June 24/BREXIT AFFIRMATIVE and with it a huge Sigma six derivative mess!/

Good evening Ladies and Gentlemen:

Gold:  $1,320.20 UP $58.80    (comex closing time)

Silver 17.79  up a tiny 44 cents

In the access market 5:15 pm

Gold: 1316.00

Silver: 17.74

 

.

The June gold contract is an active contract. Last  night we had a fair sized 21 notices filed last night, for 2100 oz to be served upon today.  The total number of notices filed in the first 16 days is enormous at 15,416 for 1,541,600 oz.  (47.950 tonnes)

ii) in silver we had 2 notices filed for 10,000 oz..  Total number of notices served  in the 16 days: 491 for 2,455,000 oz

Let us have a look at the data for today

.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 275.27 tonnes for a loss of 28 tonnes over that period

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In silver, the total open interest ROSE by A WHOPPING  7,382 contracts UP to 213,000, AGAIN A NEW ALL TIME RECORD DESPITE THE FACT THAT  THE  PRICE OF SILVER WAS UNCHANGED with respect to YESTERDAY’S trading.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.065 BILLION TO BE EXACT or 152% of annual global silver production (ex Russia &ex China)

In silver we had 2 notices served upon for 10,000 oz.

In gold, the total comex gold OI fell by a HUGE 4998 contracts down to 566,569 as the price of gold was DOWN $2.50 with YESTERDAY’S trading (at comex closing). The bankers were overjoyed with the fall in gold OI but not silver which is giving them nothing but fits

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

GLD

No changes in gold inventory. ??? on gold’s huge advance???

Total gold inventory: 915.90 tonnes

SLV

Another  855,000 oz leaves the SLV inventory

Inventory rests at 332.214 million oz.

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

1. Today, we had the open interest in silver ROSE by 7,382 contracts UP to 213,000  DESPITE THE FACT THAT THE price of silver was unchanged with YESTERDAY’S trading. The gold open interest FELL by a CONSIDERABLE 4,948 contracts DOWN to 566,569 as the price of gold was DOWN $2.50  YESTERDAY.

(report Harvey).

 

2 a) Gold trading overnight Europe, Goldcore

(Mark OByrne/

3. ASIAN AFFAIRS

i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed DOWN 37.64 POINTS OR 1.30% / /Hang Sang closed DOWN 609.21 OR 0.2.92%. The Nikkei closed DOWN 1,286.33 POINTS OR 7.92% Australia’s all ordinaires  CLOSED DOWN 3.09% Chinese yuan (ONSHORE) closed DOWN at 6.6220 /Oil FELL to 47.80 dollars per barrel for WTI and 48.82 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.6438 yuan to the dollar vs 6.5774 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

b) REPORT ON CHINA

A very big story!! We are now witnessing a huge increase in Chinese bankruptcies due to their zombie loans outstanding (non performing loans)

(courtesy zero hedge)

4. EUROPEAN AFFAIRS

i)The BREXIT vote will cause European stocks to make new lows for the next few days according to JPMorgan.  Welcome to the new BREXIT world!

( zero hedge)

ii)Merkel, the EU all scramble and ask for calm.  They did not get it

( zero hedge)

 

iii)Now it is Italy’s turn to launch a referendum campaign in conjunction with Northlern League and 5 Star

( zero hedge)

iv)Thomas Cook runs out of Euros

( zero hedge/)

v)The following is a huge commentary from RBC’s Charlie McEllligott. This morning as he awoke he quickly saw massive losses on equities: First from Asia (e.g. Nikkei down 8%) and then his own Europe equities (down 8 to 12%) and then he noticed huge increase in peripheral yields in Spain, Portugal and Italy.  We put two and two together and said that we had massive derivative losses underwritten by our huge banks. and this was a SIGMA SIX event (tail probability gone bad).  Today Deutsche bank along with other bankers collapsed in price!

a must read…
( Charlie McElligott/RBC/zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

i)Central bankers around the globe scramble to defend markets as dollars flee all markets. Derivative losses are enormous

( zero hedge)

 

ii)The G7  and the IMF join central bankers to try to calm markets to no avail

( zero hedge)

 iii)The following commentary is a biggy!  RCB’s Charlie McElligott stated today there there is a huge tail risk or in other words, a massive sigma six event.  He states that today was the appetizer.  Monday is for real
( zero hedge/Charlie McElligot/RCB)

7.OIL ISSUES

After three weeks of increases, finally we see a decline of 7 rigs this week
(courtesy zero hedge)

8.EMERGING MARKETS

none today

9. PHYSICAL STORIES

i)Chris Powell explains the gold price suppression scheme

( Chris Powell/GATA)

 

ii)Britain votes for a BREXIT

( Erlanger/New York Times)
iii)A very important commentary from Alasdair Macleod as he talks about the fallout from the BREXIT: namely black swans which will appear due to the huge drops in prices on equities and an increase in peripheral bond yields in Europe and most important derivative busts in dealers of gold who have been short for many weeks and this huge rise will bring them offside..

a must read…
( Alasdair Macleod)
iv) Another must read as Bill Holter also discusses the ramifications on the BREXIT
(Bill Holter/Holter-Sinclair collaboration)

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

i)Durable goods orders crater in May down 2.2% and it is the 17th consecutive month for durable goods declines

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE to an OI level of 569,506 for a GOOD GAIN of 2,937 contracts despite the fact that  THE PRICE OF GOLD WAS DOWN $6.80 with respect to YESTERDAY’S TRADING. OUR BANKERS WERE OVERJOYED WITH THE FALL IN TOTAL OI YESTERDAY.TODAY THERE WERE NOT HAPPY TO SEE THE OI RISE (PRIOR TO BREXIT) JUNE IS THE SECOND BIGGEST DELIVERY MONTH OF THE YEAR AND IS A VERY ACTIVE MONTH FOR GOLD DELIVERIES. 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 progressesIN 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 291 for a loss of 56 contracts. We had 21 notices filed YESTERDAY, so we lost a tiny 35 contracts or 3500 additional oz  WILL NOT STAND FOR METAL. The next active contract month is July and here we saw it’s OI fall by a GOOD SIZED 53 contracts up to 5,036.This level is still very high and no doubt will be troublesome for our bankers as the front July contract month open interest is extremely high for a non active month and it also refuses to shrivel by much. In ounces, we have 503600 oz or 15.66 tonnes  The next big active contract month is August and here the OI ROSE by 240 contracts up to 407,487. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was A RECORD at 1,080,895. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was POOR at 164,450 contracts. The comex is not in backwardation. I  cannot wait until Monday to see the new  OI figures.

Today we had 24 notices filed for 2400 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by A WHOPPING 5,479 contracts from 213,000 to 218,479. The open interest rose despite the price of silver being up by only 4 cents  with respect to yesterday’s trading. The front month of June saw it’s OI fall by 2 contracts reducing to 94 . We had 2 notices filed YESTERDAY , so we NEITHER GAINED NOR LOST ANY SILVER OUNCES STANDING  . The next big delivery month is July and here the OI fell BY 8,235 contracts down to 47,230. We have less than  1  week to go before first day notice on June 30.. The volume on the comex today (just comex) came in at 109,498 which IS huge. The confirmed volume YESTERDAY (comex + globex) was HUGE at  84,231. Silver is not in backwardation . London is in backwardation for several months.
 
We had 93 notices filed for 465,000 oz.
 

JUNE contract month:

INITIAL standings for JUNE

June 24.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil  48,407.25 OZ

incl

486 KILOBARS

SCOTIA

Deposits to the Dealer Inventory in oz 3858.000 OZ

120 kilobars

BRINKS

Deposits to the Customer Inventory, in oz   48,577.530 OZ

SCOTIA

No of oz served (contracts) today 24 contracts
(2400 oz)
No of oz to be served (notices) 267 contracts

26,700 oz

Total monthly oz gold served (contracts) so far this month 15,440 contracts (1,544,000 oz)

(48.024 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  256,902.3 OZ

Today we had 1 dealer DEPOSIT

i) Into Brinks:  3858.000 oz

(120 kilobars)

total dealer deposit:  3858.000  0z

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 1 customer deposits:

i) Into Scotia: 48,577.530 oz

Total customer deposits; 48,577.530   OZ

Today we had 2 customer withdrawal:

i) out of Brinks: 32,975.250 oz

ii) Out of Manfra: 15,432.000 oz (486 kilobars)

total customer withdrawals:  48,407.25 oz

Today we had 2 adjustments:

i) Out of HSBC:  99.991 oz oz were transferred out of the dealer and into the customer HSBC.  (we will deem this a settlement)

ii) Out of Scotia:  482.25  were transferred out of the dealer and into the customer. of Scotia. We will deem this a settlement. Total in tonnage: .018 tones

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 21 contracts of which 9 notices was stopped (received) by JPMorgan dealer and 12 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 (15,440) x 100 oz  or 1,544,000 oz , to which we  add the difference between the open interest for the front month of JUNE (291 CONTRACTS) minus the number of notices served upon today (24) x 100 oz   x 100 oz per contract equals 1,570,700 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 WE HAVE NOW WITNESSED THE SAME RESULT FOR JUNE.
 
Thus the INITIAL standings for gold for the JUNE. contract month:
No of notices served so far (15,440) x 100 oz  or ounces + {OI for the front month (291) minus the number of  notices served upon today (24) x 100 oz which equals 1,570,700 oz standing in this   active delivery month of JUNE (48.855 tonnes).
INTERESTINGLY FIRST DAY NOTICE HAD 49.119 TONNES OF GOLD STANDING FOR DELIVERY SO WE HAVE MOSTLY GAINED BACK   ALL OF THE GOLD LOST IN STANDING DUE TO FIAT SETTLEMENTS from the start of the month (48.855 TONNES) .
WE LOST 35 contracts or an additional 3500 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. The 35 contracts were not doubt settled with a fiat bonus.
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 48.855 tonnes of gold standing for JUNE and 53.36 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 + 48.855 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 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018 = 64.950 tonnes still standing against 53.36 tonnes available.
 Total dealer inventor 1,715,683.972 tonnes or 53.36 tonnes
Total gold inventory (dealer and customer) =8,854,088.661 or 275.399 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 275.399 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 24.2016

Silver
Ounces
Withdrawals from Dealers Inventory nil oz
Withdrawals from Customer Inventory  948,196.886 oz

CNT

BRINKS

Deposits to the Dealer Inventory 464,642.960 oz

CNT

Deposits to the Customer Inventory  1,257,781.889  oz

JPM,CNT,SCOTIA

No of oz served today (contracts) 93 CONTRACTS 

(465,000 OZ)

No of oz to be served (notices) 1 contracts

5,000 oz

Total monthly oz silver served (contracts) 584 contracts (2,920,000 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  24,188,599.1 oz

today we had 1 deposit into the dealer account

i) Into CNT: 464,642.960 oz

total dealer deposit:464,642.96 oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 3 customer deposits:

i) Into JPMorgan:  515,510.700 oz

ii) Into CNT: 136,055.739 oz

iii) Into Scotia: 600,215.45

Total customer deposits: 1,251,781.889 oz

everyday for the past few weeks, JPMorgan has been bringing in at least 600,000 oz or close to it into the silver comex and today they deposited again the same like quantity.

We had 0 customer withdrawals

:

total customer withdrawals:  nil  oz

 
 

 

 we had 0 adjustment

The total number of notices filed today for the JUNE contract month is represented by 93 contracts for 465,000 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 (584) x 5,000 oz  = 2,920,000 oz to which we add the difference between the open interest for the front month of JUNE (94) and the number of notices served upon today (93) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the JUNE contract month:  584 (notices served so far)x 5000 oz +{94 OI for front month of JUNE ) -number of notices served upon today (93)x 5000 oz  equals  2,925,000 of silver standing for the JUNE contract month.
We NEITHER GAINED NOR LOST ANY SILVER OUNCES STANDING IN THIS NON ACTIVE DELIVERY MONTH OF JUNE.
 
Total dealer silver:  23.810 million  (RECORD LOW INVENTORY)
Total number of dealer and customer silver:   150.767 million oz
The total open interest on silver is NOW at its all time high with the record of 218,479 being set June 24.2016.  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
At 3:30 pm we receive the COT report which gives position levels of our major players. Last week we had a humongous increase by the commercials in gold and it continued again this week:

— Published: Friday, 24 June 2016 | Print  | Disqus

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
371,148 54,623 180,871 210,498 545,440 762,517 780,934
Change from Prior Reporting Period
4,451 -6,035 7,850 6,012 17,902 18,313 19,717
Traders
212 100 156 58 72 335 269
 
Small Speculators  
Long Short Open Interest  
52,703 34,286 815,220  
2,285 881 20,598  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, June 21, 2016
Our large specs:
Those large specs that have been long in gold added 4451 contracts to their long side
Those large specs that have been short in gold covered 6035 contracts from their short side.
Our commercials;
Our criminal bankers who have been long in gold added 6012 contracts to their long side
Those bankers (commercials) who have been short in gold added another whopping 17,902 contracts to their short side
Our small specs:
Those small specs that have been long in gold added 2285 contracts to their long side
Those small specs that have been short in gold added 881 contracts to their short side.
Conclusion: same as last week; criminal activity.  We will have to wait until next week to see the damage down unto the bankers today.
And now for our silver COT:
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
106,453 24,342 36,893 63,835 156,337
9,365 -1,617 277 -1,159 7,364
Traders
116 58 76 49 48
Small Speculators Open Interest Total
Long Short 233,666 Long Short
26,485 16,094 207,181 217,572
-2,307 153 6,177 8,484 6,024
non reportable positions Positions as of: 200 154
Tuesday, June 21, 2016   © SilverSeek
Our large specs:
Those large specs that have been long in silver added a huge 9365 contracts to their long side
Those large specs that have been short in silver covered 1617 contracts from their short side
Our commercials:
Those commercials that have been long in silver pitched 1159 contracts from their long side
Those commercials that have been short in silver added another whopping 7364 contracts to their short side.
Our small specs;
Those small specs that have been long in silver pitched 2307 contracts from their long side
Those small specs that have been short in silver added a  tiny 153 contracts to their short side.
Conclusions:  criminal activity at its finest
END
And now the Gold inventory at the GLD
june 24./strange!! no additions to gold with its huge 58 dollar advance??
june 23/no change in gold inventory tonight/rests at 915.90 tonnese
June 22/with gold down badly again, we had another huge deposit of 3.57 tonnes into the GLD/Inventory rests at 915.90 tonnes
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 24/ Inventory rests tonight at 915.90 tonnes

end

Now the SLV Inventory
June 24/This makes no sense!! 855,000 oz of silver leaves the SLV headed straight to Shanghai/Inventory rests at 332.214 million oz
June 23/ no change in silver inventory/rests tonight at 333.069 million oz
June 22.2016/no change in inventory at the SLV/Inventory rests at 333.069 million oz/
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 24.2016: Inventory 332.214million oz
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 3.2 percent to NAV usa funds and Negative 2.8% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 60.9%
Percentage of fund in silver:37.8%
cash .+1.3%( June 24/2016). /
2. Sprott silver fund (PSLV): Premium RISES  to +0.35%!!!! NAV (June 23/2016) 
3. Sprott gold fund (PHYS): premium to NAV  rises TO +1.32% to NAV  ( June 23/2016)
Note: Sprott silver trust back  into POSITIVE territory at +35% /Sprott physical gold trust is back into positive territory at +1.32%/Central fund of Canada’s is still in jail.
 
 
 

END

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

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

Gold Bullion Surges 6% In USD as BREXIT Creates Global Contagion Risk

Note: Our trading desk will be open until 1800 UK time today (BST) and from 0700 UK time Monday morning (Monday 27th), in order to deal with the increased demand for precious metals.

Gold Note
– There has been record online sales on the GoldCore website for this time of day and the phones are ringing off the hook. We have had more sales than during the Lehman crisis and at the height of the Eurozone debt crisis. It is nearly all buying with a preference for gold over silver. We may have to restrict trading to existing clients if we continue to see this level of demand.

– We are seeing more selling then expected and seeing some clients choosing to take profits after the very sizeable short term capital gains. As a percentage of overall trading though, sellers are vastly outnumbered by buyers.

– Bullion inventories had already been increased to record levels and we are confident that the UK leaving the EU will lead to a sustained increase in coin and bar buying in the coming months.

 

BREXIT_GOLDMarkets Today (Finviz)

Facts
– Sterling and euro have fallen sharply on fx markets
– Gold surged 20% in sterling to £1,015/oz
– Gold now 14% in higher in GBP at £960 per ounce
– Gold 8% higher in EUR and 5% higher in USD
– Stocks globally are down sharply – FTSE down 9%
– European stocks down sharply – Euro Stoxx 50 Futures collapsed over 11% at the open
– Bank shares are down 20% to 25%
– Cameron has resigned – adding to uncertainty in markets
– Record online sales at this time of day for GoldCore
– Nearly all buying with a preference for gold over silver
– Some selling – with some investors choosing to take profits after sizeable short term gains

Ramifications
There is the real risk of contagion in the EU
– UK leaving the EU increases the risk of the EU disintegrating as it greatly increases the risk of France, Italy, Spain, Netherlands and Greece following the UK
– This poses risks to the “single currency,” the euro as these nations may revert to their national currencies
– Still fragile UK, French, Italian, Spanish, Greek and Irish banks are coming under pressure
– The uncertainty and shock is likely to undermine business and consumer confidence and likely lead to a recession in the UK and will likely impact an already vulnerable Eurozone and global economy
– Central banks are likely to embark on further QE and further devalue currencies in order to prevent recessions

UK
The UK is likely to enter recession which will lead to further QE and see sterling devalued more over the long term
– The UK total debt to GDP ratio is over 450% which also poses severe risks to the economy and sterling
– UK banks remain vulnerable and in the event of contagion will likely see bail-ins and deposit confiscation
– British people, companies etc are very exposed to sterling. One way to hedge and protect against that risk is to diversify into physical gold and silver.

Ireland
The sharp fall in sterling versus the euro is likely to lead a serious fall in Irish exports to the UK which will impact jobs and the Irish economy. This combined with already heightened global risks may lead to a recession in Ireland – impacting the Irish stock and property market
– Longer term the euro looks very vulnerable and may collapse as warned of by Soros and many others
– Irish banks remain vulnerable and in the event of contagion will likely see bail-ins and deposit confiscation
– Irish people, companies etc are seriously exposed to the euro. The way to hedge and protect against that risk is the diversify into gold.

Conclusion
– The Brexit vote underlines the importance of owning gold as vital financial insurance in these uncertain times. The degree of risk means that investors should consider having higher allocations of 25% to 30% to physical gold and silver coins and bars.

Gold Prices (LBMA AM)
24 June: USD 1,313.85, EUR 1,181.28 & GBP 945.58 per ounce
23 June: USD 1,265.75, EUR 1,112.22 & GBP 850.96 per ounce
22 June: USD 1,265.00, EUR 1,122.31 & GBP 862.98 per ounce
21 June: USD 1,280.80, EUR 1,129.67 & GBP 866.72 per ounce
20 June: USD 1,283.25, EUR 1,132.08 & GBP 877.49 per ounce
17 June: USD 1,284.50, EUR 1,142.05 & GBP 899.41 per ounce
16 June: USD 1,307.00, EUR 1,161.14 & GBP 922.01 per ounce
15 June: USD 1,282.00, EUR 1,141.49 & GBP 903.04 per ounce

Silver Prices (LBMA)
24 June: USD 18.04, EUR 16.32 & GBP 13.18 per ounce
23 June: USD 17.29, EUR 15.16 & GBP 11.61 per ounce
22 June: USD 17.20, EUR 15.23 & GBP 11.72 per ounce
21 June: USD 17.36, EUR 15.34 & GBP 11.78 per ounce
20 June: USD 17.34, EUR 15.30 & GBP 11.85 per ounce
17 June: USD 17.37, EUR 15.43 & GBP 12.19 per ounce
16 June: USD 17.71, EUR 15.79 & GBP 12.54 per ounce
15 June: USD 17.41, EUR 15.51 & GBP 12.26 per ounce


Gold News and Commentary
GoldCore experienced record online sales for the time of day and may have to restrict trading to existing clients if demand remains high (Bloomberg via Business Times Singapore)
Elderly customer fearing economic collapse asked if she could invest all of her life’s savings in gold, despite the recommended investment level of 15% (WSJ)
Gold Sees Biggest Gain Since 2008 in Rush for Havens From Brexit (Bloomberg)
Gold Soars as Investors Seek Haven Following ‘Brexit’ (WSJ)
‘Buy gold’ searches soar 500pc after Britain votes to leave EU: here’s how to get your hands on the yellow metal (Telegraph)
Pound Plunges to Lowest in More Than 30 Years as Brexit Looms (Bloomberg)
Deutsche Bank to shut 188 German branches, cut 3,000 staff (CNBC)

Gold Soars Most In 42 Years For British Buyers (Zero Hedge)
Britain Votes to Leave E.U., Stunning the World (NY Times)
EU Referendum Live (Telegraph)
U.K. votes for Brexit: Latest on the fallout from the EU referendum (Marketwatch)
Britain votes leave: Don’t panic – this is an opportunity (Money Week)
Read More Here

Recent Market Updates
– BREXIT Day – Markets Becalmed – Gold Panic Prelude – Trading Hours
– Gold Lower Despite “Panic” Due To “Supply Issues” In Inter Bank Gold Market
– Gold Slips Despite UK Gold Demand Surging – Investors “Seek Stability”
– Gold Prices Surge to Highest in Nearly Two Years On FED and Brexit Haven Demand
– Gold Bullion Has Little Downside, Brexit Or Not, Says HSBC
– Central Bank of Ireland Warns Risks are Debt, Brexit, Geopolitical Tensions and Migration
– 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

Mark O’Byrne
Executive Director
Gold trading early this morning:

Gold Soars Most In 42 Years For British Buyers

It appears Brits are quick to rotate from their Pounds Sterling into pet yellow rocks as Gold prices spike (in GBP) explode almost 15% overnight… the most in 42 years…

 

 

It seems once again, the barbarous relic provided those willing to leap the kind of wealth protection they were looking for.

 

end

 

Chris Powell explains the gold price suppression scheme

(courtesy Chris Powell/GATA)

 

end
Britain votes for a BREXIT
(courtesy Erlanger/New York Times)

Rule, Britannia! Britannia, rule THYSELF!

Section:

The nations not so blest as thee
Must in their turn to tyrants fall,
While thou shalt flourish great and free,
The dread and envy of them all.

* * *

Britain Votes to Leave the European Union

By Steven Erlanger
The New York Times
Friday, June 24, 2016

LONDON — Britain has voted to leave the European Union, a historic decision sure to reshape the nation’s place in the world, rattle the Continent, and rock political establishments throughout the West.

With 309 of 382 of the country’s cities and towns reporting early on Friday, the Leave campaign held a 52 percent to 48 percent lead. The BBC called the race for the Leave campaign shortly before 4:45 a.m., with 13.1 million votes having been counted in favor of leaving and 12.2 million in favor of remaining.

The British pound plummeted as financial markets absorbed the news.

Despite opinion polls ahead of the referendum on Thursday that showed either side in a position to win, the outcome nonetheless stunned much of Britain, Europe and the trans-Atlantic alliance, highlighting the power of anti-elite, populist, and nationalist sentiment at a time of economic and cultural dislocation.

“Dare to dream that the dawn is breaking on an independent United Kingdom,” Nigel Farage, the leader of the U.K. Independence Party, one of the primary forces behind the push for a referendum on leaving the European Union, told cheering supporters just after 4 a.m. …

… For the remainder of the report:

http://www.nytimes.com/2016/06/25/world/europe/britain-brexit-european-u.

end
A very important commentary from Alasdair Macleod as he talks about the fallout from the BREXIT: namely black swans which will appear due to the huge drops in prices on equities and an increase in peripheral bond yields in Europe and most important derivative busts in dealers of gold who have been short for many weeks and this huge rise will bring them offside..
a must read…
(courtesy Alasdair Macleod)

The consequences of leaving the party

The collective decision of the British electorate is to reject the recommendation of its government, excepting those of its few dissenting ministers, that Britain should remain in Europe.

It is a signal failure of government policy. Above all, it is a failure that undermines the state’s control over ordinary people. Time will tell whether it is just a temporary setback for the world’s economic planners, or the removal of a keystone supporting the whole structure of modern statism.

There are, therefore, two aspects of this development that must be considered, domestic UK politics and the international economic and political consequences.

There can be little doubt that David Cameron and George Osborne the Chancellor are now only caretakers, with the duty of managing a planned withdrawal from Europe until their replacement as executive politicians. The withdrawal will be a lengthy process, which over the next two years at least, will lead to the final, official separation. It is possible there will be attempts by the European elite in Frankfurt and Paris, to come up with proposals to keep Britain in the EU club and to force a second referendum. Any such attempt will fail, because it cannot even be entertained by a caretaker Prime Minister.

David Cameron’s days as Prime Minister are numbered and he now has no real authority. The Conservatives will have to elect a new leader, and the bookies’ favourite is almost certain to be Boris Johnson. He is likely to be elected by the Conservative Party by the end of this year.

Britain’s future will therefore be subject to the policies of a Boris-led government, which it has to be admitted, will have obtained power basically through the failure of the Remain camp to come up with a convincing argument. It was arguably Remain that lost, and not Leave that won.

While the Leave camp campaigned on an agenda, which by implication was for freer markets, it is another thing to assume that regulations and red-tape will actually be rescinded. Therefore, a cynic might with justification point out that instead of being controlled by one bunch of inept politicians in Brussels, the British economy will be run by another bunch of inept politicians in Westminster.

The reality is that Boris Johnson, if he becomes Prime Minister, and his future government are creatures of the system. Importantly, they lack the intellectual basis to confidently challenge it. Doubtless, they will consult the same advisors who supported Remain, not just in the civil service, but in the private sector banks and in big business. No politician, unless he really understands the economic challenge, is immune from the persuasive efforts of these lobbyists and vested interests.

Britain’s progress from being part of a European super-state to full independence is therefore unlikely to be smooth. The UK will, once again, be more exposed to the discipline of private sector markets. Sterling markets are not too big for speculators to attack successfully. There is a significant risk, in the short-term at least, that Britain will stumble from sterling crisis to sterling crisis.

We could argue that from today, nothing immediately changes. Britain will still be an EU member for the next two years. This is true, but it ignores the fact that markets are forward-looking, and will not treat government procrastination kindly. It will be a steep learning curve for Boris & Co.

Two bits of unfinished business will have to be addressed. There is little doubt that the post-referendum collapse in sterling was exacerbated by the derogatory statements of two men, George Osborne, the Chancellor, and Mark Carney, the Governor of the Bank of England. Both men in office have a duty not to undermine the economy or the currency in their statements. Some latitude can be given in this matter to an incumbent politician, but not to the head of a central bank.

If Remain had prevailed, they would have got away with it. But it did not, and the Leave vote carried the day despite their threats. The consequences of their scare tactics, it could be argued, have not only made things worse for sterling and sterling-denominated financial markets than they would otherwise be, but their statements have contributed to a wider market crisis. Both men are therefore likely to be forced from office sooner rather than later.

Black swans and just deserts

The immediate response in global markets to the Leave surprise has been one of panic, starting with Asian markets, and a yen soaring to under 103 to the dollar. Gold has been just about the only bright spot, jumping by over 6% to $1340 at one point. Given sterling’s weakness, gold has risen more dramatically measured in pounds, by nearly 20% to £1,000 per ounce. Asian equity markets are taking it badly, with the Japanese market down over 7.5%.

This is the overnight market news.  With a bit of luck, traders might be more rational when European markets begin trading properly later this morning. However, the global financial and economic situation is dire, and ripe for a crisis. At particular risk are the European banks, whose complacent bets on a Remain result will hurt them badly. Expect the share prices of banks such as Deutsche, UniCredit and Credit Suisse to plumb new lows, fuelling concerns about their solvency.

That is the black swan. Just deserts are the fare of politicians in Europe and the crew at the IMF. The EU is faced with populist demands for democracy, or at least a better system than on offer from the EU hierarchy. It will be lucky to avoid further disintegration, with ex-members seeking their own trade alliances. That is, if a systemic banking crisis doesn’t get it first.

The IMF also made a very bad and inappropriate call, with Christine Lagarde publicly supporting the Remain mantra of gloom and doom in the event of leave. This important institution, which issues the world’s SDRs, would have served markets better if it had kept quiet and prioritised risk control. Its credibility has been badly damaged.

I must end this report on one further gloomy note. The bullion banks in their complacency have built up large short positions in gold, which by 5.00AM London time this morning had soared $100 at one point. Unless, during the course of today’s trade, gold loses most of this remarkable rise, there could be defaults in this market. The gold market, being based on the one form of money that is no one else’s risk, is central to the whole financial system. This could turn out to be the largest worry of all.

end

Lawrie Williams on the huge BREXIT win for the leave:

Britain, Brexit, Bullion and the Pound

Against most predictions, Britons voted to leave the European Union in yesterdays’ referendum.  Pollsters, and even the bookmakers, had obviously failed to account for the huge underlying anti-EU sentiment across the country.  In regional terms only Scotland, Northern Ireland , and perhaps most importantly London and the odd pocket in the richer south-east of the country, voted to remain in the Union.  This will undoubtedly build-up problems ahead, particularly should Scotland, as its leadership has threatened, push for a new referendum with the intention of gaining independence and rejoining the EU on its own.  In Northern Ireland the prospect of having to re-implement border controls with the Republic, which is in the EU, could reignite sectarian differences.  Should Scotland secede and join the EU, the imposition of border controls with England, which would presumably become necessary, and free movement of people between the two countries, would be another extremely touchy subject!

Ross Norman, CEO of UK bullion dealers Sharps Pixley, noted in an early comment this morning: “Gold rocketed this morning as the shock UK referendum result saw carnage in financial markets, prompting a rush to safe haven assets like gold. With sterling falling to its lowest in 30 years, the biggest gains were seen in gold for UK investors which rose 20 pct in just a few minutes before settling this morning at gbp 960, a gain of 12 pct on the day so far.  “

We would add here that markets, perhaps somewhat surprisingly, made something of a significant recovery  with both the pound sterling and the stock market  both recovering about half the ground lost in the initial knee-jerk reaction before slipping back a little again.  Meanwhile gold, at the time of writing, remains about $60 higher than it was before the Brexit vote began to look a reality, but did fall back at one time to a level seen only just over a couple of weeks ago well before the referendum, although at a time when the Brexit possibility appeared to have taken a temporary lead in the opinion polls.  Certainly on initial considered reaction, once the London markets had opened, the pound sterling has not performed nearly as badly as some – notably George Soros, who had predicted a 15-20% drop – had forecast, nor has the gold price risen as much as many market followers had suggested.  But it is early days yet.

Commenting on the retail market for gold in London, Norman said: “At Sharps Pixley we have already seen our busiest day ever with online sales draining our stocks of our larger bullion bars and prompting us to call on emergency reserves of kilobars from Germany. Our stocks of many coins have also been sold out with only limited availability today. 

“Stocks of physical gold for retail investors in small denominations are normally quite modest in the UK compared to markets like Germany where gold buying is more commonly adopted by savers. We have had to call on our parent company in Germany, Degussa (said to to be the largest in Europe in the sector) to help us out with additional bullion. Germans are a cautious people with not only gold reserves owned by the Bundesbank about 10 times the size of the UK Treasury’s very modest 310 tonnes (just a little more than Lebanon’s gold reserves – thanks Gordon) – but Germans have 4 times the propensity to save compared to UK savers. 

Norman went on to note:  “Gold has done what it does best and that is to provide investors with protection against currency weakness and political uncertainty- it is a safe haven asset with wealth preservation properties – the prescient investor has been well rewarded by his caution. We have always cautioned against betting on gold for short term outcomes, but over the long term it does what it should and that is to provide people with financial insurance.

We are thus, in the UK, entering a pretty uncertain time.  Initial market reaction suggests that the financial sector is taking a brighter view on the exit vote than many had suggested would be the case should Brits vote ‘out’.  However they are looking very volatile at the moment and they may take some days, weeks or even months to settle down again.  We doubt the initial fallout will be anywhere near the way things will eventually settle down.

 

end

Bill Holter on the BREXIT:

(courtesy Bill Holter/Holter/Sinclair collaboration)

BREXIT!  I have to admit, I did not believe it would happen.  Rather, I did not believe it would be “allowed” to happen.  In retrospect I believe the elites will look back and wish they had “Diebold” doing the vote count.  This vote has so many various ramifications, it is hard to wrap your head around what it means but let’s take a look at what stands out most.
  First and foremost, the “people stood up and spoke”.  The vote to exit is without a doubt the largest protest vote the world has seen in many years.  It is important to note that the Brexit vote is symptomatic of what is happening worldwide.  I would also say it is very similar to the Trump phenomenon here in the States, people are angry.  (I would also say the results are very encouraging to the Trump camp).  Next, we must wonder “who” is next?  Italy, Spain, France?  Then, the next exit is the curtain for the EU experiment as a whole.  It is only a matter of time before the next referendum (Italy in October), Brexit is only the beginning of an end where individual countries will prefer to steer their own destinies.  “Globalization” has been dealt a huge blow!
It should be noted, the vote yesterday was only a referendum and does not guarantee the Parliament will petition to leave the Eurozone.  It will be interesting to see how the Brits react if Parliament defies their wishes.  All of this will take “time” to occur, but time is not something I believe is available and will most likely be cut short by the markets short circuiting.
As for markets, Brexit is being called a six sigma “Black Swan”.  I had planned to write today that the entire system itself is the fabled Black Swan, I think we will soon see if this thought is correct.  The world will wake up Monday morning to all sorts of margin calls.  You must understand, the “carry trade” is held on very thin margin.  No matter what market you are looking at, they all moved several percentage points versus 1% or much less used to carry positions.  My point is this, many “counterparties” were outright blown up today and are dead entities unable to perform.  Yes I am sure the Fed, ECB and BOJ will provide liquidity but that will not erase the losses, it will only postpone the pronouncement of death.
  I believe it is VERY important to look at the “direction” that all markets have taken since the Brexit news.  THIS is the direction of Mother Nature versus the direction of the elite controllers.  You can call the moves “out of control” if you wish, the important thing to understand is the control of markets was temporarily lost and went in “bad” directions.  These “bad” directions are your road map as to which direction various assets will move in the upcoming re set.  I say the above with one caveat, capital flowed into U.S. Treasuries and German bunds, a reset will not be kind to the owners of debt from any issuer.
   To finish, clearly today’s unanimous winner in ALL currencies was gold.  As I wrote above, I believe the action today is your road map and a “tell” as to where we are headed.  Financially, the system blew up behind the scenes and we will soon hear “who, where and how much”.   We have gone nearly eight years with “unlimited paper” pushing, pulling and “pricing” markets in directions that supported the Alice in Wonderland world.  The knee jerk reactions you saw today will only become more violent as today was only for starters.  The only question remains, how long can they keep markets open?  The carry trade unwind can only go so far without control being totally lost.  Central banks will be mere straws in a hurricane of fear.  A complete re set of “pricing” is not far off!

  This is a public article.  If you would like to read and hear all of our work, please follow this link to subscribehttps://www.jsmineset.com/membership-account/membership-levels/

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome  bholter@hotmail.com

end

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

 
 

:

1 Chinese yuan vs USA dollar/yuan  DOWN to 6.6220 ( DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6438) / Shanghai bourse  DOWN 37.64 OR 1.30%   / HANG SANG CLOSED DOWN 609.21 OR 2.92%

2 Nikkei closed DOWN 1,286.33 OR 7.92% /USA: YEN FALLS TO 102.45

3. Europe stocks opened ALL IN THE RED  /USA dollar index DOWN to 95.78/Euro DOWN to 1.1058

3b Japan 10 year bond yield: FALLS  TO -.150%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 102.45

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  47.70  and Brent: 48.30

3f Gold UP  /Yen UP

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 andDOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.047%   German bunds BASICALLY negative yields from  10 years out

 Greece  sees its 2 year rate RISE to 10.62%/: 

3j Greek 10 year bond yield FALL to  : 8.770%   (YIELD CURVE NOW COMPLETELY FLAT)

3k Gold at $1315.00/silver $17.97(7:45 am est)   SILVER RESISTANCE AT 16.52 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 1 & 91 in  roubles/dollar) 65.56-

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

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 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 .9546 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0877 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 VOTES BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -/047%

/German 10 year rate  negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)

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 1.531% early this morning. Thirty year rate  at 2.399% /POLICY ERROR)

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

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

“It’s Scary, And I’ve Never Seen Anything Like It” – Where Markets Are The Morning After

For those of you who are just waking up, first of all, congratulations. Here is what you missed.

European, Asian stocks and S&P futures plummet, as U.K. votes to leave European Union membership. FX carry trades everywhere go haywire, with the Dollar and Yen spiking while the Cable overnight plunged to 30 year lows and at last check was trading just around 1.37, down 1,300 pips from yesterday’s highs. A modest rebound was experienced when first the Bank of England and shortly after all other central banks promised to pump virtually unlimited liquidity into the financial system. Ironically, all of this takes place a day after Fed’s stress tests showing all 33 banks exceed minimum requirements  – we may find out just how “unstressed” they are as soon as today.

For those who are pressed for time, the following quote from James Butterfill, head of research and investments at ETF Securities, summarized it best: “It’s scary, and I’ve never seen anything like it. We’re going to see outflows from basically any kind of cyclical asset. A lot of people were caught out, and many investors will lose a lot of money.”

Here are key market updates:

  • S&P 500 futures down 3.9% to 2023
  • Stoxx 600 down 7% to 322
  • MSCI Asia Pacific down 4.1% to 125
  • US 10-yr yield down 22bps to 1.53%
  • Dollar Index up 1.86% to 95.27
  • WTI Crude futures down 4.2% to $48.00
  • Brent Futures down 4.3% to $48.70
  • Gold spot up 4.2% to $1,310
  • Silver spot up 2.8% to $17.77

TOP NEWS:

  • U.K. Votes for Brexit as Cameron Resigns After Historic Rupture: Prime minister to step down as Johnson weighs next step
  • Pound Plunges to 30-Year Low as U.K. Assets Slide on Brexit: ‘There are certain days you never forget,’ says HSBC’s Bloom
  • Carney Pledges $345 Billion to Fund First Line of Brexit Defense: Markets bets on a July interest rate cut climb to 50%
  • Nationalist Parties Seize on Brexit to Demand Own EU Referendums: Le Pen, Wilders, Northern League call for vote
  • Biggest U.S. Banks Seen Weathering Severe Stress in Fed Test: Regulators release results of Dodd-Frank mandated exercise
  • Oil Tumbles After Brexit Vote as Traders Assess Lasting Impact: WTI, Brent down >6.6% as traders flee risky assets
  • Gold Sees Biggest Gain Since 2008 in Rush for Havens From Brexit: Sterling-denominated gold jumps 15%, the most ever
  • Xerox Appoints Jeff Jacobson as New Chief After Co. Split: Jacobson named as incoming CEO of document technology seller
  • Albemarle, Fortive to Join S&P 500; Emcor Named to MidCap 400: Changes to be implemented after close of trading June 30

WHAT HAPPENED IN EUROPEAN MARKETS:

European shares sinks after U.K. voted to quit the European Union. All 19 Stoxx 600 sectors fall with banks, insurance underperforming and health care, food & beverage outperforming. 90% of Stoxx 600 members decline, 10% gain. “It’s scary, and I’ve never seen anything like it,” said James Butterfill, head of research and investments at ETF Securities, said by phone from London. “We’re going to see outflows from basically any kind of cyclical asset. A lot of people were caught out, and many investors will lose a lot of money.”

As the win for the Leave campaign in the EU referendum became clear, global equities plunged with the FTSE 100 falling as low as 8%, led by sharp losses in financials with UK banks (Barclays, Lloyds, RBS) lower by around 30% which has seen the iTraxx senior financials 5yr index (CDS on banks) soar to its highest level since February. As such, the fear of contagion from this outcome has seen European bourses heavily in the red (DAX -10%, Euro Stoxx -9%), while the E-mini S&P 500 saw a 5% fall to hit limit down.

However, in recent trade, equities have pulled off worst levels as markets find relative calm amid the BoE Governor stating that the central bank is willing to provide liquidity in the form of GBP 250b1n, while David Cameron announced that he will remain as PM till October in order to combat any immediate instability. Elsewhere, Gilt yields have seen its largest drop since 2009 to yet again print fresh record lows as investors flock to safe haven assets, while Bunds staggeringly opened slightly below 169.00 before paring somewhat, back to around 166.00. Of note, in the wake of the Brexit outcome, S&P have warned that the UK could lose its AAA sovereign rating, while the likes of Goldman Sachs, JP Morgan and ING have all forecast an upcoming BoE rate cut.

EUROPEAN DATA:

  • Stoxx 600 down 7% to 322
  • FTSE 100 down 5.3% to 6003
  • DAX down 6.6% to 9579
  • German 10Yr yield down 17bps to -0.08%
  • Italian 10Yr yield up 11bps to 1.51%
  • Spanish 10Yr yield up 11bps to 1.58%
  • S&P GSCI Index down 2.7% to 370.3

EUROPEAN TOP NEWS:

  • Finance Chiefs Dismay Brexit as Bank Stocks Plunge Across Europe: Deutsche Bank CEO calls decision “negative on all sides”
  • SNB Steps Into Currency Market Amid Brexit-Induced Stress: Swiss policy makers have repeatedly threatened interventions
  • German Ifo Confidence Improved Even as Brexit Threat Loomed: Ifo business climate index rises to 108.7 from 107.8
  • Deutsche Boerse Reaffirms Plan to Buy LSE After Brexit Vote: LSE equity holders to own 45.8% of the enlarged company
  • S&P Prepares U.K. Ratings Downgrade as Britain Votes to Leave EU: S&P sees period of uncertainty that may prevail for years
  • Henkel to Buy Sun Products for $3.6 Billion in Biggest U.S. Deal: Deal gives company No. 2 position in U.S. laundry care
  • Rexel Fires CEO Provoost After Disagreement on Governance: Company veteran Patrick Berard named CEO as of July 1
  • Air France-KLM Names Janaillac CEO and Chairman as of July 4: Janaillac to become chairman and CEO from July 4
  • EDF CEO Says Strategy in U.K. Won’t Be Affected by Brexit Vote: Vote has no impact on co.’s strategy, Levy says
  • IAG Sees Brexit Volatility Reducing Profit Growth This Year: No longer sees absolute op. profit increase in FY like ’15

WHAT HAPPENED IN ASIAN MARKETS:

Asian stocks slumps, heading for the steepest drop in 10 months. All 10 sectors drop in the MSCI Asia Pacific Index with materials, consumer discretionary underperforming and utilities, information technology outperforming. Yen briefly surged past 100 as Brexit in Lead in Results. “Fear is normally easier to profit from than greed. This is what we are seeing today,” said Ang Kok Heng, Kuala Lumpur-based chief investment officer at Phillip Capital Management Bhd., which oversees $630 million in Kuala Lumpur.

BoJ Governor Kuroda said he is ready to supply sufficient liquidity and to carefully watch effects on markets.

Risk assets tumbled overnight as the UK vote to leave the EU, which saw FTSE 100 futures briefly decline below the 5800. This also saw losses of around 200 points to the E-mini S&P and crashed Asian equity markets with Nikkei 225 declining as much as 8%, with Osaka futures triggering circuit breakers. Elsewhere, Shanghai Comp and Hang Seng conformed to the global sell-off with UK dual-listed financials including HSBC, Prudential and Standard Chartered under heavy pressure in Hong Kong taking on a likely Brexit. Finally, 10yr JGBs outperformed while T-notes rose around 2.5 points as the Brexit woes spur heavy flows into safer assets which also pushed gold higher by USD 80/oz. Japanese Finance Minister Aso pledged to take measures to calm markets and added that a Brexit will not have a sudden impact on the Japanese real economy.

ASIA DATA:

  • MSCI Asia Pacific down 4.1% to 125
  • Nikkei 225 down 7.9% to 14952
  • Hang Seng down 2.9% to 20259
  • Shanghai Composite down 1.3% to 2854
  • S&P/ASX 200 down 3.2% to 5113

ASIA TOP NEWS:

  • Yen Soars Past 100 Per Dollar as U.K. Vote Spurs Rush to Safety: Currency surges 18% versus pound as Britons choose Brexit
  • Offshore Yuan Drops Most in Five Months as Brexit Victory Looms: PBOC injects most funds this week since April via operations
  • HSBC, Standard Chartered Lead Asia Bank Rout as U.K. Votes ‘Out’: Banks have warned of U.K. job cuts in case of Brexit
  • Brexit Brings Short-Lived Pain for India’s Largest IT Exporters: Cos. may benefit from increased demand in long term
  • Hong Kong’s China Tourist Malaise Deepens From Bling to Buns: Sa Sa profit plunge 54% on poorer cosmetic sales to Chinese

In FX, the aftermath of the UK vote to leave the EU has seen Cable plummeting from its highs, which managed to print a 1.5000 handle before the news starting hitting the wires from the first regions reported. The sell-off led to the key spot rate recording lows around 1.3230, but the fallout has since been tempered, with what is an impressive recovery to within 30 ticks or so of the 1.4000 mark before moving back towards 1.3700. EUR/GBP highs tipped .8300, but London has since seen the cross rate dipping under .8000, but it is all early days as yet. Gains in the JPY and CHF have been notable also, but both the BoJ and SNB will have intervened to some degree — the SNB confirming as much after EUR/CHF well into to the low 1.0600’s. USD/JPY took out 100.00 to print lows ahead of 99.00, but the recovery here —alongside some moderation in equities — has seen the 103.00 attained, but struggling to maintain a foothold here —understandable in the current climate. AUD, NZD and CAD have all lost out, but have been fighting back since —AUD in particular now only 2.5 cents off the overnight highs.

In commodities, heading into the North American crossover, WTI and Brent crude futures remain pressured on the back of the strength in the greenback, as such prices hover below USD 48 and USD 49 respectively. In terms of specific newsflow it has been somewhat muted given the focus revolving around the UK referendum. Separately, gold prices outperformed with participants flocking to safe-haven assets with the precious metal reaching highs of near USD 1360/oz in light of the EU referendum result, before paring some of the moves to head into the North American open around USD 1318/oz.

END

ASIAN AFFAIRS

i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed DOWN 37.64 POINTS OR 1.30% / /Hang Sang closed DOWN 609.21 OR 0.2.92%. The Nikkei closed DOWN 1,286.33 POINTS OR 7.92% Australia’s all ordinaires  CLOSED DOWN 3.09% Chinese yuan (ONSHORE) closed DOWN at 6.6220 /Oil FELL to 47.80 dollars per barrel for WTI and 48.82 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.6438 yuan to the dollar vs 6.5774 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

b) REPORT ON CHINA

 

A very big story!! We are now witnessing a huge increase in Chinese bankruptcies due to their zombie loans outstanding (non performing loans)

(courtesy zero hedge)

Chinese Bankruptcies Surge More Than 50% In Q1; Worse To Come

 

Two months ago, when looking at the soaring number of bond issuance cancellations and postponements as calculated by BofA, we commented that it was only a matter of time before the long overdue tide of corporate defaults, held by for so many years by the Chinese government which would do anything to delay the inevitable, was about to be unleashed.

This prediction has indeed been validated and as the FT reports overnight, Chinese bankruptcies have surged this year “as the government uses the legal system to deal with “zombie” companies and reduce industrial overcapacity as part of a broader effort to restructure the economy.” In just the first quarter of 2016, Chinese courts have accepted 1,028 bankruptcy cases, up a whopping 52.5% from a year earlier, according to the Supreme People’s Court. Just under 20,000 cases were accepted in total between 2008 and 2015.

This is surprising because while China’s legislature had approved a modern bankruptcy law in 2007 it had barely been used for years, with debt disputes often handled through backroom negotiations involving local governments.  “Bankruptcy isn’t just about creditor-borrower relations. It also touches on social issues like unemployment,” said Wang Xinxin, director of the bankruptcy research centre at Renmin University law school in Beijing. “For a long time many local courts weren’t willing to accept them, or local governments didn’t let them accept.”

However, following the dramatic collapse of global commodity prices, which as we showed last October meant that more than half of local companies could not afford to even make one coupon payment with cash from operations, Beijing had no choice but to throw in the towel. And as the FT adds, “bankruptcy courts have been recruited into China’s drive for “supply-side reform”, which centres on reduction of overcapacity in sectors such as steel, coal and cement.”

Still, even with the surge in defaults there are concerns that the bankruptcy law will allow some zombie companies to continue operating. In guidance to lower courts, the supreme court has said they should, where possible, use mergers or restructuring rather than liquidation, in order to allow a company to emerge from bankruptcy as a going concern. This month the court provided several case studies of successful bankruptcies, all of which kept companies in business.

All of this goes back to the core concern and threat facing the Politburo: mass layoffs as a result of liquidating insolvent companies, leading to millions of unemployed, low-skilled workers. It is also why despite all the rhetoric of “reform”, China has been aggressively stoking its credit bubble and pumping trillions in loans into questionable business ventures and insolvent corporations.

For some the surge in bankruptcies is not enough: “We shouldn’t promote simple slogans like ‘use more restructuring and less liquidation’. That’s not really accurate,” said Li Shuguang, professor at the China-EU School of Law at China University of Political Science and Law. I personally think liquidations should be used more. Only enterprises with real value should be saved. The most important [thing] for zombie firms is to liquidate them. Then we can find better ways to deal with laid-off workers, like retraining and re-employment.”

Needless to say, the big risk is what happens in the transition period following the mass liquidations: absent substantial demand growth from offshore, China may find itself in the same predicament as all other developing nations: a structural decline in employment as a result of a secular decline in global growth as the world approaches, if not beaches, it debt capacity.

Experts say most legal bankruptcies involve small or medium-sized enterprises where the social impact is limited. Liquidation-style bankruptcies also far outweigh restructurings in terms of absolute numbers. But courts face strong incentives to keep larger enterprises operating.

In a comparable treatment to US bankruptcy laws, Chinese bankruptcy offers greater protection to borrowers compared with dealing with creditors out of court. Without bankruptcy, a single creditor can block a proposed debt restructuring or writedown, even if most others agree. By contrast, judges have the authority to override holdouts and impose a settlement on all parties.  “Once a court accepts a bankruptcy petition, creditors’ sealing off an office or seizing collateral is immediately halted, so it allows a company to return to production,” said Mr Li.

It also allows China’s massive excess capacity glut to continue, forcing the country to exports its deflation to the rest of the world, and leading to such outcomes as 500% steel duties, currency devaluation, capital outflows, and the pile up of trillions in bad loans: all issues that were front and center for the market in late 2015 yet which, inexplicable, have been deemed resolved, if only for the time being.

end

EUROPEAN ISSUES

 

The BREXIT vote will cause European stocks to make new lows for the next few days according to JPMorgan.  Welcome to the new BREXIT world!

 

(courtesy zero hedge)

 

“We Look For European Stocks To Make New Lows Over The Next Days” – JPM Reacts To The Post-Brexit World

 

Merkel, the EU all scramble and ask for calm.  They did not get it

(courtesy zero hedge)

 

The Referen-Doom: EU, Merkel, ECB All Scramble To Calm Panic

In the aftermath of the Brexit vote, the entire concept of a European Union suddenly finds itself existentially threatened, with demands for referenda issued overnight by the Netherlands, France, Italy and moments ago Scotland. This is why all the highest European institutions have been unleashed in an attempt to quell a panic that the EU has never felt, not even during the depths of the recurring Greek insolvency crisis (as we noted last night, it would be ironic if Greece ends up the last country in a European “Union” as all of its peers depart).

Below is the joint statement released moments ago by Europe’s top unelected oligarchs, the ones that the people of UK declared independence day against, including Donald Tusk, President of the European Council, Martin Schulz, President of the European Parliament, Mark Rutte, holder of the rotating Presidency of the Council of the EU, and Jean-Claude Juncker, President of the European Commission, on the outcome of the United Kingdom referendum.

President Tusk, President Schulz and Prime Minister Rutte met this morning in Brussels upon the invitation of European Commission President Juncker. They discussed the outcome of the United Kingdom referendum and made the following joint statement:

 

“In a free and democratic process, the British people have expressed their wish to leave the European Union. We regret this decision but respect it.

 

This is an unprecedented situation but we are united in our response. We will stand strong and uphold the EU’s core values of promoting peace and the well-being of its peoples. The Union of 27 Member States will continue. The Union is the framework of our common political future. We are bound together by history, geography and common interests and will develop our cooperation on this basis. Together we will address our common challenge to generate growth, increase prosperity and ensure a safe and secure environment for our citizens. The institutions will play their full role in this endeavour.

 

We now expect the United Kingdom government to give effect to this decision of the British people as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty. We have rules to deal with this in an orderly way. Article 50 of the Treaty on European Union sets out the procedure to be followed if a Member State decides to leave the European Union. We stand ready to launch negotiations swiftly with the United Kingdom regarding the terms and conditions of its withdrawal from the European Union. Until this process of negotiations is over, the United Kingdom remains a member of the European Union, with all the rights and obligations that derive from this.  According to the Treaties which the United Kingdom has ratified, EU law continues to apply to the full to and in the United Kingdom until it is no longer a Member.

 

As agreed, the “New Settlement for the United Kingdom within the European Union”, reached at the European Council on 18-19 February 2016, will now not take effect and ceases to exist. There will be no renegotiation.

 

As regards the United Kingdom, we hope to have it as a close partner of the European Union also in the future. We expect the United Kingdom to formulate its proposals in this respect. Any agreement, which will be concluded with the United Kingdom as a third country, will have to reflect the interests of both sides and be balanced in terms of rights and obligations.”

Then there was the ECB’s Nowotny who likewise pretended that things are ok, when in reality they will never again be the same:

  • NOWOTNY: THE MARKETS WERE SURPRISED BY BREXIT
  • NOWOTNY: AT THIS POINT WE ARE AGAIN SEEING STABILIZATION
  • NOWOTNY: CAN’T COMPARE CURRENT SITUATION WITH LEHMAN
  • NOWOTNY: NEGATIVE BUT LIMITED EFFECT ON SOUTHERN EMU SOV PAPER
  • NOWOTNY: IF BANKS HAD BREXIT TROUBLE,ECB WLD PROVIDE LIQUIDITY
  • NOWOTNY: PANIC IS ABSOLUTELY NOT JUSTIFIED

Right:

 

Meanwhile, confirming that the UK move was correct and that the UK will have a full victory, Handelsblatt reported that Germany just blinked first:

  • PAPER: GERMANY TO SEEK ASSOCIATE STATUS FOR UK VIS-A-VIS EU
  • PAPER:GERMANY AGAINST AUTOMATISM ON UK ACCESS TO EU INTRNL MKT

Finally, there was the queen herself, Angela Merkel, who suddenly sees not only her kingdom but her “United Europe” legacy falling apart before her eyes.  And so a gusher of Soviet-style propaganda has been unleashed:

  • MERKEL CALLS FOR CALM, MEASURED EU RESPONSE TO BREXIT VOTE
  • MERKEL: NEED TO MAKE SURE PEOPLE UNDERSTAND BENEFITS OF EU
  • MERKEL: EU GUARANTEES PEACE AND PROSPERITY
  • MERKEL: INVITED EU TUSK, FRANCE HOLLAND, ITALY RENZI TO BERLIN

As MarketNews adds, Merkel urged a calm reaction to the Brexit vote Friday, announcing a high-level meeting Monday to prepare for the EU Council gathering the following day. Giving an ad-hoc statement to the press at the Chancellery in Berlin, Merkel said she would meet with EU Council President Donald Tusk, France’s President Francois Holland and Italy’s Prime Minister Matteo Renzi Monday in Berlin to hold talks about the Brexit issue and present the talks’ results to the EU Council, to be held next Tuesday and Wednesday in Brussels.

“We are taking note of the UK decision with great regret,” Merkel said, explaining that the consequences of the UK decision “over the next days, weeks and months” would depend on the EU’s ability to make calm and joint decisions.

Noting growing doubts about the EU across Europe, Merkel said it was important to explain the EU’s benefits to the public, saying the bloc was “our guarantor of peace and prosperity.” Merkel also announced she will lay out the German government’s next steps with respect to Brexit in a speech at the German parliament next Tuesday.

* * *

Whether, and how long, Europe will exist in its current format after last night’s historic event is unknown. One thing is known: there is one very clear victor from the perilous state Europe has suddenly found itself in.

 

END

 

Now it is Italy’s turn to launch a referendum campaign in conjunction with Northlern League and 5 Star

(courtesy zero hedge)

Italy’s Northern League To Launch EU Referendum Campaign Next

Shortly after the final Brexit result was released, first Netherlands and then France quickly warned they too would proceed with their own referenda. They are not alone: moments later the head of Italy’s Northern League Said “Now it’s our turn’ After U.K.

As Dow Jones reports, Italy’s anti-immigrant and euroskeptic Northern League will start a petition calling for a law that allows a referendum on whether the country wants to exit the European Union, its leader said on Friday. In a news conference following the announcement of the U.K.’s decision to leave the EU, Northern League’s head Matteo Salvini said that it was time to give Italians a vote on their EU membership, as the citizens of Britain have just done.

“This vote was a slap in the face for all those who say that Europe is their own business and Italians don’t have to meddle with that,” Mr. Salvini said.

The Northern League launched a campaign against the euro in 2014, but it has been since overshadowed by the anti-immigrant campaigns on which it has built up its electoral support.

Northern Leage is not alone: recall that earlier this week, the anti-establishment 5 Star Movement, emboldened by dramatic victories in Italy’s recent mayoral elections in which Virginia Raggi, a 37-year old lawyer, was elected Rome’s first female mayor by winning a stunning 67% of the vote in the second round, also revived plans for a referendum on leaving the euro.

The movement launched a campaign for a referendum on the euro in 2015 and collected more than 100,000 signatures calling for such a vote.

Even so, the campaign may be moot: the Italian constitution, however, does not allow the cancellation of international agreements through a referendum.

However, even a purely symbolic vote to exit the EU or eurozone would put pressure on the Italian government, led by Matteo Renzi. He has consistently made a pro-European stance.

It will be interesting if anti-European sentiment is as prevalent in Italy as it is in the UK – leaving the euro doesn’t seem a popular option among Italians. According to a poll conducted by pollster SWG in March, 61% of Italians support remaining in the euro area and acknowledge the benefits of being part of it.

 

END

 

Thomas Cook runs out of Euros

(courtesy zero hedge/)

 

British Money-Changer Imposes Capital Controls, Suspends Online FX Transactions

Yesterday it was physical lines as people ‘queued’ for hours to exchange their pounds sterling for anything else.

Perhaps more should have done the same and exchanged their far more valuable – yesterday – pounds sterling, than waiting until today’s historic devaluation.

Not only that, but they may not be able to do it today. As The FT reports UK-based travel group Thomas Cook has suspended its online currency purchases and imposed a £1000 limit on transactions at its high street branches due to an unforseen demand for euros, a soft form of capital controls as FX service providers run out of “harder” currencies.

Having alreay warned yesterday that…

 “There’s been a surge in customers buying euros in the last six weeks and euro sales have been consistently strong, building day by day.”

… The leading money-changer’s statement added today:

We have temporarily suspended our travel money website following unprecedented customer demand for foreign currency overnight and this morning.

 

We apologise to all customers affected.

 

Our immediate priority is to ensure that we have enough currency in store to fulfill outstanding orders.

 

We hope to be back up and running as soon as possible.

Is this the beginning of more than just “soft” capital controls?

end
The following is a huge commentary from RBC’s Charlie McEllligott. This morning as he awoke he quickly saw massive losses on equities: First from Asia (e.g. Nikkei down 8%) and then his own Europe equities (down 8 to 12%) and then he noticed huge increase in peripheral yields in Spain, Portugal and Italy.  We put two and two together and said that we had massive derivative losses underwritten by our huge banks. and this was a SIGMA SIX event (tail probability gone bad).  Today Deutsche bank along with other bankers collapsed in price!
a must read…
(courtesy Charlie McElligott/RBC/zero hedge)

“Lights Out Stories Making The Rounds On Huge Losses”

Some thoughts on markets from RBC’s Charlie McElligott

“CORRELATIONS GO TO ONE” ON BREXIT NAPALM

QUICK UPDATE:

Pockets of risk are notably higher off the initial “shock” levels seen last night (i.e. GBP trading back to 1.388 last from 1.323 low / JPY to 103.1 last from 99.0 low / FTSE from -8.7 to now “just” -5.1% / SPX at worst -120 handles to 1999, now 2032 last), as tactical market participants front-run expected liquidity injections and interventions from CB’s to either ‘dip buy’ for a trade, or sell into.

Nonetheless, the ‎psychological damage overnight is simply jarring, and the long-term implications of the first domino in a potential “unwind” of globalization / shift to populism / protectionism / nationalism (see every nationalist right party calling for referendums throughout their respective countries in the EU) plays-out against a trading world lulled to sleep by the siren-song of “free carry,” low vol and leverage.  As stated last week, when people, goods and money are unable to move freely, it’s a global growth negative, period.

COMMENTARY:

Just…wow. The “left tail” scenario has played-out, and now, we are in the midst of a real-time “Minsky Moment” in Europe.

The UK has voted to leave the EU, shocking pollsters, book-makers, statisticians and–even just a handful of hours ago–the universal “market” embrace‎ of an assumed “remain” scenario. I was part of that complacency.  On account of this “all clear” view, many market participants had spent much of this past week “grossing back up.”

The market carnage is staggering with regards to the violence seen in such a short period of time, as the stress and convexity of the move is exacerbated by the inability and unwillingness of market-makers to provide liquidity. There are few bodies capable of catching the falling knife right now, which has been the exact “unintended consequences” of post-crisis regulation that banks and brokers have warned about. Markets could SURE use that dealer balance sheet, prop desk or stat arb market-making book to mitigate such exaggerated price-action, i.e. JPY moving 450pips in about 7 seconds last night when it made absolute lows.

Moves of this magnitude are pure reads on “force outs”…that wasn’t discretionary selling / covering, as NOBODY was positioned for this.  The tide has “gone out”…and we are about to see who’s been swimming naked.

It’s “game over” for anybody out there who was short duration.  ‎CTA’s / systematic trend strategies / managed futures funds / Crude and FX carry traders–all of whom exist on leverage–here comes “Mr Margin” calling on your risk longs.  Obviously the “long cyclical beta” equities trade, which has been the basis of the recovery off the February lows, is about to come unglued when the US opens.  Bank options dealer desks who by definition are “short volatility,” as well as many clients who’ve made a living shorting vol in the post-GFC era as well–there are going to be some “lights out” stories making the rounds on huge losses…very scary stuff. 

LARGEST OVERNIGHT MOVERS ON Z-SCORE BASIS: EU-centric obviously, but the drag-down implications of the Dollar move higher (see: crude and EMFX) are very troubling.

 

And don’t sleep on EU credit, where both SubFin and Xover are seeing 3.5+SD moves (SubFin just behind Lehman for all-time largest % one day move).

 

WHAT IS MOST “AT RISK”?: EU periphery equities (BANKS BANKS BANKS SX7E now -16.3% on day and 32.7% YTD, along w/ consumer discretionary), Eu peripheral Bonds (BTPs and Bonos), EU FX (Sterling resets to a new level in light of current acct deficit, Euro resets on existential risk uncertainty freezing the entire union economy), EMFX breakdown on USD move and leveraged deployed in space, and flight to safety in Yen and Franc crushing Japanese and Swiss exporters and thus local stock markets.

-WHERE DOES THE $ GO?: Gold and all things US—UST’s, USD, even US equities (not immediately of course, but eventually on relative basis) seeing enormous safe haven bid.  “Low vol” / “anti-beta” market neutral / defensive sectors like utes, staples, telco and sleepy healthcare will obviously outperform against aforementioned cyclicals, beta, consumer discretionary and financials.

-WHAT MIGHT BE DIP-BUYABLE A LITTLE CLOSER TO THE “HOT ZONE”?: There will be support “at a price” on the ability for ECB to intervene in EU credit and periphery sovereigns (although CDS will u/p cash bonds)…but that is real “Kevlar gloves” trading with tight stops.

-RETURN OF THE DEFLATION TRADE: Dollar strength should be absolutely crushing for crude / commods / EM, as the deflation trade spectre rears its head again.  Difficult to touch any of this stuff for a long time as I anticipate persistent weakness in Euro continuing to help strengthen the Dollar.

So is there any silver-lining here? Most likely, all the “bad news” is out there for now as we enter the haze of the article 50 / Lisbon Treaty “trigger” (3 month lag while PM Cameron transitions the government) and an ambiguous negotiated withdrawal that follows.

Now, we watch for “market stabilizing forces”–central banks, FX and pension rebalancers, corporates hedgers etc–to “do work.” IT’S TIME TO BE AWARE OF UPSIDE “GAP RISK” NOW AS THESE PLAYERS ARE FORCED INTO ACTION. Even more obvious are the conditioned “dip buyers” who are already front-running the above inevitable action.

WHAT ARE NEXT MOVES / THOUGHTS / QUESTIONS?:

-BoE rate cut just a matter of time…

-Coordinated liquidity‎ CB swap lines…

-Fed inability to act preemptively with a cut of their own as it’s not a local issue.  QE4 not relevant as rates have only plummeted lower. Tough spot for Yellen.

-What’s the PBoC to do?‎  Yuan fixes at weakest level against the Dollar since Jan ’11.  Watch this. 

-Govts intervening in FX mkts‎ real-time, esp the Swiss National Bank, and EM’s (south Korea, India and likely Singapore already), with risk of BoJ soon…

Welcome to your summer.

GLOBAL ISSUES

Central bankers around the globe scramble to defend markets as dollars flee all markets. Derivative losses are enormous

(courtesy zero hedge)

 

Central Bankers Around The Globle Scramble To Defend Markets: BOE Pledges $345BN; ECB, Others Promise Liquidity

There was a reason why we warned readers two days ago that “The World’s Central Bankers Are Gathering At The BIS’ Basel Tower Ahead Of The Brexit Result“: simply enough, it was to facilitate an immediate response when a worst-cased Brexit vote hit. And that is precisely what has happened today in the aftermath of the historic British decision to exit the EU.

It started, as one would expect, with Mark Carney who said the Bank of England is ready to pump billions of pounds into the financial system as he stands at the front line of Britain’s defense against a Brexit-provoked market crisis. The BOE governor declared that the central bank can provide an extra 250 billion pounds ($345 billion) through its existing facilities. It also has further measures if needed to deal with what he described as a “period of uncertainty and adjustment” after Britons voted to end their 43-year membership of the world’s largest single market.

The pound plunged to a three-decade low, British and global stocks tumbled and European bond spreads widened as the Brexit vote unfolded on Friday. Investor bets on a July interest-rate cut rose and Standard & Poor’s said the U.K. will lose its top credit rating.

Some market and economic volatility can be expected as this process unfolds,” Carney said in a televised statement in London after the referendum result. His comments followed Prime Minister David Cameron’s announcement that he will step down this year, which will inject political uncertainty into an already volatile period. His full announcement is below and his statement can be found here:

 

More from the central bank governor who is now scrambling to undo all the scaremongering he had unleashed to prevent precisely this outcome:

But we are well prepared for this.  The Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have been in close contact, including through the night and this morning. The Bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward.

These adjustments will be supported by a resilient UK financial system – one that the Bank of England has consistently strengthened over the last seven years. The capital requirements of our largest banks are now ten times higher than before the crisis.

The Bank of England has stress tested them against scenarios more severe than the country currently faces. As a result of these actions, UK banks have raised over £130bn of capital, and now have more than £600bn of high quality liquid assets.

* * *

In the coming weeks, the Bank will assess economic conditions and will consider any additional policy responses.

* * *

A few months ago, the Bank judged that the risks around the referendum were the most significant, near-term domestic risks to financial stability.

To mitigate them, the Bank of England has put in place extensive contingency plans.

These begin with ensuring that the core of our financial system is well-capitalised, liquid and strong. This resilience is backed up by the Bank of England’s liquidity facilities in sterling and foreign currencies.

 

All these resources will support orderly market functioning in the face of any short-term volatility.  The Bank will continue to consult and cooperate with all relevant domestic and international authorities to ensure that the UK financial system can absorb any stresses and can concentrate on serving the real economy.

 

That economy will adjust to new trading relationships that will be put in place over time.  It is these public and private decisions that will determine the UK’s long-term economic prospects.

 

The best contribution of the Bank of England to this process is to continue to pursue relentlessly our responsibilities for monetary and financial stability. These are unchanged.

We have taken all the necessary steps to prepare for today’s events. In the future we will not hesitate to take any additional measures required to meet our responsibilities as the United Kingdom moves forward.

As Bloomberg adds, The BOE has been preparing for more than a year to deal with this outcome and Carney will now have to rely on that crisis playbook to stem panic in financial markets. With the result announced on a normal trading day, the immediate threats of Brexit could include investors dumping U.K. assets and a drying up of bank funding.

The BOE “has undertaken extensive contingency planning and is working closely with HM Treasury, other domestic authorities and overseas central banks,” it said in a statement early Friday. “The Bank of England will take all necessary steps to meet its responsibilities for monetary and financial stability.”

Bank of Japan Governor Haruhiko Kuroda said on Friday that central banks will do their utmost to provide liquidity. Central banks around the world have been on high alert, and the chiefs of the Fed, BOJ, the Bank of Canada and the Swiss National Bank cited the referendum as being potentially disruptive.

As well as intensive supervision to ensure banks had enough cash ahead of the vote, BOE plans include additional funding operations and activation of swap lines with other central banks to help firms access overseas currencies. It also has a number of other “stability measures” available, though policy makers haven’t provided details in advance.

What happens next depends on how markets play out . At the time of the Scottish independence referendum in 2014 – where a potential splintering of the U.K. was averted – the BOE’s Financial Policy Committee emphasized readiness to “take steps rapidly” if needed.

So far, after both stocks and FX plummeted, there has been a modest rebound from historic lows, which saw the British pound drop to 31 year lows as risk assets already start to anticipate concrete action. The BOE has already added extra auctions this month to make funds available to lenders. It could cut its key interest rate to as low as zero from 0.5 percent, perhaps immediately, analysts at ING Bank NV said in a note to clients. Traders are now pricing in a more than 50 percent chance that the BOE will cut borrowing costs by its July meeting.

Beyond the immediate market ructions, there are longer-term policy issues. While Carney’s view was that the next BOE interest-rate move is “more likely to be up than down,” that was conditioned on a “Remain” decision. Recent signs have pointed to an economic slowdown, and the possible consequences of Brexit may include a spike in inflation, a rise in unemployment and even a recession. The BOE potentially faces what Carney has described as a “challenging trade off” between supporting growth and employment and stabilizing inflation.

The central bank has cited the U.K.’s record current-account deficit as a potential vulnerability, saying “an abrupt decline in capital inflows could pose a major financing difficulty.” Data in March showed the difference between money coming into the U.K. and money sent out widened to 32.7 billion pounds ($43.3 billion) in the fourth quarter. That equates to 7 percent of GDP, the most since records began in 1955.

* * *

It wasn’t just Carney.  Central banks across the world shifted into crisis-management mode, as the U.K.’s vote to leave the European Union tipped markets into turmoil and cast a pall over the already-weak outlook for global growth.

Officials in London, Frankfurt and Zurich are having to take the baton in the efforts to control the turmoil from Asian central banks, where the Bank of Japan reiterated its readiness earlier on Friday to intervene to hold down the yen, as investors sought refuge from plunging asset prices in Europe. Beyond the initial gyrations, central banks will face questions over how they can support growth and hit inflation targets at a time when policy instruments are already stretched.

Bank of Japan Governor Haruhiko Kuroda and Japan’s Finance Minister Taro Aso, whose country currently heads the Group of Seven, highlighted that central banks of six major developed nations have currency-swap lines at the ready to provide liquidity. Those lines, among the Japanese, U.S., euro-region, U.K., Swiss and Canadian central banks, were set up during the global financial crisis and made permanent in 2013. G-7 officials will speak by phone some time after midday European time, according to two people familiar with the matter, who declined to be identified because the talks are private.

The swaps will probably be activated, at least in London, Krishna Guha, the vice chairman of Evercore ISI in Washington who previously worked at the Federal Reserve Bank of New York, wrote in a note. “While there will be a G-7 statement and possibility of coordinated international intervention if currency markets become dysfunctional, we think the bar for such joint intervention is high and suspect that we may get unilateral action.”

South Korea and India were among those reported to have intervened in an effort to smooth trading in their currencies, while analysts said Denmark probably did the same and those including Singapore could step in. Kenya’s central bank said it was ready to temper market volatility, while counterparts including Thailand said they were monitoring the situation in their locations.

Eight years after the start of the global credit crisis, the post-Brexit turmoil seemed set to unleash a further wave of monetary easing, potentially including in the U.K. itself. Economists in research notes Friday highlighted that the People’s Bank of China could act, either through intervention to prop up its currency or potentially with a cut in the required reserve ratio for its commercial banks.

The Bank of Japan was already forecast to step up monetary easing at its policy meeting next month, with an historic surge in the yen serving to underscore that call. Aso, the finance chief, told reporters that stability in the foreign-exchange market is very important and that markets have been extremely jittery, with rough moves. He highlighted Japan’s concern about the impact of the Brexit vote on the global economy and said “we will respond properly if needed.”

Then, moments ago, the ECB issued a widely anticipated statement as well. This is what it said in the tersely worded and vague press release:

ECB is closely monitoring financial markets

 

  • European Central Bank is closely monitoring financial markets
  • ECB continues to fulfil its responsibilities to ensure price stability and financial stability in the euro area

 

Following the outcome of the UK referendum, the European Central Bank (ECB) is closely monitoring financial markets and is in close contact with other central banks.

 

The ECB stands ready to provide additional liquidity, if needed, in euro and foreign currencies.

 

The ECB has prepared for this contingency in close contact with the banks that it supervises and considers that the euro area banking system is resilient in terms of capital and liquidity.

 

The ECB will continue to fulfil its responsibilities to ensure price stability and financial stability in the euro area.

But the main question everyone will want answered is what the Fed will do: a Fed who rate hiking cycle is now officially dead, and the question is when the next rate cut, or outright QE will take place.  As Bloomberg notes, for the Federal Reserve, the unsettled markets justified its decision to hold off on raising interest rates this month. U.S. stock-index futures were among those tumbling Friday, and the dollar climbed against all major currencies save the yen. U.S. Treasuries jumped.

“The Fed will want to see the impact from the U.K. vote before considering resuming rate rises so a July move looks very unlikely now,” a Mansoor Mohi-uddin, a Singapore-based strategist at Royal Bank of Scotland Group Plc. “The dollar, however, is likely to keep gaining across the board as foreign central banks consider rate cuts or FX intervention.”

We expect Yellen to make a statement shortly after, or perhaps before, the market open to do the one thing central banks do so well… perhaps the only thing: stabilize markets.

 

end

 

The G7  and the IMF join central bankers to try to calm markets to no avail

(courtesy zero hedge)

 

“Today Is The Appetizer For Monday”

Early this morning we laid out the thoughts of RCB’s Charlie McElligott on today’s dramatic market action, which discussed not the blow up of “fat tail” quant stategies (something we touched upon later and which is likely to unleash even more quant-driven selling next week) and the “forced out” liquidations across the curve coupled with a rush into safety, but also the biggest question of all for today’s trades – which macro funds are quietly blowing up?  Now, we follow it up with a second piece by the RBC trader, one which those worried about being caught long risk over the weekend, are urged to read.

* * *

TODAY IS THE APPETIZER FOR MONDAY

The early macro trade has been focused on two things:  1) the outstanding performance of credit early (even before the stock rally as HY, IG and Converts all saw size “offers wanted” around Street from real $ and credit HFs) and 2) monetization of downside hedges from select macro funds in stocks and GBP (and then seeing those same accts turn and buy upside calls) as the driver of this phenomenal 60-plus handle rally in Spooz off the lows / pairing-back of half the collective loss in liquid EU equities indices / 500 pip recovery in GBP off lows.   Same with VIX as a derivative of that too, where profit-takers in their upside vol bets have made the VIX a one-way trade lower today (or V2X which is EU’s version of VIX and was +32% at one point today….now just +6%).  Similarly with regards to “monetization of winners,” USTs options are seeing ‘like’ flows—extremely profitable liquidation of TY calls, contributing the the move higher in UST 10Y yields +17bps off the lows).

There are some who are pounding-table for another leg-down in risk, but now that we’ve just cleared the first hour, I’m seeing INCREASED client activity (after almost consensual “avoiding the noise of the cash open” feedback earlier), and it’s significantly “better to buy.”  We’re now running at 280% of the 20adv (notional) on the US cash desk, and sit at 64.2% notionally better to buy.  By the way, the longer we go on without seeing a “rollover” in Spooz, you’ll see further capitulation from overnight futures shorts who are already way upside-down.

I do feel that Monday is where we’re going to see a truer-look at “where the bodies are buried” and a more accurate “price discovery” process than what we’re seeing today (as we’re washing out all the delta one flows which are dwarfing client trading)…lots of discipline being displayed thus far, with low turnovers and folks not chasing.

  • FTSE (UKX, benchmark equities index) is an absolute CHAMP right, trading -8.7% within the first 10 minutes of the open before clawing-back to all but -1.9% at ‘highs.’  Wrap your head around this: week-to-date, UKX is up over 2.8%!  What’s the driver of today’s massive rally?  People are getting their arms around the impact of this extraordinarily weak Sterling as a backdoor stimulus for exporters (ironic the power of what a departure from the EU can do vs what x # of kagillions of QE purchases couldn’t get done) and the inevitable rate cut from the BoE.
  • What I have to continue keeping one eyeball on is SX7E (EU banks index); the thing cannot get off mat.  And if that can’t get off the mat, peripheries (and their sovereign debt) won’t either, as we re-enter the EU-crisis-era “Doom Loop” where widening sovereign spreads drag down the banks who are stuffed to the gills with them….vicious cycle, what else is new.  FWIW, as I write and we’ve had this massive bounce in equities, Italian stocks (FTSEMIB) are back at their lows. This will likely be the next “hot zone” as we begin playing EU existential dominos (Spanish elections Sunday too).
  • My model Equity L/S portfolio is -285bps today.  That is NOT cool.  Elsewhere, from a thematic or factor perspective, we see the implications we spoke about earlier of the RAGINGLY STRONGER DOLLAR smashing the reflation / cyclical beta trade (value, energy, beta all struggling, while momentum mkt neutral works with defensive longs + and fins / biotech / energy -):

 

NOT A GOOD LOOK FOR EU BANKS / ITALIAN EQUITIES: No bounce.


 

And Nomura warns the same:  do not underestimate the global contagion from a BREXIT:

(courtesy Nomura/zero hedge)

Nomura Warns “Do Not Underestimate The Global Contagion” From Brexit

end

OIL ISSUES

After three weeks of increases, finally we see a decline of 7 rigs this week
(courtesy zero hedge)

US Oil Rigs Decline Most In Six Weeks

After 3 straight weeks of rig count increases, US oil rigs declined 7 to 330 this week – the biggest drop in 6 weeks – sparking a very modest rise in WTI Crude.

Biggest decline in oil rigs in six weeks…

 

And oil jumped a smidge…

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

Euro/USA   1.1058 DOWN .02699 ( REACTING TO BREXIT)

USA/JAPAN YEN 102.45  DOWN 2.46 (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 1.3711 DOWN .0833 ( BREXIT)

USA/CAN 1.3051 UP .0236

Early THIS FRIDAY morning in Europe, the Euro FELL by 270 basis points, trading now JUST above the important 1.08 level FALLING to 1.1058; 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 37.64 POINTS OR 1.30%   / Hang Sang CLOSED DOWN 609.21 POINTS  OR 2.92%   AUSTRALIA IS LOWER BY 3.09%/ EUROPEAN BOURSES ARE ALL IN THE RED  as they start their morning/

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

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

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

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

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

The NIKKEI: this THURSDAY morning: closed DOWN 1,286.33 POINTS OR 7.92% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 609.21 POINTS OR 2.92% . ,Shanghai CLOSED DOWN 37.64POINTS OR 1.30% / Australia BOURSE IN THE RED: (RESOURCES UP)/Nikkei (Japan) CLOSED  IN THE RED/India’s Sensex IN THE RED

Gold very early morning trading: $1317.60

silver:$17.92

Early FRIDAY morning USA 10 year bond yield: 1.531% !!! DOWN 22 in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.3999 DOWN 15 in basis points from TUESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early THURSDAY morning: 93.78 DOWN 257 CENTS from WEDNESDAY’s close.

This ends early morning numbers FRIDAY MORNING

END

And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  3.36% UP 27 in basis points from THURSDAY

JAPANESE BOND YIELD: -0.150% UP 1  in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD:1.63%  UP 16 IN basis points from THURSDAY

ITALIAN 10 YR BOND YIELD: 1.56  UP 16 IN basis points from THURSDAY

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

GERMAN 10 YR BOND YIELD: -.047% DOWN 11 FULL  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

 

Euro/USA 1.1138 UP .01833 (Euro =DOWN 188 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 102.18 DOWN 2.750 (Yen UP 275 basis points )

Great Britain/USA 1.3698 DOWN.0848 ( Pound DOWN 848 basis points/BREXIT DECISION AFFIRMATIVE

USA/Canada 1.2941- UP 0.0125 (Canadian dollar DOWN 125 basis points  AS OIL FELL  (WTI AT $4763).

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 188 basis points to trade at 1.1138

The Yen ROSE to 102.18 for a GAIN of 275 basis points as NIRP is STILL a big failure for the Japanese central bank/

The POUND was DOWN 848 basis points, trading at 1.3698

The Canadian dollar FELL by 125 basis points to 1.2941, WITH WTI OIL AT:  $47.63

The USA/Yuan closed at 6.615/

the 10 yr Japanese bond yield closed at -.150% DOWN 1  IN BASIS  points in yield/

Your closing 10 yr USA bond yield:DOWN 18 IN basis points from THURSDAY at 1.571% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.417 DOWN 14 in basis points on the day ( HUGE POLICY ERROR)

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

Your closing USA dollar index, 95.20 UP 167 CENTS  ON THE DAY/4 PM

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

London:  CLOSED DOWN 199.41 OR 3.15%
German Dax :CLOSED DOWN 699.87 OR  6.82%
Paris Cac  CLOSED DOWN 359.17  OR 8.04%
Spain IBEX CLOSED DOWN 1097.60 OR 12.35%
Italian MIB: CLOSED DOWN 2,242.36 OR 12.48%

The Dow was DOWN 610.32  points or 3.39%

NASDAQ DOWN 202.06 points or 4.12%
WTI Oil price; 47.60 at 4:30 pm;

Brent Oil: 48.38

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  65.13 (ROUBLE DOWN 1 & 47/100 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT ROSE AND WTI ROSE

TODAY THE GERMAN YIELD FALLS TO -.047%  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:47.57

BRENT: 48.46

USA 10 YR BOND YIELD: 1.599% 

USA DOLLAR INDEX: 95.54 up 233 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3659 down .0886 or 886 basis pts.

German 10 yr bond yield at 5 pm: -.047%

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

Brexistential Bloodbath – Dow Crashes 600 Points As Vol Explodes

Overheard in Britain today…

Well they did it… and no one expected it…

  • UK Stocks -3.14% worst since Jan 2016
  • US Stocks -3% worst since Aug 2015 (biggest opening gap down since 1987)
  • VIX +6pts biggest daly rise since Aug 2015 crash
  • Japan Stocks -7.9% worst since 2011 (Tsunami)
  • Spain Stocks -12.5% worst since 1987
  • Italy Stocks -12% worst since 1997
  • EU Banks -14.5% worst ever
  • US Banks -4.75% worst since Nov 2011
  • US 30Y Yield -14bps biggest drop since 2011
  • US 2Y Yield -14bps biggest drop since 2009
  • German 10Y Yield -14bps biggest drop since 2011
  • GBPUSD -11% biggest drop ever
  • USDJPY -4% biggest drop since 1998
  • EURUSD -2% biggest drop since Oct 2015
  • Gold +5% biggest day since Lehman 2008
  • Crude -4.4% most since Jan 2016

But apart from that everything is awesome.

What it looked like when Brexit news hit gold and currencies (h/t @NanexLLC)

 

The broad EU banking system bore the brunt of it…

 

and peripheral Europe was a bloodbath…

 

As Cable saw its biggest intraday swing ever…

 

Across asset classes, here is how the day went…

 

On the day, the early dead cat bounce died…

  • *DOW AVERAGE PLUNGES 610 POINTS AT 4 P.M., MOST SINCE AUGUST
  • *NASDAQ COMPOSITE TUMBLES 4.1% IN BIGGEST ROUT SINCE 2011

 

Dow dropped 850 from pre-Brexit highs…

 

Today’s S&P drop was just shy of the collapse on Aug 24th last year…

 

Financials were a yuuge loser, catching down to the yield curve… worse drop that Aug crash and broke all major technical support…

 

Since the Jo Cox death lows, stocks are now red…

 

All major US equity indices are now red year-to-date…

 

Since The Fed raised rates, Gold is up 23%, Bonds up 12%, and Dow down 1.7%…

 

VIX exploded (but we note that XIV – inverse VIX ETF – dropped almost 30%, the biggest move ever and 7 standard deviation shift)

 

It was one of the Top 5 moves in VIX ever:

And the Final Print as of 4:15pm puts today as the 5th largest move in history.

 

With S&P losing 2,100 as VIX topped 24…

 

On the day, VIX surged after the cash close, dragging futures even lower…

 

So next we turn to FX markets…

Cable fell to 31year lows… Today’s drop was a 16 standard deviation crash

 

The USDollar Index rose 1.3% on the week (best in 4 months), driven by major spike today, but the GBP and JPY moves were colossal…

 

And on the day – GBP and JPY were the big movers…

 

Treasury yields dropped drastically today, puking before the US open but bounced higher to leave 30Y yields unch on the week…

 

Commodities flipped overnight with crude ending the week the biggest loser and PMs best…

 

On the day, gold unusually outperformed silver…

 

Gold and Silver soared…

AND JUST REMEMBER – CHINA WAS CLOSED BEFORE THIS BLOODBATH STARTED…

Charts: Bloomberg

Bonus Clip: Risk just went to 11…

Overheard in Britain today…

 

END

 

Trading from NY early today;

 

Dow Opens Down 500 Points To “Jo Cox” Lows – Largest Gap-Down Since 1986

The bounce’ gap from last Friday has been filled…

 

… Bringing us to the largest gap-down in the S&P since 1986:

 

end

 

Durable goods orders crater in May down 2.2% and it is the 17th consecutive month for durable goods declines

(courtesy zero hedge)

Durable Goods Orders Crater In May – Longest Non-Recessionary Slump In American History

Durable Goods Orders cratered 2.2% in May, drastically below -0.5% expectations – the worst since Feb. The entire data series disappointed with unexpected declines in Durables Ex-Transports and non-defense orders and shipments. However this is now the 17th month in a row of YoY Core Durable Goods declines, something that has never happened without a US economic recession being present.

 

 

Time to hike rates Mrs. Chairwoman.

 

Charts: Bloomberg

end

 

Two quant specialists warn of huge selling pressure over the next 3 days:

(courtesy zero hedge)

 

Derivative Strategist Warns Of $150 Billion In Quant Selling Over The Next Three Days

When it comes to forecasts about upcoming major quant trades, few have been as prominent or as accurate as JPM’s Marko Kolanovic, although to be fair, after having predicting up to $1 trillion in expiring S&P options two weeks ago, when he said that the “gamma imbalance turned towards puts yesterday ($9bn per 1% currently), and this will likely push realized volatility higher near term” and… nothing happened. While that does not mean that JPM’s “quant guru” has lost his magic touch (yet), it has opened up the financial playing field for forecasting challengers to emerge. Challengers such as UBS derivatives strategist Rebecca Cheong, who picked up Kolanovic’ baton, and according to whom selling of US stocks in the aftermath of Brexit is just getting started for quantitative traders who make buy or sell decisions based on price trends.

According to Cheong, such sales could total as much as $150 billion should equity volatility persist in the S&P 500 Index for the next week. “They’ll be buying volatility and selling the S&P,” said Cheong. “On days like today, when the VIX goes up, they have to buy.” And judging by the early attempt to slam VIX down only to see it ramp higher again during the day, a rising VIX is almost assured especially as now the “exit” bug in Europe has awoken another other nations such as France, the Netherlands and Italy are also demanding independence referendums.

As Bloomberg adds, “strategies designed to mitigate risk will actually add to downward pressure in the S&P 500 over the next week as computerized selling ramps up to keep pace with falling prices. It reminds Cheong of the rapid stock selling that roiled markets in August, when the S&P 500 fell 11 percent to a 10-month low while facing similar behavior from algorithmic traders.”

“The bigger the down move today, the more they have to sell, which would basically create a vicious cycle,” Cheong, head of Americas equity derivatives strategy at UBS, said in a phone interview. “We’ll see front-loaded selling in the range of $100 billion to $150 billion over the next two to three days. It could be very similar to August in terms of model-based selling.”

Cheong went so far as to quantify how much the seeling could be: rebalancing of risk control funds could result in up to $98 billion in S&P 500 selling should the index see price swings of about 3.5 percent or more over the next several days. Risk parity instruments may stir up as much as $30 billion in selling given similar volatility, she said. The number may end up being far more if Bridgewater, which as we exclusively reported yesterday was down 6% through last Friday, is forced to rebalance in order to once again get neutral. This would involve the selling of far more equities.

Additional downward price momentum will be created as owners of leveraged exchange-traded funds linked to the CBOE Volatility Index buy more shares as part of their own rebalancing process, according to UBS.

In short, the actionable information here is that i) a new “Kolanovic” may have emerged, one we should pay attention to and ii) if Cheong is right, the sharp market selloff from last August is just a few days away. Which reminds us: the August 24 plunge was on a Monday (also known as Black Monday 2.0) and took place after Chinese devaluation concerns the previous Friday sent the S&P sharply lower… just like today.

So is today’s Black Friday about to be followed by another Black, or pick any other color, Monday once more? If the UBS analyst is correct, buying a few puts here may not be such a bad idea.

end

It was quite a day

I will see you Monday and prepare for more fireworks

Harvey.

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3 comments

  1. THANK YOU for the post, long time follower !!

    Like

  2. Thanks Harvey…soon you will be on CNN…..short sqeeze Monday in Gold….Next is Fed rate cut and QE..otherwise USD rips apart world economies…

    Like

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