Now the IMF strangely tells Japan that Abenomics is a miserable failure and get this : it recommends forcing companies to raise wages ..or else>>>

( zero hedge)

b) REPORT ON CHINA

The Chinese real estate bubble especially in tier one cities has gone exponetial as land prices soar over 50% in one year.  What a bubble!!..

( zero hedge

4. EUROPEAN AFFAIRS

i) All the big guns are out last night, George Soros and Rothschild warning of a BREXIT. They both have a lot to lose if Britain opts out:

( zero hedge)

ii)SocGen talks about Britain’s real problems whether BREXIT is a reality or not>>

( Soc Generale/zero hedge)

iii)And now correctly, we see this UK billionary, Peter Hargreaves believes a BREXIT will be good for the UK

( zero hedge/Peter Hargreaves)

iv)The Cardinals of Karlsruhe fold and allow the ECB’s OMT program of unlimited bond buying:

( zero hedge)

v)At 8:30 est  (3:30 pm London Time) a new poll suggests a rise in the leave vote:

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

7.OIL ISSUES

i)What a joke:  Militants agree to a “ceasefire” with Nigeria and that causes oil to fall to the 48 dollar handle:

(courtesy zero hedge)

\

ii)Then oil spikes up on a huge inventory drawdown:

( zero hedge)

8.EMERGING MARKETS

I will bet you have never seen this happen to a major country:  Brazilian Telecom company OI files for bankruptcy protection in the country;s largest bankruptcy in history: (19.2 billion in debt)

Is there a mercy rule somewhere to bail out Brazil?

(courtesy zero hedge)

9. PHYSICAL STORIES

i)Hugo offers a view that Russia should adopt a silver rouble 1/2 oz coin trading parallel to the paper rouble and it’s price determined daily.  He has also commented that Mexico should adopt this same policy:

( Hugo Salinas Price.)

 

ii)A must read..James Turk talks about the worsening positions of European banks especially Italy with 18% of all loans issued being non performing.  Many of the European big banks have non performing loans greater than their equity and thus they are insolvent.

( James Turk/Kingworldnews)

 

iii)John Embry talks about the gold price suppression getting more desperate per day.

a must read..

( John Embry/.Kingworldnews)

10.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)We have been reporting on that huge gas leak in Southern California.  Reuters comments that the entire Southern half of California will be subject to blackouts lasting 14 days without power.

( Mac Slavo/SHFPlan )

ii)My goodness, Janet must be reading zero hedge and David Stockman:  USA stocks are vulnerable as forward valuations are well above normal:

( zero hedge)

iii)A major trucking company, Werner warns about the awful state of trucking and logistics inside the USA/  the stock plummets today:

( zero hedge)

iv)Dave Kranzler does a good job reporting on the tanking economy:

(courtesy Dave Kranzler/IRD)

Let us head over to the comex:

The total gold comex open interest FELL to an OI level of 581,190 for a TINY LOSS of 774 contracts despite the fact that THE PRICE OF GOLD WAS DOWN $2.50 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 A TINY LOSS 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 606 for a loss of 60   contracts. We had 15 notices filed YESTERDAY, so we lost 45 contracts or 4500 additional oz  WILL NOT STAND FOR METAL. The next active contract month is July and here we saw it’s OI rose by a GOOD SIZED 72 contracts up to 4,857.This no doubt will 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 1,018 contracts UP to 424,865. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was GOOD at 235,521. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was GOOD at 211,745 contracts. The comex is not in backwardation.

Today we had 64 notices filed for 6400 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by 4,924 contracts from 205,342 UP to 210,266, A NEW ALL TIME RECORD FOR OPEN INTEREST AND THIS WAS DONE WITH A LOW PRICE FOR SILVER The OI rose appreciably despite the fact that the price of silver was UP BY only  10 cents with YESTERDAY’S TRADING. The front month of June saw it’s OI FALL by 77 contracts DOWN TO  56. We had 80 notices filed ON FRIDAY , so we  GAINED 3 contracts or an additional 15,000 oz will  stand for metal during non active June contract month. The next big delivery month is July and here the OI fell BY 6,976 contracts down to 83,808. We have a little more than 1  week to go before first day notice on June 30.. The volume on the comex today (just comex) came in at105,834 which IS HUGE. The confirmed volume YESTERDAY (comex + globex) was HUGE at 83,941. 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 21.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil  NIL
Deposits to the Dealer Inventory in oz 3086.400

BRINKS

Deposits to the Customer Inventory, in oz   3599.88 OZ

BRINKS

 

No of oz served (contracts) today 64 contracts
(6400 oz)
No of oz to be served (notices) 542 contracts

54,200 oz

Total monthly oz gold served (contracts) so far this month 15,220 contracts (1,522,000 oz)

(47.34 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  150,442.8 OZ

Today we had 1 dealer DEPOSIT

i) Into Brinks:  3086.400 oz

 

total dealer deposit:  3086.400  0z

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 1 customer deposit:

i) Into Brinks:  3599.88 oz

Total customer deposits; 3599.88   OZ

Today we had 0 customer withdrawals:

 

total customer withdrawals:  nil oz

Today we had 0 adjustments:

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 64 contracts of which 29 notices was stopped (received) by JPMorgan dealer and 34 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 (15,220) x 100 oz  or 1,522,000 oz , to which we  add the difference between the open interest for the front month of JUNE (602 CONTRACTS) minus the number of notices served upon today (64) x 100 oz   x 100 oz per contract equals 1,576,200 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 (15,220) x 100 oz  or ounces + {OI for the front month (602) minus the number of  notices served upon today (64) x 100 oz which equals 1,576,200 oz standing in this   active delivery month of JUNE (49.026 tonnes).
INTERESTINGLY FIRST DAY NOTICE HAD 49.119 TONNES OF GOLD STANDING FOR DELIVERY SO WE HAVE GAINED BACK   ALL OF THE GOLD LOST IN STANDING DUE TO FIAT SETTLEMENTS from the start of the month (49.026 TONNES) .
WE LOST 45 contracts or an additional 4500 oz will not stand for GOLD in this June delivery month. The CME must have been very busy trying to coax some of our remaining longs to accept fiat.
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 49.026 tonnes of gold standing for JUNE and 53.151 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 + 49.026 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  = 65.668 tonnes still standing against 53.151 tonnes available.
 Total dealer inventor 1,708,814.092 tonnes or 53.151 tonnes
Total gold inventory (dealer and customer) =8,834340.101 or 274.78 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 274.78 tonnes for a loss of 28 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.
THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD!!
 
 
 end
GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX
And now for silver
 

June initial standings

 June 21.2016

Silver
Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory  2,216,417.996 oz

BRINKS, CNT

Delaware,Scotia

Deposits to the Dealer Inventory nil

 

Deposits to the Customer Inventory  608,207.700  oz

JPM,

No of oz served today (contracts) 0 CONTRACTS 

(NIL OZ)

No of oz to be served (notices) 56 contracts

280,000 oz

Total monthly oz silver served (contracts) 489 contracts (2,445,000 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  22,573,979.6 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:  608,207,700 oz

 

Total customer deposits: 608,207.700  oz.

We had 4 customer withdrawals

i) Out of Brinks:  608,203.400 oz

ii) Out of CNT:  1,292,847.066 oz

iii) Out of Delaware: 5002.65 oz

iv) Out of Scotia; 310,424.880 oz

:

total customer withdrawals:  2,216,417.996  oz

 
 

 

 we had 0 adjustment

Looks to me like we have our good old fashioned run on silver at the comex/

today 2.216 million oz leaves the silver comex.

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 (489) x 5,000 oz  = 2,445,000 oz to which we add the difference between the open interest for the front month of JUNE (56) 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:  489 (notices served so far)x 5000 oz +{56 OI for front month of JUNE ) -number of notices served upon today (0)x 5000 oz  equals  2,725,000 of silver standing for the JUNE contract month.
We gained 3 silver contracts or an additional 15,000 silver ounces will stand in this non active month of June.
 
Total dealer silver:  23.941 million  (RECORD LOW INVENTORY)
Total number of dealer and customer silver:   149,452 million oz
The total open interest on silver is NOW surpassed  its all time high with the record of 207,394 being set May 18.2016 with today’s reading  at 210,266. The registered silver (dealer silver) is NOW AT  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
end
And now the Gold inventory at the GLD
June 21/ with gold down badly, we had a huge deposit of 3.56 tonnes into the GLD/Inventory rests at 912.33 tonnes
June 20/we had one deposit of .890 tonnes of gold into the GLD inventory/Inventory.
rests at 908.77 tonnes.
June 17./we had two huge deposits: last night: 1.782 tonnes and this afternoon: 5.3480 tonnes/Inventory rests at 907.88 tonnes
JUNE 16/no changes in GLD/Inventory rests at 900.75 tonnes.
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 14./ANOTHER HUGE “PAPER” DEPOSIT OF 2.38 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 898.67 TONNES
JUNE 13/ANOTHER GOOD SIZED PAPER GOLD DEPOSIT OF 2.47 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS 896.29 TONNES
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 31/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 868.66 TONNES
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

June 21.:  inventory rests tonight at 912.33 tonnes

end

Now the SLV Inventory
June 21/ we had another 2.67 million oz of silver withdrawn from the SLV.  This no doubt is real silver leaving and heading straight to China/Inventory at 333.069 million oz
June 20/we had another 2.852 million oz of silver withdrawn from the SLV. Again this is probably real silver leaving and heading straight to China. Inventory rests at 334.495
June 17/a monstrous 5.418 million oz of silver withdrawn from the SLV.  This may be some real silver and thus it is heading for China which is massively importing silver/inventory rests at 337.347 million oz
JUNE 16./no changes in silver inventory/rests tonight at 342.765 million oz
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 14./NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY REMAINS AT 340.389 MILLION OZ
JUNE 13/A HUGE PAPER SILVER ADDITION OF 1.664 MILLION OZ/INVENTORY RESTS AT 340.389 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 31/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 335.739 MILLION OZ
.
June 21.2016: Inventory 333.069 million oz
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 2.0 percent to NAV usa funds and Negative 2.5% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 61.0%
Percentage of fund in silver:37.6%
cash .+1.4%( June 21/2016). /
2. Sprott silver fund (PSLV): Premium FALLS  to -0.64%!!!! NAV (June 21/2016) 
3. Sprott gold fund (PHYS): premium to NAV  FALLS TO +0.70% to NAV  ( June 21/2016)
Note: Sprott silver trust back  into NEGATIVE territory at -64% /Sprott physical gold trust is back into positive territory at +0.70%/Central fund of Canada’s is still in jail.
 
 
 

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)

Gold Slips Despite UK Gold Demand Surging – Investors “Seek Stability”

Gold fell again today despite very robust physical demand in western markets and especially the UK. Gold fell to a ten-day low as the recent global share rally showed signs of exhaustion.

BREXIT

Expectations that Britain could vote to leave the European Union in Thursday’s referendum have receded somewhat but remain and this is leading to very significant UK gold demand.

Over the last 5 days, we have had record demand from both Irish and UK retail and high net worth clients acquiring bullion in advance of the important poll. Other bullion dealers in the UK and indeed mints are reporting similar surging demand.

The Royal Mint has seen demand for gold “rocket” as investors seek sanctuary in safe haven gold due to increased volatility in stock and fx markets and concerns about the outlook for the UK economy and sterling (see News).

Two opinion polls yesterday showed the “Remain” camp had recovered some ground in the referendum debate though a third poll found those wanting to leave were ahead by a whisker.

As ever, speculative money in the futures market appears to be dictating gold prices in the short term. We expect the very robust physical demand will lead to a sharp bounce in gold prices in the medium term. We are hearing of increasing illiquidity in the inter-bank gold market and will look at this in more detail tomorrow.

Gold and Silver News
UK gold bullion demand surges in run-up to EU referendum (Guardian)
Demand for gold rockets in UK as investors seek stability (Belfast Telegraph)
Gold slips ahead of Britain’s vote on EU membership (Reuters via CNBC)
Gold extends downturn, Yellen to address Congress (Bullion Desk)
Gold edges up on softer dollar; Brexit concerns ease further (Reuters)

It’s Francs, Gold If U.K. Goes and Euros, Sterling If It Stays (Bloomberg)
Investors Flee to Gold as Brexit Looms (Video) (Bloomberg)
UK Referendum: What you need to know about the EU (Professor Werner)
What Brexit Is All About: Taxation (and Regulation) Without Representation (Gold Seek)
Worst Yet to Come – Generational Chaos Ahead – Mauldin Economics
Read More Here

 

Gold Prices (LBMA AM)
21 June: USD 1,280.80, EUR 1,129.67 and GBP 866.72 per ounce
20 June: USD 1,283.25, EUR 1,132.08 and GBP 877.49 per ounce
17 June: USD 1,284.50, EUR 1,142.05 and GBP 899.41 per ounce
16 June: USD 1,307.00, EUR 1,161.14 and GBP 922.01 per ounce
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

Silver Prices (LBMA)
21 June: USD 17.36, EUR 15.34 and GBP 11.78 per ounce
20 June: USD 17.34, EUR 15.30 and GBP 11.85 per ounce
17 June: USD 17.37, EUR 15.43 and GBP 12.19 per ounce
16 June: USD 17.71, EUR 15.79 and GBP 12.54 per ounce
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

Recent Market Updates
– Gold Surges to $1,313/oz – Fed Concerned Re Outlook, BREXIT and May “Consider Using Helicopter Money”
– Gold Prices Higher For 5th Session On BREXIT and FED
– Gold In Euros Surges 6.5% In June and 17% YTD On BREXIT Concerns
– Soros Buying Gold On BREXIT, EU “Collapse” Risk
– 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

7RealRisksBlogBanner

Mark O’Byrne
Executive Director
Published in Daily Market Update
end

Hugo offers a view that Russia should adopt a silver rouble 1/2 oz coin trading parallel to the paper rouble and it’s price determined daily.  He has also commented that Mexico should adopt this same policy:

(Courtesy Hugo Salinas Price.)

Hugo Salinas Price: A silver ruble coin for Russia

Submitted by cpowell on Mon, 2016-06-20 17:24. Section: 

1:23p ET Monday, June 20, 2016

Dear Friend of GATA and Gold:

Russia can defend its sovereignty, enrich itself, and impress the world by restoring silver to circulation as money, Mexican Civic Association for Silver President Hugo Salinas Price told a conference in St. Petersburg last week. His presentation is headlined “A Silver Ruble Coin for Russia” and it’s posted at the association’s Internet site here:

http://plata.com.mx/Mplata/articulos/articlesFilt.asp?fiidarticulo=291

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

 

end

 

A must read..James Turk talks about the worsening positions of European banks especially Italy with 18% of all loans issued being non performing.  Many of the European big banks have non performing loans greater than their equity and thus they are insolvent.

(courtesy James Turk/Kingworldnews)

Banks weakening throughout Europe and even in U.S., Turk tells KWN

Submitted by cpowell on Mon, 2016-06-20 17:39. Section: 

1:38p ET Monday, June 20, 2016

Dear Friend of GATA and Gold:

The nonperforming loans of Italian banks are now far greater than the banks’ equity, GoldMoney founder and GATA consultant James Turk tells King World News today, adding that bank solvency is declining throughout Europe and even the United States. Since so much more debt has been created in recent years, Turk says, the next financial crisis is likely to be far worse than previous ones. An excerpt from Turk’s interview is posted at KWN here:

http://kingworldnews.com/the-world-is-headed-for-another-terrifying-coll…

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

 

end

 

John Embry talks about the gold price suppression getting more desperate per day.

a must read..

(courtesy John Embry/.Kingworldnews)

Gold price suppression gets more desperate, Embry tells KWN

Submitted by cpowell on Tue, 2016-06-21 00:03. Section: 

8p ET Monday, June 20, 2016

Dear Friend of GATA and Gold:

Sprott Asset Management’s John Embry, interviewed by King World News, remarks that gold price suppression is getting ever more desperate, as by doubling margin requires for gold futures contract trading. An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/serious-problems-emerging-as-desperate-short-bu…

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

 

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  UP to 6.5832 ( DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.59000) / Shanghai bourse  DOWN 10.35 OR 0.35%   / HANG SANG CLOSED UP 158.74 OR 0.77%

2 Nikkei closed UP 203.81 OR 1.28% /USA: YEN RISES  TO 104.62

3. Europe stocks opened ALL IN THE GREEN  /USA dollar index DOWN to 93.57/Euro UP to 1.1323

3b Japan 10 year bond yield: RISES  TO -.1420%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 104.62

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  48.85  and Brent: 50.03

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 +069%   German bunds BASICALLY negative yields from  9 years out

 Greece  sees its 2 year rate FALL to 8.92%/: 

3j Greek 10 year bond yield FALL to  : 7.930%   (YIELD CURVE NOW COMPLETELY INVERTED)

3k Gold at $1272.20/silver $17.26(7:45 am est)   SILVER RESISTANCE AT 16.52 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 72 in  roubles/dollar) 64.02-

3m oil into the 48 dollar handle for WTI and 50 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 104.62 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 .9588 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0858 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 NEW POLLS INDICATES A SWING TO THE BREMAIN.

3r the 9 Year German bund now NEGATIVE territory with the 10 year RISES to  + .069%

/German 9 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 1.681% early this morning. Thirty year rate  at 2.488% /POLICY ERROR)

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

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

Stocks, Sterling Rise As “Brexit” Fears Forgotten; Dollar Drops Ahead Of Yellen Speech

 

Tuesday’s overnight price action has been a continuation of yesterday’s Brexit relief rally, as investors focused on the two latest polls favorable to Remain in Thursday’s referendum (while ignoring the YouGov poll which gave Leave a small lead), and hoping the doom and gloom by George Soros will convince the undecideds to vote against Leaving. As a result, global stocks continued their advance while pound extending the biggest rally since 2008, rising to the highest level since the announcement of the EU referendum, and just 20 pips shy of what Citi had forecast would be the “extreme” print should a Remain outcome be confirmed, suggesting a Remain vote has been largely priced in.

The latest UK referendum polls are summarized below:

  • ORB/Daily Telegraph poll showed 53% would vote to Remain and 46% to Leave.
  • YouGov/Times poll showed 42% to Remain and 44% to Leave.
  • NatCen Brexit poll showed 53% would vote to Remain and 47% would vote to Leave.
  • The latest Survation poll is expected at 1330BST/0730BST.

However, today it’s not just about Brexit, polling and bookie odds: at 10am Eastern, Janet Yellen will speaking before the Senate Banking Committee for her semiannual monetary policy testimony. Tomorrow, Yellen will return to the Hill on Wednesday for round two before the House Financial Services Committee. The timing of these so-called Humphrey-Hawkins hearings is of note. They come just days after the Fed’s latest policy meeting and before a U.K. referendum on whether to the leave the European Union. They also are the last scheduled chance lawmakers, many of whom face re-election, will have to publicly question the Fed chief before voters head to the polls in November. That could make it an especially uncomfortable visit to Capitol Hill for Ms. Yellen, who likely will face grilling on a range of issues, such as the economic effects of increasingly stringent bank regulation, the Fed’s cybersecurity controls and its focus on global developments in setting U.S. monetary policy.

Then again, even Yellen will be relegated to second place behind headlines about the upcoming UK referendum, which however the market is increasingly seeing as no longer a risk factor: the MSCI All-Country World Index rose to the highest level in more than a week while gold fell with the yen as haven demand eased. A gauge of the dollar declined for a fifth day in the longest run of losses since the start of April.

Some remain cautiously optimistic: “Sterling is supported by the recent rise in support for the ‘Remain’ camp, but if you look at an average of recent polls they still suggest it is neck and neck,” said Steven Barrow, head of Group-of-10 strategy at Standard Bank Group Ltd. in London. “It’s hard for traders or investors to go into Thursday with any strong conviction — or large position.”

Others, such as Citi equity strategist Jonathan Stubbs, have already largely assumed a positive outcome: “the U.K. referendum brings significant uncertainty and has contributed alongside macro uncertainty more generally to push many investors to ‘sit on their hands’. Citi’s house view retains a 60-70% probability that a ‘remain’ outcome will prevail. We see this as supporting a return of risk appetite across the U.K. and the rest of Europe and helping to drive share prices higher during 2H 2016.”

Yet others are even more euphoric: “People are starting to take risks again,” said Karl Goody, a private wealth manager at Shaw and Partners Ltd. in Sydney, which oversees about A$10 billion ($7.5 billion). “We saw a bit of an overreaction and you often need that to get people back into the market. It had got a bit overdone.”

While global market remain very illiquid, and prone to sudden gaps and dislocations, as of this morning the MSCI AC World Index rose 0.2% after climbing 2.3% in the previous two days. The Stoxx Europe 600 Index added 0.1% , with banks rising for a third day, while miners followed commodity prices lower, while the MSCI world index advanced 0.2 percent. Futures on the S&P 500 climbed 0.5%, indicating U.S. equities will extend gains for a second day, after the index rose the most in almost four weeks on Monday.

Market Snapshot

  • S&P 500 futures up 0.5% to 2085
  • Stoxx 600 up 0.1% to 338
  • FTSE 100 down 0.2% to 6192
  • DAX up less than 0.1% to 9969
  • S&P GSCI Index down 0.7% to 380.2
  • MSCI Asia Pacific up 0.9% to 130
  • Nikkei 225 up 1.3% to 16169
  • Hang Seng up 0.8% to 20668
  • Shanghai Composite down 0.4% to 2879
  • S&P/ASX 200 up 0.3% to 5274
  • US 10-yr yield down 2bps to 1.67%
  • German 10Yr yield up 1bp to 0.06%
  • Italian 10Yr yield up 2bps to 1.45%
  • Spanish 10Yr yield up 2bps to 1.5%
  • Dollar Index down 0.14% to 93.48
  • WTI Crude futures down 0.9% to $48.91
  • Brent Futures down 1% to $50.12
  • Gold spot down 0.6% to $1,282
  • Silver spot down 0.4% to $17.44

Top Global Headlines

  • Brexit Vote in Balance as Polls Differ Over Which Side Leads: Soros warns of 20% slump in Pound if U.K. votes to leave EU
  • Treasuries Halt Decline Before Brexit Vote as Polls Show Split: Benchmark Treasuries halt a three-day decline
  • Draghi Gets Reluctant Backing From German Court for OMT Plan: OMT program underpins Draghi vow to do ‘whatever it takes’
  • Oi Files for Brazilian Record $19 Billion Bankruptcy Protection: Major creditors include BNDES, Caixa Economica, Itau
  • Fund Manager Franklin Templeton Bets on Higher Oil Prices: Current price of $50 a barrel isn’t enough to boost supply
  • Brookfield, State Bank Said to Mull India Stressed Asset Venture: Canadian asset manager discusses $1 billion investment
  • Post-Orlando Limits on Gun Purchases Blocked in U.S. Senate: Four Republicans are unveiling a compromise proposal Tuesday
  • BofA Faces High Stress as Fed Test Verdict Hits With Brexit Vote: BofA seen raising payouts most if Fed approves
  • Amplats Sees Profit Falling on Platinum Drop, Tax Adjustment: Platinum prices have almost halved since high reached in 2011
  • Iran Air Signs Agreement to Buy Boeing 737, 777 Airplanes: Contract is Boeing’s first since sanctions against Iran lifted
  • Apple’s Cook Plans Ryan Fundraiser Amid Reported Doubts on Trump: Co. said to withhold sponsorship of party convention
  • Netflix Said to Near CW Deal With Shorter Wait Times: L.A. Times: New deal would have episodes available within 2 weeks
  • KKR Raises $739 Million for First European Real Estate Fund: Fund plans to focus on investments in western Europe
  • BHP CEO Says Iron to Take Longer to Balance Than Oil, Copper: Prices now ‘more realistic’ on basis of fundamentals, CEO says

Asian equity markets picked up on the momentum from the positive Wall Street close, following continued gains in energy and after the latest Brexit polls provided reassurance to the market. Nikkei 225 (+1.3%) erased its earlier losses to trade higher as a rebound in USD/JPY boosted exporter sentiment, while the ASX 200 (+0.2%) is led higher by defensive stocks. Elsewhere, Chinese markets conformed to the positive tone with the Shanghai Comp (+0.2%) higher after the PBoC continued to inject a respectable amount of funds into the inter-bank market. Finally, 10yr JGBs traded lower as the risk-on sentiment in Japan dampened demand for safe-haven assets, while today’s enhanced liquidity auction for long-end JGBs saw a lower than prior b/c. BoJ Minutes from the April 27th-28th meeting stated Japan’s economy is continuing to recover gradually and that underlying trend in inflation is showing steady improvement. In addition, several BoJ members were more cautious for the outlook on inflation and stated that NIRP impairs financial market function and JGB market stability, while 1 member stated the impact of QQE is diminishing and that the side-effects are greater.

Asia Top News

  • PBOC Discusses Opening Offshore Yuan Trading to Onshore Banks: Chinese banks have need for better integration, PBOC says
  • RBA Sees Positive Economic Data Outweighing CPI for Now: Higher Aussie dollar could complicate economy’s adjustment
  • LVMH-Backed Asia Private Equity Fund Sued by Fired Executive: Mehra seeks at least $37.5m in claims for dismissal
  • Tesla Said to Target Shanghai as Front-Runner for Production: Tesla, Jinqiao may invest $9b in Shanghai project
  • Billionaire Li Ka-Shing Warns Against Brexit as Referendum Looms: As one of the U.K.’s largest investors, Li has much at stake

This morning has seen European stocks rather steady after their largest one-day rally since August, inspired by increasing expectations that the UK will remain in the EU. As such, equities have traded in choppy fashion with the upside in defensive stocks (Healthcare) offset the softness in energy stocks, with news flow fairly light thus far ahead of Fed Chair Yellen’s Testimony. In credit markets, the German 10-yr benchmark has also seen price action relatively muted, with spreads widening and the yield curve bear steepening yet again. Also, of note the top German court have rejected the challenge against the ECB’s OMT which saw little reaction given the fact that the decision had been widely expected.

European Top News

  • German Investor Sentiment Unexpectedly Rises Ahead of U.K. Vote: ZEW expectations index climbs to 19.2 in June from 6.4
  • Axa Targets $2.4b Cost Cuts by 2020, Weighs Acquisitions: Underlying EPS expected to rise 3%-7% annually over the period
  • Kion Buys Dematic for $2.1 Billion to Move Into Warehouse Robots: Co. says acquisition to bolster position in automation
  • Nordea Bank Rejects Speculation It Lacks Billions in Capital: Swedish regulator says Nordea meets capital requirements
  • BMW Seeks Partners in Race to Build Self-Driving Car’s Brain: BMW expects talks on more HERE partners to finish by end-2016
  • Spain’s Grand Compromise Emerging With Just One Sticking Point: Socialists, Ciudadanos may be ready to back PP-led govt

In FX, the star attraction continues to be the pound, which strengthened another 0.5% to $1.477, having surged 3.5% in the previous two days. Billionaire investor George Soros said sterling may slump more than 20 percent if British voters choose to leave the EU, a devaluation that would be bigger and more disruptive than when he profited by betting against the currency in 1992. “There’s quite a lot of volatility in the pound now with investors repositioning after the massive rally,” said Angus Nicholson, a market analyst at IG Ltd in Melbourne. “There is a lot of uncertainty with the Brexit vote and Remain is not a given yet.” The Bloomberg Dollar Spot Index declined 0.2 percent, falling to its lowest in more than a month. The gauge has weakened every day since the Fed left interest rates unchanged last week and Yellen said Brexit was a factor in the decision. The euro strengthened for a third day versus the greenback, its longest winning streak in seven weeks. European Central Bank President Mario Draghi will be speaking Tuesday in Brussels. The yen weakened 0.5%, after surging 3 percent over the last seven trading sessions, as a technical indicator — the relative strength index — reached a level that indicated a reversal was likely. Finance Minister Taro Aso signaled that Japan’s government won’t intervene to stem the yen’s strength without due consideration

In commodities, gold declined 0.7%, extending Monday’s retreat from its highest close since January 2015. West Texas Intermediate crude dropped as much as 1 percent to $48.87 a barrel in New York, after rallying 6.8 percent in the last two sessions. U.S. inventories probably fell by 1.5 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report Wednesday.Copper slid from a two-week high in London and nickel dropped 1 percent, after ending the last session at a six-week high. U.S. natural gas futures fell as much as 1.4 percent after settling Monday at a nine-month amid forecasts for unusually hot weather across the country through next week. The deadly heat hitting the Southwest states is set to ease from Tuesday.

There’s again no data due out in the US however that should give the market a chance to focus on Fed Chair Yellen’s testimony to the Senate at 10am ET. It’s more than likely that the tone of the prepared remarks are a bit of a rehash of those comments post the FOMC last week. Also of potential interest today will be comments from the ECB’s Draghi who is due to speak at the European Parliament today.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • GBP/USD remains bid to reach its highest level since before the announcement of the EU referendum date as polls continue to lean to the remain camp.
  • Equities have been somewhat tepid this morning following yesterday’s largest advance since August.
  • Highlights include Fed Chair Yellen’s Semi Annual Testimony as well as comments from Fed’s Powell and ECB’s Draghi.
  • Treasuries little changed in overnight trading, global equities mixed as Yellen’s semi-annual testimony begins today before the Senate Banking Committee at 10am ET; Treasury auctions continue with sale of $34b 5Y notes, WI 1.20%; last sold at 1.395% in May, first 5Y auction since Feb. to stop through.
  • Britain’s referendum on EU membership remained too close to call two days before the vote, with separate polls showing leads for both sides and George Soros warning of a slump in the pound should voters back a so-called Brexit
  • German judges reluctantly rejected challenges against one of the European Central Bank’s most powerful tools just two days before a potential Brexit vote could unleash economic turmoil across the euro area
  • The ECB is about to find out how attractive its offer to pay lenders to lend really is. Starting tomorrow, euro-area banks can bid for a four-year loan from the ECB at an interest rate that begins at zero and could ultimately be negative
  • The Bank of England allotted less to banks in the second of its extra liquidity operations being held to assure sufficient funding around Britain’s referendum on EU membership
  • There have been no substantial corporate sterling deals since May and issuance in euros has slowed to a trickle as markets are roiled by uncertainty over whether the U.K. will vote on Thursday to leave or remain in the European Union
  • German investor confidence unexpectedly improved in June after polls on Britain’s future in the European Union showed the ‘Remain’ camp gaining ground

DB’s Jim Reid concludes the overnight wrap

It felt like the longest day watching England last night but as the match ended and we saw the last flickers of twilight, 3 new Brexit opinion polls were released after a Monday surge in risk that included the largest single day gain for Sterling (+2.37%) since December 2008. The first from the National Centre for Social Research polled at 53/47% in favour of ‘remain’. The second from ORB/Telegraph (phone) showed a 53/46% lead in favour of ‘remain’ for decided voters and 49/47% including undecided. The previous ORB/Telegraph poll covering June 8th-12th was split 49/48% in favour of ‘leave’ when accounting for those certain to vote. Finally YouGov bucked the trend to see a 44/42% lead for ‘leave’ with a poll out late last night. That included the don’t knows although the trend was similar when you exclude these at 51/49% in favour of ‘leave’. That’s a swing from the last YouGov/Times survey on June 16th-17th when the split was 44/43% in favour of ‘remain’ including don’t knows and 51/49% in favour of ‘remain’ excluding don’t know’s.

It’s worth noting that the fieldwork for the NatCen poll covered a wide period of between May 16th and June 12th with 65% of the interviews coming between May 16th and 26th and interestingly it was said to be an ‘experimental phone/online survey’. However considering the ebbs and flows in polls we’ve seen over the last month or so this poll looks a little less reliable as a gauge of current expectations given the timeframe. Meanwhile, fieldwork for the YouGov poll covered June 17th-19th and while the dates for the Telegraph Poll weren’t provided, much of the article pointed towards last Thursday’s tragedy as being a swing factor so we assume at least the majority of the survey period came after this date and so it’s probably fair to rule out any survey date biases with these two latest polls.

Interestingly the Telegraph poll also ran a survey on expected turnout numbers. It revealed that turnout among ‘remain’ voters has increased 9 points over the last week to 69% now, while turnout for ‘leave’ voters has fallen 4 points to 64% with the article going on to suggest that a complacency factor could be in play among the ‘leave’ camp.

The last 24 hours has also seen the Telegraph join the support for the ‘leave’ camp and so joining the Sunday Times in the process. In the mean time some comments from investor George Soros are also getting some airtime. In an op-ed in today’s Guardian newspaper, Soros said that a reasonable assumption under a ‘leave’ outcome would be for a drop in the pound by ‘at least 15% and possibly more than 20% to below $1.15’.

Following that huge rally for the pound yesterday to just shy of $1.470, it weakened a touch following that last YouGov poll and is currently down about -0.27% in trading this morning as we go to print. Sentiment in Asia generally is relatively positive. The Nikkei (+0.51%), Hang Seng (+0.42%), Shanghai Comp (+0.27%) and ASX (+0.10%) are all higher, although the Kospi (-0.36%) is struggling a little. EM currencies are generally posting modest gains too, while US equity index futures are showing small gains at present of less than half a percent.

The moves this morning come after risk assets surged yesterday having got the green light from the off as markets reacted to the latest sharp re-pricing in referendum odds. The implied probability based on political bookmaker odds of a ‘remain’ outcome closed at 79.8% (and touched 80.6% intraday) after starting the day around 74.0%. We’re sitting at 79.7% as we type now. European equity markets surged out of the gates and consolidated mid-morning without ever really looking back. Led by banks and Lloyds (+7.61%) and Barclays (+6.70%) in particular, the Stoxx 600 closed +3.65% for the largest one-day gain since August 25th last year. The FTSE 100 closed up +3.04% – the most since February – and there were big moves also for the DAX (+3.43%), CAC (+3.50%), IBEX (+3.41%) and FTSE MIB (+2.54%). Credit indices were in similar full blown rally mode too with the iTraxx Main and Crossover indices finishing 7bps and 28bps tighter respectively. Rates markets also reflected the hugely positive tone. Peripherals rallied with 10y yields in Italy, Spain and Portugal 8bps, 8bps and 17bps tighter respectively. Greek 10y yields were even 34bps tighter. On the flip side 10y Bund yields had a rare move higher, closing just over 3bps higher on the day at 0.050%.

As the US session kicked in it looked initially like risk assets across the pond might be in for similar magnitude gains although the early big gains were trimmed back as the session wore on. The S&P 500 still closed +0.58% after touching the 2100 level intraday early doors which was perhaps a signal for some profit taking. CDX IG finished just over 2.5bps tighter and the US Dollar eased with the Dollar index (-0.63%) closing lower for a fourth consecutive session. 10y Treasury yields also closed 8.1bps higher yesterday at 1.689% and the highest in ten days. Unsurprisingly commodities ex Gold rallied with the greatly improved sentiment. Copper closed up over 2%, while Brent climbed 3% and back above $50/bbl for the first time in a week. Gold pared back -0.67%.

So while we are all understandably fixated by Brexit, yesterday we mentioned the 5SM successes in Sunday’s local Italian elections. Further to this, DB’s Marco Stringa has published a note delving deeper. He suggests that the anti-establishment 5SM’s success was mainly at the expense of PM Renzi’s PD. Indeed, part of the centre-right seems to be willing to support the 5SM to antagonise Renzi. This increases the probability of a rejection of the crucial Senate reform in the October referendum. Marco now thinks that it is a 50-50 call. If the referendum is rejected, he would expect the fall of Renzi’s government. Forming a stable government majority either before or after a new election could become extremely challenging even by Italian standards. Marco thinks the 5SM has a real chance to beat the PD in a second round in the general election (2018). Much can change before then but the political momentum is not currently with Renzi. As he concludes, Italy’s political situation has the potential to pose a greater long-term challenge to the euro area’s stability than the election in Spain this weekend or even Brexit.

While we’re in Europe and on another non-Brexit related theme, yesterday saw the ECB release their official CSPP holdings figures following the first full week of purchases to last Friday. Current holdings amount to €2.25bn of corporate purchases since buying first started on June 8th. Bloomberg is reporting that purchases last week amounted to €1.9bn which would imply a slightly better than expected run rate on our roughly >€5bn monthly expectation for now. As we’ve highlighted in previous reports though it could be that we see certain months’ purchases coming in well above others depending on liquidity, upcoming holiday months and so forth. In any case it appears to be a strong early statement of intent.

Meanwhile there was also some commentary out of the Fed to mention yesterday. Minneapolis Fed President Kashkari said that the effect of a potential ‘Brexit’ is likely to have only ‘moderate direct effects on the US economy in the near term’. He confirmed that all policy options would be on that table in response should a ‘leave’ outcome be the case.

Before we move onto the day ahead, the latest The House View titled “Brexit: Decision time” came out overnight. The June 23rd UK referendum has been the dominant theme for markets, with shifts in opinion polls and betting odds leading to sharp swings in asset prices. The team note that the outcome of the referendum remains too close to call. But regardless of the result, political uncertainty is unlikely to subside for some time. This comes against a global growth backdrop that remains sluggish but overall little changed since the start of the year. Markets will take their near-term cues from the UK referendum: A material shock would trigger a forceful central bank response; absent a shock, attention should shift back to fundamentals.

ASIAN AFFAIRS

i)Late  MONDAY night/ TUESDAY morning: Shanghai closed DOWN 10.25 POINTS OR 0.35% / /Hang Sang closed UP 158.74 OR 0.77%. The Nikkei closed UP 203.81 POINTS OR 1.28% Australia’s all ordinaires  CLOSED UP 0.33% Chinese yuan (ONSHORE) closed DOWN at 6.5832 /Oil ROSE to 48.85 dollars per barrel for WTI and 50.03 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.5900 yuan to the dollar vs 6.5832 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS A BIT 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

Japan’s exports fell again at 11.3% year over year. Exports to the USA fell 1.07% and Exports to its largest trading partner China fell 14.9%.  The higher yen has certainly killed off Japan’s exports.  Now the IMF strangely tells Japan that Abenomics is a miserable failure and get this : it recommends forcing companies to raise wages ..or else>>>

(courtesy zero hedge)

The IMF Tells Japan: Abenomics Is A Miserable Failure, Recommends “Forcing Companies To Raise Wages.. Or Else!”

 

For those confused as to whether or not Abenomics was working, all one has to do is glance at the recent export data released by the Ministry of Finance for confirmation that it’s been a complete disaster.

Japan’s exports fell 11.3% in May on a y/y basis, the eighth consecutive month that exports have fallen according to Bloomberg. Exports to the US fell 10.7% from a year earlier, and exports to China, Japan’s largest trading partner plummeted 14.9% y/y.

However, do not be alarmed, as the IMF is all over the matter. In a statement released on Monday, the IMF had a lot of sage advice to provide Prime Minister Abe about his Abenomics policies that have failed to produce literally any of the intended results.

As the Nikkei Asian Review summarizes, the IMF said that “Abenomics needs to be reloaded”, arguing that income policies and labor market reforms should be moved to the forefront. What stands out immediately here, is that the IMF is advocating a policy whereby companies are made to raise wages by at least 3%, and if they fail to do so, penalties are imposed. If central planning hadn’t jumped the shark a long time ago, we’d submit that this would be that point.

From the Nikkei Asian Review

Despite initial success, progress under Abenomics, Prime Minister Shinzo Abe’s trademark economic policies, has stalled in recent months. The inflation rate has dropped to negative territory again, while economic growth has remained anemic.The IMF now expects Japan’s economy to grow by about 0.5 percent in 2016, before slowing to 0.3 percent in 2017, with potential growth sliding to close to zero by 2030, due to the declining demographic.

Abenomics needs to be reloaded,” the IMF said in its report and argued that income policies combined with labor market reforms should “move to the forefront” of the country’s fight against lagging growth.

The government can introduce a ‘comply or explain’ mechanism for profitable companies to ensure that they raise base wages by at least 3% and back this up by stronger tax incentives or — as a last resort — penalties,” the IMF wrote. Promoting intermediate contracts that balance job security and wage increases will “reinforce income policies,” it added.

“Our perception is that much of the stasis of inflation [in Japan] comes from the legacy, the history of having negative inflation,” said David Lipton, first deputy managing director at the IMF, in a press conference in Tokyo. “Certainly firms have at this point the cash flow and resource at hand to provide some wage increases. There are wage increases evident in a wide range of companies across this economy, so our thought is to suggest that this be a broader practice and that it be more uniform.”

Upon learning of the news that Abe delayed Japan’s long awaited tax hike, we pointed out that it was an admission of failure for Abenomics, and Japan had no hope of ever reducing its debt load. The IMF is now pushing Japan to not only put the tax hikes back on the table, but incresae the percentage to “at least 15%.” as part of a “credible fiscal plan.” – good luck with all of that.

The fund noted that these reforms need to be backed up by measures to support demand as well as credible fiscal plans, and argued that the consumption tax hike to 10%, which the government delayed until October 2019, should be replaced by a gradual increase towards “at least 15%.”

Starting the increases soon and replacing the currently planned 2019 hike with such a pre-announced, gradual path would enhance the credibility of the long-run fiscal adjustment, reduce uncertainty for consumers and avoid large intertemporal shifts in spending around the time of the tax hikes,” the IMF said.

The IMF even admits that NIRP has failed to generate any domestic demand at all, and is calling for the BOJ to scrap any expectation of inflation in order to be more realistic.

The Bank of Japan in February introduced a negative interest rate in part to support domestic demand. However, in the event that the IMF’s suggestions will not be implemented, Japan will lack growth and therefore would need a longer time to get its fiscal books in order. In that scenario, the IMF called on the bank to scrap its time frame for achieving its 2% inflation target, which the BOJ now sets at somewhere in fiscal 2017.

“The monetary policy framework would need to become more flexible, with the BOJ abandoning the use of a specific calendar date for achieving its inflation target,” the IMF said. “While such a shift should raise BOJ credibility by setting a more realistic goal,the transition will need to be well-communicated to avoid perceptions that the BOJ is reducing its commitment to achieving its inflation target and to limit the potential for adverse market reactions, including yen appreciation.”

* * *

So in summary, the IMF has studied Japan’s economy and has come to the conclusion that Abenomics has been a miserable failure. The advice now is to scrap all of the plans for hitting any kind of economic targets, and just start forcing companies to raise wages, while simultaneously raising everyone’s taxes 15%. The central planners are literally starting to lose their collective minds.

END

b) REPORT ON CHINA

The Chinese real estate bubble especially in tier one cities has gone exponetial as land prices soar over 50% in one year.  What a bubble!!..

(courtesy zero hedge)

The Chinese Real-Estate Bubble Has Gone Parabolic: Land Prices Soar 50% In One Year

The saying goes “when in a hole, stop digging.” In China, conventional wisdom appears to be flipped on its head as follows: “when facing a massive real estate bubble, keeping blowing.” That is the case at least according to the following chart showing the average price of land, the main ingredient of the property world, in the top 100 Chinese cities, which as of May has hit a record 3,100 Yuan per square meter.

As the WSJ calculates, the average land price per square meter for the top 100 Chinese cities in the first five months of this year jumped nearly 50% from same period last year, citing Wind Information. More stunning is that according to Wind, some land prices are even higher than asking prices for fully-built houses nearby.

You read that right: unbuilt land in many places in China now costs more than fully-finished apartments.

Some examples of how the government itself, through SOEs, is pushing the real-estate bubble on a parabolic path that will lead to an unmitigated bubble explosion.

  • State-owned developer Poly Real Estate bought a piece of land in a Shanghai suburb for 5.5 billion yuan ($835.5 million) last month. This translates to roughly 44,000 yuan per square meter of buildable space. This is more than what full-built houses in the region sell for, with the average price at around 40,000 yuan per square meter. After taking into account construction costs, taxes and other expenses, property prices would have to nearly double for the developer to make money.
  • A property subsidiary of China Gezhouba Group, a state-owned builder of power plants and dams,spent 3.3 billion yuan last month to buy the most expensive land, in terms of price per square meter, in Nanjing. Another state dam construction company, Power Construction Corp. of China, snapped up a piece of land in China’s bubbliest property market, the southern metropolis of Shenzhen, for 8.3 billion yuan.
  • Cinda Real Estate, a subsidiary of state-owned “bad bank” China Cinda Asset Management, has splurged on at least 35 billion yuan of land over the past year, even though the market value of the company, listed in Shanghai, is just 7.3 billion yuan.

Behind all the ludicrous transaction? The Government. And while we understand that the ultimate debt issuers are government-owned entities, the question of where the money comes – ignoring the ultimate guarantor – from is still applicable.

The answer: mountains of new debt.

The WSJ reports that to fund the purchases, Cinda’s net debt has swelled to more than three times its shareholders’ equity. It still managed to raise 3 billion yuan last month in a bond financing at 5.5%, mostly because of its state backing.

And since the company is backstopped by the government, it will be able to issue even more debt before it inevitably defaults on its obligations, leading to yet another zombie company which can not be liquidate due to Beijing being on the hook, yet which can no longer operate.

As the WSJ puts, it, “the domestic bond market and growth in asset-backed securities have made financing easier for developers, causing companies to chase whatever assets they can.”

Which really boils down to one simple admission: it’s a bubble.

It gets better: continuing “reforms” of state-owned enterprises could also be a trigger, as these firms have incentives to inflate their balance sheets to gain clout in consolidation talks. For some which have already invested heavily in real estate, keeping land prices high makes sense. In other words, to keep the value of their collateral high and avoid insolvency, the firms are forced to “paint the tape” and buy even more assets at ever higher prices.

And since the money comes from naive bondholders who are convinced they may even get repaid one day, this reflexive charade will continue for a long time until one day China, too, will realize that one can’t create money out of thin air in perpetuity and live happily ever after.

END

EUROPEAN AFFAIRS

All the big guns are out last night, George Soros and Rothschild warning of a BREXIT. They both have a lot to lose if Britain opts out:

(courtesy zero hedge)

The Big Guns Are Out: Soros, Rothschild Warn Of Brexit Doom; Osborne Threatens With “Suspending” Market

The big guns are officially out.

Just yesterday, we recounted the story of “Black Wednesday” when on September 16, 1992, the UK was forced out of the EU’s exchange-rate mechanism, or ERM, when the BOE tapped out and allowed the British pound to float freely, leading to 15% losses in the sterling. As we noted, this was George Soros’ infamous trade which “broke the Bank of England” and made the Hungarian richer by over $1.5 billion.

24 years later Soros is back, and this time he is warning against the kind of devaluation that made him a billionaire and which he believes will be unleashed by Brexit, when in a Guardian Op-Ed he wrote that U.K. voters are “grossly underestimating” the true costs of a vote to leave the EU, saying that there would be an “immediate and dramatic impact on financial markets, investment, prices and jobs.”

He predicts that the pound would decline “precipitously”, seeing a gargantuan drop of at least 15% and possibly >20% to below $1.15. Considering it has now become trendy for analysts to come up with ever “doomier” forecasts of just how low cable would plunge in case of Brexit, we are surprised Soros stopped there.

Here Soros makes the distinction how the collapse in cable would be different from the one that made him richer by saying that this devaluation wouldn’t be “healthy” like the one in 1992 because BOE wouldn’t cut rates, U.K. has large current account deficit and devaluation unlikely to improve manufacturing exports this time. Just don’t tell that to the BOJ, which would gladly leave the EU – twice if it had to – if it meant a 20% devaluation.

“Brexit would make some people very rich – but most voters considerably poorer”; “there are speculative forces in the, markets much bigger and more powerful” than the speculators that profited from the 1967 devaluation at Britain’s expense. “A vote to leave could see the week end with a Black Friday, and serious consequences for ordinary people.”

Here is the gist of Soros’ scaremongering, from the Guardian op-ed titled “The Brexit crash will make all of you poorer – be warned:

David Cameron, along with the Treasury, the Bank of England, the International Monetary Fund and others have been attacked by the leave campaign for exaggerating the economic risks of Brexit. This criticism has been widely accepted by the British media and many financial analysts. As a result, British voters are now grossly underestimating the true costs of leaving.

As opinion polls on the referendum result fluctuate, I want to offer a clear set of facts, based on my six decades of experience in financial markets, to help voters understand the very real consequences of a vote to leave the EU.

Of course, Soros’ set of facts may be clouded by his far greater equity stake in equity interests around Europe, and the globe, which would be drastially impacted by not only a Brexit, but by a European Union which is suddenly on the rocks.

From that point on, Soros’ entire analysis is on the “worst case” scenario centered around a collapsing pound, something which most ironically every other central bank around the globe is so desperate to achieve:

… sterling is almost certain to fall steeply and quickly if there is a vote to leave– even more so after yesterday’s rebound as markets reacted to the shift in opinion polls towards remain. I would expect this devaluation to be bigger and more disruptive than the 15% devaluation that occurred in September 1992, when I was fortunate enough to make a substantial profit for my hedge fund investors, at the expense of the Bank of England and the British government.

At least he is honest.

It is notable that Soros’ warning comes just days after that of Jacob Rothschild himself who said in another Op-Ed, this time for The Times, that leaving the EU could lead to a “damaging and disorderly situation” in the UK as he urged Britons to vote ‘remain’. Just like Soros, Lord Rothschild, suddenly exhibiting a rare strain of humanitarian concern, said readers should not “risk the wellbeing of our country”and European countries are “better off together”.

He said that “at present we enjoy being a permanent member of the UN security council and we are essential to the G8 and Commonwealth. But diplomacy, defence, the environment and our values of being a liberal democracy will all be at risk” adding that “I can see no good reason why we should accept our playing a diminished role on the world stage,” especially if his own personal fortune would be jeopardized.

* * *

Finally, completing the doom loop, was none other than Chancellor George Osborne who, according to the Telegraph, “refused to rule out suspending trading on the London stock market if Britons vote to leave the European Union on Friday morning… The threat from the Chancellor, made in an LBC radio interview on Monday evening, after the market had closed could force shares down in London as early as Tuesday morning.”

Iain Dale, the presenter, asked Mr Osborne: “If the financial markets do plummet on Friday would you have to consider suspending trading on the FTSE?”

The Chancellor responded: “Well look, the Bank of England and the Treasury – Governor Carney and myself – we have of course discussed contingency plans.

But the sensible thing is to keep those secret and make sure you are well prepared for whatever happens but if you set them all out in advance then you rather undermine the power of those plans.”

Pushed again on the contingency plans, Mr Osborne said: “I have a responsibility to the people listening to this programme to do all I can to protect them.  “But I have to tell you that you cannot in the end protect people from the economic shock that leaving the EU would bring about.”

And in case the threat of shuttered markets was not enough, Osborne also hinted at imminent mass layoffs, suggesting that redundancy notices could be issued hours after Britons vote to leave the EU at the vote.

Mr Osborne pointed to warnings from the London Stock Exchange there would be 100,000 job losses in the City after a Brexit.

Mr Osborne was challenged about whether redundancies warned by the bank JP Morgan could come as early as Friday – the day after the referendum. Mr Osborne replied: “I think that will start to happen very quickly, sadly.”

Amid all this gloom, Osborne presented the “only” alternative that would not lead to the imminent economic collapse he so forcefully imagines:

“he added that if the UK voted to remain there would be a “quick snap back” for the British economy, he said that “decisions will be taken and investment will come in”. Asked if these redundancy notices would be issued on Friday morning if Britons vote to leave, Mr Osborne said: “That will start to happen very quickly sadly.”

Now if only the people will do what these noble public servants tell to do in their own best interest…

Finally, Osborne also played down claims he could be forced to leave the Treasury after the referendum amid anger from Tory backbenchers over the way he has campaigned, saying: “It’s really not about my job”.

Oh but is George, just like it is in Soros and Rothschild’s own self interest for the people to vote “Remain.” To suggest otherwise is naive, but it may also be irrelevant. With just three days until the vote, the scaremongering tactic, not to mention the murder of an innocent woman, may have already done its job judging by the reveral in public opinion.

In any case, one can only hope that unlike the case of the failed Greek referendum where the people voted one way only to get the opposite, no matter how the Brits vote, it will truly represent the democratic will of the majority and that particular outcome is what they get.

END
SocGen talks about Britain’s real problems whether BREXIT is a reality or not>>
(courtesy Soc Generale/zero hedge)

When Brexit Has Come And Gone, The Real Problems Will Remain: A Reminder From Socgen

 

In a few days, Brexit will come and go, and just a few days later it will be forgotten, as either outcome will be far less dramatic than has been widely predicted by the same fearmongering economist pundits who have been wrong about everything else for the past 8 years. Ironically, the better outcome for the market is precisely a Brexit as the panic selloff will prompt central banks around the globe to boost enough monetary stimulus to send risk assets to new all time highs.

What will remain, however, are the real problems.

Here is SocGen with a useful reminder of just what those are, and why the market may have already forgotten that just one week ago the Fed threw in the towel when addressing precisely these problems.

From SocGen’s Andrew Lapthone:

Global equity markets continued to struggle last week, with the MSCI World index off 1.8% pushing the index back into red for the year. Big losses were seen in Japan with the Topix 500 down 6% and the volatile Mothers index crashing 18.5% over the week as the yen continued to strengthen. According to the BOE measure, the trade-weighted yen is now up more than 20% over the past year and back to where it stood three years ago. In the battle for the weakest currency, Japan looks to have thrown in the towel.

Whatever the outcome of the Brexit vote this week investors will still be facing the prospect of negative rates and negative yields on a huge range of bonds, massive corporate leverage with worryingly rising delinquencies and of course expensive equity markets and falling profits. To that extent these political events are a distraction from the main event, weak global economic growth and perverse asset markets. So whilst the market preference for the status quo might be celebrated in the short-term, actually when the fog clears all of the problems will still be there.

Let’s take the UK for example. The market will most probably rally as it is doing today if Brexit is rejected, but rally to where? We have already highlighted the excessive leverage and payout ratios in the UK, but these are not the only problems. On a disaggregated basis, median valuations are at the upper end of historical estimates (see below), profitability whether measured on an ROE, ROA or ROIC basis has rarely been this weak outside of an economic slump, and these figures do not materially change whether the problematic commodity and financial sectors are included or not. Brexit or not, the UK equity market hardly looks healthy.

END
And now correctly, we see this UK billionary, Peter Hargreaves believes a BREXIT will be good for the UK
(courtesy zero hedge/Peter Hargreaves)

Why A UK Billionaire Believes Brexit Would Be “Good For The UK”

The City of London and the pound would both benefit from the U.K. leaving the EU, says billionaire Peter Hargreaves. Brexit may knock the pound initially, but it would rebound, the co-founder of Hargreaves Lansdown — the largest U.K. retail broker, with more than $84.1 billion equivalent in assets — told Bloomberg Briefs’ Geoff King in a June 17 interview.

Q: Why do you support “Leave”?

A: Every year in the EU it gets more political, it gets more legislative, more regulative; we don’t seem to get very much benefit from it. We will be far better out.The EU as an economic mark is declining in the world, when there were only nine countries in it was 30 percent of the world’s GDP, now there are 28 it is only 17 percent. That’s some serious decline. Other countries that are growing — India, parts of Africa, Brazil, China and even Russia — are the places we should be trading with.

Q: How do you counter strong economist/analyst support to remain?

A: There’s a huge amount of vested interest, a lot people making these comments are politically motivated and also work for big banks that aren’t British. They’ve built these enormous dealing rooms and offices in the City of London and Canary Wharf and their bosses are saying we don’t want to endanger this huge investment of ours. I don’t think it will endanger that huge investment. You can’t move the City of London to anywhere else in Europe. It’s madness to suggest it. Frankfurt, the place everybody keeps talking about, only has a population of 700,000, it could not accommodate anything like the City of London. The City of London is absolutely guaranteed, it is bound to survive. The only center that could take over would be Zurich and that’s not in the EU either. It’s absolute drivel that the City of London will be affected. The City of London will go out and it will deal with these emerging economies in the Pacific Basin, Southeast Asia, Africa —  they’re all going to want finance for different things. You can’t set up the City of London anywhere else. It takes years, and during that time the City of London will have grown stronger. Any attempt at usurping it will fail.

Q: How will London’s role change?

A: It will become more global. There are only two global financial cities: New York and London. The fact London is no longer shackled to the EU means it will go out and deal with the rest of the world. New York is not in a great place, it is only in a great place for dealing with America and South America. The London time-zone is perfect for almost everywhere else in the world.

Q: What will happen to the EU?

A: The EU will disintegrate when we leave. They will realise there is nothing left. The political union is going to be a disaster and they’ll want a free-trade area. Do you know who’ll be the first country invited to that free trade area? The U.K.

Q: What happens to interest rates with a Brexit?

A: I don’t think there’ll be any change. One thing every country in the world is trying to do is get the value of their currency down. That’s why interest rates are low. It is quite likely the pound will come under a bit of pressure, initially it will go down. That will be compensation for any tariffs, so the tariffs won’t bother us. Not that they will instigate tariffs anyway, but any worry about it will already be compensated by the pound. The pound will become strong again, just like after we left the ERM snake under John Major. [At that time] the pound came under enormous pressure, but within 12 months was one of the strongest currencies in the world because we weren’t shackled to the euro.

Q: How will factors holding down inflation differ?

A: Everyone is trying to increase inflation by reducing their interest rates and reducing the value of their currencies. We don’t know what the impact of us leaving will be. I can’t make any suggestion on how we get the currency to the level we want and inflation to level we want until I know how markets react to us leaving the EU. It is a hypothetical question, it may do it automatically, we may have measures to take. I think there’ll be a knee-jerk reaction, but afterwards there’ll be calm with people realizing it is no big deal us leaving. I think everyone is going to realize it is actually going to be good for the British economy.

Q: Would leaving the EU impact savings and investment?

A: I have more money in the stock market than any other person in the U.K., I have 2 billion pounds in the U.K. stock market. No one has anything like that. Do you think I would be intent on leaving if I thought that was going to endanger my wealth?

end
At 8:30 est  (3:30 pm London Time) a new poll suggests a rise in the leave vote:
(courtesy zero hedge)

Stocks, Sterling Slide As Brexit Poll Show Rise In “Leave” Vote

Following the mixed picture from last night’s polls (YouGov “Leave” +2, ORB “Remain” +7), Soros scaremongery, and Schaeuble seriousness this morning, “UK exit would be ‘very’ negative for Germany,” bookies’ odds hover around 75-80% and Cable continues to push higher (to 6-month highs) as if the Brexit vote was a done deal. However, the Survation polls showed a rise from 42% on 6/18 to 44% today for “Leave” and Sterling is starting to slide…

Before the poll hit, Germany was in full fear mode:

  • *SCHAEUBLE SAYS `EUROPE ISN’T IN GOOD SHAPE’
  • *SCHAEUBLE SAYS EU CAN’T GO ON AS BEFORE IF U.K. REMAINS
  • *SCHAEUBLE SAYS U.K. EXIT WOULD BE `VERY’ NEGATIVE FOR GERMANY
  • *SCHAEUBLE SAYS U.K. MARKET VERY IMPORTANT FOR GERMANY

Which makes us wonder, if UK Brexits, will Germany bit off its UK-Trade-deal face to spite its own nose?

Survation’s last poll (on 6/18) was as follows:

  • *U.K. SURVATION POLL ON EU SHOWS REMAIN 45%, LEAVE 42%: PA

And today’s new post-Cox poll:

  • *U.K. POLL ON EU SHOWS REMAIN 45%, LEAVE 44%: IG/SURVATION

Which has sent Cable leaking lower…

As “Leave” gains post-Cox.

As JPMorgan notes, given that the actual referendum isn’t until Thurs night and the existing (albeit diminished and unlikely) potential of an “Out” victory, the SPX will likely struggle to move north of 2100 until at least Fri.

In the intermediate-term, the bull vs. bear debate is relatively balanced w/each side possessing credible ammunition with which to make their case.

However, in the near-term bears only have Brexit and if “Out” losses then the late-May/early-June narrative will quickly reassert itself (where the combination of very gloomy sentiment, increased US election clarity, a benign Fed, and ~$130 in ’17 EPS all helped to underpin an equity upside pain trade).

end
The Cardinals of Karlsruhe fold and allow the ECB’s OMT program of unlimited bond buying:
(courtesy zero hedge)

German Top Court “Reluctantly” Rejects Challenges To ECB’s OMT Program, Lists 6 Conditions

With traders already on edge in illiquid markets ahead of the Breferendum, one potential risk to sentiment today was the long-awaited decision by Germany’s powerful constitutional court whether Mario Draghi’s OMT, or Outright Monetary Transactions, was constitutional. However, any lingering concerns were swept away when the Kardinals of Karlsruhe “reluctantly” ruled in favor of the one of the European Central Bank’s most important tools to fight financial crises, which however was caveated with six specific conditions.

Specifically, Germany’s highest court dismissed five suits seeking to stop the country from participating in a controversial bond-buying plan that underpinned European Central Bank President Mario Draghi’s 2012 vow to do “whatever it takes” to save the euro. While they voiced concerns, the German judges said they were bound by last year’s ruling on the Outright Monetary Transactions program by the European Court of Justice, which said it includes sufficient safeguards to prevent the bond purchases from being disproportionate, which would violate EU rules governing the ECB.

The ECB’s landmark bond-buying programme, launched at the height of the eurozone’s debt crisis in 2012 well ahead of the ECB’s subsequent launch of QE, despite having never been used is widely credited with bringing the currency area back from the brink of collapse.

In the final ruling issued on Tuesday, the Karlsruhe-based court said should the scope of OMT be limited and other conditions for purchases met, the scheme would “not currently impair the Bundestag’s overall budgetary responsibility” or “‘manifestly’ exceed the competences attributed to the European Central Bank”. As the FT adds, after four years of judicial battles, the decision now clears the last remaining stumbling block to the deployment of the policy, under which the central bank can buy bonds of distressed member states.

Previously, a group of more than 37,000 German academics, businessmen and politicians had objected to the scheme, arguing it violated German federal law through the illegal monetary financing of eurozone governments. But ahead of the German decision, the European Court of Justice ruled in June last year that OMT was in accordance with EU treaty law.

In line with that decision, the German court said should all six of the conditions laid out by the ECJ be met, OMT would not constitute an “ultra vires act” in breach of German federal law. These include making sure the volume of any bond buying is “limited from the outset”, “purchases are not announced” and the ECB only holds securities until maturity in “exceptional cases”.

The ruling was promptly criticized by some such as Clemens Fuest, president of the Munich-based Ifo Institute, who said “the judges have made a U-turn on their original ruling, and haven’t dared to to restrain the ECB’s bond buying further than the ECJ. It’s a pity, as it is obvious that the OMT program primarily follows the fiscal goal of retaining the access of highly-indebted states to credit.”

While OMT has never been called upon, a negative ruling would have been a blow to the ECB. The program gives it a tool to address a breakdown in monetary-policy transmission in specific countries. In contrast, its current program of quantitative easing buys debt across the entire currency bloc in proportion to the size of each nation’s economy.

The German court laid out six conditions for approval of ECB’s OMT plan, noting that the Bundestag and government need to monitor volume and risk structure of bonds to avert any “concrete risk” to German budget. The conditions were the following:

  • Bond purchases may not be announced beforehand
  • Volume of purchases must be limited in advance
  • There must be a minimum time between issuance of bonds by states and purchase by ECB
  • Bonds can only be purchased from states that have access to financial markets
  • As a rule, bonds are not held until maturity, only in exceptional cases they can be held until maturity
  • Bonds must be sold back to markets when intervention no longer necessary

Needless to say, a negative judgement could have seriously curbed the German Bundesbank’s role in OMT and spooked financial markets ahead of the UK’s increasingly tight EU referendum. The court’s ruling said: “If interpreted in accordance with the Court of Justice’s judgment, the OMT programme does not present a constitutionally relevant threat to the Bundestag’s right to decide on the budget. Therefore, it can currently also not be established that implementation of the OMT programme would pose a threat to the overall budgetary responsibility.”

The decision was largely symbolic: the unused OMT has since been overtaken by the ECB’s quantitative easing measures, in which the central bank is purchasing government, corporate and asset-backed bonds across all member states in a bid to revive growth and inflation in the bloc. However, even these stimulus measures, launched in March last year, have also met legal challenge with four current outstanding cases against the QE scheme. Today’s decision will likely weaken any future German challenges against ECB policies.

The German judges said the Luxembourg-based European Court of Justice had “provided no answer” to the question of the ECB’s independence which it argues has led to “a noticeable reduction in the level of democratic legitimation of its actions”. However, it did not deem these objections sufficient to reject the ECB’s measures.

“The German Court’s ruling had the potential to shake the European Union or at least the monetary union to its very foundations”, said Carsten Brzeski at ING. However, as the FT concludes, “Fortunately, it did not”.

end

EMERGING MARKETS

I will bet you have never seen this happen to a major country:  Brazilian Telecom company OI files for bankruptcy protection in the country;s largest bankruptcy in history: (19.2 billion in debt)

(courtesy zero hedge)

Brazilian Telecom Giant Files Largest Bankruptcy In Nation’s History

Brazil has had a rough past few months to put it mildly. Ex-president Dilma Rousseff has been suspended and now faces an impeachment trial, interim president Michel Temer is embroiled in corruption allegations already, theeconomy is crumbling, and Rio has declared a state of “Public Calamity” putting the Olympic games in question. Now, to add insult to injury, we learn that Brazil’s fourth largest telephone company Oi SA filed the largest bankruptcy in the country’s history on Monday, Brazil is in need of a mercy rule, even as investors who have been scrambling to buy Brazilian assets in 2016 realize just how bad things really are.

After talks with creditors to restructure its debt collapsed, Oi and six subsidiaries filed for bankruptcy listing $19.26 billion in debt. In its filing, the company said it chose reorganization in order to preserve the value of its holdings and to continue to serve its customers according to the WSJ.

Oi has low penetration in the mobile phone and broadband markets, and Since 2009 the company had accumulated large amounts of debt in order to complete two mergers, first with Brasil Telecom and later with Portuguese company Portugal Telecom. As the WSJ notes, those deals failed to generate enough cash flow to fund the company’s investment needs.

CEO Bayard Gontijo resigned on June 10, and although no reason was given for Gontijo’s departure, shareholders had been putting significant pressure on the CEO to resist a proposal by creditors to convert debt into equity – a plan which according to the WSJ would have given a 95% stake of the restructured business to existing bondholders, thus significantly diluting shareholders.

As of March 31, Oi had reported gross debt in the amount of $14.72 billion, much of which was held by international bondholders.  The bonds, as shown below, have been plunging over the past few months, anticipating precisely this outcome:

Debt negotiations involved Oi’s executives and main shareholder, Bratel BV which controls 22.24% of the company. Representing the creditors was investment bank Moelis & Co who is advising creditors holding roughly 40% of the outstanding bonds. Those creditors being represented by Moelis include Pacific Investment Management Co, Citadel LLC and Wellington Management Co.

Other notable shareholders include the Ontario Teacher’s Pension Plan, with a 4.77% stake; the equity arm ofBrazil’s development bank, with 4.63%; and BlackRock, with .96%. Additional notable creditors include commercial banks such as Banco Itau SA Banco Santander SA, Banco do Brasil SA and Caixa Economica Federal. 5% is held by development banks such as the Brazilian Development bank and Banco do Nordeste do Brasil SA.

Just last week, Fitch downgraded Oi by two notches to C from CCC, citing an unsustainable capital structure.

As Bloomberg notes, the impact of Oi SA’s bankruptcy filing will go beyond Brazil, with the company’s euro-denominated bonds comprising 1.8% of Bank of America Merrill Lynch’s euro high-yield index by face value, the 11th-biggest issuer in the index.


* * *

And now that the bankruptcy spigot in Brazil has been tapped, we eagerly await as the repricing of Brazil’s equities – which have soared in the past few months on empty hopes the Temer regime would magically make things better- takes place – gradually at first, then very fast.

END

OIL ISSUES

What a joke:  Militants agree to a “ceasefire” with Nigeria and that causes oil to fall to the 48 dollar handle:

(courtesy zero hedge)

WTI Crude Tumbles To $48 Handle After Nigeria ‘Ceasefire’ With Militants

While crude has short-squeezed over 7% higher since the death of UK lawmaker Jo Cox, it is stumbling on fundamentals overnight as Reuters reports Nigeria has agreed a one-month ceasefire with militants including the Niger Delta Avengers in the oil-producing southern regiondespite the NDA denying it a week ago.

As Reuters reports,

Militant groups including the Avengers, who have claimed responsibility for a string of attacks on oil and gas facilities in recent weeks, could not immediately be reached for comment.

They say they want a greater share of Nigeria’s oil wealth to go to the impoverished Delta region. Crude sales make up about 70 percent of national income and the vast majority of that oil comes from the southern swampland.

The latest attacks have pushed production to a 30-year low.

Last week the Avengers said they would negotiate with the government if independent foreign mediators were involved.

“It was very difficult getting the Niger Delta Avengers to the negotiating table but we eventually did through a proxy channel and achieved the truce,” said the official, who asked not to be identified.

A second government official, who also wished to remain anonymous, said a “a truce was agreed” with militants.

*  *  *

One wonders why suddenly the NDA decided to play ball with the hyperinflating government? Perhaps the same ‘people’ behind the sudden mysterious rise of the freedom fighters who control global oil prices is now more worried about the state of the global economy being able to handle higher oil prices?

And not helping matters, despite China’s May crude imports from Russia and Iraq rising to a record…

  • China’s imports of crude oil from Russia rose 34% y/y to record 5.24m mt, or 1.24m b/d, according to data released Tuesday by the General Administration of Customs.
  • Imports of Iraq crude +57% y/y to a record 3.4m mt, up from April’s 3.14m mt
  • Imports of Saudi crude +34% y/y at 4.08m mt, down from April’s 4.12m mt
  • Imports of Iran crude +19.5% y/y to 2.63m mt, down from April’s 2.76m mt
  • Imports of Angola crude -4.9% y/y to 3.1m mt, down from 3.98m mt in April
  • Russia, Saudi, Iraq were China’s top 3 crude suppliers in May

Overall, it appears China demand is starting to rollover…

  • China’s apparent oil demand fell 0.9% in May, according to data compiled by Bloomberg.
  • Naphtha demand +21.1% y/y to 935k b/d
  • Gasoline demand -1.7% y/y to 2.68m b/d
  • Diesel demand -12.9% y/y to 3.17m b/d

So, the Nigeria deal will add supply and the China news cuts demand… now what happens next?

 

end

 

Then oil spikes up on a huge inventory drawdown:

(courtesy zero hedge)

WTI Crude Spikes Above $50 On Massive Inventory Draw

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   1.1323 UP .0002 ( STILL REACTING TO USA FAILED POLICY

USA/JAPAN YEN 104.62  UP 0.791 (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 1.4746 UP .0078 (MUCH LESS THREAT OF BREXIT)

USA/CAN 1.2777 DOWN .0022

Early THIS TUESDAY morning in Europe, the Euro ROSE by 2 basis points, trading now WELL above the important 1.08 level FALLING to 1.1320; 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 10.25 POINTS OR 0.35%   / Hang Sang CLOSED UP 158.74 POINTS  OR 0.77%   AUSTRALIA IS HIGHER BY 0.33%/ 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 MONDAY morning: closed UP 203.81 POINTS OR 1.28% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 158.74 POINTS OR 0.77% . ,Shanghai CLOSED DOWN 10.25 POINTS OR 0.35% / Australia BOURSE IN THE GREEN: (RESOURCES UP)/Nikkei (Japan) CLOSED IN THE GREEN/India’s Sensex IN THE GREEN

Gold very early morning trading: $1178.70

silver:$17.39

Early TUESDAY morning USA 10 year bond yield: 1.681% !!! UP 2 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 FALLS to 2.488 UP 2 in basis points from MONDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early TUESDAY morning: 93.57 DOWN 8 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

END

 

And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  3.17% UP 1 in basis points from MONDAY

JAPANESE BOND YIELD: -0.140% UP 1/2  in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.51%  UP 3 IN basis points from MONDAY

ITALIAN 10 YR BOND YIELD: 1.45  UP 2 IN basis points from MONDAY

the Italian 10 yr bond yield is trading 6 points lower than Spain.

GERMAN 10 YR BOND YIELD: +.05% up 3 FULL  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 1.1258 DOWN .0063 (Euro =DOWN 63 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 104.78 UP .954 (Yen DOWN 95 basis points )

Great Britain/USA 1.4640 DOWN.0028 ( Pound DOWN 28 basis points/(MORE BREXIT CONCERN)

USA/Canada 1.2808- UP 0.0009 (Canadian dollar DOWN 9 basis points  AS OIL ROSE  (WTI AT $49.24).

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 63 basis points to trade at 1.1258

The Yen FELL to 104.40 for a LOSS of 95 basis points as NIRP is STILL a big failure for the Japanese central bank/

The POUND was DOWN 28 basis points, trading at 1.4640 

The Canadian dollar FELL by 9 basis points to 1.2808, WITH WTI OIL AT:  $48.95

The USA/Yuan closed at 6.5890/

the 10 yr Japanese bond yield closed at -.140% UP 1/2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 4 IN basis points from MONDAY at 1.709% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.514 UP 4 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, 94.06 UP 45 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 22.55 OR 0.36%
German Dax :CLOSED UP 53.52 OR  0.54%
Paris Cac  CLOSED UP 26.48  OR 0.61%
Spain IBEX CLOSED UP 20.20 OR 0.23%
Italian MIB: CLOSED UP 77.72 OR 0.45%

The Dow was up 24.86  points or 0.14%

NASDAQ up 6.55 points or 0.14%
WTI Oil price; 48.95 at 4:30 pm;

Brent Oil: 50.88

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.95 (ROUBLE DOWN 4/100 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT ROSE AND WTI ROSE

TODAY THE GERMAN YIELD REMAINS AT +.05%  FOR THE 10 YR BOND

.

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:48.95

BRENT: 50.90

USA 10 YR BOND YIELD: 1.709% 

USA DOLLAR INDEX: 94.06 UP 45 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.4646 DOWN .0023  or 23 basis pts.

German 10 yr bond yield at 5 pm: +.050%

 

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

Stocks Steady Amid Brexit Bounce, Yellen Yawn, & Copper Chaos

Seemed appropriate…

 

The polls and the bookies are very far apart…

 

Which impacted Cable but stocks didn’t care…

 

Equity market volume was abysmal…

 

Stocks really went nowhere today with Trannies and Small Caps underperforming…

 

But are still up notably from the moment Jo Cox death was announced…

 

Short-term vol soared… (VIX tagged 19 briefly but STVX surged)

 

Treasury yields pushed higher across the complex again today, not helped by an ugly 5Y auction…but ended only 1-2bps higher

 

Following this morning’s poll – with a rise in “Leave” votes – Cable sold off and US Dollar rallied for the first time in 5 days…

 

Cable gone nowhere in 36 hours…

 

This is anything but over – ST Cable vol is spiking vs 1m Vol.

 

Commodities were mixed as USD strength kept a lid on PMs while copper and crude surged into expiration….

 

And finally, copper prices surged by the most in 6 months in the last 2 days. Of course the “Bremain” rally helped but, given the expiration of the July contract – and the fact that someone had basically cornered the copper market – we suspect this surge is much more technical forced-in buyers than anything ‘fundamental’. Based on Bloomberg’s prices, July drastically outperformed Sept futures today into its expiration…

 

And crude round tripped (ahead of tonight’s API report) on the back of denied reports of a ceasefire between militants and the government in Nigeria…

 

Charts: Bloomberg

end

 

We have been reporting on that huge gas leak in Southern California.  Reuters comments that the entire Southern half of California will be subject to blacouts lasting 14 days without power.

(courtesy Mac Slavo/SHFPlan )

Blackouts Loom With California In Power Grid Emergency: “All Customers Should Expect 14 Days Without Power”

Submitted by Mac Slavo via SHTFPlan.com,

The entire Los Angeles metropolitan area and most of Southern California can expect blackouts this summer.

The power grid is under direct threat as a result of the unprecedented, but little reported, massive natural gas leaks at Alisco Canyon that was ongoing for  four months as an intense summer heat wave sets in.

According to Reuters:

California will have its first test of plans to keep the lights on this summer…

With record-setting heat and air conditioning demand expected in Southern California, the state’s power grid operator issued a so-called “flex alert,” urging consumers to conserve energy to help prevent rotating power outages – which could occur regardless.

Electricity demand is expected to rise during the unseasonable heatwave on Monday and Tuesday, with forecast system-wide use expected to top 45,000 megawatts, said the California Independent System Operator (ISO), which manages electricity flow through the state. That compares with a peak demand of 47,358 MW last year and the all-time high of 50,270 MW set in July 2006.

That could put stress on the power grid, particularly with the shut-in of Aliso Canyon, following a massive leak at the underground storage facility in October [Editor’s Note: which was not stopped fully until mid-February 2016].

The large-scale natural gas disaster – which curiously escaped media frenzy and widespread environmental concern – has resulted in the shutdown of key storage facilities that supply most of the power for the southern portion of the state.

As summer demand for electricity to cool homes and businesses kicks into high gear, power plants are planning to shut down, with supply shortages triggering controlled blackouts and brownouts.

Reports say that “all customers” should expect to be without power a total 14 days – 2 weeks time – out of this summer. Some 21 million Californians stand to be directly affected:

All customers, including homes, hospitals, oil refineries and airports are at risk of losing power at some point this summer because a majority of electric generating stations in California use gas as their primary fuel. In April, millions of electric customers in Southern California were warned they could suffer power outages on up to 14 days this summer due to the closure.

[…]

Unlike some other gas transmission systems that can store large amounts of so-called linepack gas in pipelines, like PG&E Corp in northern California, SoCalGas cannot function with only pipeline or storage supplies.

Planned rolling brownouts have been done on a regular basis in Southern California since the days of Enron and the California energy crisis of 200o-2001, but the situation is getting more dire.

As demand spikes, customers can expect to pay more for electricity, even as supplies threaten to be cut off, leaving families, residents and businesses in the dark.

All this, as California’s historic drought problems continue to plague the state and restrict available services.

As Tess Pennington notes:

This puts stress of the other electrical grids who then compensate for the loss of energy to that existing grid. When these events take place, there is an overwhelming increase of power in homes and commerce to either generate heat, air conditioning or electricity. When this need overwhelms the grid, the utility company intentionally “shuts off the power to an area in order to reduce the load on an electricity generation and grid. The utility company turns it back on, and then shuts the power off in a different area, with outages in any given area typically lasting 60 to 90 minutes, according to the California Energy Commission. This is a last resort measure of utility companies to avoid an even worse situation — a total power blackout.

Of course, there is plenty of room for unplanned blackouts as well, as an increasingly vulnerable power grid nears the perfect conditions for a grid down scenario.

In the worst case scenario, these massive power outages, particularly if they are sustained for longer periods (authorities estimate up to 2 weeks without electricity is likely, though not necessarily in consecutive days), could interrupt other vital services – including grocery deliveries, water, gasoline at the pumps, and even communications.

The larger question is whether or not they want the grid to fail.

It is simple economic fact that the power companies stand to make more money of a power shortages during a crisis than they do during abundant and cheap energy.

Homeland Security and other government agencies have been preparing in secret for a grid disaster for several years now

Former DHS secretary Janet Napolitano ominously warned ahead of the Grid Ex II multi-agency drill that an unprecedented collapse of the power grid is imminent, and could result from a cyber attack, an EMP or a massive natural disaster:

The outgoing Homeland Security Secretary has a warning for her successor: A massive and “serious” cyber attack on the U.S. homeland is coming, and a natural disaster — the likes of which the nation has never seen — is also likely on its way.

[…]

An electrical grid joint drill simulation is being planned in the United States, Canada and Mexico. Thousands of utility workers, FBI agents, anti-terrorism experts, governmental agencies, and more than 150 private businesses are involved in the November power grid drill.

If the power grid fails, a lack of electricity and food delivery are only the first wave of troubles facing the American people. Police could face major problems with civil unrest. Of course, there also would not be any electric heating or cooling, which easily could lead to many deaths depending on the season. (source)

It seems that it is a matter of when, not if.

That’s why having an off-grid, alternative source of energy is essential for any prepper or level-headed individual, though many communities are now discouraging solar by requiring that it be connected to the grid and regulated by energy companies.

At a minimum, with an admitted potential for two weeks with the light out, you should have a one month supply of food for your family, as well as basic emergency supplies (including candles, flashlights, batteries and other light sources).

It is also prudent to:

  1. Follow energy conservation measures to keep the use of electricity as low as possible, which can help power companies avoid imposing rolling blackouts.
  2. Look into alternative power sources to supply your home with power.
  3. Have ways to prepare food off the grid.
  4. Keep your car tank at least half full because gas stations rely on electricity to power their pumps.
  5. Be aware that most medication that requires refrigeration can be kept in a closed refrigerator for several hours without a problem. If unsure, check with your physician or pharmacist.
  6. Know where the manual release lever of your electric garage door opener is located and how to operate it. Garage doors can be heavy, so know that you may need help to lift it.
  7. Keep a key to your house with you if you regularly use the garage as the primary means of entering your home, in case the garage door will not open.
  8. Have money on hand in case stores are not processing credit cards.

(Among other good ideas. Read more from Tess Pennington’s Are You Ready Series: Rolling Blackouts and Power Outages)

This isn’t just planning for the possible, this is planning for the inevitable, and even the California authorities admit it.

end

My goodness, Janet must be reading zero hedge and David Stockman:  USA stocks are vulnerable as forward valuations are well above normal:

(courtesy zero hedge)

Fed Warns Stocks Are “Vulnerable”, Forward Valuations “Well Above” Norms

 

In what we are sure will be aggressively spun by the mainstream media, The Fed’s full monetary policy report dropped a notable tapebomb this morning…

  • *FED: STOCKS’ FORWARD P/E RATIOS WELL ABOVE THREE-DECADE MEDIAN
  • *FED: STOCKS VULNERABLE TO A TERM PREMIUM RETURN TO NORMAL

Remember, “don’t fight The Fed” unless of course she says “sell.”

As The Fed explains:

Valuation pressures have generally stayed at a moderate level since January, though they rose for a few asset classes. Forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades.

Although equity valuations do not appear to be rich relative to Treasury yields, equity prices are vulnerable to rises in term premiums to more normal levels, especially if a reversion was not motivated by positive news about economic growth.

It appears The Fed has been reading:

Finally, the chart below shows the median price/revenue ratio of S&P 500 component stocks, which recently pushed to the highest level in history, exceeding both the 2000 and 2007 market peaks. In recent quarters, the broad market has deteriorated, even in the most reasonably valued decile of stocks, but the most richly valued decile has held up for a last hurrah, as it did near the peaks of previous bubbles. This dispersion has created a headwind for hedged-equity strategies in U.S. stocks, particularly value-conscious strategies, but investors should understand that beneath the surface of this short-term outcome is singularly the most extreme point of overvaluation for the median stock in history.

*  *  *

Full monetary policy report:

20160621_mprfullreport

end

A major trucking company, Werner warns about the awful swtate of trucking and logistics inside the USA/  the stock plummets today:

(courtesy zero hedge)

Werner Issues “Disturbing” Warning About State Of Trucking And Logistics Industry

Following ongoing warnings of the dismal reality surrounding heavy, Class 8 trucking, reality finally hit overnight when trucking and logistics company Werner Enterprises warned that a sluggish freight market and increases to driver pay would hurt its second-quarter earnings, leading to a plunge in its stock price. Werner said it now expects to report a profit of 21 cents to 25 cents a share, which includes a pretax gain of $3.4 million from the sale of real estate; this was nealy 50% below the consensus forecast of 40 cents a share.

Werner also said market conditions have led to “difficult” customer rate negotiations.

The announcement was a confirmation of the company’s Q1 warning when the company said market conditions could make it tough to attain year-over-year rate increases during the next few quarters.

Werner was not alone: its peer Knight Transportation and Swift Transportation all saw double-digit profit declines in the first quarter, partly because of rising driver wages. Knight and Swift shares also declined in sympathy in after-hours trading Monday. Werner said Monday that it is focusing on cost-management initiatives. The company is moving toward a goal to reduce the average age of its truck fleet to about 1.5 years by Dec. 31, but it doesn’t plan to expand its truck fleet until freight and rate markets “show meaningful improvement.”

The announcement was enough for Deutsche Bank to change its Buy recommendation on WERN shares to a Hold. This is what DB said:

Yesterday after the close, WERN preannounced Q2 EPS in the range of $0.21-0.25/share (vs. DBe and Consensus $0.40/share), including a pre-tax gain on sale of $3.4 million (~$0.03/share). The company notes that the weaker-thanexpected Q2 guidance is due largely to a challenging freight backdrop which is putting downward pressure on pricing (revenue/total mile), driver pay increases which were implemented in Q1 2016 and Q4 2015, and a soft used truck market. We note that the preannouncement is particularly disturbing given normal seasonality (see Figure 1 below) and bodes poorly for TL Q2 earnings, which will pressure the stock as well as the TLs such as HTLD, SWFT, KNX, and JBHT. For the first time in our model (which dates back to 1999), WERN’s Q2 EPS is poised to decline sequentially from Q1 as a perfect storm (higher driver pay, lower rates, weak tractor utilization, deteriorating mix [increased spot market exposure], and fuel) weighed on earnings. Consequently, Q2 EPS is expected to decline $0.05/share sequentially to $0.23 instead of experience the more normal $0.10/share average increase as illustrated below.

We are lowering our 2016-17E EPS to $1.00 and $1.25 from $1.60 and $1.82, respectively. Our new $22 price target is based on 17.5x multiple our new 2017E EPS. We have raised our target multiple to 17.5x our 2017 EPS estimate (from 16x previously) to reflect our downwardly revised earnings expectations and looming government regulations. Since we believe investors will be looking out to better EPS trends in H2 2017+ we have increased our target multiple to reflect this expectation as we see trucking fundamentals troughing in H2 2016 as supply starts to exit the industry. Our sense is that weather and/or a holiday uptick in volumes could serve to tighten trucking capacity in late 2016/early 2017. Upside risks include: better-than-expected cost performance, improved driving school results, new and/or accelerated government regulation, and the broader economy. Downside risks include: weaker-than-expected rates, used truck prices, higher-than-expected driver pay inflation, and the broader economy.

It appears that the Fed has another secular, not cyclica, concern to worry about.

end
Dave Kranzler does a good job reporting on the tanking economy:
(courtesy Dave Kranzler/IRD)

The Economy Is Tanking – Inflation/Obamacare Attacking The Middle Class

The economic reports continue to show an overall rate of deterioration in economic activity down to levels – in general – comparable with the 2008-2010 period.  Freight transportation activity is part of the “nerve center” of the economic system.   The latest data from Cass shows a rapid decline in both freight shipments and expenditures that began in mid-2014:

UntitledAlthough shipments ticked up from April to May 1.3% – attributable to seasonality –  year over year shipments for May dropped nearly 6%:Untitled

As you can see, expenditures plunged 10.1% year over year.  North American freight shipments reflect all economic activity at all levels of the economic system across a broad spectrum of industries.

Retail sales reports going back to December 2014 are signalling economic stress at the household level:   “During normal economic times, annual real growth in Retail Sales at or below 2.0% signals an imminent recession. That signal basically has been in play from December 2014, based on industrial production, retail sales and other indicators), suggesting a deepening, broad economic downturn” (John Williams,Shadowstats.com)

This financial stress at the household level is beginning to show up in credit delinquencies and defaults.  Last Tuesday Synchrony Financial reported an unexpected spike in its credit card charge-off rates:  Rising Credit Card Defaults.   As I’ve detailed in prior posts, auto loan delinquencies and defaults are beginning to accelerate.  I’ve covered a couple of credit and credit-related companies in my Short Seller’s Journal , one of which is down 18% since I featured it on March 20th. This is a remarkable fact given that the S&P 500 is up 1.5% in the same time-frame.   When the stock market rolls over, this stock will drop at least 50%.

Although the latest retail sales report last week showed a small gain month over month, the unexpected gain was fueled almost entirely by the rise in gasoline prices.   The Government CPI report does not show much inflation, because the Government goes out of its way to not measure inflation.

The Government’s methodologies used to hide real inflation have been dissected ad nauseum by this blog and many others over the years.  Instead, I wanted to share a write-up a friend and colleague of mine sent me which elegantly describes the truth about inflation and Obamacare and the affect both are having on the average American household:

There’s a huge disconnect between the Government CPI report and true inflation. May wholesale gas prices were flat while the Commerce Dept reported that May gasoline sales for retail sales purposes went up 2.1%. Implies 2% usage higher which might tie in with how, with lower gas prices earlier this year there was the shift to the lower mileage bigger vehicles, or could be more driving.

However, April gas prices according to CPI were up 8.1% but wholesale prices were up more like 14% in April. So the CPI price increase is 57% of the futures price increase. Apply the “lower inflation” to revenues driven by inflation and that’s how GDP gets overstated.

There a lot of moving pieces in the data charade. CPI is reported later this week (June 16th) and it will be interesting to see whats reported for gas. I looked at this a few years ago and found stark inconsistencies between the price level used by the Government in its CPI index vs wholesale gas prices, which are futures based.

The other issue is in food. This is where the CPI index substitution comes into play that John Williams (Shadowstats.com) talks about. My own index includes “outside skirt steak” which is approaching $20 a pound, where I used to pay $5-7 a pound a few years back. So we actually bought/substituted rib eyes at 10 bucks a pound. From an inflation perspective, if that got into the counting, I reduced my inflation by 50% (we later bought hamburger meat at Sams for 2.79 a pound so in the month we cut out our personal CPI on meat by 85%-although we moved to lower quality products). Another issue was cereal–which I used to buy regularly at Walmart early this year at $2.50 a box and it’s now $3.30 a box (32% price inflation).

So, what’s the point?

The point is that there is getting to be some serious inflation in food and somehow its not showing up in the Govt data. In addition, with all the variability with sales and type of stores and how the GDP, Jobs or CPI surveys are created–less than scientific, the government can drive whatever reporting outcome it wants and it’s virtually impossible for anybody to follow.

Regardless of how gasoline pricing is showing up for various Govt reports, between the higher cost of gas and food, and lower earnings in general, people are getting more and more stretched especially as healthcare, education and housing costs go much higher.

This latest retail sales report did confirm home improvement is now declining (big ticket items and durable goods), which had been one of the few bright spots in retail. I am also guessing that there is a shift in overall spending to necessities. The huge increases in Healthcare premiums is pretty significant for a family along with co-pays and deductibles. Practically speaking the middle class is getting attacked. There are not enough ultra-high income earners who can carry the economy.

The S&P 500 made another failed run at an all-time high earlier this month.  If the Fed was not aggressively preventing any down-side momentum from gripping the stock market, there would like be a stock market crash.

The U.S. financial and economic system is inching toward an abyss that is much deeper and darker than the abyss into which it plunged in 2008.

 

END

 

And for your enjoyment:

 

Clinton Foundation “Hacked By Russians”, “Foundation Vulnerabilities” Document Leaked

Moments ago the newswires lit up with news that the Clinton Foundation  was among the organizations breached by suspected Russian hackers in a dragnet of the U.S. political apparatus ahead of the Nov. election, Bloomberg reports. 

  • CLINTON FOUNDATION SAID TO BE BREACHED BY RUSSIAN HACKERS

As Bloomberg adds, the attacks on the foundation’s network, as well as those of the Democratic Party and Hillary Clinton’s presidential campaign, compound concerns about her digital security even as the FBI continues to investigate her use of a personal e-mail server while she was secretary of state.

A spokesman for the foundation, Brian Cookstra, said he wasn’t aware of any breach. The compromise of the foundation’s computers was first identified by government investigators as recently as last week, the people familiar with the matter said. Agents monitor servers used by hackers to communicate with their targets, giving them a back channel view of attacks, often even before the victims detect them.

That’s the official version, and one which accurately focuses on the porous security at both the DNC and Clinton Foundation servers.

What really happened is that earlier today, the infamous hacker Guccifer2 – who as we reported previously, revealed himself as the individual who penetrated the DNC server (which was also blamed on Russian hackers) and revealed to the world the DNC’s “attack files” on Donald Trump, among others, including the Clinton mega donors – released another data dump which he titled as the “Dossier on Hillary Clinton from DNC.

In the post he says the following:

This’s time to keep my word and here’re the docs I promised you.

 

It’s not a report in one file, it’s a big folder of docs devoted to Hillary Clinton that I found on the DNC server.

 

The DNC collected all info about the attacks on Hillary Clinton and
prepared the ways of her defense, memos, etc., including the most
sensitive issues like email hacks.

 

As an example here’re some files:

 

2016er Attacks – HRC Defense Master Doc [updated]

04.29.15 CGEP

2016 Democrats Positions Cheat Sheet 7-7-15

20150426 MEMO- Clinton Cash Unravels

Attacks on Clinton Family Members

Clinton Foundation Donors $25K+

Clinton Foundation Vulnerabilities Master Doc FINAL

Clintons PFD 2015

HRC Defense – Emails

HRC Travel – Private Jets FINAL

MEMO — Clinton Cash Claims (2)

Most notable among these files is the file called “Clinton Foundation Vulnerabilities Master Doc FINAL”which, as the title implies, is an extensive 42-page summary of how the Clinton Foundation views its biggest vulnerabilities based on mentions, references and attacks from the press.

Here are some of the section titles:

  • THE CLINTON FOUNDATION RECEIVED DONATIONS FROM INDIVIDUALS TIED TO SAUDI ARABIA WHILE CLINTON SERVED AS SECRETARY OF STATE
  • AN EMBATTLED BUSINESSMAN WITH “TIES TO BAHRAIN’S STATE-OWNED ALUMINUM COMPANY” GAVE BETWEEN $1 MILLION AND $5 MILLION TO THE CLINTON FOUNDATION
  • A VENEZUELAN MEDIA MOGUL WHO WAS ACTIVE IN VENEZUELAN POLITICS DONATED TO THE CLINTON FOUNDATION DURING CLINTON’S TENURE AS SECRETARY OF STATE
  • GERMAN INVESTOR WHO HAS LOBBIED CHANCELLOR MERKEL’S ADMINISTRATION GAVE BETWEEN $1 MILLION AND $5 MILLION TO THE CLINTON FOUNDATION, SOME OF WHICH WAS DURING MRS. CLINTON’S TENURE AT THE STATE DEPARTMENT
  • THE CEO OF AN AMSTERDAM BASED ENERGY COMPANY DONATED AT LEAST $1 MILLION TO THE CLINTON FOUNDATION AND LATER ANNOUNCED AT THE 2009 CGI MEETING A $5 BILLION PROJECT TO DEVELOP ENVIRONMENTALLY FRIENDLY POWER GENERATION IN INDIA AND CHINA
  • INDIAN POLITICIAN AMAR SINGH, WHO HAD DONATED AT LEAST $1 MILLION TO THE CLINTON FOUNDATION, MET WITH HILLARY CLINTON IN SEPTEMBER 2008 TO DISCUSS AN INDIA-U.S. CIVIL NUCLEAR AGREEMENT
  • THE CLINTON FOUNDATION RECEIVED ADDITIONAL DONATIONS FROM INDIAN BUSINESS INTERESTS PRIOR TO HER BECOMING SECRETARY OF STATE
  • BILLIONAIRE STEEL EXECUTIVE AND MEMBER OF THE FOREIGN INVESTMENT COUNCIL IN KAZAKHSTAN LAKSHMI MITTAL GAVE $1 MILLION TO $5 MILLION TO THE CLINTON FOUNDATION BEFORE CLINTON BECAME SECRETARY OF STATE
  • SOON AFTER SECRETARY CLINTON LEFT THE STATE DEPARTMENT, THE CLINTON
    FOUNDATION “RECEIVED A LARGE DONATION FROM A CONGLOMERATE RUN BY A
    MEMBER OF CHINA’S NATIONAL PEOPLE’S CONGRESS”
  • …AND THE CLINTON FOUNDATION DEFENDED ITS PARTNERSHIPS WITH BOTH FOREIGN AND DOMESTIC CORPORATE INTERESTS
  • POWERFUL AND CONTROVERSIAL CORPORATE INTERESTS BASED IN THE U.S. ALSO DONATED TO THE CLINTON FOUNDATION
  • AMONG THE CLINTON FOUNDATION DONORS REVEALED IN 2009 WERE SEVERAL FOREIGN GOVERNMENTS WHO HAD GIVEN MILLIONS OF DOLLARS
  • WHEN HILLARY CLINTON BECAME SECRETARY OF STATE IN 2009, BILL CLINTON AGREED TO STOP ACCEPTING CONTRIBUTIONS TO THE CLINTON FOUNDATION FROM MOST FOREIGN COUNTRIES
  • IN THE PAST, SOME OBSERVERS HAD LINKED FOREIGN GOVERNMENT DONATIONS TO THE CLINTON FOUNDATION AND SECRETARY CLINTON’S WORK AT THE STATE DEPARTMENT
  • THE CLINTON FOUNDATION CAME UNDER INTENSE SCRUTINY IN FEBRUARY 2015 WHEN IT WAS REVEALED THAT THE FOUNDATION HAD ACCEPTED DONATIONS FROM FOREIGN GOVERNMENTS AFTER SECRETARY CLINTON LEFT THE STATE DEPARTMENT
  • THE WALL STREET JOURNAL TIED FOREIGN GOVERNMENT DONORS TO THE CLINTON FOUNDATION’S ENDOWMENT FUNDRAISING UNDER SECRETARY CLINTON
  • CLINTON FOUNDATION ANNOUNCED THAT SHOULD HILLARY CLINTON DECIDE TO RUN FOR PRESIDENT, THE FOUNDATION WOULD FOLLOW APPROPRIATE PROCEDURES FOR ACCEPTING DONATIONS FROM FOREIGN DONATIONS, JUST LIKE IT HAD HAD UNDER SECRETARY CLINTON…
  • REPORTS THAT STATE DEPARTMENT LAWYERS DID NOT EXHAUSTIVELY VET BILL CLINTON’S PAID SPEECHES DURING SECRETARY CLINTON’S TENURE RAISED QUESTIONS ABOUT THE ROLE CLINTON FOUNDATION DONATIONS MAY HAVE PLAYED IN ORGANIZING THOSE SPEECHES
  • SOME CONSERVATIVES USED THE FOREIGN DONATIONS CONTROVERSY TO IMPLY THAT THE CLINTON FOUNDATION IS NOT A CHARITY AND QUESTION THE FOUNDATION’S CHARITABLE WORK
  • THE CLINTON FOUNDATION HAS ACCEPTED DONATIONS FROM INDIVIDUALS, SOME OF WHOM HAD TIES TO FOREIGN GOVERNMENTS, DURING HER TENURE AS SECRETARY OF STATE
  • THE CLINTON FOUNDATION RECEIVED MONEY FROM A FOUNDATION FORMED BY FORMER UKRAINIAN PARLIAMENT MEMBER VICTOR PINCHUK
  • WALL STREET JOURNAL COLUMNIST MARY O’GRADY CITED A CONTRACT BETWEEN TWO CLINTON DONORS FOR HAITI AID AS EVIDENCE OF A CONFLICT OF INTEREST FOR THE CLINTONS

There is much more in the full document presented below (link).

* * *

One important thing to note: according to an interview that Motherboard conducted with Guccifer2 on Tuesday, the hacker makes it clear he is not Russian. He is, in fact, from Romania, just like the Original Guccifer.

“I’m a hacker, manager, philosopher, women lover,” Guccifer 2.0 told Motherboard on Tuesday in a Twitter chat. “I also like Gucci! I bring the light to people. I’m a freedom fighter! So u can choose what u like!”

 

The hacker, who claimed to have chosen the name in reference to the notorious hacker who leaked the George W. Bush paintings and claims to have hacked Hillary Clinton’s email server, denied working for the Russian government, as several experts believe.

 

“I don’t like Russians and their foreign policy. I hate being attributed to Russia,” he said, adding that he was from Romania, just like the first Guccifer.

When asked to explain how he hacked into the DNC in Romanian, “he seemed to stall us, and said he didn’t want to “waste” his time doing that. The few short sentences he sent in Romanian were filled with mistakes, according to several Romanian native speakers.”

The hacker said he left Russian metadata in the leaked documents as his personal ”watermark.” He also said he got kicked out of the network on June 12, when the DNC “rebooted their system.”

 

A senior DNC official said in an emailed statement that “our experts are confident in their assessment that the Russian government hackers were the actors responsible for the breach detected in April, and we believe that the subsequent release and the claims around it may be a part of a disinformation campaign by the Russians.”

 

Guccifer 2.0 also said the DNC isn’t the only victim of his hacks, but declined to name any others because “my safety depends on it.”

It appears the Clinton Foundation was one of the other hacks.

Finally, when asked why he targeted the DNC, “Guccifer 2.0 said he simply did it to follow the lead of Marcel Lazar, the original Guccifer, and that he doesn’t “care at all” about Donald Trump. The hacker declined to say whether he knew him personally, “cause I care for Marcel.” “I think we must fight for freedom of minds,” he wrote. “Fight for the world without Illuminati.”

Good luck.

* * *

So while we are going through the full data dump (found here), here is the leaked document revealing the “Clinton Foundation’s Vulnerabilities.”

 

end

Well that about does it for tonight

I was out of the loop for most of the afternoon but I am just catching up what I missed

I will see you tomorrow night

h

 

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3 comments

  1. Craig D Holcomb · · Reply

    Enjoyed the pieces from Fleckenstein asn Russell. Thanks.

    Like

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