July 13/A massive “paper” deposit of silver into SLV/A huge 15.98 tonnes of paper withdrawal in gold/gold and silver rise/open interest in silver is causing headaches to our bankers/Huge conflict brewing in the South China Sea/Is helicopter money coming to the USA?

Gold:1342.10 UP $8.30

Silver 20.37  UP 23 cents

In the access market 5:15 pm


Gold: 1343.20

Silver: 20.36


And now for the July contract month

For the July gold contract month,  we had a monstrous  612 notices served upon for 61,200 ounces.  The total number of notices filed so far for delivery:  4,677 for 467,700 oz or 14.547 tonnes

In silver we had 57 notices served upon for 285,000 oz.  The total number of notices filed so far this month for delivery:  1383 for 6,915,000 oz

Yesterday I stated the following:

“The crooks will now do anything to orchestrate a sell off in our precious metals.  They are very concerned about silver as they lean on gold hoping to generate a waterfall in price.  The bankers are massively short comex paper and need lower prices so as to cover and ameliorate those losses.”

Everyday that statement seems to be true.  Central bankers do not have any above ground supplies of silver like they do with respect to gold.  This is their Achilles heal and it will bring them down!



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 301.41 tonnes for a loss of 1 1/2 tonnes over that period


In silver, the total open interest ROSE BY 1471 contracts UP to 214,617, AND STILL CLOSE TO AN  ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH FELL BY 14 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.074 BILLION TO BE EXACT or 154% of annual global silver production (ex Russia &ex China).

In silver we had 57 notices served upon for 285,000 oz.

In gold, the total comex gold FELL BY A HUMONGOUS 24,756 contracts as gold’s FALL in price YESTERDAY to the tune of $20.90. did its job. The total gold OI stands at 633,020 contracts.  The bankers are to be congratulated for doing another fine criminal job in fleecing unsuspecting longs.


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


Surprisingly, we had a huge change in gold inventory./

a massive “paper withdrawal” of 15.98 tonnes.

the GLD is a massive fraud and a massive farce on investors!

Total gold inventory rest tonight at: 965.22 tonnes


Surprisingly we had a huge addition, a deposit of 5.187 million oz into the SILVER INVENTORY TO THE SLV (it was a paper addition)

Inventory rests at 348.580 million oz.

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

1. Today, we had the open interest in silver ROSE by 1471 contracts UP to 214,617 despite the fact that the price of silver FELL BY 14 cents with YESTERDAY’S trading. The gold open interest fell by 24,756 contracts down to 633,020 as  the price of gold fell by $20.90  YESTERDAY. the crooks got their way in gold but not silver!

(report Harvey).


2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge


i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 11.03 POINTS OR 0.37%/ /Hang Sang closed UP 97.63 OR 0.46%. The Nikkei closed UP 135.78 POINTS OR 0.84% Australia’s all ordinaires  CLOSED UP 0.68% Chinese yuan (ONSHORE) closed UP at 6.6908 /Oil FELL to 46.16 dollars per barrel for WTI and 47.66 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.6951 yuan to the dollar vs 6.6908 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS QUITE A BIT AS 




this does not look good;  Taiwan deploys a frigate in the South China Sea  upon which China warns of an “Air Defense Zone”

( zero hedge)


i)Trouble ahead as property funds in England start selling to match redemptions. The problem of course is that everyone is selling which will force down values

( zero hedge)


ii)In a surprise selection, Boris Johnson, leader of the Brexit is now appointed British foreign secretary.  The pound immediately tumbled!

(courtesy zero hedge)
iii) Will the Bank of England cut its central bank rate tomorrow?( zero hedge)


 migrants (Islamic)

French Intel Chief Patrick Calvar warns that the increase in frequency of sexual assaults caused by Islamic migrants will bring on a civil war :

(courtesy zero hedge/)



Canadian dollar rises as the Bank of Canada does not lower rates.  However it cut 2016 and 2017 GDP forecasts as it blames BREXIT, wildfires and weak consumption:
( zero hedge)


i)Now we witness a huge buildup of distillates as production also spikes. OIl extends its losses:

( zero hedge)

ii) Gartman covers his oil short and then oil retreats more

(zero hedge)

iii)Oh OH! we have been pointing this out to you on several occasions.  The crack spread on oil has now reached rock bottom of 13.00 dollars a huge drop from two weeks ago’s 28 dollar crack spread.  The higher spread has been keeping refiners busy and profitable.  A low crack spread means huge inventories exist for gasoline and other distillates.  This means that refiners must close down and oil must come down in price

( zero hedge)


i)Well that about does it for Venezuela’s car industry;  They sold only 243 cars in June 2016. In 2006-2007 they were averaging over 200,000 cars per month

( zero hedge)

ii)It gets from bad to worse for Venezuela. Now Maduro puts the Military in charge of food.

What this total moron did was sacrifice his people to save the creditors?  And lose all of its gold? What a clown!

(courtesy zero hedge)


i)Venezuela just lost  about 23 tonnes of gold ($1 billion dollars worth ) to Citibank who basically store the gold away from this brain dead ruler:

( zero hedge)

ii)Who put these clowns to head their mining operations? They hedge another 50 tonnes in the quarter!

( Reuters/GATA/Jan Harvey)

iii)Please read the following:

technical analysis is a fraud as central banks are buying everything.  You discern nothing from charts

( Chris Powell/GATA)

iv)They nail the little guy:  what about the big fish (our big HFT traders) that are doing the same thing!

(courtesy Bloomberg)


i)A must read to those who follow the USA earnings scene.  In essence the S and P earnings are falling and is evidenced by the lower taxes collected.

( zero hedge)


ii)Gundlach does not like what he sees.  He is betting on the short side even though central banks are buying equities:

( zero hedge)

iii)And you thought that helicopter money is not coming to the USA! Guess again:

Who put these clowns in power!!

( zero hedge)


iv)A must view interview:  Greg Hunter with my favourite guy: Rob Kirby

( Rob Kirby/USA Watchdog)

Let us head over to the comex:

The total gold comex open interest FELL TO AN OI level of 633,020 for a GIGANTIC LOSS of 24,756 contracts AS  THE PRICE OF GOLD  FELL BY $20.90 with respect to YESTERDAY’S TRADING. We are now in the non active month of July. Somebody big is continually standing for the gold metal as July is generally a poor delivery month. The open interest for the front July contract stands at 1034 for a LOSS of 156 contracts. We had 0 notices filed on yesterday, so we LOST 156 contract or an additional 15,600 oz that will not stand for delivery in this non active month of July. We  are again witnessing the same scenario as in May and June whereby the front delivery month increases in OI standing for metal or a slight contraction.  The next big active contract month is August and here the OI fell by  29,997 contracts down to 372,992  as this month starts its wind down until first day notice for the August contract, Friday,July 29/2016: less than 3 weeks away.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was  GOOD at 223,756. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was very good at 294,422 contracts.The comex is not in backwardation.
Today, we had 612 notices filed for 61200 oz in gold
And now for the wild silver comex results. Total silver OI ROSE by 1,471 contracts from 213,8146 UP TO 214,617.  We are still close to the new all time record high for silver open interest set on June 24. The front active delivery month is July and here the OI fell BY 142 contracts down to 1139. We had 216 notices served on YESTERDAY so we gained 74 contracts or 370,000 additional silver ounces that will stand for delivery.The next non active month of August saw it’s OI RISE by 70 contracts UP to 546. The next big active month is September and here the OI ROSE by 1051 contracts UP to 155,998.   The volume on the comex today (just comex) came in at 69,315 which is HUGE. The confirmed volume yesterday (comex + globex) was HUGE at 89,418. Silver is not in backwardation. London is in backwardation for several months.
We had 57 notices filed for 285,000 oz. in silver JULY contract month
:INITIAL standings for JULY
July 13.
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
 105,290.22 oz
Deposits to the Dealer Inventory in oz  


Deposits to the Customer Inventory, in oz 
104,872.150 OZ
No of oz served (contracts) today
612 notices 
61,200 oz
No of oz to be served (notices)
422 contracts
42200 oz
Total monthly oz gold served (contracts) so far this month
4677 contracts (467,700 oz)
(14.547 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month   220,070.6 OZ

Today we had 0 dealer DEPOSIT
total dealer deposit: NIL   0z
Today we had 0 dealer withdrawals:
total dealer withdrawals:  nil oz
Today we had 1 customer deposit:
iii) into JPMorgan: 104,872.15 oz
Total customer deposits; 104,872.150   OZ
Today we had 2 customer withdrawal:
i) out of Manfra: 192.90 oz  6 KILOBARS
Total customer withdrawals:105,290.22   oz
Today we had 0  adjustments:
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 612 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 365 notices was stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the JULY contract month, we take the total number of notices filed so far for the month (4677) x 100 oz  or 467,700 oz , to which we  add the difference between the open interest for the front month of JULY (1034 CONTRACTS) minus the number of notices served upon today (612) x 100 oz   x 100 oz per contract equals 509,900 oz, the number of ounces standing in this active month. 
Thus the INITIAL standings for gold for the JULY. contract month:
No of notices served so far (4677) x 100 oz  or ounces + {OI for the front month (1034) minus the number of  notices served upon today (612) x 100 oz which equals 509900 oz standing in this non   active delivery month of JULY  (15.860 tonnes).
We LOST 156 CONTRACTS or an additional 15,600 oz of gold that will NOT  stand for delivery in this non active month of July.
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 now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  16.345 TONNES FOR JULY + 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; june 29 .036 tonnes; JUNE 30 2.49 /july 1 17.78 tonnes = 45.715 tonnes still standing against 46.653 tonnes available.
 Total dealer inventor 1,532,061.922 tonnes or 47.653 tonnes
Total gold inventory (dealer and customer) =6,690,629.421 or 301.41 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 301.41 tonnes for a loss of 1 1/2 tonnes over that period. 



And now for silver
JULY INITIAL standings
 July 13.2016
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
 233,369.351 OZ
Deposits to the Dealer Inventory
1020.300 oz
Deposits to the Customer Inventory
 212,421,567 oz
No of oz served today (contracts)
(285,000 OZ)
No of oz to be served (notices)
1082 contracts
(5,410,000 oz)
Total monthly oz silver served (contracts) 1383 contracts (6,915,000 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  3,300,098.4 oz
today we had 0 deposit into the dealer account
total dealer deposit :NIL oz
we had 0 dealer withdrawal:
total dealer withdrawals:  NIL oz
we had 1 customer deposit:
i) Into CNT: 1020.300 oz
Total customer deposit: 1020.300 oz
We had 2 customer withdrawals
i) Out of Brinks:  223,164.630 oz
ii) Out of CNT: 10,204.721 oz
total customer withdrawals: 233,369.351  oz
 we had 0 adjustments
The total number of notices filed today for the JULY contract month is represented by 57 contracts for 285,000  oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at (1383) x 5,000 oz  = 6,915,000,000 oz to which we add the difference between the open interest for the front month of JULY (1139) and the number of notices served upon today (57) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the JULY contract month:  1383(notices served so far)x 5000 oz +{1139 OI for front month of JULY ) -number of notices served upon today (57)x 5000 oz  equals  12,325,000 oz  of silver standing for the JULY contract month.
We gained 74 contracts or 380,000 additional oz that will  stand for delivery in this active month of July.
Total dealer silver:  25.835 million (close to record low inventory  
Total number of dealer and customer silver:   151.593 million oz (close to a record low)
The total open interest on silver is NOW NEAR its all time high with the record of 218,979 being set June 24.2016.  The registered silver (dealer silver) is NOW NEAR  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.
And now the Gold inventory at the GLD
July 13/ we had a huge paper withdrawal of 15.98 tonnes of gold from the GLD/inventory rests at 965.22 tonnes.
July 12/we had no changes in gold inventory at the GLD/Inventory rests at 981.20 tonnes
July 11/no changes in gold inventory at the GLS/Inventory rests at 981.20 tonnes
JULY 8/ A  good sized deposit of 2.91 tonnes into the GLD/Inventory rests at 981.20
July 7/a good sized withdrawal of 4.15 tonnes from the GLD/Inventory rests at 978.29 tonnes (this was nothing but a paper entry/no physical moved)
July 5/no change in inventory/rests tonight at 982.44
July 1/a huge change in the gold inventory/ a deposit of 3.86 tonnes/rests tonight at 953.91 tonnes
JUNE 30/no change in gold inventory /inventory rests tonight at 950.05 tonnes
June 29/ a good sized deposit of 2.67 tonnes/inventory rests at 950.05 tonnes
June 28/ a huge deposit of 13.067 tonnes into inventory/new inventory rests so far at 947.38 tonnes.  This was a paper addition
June 27/a huge deposit of 18.415 tonnes into the GLD inventory/the new inventory rests at 934.313 tonnes.  The addition was a paper addition and not physical
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.
July 13 / Inventory rests tonight at 965.22 tonnes


Now the SLV Inventory
July 13./ a huge addition of 5.187 million oz into silver inventory at the SLV/ this is a paper addition as inventory rests at 348.580 million oz
July 12/ a huge addition of 1.94 million oz into silver inventory at the SLV/a “paper” addition/inventory rests at 343.393 million oz
July 11/no changes in silver inventory/rests tonight at 341.453 million oz
JULY 8/no change in silver inventory/rests tonight at 341.453 million oz
July 7./no change in silver inventory/inventory rests at 341.453 million oz
july 5/no change in silver inventory/inventory rests at 333.554 milllion oz
july 1/no change in silver inventory/inventory rests at 333.544 million oz
JUNE 30/no changes in silver inventory/inventory rests at 333.544 million oz
June 29/ a small deposit of 760,000 oz/Inventory rests tonight at 333.544 million oz/
June 28/no change in silver inventory/rests tonight at 332.784 million oz
June 27/ a small deposit of 570,000 oz in the SLV inventory/Inventory rests at 332.784 million oz
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
July 13.2016: Inventory 348.580 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 2.8 percent to NAV usa funds and Negative 2.6% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 58.7%
Percentage of fund in silver:40.1%
cash .+1.2%( July 13/2016). 
2. Sprott silver fund (PSLV): Premium rises  to +0.91%!!!! NAV (July13/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.56% to NAV  ( July 13/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.91% /Sprott physical gold trust is back into positive territory at +0.56%/Central fund of Canada’s is still in jail.


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

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

Stocks Rally – Is Brexit Systemic Risks Contained?

GoldCore's picture

Equity markets globally have rebounded to their pre-Brexit levels and volatility in financial markets is the lowest that it has been for a month. Even the precious metals rally has taken a breather. Are the markets suggesting that the fallout from Brexit is less than previously thought and that the systemic risk posed by the UK leaving the EU is contained.

The emergence of Theresa May as the new Prime Minister of Great Britain has at least given a degree of certainty in what was looking like a political vacuum but is this enough to ease the nerves of the financial markets. In the short term, at least it would appear so.

Unexpectedly, calm is returning to global markets on speculation central bank action will be sufficient to restrict any Brexit contagion. Economists predict the Bank of England will cut interest rates Thursday, while Japanese Prime Minister Shinzo Abe has ordered more fiscal stimulus. Traders are pricing in less than 35 percent odds of the Federal Reserve raising rates this year.

Today, Bloomberg takes a look at what one Fund Manager has described; ““the strangest environment I’ve seen in 30 years”

The full report can be read here 


Gold and Silver Bullion – News and Prices

Gold hovers near previous session’s lows on stronger equities (Reuters)

Gold plunges in broad risk-on trade, as Dow hits all-time high (Investing.com)

Silver surrenders gains to join gold’s retreat (MarketWatch)

IMF sees ‘negligible’ Brexit impact on U.S. growth (Reuters)

US wholesale inventories rise slightly, sales extend gains (CNBC)

That’s it: I’m calling the low on the pound (MoneyWeek)

Gold Prices (LBMA AM)

13 July: USD 1,340.25, EUR 1,211.45 & GBP 1,009.74 per ounce
12 July: USD 1,352.85, EUR 1,217.84 & GBP 1,029.11 per ounce
11 July: USD 1,358.25, EUR 1,231.66 & GBP 1,059.95 per ounce
08 July: USD 1,356.10, EUR 1,224.83 & GBP 1,047.45 per ounce
07 July: USD 1,367.10, EUR 1,233.40 & GBP 1,052.80 per ounce
06 July: USD 1,370.00, EUR 1,239.71 & GBP 1,059.01 per ounce
05 July: USD 1,344.75, EUR 1,207.05 & GBP 1,023.89 per ounce

Silver Prices (LBMA)

13 July: USD 20.29, EUR 18.31 & GBP 15.25 per ounce
12 July: USD 20.35, EUR 18.35 & GBP 15.47 per ounce
11 July: USD 20.47, EUR 18.53 & GBP 15.78 per ounce
08 July: USD 19.72, EUR 17.82 & GBP 15.20 per ounce
07 July: USD 19.95, EUR 18.00 & GBP 15.31 per ounce
06 July: USD 20.43, EUR 18.46 & GBP 15.75 per ounce
05 July: USD 19.73, EUR 17.69 & GBP 14.99 per ounce

Recent Market Updates

– Britain has a new prime minister – here’s what that means for you
– Metals Caught Between Global Gloom, U.S. Job Gains as Gold Slips
– Central Bank Resumes Monthly Gold Buying in Bid to Diversify Reserves
– Property Fund Turmoil in the UK has Eerie Echoes of Bear Stearns
– “In Gold We Trust” Annual Report – New Bull Market “Emerging”
– 3 Charts Show “How Precious Brexit Is” for Gold and Silver Bullion
– Gold, Silver Best Performing Assets In H1, 2016 – Up 26% & 38%
– Gold Surges to $1,313/oz – Fed Concerned Re Outlook, BREXIT and May “Consider Using Helicopter Money”
– Gold Prices Higher For 5th Session On BREXIT and FED
– Soros Buying Gold On BREXIT, EU “Collapse” Risk
– UK Gold Demand Rises On BREXIT “Nerves”



Venezuela just lost  about 23 tonnes of gold ($1 billion dollars worth ) to Citibank who basically store the gold away from this brain dead ruler:

(courtesy zero hedge)

Did Citi Just Confiscate $1 Billion In Venezuela Gold

Just over a year ago, cash-strapped Venezuela quietly conducted a little-noticed gold-for-cash swap with Citigroup as part of which Maduro converted part of his nation’s gold reserves into at least $1 billion in cash through a swap with Citibank.

As Reuters reported then, the deal would make more foreign currency available to President Nicolas Maduro’s socialist government as the OPEC nation struggles with soaring consumer prices, chronic shortages and a shrinking economy worsened by low oil prices. Needless to say, the socialist country’s economic situation is orders of magnitude worse now.

According to El Nacional, “the deal was for $1 billion and was struck with Citibank, which is owned by Citigroup.”

As Reuters further added:

“former central bank director Jose Guerra and economist Asdrubal Oliveros of Caracas-based consultancy Ecoanalitica said in separate interviews that the operation had been carried out.  A source at the central bank told Reuters last month it would provide 1.4 million troy ounces of gold in exchange for cash. Venezuela would have to pay interest on the funds, but the bank would most likely be able to maintain the gold as part of its foreign currency reserves.”

On paper yes – very much as any comparable gold leasing operation conducted by sovereign nations with central banks – but the actual physical gold would be transferred to an unknown vault of Citi’s choosing where it would become an asset controlled by the bailed out US bank.

We note this peculiar gold swap case because something curious took place overnight. On the same day that Venezuela announced it would seize a local Kimberly-Clark factory after the US consumer-products giant announced it would shutter its Venezuela operations after years of “grappling with soaring inflation and a shortage of hard currency and raw materials”, Venezuela’s President Nicolas Maduro said on Monday that Citibank planned to shut his government’s foreign currency accounts within a month, denouncing the move by one of its main foreign financial intermediaries as part of a “blockade.”

Among the many reasons why the sudden departure is surprising is that due to strict currency controls in place since 2003, the government relies on Citibank for foreign currency transactions, meaning that suddenly Venezuela’s financial “blockade” is indeed about to get worse.

“With no warning, Citibank says that in 30 days it will close the Central Bank and the Bank of Venezuela’s accounts,” Maduro said in a speech, adding that the government used the U.S. bank for transactions in the United States and globally.

In typical bluster, Maduro added: “Do you think they’re going to stop us with a financial blockade? No, gentlemen. Noone stops Venezuela.”

What Maduro did not mention is that among the central bank accounts closed by Citi will be at least one, rather prominent, gold swap launched just over a year earlier.

Reuters adds that Citibank, could not immediately be reached for comment about the purported measure against Venezuela’s monetary authority and the Bank of Venezuela which is the biggest state retail bank.

With the OPEC nation’s economy immersed in crisis, various foreign companies have been pulling out or reducing operations. However, few of them held over $1 billion in Venezuela gold as hostage.

So during his next address, perhaps someone inquire Maduro if as part of its “blockade” Citi also absconded with a substantial portion of the country’s gold reserves, and if so, which other banks have comparable “swap” arranagements with the insolvent nation?

Meanwhile, Hugo Chavez, who spent the last years of his life repatriating Venezuela’s gold is spinning in his grave.


Who put these clowns to head their mining operations? They hedge another 50 tonnes in the quarter!

(courtesy Reuters/GATA/Jan Harvey)

Gold miners expand hedge book by another 50 tonnes in first quarter


By Jan Harvey
Monday, July 11, 2016

Gold miners expanded the global hedge book by another 50 tonnes in the first quarter after hedging on a net basis for a second straight year in 2015, an industry report showed on Monday.

Miners use hedging, usually by selling future production forward, to guarantee returns for their output.

In their quarterly Global Hedge Book Analysis, Societe Generale and GFMS analysts at Thomson Reuters said the global hedge book total stood at 270 tonnes at the end of March. …

… For the remainder of the report:





Please read the following: technical analysis is a fraud as central banks are buying everything.  You discern nothing from charts


(courtesy Chris Powell/GATA)

As central banks buy nearly everything, technical analysis is a fraud


1:07p Tuesday, July 12, 2016

Dear Friend of GATA and Gold:

Zero Hedge today reports the latest findings by Citigroup market analyst Matt King, who has determined that stock markets keep going up because selling in emerging markets has been more than offset by “a surge in net global central bank asset purchases to their highest since 2013.”

Soon, perhaps, central banks will have purchased nearly everything to maintain asset prices and prevent markets from functioning, thereby enveloping the world in “financial repression.” Or, as a high school graduate remarked at GATA’s Washington conference in 2008, “There are no markets anymore, just interventions”:


So what are the “technical analysts” among the financial letter writers really analyzing? Not markets but their own gullibility or that of their subscribers.

Zero Hedge’s report on King’s findings is headlined “The ‘Mystery’ of Who Is Pushing Stocks to All-Time Highs Has Been Solved” and it’s posted here:


CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.




They nail the little guy:  what about the big fish (our big HFT traders) that are doing the same thing!

(courtesy Bloomberg)

First Trader Convicted of Spoofing Gets 3-Year Prison Term

Spoofing Trader Who Outsmarted Citadel And HFTs Gets 3-Year Jail Sentence

Back in November, when we last recounted the story of Michael Coscia, who was the first ever criminally convicted spoofer, we said that HFTs (and Citadel) have officially issued a warning “Outsmart Us, And You Go To Jail.

Here is a quick reminder for those who are unfamiliar with Mike Coscia’s story:


He grew up in Brooklyn. His father was a subway token clerk and he was the first in his family to go to college. During the day he was a mail carrier and went to Brooklyn College at night and graduated with a business management degree in 1986. He has been married for 25 years and his son attends the University of Michigan.

He testified that he first became interested in the markets after his father bet on a horse race and turned a $2 bet into a $55,000 winner. His father put the profit in the market and Coscia tracked his father’s investments, sparking his interest in finance. Coscia had a cousin who worked on the floor of the New York Mercantile Exchange and that’s how he got started on the floor, beginning as a clerk. He was a trader for 27 years.

What happened then is the same thing that happened with the other two notorious “spoofers” who have gained prominence in the recent year, Nav Sarao and Igor Oystacher: they got too good. So good in fact the HFTs – mostly Citadel – were consistently losing money to them. As a result, Coscia et al had to be punished. He was accused of entering large orders into futures markets in 2011 that he never intended to execute. His goal, prosecutors said, was to spoof, or fool other traders to markets by creating an illusion of demand so that he could make money on smaller trades. Prosecutors said he illegally earned $1.4 million in fewer than three months in 2011 through spoofing.

As Reuters added, Coscia’s firm had fewer than 10 employees. However, he “entered more large orders than anyone else in the world” in nearly a dozen CME Group Inc markets ranging from corn and soybeans to gold after he began using two algorithmic trading programs in August 2011, prosecutors said during the trial. To be sure Coscia disagreed with the accusation: he testified that he didn’t do anything wrong and repeatedly said he intended to trade on every order he placed. He also said he traded a lot of large orders he placed. He was asked whether he fraudulently induced other market participants to react to the deceptive market information he created.

“I didn’t induce anyone,” Coscia said. “There’s no deceptive market information either.”

Technically, he is right – he did not induce anyone. He induced a whole of anythings, mostly countless HFT algos that reacted to his orders by pushing the market in the direction of his orderflow, only to be “spoofed.” At which point the case really boiled down to just one thing: not whether it is legal to spoof, which it is and yet massive, well-connected HFT firms get away with it every single day, but whether it is legal to take advantage of HFT algos programmed to do just one thing – frontrun orders, and activity which leads to massive losses for the algos and the Citadels behind them, when the spoofer realizes just how dumb his counterparty truly is.

The verdict was clear: nobody is allowed to outspoof the spoofers. And this was the punchline from the lobby of very group of people who take advantage of broken markets every given day:

“Investors are better off when spoofers who prey on high-frequency traders are brought to justice,” said Bill Harts, chief of the Modern Markets Initiative, a group representing high-frequency and algorithmic traders.

Funnier words had rarely been spoken by the person whose “Modern Markets” Initiative has made real modern markets a farcial disaster.

And so the gauntlet has been thrown: anyone who dares to make money by “abusing” the dumb logic of Citadel algos will go to jail.

“This is the clarity that people have been looking for – what exactly is spoofing, what defines it,” said Trace Schmeltz, an attorney specializing in white-collar crime at law firm Barnes & Thornburg who was not involved in the case.

“The defendant’s trading activities disrupted the markets in his favor and against legitimate traders and investors,” said Zachary Fardon, U.S. Attorney for the Northern District of Illinois.

Such as… high-frequency traders.

And the biggest irony: Steven Peikin, one of Coscia’s lawyers, argued that high-frequency traders routinely canceled orders. He told the jury that Coscia’s trading strategy was unique but not illegal.

Wrong: it is illegal, but he is absolutely right that everyone does it, especially the HFTs. But doesn’t matter – next year Coscia will be back in court to hear just how many years he will spend in prison.

* * *

Fast forward to today when Coscia’s story gets its conclusion.  As Bloomberg reports, Michael Coscia, the first person convicted of spoofing after it was made a crime under the Dodd-Frank Act, was sentenced to three years in prison by a federal judge in Chicago, less than half the time sought by prosecutors.

Spoofing, which became illegal under the Dodd-Frank Act, carries a maximum of 10 years in prison. The practice typically consists of systematically placing orders without intending to execute them to trick the market into thinking there’s interest in buying or selling that doesn’t actually exist.

Prosecutors had sought a term as long as seven years and three months. Coscia’s lawyers, who argued for probation, said sentencing guidelines allowed for a term of only four to 10 months. His three-year prison term is to be followed by two years of supervised release.

Coscia’s sentencing follows a ruling Tuesday in a spoofing lawsuit brought by the Commodity Futures Trading Commission allowing a defendant to continue trading before a trial set for January. Igor Oystacher, of 3Red Trading LLC, was accused by the CFTC of continuing illegal trades even after it sued him.

Coscia tried the Hillary defense, but it did not work this time:

Testimony during the trial showed that Coscia, like many high frequency traders, used an algorithm to place, cancel and execute orders. Coscia testified that he intended to execute all of his orders at the time he placed them. He said he wasn’t aware of the provision of the Dodd-Frank Act and his lawyers argued in court filings that the law was unconstitutional.

How big was Coscia’s criminal profit from the transactions for which he was charged? A laughable $1,070.

During the trial, prosecutors focused on six transactions in the gold, euro, soybean meal, soybean oil, British pound, and copper futures markets. In total, these trades resulted in a profit of $1,070, according to testimony. Coscia conducted thousands of such trades, prosecutors told jurors.

His real crime? Taking on the HFTs, and Citadel, and winning. Now he gets to spend 3 years in prison thinking about it. And let that be a lesson to anyone else out there who dares to do the same.




 There is no rule of law either… (public article)


I finished my last writing with the question “will we still have the rule of law?” and commented what a can of worms this topic is.  While I knew the question of the rule of law would certainly come up later this year, I had no idea how quickly!  Normally forensic logic is a process of “connecting dots”, in this instance the “dots” are more like one giant blob of crap covering the page entirely.  On many previous occasions we have seen election fraud, market riggings and bogus economic reports, the corruption is now no longer contained or done in secret… it is done in public.  Maybe so the public can “see it”?  Let’s take a look at “law”.   
  We have heard stories where the police are confiscating cash during traffic stops where the driver/passenger then has to prove “how or where” they got the money.  In many cases, even after proof is delivered …the money is not returned.  We also have recently seen where Oklahoma troopers/officers have technology to swipe debit cards and clear balances because “you might buy drugs or commit a crime” with that cash.  Does this scare you?  It should!
  A week or so back, we heard of Bill Clinton meeting with Attorney General Loretta Lynch on an airport tarmac.  Within a week, James Comey (who turns out to have many past trails crossing the Clinton’s path) http://21stcenturywire.com/2016/07/13/fbi-director-comey-board-member-of-clinton-foundation-connected-bank-hsbc/ recommended no charges for Hillary’s mishandling of classified information.  This was the ultimate George Carlin joke, “it’s a big club and you ain’t in it”!  The average Joe now knows because he has seen with his own eyes, the law does not pertain to the elite …but it and then some does pertain to you.  While on the subject of public servants, I believe the breakdown in the rule of law truly reared its ugly head upon the death of Justice Antonin Scalia.  How is it possible that an autopsy was mandatory for “Prince” but not for a Supreme Court Justice?  Another public servant, Supreme Court Justice Ginsberg recently badmouthed Donald Trump in a very public fashion.  “Impartiality”?
  Of course we have seen some bad shootings.  Two recently where blacks were shot and killed by police, which in turn was followed by police being shot or shot at in Georgia, Tennessee and Dallas.  (Where was the media for LaVoy Finicum?).  Next up will apparently be this Friday as information has surfaced that a list of protests will occur in three dozen major U.S. cities. http://offgridsurvival.com/majorcivilunrest-blmpantherschaos/  There are also rumors of more than 10,000 being bussed in to protest the Republican convention for what is being called the “summer of chaos”.  This, courtesy of the globalists and of course George Soros.
The rule of law has not solely been repealed within the U.S..  The world court in Hague recently ruled the Chinese have no claim to occupied islands http://www.bloomberg.com/news/articles/2016-07-12/china-no-historic-right-to-south-china-sea-resources-court-says .  To this I was quite surprised because many rulings and treaties after WWII clearly void Japanese claim to any and all of them.  Now we will wait to see how this progresses.  I would assume the Chinese will take the attitude of ignoring the ruling entirely with a stance of “we are here, come and take it”.  Mr. Putin has and is clearly preparing to stand with China.  No matter what happens, it cannot be good.  It will either be war, or the U.S. loses more face and credibility.  Because this ruling will force action, it is no doubt a step forward in strength and resolve by China and a step backward for the U.S..
The important thing to take from this writing is the fact that the previous “de facto” lack of law has now become “public” and in your face REAL!  The mayor of Atlanta even mentioned the “National Guard” in passing yesterday.  Please understand this, once the National Guard is called out anywhere …they will be called out everywhere.  What was unthinkable will become the new normal.  This will be your beginning to martial law which will sweep the country very rapidly. 
I have said all year long, I believed the odds of having a November election were slightly less than a coin flip.  I will now update that as I believe the odds have risen to somewhere between 65-70% …no election.  Am I wrong?  I believe we will very soon see.  We will see the aftermath of protests this coming Saturday morning and also see whether or not the Republican convention is completed.
I know that many are very opposed to “guns” and believe the world would be a safer place without them, I personally do not understand the logic.  I would only point out, there are no atheists in a foxhole and no anti gun advocates when there are no police and you are the only one without a gun.  The rule of law has and is breaking down …and doing so in very public fashion.  We are facing societal breakdown right in the face and unfortunately this will play right into globalist hands.  You see, the mass of “helpless” will BEG for safety and security in lieu of liberty.  For years “safety and security” have been offered in the place of liberty.  The next six months are extremely crucial for the direction of our country and the world.  Sadly, for many it will mean a choice between liberty and death …”safety be damned’!
Standing watch, locked and loaded.

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




2 Nikkei closed UP 135.78 OR 0.84% /USA: YEN RISES TO 104.70

3. Europe stocks opened ALL IN THE GREEN   /USA dollar index DOWN to 96.38/Euro UP to 1.1076

3b Japan 10 year bond yield: FALLS TO -.280%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 104.70

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  46.16  and Brent: 47.66

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 and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.044%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 7.65%/: 

3j Greek 10 year bond yield FALL to  : 7.81%   (YIELD CURVE NOW  FLAT)

3k Gold at $1340.40/silver $20.39(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 7/100 in  roubles/dollar) 63.87-

3m oil into the 46 dollar handle for WTI and 47 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/GOT a BIG DEvaluation DOWNWARD from POBC.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9849 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0910 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -.044%

/German 10+ year rate  negative%!!!


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 1.479% early this morning. Thirty year rate  at 2.197% /POLICY ERROR)

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

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


Global Stocks, Futures Rise On Disappointing Chinese Trade Data, Hopes For More Central Bank Intervention

In an otherwise quiet overnight session, which among other things saw Germany sell 10Y Bunds with a zero coupon and a negative yield (-0.05%) for the first time ever (despite being uncovered with just €4.038BN sold below the €5.00BN target) anyone hoping for a confirmation that China will be able to prop up the world economy once more, was left disappointed when earlier this morning China reported June exports and imports that once again dropped substantially in dollar terms as soft demand at home and abroad continued to weigh on the world’s largest trading nation.

The details: exports in USD terms fell 4.8% from a year earlier, in line with expectations, while imports dropped 8.4%, worse than the -6.2% expected, resulting in a $48.11 billion trade surplus driven by economic contraction.

Needless to say, and as we will shortly show, the numbers are once again not to be trusted as a result of clear fabrication in HK “trade” data which continues to soar and remains China’s favorite way of smuggling out capital.

What was surprising is that Chinese trade continues to stagnate even as the yuan continued its not so stealth devaluation, posting a fifth straight drop last week, the longest losing streak this year, signaling policy makers are more tolerant of further weakening. With tepid global demand and businesses proving reluctant to invest, the government has been stepping up spending to keep its growth target of at least 6.5% this year in sight.

“It’s still very weak trade,” said Iris Pang, senior economist for Greater China at Natixis SA in Hong Kong. “I don’t think there will be a significant improvement and I expect heavier and speedier fiscal stimulus in the second half.”

“With little support from global demand, China will be constrained to retain an easing bias in domestic policy,” Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a note. “Yuan weakness has bolstered competitiveness and prevented a sharper slide in overseas sales. In the immediate future, though, the central bank may be forced to lean against excess depreciation pressure. The risk of Brexit aftershocks add to the gloom on the export outlook.”

It is bound to get worse: exports face downward pressure in the third quarter, a customs administration official said at a briefing in Beijing. Trade will remain sluggish, though may continue to stabilize in the second half, the official said, adding that exporters face increasing labor costs while other countries are competing with cheaper wages.

In short: more global bad news, which means more stimulus in some capacity, which means good news for stocks.

Indeed, China wasn’t the only bad news out there to prop up stocks: so did Japan, which continues its helicopter money jawboning, with constantly conflicting messages. A few hours after the Sankei reported that the Japanese government is “mulling” helicopter money, Japan’s Suga denied that the government was in fact considering this. However, by this morning the narrative had changed twice more and now we have “stores” that the BOJ should consider more easing in the form of QE according to an Abe advisor, while Bloomberg reported that Japan will consider JPY10 trillion in fiscal stimulus. lower than the JPY 30 trillion originally reported.

Said otherwise, trial balloon after trial balloon to gauge the market reaction.

Elsewhere, it was more of the same, with stocks everywhere now having rebounded from their pre-Brexit levels (in addition to the US trading at all time highs of course) on more central bank easing expectations:

Risk assets are rallying, driven by renewed hopes of monetary and fiscal stimulus,” said James Woods, a strategist at Rivkin Securities in Sydney. “The rally looks sustainable, especially if the BOE cuts rates this Thursday. Abe will definitely add some kind of fiscal stimulus to boost the Japanese economy.”

As Bloomberg puts it, wherever you look in global financial markets, signs are emerging that the fallout from Britain’s vote to leave the European Union is under control. Global stocks are rising for a fifth day, having recovered almost $4 trillion in value lost in the days following the U.K.’s June 23 referendum, and emerging-market valuations are near their highest in more than a year. Copper is rising, boosted by signs policy makers are prepared to act to limit the fallout, while acquisitions have resumed and corporate bond sales are showing signs of picking up. The yen and government bonds, while climbing on Wednesday, have given back much of the gains they made since the Brexit vote.

“Calm is returning to global markets on speculation central bank action will be sufficient to restrict any Brexit contagion. Economists predict the Bank of England will cut interest rates Thursday, while Japanese Prime Minister Shinzo Abe has ordered more fiscal stimulus. Traders are pricing in less than 35 percent odds of the Federal Reserve raising rates this year, even though Fed Bank of St. Louis President James Bullard says he expects near-zero impact on the U.S. The mark on the U.K. is more enduring, with sterling about 11 percent weaker versus the dollar since the vote.”

Some remain surprised by how aggressive and pervasive central bank intervention has been: 36 South Capital Advisors, a London-based volatility hedge fund, was surprised at how rapidly markets settled, according to Chief Investment Officer Richard Haworth. “This is the strangest environment I’ve seen in 30 years,” Haworth said. “I had a sneaking suspicion that Brexit could have been the butterfly’s wing that created a hurricane down the line. But maybe, maybe not.”

As a result of the above, “markets” have been more of the same, with Asia and Europe both higher, and US equity futures modestly in the green: The MSCI All-Country World Index rose 0.2 percent at 10:38 a.m. London time, leaving them 0.4 percent stronger than the close on the day before the results of Britain’s referendum were released.  The Stoxx Europe 600 Index added 0.3 percent, rising for a fifth day in the longest winning streak since the Brexit vote. The gauge is within 10 points of erasing its losses after the June 23 referendum. S&P 500 futures were up 0.1%, after the benchmark ended the last session at a record high. The VIX has been cut in half halved since June 24, when the shock Brexit vote caused the wildest swings since August 2011. A similar gauge of European stock volatility fell on Tuesday to the lowest level since May.

Treasuries rose, sending the yield on notes due in a decade two basis points lower to 1.49 percent. The rate, which sank to an unprecedented 1.32 percent a week ago, surged 15 basis points over the past two sessions as demand at auctions of three- and 10-year weakened to levels last seen in 2009.  Deutsche Bahn AG this week became the first non-financial company to sell negative-yielding bonds in euros. The German state-owned railroad sold 350 million euros of five-year debt to yield minus 0.006 percent on Tuesday, according to data compiled by Bloomberg. Deutsche Bahn AG this week became the first non-financial company to sell negative-yielding bonds in euros. The German state-owned railroad sold 350 million euros of five-year debt to yield minus 0.006 percent on Tuesday, according to data compiled by Bloomberg.

All of this will end in tears according to Jeff Gundlach, who during a webcast yesterday said that “there’s something of a mass psychosis going on related to the so-called starvation for yield. Call me old-fashioned, but I don’t like investments where if you’re right you don’t make any money.”

Market Summary

  • S&P 500 futures up 0.1% to 2148
  • Stoxx 600 up 0.1% to 337
  • FTSE 100 down less than 0.1% to 6675
  • DAX down 0.2% to 9943
  • German 10Yr yield up 5bps to -0.04%
  • Italian 10Yr yield down less than 1bp to 1.22%
  • Spanish 10Yr yield down 2bps to 1.16%
  • S&P GSCI Index down 0.6% to 363.3
  • MSCI Asia Pacific up 0.9% to 133
  • Nikkei 225 up 0.8% to 16231
  • Hang Seng up 0.5% to 21322
  • Shanghai Composite up 0.4% to 3061
  • S&P/ASX 200 up 0.7% to 5389
  • US 10-yr yield down 3bps to 1.48%
  • Dollar Index up 0.08% to 96.52
  • WTI Crude futures down 1.5% to $46.10
  • Brent Futures down 1.8% to $47.60
  • Gold spot up 0.6% to $1,341
  • Silver spot up 0.9% to $20.37

Top Global News

  • Disney Gets $267 Million From City to Build $450-a-Night Hotel: Park operator currently has 3 hotels in Anaheim, California
  • Fiat Chrysler Offers $1,500 to Find Vehicles’ Cyber Soft Spots: Program with Bugcrowd pays rewards to good-guy hackers
  • Canada Vitamin Maker Jamieson Labs Said to Scrap $1 Billion Sale: Sale had attracted interest from By-health, Shanghai Pharma
  • Musk Energy Plan Delivers Slow Payoff in Tesla, SolarCity Merger: Pairing solar and storage the key to $2.86b Tesla bid
  • IEA Sees Record Middle East Oil Supply While U.S. Output Slumps: Record inventories remain ‘threat to stability’ of prices
  • Exxon Said to Top Oil Search’s Bid for InterOil: Reuters: Offer comprises Exxon stk, contingent value right
  • McDonald’s Said Struggling to Get Strong Bidders for China: FT: Co. has had to turn down “a lot” of the unqualified bidders

* * *

Looking at regional markets, we start in Asia, where overnight we saw a somewhat muted affair in terms of newsflow, however equities extended on advances following on from record high closes in the Dow Jones and S&P 500. Nikkei 225 (+0.8%) pulled off best levels in the wake of comments from Japan’s Suga refuting press reports that the Japanese government is considering helicopter money.ASX 200 (+0.7%) was buoyed by the gains in energy names amid the 4.5% seen in WTI Crude futures yesterday. Hang Seng (+0.5%) and Shanghai Comp (+0.4%) traded modestly in the green with participants awaiting the delayed Chinese trade balance data. 10yr JGBs trade are a touch softer amid the heightened risk appetite seen across Japanese stocks. BoJ should conduct further easing this month by purchasing more bonds, not by reducing negative rates, according to PM Abe Adviser. Sources suggest Japan is said to consider JPY 10trl in its fiscal stimulus measures. Japan’s Chief Cabinet Secretary Suga refuted earlier press reports that the Japanese government is considering helicopter money.  China Premier Li stated that China can achieve 6.5% GDP growth target this for 2016, adding that growth was sound in Q2.

Top Asian News

  • Japan Cuts GDP, CPI Forecasts For This Year: Real GDP to grow 1.2% in FY2017
  • Yen Rallies, Halting 2-Day Drop, on Suga Helicopter Money Denial: Currency rises against 15 of its 16 major counterparts
  • Offshore Yuan Rises as Borrowing Costs Surge Amid Reduced Supply: PBOC may be defending level of 6.7 against dollar, OCBC says
  • Top Rupee Forecaster Sees Record Low by Yearend on Brexit Clouds: Currency will drop to 69.50 per dollar, Kotak Mahindra says
  • Malaysia Unexpectedly Cuts Rate to Shield Growth as Risks Mount: Central bank lowers overnight policy rate by 25bps to 3%
  • Ex-BSI Asia CEO Sues Bank Over Bonus Amid Prosecutors’ Scrutiny: Brunner says bank has no legal basis to freeze deferred bonus
  • U.S. Presses China to Be Responsible Power After Sea Ruling: American military will keep up operations in region

In Europe, equities have traded in a choppy fashion after gapping down at the open. Currently the major European bourses are trading in the red, with the worst performer being the FTSE MIB, with financials the 2nd worst performer across Europe. Another sector to take a hit this morning is UK housing as Barratt Developments made some downbeat comments following the release of their quarterly results this morning. In fixed income markets prices pushed higher as risk seems to be pulling off after a few days worth of equity gains. This came in spite of a raft of supply from Germany, Italy and Portugal which typically can actually weigh on prices. In terms of how the auctions went, the Bund auction was the focus for European participants after the Buba issuing the bond with a negative yield for the first time and drawing a soft b/c of 1.2.

Top European News

  • Steinhoff Agrees to Buy U.K.’s Poundland for $794 Million: Offer follows 2 failed attempts to buy retailers this year
  • Airbus A380 Cut May Mark Beginning of End for Superjumbo: Co. will slash deliveries to just 12 a year from 2018
  • Burberry Sales Beat Estimates on Recent Boost in U.K. Demand: Fashion label also lowers outlook for wholesale revenues
  • ICAP’s Sales From Electronic Markets Drop Despite Brexit Spike: EBS average daily volume declines 15% to $83b
  • Theresa May’s First Job as U.K. Leader Is Naming Brexit Czar: Specialist negotiators already being hired to handle talks
  • Norway’s Largest Bank Beats Retreat From Oil as Losses Mount: DNB to increase focus on retail customers, small businesses

In FX, the yen strengthened 0.1 percent to 104.60 per dollar, after sliding more than 4 percent over the last two days. Abe has ordered his economy minister to compile stimulus measures this month, while the Sankei newspaper reported government officials are considering “helicopter money” as a policy option. Chief Cabinet Secretary Yoshihide Suga said such a policy, which involves the central bank directly financing government spending, was not being looked at. The pound rose 0.2 percent to $1.3270, headed for its longest winning streak in two months, before Theresa May takes over as prime minister later Wednesday, ending a period of political instability that has lasted since the EU vote. The result of the referendum pushed sterling to its worst day on record and sent the pound to the lowest level since 1985 last week, before it recovered some of that ground as it became clear a new leader would take power earlier than previously thought. The yuan was little changed at 6.6959 per dollar in offshore trading amid speculation China’s central bank is limiting the supply of the currency in Hong Kong to deter bets on depreciation, as it did in January to halt the yuan’s slide to a five-year low. The currency’s overnight interbank rate in Hong Kong more than doubled to 4.83 percent, the highest since February. “It feels like the People’s Bank of China is quite serious about defending the 6.7 level,” said Tommy Xie, an economist at Oversea-Chinese Banking Corp. in Singapore. “This reminds me of what happened in January.”

In Commodities, crude oil fell 1.3% to $46.20 a barrel, after jumping 4.6% on Tuesday, when API showed the nation’s stockpiles increased by 2.2 million barrels last week. Government figures on Wednesday are forecast to show supplies slid.  Copper climbed 1.5 percent in London, building on a 3.9 percent advance over the last three trading days, on speculation central-bank stimulus measures will buoy demand for materials. Iron ore rose to the highest level since April on the Dalian Commodity Exchange as steel rebar traded near a 10-week high in Shanghai. Nickel fell 1.7 percent, retreating from an eight-month high. Cotton jumped as much as 5 percent to a two-year high in China after the U.S. Department of Agriculture cut its projections for world output and stockpiles by more than analysts forecast.

Bulletin Headline Summary

  • European equities enter the North American crossover relatively mixed as participants taking a breather from recent gains and Chinese trade data failing to instigate price action
  • The latest source reports suggest Japan are looking at a JPY 10trl fiscal package while PM Abe Adviser Hamada has put pressure on the BoJ to purchase more bonds
  • Looking ahead highlights include BoC Rate Decision and DOE U.S. Crude Oil Inventories
  • Treasuries higher in overnight trading along with global equities, which have erased Brexit losses due to hopes of yet more central bank largess; auctions conclude with $12b 30Y bonds, WI 2.20%, last sold at 2.475% in June, lowest 30Y auction stop since record low 2.43% in Jan. 2015.
  • After weeks of political turmoil, a semblance of stability is returning to U.K. politics, and the pound is headed for its longest winning streak in two months before Theresa May takes over as prime minister
  • Japan’s cabinet office cut its forecasts for growth and inflation as Prime Minister Abe orders his ministers to compile a fiscal spending package that one adviser said should be as large as 20 trillion yen ($192 billion)
  • Japan’s biggest bank, Bank of Tokyo-Mitsubishi UFJ Ltd., is quitting its role as one of the 22 primary dealers that underwrite auctions of the nation’s bonds, the first financial institution to withdraw since the central bank’s introduction of negative interest rates
  • Longer-maturity debt from Mexico to Russia has become one of the most popular post-Brexit trades on bets a split European Union will cause global growth to stagnate and thwart central-bank rate increases. It’s also leaving investors more vulnerable than ever before
  • “There’s something of a mass psychosis going on related to the so-called starvation for yield,” Jeffrey Gundlach, CEO of DoubleLine Capital, said Tuesday. “I don’t like investments where if you’re right you don’t make any money”; Germany sold EU4.78b 10Y bunds at a negative yield for the first time
  • Spanish banks surged after an aide to the EU’s top court said they may avoid having to refund billions of euros to customers who paid too much interest on home loans before a 2013 ruling on so-called mortgage floors
  • Crude oil will rise to a range of $50 to $60 a barrel until at least 2018 as demand increases and markets absorb an oversupply that’s led to lower prices over the last two years, according to the acting oil minister of OPEC member Kuwait
  • Oil fell after the biggest gain in three months as U.S. industry data showed the nation’s crude stockpiles increased, adding to concerns about oversupply

DB’s Jim Reid concludes the overnight wrap

It’s been another decent 24 hours for markets as the concoction of abating Brexit concerns, elevated central bank stimulus expectations and Friday’s reassuring payrolls number proves to be a winning formula for now. Throw in some supportive comments yesterday from German Chancellor Merkel about the Italian banking sector and it was another day of positive price action for risk assets. We’ll touch on those comments shortly, but in terms of the moves in Europe the Stoxx 600 (+1.06%) marked the fourth consecutive session that it has finished the day with at least a 1% gain. The DAX (+1.33%) was also stronger while the FTSE MIB (+2.83%) rallied with some big gains for Italian Banks. Indeed the Euro Stoxx Banks index rallied +5.38% for its biggest one-day gain since April as Italian Banks finished anywhere from 6-13% higher. It was a similar story in credit with iTraxx senior and sub financials indices tightening 8bps and 20bps respectively on the day. The positive sentiment continued on Wall Street where a number of milestones were made. The S&P 500 (+0.70%) and Dow (+0.66%) both made new all-time highs while the Nasdaq (+0.69%) moved back into positive territory for the year. All of these moves came in the face of a big rebound for Oil (+4.56%), a softer USD for the most part and Treasury and Bund yields finishing up 7-8bps. The one outlier to yesterday was the FTSE 100 (-0.03%) which ended little changed although that largely came about due to the near 2% rally for the Pound.

So with global equities largely either passing or approaching pre-Brexit levels again we thought it would be a good time to take stock and update our performance review charts to look at total return performance for various asset classes in the period from the 23rd June (referendum day) to closing levels last night. As our charts show in the PDF, the clear winner in the wake of the vote has been Silver (+17%) which has notably outperformed Gold (+6%) with the bulk of that move coming in the first week post the vote. If we look at equity market performance, interestingly it’s EM equities which have outperformed, notwithstanding some volatility. The Shanghai Comp (+7% local, +5% USD terms), Bovespa (+5% and +7%) and MSCI EM index (+3% and +3%) all sit near the top of our leaderboard. The S&P 500 (+2%) has also turned around while unsurprisingly its European equities which occupy the lower places. The Stoxx 600 (-3% and -6%) has not quite got back to pre-referendum levels while the resurgence of fears over Italian banks has the FTSE MIB (-7% and -10%) and Stoxx 600 Banks (-14% and -16%) hovering near the bottom.

Looking at the performance of UK assets, with Sterling -11% since the vote, the FTSE 100 (+5%) is actually one of our top performers in local currency terms, however this translates to a -6% return in USD terms. It’s a similar story for Gilts (+6% and -6%) too. Meanwhile the notable theme to come from credit markets is the outperformance of US versus EUR. Indeed US indices are up 1-3% during the time with IG Non-Fin and HY sitting atop, while EUR indices sit anywhere from 0-2%. Again however, this translates into losses of 1-3% in USD terms and those returns largely reflect what we’ve seen for European government bond markets. If we look at where current CDS indices are, iTraxx Main is roughly 4bps tighter and iTraxx Crossover is more or less back to where it started. The iTraxx Senior Fins index is still 3bps wider although it has pared a move wider of as much as 43bps at one stage. Finally CDX IG is now 5bps tighter. As mentioned above, the graphs are in the PDF today.

Changing tack now and switching over to the latest in Asia this morning, we find that bourses are continuing their strong performance this week. The Nikkei (+1.00%) and Topix (+1.32%) are again leading the way as investors continue to weigh the expectation of more BoJ stimulus, although the Yen has strengthened some 0.3% or so this morning after weakening over 4% in the past two sessions. Elsewhere the Hang Seng (+0.41%), Shanghai Comp (+0.35%), Kospi (+0.38%) and ASX (+0.42%) are also higher this morning. Markets are also eagerly awaiting the June trade data in China this morning which is expected to come out shortly after this hits your emails.

Moving on and touching on those Merkel comments we highlighted at the top. According to the German Chancellor ‘intensive talks’ are in progress between the Italian government and the European Commission over some sort of solution to Italy’s banking woes. Merkel also said that ‘I am very convinced that the questions that need to be decided there will be resolved in a good way’ and that ‘I don’t see any crisis-like development overall’. Italy Finance Minister Pier Carlo Padoan added that ‘the government is now engaged in finding precautionary solutions to support any eventual case of needed intervention’. Those upbeat comments contributed to a good day for Italian bank stocks with news of some successful stake sales at Unicredit also helping fuel sentiment.

That July 29th EU stress test results date continues to be a self-imposed deadline of sorts for Italy but expect headlines to rumble on in the mean time. An important event due to come before that though is the BoE policy meeting tomorrow where the overall majority of economists are calling for a 25bp cut. One story gaining some traction on this though is the chatter of possible corporate bond buying by the BoE. Indeed the FT ran a story yesterday suggesting that expectations of such a move is on the rise, amid other possible policy options. It’s hard to argue against the ECB CSPP being anything but a success thus far (performance wise) so such a consideration is inevitable, notwithstanding what would be an obviously smaller eligible universe to choose from. Stay tuned for more on this.

On this theme, both Bloomberg and Reuters reported yesterday that Deutsche Bahn has become the first non-financial company to issue debt with a negative yield. The railway operator sold €350m of five-year bonds with a zero coupon which were priced to yield -0.006% according to Bloomberg. Given Deutsche Bahn is 100% state-owned we’d hesitate to go as far as saying that this marks the first such time a true corporate has issued negative yielding bonds in Euros, but it’s a phenomenal statistic nonetheless and shows the power of ECB bond buying at government and corporate level.

Sticking with the central bank theme, over at the Fed yesterday we heard comments from a couple of officials. The first was St Louis Fed President Bullard who has clearly become one of the more dovish members of the committee. Bullard reiterated his view that the US economy is likely stuck in a low growth environment for the next two to three years and the ‘policy rate would likely remain essentially flat over the forecast horizon’. Bullard also said that he sees the impact of Brexit on the US economy as ‘close to zero’. Meanwhile, speaking late last night the Minneapolis Fed President Kashkari (also fairly dovish) said that ‘there’s not a huge urgency to raise rates because inflation is coming up low’.

Away from this there was a bit of economic data to sift through yesterday. Across the pond the NFIB small business optimism survey rose 0.7pts to 94.5 (vs. 93.9 expected) which is the best reading since December last year. The JOLTS report for May revealed a near 300k decline in job openings during the month to 5.5m (vs. 5.65m expected). Remember that this was the month that payrolls plummeted to 11k (after Friday’s revision) so it’s not entirely surprising. We highlight that the quits rate held steady at 2%. Meanwhile wholesale inventories rose a little less than expected in May (+0.1% mom vs. +0.2% expected) with trade sales (+0.5% mom) printing in-line. The Atlanta Fed revised down their Q2 GDP forecast by one-tenth to 2.3% on account of that data. Data-wise in Europe there was little to report with the only data being the final German CPI revisions where there was no change to the +0.1% mom.

Looking at the day ahead, this morning in Europe we’ve got final June CPI revisions in France, Italy and Spain. Also due out is the Euro area industrial production report where market expectation is for a -0.8% mom print. The UK is also set to release its credit conditions and bank liabilities surveys at 9.30am BST. Over in the US this afternoon we’ll get the import price index reading for June followed by the monthly budget statement and Fed’s beige book this evening. Fedspeak wise we’ve got Harker (11pm BST) due to speak this evening.



i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 11.03 POINTS OR 0.37%/ /Hang Sang closed UP 97.63 OR 0.46%. The Nikkei closed UP 135.78 POINTS OR 0.84% Australia’s all ordinaires  CLOSED UP 0.68% Chinese yuan (ONSHORE) closed UP at 6.6908 /Oil FELL to 46.16 dollars per barrel for WTI and 47.66 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.6951 yuan to the dollar vs 6.6908 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS QUITE A BIT AS 




this does not look good;  Taiwan deploys a frigate in the South China Sea  upon which China warns of an “Air Defense Zone”

(courtesy zero hedge)

South China Sea Tensions Surge After Taiwan Deploys Frigate, China Warns Of “Air Defense Zone”

Following the much anticipated ruling by the international court which found yesterday that China does not have a right to claims on the South China Sea, an unexpected supporter for China’s position – which has vocally warned it won’t comply with the tribunal’s ruling – emerged overnight when Taiwan, which shares territorial claims with China in the disputed area – sent a naval frigate to patrol the disputed waterway Wednesday, to show the government’s “determination” to defend its national interest.

The order from Taiwan’s president Tsai Ing-wen came just hours after the Permanent Court of Arbitration found found that the largest natural feature in the contested Spratly Islands, the Taiwanese-held Itu Aba, was a “rock” rather than an island and didn’t qualify for a 200-nautical mile (370 kilometer) exclusive economic zone. The frigate’s planned patrol included a resupply stop at the feature, which Taiwan calls Taiping, a defense ministry spokesman said.

Taiping island

As Bloomberg writes, confirming what we said yesterday after the tribunal’s ruling, the decision to deploy the warship could further escalate tensions in the area. China has said it doesn’t recognize the court’s jurisdiction. Overnight, China firmly rejected the verdict claiming its ruling on the South China Sea is both “null and void” with no binding force. Chinese Foreign Minister Wang Yi Tuesday called the South China Sea arbitration a political farce made under the pretext of law.

As a reminder, the ruling, resulting from a challenge brought by the Philippines, invalidated China’s “nine-dash line” claim. China’s assertions cross over with those from countries like Malaysia, Vietnam and the Philippines, and are based on a map created by Taiwan’s Republic of China government in 1947. Taiwan has administered Itu Aba since the 1950s.

The chart below, showing that 40% of Chinese oil imports pass through the contested region, explains why the disputed territory is of vital importance to China. The region is also home to 10% of the world’s commercial ocean fish stock, and lies above an estimated 11 billion barrels in oil reserves.

China also warned Wednesday it was ready to set up an air defense identification zone over disputed waters, repeating a threat it first made one month ago. “If our security is being threatened, of course we have the right to demarcate a zone,” Chinese Vice Foreign Minister Liu Zhenmin said on Wednesday.

A new air defence identification zone (ADIZ) would likely increase tensions not only with the Philippines, but also with other rivals to claims in the South China Sea, including Brunei, Malaysia and Vietnam. China declared an ADIZ over disputed islands in the East China Sea in 2013, a move which caused anger with Japan and the United States.

Vice minister Liu said the islands were China’s “inherent territory”, as he launched a policy paper in response to the ruling. “We hope that other countries will not take this opportunity to threaten China and to work with China to protect the peace and stability of the South China Sea, and not let it become the origin of a war,” he told reporters.

For now, however, focus is on naval deployments, and China’s Vice Foreign Minister Liu Zhenmin on Wednesday praised Taiwan’s efforts to defend rights shared by the one-time civil war foes. “The arbitration has damaged the rights of all Chinese, and it’s the common interest and responsibility of both sides to protect the maritime rights of the South China Sea,” Liu said at a briefing in Beijing. He accused the tribunal judges in the case of bias and a lack of common sense.

While China refused to participate in the tribunal proceedings, it did submit a paper outlining its position and worked behind the scenes to lobby the court, according to the decision. Taiwan, under former President Ma Ying-jeou, filed a brief to the panel stating a case for an exclusive economic zone around Itu Aba, citing its ability to support life.

South China Sea Islands are China’s inherent territory: Chinese government’s white paper http://xhne.ws/QkbME 

As Bloomberg adds, in a statement echoing China’s own response Tuesday, Tsai said the Hague ruling had no binding effect on Taiwan and undermined her government’s rights. The former law professor, who ousted Ma’s Nationalist party in a landslide election in January, called for multilateral talks to promote stability in the region.

What is most surprising is that the president’s remarks put Taiwan’s new leader at odds with its chief security protector, the U.S., which has called on China to abide by the ruling. They also provide a rare area of agreement between Tsai and Communist Party leaders, who have cut off communications over her refusal to affirm the contention the two sides represent “one China.”

Tsai’s Democratic Progressive Party officially supports independence for Taiwan. New York University law professor Jerome Cohen, a specialist in Chinese law who counts Ma among his former students, said Tsai was struggling to “adjust to an uncomfortable situation.”

“Today’s response openly rejecting the decision is a big mistake and different from what even Ma would have done,” Cohen wrote in a blog post Tuesday. “Tsai will be criticized at home for following Beijing’s lawless line at the same time that Beijing was responsible for excluding Taiwan from participation in the arbitration.”

Taiwan’s Coast Guard Administration also stations vessels at Itu Aba, and another Wei-Shin frigate arrived at the feature late Tuesday, the agency said.

Tsai Ing-wen’s position “is really hard” because the claims of Taiwan and China are practically identical, said Nick Bisley, a professor of international relations at La Trobe University in Melbourne. “How you chart a course that maintains a Taiwanese position without sounding like you are China is very tricky. ”

“Suddenly, you are back to large areas of the South China Sea that are high seas, open to freedom of navigation and travel,” said Eric Shrimp, a former U.S. diplomat who’s now a Washington-based policy adviser at law firm Alston & Bird. “The question then becomes: how do the interested parties cooperate to secure those high seas?”

The answer: it will be increasingly more difficult for them to do so.

Meanwhile, defense stocks were mixed in Wednesday trading on Chinese exchanges. AVIC Aircraft Co. and AVIC Helicopter Co. fell 0.8% while Jiangxi Hongdu Aviation Industry Co. slipped 1%. AviChina Industry & Technology Co. rose 1.4% and AVIC Jonhon Optronic Technology Co. gained 3.1%.  Expect these to surge if and when the territorial conflict escalates further, as it is almost certain to do in the aftermath of the international court’s politically-motivated ruling.



Trouble ahead as property funds in England start selling to match redemptions. The problem of course is that everyone is selling which will force down values

(courtesy zero hedge)

UK Fund Managers Start Dumping Properties, Admit “Real Estate Needed Re-Pricing”

The uncomfortable moment of truth has arrived for property funds in the UK (and their investors).Following the initial tumble of the post-Brexit dominoeseight major funds so far either gating redemptions or forcing massive haircuts on to investors who want out – contagion concerns even woke up Britain’s regulators (and central bank) as fears of Bear-Stearns-esque forced liquidations spread; and now, as The FT reports, that is what has just started.

With every UK property fund knowing every other UK property fund needs to sell assets (real physical illiquid property) to meet cash calls (in their unreal faux-liquidity funds), the game-theoretical first-mover advantage has begun with Henderson Global Investors, which has begun offloading prime assets to provide liquidity to investors… (as The FT details)

The major fund plans to sell 440 Strand, the headquarters of the private bank Coutts, by the end of 2016.

The property, bought for £175m in 2014, was valued at £220m before the Brexit vote and will be formally brought on to the market in the autumn by the suspended Henderson UK Property fund, according to two people briefed on the plans.

The sale of 440 Strand is one of a number of disposals expected to follow the suspensions of seven property funds last week after investors rushed for the exit following the UK’s vote to leave the EU. Henderson, which manages the fund through TH Real Estate — its joint venture with the US retirement provider TIAA-CREF — declined to comment.

Funds holding more than £15bn of investors’ money are preventing redemptions, including the UK’s largest property fund, M&G’s £4.3bn Property Portfolio, and funds from Standard Life, Henderson, Aviva, Columbia Threadneedle and Canada Life.

Aberdeen Asset Management, which suspended its fund for a shorter period than the others — until July 13 — has begun marketing properties including an office building at 10 Hammersmith Grove, the UK headquarters of Fox International, a division of 21st Century Fox.

Early bids on the buildings Aberdeen is marketing indicated yields 50 basis points higher than before the Brexit vote, according to people briefed on the sales.

This indicates there will be discounts, but [ZH – we note The FT’s carefully scripted “do not panic” edit here] not the steep drops in price seen during the 2008 financial crisis.

But given the following chart as an example of the ‘liquidity gap’ between fund-level liquidations and the exuberant UK real estate market, things could get ugly very quickly

Perhaps even more troubling is the reality that you sell what you can, not what you want to

Property funds are expected to focus initially on disposing of “prime” assets, which will be easier to sell in uncertain markets, agents said.

Investors are more worried about properties in sectors thought to be vulnerable to Brexit, such as London offices.

Which suggests the lower-quality assets could be severely impaired, just as Richard Divall, head of cross-border capital markets at the property advisers Colliers, admitted:

“Brexit has caused short-term panic and stalling to most of the UK market, but… UK real estate needed re-pricing — the world looked at the UK as too expensive nine months ago.

And with managers forced to liquidate some of their best holdings to raise cash, the potential for fire-sale prices is very real (once again that chart above suggests the mark-to-market impact on real UK property alone could be significant), and that is why, as we previously noted, the Bank of England has been mulling a bailout…

The Bank of England’s ‘strawman’ here is likely the first step down the road of a full-blown bailout – a slush-fund to promise to buy UK property from the funds… with the hope that once they even mention it, investors will stop their selling and pile back in.

Of course, we have seen and heard all of this before (about 9 years ago) when any number of government backstops, bailouts, partnerships, and direct buying did nothing to stop the contagious collateral chain collapse following the gating and liquidation of two Bear Stearns funds. We will never learn and this time is no different for as one major fund manager warned…

“This throws up all sorts of questions about the suitability of daily-traded, open-ended property funds that are giving investors access to an illiquid asset.”

But all the time investors believe a central bank has their back, this is not a problem… until it is THE problem, and the walls come thundering down.

It would seem monitoring the price-discussions of 440 Strand (£175m in 2014 shooting up staggeringly quickly to £220m pre-Brexit) is as good an indicator of crisis as any… and perhaps the least manipulated (for now).

In a surprise selection, Boris Johnson, leader of the Brexit is now appointed British foreign secretary.  The pound immediately tumbled!
(courtesy zero hedge)

Boris Johnson Appointed British Foreign Secretary

While today’s resignation of David Cameron and immediate appointment of Teresa May as his replacement was fully expected, moments ago May’s cabinet served up her first major surprise when it was revealed that the man who led the Brexit campaign, Boris Johnson, and who many assumed would not hold a key role in the new UK cabinet, was just appointed to replace Philip Hammond (who will now be finance minister) in what may be the most prominent and important role as the UK prepares to negotiate its exit from the EU: that of foreign secretary.

Bloomberg adds:

The former London mayor campaigned for Brexit but pulled out of the race to succeed David Cameron as prime minister, Bloomberg News reports. His appointment came moments after new Prime Minister Theresa May named Philip Hammond as foreign secretary.


Amber Rudd, energy secretary under former PM David Cameron, was named home secretary – the position held by May for the past six years.


The new team will be tasked with crafting a path forward for the U.K. as it bids to leave the European Union after a referendum last month.

While those voting Leave may be delighted, the pound isn’t and moments after the announcement, sterling set a new intraday low at 1.3155.




Will the Bank of England cut its central bank rate tomorrow?

(courtesy zero hedge)


Will The Bank Of England Become The 55th Central Bank To Cut Rates Since 2014?

Malayisa’s surprise rate-cut overnight made it the 54th central bank to ease policy since the beginning of last year. Will Carney make The Bank of England the 55th tomorrow?


As Reuters reports, interest rates have never been lower, monetary policy has never been looser.

A total of 54 central banks around the world have eased policy since the beginning of 2015 to boost growth, ward off deflation, or both.

Below is a list of all 54 and the steps they have taken, starting with the most recent move.

click image for detailed interactive version…


Expectations are certainly biased towards The Bank of England cutting rates, but as Bloomberg reports, the views of his eight colleagues on the BOE’s rate-setting panel are less clear.

Chief Economist Andy Haldane and policy maker Gertjan Vlieghe may be minded to vote for a cut, having indicated a willingness in the past.


Others may prefer to wait for more data. The Office for National Statistics says the impact of Brexit won’t be visible in hard economic figures until mid-August. Even so, a gauge of consumer confidence dropping at the fastest pace in 21 years, the pound sinking to the weakest against the dollar since 1985 and the freezing of multiple property funds may provide sufficient evidence that action is necessary.


“That the governor has already signaled the BOE will ease soon tells us that the BOE’s strategy is to act in anticipation of the forthcoming weakness rather than being data dependent,” said Kallum Pickering, an economist at Berenberg Bank in London. “This suggests the BOE will probably move sooner rather than later.”



“I can’t think of a speech where we’ve had a clearer policy signal from him,” said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. “He has created a clear expectation in the market that they will deliver something this week.”

“priced in” – Investors are pricing in an 80 percent chance of a rate cut this week, up from 11 percent just before vote counts showed the “Leave” campaign had won the referendum. A significant spike in those bets came after Carney’s speech on June 30, where he said it was “plausible that uncertainty could remain elevated for some time” and that “some monetary-policy easing will likely be needed over the summer.”


French Intel Chief Patrick Calvar warns that the increase in frequency of sexual assaults caused by Islamic migrants will bring on a civil war :

(courtesy zero hedge/)

French Intel Chief’s Stunning Warning: Europe Is “On Brink Of Civil War” Due To Migrant Sex Attacks

In a shockingly non-politically-correct outburst, Patrick Calvar, chief of the Directorate General of Internal Security, told members of the French parliamentary commission that thanks to the increasing frequency of sexual assaults by islamic migrants, “Extremism is growing everywhere… We are on the brink of civil war.” 

As The Express reports, Calver said he feared an inevitable confrontation between the far right and Muslims poses more of a threat than terrorism.

He said that the situation in France is on such a knife edge that it could just take one more major Islamist terror attack to lead to a huge right-wing backlash.


Speaking to the leading French newspaper, Le Figaro, Mr Calvar said: “This confrontation I think it will take place.


“Even another one or two attacks and it will happen. It therefore behooves us to anticipate and block all these groups.”


“There will be a confrontation between the far right and the Muslim world.”


At one point, Mr Calvar said: “Europe is in great danger, extremism is growing everywhere.”

The fears are that the country could suffer an attack similar to the one that happened in Germany on New Year’s Eve where a staggering 1,200 women were sexually abused in German cities, particularly in Cologne. Many of the suspect perpetrators were migrants of North African origin.

Finally, it is not just the French who are hitting the panic button:

Mr Calvar’s comments have come as the former MI6 boss Richard Dearlove also said that Europe faced a “populist uprising” if Governments do not take control of the migrant crisis.

And security experts in Germany have also warned Chancellor Angela Merkel that the middle class was becoming increasingly radicalised because of her open borders migrant policy.



Canadian dollar rises as the Bank of Canada does not lower rates.  However it cut 2016 and 2017 GDP forecasts as it blames BREXIT, wildfires and weak consumption:
(courtesy zero hedge)


Loonie Surges As BOC Keeps Rate Unchanged, Cuts 2016, 2017 GDP, Blames Brexit, Wildfires, Weak Consumption

The Bank of Canada did not surprise moments ago when it kept the overnight rate at 0.5%, as expected The Bank said that the “current stance of monetary policy is still appropriate” adding that risks to inflation profile are roughly balanced. It also said that “fundamentals remain in place for a pickup in growth over the projection horizon, albeit in a climate of heightened uncertainty.”

Where the BOC did surprise was in its latest cut to Canada’s economic outlook: the central bank now expects GDP to grow 1.3% in 2016, 2.2% in 2017, down from 1.7%, 2.3%, respectively.

The BOC said that Real GDP is expected to fall 1% in 2Q, pulled down by “volatile trade flows, uneven consumer spending, and the Alberta wildfires.” It does expect Real GDP to grow 3.5% in 3Q as oil production resumes, rebuilding in Fort McMurray occurs, and the Canada Child Benefit boosts consumer spending. However, that won’t offset the full year slowdown, which sees 2016 growth slased by 0.4%.

Some other points:

  • Brexit to decrease the level of Canada’s GDP by 0.1% over projection period
  • Contribution of exports to average annual real GDP growth in 2016 revised downwards to 0.3 from 1.1 percentage points
  • Bank: Output gap will close near the end of 2017, later than estimated in April, due to downward revisions to business investment
  • Contribution of business fixed investment to average annual real GDP growth in 2017 revised downwards to 0.2 from 0.4 percentage points
  • Recent housing market developments in Vancouver and Toronto have “exacerbated” financial vulnerabilities in the household sector
  • Contraction of investment spending in the oil and gas sector will be nearly complete by end of 2016

The Loonie’s kneejerk reaction shows an immediate relief that the BOC did not cut, although rate cuts may still be coming.

Full statement below:





Well that about does it for Venezuela’s car industry;  They sold only 243 cars in June 2016. In 2006-2007 they were averaging over 200,000 cars per month

(courtesy zero hedge)


This Is What Happens To Car Sales In A “Socialist Utopia”

Before the ‘election’ of President Maduro, Venezuelan domestic car sales were in the 8 to 10,000 range per month. Since Maduro’s election things have gone south fast in the socialist utopia…


Yes – that is correct – that is 243 cars were sold in Venezuela in June (not 243,000)!




It gets from bad to worse for Venezuela. Now Maduro puts the Military in charge of food.

What this total moron did was sacrifice his people to save the creditors?  And lose all of its gold? What a clown!

(courtesy zero hedge)


Now we witness a huge buildup of distillates as production also spikes. OIl extends its losses:

(courtesy zero hedge)

Oil Extends Losses After Biggest Distillates Build In 6 Months, Production Spike

Following last night’s surprising inventory builds (from API), DOE once again totally dismissed the headline with a 2.55mm draw. However, the numbers are all over the place with major builds in gasoline (1.2mm) and distillates (+4.058mm – the biggest in six months). Last week’s plunge in crude production (Alaska-driven) was followed by a 0.6% surge in production this week – biggest since Oct 2015. Crude prices had extended their post-API losses into the DOE data, kneejerked higher on the hesadline then plunged on production and distillates.


  • Crude +2.2mm (-3mm exp)
  • Cushing -166k (-900k exp)
  • Gasoline +1.5mm
  • Distillates +2.6mm


  • Crude -2.55mm (-3mm exp)
  • Cushing -232k (-900k exp)
  • Gasoline +1.21mm
  • Distillates +4.06mm

Biggest Distillates build in 6 months but the 8th week in a row of crude draws…

Last week’s big plunge in US crude production (driven by a seasonal collapse in Alaska) was followed by a bounce back biggest rise since Oct 2015…

(What we lost last week in Alaska productuion made up for partially this week as total domestic supply grew 57,000 boe/d (alaska +71K))

The reaction was a kneejerk higher oin the headline crude draw but then plunge on products..

Some context…

Charts: Bloomberg






Your humour story of the day:

Oil Plummets After Gartman Covers Crude Short, Goes Long

Some can blame today’s plunge in oil on the increased oil production in the US, or perhaps the substantial distillate and gasoline builds, as reported moments ago by the DOE

… but those who follow Dennis Gartman’s daily flip-flopping know very well what caused it.

Overnight, Gartman finally closed his 20-day old oil short and, drumroll, went long.

Short One Unit of Crude: Thursday, June 23rd, we were sellers of crude oil, selling both September Brent and WTI crude upon receipt of this commentary. We sold a half unit of each, selling September WTI at or near to 49.88 and September Brent at or near to $50.72/barrel. They are this morning $46.90 and $47.75 respectively and as noted above following the material shift in the term structure ANDfollowing the “reversal” to the upside, we wish firstly to cover this short position AND we wish to go long of crude oil at the same time. So we are buying two units of crude this morning; one to cover the short and the other to go long. We trust we are clear.

Oil then promptly crashed.

And as oil closes in on a $44 handle, we wait to see how long before Gartman’s lethal prediction that oil would never hit that price in his lifetime (which it did just three months later from the downside), will also be validated from the other direction.


Finally, here is Gartman ranting at the market:

Are stocks over-done on the upside? Yes, of course and that is stunningly clear from the fact that the CNN Fear & Greed Index finished yesterday afternoon at 88, a level exceeded only once in the course of the past three years when it touched 93 back in the spring of ’14. However, even then the market continued to run to the upside and it is worth remembering that fact. The market was egregiously over-bought then and it became even more egregiously over-bought in the weeks and months ahead. As Keynes said, “The market can remain irrational far longer than we can remain solvent.” The present “irrationality” may persist and likely shall. It may be illadvised… and very so… to initiate long positions here, but it is still wise to remain long of what one owns in order to participate in the “game” as long as the music is still playing. There will come a time when the music stopes; when the reality of the situation created by the world’s leading central banks hits and hits hard and when the game turns ugly and bloody, but that time is not yet upon us. So we are to dance while the band plays; the champagne’s cold; the ladies are beautiful and the men are handsome, for soon enough it will all change… the only question is “When?”:

As Lord Keynes reminded us, the market can remain illogical far longer than we can remain solvent, but when we couple Herb Stein’s dictum with that of Keynes we know intuitively that something is going to  give; that these closed end fund premiums are doing to collapse and that this will end badly. It’s a given; it will happen!

Maybe the market is rational after all?




Oh OH! we have been pointing this out to you on several occasions.  The crack spread on oil has now reached rock bottom of 13.00 dollars a huge drop from two weeks ago’s 28 dollar crack spread.  The higher spread has been keeping refiners busy and profitable.  A low crack spread means huge inventories exist for gasoline and other distillates.  This means that refiners must close down and oil must come down in price

(courtesy zero hedge)


Talk Of Oil “Death Spiral” Emerges


One week ago, we looked at an epic build up of gasoline inventories on the East Coast, also known as PADD1, which had slammed the crack spread to record lows for this time of the year, and asked if “This What Finally Drags Crude Oil Lower.” We were referring to the collapsing Crack Spreads, which show that something disturbing is taking place for US refiners who are no longer able to “internalize” the massive crude glut.

U.S. gasoline crack spread a proxy for refiner margins, has dropped 34 percent in two weeks. On Wednesday, it hit a five-year low for this time of year below $13 a barrel. That is less than half the crack spread of $28 a barrel at this time last year.


As of today, the WTI crack spread was $13.1, largely unchanged from a week ago.

We then quoted Andrew Lebow, senior partner at Commodity Research Group in Darien, who summarized it best by saying that PADD 1 is a holy mess. It is very unusual. If a market becomes extremely oversupplied, like PADD 1, they are going to have to cut runs.” That is another way of saying refiners will have to stay shut, which in turn will force crude to  build up in various on and offshore storage locations.

Our summary of the strange events taking place in the US refining industry:

with the inventory bottlenecking having reached all the way to the gasoline level, in lieu of refiner buying, crude producers will be forced to start selling oil and dumping prices just to get marginal demand as both onshore and offshore storage is near capacity. Most likely this will happen in the next few weeks, when coupled with the near full Chinese SPR, the slump in Chinese oil demand, the elimination in Nigerian supply overhangs, the resumption of Libyan exports, it will send the price of oil tumbling, and incidentally replaying the summer of 2015 when crude crashed…



One week later, and with gasoline and distillate inventory builds continuing to rise precariously, it appears that this sentiment is starting to permeate the analyst community.  This is how WSJ’s Market Talk blog describes what is going on:

Inventories of gasoline and other refined products in the US rose strongly last week, weighing on prices today. It’s the result of months of cheap crude prompting refiners to buy more crude and run at higher rates to turn it into products. Lipow Oil Associates sees the start of a “death spiral” as “product inventories are high, margins come under pressure, refiners reduce crude runs and therefore the crude-oil glut grows to the point where someone wants to discount” to unload it–inspiring refiners “to kick up their runs again.” .

End result: today WTI closed the NYMEX session at its lowest level since May 10. It may be only the beginning.



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

Euro/USA   1.1076 UP .0016 (STILL  REACTING TO BREXIT)



USA/CAN 1.3042 DOWN .0017

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 16 basis points, trading now JUST above the important 1.08 level RISING to 1.1076; Europe is still reacting to BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED UP 11.03 POINTS OR 0.37%   / Hang Sang CLOSED UP 97.63 PTS OR .46% /AUSTRALIA IS HIGHER BY 0.68%/ EUROPEAN BOURSES ARE ALL DEEPLY IN THE GREEN   as they start their morning

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning: closed UP 135.78 POINTS OR 0.84% 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 97.63 OR 0.46%  ,Shanghai CLOSED UP 11.03 OR 0.37%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED IN THE GREEN/India’s Sensex IN THE GREEN  

Gold very early morning trading: $1338.95


Early WEDNESDAY morning USA 10 year bond yield: 1.479% !!! DOWN  3 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 2.197 DOWN 3 in basis points from TUESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early WEDNESDAY morning: 96.38 DOWN 12 CENTS from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING



And now your closing WEDNESDAY NUMBERS


Portuguese 10 year bond yield:  3.10% DOWN 2 in basis points from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.280% DOWN 2  in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD: 1.15%  DOWN 3 IN basis points from TUESDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.21 DOWN 2 IN basis points from TUESDAY (again totally nuts/)

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





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


Euro/USA 1.1108 UP .0048 (Euro =UP 48 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 104.38 DOWN 0.329(Yen UP 33 basis points/HELICOPTER MONEY )


USA/Canada 1.2960-DOWN 0.0098 (Canadian dollar UP 98 basis points  DESPITE OIL FALLING (WTI AT $44/93). Canada keeps rate at 0.5% and does not cut!


This afternoon, the Euro was UP by 48 basis points to trade at 1.1108

The Yen ROSE to 104.38 for a GAIN of 33 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY TO COMMENCE

The POUND was DOWN 110 basis points, trading at 1.3157 AS PRIME MINISTER THERESA MAY TAKES OFFICE

The Canadian dollar ROSE by 98 basis points to 1.2960, WITH WTI OIL AT:  $44.91


The USA/Yuan closed at 6.6855

the 10 yr Japanese bond yield closed at -.28% UP 1  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 4  IN basis points from TUESDAY at 1.470% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.217 DOWN 6  in basis points on the day 


Your closing USA dollar index, 96.21 DOWN 23 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED DOWN 10.29 OR 0.15%
German Dax :CLOSED DOWN  33.36 OR  0.33%
Paris Cac  CLOSED UP 3.88  OR 0.09%
Spain IBEX CLOSED DOWN 32.10 OR 0.38%
Italian MIB: CLOSED DOWN 193.12 OR 1.15%

The Dow was UP 24.45  points or 0.13%

NASDAQ DOWN 17.09 points or 0.34%
WTI Oil price; 44.91 at 4:30 pm;

Brent Oil: 46.42




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

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


BRENT: 46.59

USA 10 YR BOND YIELD: 1.472% 

USA DOLLAR INDEX: 96.38 DOWN 7 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3140 DOWN .0128 or 128 basis pts.

German 10 yr bond yield at 5 pm: -.044%


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


Some Stocks Fall: Mainstream Media Proclaims “Flat Is Kind Of A Win!”

Some stocks did not rise today… but do not worry – one clever CNBC chap noted “flat is kind of a win!” – nevertheless, panic began to sweep the mainstream media as a new record high was not achieved in some indices…


Another day, another record high for stocks with a pre-open ramp…


but that was the best of it… although the panic bid resumed after Europe closed…


In cash, Trannies which went vertical as CSX earning sleaked before the bell)


But stocks remain the post-payrolls winner…


Notably The Dow stuck around its previous record high again 18,351 intraday…


Another new high in July, which FBN Securities technical analyst JC O’Hara notes could be a problem…

Since 1950, 27 years posted a new 52-week high in July; avg. 3-month pattern suggests “new high momentum fizzled” into sideways trading, with median pullback 7.5%, avg. decline nearly 12.5%..


After a July high, stocks bottom in late October.


“Chasing the market is not the best option” especially amid “plethora of severely overbought breadth indicators.”

And today, bonds notably decoupled from stocks once again…


Having decoupled for a few days, VIX dipped today to a 12 handle – smells a lot like managers unwinding hedged positions (i.e. covering hedge and reducing underlying exposure)…


Treasury yields tumbled 2-5bps (long-end outperforming) as yesterday’s CNBC call for the start of the Great Rotation is dashed…


The USD Index ended very modestly lower but basically flat on the week as the chaos in GBP and JPY swung the other way today (GBP weakness on May and cabinet apointments and JPY strength on Heli money denials) biggest drop in Cable in 7 days…


Silver and Gold gained on the day, as did Copper extending its post-payrolls gains to 6%!! but crude tumbled…


Biggest 3-day surge in Copper in over 4 months…


Dramtically bigger than expected Distillates build and production rise sent oil sliding today back to 9 week lows (below $45)


Oil “doesn’t matter”…


As the 2015 analog looks increasingly spooky…


Charts: Bloomberg



A must read to those who follow the USA earnings scene.  In essence the S and P earnings are falling and is evidenced by the lower taxes collected.

Please study..

(courtesy zero hedge)

Greater Fools Storm The Casino

Since last Friday’s phony jobs report the casino has become so unhinged that analysis is beside the point. A picture worth an eventual thousand point drop on the S&P 500 will do the job.

Grim Reaper

While we are waiting it might be wondered, however, whether nearly two decades of central bank financial repression have not merely destroyed honest price discovery on Wall Street. Perhaps it has actually extinguished brain function entirely among the corporal’s guard of carbon units that remain.

Yes, it is not surprising at all that the robo-machines are now gunning for the 2200 point on the S&P 500 charts. That’s what they do.

What defies explanation, however, is that the several dozen humans left on Wall Street who apparently talk to Bob Pisani are actually attempting to rationalize this “breakout” of, well, madness.

According to JPMorgan’s latest thoughts, for example, it’s all explained by Mr. Market hard at work discounting a meme called “17x/$130”.

Market update – more of the same for this market. The 17x/$130 argument continues to resonate (that combination of numbers points to 2200). It’s still very, very early in the CQ2 season but the indications so are more positive than negative (AA, Daimler, PEP, Samsung, SIMO, STX, WDC, etc) and that is helping investors look past the earnings recession and is bolstering confidence in a ~$130 number for next year.

Let’s see. Before we get to whatever massaged and medicated version of “earnings” JPM is talking about with its $130 per share number, it would be useful to start with reality.

According, to Howard Silverblatt, the S&P’s authority on these matters, reported (GAAP) earnings for the March LTM finally came in at $86.44 per share.

So barring some near-term earnings miracle, the market is now valued at a nosebleed 24.9X. The last time it was near that level outside of outright recession was on May 16, 2008.

At that point, March 2008 LTM earnings on a GAAP basis had posted at $60.39 per share. So when the market hit an intraday high of 1430 the implied multiple was nearly 24X.

Needless to say, it was a long way down from there. In fact, ten months later the market was 53% lower, and S&P reported earnings actually bottomed that quarter at $6.86 per share, or 90% lower.


But then, of course, who would credit GAAP?

That is, besides the the several thousand white collar “criminals” domiciled in Federal hospitality facilities who undoubtedly rue the day they violated it; or the tens of thousands of bureaucrats at the SEC, DOJ and state attorneys general offices who make a living enforcing it; or the far greater numbers of white collar defense attorneys who make an even better living parsing its fine points.

Then again, you don ‘t have to make a fetish of GAAP, even if several billion dollars annually of law enforcement and regulatory intrusion insist upon it. In fact, back in May 2008—–at a time that even the White House council of economic advisers said there was no recession in sight and Bernanke was preaching mainly blue skies ahead—-operating earnings had posted at $76.77 per share, according to Howard Silverblatt.

So even using the ex-items style of earnings, the market was trading at a pretty sporty 18.6X.

Alas, a recession had already been underway for six months, but no one had bothered to tell the Eccles Building and their Wall Street acolytes. The latter are otherwise known as “street economists” and “equity strategists” of the JPMorgan ilk quoted above.

Here’s the thing. Even the LTM “operating earnings” number at the time was down by 16% from its cyclical high of $91.47 per share that had posted three quarters earlier (June 2007 LTM). But like now, the street insisted that the “earnings bottom” was in, and that 2008 profits would come in at over $100 per share or 30% higher than the March 2008 LTM actual.

At it happens, Silverblatt’s certified operating earnings number for the March 2016 LTM period was $98.61 per share. (Harvey: non GAAP)

That means that today’s market traded at 21.8X Wall Street’s preferred earnings measure. That’s even above the 18.6X delusion back in May 2008, and also something more.

Like eight years ago, the March operating earnings number is down 14%from its peak of $114.50 posted for September 2014. And also like back in 2008, expected forward earnings of $130 per share are 30% above current levels.

In truth, all of this is worse than deja vu. That’s because the casino’s financial narrative has been so corrupted by recency bias and accounting promiscuity that it has no idea what the profits picture really is or where it is going.

In a moment we will put a bullet through JPM’s $130 per share fantasy. But it is worth reiterating just how far the “earnings” narrative has departed from GAAP, and that near the end of a cycle this GAAP gap becomes especially wide.

As the WSJ recently documented,  Wall Street’s ex-items or pro forma  version of S&P 500 earnings came in at $1.040 trillion in CY 2015 compared to GAAP earnings of $787 billion. It would appear that CEOs and CFO’s who filed their SEC statements on penalty of prison time, averred that their actual profits were exactly $256 billion smaller than what they told their investors.

As it happens, that quarter trillion dollar fib is exactly the size of the ex-items charade back in 2007. It seems as if companies actually need a periodic recession so that they can toss into the kitchen sink the write-offs for all the dumb deals and investment mistakes they made while the bubble was still inflating.

In any event, not only are Wall Street’s hockey sticks extremely crooked from an accounting point of view, but they are also egregiously predictable in the magnitude by which they deflate as one-year forward estimates are eventually overtaken by reality.

To wit, in March 2014, the one-year forward estimate for CY 2015 came in at$135 per share of “operating earnings” for the S&P 500. At length, CY 2015 unfolded—-bringing with it a collapse of oil and materials prices and a sharp slowdown of global growth that came as a big surprise to Wall Street.

Accordingly, Silverblatt now certifies that actual operating earnings for CY 2015 came in at $100.45 per share. Apparently, in a world where “one-timers” don’t count, that gigantic 26% miss doesn’t count.

That’s because in March 2015, the street “bottoms up” consensus for 2016 was pegged at, yes, $135 per share, again.

The problem is, that hockey stick has already been rolled-down to just $114 per share as of June. Yet even if Q2 comes in at the current estimate of $28 per share and there is no further earnings decline in Q3 and Q4, earnings will come in at $100 per share for 2016. That would be another 25% miss.

Never fear. The street consensus estimate for 2017 as of this March was $136 per share for the third year in a row.

That JPMorgan has already walked it down to $130 per share, therefore, is not the least bit surprising. Walking it back is what equity analysts do.

Then again, according to Howard Silverblatt, operating earnings for the current LTM period (June 2016) are expected to come in at just $100.55 per share.

Yet why is the implicit 30% climb from here to get to JPM’s magic “17X” on next year’s earnings any more plausible than was the outlook back in July 2014? Back then, LTM operating earnings posted at $112 per share and the expectation was for a 20% gain on a year forward basis for 2015.

In fact, since July 2014 total business sales in the US economy have declined by 6% and the inventory to sales ratio has soared from an already high 1.3X sales to 1.41X. That’s recession territory.

Likewise, unlike the BLS’s monthly random numbers generator, the treasury tax collections do not lie. And they do not reflect taxes paid by real world employers for phantom workers on account of seasonal maladjustments, birth-death imputations or trend-cycle adjustments to actual payroll records.

As we showed last week, the 90-day moving average of payroll tax collections in June had dropped from last year’s 5-6% Y/Y trend to barely 3%. This means that after allowance for average hourly pay gains of 2.6% since last June,  labor hours worked in the US economy are evidently at stall speed.

Withholding Taxes Growth Rate - Click to enlarge

That probability is reinforced by two other straws in the wind.

First, total Federal tax collections—-including upper income estimated payments, corporate taxes and excise taxes—-at $380 billion in June were flat over prior year. That’s a radical departure from the hefty gains registered since anti-recession tax cuts expired in 2013.

Likewise, the recovery of incomes among the top 10%-20% of households since 2009 has generated solid gains in restaurant and bar sales.



Gundlach does not like what he sees.  He is betting on the short side even though central banks are buying equities:

(courtesy zero hedge)

Gundlach Gets More Bearish, Says “Big Money” To Be Made On The “Short Side”

And you thought that helicopter money is not coming to the USA! Guess again:

Who put these clowns in power!!

(courtesy zero hedge)

Fed’s Mester Says Helicopter Money “The Next Step” In US Monetary Policy

Think “helicopter money” is/will be confined only to Japan, which has been sending conflicting trial balloons about this unprecedented next step in monetary policy for the past two days (first Japan’s Senkei reported that the government will be adopting “helicopter money” followed by a government spokesman denying the report, then followed by a separate Bloomberg report about a 10T yen stimulus plan, the concluding with Abe advisor Koici Hamada saying that “boosting fiscal and monetary stimulus at the same time would be effective” in Japan)? Think again.

Speaking overnight in Australia, the Fed‘s Loretta Mester said helicopter money” could be considered to stimulate America’s economy if conventional monetary policy fails.

As Australia’s ABC reports, Mester, president of the Federal Reserve Bank of Cleveland and a member of the rate-setting Federal Open Market Committee (FOMC), signalled direct payments to households and  businesses to stoke spending was an option if interest rate cuts and quantitative easing fail.

“We’re always assessing tools that we could use,” Mester told the ABC’s AM program. “In the US we’ve done quantitative easing and I think that’s proven to be useful.

So it’s my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.

Mester’s qualified support for the use of “helicopter money” comes amid expectations that the Bank of Japan is poised to unleash a major fiscal stimulus package of at least 10 trillion yen ($130 billion) to kickstart its flat-lining economy.

The surprising comments from a Fed hawk, come on the heels of two other Fed presidents hinting that more QE could be used as additional “ammo” should the US economy relapse back into recession, and as major central banks consider unconventional policy tools in a world of slowing growth, low inflation and record low interest rates. Mester said that concerns about the Brexit vote were a consideration in June when the Federal Reserve left rates at between 0.25 and 0.5 per cent, a consideration  While the immediate impact of Brexit rattled financial markets, Mester said the Fed would be looking to medium and long term fallout.

“Between now and our next meeting and future meetings we are all going to be assessing what the impact of that decision will mean in terms of economic conditions and how they effect the medium term outlook for the US economy,” she explained.

Ironically, the same Mester said she believes there are risks in keeping US interest rates too low for too long. “For the US, if we overstay our welcome at zero then of course there would be financial stability risks,” Dr Mester acknowledged. So her “solution” is not just more easing, but outright monetary paradrops.

“I don’t think we’re behind the curve in the US on interest rates, but it’s something we have to assess going forward and where the risk balance is.”

With the next FOMC rate setting meeting scheduled for July 28, Dr Mester declined to be drawn on whether there would be another US rate rise this year. However, she signalled her support for moving rates higher and that rising employment and inflation meant “a gradual increasing pace in interest rates is appropriate.”

“I’ve been one of the more positive members in terms of the US economy. I do think we’ve made significant progress on the employment part of our mandate and the recent inflation data has been encouraging,” Dr Mester said.

“But of course the timing of the next and the ultimate slope of that gradual pace will depend on how the risks around the outlook evolve.”

And if all else fails, there is always Bernanke’s helicopter, first in Japan then coming to the





No comment necessary:


Humpday Humor: Earnings Expectations Edition


Fool me once, shame on you. Fool me twice, shame on me. Fool me for the sixth year in a row – I must be a bloody idiot!!


h/t @Stalingrad_Poor


And it is that ‘idiocy’ that makes the following chart somehow acceptable to investors…

Bonus Humor… US GDP growth expectations seasonal tendency to be revised dramatically lower…


Charts: Bloomberg



A must view interview:  Greg Hunter with my favourite guy: Rob Kirby

(courtesy Rob Kirby/USA Watchdog)


Global Economy Critical Condition Code Blue-Rob Kirby

Macroeconomic analyst Rob Kirby says don’t trust the stock market’s rise to new all-time highs. The global economy is in terminal trouble, and Kirby explains, “My view of the financial system as it sits today is we are in an intensive care unit, and we have a lot of tubes and wires connected to us right now.  The question you are asking me is how long is a person in critical condition in an intensive care unit going to live?  I don’t really know the answer to it other than we could get a code blue any day. We could get a code blue tomorrow . . . code blue is when somebody has passed.”

Kirby also says, “This is the real world that we live in, and most of our neighbors and friends are having a tough time making ends meet. There is a huge, huge contradiction from what we hear from officialdom and what we are all experiencing on the street.  As to the record highs in the financial markets, everybody should know about the ‘Plunge Protection Team’ or ‘The Presidents Working Group on Financial Markets’ and know that the hand of government is tweaking or propping up markets around the world.  The onslaught of freshly produced new money can do wonders for paper assets.  What all this fresh new paper doesn’t do is create new physical precious metal because new precious metal doesn’t come from a Gutenberg Press.  It cannot be printed into existence with key strokes. . . . That creates a problem for officialdom because the demand for physical precious metal has been spiraling up. . . . The central banking committee, spearheaded by the U.S. Treasury and the Exchange Stabilization Fund, has been throwing unprecedented amounts of paper promises of metal at the markets to stem the rise which should have been much bigger in free markets than the recent rise we have seen in both gold and silver. . . . This does not diminish the outcome that will ultimately happen.  The outcome that will ultimately happen is the price of gold and silver will trade at many multiples than they currently are because the paper market will be so discredited that it will turn into a cash and carry type of market.  This is coming. . . . The LBMA and the COMEX in New York will show themselves they are complete and utter frauds that they are because the amount of paper they continue to sell will ultimately discredit them.”

Kirby says the metal central banks are most fearful of is silver. Kirby says, “Silver is Kryptonite to central bankers. .  . . Why?  Because they don’t have any.  They don’t have physical stores of silver to feed into the market to beat the price down.  So, recently, to stem the rise of silver, they have really been attacking the price of gold.  The whole notion there is if they beat the price of gold down, silver will decline in sympathy with the attack on gold.”

On the ongoing dispute with China losing part of its claim to the South China Sea at The Hague, Kirby says, “It’s really just another case of rising geo-political tensions. In recent weeks, Vladimir Putin has been making some very strong statements regarding the actions of the West and NATO, very provocative actions.  Putin actually issued a very terse warning to the West last week saying we were headed for a nuclear conflict if the West’s aggressive posture continues.”

So, does the West want war? Kirby contends, “Typically, when money fails, the elites take us to war.  That is a constant in history.”



Join Greg Hunter as he goes One-on-One with Rob Kirby, founder of KirbyAnalytics.com.



Video Link

http://usawatchdog.com/global-economy-critical-condition- code-blue-rob-kirby/


(There is much more in the video interview.)

After the Interview:

Kirby also says more and more things will be happening that will be unreal, but there will be no return to any sort of “normalcy.” Kirby explains, “The Humpty Dumpty economy did not just fall off the wall



.see you tomorrow night




  1. I just can’t help but wonder why the herd is so stupid. I suggest that is why only 5% are successful and 95% are not. Like Jim Rohn said =”just walk away from the 95%”. Even with the internet these fools don’t fully research their investments. I can’t wait for the @#it to hit the fan. No wonder the elite are laughing at the commoners….Idiots.


  2. Michael J. Doherty · · Reply

    Harvey, Do you really think it is fair to go on a rant so often about “socialism” being the only problem and the only reason for Venezuela’s downfall. You know that when a country tries to bring any socialist policy to help the people, the powers that be – IMF, World Bank, US gov’t and the rest of their western world toadies all co-ordinate a relentless attack on that countries currency and economy causing economic failure and suffering of the people. Thank God that Canada brought in public health care back in 1966 (socialist policy). If they tried to do it today, no doubt we would be attacked in the same way. No Harvey, I am not a socialist, but some socialist policies are just the humane thing to do.


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