July 14/Bankers orchestrate raid on gold and silver in an attempt to lower OI in silver/Silver is the banker’s Achilles heel/Japan does not have legal authority to commence “helicopter money”/China introduces a new guided missile destroyer in the South China Sea as tensions escalate

Gold:1331.30 DOWN $11.10

Silver 20.28  DOWN 9 cents

In the access market 5:15 pm

 

Gold: 1334.25

Silver: 20.30

.

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

The following is what I said yesterday and it fully pertains to events today:

 

“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 302.22 tonnes for a loss of 1  tonnes over that period

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY 1759 contracts UP to 216,376, AND STILL CLOSE TO AN  ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH ROSE BY 23 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.082 BILLION TO BE EXACT or 155% 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 10,853 contracts despite gold’s RISE in price YESTERDAY to the tune of $8.30. The total gold OI stands at 622,167 contracts. The bankers are to be congratulated for doing another fine criminal job in fleecing unsuspecting longs.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

we had another  change in gold inventory./

a massive “paper withdrawal” of 2.37 tonnes.

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

Total gold inventory rest tonight at: 962.85 tonnes

SLV

we had no changes into the SILVER INVENTORY TO THE SLV

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 1759 contracts UP to 216,376 as the price of silver ROSE BY 23 cents with YESTERDAY’S trading. The gold open interest fell by 10,853 contracts down to 622,167 as  the price of gold ROSE by $8.30 YESTERDAY.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 6.67 POINTS OR 0.22%/ /Hang Sang closed UP 238.69 OR 1.12%. The Nikkei closed UP 154.46POINTS OR 0.95% Australia’s all ordinaires  CLOSED UP 0.39% Chinese yuan (ONSHORE) closed UP at 6.6838 /Oil FELL to 45.64 dollars per barrel for WTI and 46.80 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.6909 yuan to the dollar vs 6.6838 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS A LITTLE MORE USA DOLLARS LEAVES THEIR SHORES. 

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

Helicopter money in Japan:  not so fast!  They have to change the law and being doing so it causes the fundamental principle of central bank independence from government out the window:

(courtesy zero hedge)

b) REPORT ON CHINA

This news is a “great” reason for gold to be whacked today  After the ruling, Beijing unveils a new guided missile destroyer:

( Sputnik)

4 EUROPEAN AFFAIRS

i a.)The pound rises as there was no rate drop and also no new QE is planned.  The world is now expecting Japan to lead the way

(zero hedge)

i b)UK property funds are imploding:  check the charts:

( zero hedge)

ii)Christensen explains why Italy’s economy is in a mess and how the higher value of the Euro is not helping the “southern block”.  It is beneficial to the “northern block” but to the south the higher Euro is equal  to tightening

( Lars Christensen/Market Monetarist blog)

 

iii)A terrific commentary from Simon Black who outlines the origins of Deutsche bank and how the entire global banking system can come crashing down:

( Simon Black/SovereignMan.com)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Omar, the Chechen is dead in a strike near Mosul.  Kerry visits Moscow with an olive branch:

(courtesy zero hedge)

 

ii)Congress to release the classified 28 pages which details Saudi involvement in 9/11.  The next move will be up to Saudi Arabia.  When it was announced 4 months ago that the USA might release the documents, the Saudi’s threatened severe retaliation.

( zerohedge)

6.GLOBAL ISSUES

What a great way to show how the earnings throughout the globe are faltering badly and yet stock markets rise:

(courtesy zero hedge)

7.OIL ISSUES

i)An extremely important paper on why oil will fall.  China is massively exporting gasoline while at the same time crack spreads are dropping like flies:

( zero hedge)

8.EMERGING MARKETS

none today

9. PHYSICAL STORIES

i)john Embry is in our camp on the expected explosion in the price of silver as the bankers are operating on nothing but silver vapour.

( John Embry/Kingworldnews)

 ii)Steve gives his reasoning as to why silver will explode higher in percentage than gold(courtesy Steve St Angelo/SRSRooco report)

 

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

i)Initial jobless claims hover at 43 year lows despite awful labour market conditions

Nothing but phony data:

( zero hedge)

ii)This leading indicator for consumer inflation came in red hot:  Final PPI demand surges the highest since Sept 2012:

( zero hedge)

iii)The following is an extremely important paper and you must all read.

 In a nutshell helicopter money is permanent money.  It is issued directly by the government to citizens to spend, to the government itself to finance its deficits. Unlike QE the fed has no corresponding asset on its balance sheet.  It “buys” no asset.  It only has the liability of the huge amount of paper dollars printed to finance stuff. This is where hyperinflation comes upon quickly.  Confidence will wane and trouble will ensue.

a must read..

(courtesy David Stockman/ContraCorner)

Let us head over to the comex:

The total gold comex open interest FELL TO AN OI level of 622,167 for a  LOSS of 10,853 contracts DESPITE  THE FACT THAT THE PRICE OF GOLD ROSE BY $8.30 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 422 for a LOSS of 612 contracts. We had 612 notices filed on yesterday, so we neither lost nor gained any gold ounces that  will  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  23,419 contracts down to 349,573  as this month starts its wind down until first day notice for the August contract, Friday,July 29/2016: almost 2 weeks away.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was VERY  GOOD at 389,304. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was  good at 244,789 contracts.The comex is not in backwardation.
Today, we had 3 notices filed for 300 oz in gold
And now for the wild silver comex results. Total silver OI ROSE by 1759 contracts from 214,617 UP TO 216,376.  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 39 contracts down to 1100. We had 57 notices served on YESTERDAY so we gained 19 contracts or 95,000 additional silver ounces that will stand for delivery.The next non active month of August saw it’s OI FALL by 55 contracts DOWN to 490. The next big active month is September and here the OI ROSE by 1164 contracts UP to 157,162.   The volume on the comex today (just comex) came in at 81,129 which is HUGE. The confirmed volume yesterday (comex + globex) was EXCELLENT at 66,123. Silver is not in backwardation. London is in backwardation for several months.
We had 207 notices filed for 1,035,000 oz. in silver JULY contract month
:INITIAL standings for JULY
July 14.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
6430.000 oz
 Scotia
200 kilobars
Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz 
32,151.000 OZ
HSBC
???
1000 kilobars??
s/b 32,150.00
No of oz served (contracts) today
3 notices 
300 oz
No of oz to be served (notices)
419 contracts
41900 oz
Total monthly oz gold served (contracts) so far this month
4680 contracts (468,000 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   226,500.6 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: and it was a dandy!!
iii) into  HSBC:32151.000 oz
(THE PROBLEM IS THIS IS SUPPOSE TO BE 1000 KILOBARS.  BUT THE WEIGHT OF 1000 KILOBARS IS 32,150.000.  HOW DID THEY RECEIVE 32151.000???)
Total customer deposits; 32151.000   OZ
1000 KILOBARS
Today we had 1 customer withdrawal:
i) out of SCOTIA: 6430.000 oz  200 KILOBARS
Total customer withdrawals:6430.000   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 3 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 2 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 (4680) x 100 oz  or 468,000 oz , to which we  add the difference between the open interest for the front month of JULY (422 CONTRACTS) minus the number of notices served upon today (3) 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 (4680) x 100 oz  or ounces + {OI for the front month (422) minus the number of  notices served upon today (3) x 100 oz which equals 509900 oz standing in this non   active delivery month of JULY  (15.860 tonnes).
We  neither lost nor gained any gold ounces that will stand for metal 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) =9,716,350.421 or 301.41 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 302.22 tonnes for a loss of 1  tonnes over that period. 
 

THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

 

 
 end
GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX
And now for silver
 
JULY INITIAL standings
 July 14.2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
 393,976.966 OZ
(DELAWARE)
Deposits to the Dealer Inventory
60,991.710 oz
CNT
Deposits to the Customer Inventory
 NIL
No of oz served today (contracts)
207 CONTRACTS 
(1,035,000 OZ)
No of oz to be served (notices)
899 contracts
(4,465,000 oz)
Total monthly oz silver served (contracts) 1590 contracts (7,950,000 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  3,694,075.4 oz
today we had 1 deposit into the dealer account
 i) into CNT: 600,991.710 oz
total dealer deposit :600,991.710 oz
we had 0 dealer withdrawal:
:
total dealer withdrawals:  NIL oz
we had 0customer deposit:
Total customer deposit: nil oz
We had 1 customer withdrawals
i) Out of DELAWARE: 393,976.966 oz
:
total customer withdrawals:393,976.966. oz
 
 
 
 we had 1 adjustment
i) out of CNT:  70,363.780 oz was adjusted out of the customer and this landed into the dealer account of CNT
The total number of notices filed today for the JULY contract month is represented by 207 contracts for 1035,000  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 (1590) x 5,000 oz  = 7,950,000,000 oz to which we add the difference between the open interest for the front month of JULY (1100) and the number of notices served upon today (207) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the JULY contract month:  1590(notices served so far)x 5000 oz +(1100 OI for front month of JULY ) -number of notices served upon today (207)x 5000 oz  equals  12,415,000 oz  of silver standing for the JULY contract month.
We gained 19 contracts or 95,000 additional oz that will  stand for delivery in this active month of July.
 
Total dealer silver:  25.507 million (close to record low inventory  
Total number of dealer and customer silver:   151.800 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.
END
And now the Gold inventory at the GLD
July 14/a good sized withdrawal of 2.37 tonnes from trhe GLD/this would be a “paper withdrawal”/inventory rests tonight at 962.85 tonnes..
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 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
July 14 / Inventory rests tonight at 962.85 tonnes

end

Now the SLV Inventory
July 14/no changes in silver inventory at the SLV/Inventory rests at 348.580 million oz/
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 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/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
.
July 14.2016: Inventory 348.580 million oz
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 2.2 percent to NAV usa funds and Negative 2.3% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 58.4%
Percentage of fund in silver:40.4%
cash .+1.2%( July 14/2016). 
2. Sprott silver fund (PSLV): Premium falls  to -0.02%!!!! NAV (July14/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.40% to NAV  ( July 14/2016)
Note: Sprott silver trust back  into NEGATIVE territory at -.02% /Sprott physical gold trust is back into positive territory at +0.40%/Central fund of Canada’s is still in jail.
 
 
 

end

And now your overnight trading in gold,THURSDAY 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)

“We Are On the Cusp of an Explosion in the Silver Price” – John Embry

GoldCore's picture

Not everybody is believing the positive spin being put on recent financial market data. In fact some would go as far as to say that it is “propaganda” being spread in the mainstream media in an election year for the US.  At least that is what John Embry concluded in a recent interview.

For those that are not familiar with Embry, he is the chief investment strategist at Sprott Asset Management and Sprott Gold and Precious Minerals Fund, and a highly respected precious metals industry expert with nearly 50 years of experience.

King World News - 50-Year Veteran Says Silver To Hit New All-Time Highs, Warns About Hyperinflation And The BIS

Embry believes that, while stock markets have gone back to near record levels in the US, the fact that interest rates remain at depression levels in most industrialised countries, including the US, is telling the real economic story.

He also highlights the stellar performance of silver mining stocks as an indicator of what might be in store for the silver price.

“The absolutely spectacular performance of silver mining equities so far this year tells the real story.  I firmly believe we are on the cusp of an explosion in the silver price that will ultimately see silver trade at many multiples of the current $20 price (new all-time highs).  And if the hyperinflation occurs, which I believe is inevitable due to the current global monetary policy, who knows how high the price can go?”

You can read the full interview here 

7RealRisksBanner


Gold and Silver Bullion – News and Prices

Gold steady, supported by expectations of interest rate cuts (Reuters)

Gold Declines as Investors Await Stimulus From Policy Makers (Bloomberg)

Silver back at two-year high as gold marks first gain in five sessions (MarketWatch)

Fed’s beige book finds ‘softening’ in retail sales (MarketWatch)

U.S. posts $6 billion budget surplus in June (Reuters)

Gold Finds Its Place Amid Shifting Global Risks (Bloomberg)

“Soon” And “Really, Really Crazy”: Starting Up The Helicopters (Zerohedge)

Forget plain old money printing – it’s time to get really radical (MoneyWeek)

Gold Prices (LBMA AM)

14 July: USD 1,325.705, EUR 1,192.99 & GBP 1,001.96 per ounce
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

Silver Prices (LBMA)

14 July: USD 20.25, EUR 18.23& GBP 15.15 per ounce
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


Recent Market Updates

– Stocks Rally – Is Brexit Systemic Risks Contained?
– 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

end

john Embry is in our camp on the expected explosion in the price of silver as the bankers are operating on nothing but silver vapour.

(courtesy John Embry/Kingworldnews)

Silver shares forecast explosion in metal’s price, Embry tells KWN

Section:

4p ET Wednesday, June 13, 2016

Dear Friend of GATA and Gold:

In an interview today with King World News, Sprott Asset Management’s John Embry notes the recent “spectacular” performance of silver mining company stocks and suspects that this forecasts an explosion in the silver price, and possibly hyperinflation. An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/50-year-veteran-says-silver-to-hit-new-all-time…

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

 

END

 

Steve gives his reasoning as to why silver will explode higher in percentage than gold

(courtesy Steve St Angelo/SRSRooco report)

 

The Fundamental Reason The Silver Price Will Explode Much Higher Than Gold

by SRSrocco on July 14, 2016

Investors need to understand an important fundamental reason why the silver price will explode much higher than gold.  While many analysts state several reasons why silver will outperform going forward, I believe one vital fundamental factor is overlooked.

This critical factor is based upon a certain supply versus demand component of the gold and silver markets.  Actually, I came across this data while working on the research for a completely different article.  However, the more I compared the figures, the more surprised I was by the results.

One of the important aspects of my work here at the SRSrocco Report is to take data, figures and information and to look at them in a different way than most analysts.  By doing this, I can spot interesting trends and factors unnoticed by the majority of analysts.

However, before I get into the critical reason why silver will outperform gold in a big way going forward, let’s dissect some of the underlying factors

THE HUGE DISCONNECT:  Silver vs Gold Jewelry Recycled Supply vs Demand

While most investors realize that gold and silver scrap supply are used to help supplement the market, very few understand the huge disconnect between these two precious metals when it comes to recycled jewelry scrap.

First, let’s take a look at silver jewelry scrap supply.  According to the Metals Focus: Silver Scrap Report, the world recycled approximately 551 metric tons (mt) of silver jewelry in 2015.  This may seem like a substantial amount until we compare it to total world silver jewelry demand of 7,045 mt:

Global-Silver-Recycled-
Jewelry-Supply-vs-Demand-2015

Thus, recycled silver jewelry supply of 551 mt accounted for only 8% of global silver jewelry demand in 2015.  Why so little?  Because, very few people will take the time to go down to a pawn shop or precious metal dealer and sell a couple of pieces of silver jewelry for a few bucks.  It’s just not worth the effort.

This is the very reason why very little silver jewelry is recycled.  However, gold jewelry is a much different animal all together.  Matter-a-fact, the majority of global gold scrap supply comes from recycled gold jewelry.  It was difficult to obtain the data on global gold jewelry scrap supply, but I was able to provide an approximate figure based on the data in the Metals Focus: 2015 Silver Scrap Report:

The recycling of silver from old jewelry makes up the second smallest category of silver scrap supply. Its limited scale is also marked in comparison to gold; silver jewelry fabrication may be more than double gold by weight, but its jewelry scrap is less than half gold’s. These modest numbers for silver are largely due to the small amounts typically sold back by consumers as the low value per item means there is little incentive to sell.

Second, according to data from the World Gold Council’s Full Year Demand Trends, and based upon my calculations, global gold jewelry scrap supply was approximately 1,000 mt versus 2,415 mt of total gold jewelry demand in 2015:

Global-Gold-Recycled-Jewelry-
Supply-vs-Demand-2015

Thus, global gold jewelry scrap supply comprised 41% of total gold jewelry demand in 2015.  This is an astonishing figure as gold jewelry scrap supply versus gold jewelry demand is five times greater in percentage terms (41% gold vs 8% silver) than its silver counterpart.

Again, this is due to the fact that gold jewelry owners are well rewarded for their time to sell a few gold rings for say $500- $1,000 versus $5-$15 for several pieces of silver jewelry (based on metal content only).

NOTE:  The data in the Metal Focus:  Silver Scrap Report states that silver jewelry scrap was less than half of gold jewelry.  Unfortunately, this is where I had to make an adjustment and estimation.  The World Gold Council states that total gold scrap supply in 2015 was 1,093 mt.  Half of that would be 545 mt.  This is less than the 551 mt reported by Metal Focus for silver jewelry scrap supply.  Not all of global gold scrap supply comes from jewelry.  Some may come from recycled industrial scrap and old gold coins and bars.

This is why I provided the estimate of 1,000 mt for global gold jewelry scrap supply in 2015.  Furthermore, each official reporting source may publish different statistics for the same data which makes it difficult to provide exact figures.  So, it is important to look at the overall trend and not to waste time focusing on exact measurements or data.

Now that we have an idea just how out of balance silver jewelry scrap supply is compared to gold jewelry scrap, let’s look at pathetic figures in the next component.

The Majority Of Industrial Silver Demand Is Not Recycled

One of the things I hear a lot thrown around the precious metals community is the figure that 50% of silver demand is lost forever.  This is due the huge consumption of silver by industry.  However, the real figure is much larger.  I’ll get to that in a moment, but let’s first look at how little of industrial silver is recycled on an annual basis:

Global-Silver-Recycled-
Industrial-Demand-vs-Supply-2015

Well, if we go by the figures in the 2016 World Silver Survey and Metals Focus: Silver Scrap Report, global industrial silver scrap was approximately 3,266 mt in 2015 compared to the massive 18,311 mt of world industrial silver demand.  Which means, global industrial scrap supply only accounted for 18% of world silver industrial demand in 2015.

I have decided to convert some of these figures in troy ounces for new folks in the gold and silver industry:

Silver Jewelry Scrap vs Demand 2015:  (metric ton = mt) (million oz = Moz)

Silver Jewelry Scrap of 551 mt = 17.1 Moz

Silver Jewelry Demand of 7,045 mt = 226 Moz

Gold Jewelry Scrap of 1,000 mt = 32 Moz

Gold Jewelry Demand of 2,415 mt = 78 Moz

Silver Industrial Scrap of 3,266 mt = 105 Moz

Silver Industrial Demand of 18,311 mt = 598 Moz

Several of my readers have contacted me asking me to present the figures in only one standard to make it easier for individuals (especially new investors) to understand.  Unfortunately, private and government sources report their data in either metric tons or troy ounces.  Even though it would be convenient to only publish my data in one standard, TROY OUNCES for example, readers would be lost when they come across tables or reports that are published in metric tons.  So, I try to convert figures as much as possible.  And if I don’t, remember this conversion:

[1 metric ton = 32,150 troy ounces]

Okay… if you are beginning to understand how little silver is recycled in the jewelry or industrial markets, wait until you see the TOTAL PICTURE.

A Hell Of A Lot More Silver Is Lost Forever Than Originally Thought

If we compare global silver scrap supply versus total demand compared to the gold market, the figures are like NIGHT & DAY.  In 2015, the world recycled 4,665 mt of silver, while total demand was a staggering 36,423 mt.  Thus, only 13% of total world silver demand was recycled last year.  This is one hell of a lot less than the 50% figure repeated by the precious metals community.

Total-Global-Silver-Recycled-
Supply-vs-Total-Demand-2015

While it’s true that physical silver investment demand is a significant portion of total demand, much of that will never be recycled.  This is true for Official Silver coin sales which reached 134 Moz in 2015 (4,168 mt).  Regardless, some of Silver Bar & Coin demand will be recycled, but it’s the smallest segment of the silver scrap market.

According to the Metals Focus: Silver Scrap Report, only 6 Moz (186 mt) of silver coins were recycled in 2015.  And, the majority of that amount came from unsold European commemorative silver coins minted years ago.

So, how does the gold scrap market compare to silver recycled supply?  In 2015, global gold scrap supply was 1,093 mt versus total world demand of 4,253 mt:

Total-Global-Gold-Recycled-
Supply-vs-Total-Demand-2015

Here we can see that global gold scrap represents 26% of total gold demand.  This is double the percentage of silver.  Only 13% of total silver demand was recycled last year.  However, these percentages don’t really paint the true picture.

Global Gold-Silver Demand Minus Scrap Supply 2015

Gold Demand – Gold Scrap = 3,160 mt

Silver Demand – Silver Scrap = 31,718 mt

If we compare total demand minus scrap supply, there is ten times more silver demand that is not recycled compared to gold (silver = 31,718 mt vs, gold = 3,160 mt).   Which means, there is a hell of a lot less silver available to the market than gold…. in percentage terms

Furthermore, the majority of gold bullion, jewelry and coins still remain in the world compared to silver.  If we assume that most of silver jewelry and industrial demand is not recycled, then this is truly lost forever unless the silver price surpasses $200-$300.

When the world wakes up the fact that they are invested in PAPER ASSETS that have no future, the mad rush into physical precious metals will push the value of silver up much higher than gold.  As these charts show, a great deal more gold is recycled compared to its total demand than silver.

Which means, a lot more than 50% of silver demand is lost forever.  Actually, if we go by the data, only 13% of total world silver demand came from recycled silver supply in 2015 while 26% came from gold. Thus, 87% of total world silver demand did not come from recycled silver supply.

Yes, it’s true that in 2011, silver scrap supply increased due to the high annual average price of $35.  Even though total scrap supply increased to 6,430 mt (206 Moz) in 2011, it still only represented 20% of total silver demand that year.  I am using the 206 Moz figure from Metals Focus: Silver Scrap Report rather than the 260 Moz figure reported by the World Silver Surveys because the Metals Focus group went back and did a much more detailed job researching scrap and found out that the market had overstated scrap supply for several years.  I will be writing about this shortly.

Regardless, even at a much higher price of $35, only 20% of the total silver demand in 2011 came from silver scrap supply.  Which means the world lost 80%, more than the 50% figure repeated by the precious metals community.

Furthermore, if we just add up all the silver jewelry produced for the past decade it equals 60,500 mt or 1.95 billion oz.  Let’s say a conservative average of 10% of this silver jewelry was recycled (remember only 8% was recycled in 2015).  That means only 6,050 mt of silver jewelry was recycled since 2006.  Thus, nearly 54,500 mt or 1.75 billion ounces was lost to the market.   Only at much higher silver prices will some this silver jewelry come back on the market as scrap supply.

Precious metals investors need to understand that the majority of manufactured silver will never come back on the market until we see insanely high prices.  However, at that point… it won’t matter.  There still won’t be enough silver to meet demand as mainstream investors stampede out of worthless paper assets and into physical precious metals.

-END-

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

 
 

:

1 Chinese yuan vs USA dollar/yuan DOWN to 6.6838 (  REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.69099) / Shanghai bourse  DOWN 6.67 OR 0.22%   / HANG SANG CLOSED UP 238.69 OR 1.12% 

2 Nikkei closed UP  154.46 OR 0.95% /USA: YEN RISES TO 105.58

3. Europe stocks opened ALL IN THE GREEN   /USA dollar index DOWN to 96.38/Euro UP to 1.1100

3b Japan 10 year bond yield: RISES TO -.257%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 105.58

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  45.64  and Brent: 46.80

3f Gold DOWN  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.034%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 7.29%/: 

3j Greek 10 year bond yield RISE to  : 7.82%   (YIELD CURVE NOW  FLAT)

3k Gold at $1325.45/silver $20.15(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 66/100 in  roubles/dollar) 63.29-

3m oil into the 45 dollar handle for WTI and 46 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 SMALL REvaluation UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 105.58 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9766 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0898 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -.034%

/German 10+ year rate  negative%!!!

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

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.511% early this morning. Thirty year rate  at 2.209% /POLICY ERROR)

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

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

HELICOPTER MONEY COMING!

US Futures, Global Markets Storm Higher As More Details Emerge About Japan’s “Helicopter Money”

The global meltup continues with the S&P set to open at new all time highs, some 20 points higher from yesterday’s close, however the driver for the latest rally is not so much the imminent BOE announcement which is expected to cut rates by 25 bps from 0.50%, but a dramatic surge in the USDJPY just after 1am Eastern when Bloomberg revealed more details about Ben Bernanke’s masterplan for Japan’s helicopter money.

According to Bloomberg, Bernanke, who met Japanese leaders in Tokyo this week, had floated the idea of perpetual bonds during earlier discussions in Washington with one of Prime Minister Shinzo Abe’s key advisers. Abe advisor Etsuro Honda said that during an hour-long discussion with Bernanke in April the former Federal Reserve chief warned there was a risk Japan at any time could return to deflation. He noted that helicopter money could work as the strongest tool to overcome deflation, according to Honda. Bernanke noted it was an option. The implication, as we said last week when we previewed just this “big thing” is that Japan is indeed set to be the first testing ground of helicopter money in the modern financial system.

Though Honda said he thought Japan was already engaged in a strategy that involved helicopter money, he said that he wanted to convey the idea to Abe and asked Bernanke to meet with the premier in Japan. While this didn’t happen in the spring, Bernanke joined central bank chief Haruhiko Kuroda over lunch this Monday and on Tuesday he attended a gathering with Abe and key officials, including Koichi Hamada, another influential economic adviser.

Honda, 61, said he told Abe about Bernanke’s views after his April meeting. “I told him now is the time for Japan to expand fiscal spending and at the same time, additional monetary easing should be taken,” Honda said. “I told him it is necessary to strengthen the effects of Abenomics” through such a strategy.

While nothing definitive has been revealed by Japan yet, bond, stock traders and economists have been mulling the possible implications of Bernanke’s visit and the next steps to come in Abenomics. Amid intense speculation about the chances of helicopter money, and the certainty of further fiscal stimulus ordered by the prime minister, Japanese shares have rallied for four consecutive days while the yen has weakened. The Japanese currency weakened sharply in late afternoon trading in Tokyo, and reached just shy of 106 around 6am ET, having soared nearly 600 pips in the past 4 days.

And with the Yen – the world’s carry currency – plunging, global stocks have climbed with U.S. equity index futures.  European shares rose to a three-week high and emerging-market equities advanced for a sixth day. South Africa’s rand and Russia’s ruble were among the biggest gainers against the yen after a gauge of metal prices climbed to a nine-month high and oil rebounded from a two-month low. The pound advanced as traders awaited the Bank of England’s first interest-rate decision since the U.K. voted to leave the European Union.

“The expectations of a two-pronged stimulus approach — both fiscal and monetary — have definitely put the yen under pressure,” said Peter Dragicevich, a foreign-exchange strategist at Commonwealth Bank of Australia in London.

Meanwhile, as Japan prepares to formalize helicopter money, the BOE is set to ease in a more conventional way in less than an hour: “Everyone is focused on the BOE and whether or not they will announce more stimulus and cut rates.”

The Stoxx Europe 600 Index rose 1 percent at 10:55 a.m. in London, paring its losses since Britain’s referendum on June 23. All industry groups in the gauge climbed, led by carmakers and commodity producers. The MSCI Emerging Markets Index added 0.7 percent in its longest winning streak since April. The gauge advanced to 8.6 percent this year and trades at the highest valuation in more than a year. The MSCI World Index of developed markets has gained 2.1 percent in 2016.  Futures on the S&P 500 Index added 0.8%. BlackRock and JPMorgan are scheduled to report earnings before the market opens. Yum! Brands Inc. jumped 3.1 percent as the company raised its forecast after its KFC chain performed better than expected in China. Analysts predict second-quarter profits will drop 5.7 percent at S&P 500 firms, which would make it the fifth straight quarterly decline, the longest streak since 2009.

Sovereign debt fell in the U.S., the U.K., Japan and Germany. The yield on U.S. Treasuries due in a decade rose two basis points to 1.50 percent, while that on Japanese debt increased by two basis points to minus 0.26 percent. Yields climbed four basis points in the U.K. and Germany to 0.78 percent and minus 0.05 percent, respectively.

Global market snapshot

  • S&P 500 futures up 0.8% to 2162
  • Stoxx 600 up 0.9% to 339
  • FTSE 100 up 0.8% to 6726
  • DAX up 1.5% to 10076
  • German 10Yr yield down less than 1bp to -0.07%
  • Italian 10Yr yield down 2bps to 1.19%
  • Spanish 10Yr yield down 2bps to 1.13%
  • S&P GSCI Index up 0.6% to 360.1
  • MSCI Asia Pacific up 0.2% to 133
  • Nikkei 225 up 1% to 16386
  • Hang Seng up 1.1% to 21561
  • Shanghai Composite down 0.2% to 3054
  • S&P/ASX 200 up 0.4% to 5412
  • US 10-yr yield up 2bps to 1.49%
  • Dollar Index up 0.08% to 96.29
  • WTI Crude futures up 0.6% to $45.02
  • Brent Futures up 0.6% to $46.53
  • Gold spot down 1.2% to $1,326
  • Silver spot down 0.9% to $20.17

Top Global Headlines:

  • Bernanke Floated Japan Perpetual Debt Idea to Abe Aide Honda
  • Fed’s Harker Says Two Interest-Rate Hikes May Be Needed in 2016
  • Volkswagen’s 3-Liter Car Recall Plan Rejected by California: Talks continue on how to fix VW, Audi, Porsche vehicles
  • Monsanto Said to Revive Talks With BASF on Bayer Alternative: Monsanto board said split over merits of Bayer, BASF deals
  • UBS, BofA Merrill Lynch Lead Wealth Managers With $3 Trillion: Volatile markets, ‘hesitating’ clients crimp industry assets
  • Google Said to Face Added EU Antitrust Charges, WSJ Reports: EU Commission accuses co. of breaching EU antitrust rules by imposing strict contractual terms with its advertising service
  • Wanda in Talks to Buy 49% of Viacom’s Paramount, WSJ Reports: Any agreement could face opposition from Sumner Redstone

We start the overnight update with Asian markets, where it was another mostly quiet session for equities with participants awaiting the Bank of England rate decision. Nikkei 225 (+0.95%) traded with modest gains to continue its 4-day winning streak amid source reports that fiscal stimulus worth around JPY 10tr1 could be announced later this month. Upside in ASX 200 (+0.43%) had been curbed by the decline in crude prices seen yesterday post DoE’s, while a lacklustre CNY 20bIn liquidity injection failed to lift the Shanghai Comp (-0.22%) out of the red.10yr JGBs traded flat amid the continued upside seen in Japanese stocks while a disappointing 5yr auction in which the b/c, and average yield were lower than prior failed to have a significant impact on price action.

Top Asian News

  • Bernanke Floated Japan Perpetual Bonds Idea to Abe Adviser Honda: Prominent foreign economists drawn into nation’s policy making
  • TSMC Profit Tops Estimates as China Phones Make Up for Apple: Co. raised planned 2016 capex
  • Fast Retailing Cuts Profit Forecast for Third Time This Year: Stronger yen eroded Uniqlo-owner’s earnings from overseas
  • UBS Said to Have Flagged Suspicious 1MDB Transactions to MAS: Suspicious transactions prompt investigation of accounts involved
  • Great Eagle’s Lo Halts $330 Million London Project After Brexit: Group had planned to buy land in Shoreditch for Eaton Hotel
  • Singapore Exchange Says Won’t Resume Trading at 2pm Local Time: Shares including DBS Group, Singapore Airlines not trading

Much of the price action so far today took place as European participants arrived at their desks, with significant moves seen early on amid mounting expectations for BoE and Japanese stimulus, but light newsflow thereafter has led ti subdued trade as we move closer towards the BoE rate decision. European equities saw significant upside through the open and trade in firm positive territory (Euro Stoxx: +1.4%). In terms of a sector break down, the likes of financials, materials and energy names are the best performers, while the defensive sectors healthcare and utilities are the session’s laggards. Italian banks Banca Monte dei Paschi and UniCredit lead the way higher in stock specific terms after Italian press reports suggested that a capital increase was on the card for both Co.’s. Despite much of the focus on macro news falling on the potential for further easing for the likes of UK and Japan, fixed income markets have been somewhat indecisive so far today, seeing initial downside before a turnaround by mid-morning. As such, by mid-morning Bunds are on the way to closing the opening gap and trading firmly back above the 167 level.

Top European News

  • Bank of England Rate Cut in Focus as Brexit Rattles Economy: Traders are pricing in about an 80% chance of a rate reduction
  • May Draws Line Under Cameron Era as Johnson Named to Brexit Team: May fires Osborne, appoints Hammond U.K. finance minister
  • Boris Johnson an Undiplomatic Pick as Britain’s Top Diplomat: Former mayor said Kenyan ancestry affected Obama view of U.K.
  • Deutsche Boerse Edges Closer to Investor Approval for LSE Deal: Shareholder approval rises to 53% — near 60% minimum needed
  • Commerzbank Quarterly Profit Didn’t Improve, Handelsblatt Says: 1Q net income fell 52% to EU163m y/y
  • Credit Suisse Said to Lift Salary, Chop Allowance for Some Staff: Other lenders have made similar moves in response to EU rules

In FX, the biggest story remains the Japanese yen which weakened 1.1 percent versus the dollar, after earlier strengthening as much as 0.5 percent. The pound strengthened 0.6 percent to $1.3229, having touched $1.3338 on Wednesday, the highest since July 4. Sterling rallied even amid rising speculation that the central bank will cut its benchmark rate for the first time since 2009 to support the U.K. economy from the fallout of Brexit. Futures pricing shows the chance of a reduction at this meeting has climbed to 85 percent, compared with 11 percent on June 23, the day of the nation’s referendum.“Currency investors see a rate cut today as a done deal,” Valentin Marinov, head of Group-of-10 currency strategy at Credit Agricole SA’s corporate and investment-banking unit in London, wrote in a client note. “The BOE will struggle to exceed the already dovish market expectations and this will help the pound to consolidate in the aftermath of the meeting.”

In commodities, West Texas Intermediate crude oil rose 1 percent to $45.20 a barrel, after tumbling 4.4 percent on Wednesday as U.S. data showed crude stockpiles fell an eighth week,the longest declining streak since June 2015.The LME Index of six base metals rose to the highest since Oct. 15 on Wednesday as nickel climbed on potential supply disruptions and copper advanced on speculation policy makers’ efforts to spur economic growth will boost demand for metals. Zinc and aluminum rose, while tin fell. Gold declined 1.2 percent to $1,327.12 an ounce, after gaining 0.7 percent in the last session. Corn increased 2 percent in Chicago, climbing for a third day as forecasts for hot and dry weather in the U.S. Midwest raised concern crop yields will deteriorate.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities enter the North American crossover in positive territory with all eyes now firmly placed on the BoE at 1200BST/0600CDT
  • The median expectation for the BoE is for the bank to cut rates by 25bps but analysts are very much split in their views
  • Looking ahead, highlights include BoE Rate Decision, US PPI & Initial Jobless Claims & Earnings from JP Morgan & Blackrock

DB’s Jim Reid concludes the overnight wrap

The market is pricing an 80% chance of a 25bps cut today with economists a little more split as to whether they do or not (30 out of 54 are expecting a cut). DB’s George Buckley thinks it’s a close call but on balance believes the BoE will wait the extra three weeks until the August meeting when a lot more data will be available for the post referendum period. Supporting this he says that the comments from the BoE pre-referendum seemed to hint at waiting to tailor the response to the world that emerges after the vote. The BoE will be compiling the quarterly Inflation Report/analysis of the economy coinciding with the August meeting. He thinks delaying may be the preference and they can buy themselves time with a sufficiently dovish statement today. The markets have offered the BoE an opportunity not to rush given the recent rally. Politics may also be involved to some degree. Without knowing what the new administration’s policy will be, a wait and see approach maybe gives them powder for a more comprehensive package down the line. It’s a fine line though and we’re highly likely to see action by the August meeting at the very least.

Staying with the UK, last night should remove any doubt that Brexit does indeed mean Brexit as new PM Theresa May appointed Brexit campaigners David Davies and Boris Johnson Secretary for exiting the EU and Foreign Secretary respectively. So the long roadmap to exiting the EU started being formulated as of last night.

Away from this, today brings the first key US earnings report of the season with JP Morgan reporting before market opening. That will kick start a run of quarterly bank reports that we’re due to get in the next ten days or so including Citi and Wells Fargo on Friday and BofA, Goldman Sachs and Morgan Stanley next week. Markets hit a bit of a brick wall yesterday with the recent rally showing some signs of fatigue so these upcoming earnings reports could provide a bit of direction again.

Indeed it was a large leg lower for Oil which weighed on sentiment yesterday. WTI plunged -4.38% yesterday and tested those Monday low’s again back below $45/bbl after the latest EIA data showed evidence of an unexpected increase in gasoline supplies last week. Energy stocks were under pressure as a result and it ended with the S&P (+0.01%) fluctuating between modest gains and losses and closing pretty much flat. The Stoxx 600 (-0.13%) closed just in the red although European Banks (Stoxx Banks -1.51%) and the FTSE MIB (-1.15%) stood out. That was actually despite some more positive chatter around Italian Banks with the news that a second bank support fund to supplement Atlante is being discussed.

Meanwhile, sovereign bond markets reversed some of their weakness this week with 10y and 30y Treasury yields in particular 4-5bps lower following a strong 30y auction. In another eye catching stat for the week, a new 10y Bund was issued yesterday with a negative yield (-0.05%) for the first time ever. It’s the first Eurozone 10yr sovereign bond to be issued with a negative handle yield and joins Japan as the second G7 member to do such.

As we flick over to the latest in Asia this morning, most major bourses are following the lead from Wall Street and Europe yesterday and trading with a relatively cautious tone, although the outlier is again Japan where the Nikkei (+0.76%) and Topix (+0.75%) continue to benefit from the elevated expectations that stimulus is around the corner. Elsewhere, the Hang Seng (+0.02%), Shanghai Comp (-0.36%), Kospi (-0.06%) and ASX (+0.35%) are a bit more mixed although moves have been modest. As expected the Bank of Korea kept rates on hold this morning, although they did move to cut growth and inflation expectations this year.

Moving on. There was a bit of Fedspeak for markets to take account of yesterday. Earlier in the day we heard from Dallas Fed President Kaplan (moderately hawkish) who said that the recent US employment report shows signs of making progress in reducing labour market slack but that a ‘slow, gradual, careful’ approach to raising rates is still appropriate. Kaplan added that there are two effects coming from the current slow GDP growth environment. He noted that it means that the Fed will ‘make progress on our dual mandate but it might be slower than it would be otherwise’ and that the other impact ‘is that the neutral rate is probably lower than it would be otherwise’. Meanwhile and speaking overnight, Philadelphia Fed President Harker (also moderately hawkish) said that he believes inflation will return to target sometime next year and that ‘I anticipate that it may be appropriate for up to two additional rate hikes this year and that the funds rate will approach 3% by the end of 2018’.

Staying in the US, datawise yesterday there wasn’t too much to add to the debate. Import prices rose a less than expected +0.2% mom in June (vs. +0.5% expected) with the YoY rate now at -4.8% from -5.0%. The June Monthly Budget Statement revealed a smaller than expected surplus during the month ($6.3bn vs. $19.0bn expected) with receipts down -3.9% yoy. Later in the evening the Fed’s Beige Book revealed that the US economy has expanded at a modest pace since mid-May and that ‘districts reporting on overall growth expect it to remain modest’. The text also suggested that labour market conditions were said to have remained stable with employment continuing to grow modestly and wage pressures remaining ‘modest to moderate’.

The Bank of England also released its Q2 credit conditions survey yesterday. The main take away from the summary was the reference to the outlook post-Brexit with the summary revealing that major UK lenders expect the availability of secured credit to be little changed in the near term but the demand for secured credit to fall. The text also revealed that the availability of credit to the corporate sector is expected to hold steady, although a further tightening is expected for the commercial real estate sector.

Before we look at today’s calendar and just wrapping up the data yesterday, France revised down their final June CPI print to +0.1% mom from +0.2%, although the YoY rate stayed as is at +0.2%. More notable was the weaker than expected Euro area industrial production report for May (-1.2% mom vs. -0.8%) which has resulted in the YoY rating fall to +0.5% from +2.2%.

ASIAN AFFAIRS

 

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 6.67 POINTS OR 0.22%/ /Hang Sang closed UP 238.69 OR 1.12%. The Nikkei closed UP 154.46POINTS OR 0.95% Australia’s all ordinaires  CLOSED UP 0.39% Chinese yuan (ONSHORE) closed UP at 6.6838 /Oil FELL to 45.64 dollars per barrel for WTI and 46.80 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.6909 yuan to the dollar vs 6.6838 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS A LITTLE MORE USA DOLLARS LEAVES THEIR SHORES. 

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

Helicopter money in Japan:  not so fast!  They have to change the law and being doing so it causes the fundamental principle of central bank independence from government out the window:

(courtesy zero hedge)

A Big Problem Emerges For Japan’s “Helicopter Money” Plans

Over the past four days, risk assets have been on a tear, led by the collapsing Yen and soaring Nikkei, as the market has digested daily news that – as we predicted last week – Bernanke has been urging Japan to become the first developed country to unleash the monetary helicopter, in which the central banks directly funds government fiscal spending, most recently with an overnight report that Bernanke has pushed Abe and Kuroda to sell perpetual bonds, all of which would be bought by the BOJ.

There may be a very big problem with what the market is pricing in, however. As Reuters reports, citing government and central bank officials directly involved in policymaking, “there is no chance Japan will resort to helicopter money. The problem: it is prohibited by law to directly underwrite government debt, which means parliament needs to revise the law for the central bank to start directly bank-rolling debt.

Adopting helicopter money in the strict sense is impossible as it’s prohibited by law,” said one of the officials. “If it’s about the BOJ buying huge amounts of bonds and the government deploying fiscal stimulus, we’re already doing that.”

With the BOJ already keeping borrowing costs near zero with aggressive money printing, as the central bank already gobbles up more government bonds than is sold to the market each month under its massive monetary stimulus program,  there is no strong push from premier Shinzo Abe’s administration to revise the law and force the central bank to resort to helicopter money, said the officials, who declined to be named due to the sensitivity of the matter.

While hardly a hurdle to Bernanke, the reality is that for Japan to adopt helicopter money, Abe would need to change the fundamental laws of central bank independence, and many are already rising up against this prospect. “It’s an illusion to think that a country can spend as much money as it wants, without having to pay it back,” said another official on condition of anonymity.

“I haven’t heard of any such discussions taking place in the Ministry of Finance,” a third source said,adding that adopting helicopter money was “unthinkable.”

One can probably discount what BOJ Governor Haruhiko Kuroda said when he dismissed the idea of helicopter money, stressing the central bank is buying bonds not to finance debt but to hit its 2 percent inflation target: recall that Kuroda said just one week before Japan unveiled NIRP that no NIRP would come to Japan, which certainly dilutes any credibility he may have.

However, the dissent to Bernanke’s plan has spread far and wide, spreading as far as Abe’s cabinet.

Masahiko Shibayama, an influential aide to Abe, voiced caution over helicopter money involving the issuance of perpetual bonds.

Koichi Hamada, another key economic adviser to Abe, told Reuters on Thursday Japan should not resort to helicopter money as it could lose control of inflation. “Resorting to such a step would be sending a grave message to the international community” on Japan’s fiscal management, he told Reuters on Thursday. “We need to think carefully about how markets will react if we even signal it as an option.”

Worse, quoted by the WSJ, Hamada hinted at what we have said all along: helicopter money would be the precursor to hyperinflation.

Japan shouldn’t make its central bank directly underwrite government borrowing, or it could suffer the kind of runaway spending and inflation that followed a similar move in the 1930s, said Hamada.

“It would be too tempting for politicians. They wouldn’t give it up once you made it possible for them to print and spend as much money as they please, either for political purposes or for their own ambitions,” said Koichi Hamada in an interview with The Wall Street Journal recently.

The stern warning from the Yale University professor comes as economists increasingly speculate that Mr. Abe may resort to the radical step to save his campaign to escape deflation, a negative cycle of price falls. Mr. Abe’s recent pledge to bolster spending and his meeting earlier this week with former Federal Reserve Chairman Ben Bernanke, an advocate of monetization, has fueled such speculation.

Which is not to say that helicopter money is impossible. Supporters of the measure, known as “helicopter money,” view it as the quickest, surest way to stimulate demand and create the 2% inflation wanted by Mr. Abe. But the problem is that politicians may not have the self-discipline to withdraw the policy before it destabilizes the economy, Mr. Hamada said, playing down a recent local newspaper report that portrayed him as supportive of helicopter money.

“There is a huge risk that fiscal expansion would get out of control” if the Bank of Japan started underwriting government borrowing, Mr. Hamada said.

The adviser called attention to the consequences of debt monetization in the 1930s by finance minister Korekiyo Takahashi. Mr. Takahashi’s powerful stimulus helped the nation escape the Great Depression, but Mr. Hamada said it opened the door to aggressive military spending that later caused sky high inflation.

Mr. Takahashi was assassinated by rebel officers in 1936.

Other aides to Mr. Abe, including Japan’s ambassador to Switzerland Etsuro Honda, see Mr. Takahashi as a national hero and put the blame for spiraling spending and inflation squarely on the military and capacity shortages in a war-torn economy.

For now, the reality is that with a political gate to helicopter money, the best Japan can hope for is to jawbone the Yen and markets higher; however for Abe to actually change the law a far more drastic deterioration in Japan’s inflationary picture will have to emerge.

Renewed debate over helicopter money underlines the continued radicalization of discussions over how to remedy Japan’s lost two decades. It also reflects frustrations over the limited effects so far of Abenomics.

Hamada agreed that expanding fiscal and monetary policies at the same time is likely to produce stronger stimulus effects than implementing them in isolation. But Mr. Hamada said that if the BOJ continues to buy debt from the markets, not directly from the government, the policy coordination wouldn’t amount to monetization by strict definition.

Speaking of the BOJ’s coming policy decision on July 29, Mr. Hamada said he “can’t say with absolute certainty for now” whether the central bank should undertake additional easing. “It depends on how much stock prices will have recovered and how much the yen’s upward momentum will have weakened by then,” he said.

However, that goes back to problem #1 for Japan: it has insufficient bonds to monetize, forcing the BOJ to increasingly soak up ETFs and other non-debt instruments. As such, continuing with merely more QE will lead to even lower record JGB rates, sending even more acut deflationary signals to the local and global economy, and forcing Japanese investors to buy even more record amounts of offshore debt.

Mr. Hamada said policy decisions are up to Mr. Kuroda to make, but added that Japan’s tightening labor market means that officials don’t need to debate the need for action at every meeting. He also urged Japanese companies to stop expecting too much from the BOJ and instead to put their savings to better use, by investing more or offering sharper pay raises.

“I am wondering if those corporate managers…understand that they are a drag on the Japanese economy,” Mr. Hamada said.

They do, however with the help of such “experts” as Kuroda and Bernanke, they have every reason to believe that the punch bowl will not only not be taken away but will be spiked even more. This time, however, that may not happen.

end

b) REPORT ON CHINA

This news is a “great” reason for gold to be whacked today  After the ruling, Beijing unveils a new guided missile destroyer:

(courtesy Sputnik)

After South China Sea Ruling, Beijing Unveils New Guided-Missile Destroyer

On the same day that the Permanent Court of Arbitration in The Hague ruled against China’s territorial claims in the South China Sea, Beijing has commissioned its fourth guided-missile destroyer.

The latest 052D Yinchuan destroyer was commissioned at a naval port in Sanya, in the Hainan province. Roughly 150 meters long with a 20-meter beam, the ship is one of China’s most sophisticated vessels.

Equipped with advanced weapons systems, the Yinchuan is capable of aerial defense, antisubmarine operations, and anti-sea missions.

According to Chinese military expert Cao Weidong, the new ship can outperform South Korea’s Sejong the Great-class destroyers, Japan’s Atago-class destroyers, and the US Navy’s Arleigh Burke-class destroyers.

The unveiling comes directly after the Permanent Court of Arbitration ruled against Beijing in its dispute over territorial claims in the South China Sea.

“The Tribunal concluded that there was no legal basis for China to claim historical rights within sea areas falling within the ‘nine-dash line,'” the court said in a statement.

“Accordingly, the Tribunal concluded that, to the extent China had historic rights to resources in the waters of the South China Sea, such rights were extinguished to the extent they were incompatible with the exclusive economic zones provided for in the Convention.”

Tensions have been high in the waterway, through which roughly $5 trillion in international trade passes annually. Beijing has constructed artificial islands in the region that the US and its Pacific allies claim is an attempt to establish an air defense zone.

In response, the Pentagon has performed a number provocative patrols within the 12-mile territorial limits of the land reclamation projects and performed a number of military exercises with regional partners.

China maintains that it has every right to build within its own territory and maintains the islands will be used primarily for civilian purposes.

Responding to the Hague’s decision, the Chinese Foreign Ministry said it does not accept the ruling as valid.

“With regard to the award rendered on 12 July 2016 by the Arbitral Tribunal in the South China Sea arbitration established at the unilateral request of the Republic of the Philippines…the Ministry of Foreign Affairs of the People’s Republic of China solemnly declares that the award is null and void and has no binding force.

“China neither accepts nor recognizes it.”

end

EUROPEAN AFFAIRS

The pound rises as there was no rate drop and also no new QE is planned.  The world is now expecting Japan to lead the way

(courtesy zero hedge)

Sterling Jumps As Bank Of England Disappoints – Holds Rate Unchanged, No New QE

With markets pricing in an 86% chance of a rate-cut (compared to 11% pre-Brexit) and hopes high for some form of increased QE, Bank of England’s Carney had highly dovish expectations to live up to today. Cable and FTSE were both rallying into the decision (with Gilt yields slightly higher). Given that there has been little post-Brexit data to show any effects, Carney appears to have decided to wait…

  • *BOE VOTES 9-0 TO KEEP ASSET-PURCHASE FACILITY AT 375B POUNDS
  • *BOE VOTES 8-1 TO KEEP RATE AT 0.5%; VLIEGHE WANTED 25BPS CUT
  • *BOE SAYS MOST OFFICIALS EXPECT POLICY LOOSENING IN AUGUST

And offeres hope for an August cut – after more data is available.

The pound is spiking on this disappointment – up 2.5%.

Stocks and bonds are both lower…

  • *U.K. TWO-YEAR GILT EXTENDS DROP; YIELD UP 4 BPS TO 0.15%
  • *FTSE 100 PARES GAIN AS BOE MAINTAINS BENCHMARK INTEREST RATE

The MPC Statement is a big disappointment:

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target and in a way that helps to sustain growth and employment.

At its meeting ending on 13 July 2016, the MPC voted by a majority of 8-1 to maintain Bank Rate at 0.5%, with one member voting for a cut in Bank Rate to 0.25%.  The Committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion.  Committee members made initial assessments of the impact of the vote to leave the European Union on demand, supply and the exchange rate.  In the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August.  The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.

KEY POINT FROM STATEMENT: Most members of the Committee expect monetary policy to be loosened in August

  • MPC voted by a majority of 8-1 to maintain Bank Rate at 0.5%, with one member voting for a cut in Bank Rate to 0.25%.
  • Committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375b

Committee members made initial assessments of the impact of the vote to leave the European Union on demand, supply and the exchange rate; in the absence of a further worsening in the trade-off between supporting growth and returning inflation to target on a sustainable basis, most members of the Committee expect monetary policy to be loosened in August.

The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.

Since the Committee’s previous meeting, the sterling effective exchange rate has fallen by 6%, and short-term and longer-term interest rates have declined.

Reflecting the fall in the level of sterling, financial market measures of inflation expectations have risen moderately at short-term horizons, but only to around historical averages, and have fallen slightly at longer horizons.

Markets have functioned well, and the improved resilience of the core of the UK financial system and the flexibility of the regulatory framework have allowed the impact of the referendum result to be dampened rather than amplified.

Official data on economic activity covering the period since the referendum are not yet available.

Regarding the housing market, survey data point to a significant weakening in expected activity; indicators suggest economic activity is likely to weaken in the near term.

In addition, the sharp fall in the exchange rate will, in the short run, put upward pressure on inflation as the prices of internationally traded commodities increase in sterling terms, and as importers pass on increases in their costs to domestic prices.

The MPC is committed to taking whatever action is needed to support growth and to return inflation to the target over an appropriate horizon.

The exact extent of any additional stimulus measures will be based on the Committee’s updated forecast, and their composition will take account of any interactions with the financial system.

Against that backdrop, at its meeting ending on 13 July, the majority of MPC members judged it appropriate to leave the stance of monetary policy unchanged at present.

Which makes one wonder if Carmey is not keeping his poweder dry in the belief that this releif rally is short-lived.

What did the BOE Minutes say about the economy? Here is Bloomberg”

DID THE MPC CUT RATES, BY HOW MUCH?

  • No; it kept rates at 0.5%
  • That said, most members of the Committee expect monetary policy to be loosened in August
  • A slim majority of analysts surveyed by Bloomberg expected a cut as soon as today; 23 saw rates on hold, 25 saw a 25bps decrease

HOW SPLIT WERE THE VOTES ON THE MPC?

  • While most members voted to keep rates unchanged, Gertjan Vlieghe preferred to a 25bps cut at this meeting

WHAT ABOUT QE AND THE FLS?

  • While the minutes show the MPC discussed various easing options and combinations but didn’t give any further details
  • They say the precise size and nature of any measures will be determined next month

WHAT DID THE BANK SAY ABOUT STERLING, BREXIT, INFLATION?

  • There are preliminary signs the result of the referendum has affected sentiment in households and firms, including sharp falls in some measures of business and consumer confidence
  • There are signs some businesses are beginning to delay investment projects and postpone recruitment decisions
  • The MPC says influences could lead to a significantly lower path for growth and a higher path for inflation than were in its central projections in the May Inflation Report

Finally, as The Wall Street Journal notes,BOE officials said this month they are considering “a package” of stimulus measures to launch in August to support growth.

They weren’t explicit about their plans but officials have previously listed the tools at their disposal. They include rate cuts; reviving the BOE’s bond-buying program and extending purchases to corporate debt and other assets; and boosting the supply of credit for households and businesses by offering banks ultracheap loans through its funding-for-lending program.

Officials said they expect the economy to weaken in the coming months, flagging evidence of slowing business investment and falling consumer confidence. They said activity in the U.K. housing market looks set to weaken significantly.

The BOE will publish its latest forecasts for U.K. growth and inflation in its quarterly inflation report alongside its next policy decision August 4.

So jawboned promises of forward guidance is all we get in July.

 

end

 

UK property funds are imploding:  check the charts:

(courtesy zero hedge)

The 3 Charts That No UK Property Fund Manager Wants You To See

Things just went from worst to worst-er in Britain’s property market. Having detailed the numerous ‘dominoes’ that have begun to fall, and most recently the start of forced real asset liquidations, the hard data from Britain’sRoyal Institute of Chartered Surveyors suggests Brexit just killed the British housing market.

Having previously shown 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

But things are about to get a lot worse… Here are three charts that no UK Property fund manager wants their investors to see…

New Vendor Instructions (roughly translated as pending home sales) has crashed by the most ever

Source: RICS

“Hope” has collapsed with National Sales Expectations for the next 3- and 12-months are the worst on record

Source: RICS

And Price expectations have plunged…

Source: RICS

Simply put, as RICS concludes, this is the “most negative reading for near term expectations since 1998.”

 

end

A good look at the Italian banking crisis in one simple chart:

He explains why Italy’s economy is in a mess and how the higher value of the Euro is not helping the “southern block”.  It is beneficial to the “northern block” but to the south the higher Euro is equal  to tightening

(courtesy Lars Christensen/Market Monetarist blog)

The Italian Banking Crisis (In 1 Simple ‘Death Cross’ Chart)

Submitted by Lars Christensen via Market Monetarist blog,

Today I was interviewed by a Danish journalist about the Italian banking crisis (read the interviewhere). He asked me a very good question that I think is highly relevant for understanding not only the Italian banking crisis, but the Great Recession in general.

The question was: “Lars, why is there an Italian banking crisis – after all they did NOT have a property market bubble?”

That – my regular readers will realise – made me very happy because I could answer that the crisis had little to do with what happened before 2008 and rather was about monetary policy failureand in the case of the euro zone also why it is not an optimal currency area.

Said, in another way I repeated my view that the Italian banking crisis essentially is a consequence of too weak nominal GDP growth in Italy. As a consequence of Italy’s structural problems the country should have a significantly weaker “lira”, but given the fact that Italy is in the euro area the country instead gets far too tight monetary conditions and consequently since 2008 nominal GDP has fallen massively below the pre-crisis trend.

That is the cause of the sharp rise in non-performing loans and bad debt since 2008. The graph below clearly illustrates that.

I think it is pretty clear that had nominal GDP growth not fallen this sharply since 2008 then we wouldn’t be talking about an Italian banking crisis today. There was no Italian “bubble” prior to 2008 and there are no signs that Italian banks have been particularly irresponsible, but even the most conservative banks will get into trouble when nominal GDP drops 25% below the pre-crisis trend.

Therefore, I also don’t think that the “solution” to the crisis is a re-capitalisation of the Italian banks or of the entire European banking sector. Rather the solution is to ensure nominal stability in the euro zone. The best way of doing that would be for the ECB to aggressive increase the money base to ensure 4% NGDP growth in the euro zone (see my recent post on what the ECB in the present situation here and my post from 2012 on a cheap firewall against an escalation of the crisis here.)

A key problem, however, is that the euro zone is not an optimal currency area. In a good recentblog post my friend Marus Nunes rightly argued that there is a “Northern” part of the euro zone where monetary policy broadly speaking is “right” and a “Southern” part, where monetary policy is far too tight. Italy is part of this latter group.

This means that the question is whether keeping euro zone nominal demand “on track” is enough to ensure enough NGDP growth in the Southern countries to avoid banking and sovereign debt crisis coming back again and again. Unfortunately the development over the past eight years gives little reason for optimism.

P.S. There are now also increasing talk about problems in the German banking sector. Given the fact that the German economy has doing quite well compared to most other economies in Europe this is rather incredible. Therefore if we should talk about imprudent banking (due to moral hazard problems) then we might want to point the fingers at the German banks.

end

 

A terrific commentary from Simon Black who outlines the origins of Deutsche bank and how the entire global banking system can come crashing down:

(courtesy Simon Black/SovereignMan.com)

Bancopalypse 2.0 – Some Disturbing Figures From The Looming Financial Crisis

Submitted by Simon Black via SovereignMan.com,

In early 1870, the Kingdom of Prussia and French Empire were about to go to war.

It was one of countless conflicts between the dozens of European kingdoms and empires throughout the 18th and 19th centuries, and this one was over before it even started.

Prussia’s military might was legendary. They had recently beaten the pants off of Austria and Denmark, and they’d go on to neutralize or capture over 80% of French soldiers within a matter of months, while losing just 2% of their own.

Very few wars have been so one-sided.

And yet despite its nearly unparalleled military successes and clear dominance in European politics, Prussia lacked something critical: financial power.

Prussia’s economy was robust and healthy. But businesses across all German kingdoms depended almost exclusively on the British banking system to conduct international trade.

It was similar to how nearly the entire world depends on Wall Street mega-banks today for global trade. Germany lacked its own strong financial system.

So on March 10, 1870, King Wilhelm I of Prussia (soon to be German Emperor) granted a banking license to a trio of local entrepreneurs and gave them explicit instructions to establish a banking powerhouse.

And that’s exactly what they did. The bank was called Deutsche Bank, and it eventually grew into one of the largest banks in the world.

Deutsche Bank has seen a lot in its years; multiple world wars and the devastation of Europe. Hyperinflation in the Weimar Republic. Nazi Germany.

The bank even outlasted its own country, as the Kingdom of Prussia was formally abolished in 1947.

But as the world learned in 2008 when the 158-year old investment bank Lehman Brothers went bust, even giant, centuries-old financial institutions can collapse.

Banking is such a bizarre industry when you think about it.

Regular, everyday people like you and I fork over our hard-earned savings to banks.

They take our money and do some of the most insane things with it… whether loaning it to jobless, homeless people, or buying the negative-yielding debts of bankrupt governments.

You and I would never do anything so foolish with our own funds. Yet we hand everything over to banks and give them full license to engage in this madness.

And even when their decisions blow up and they go to the taxpayer with hat in hand for a bailout, they prove that they have memories like goldfish.

Today, banks are up to the same tricks as they were 10 years ago, except they’ve taken things to a whole new level.

And Deutsche Bank is leading the charge.

One of the major issues in the 2008 crisis was that banks were over-leveraged and had very thin levels of capital.

In other words, the banks’ rainy-day reserve funds as a percentage of their overall balance sheets were extremely low, so even a small loss in their investment portfolios would cause financial Armageddon.

That’s precisely what happened.

Lehman Brothers famously had a capital ratio of less than 3% of its assets. So when the value of its assets fell by more than 3%, the bank was finished.

Well-capitalized banks are supposed to have double-digit capital levels while making low risk investments.

Deutsche Bank, on the other hand, has a capital level of less that 3% (just like Lehman), and an incredibly risky asset base that boasts notional derivatives exposure of more than $70 trillion, roughly the size of world GDP.

Even the IMF has stated unequivocally that Deutsche Bank poses the greatest risk to global financial stability.

And the IMF would be right… except for all the other banks.

Because, meanwhile in Italy, nearly the entire Italian banking system is rapidly sliding into insolvency.

Italian banks are sitting on over 360 billion euros in bad loans right now and are in desperate need of a massive bailout.

IMF calculations show that Italian banks’ capital levels are among the lowest in the world, just ahead of Bangladesh.

And this doesn’t even scratch the surface of problems in other banking jurisdictions.

Spanish banks have been scrambling to raise billions in capital to cover persistent losses that still haven’t healed from the last crisis.

In Greece, over 35% of all loans in the banking system are classified as “non-performing”.

This is astounding. But what’s even more incredible is that the ratio of non-performing loans has actually been increasing for several years since the country’s supposed bailout.

Banks in Cyprus and Portugal are hemorrhaging cash and reporting widespread losses.

And banks’ stock prices across the region have practically collapsed in recent weeks as investors have started to realize that Bancopalypse 2.0 may be upon us.

(Oh, and lest anyone think that the United States is a banking safe haven, it’s worth noting that the non-performing commercial loan ratio in the US banking system has tripled in 18-months… but we’ll save that for another time.)

Here’s the bottom line: the banking crisis of 2008 never fully healed.

It just got shuffled under the carpet while the public was fed a phony narrative that everything is fantastic.

This turned out to be a gigantic farce; many of the world’s banking systems are just as risky as they were back in 2008.

Do yourself a favor: don’t keep 100% of your savings trapped in a risky banking system.

What’s the point? They’re only paying you 0.1% anyhow. Why take on so much risk?

If you have savings of even more than $10,000 (and definitely if you’re in the six to seven figure range), move some funds to a stronger, better capitalized banking system abroad.

And definitely consider owning precious metals, plus holding at least a month’s worth of expenses in physical cash in a safe at your home.

Given how low interest rates are, you won’t be any worse off. But should Bancopalypse 2.0 be upon us, cash and gold could end up being a phenomenal insurance policy.

 

 

end

 

GLOBAL ISSUES/GLOBAL MARKETS

Nothing Else Matters

What a great way to show how the earnings throughout the globe are faltering badly and yet stock markets rise:

 

(courtesy zero hedge)

There are still some who live in the fantasy world of fundamentals, earnings, macro business-cycles, and efficient markets… for everyone else, we offer the following seven charts to explain what really matters in the new red-pill normalare you ready to find out how deep the rabbit hole runs?

As Global GDP growth expectations plumb new depths, world stock markets are surging to record highs…

 

From Japan…

To Europe…

 

Even Britain…

 

And finally the US…

 

With its 6th quarterly decline in earnings…

 

So given that it is obvious the stock ‘markets’ of the world are not discounting macro- or micro-fundamentals anymore… What is it that drives equity market capitalization?

 

Central Bank Balance Sheets – nothing else matters!!

The truth is sometimes too much to handle…

Charts: Bloomberg

 

RUSSIAN AND MIDDLE EASTERN AFFAIRS

Omar, the Chechen is dead in a strike near Mosul.  Kerry visits Moscow with an olive branch:

(courtesy zero hedge)

Putin Claims Biggest Diplomatic Victory In Syria Conflict Yet, As Kerry Arrives In Moscow To “Seek Cooperation”

In the latest confirmation that ISIS is slowly but surely losing the land war against a joint front of US-coalition, Russian and Syrian army forces, overnight ISIS confirmed that Abu Omar al-Shishani, also known as Omar the Chechen, who the Pentagon described as Islamic State’s “minister of war”, was killed in combat in the Iraqi city of Shirqat, south of Mosul.

Shishani ranked among America’s most wanted militants under a U.S. program that offered up to $5 million for information to help remove him from the battlefield. Born in 1986 in Georgia, then still part of the Soviet Union, Shishani had a reputation as a close military adviser to Islamic State leader Abu Bakr al-Baghdadi, who was said by followers to have relied heavily on him.

Shishani once fought in military operations as a rebel in Chechnya before joining Georgia’s military in 2006 and fighting against Russian troops before being discharged two years later for medical reasons, according to U.S. officials. He was arrested in 2010 for weapons possession and spent more than a year in jail, before leaving Georgia in 2012 for Istanbul and later Syria.

He decided to join Islamic State the following year and pledged his allegiance to Baghdadi. The State Department said Shishani was identified as Islamic State’s military commander in a video distributed by the group in 2014.

As often happens with such events, this is the second time the death of the ISIS militant has been reported. Back in March, the Pentagon said that Shishani had likely been killed in a U.S. air strike in Syria, but this was the first time the group appeared to confirm his death.

Islamic State supporters exchanged notes of praise and condolence on social media, including pictures of the ginger-bearded fighter, and pledged to launch a fresh offensive in his honor.

According to Reuters, Hisham al-Hashimi, a Baghdad-based security expert who advises the Iraqi government, said a source in Shirqat confirmed Shishani had been killed there along with several other militants.

Iraqi forces are advancing towards Mosul, the largest city still under the control of Islamic State. They have mostly surrounded Shirqat, 250 km (160 miles) north of Baghdad, and last week retook a major air base from the militants to use in the main push on Mosul, 60 km further north.

The commander of the U.S.-led coalition battling Islamic State, U.S. Army Lieutenant General Sean MacFarland, expressed confidence in the intelligence that led to the recent strike on Shishani in the Tigris River valley where Shirqat is located, but declined on Thursday to declare him dead. “We’re being a little conservative in calling the ball on whether or not he’s actually dead or not. But we certainly gave it our best shot,” MacFarland told reporters in Baghdad, joking that Shishani might be the “Rasputin of this conflict.”

“(IS) lost something important: the charisma that he had to inspire and seduce Salafists from Chechnya, the Caucasus and Azerbaijan – the former Soviet republics,” Hashimi said.

Asked about the potential impact, MacFarland said it could disrupt Islamic State operations if Shishani were indeed dead. “They would have to figure out who’s going to pick up his portfolio,” he said.

“We’re being a little conservative in calling the ball on whether or not he’s actually dead or not. But we certainly gave it our best shot,” MacFarland told reporters in Baghdad, joking that Shishani might be the “Rasputin of this conflict.”

* * *

Rasputin may be dead, but the war against ISIS goes on.

And in an unexpected twist, John Kerry arrives Moscow today to seek closer Russian cooperation in the war against Islamic State in Syria, in what some have dubbed a dramatic shift in US military objectives on the ground, and what to most is seen as the clearest diplomatic victory by Putin in the escalating “new cold war” with the west yet.

Kerry’s trip, which State Department officials say is his second to the Russian capital this year takes place as U.S.-Russian relations have worsened with tit-for-tat diplomatic expulsions, escalating aggressive Russian maneuvers toward U.S. aircraft and vessels and vice versa, and a disregard for a cessation of hostilities in Syria, where Russia has bombed U.S.-backed rebels. Relations between Moscow and Washington also remain strained over the Ukraine crisis and what the Kremlin considers NATO’s unjustified activities along its borders, raising fears that disagreements could escalate into confrontations, either accidental in Syria or the result of miscalculations in the air and naval encounters from the Baltics to the Black Sea.

According to the WaPo, the Obama administration’s new proposal to Russia “would open the way for deep cooperation between U.S. and Russian military and intelligence agencies and coordinated air attacks by American and Russian planes on Syrian rebels deemed to be terrorists, according to the text of the proposal I obtained.

The Obama administration is proposing joining with Russia in a ramped-up bombing campaign against Jabhat al-Nusra, al-Qaeda’s Syria branch, which is also known as the Nusrah Front. What hasn’t been previously reported is that the United States is suggesting a new military command-and-control headquarters to coordinate the air campaign that would house U.S. and Russian military officers, intelligence officials and subject-matter experts.

As WaPo adds, “the proposal would dramatically shift the United States’ Syria policy by directing more American military power against Jabhat al-Nusra, which unlike the Islamic State is focused on fighting the regime of Syrian President Bashar al-Assad. While this would expand the U.S. counterterrorism mission in Syria,it would also be a boon for the Assad regime, which could see the forces it is fighting dramatically weakened. The plan also represents a big change in U.S.-Russia policy. It would give Russian President Vladi­mir Putin something he has long wanted: closer military relations with the United States and a thawing of his international isolation. That’s why the Pentagon was initially opposed to the plan.”

Still despite what may be the biggest symbolic victory for Putin since the start of the Syria conflict, it’s not clear that the plan will be accepted by Putin. “Administration officials caution that no final decisions have been made and that no formal agreement has been reached between the two countries. Negotiations over the text are ongoing ahead of Kerry’s arrival in Russia.”

“The participants, through the JIG, should enable coordination between the participants for military operations against” Jabhat al-Nusra, the document states. First, the United States and Russia would share intelligence. Then, if both governments agreed, “the participants should coordinate procedures to permit integrated operations.”

The initial mission would include the United States and Russia developing Jabhat al-Nusra and Islamic State targets together and then deciding which air force would fly which missions. Later, if both governments agreed, the two air forces could begin “integrated operations” that include assisting each other in the fight.

In exchange for U.S. assistance against Jabhat al-Nusra, the Russian side would be required to limit airstrikes to targets both sides agreed on and also to ensure that the Syrian air force would stand down and not bomb targets in agreed-upon “designated areas.”

Meanwhile, many US-based diplomats are furious at this unexpected olive branch: “It isn’t clear why the secretary of state thinks he can enlist the Russians to support the administration’s goals in Syria,” said one U.S. intelligence official quoted by Reuters. Other U.S. intelligence officers are incensed by the administration’s continued overtures to Russia, in part because they say the Russians knew that two rebel camps they bombed this week were far from any Islamic State fighters and housed U.S.-backed rebels or their families.

But the biggest concession by the US would be the admission that Assad can remain in power. Recall that the entire Syrian war, and the creation of ISIS in the first place, were a pretext to overthrow the Syrian president. However, nobody in the US predicted the stern Russian response, which has preserved Assad’s power for the past three years.

“The Russians want a settlement that would keep (Syrian President Bashar al-Assad or some replacement acceptable to them in power,” said a defense official, who like others who discussed the schism in the administration agreed to do so only on condition of anonymity.

“The president has said that Assad has got to go, and our allies, especially the Saudis, hold that view very strongly. In fact, they keep asking us why we’re cozying up to Moscow.”Assad said in an interview broadcast on Thursday that Russian President Vladimir Putin has never talked to him about leaving power, despite pressure from Washington for Assad to step down.

Finally, the biggest question is just why did the US expend so much military power and resources over a mission that has led to a dead-end.

“I think quite frankly (Kerry’s) visit is a microcosm of the confusion about U.S. policy towards Russia,” said Heather Conley, director of the Europe Program at the Center for Strategic and International Studies think tank in Washington. “It’s a lot of political capital to send the secretary of state if you don’t have a clear objective of what you want to accomplish,” she told Reuters.

Actually, scratch that: we know why. As Reuters also reportted yesterday, “U.S. arms sales approvals on track to reach nearly $40 billion.” And that makes all the death and suffering worth it.

END

 

Congress to release the classified 28 pages which details Saudi involvement in 9/11.  The next move will be up to Saudi Arabia.  When it was announced 4 months ago that the USA might release the documents, the Saudi’s threatened severe retaliation.

(courtesy zerohedge)

 

 

Congress To Release Classified “28 Pages” Detailing Saudi Involvement In 9/11 As Soon As Friday

Four months ago, Saudi Arabia went “nuclear” when it emerged that Congress was preparing legislation which would allow plaintiffs to sue the Kingdom for its involvement in the September 11, with Saudi officials going so far as threatening to liquidate their holdings of US reserves. In the subsequent weeks, the legislation was quietly killed, however an open topic remained: the classified “28 pages” that were part of the 2002 Congressional report which allegedly disclose Saudi involvement in the worst terrorist attack on US soil ever.

To be sure, this wouldn’t be the only smoking gun: as we posted in April, another report, also known as “Document 17″ linked the Saudi Embassy In Washington To Sept 11. As such, Saudi involvement is largely taken for granted. The only thing that has been missing is an official policy stance.

That may changed tomorrow because as CNN reports, citing sources, the classified pages detailing alleged Saudi Arabia government ties to the 9/11 hijackers will be released as early as Friday by Congress.

Known as the “28 pages,” the document was part of a 2002 Congressional investigation of the 9/11 attacks and has been classified since the report’s completion.

Sources said there are still some procedural steps that need to be taken before the release.

Under pressure from the victims’ families and lawmakers, President Barack Obama said in April his administration would declassify the pages. That same month, Director of National Intelligence James Clapper said mid-June was a realistic target date for their release.

Former Senator Bob Graham, who chaired the committee that carried out the investigation, recently told CNN that when he personally went to the President in April to advocate for the release, he was told a similar timeframe was possible. “I was told on April 12th that the decision as to whether to release the pages would be made before June 12th,” Graham told CNN. “Well, we’re now well beyond that date and no decision as to whether a decision is going to made has been released.”

Graham said the White House was no longer returning his calls. “Immediately after June 12th, I began calling the White House to ask what is the new date for the decision to be made and a half dozen telephone calls have not been returned,” he said.

So will the pages be just the usual mish mash of ineligible, redacted text? “Sources told CNN that intelligence agencies, law enforcement and the State Department have all reviewed and approved the release of the 28 pages with “minimal redactions.””

However, a White House official told CNN, “This is a Congressional document, which we expect ultimately would be released by the Hill once the (Director of National Intelligence) has reviewed it.”

Last week, Democratic and Republican House members called on the White House to fulfill its promise to declassify and make the pages public, introducing a new bill to do so if the president doesn’t act.

“If the Obama administration does not move forward then we need to pass (the legislation) to have the House Intelligence Committee publish the pages,” Rep. Stephen Lynch, a Democrat from Massachusetts, said at the time.

Terry Strada has been pushing for the right to sue Saudi Arabia over its alleged involvement in the attack. Her husband was working on the 104th floor of the North Tower when the planes struck. The couple had had their third child just four days earlier.

“All of this could be settled, if we would just release the 28 pages and let everyone see what’s in there,” Strada said. “If it was just this low-level … government officials in the Saudi Arabian government, then they have nothing to worry about. The American people deserve this just as much as the 9/11 families deserve it, but we’re the ones that are suffering by not having them released.”

For its part, the Saudi government is also calling for the pages to be released so that it can respond to any allegations, which it has long called unfounded. A senior Saudi official told CNN that Riyadh will make any potential suspects available for interview by US authorities. So far, this official said, the Saudi government has received no such requests.

If this is accurate, the timing, coming just before the Republican convention, is perhaps surprising. Alternatively, one wonders if Saudi Arabia was so vocal previously, why it is willing to go along with this release which – unless it is utterly fabricated – will reveal the Saudi “allies” in a very unpleasant light. We look forward to reading the “pages” if and when they are released.

OIL ISSUES/OIL MARKETS/

An extremely important paper on why oil will fall.  China is massively exporting gasoline while at the same time crack spreads are dropping like flies:

(courtesy zero hedge)

As Chinese Refiners Flood The World, Gasoline Tankers Pile Up In New York City Harbor

Just over a month ago, when we pointed out that that the gasoline curve was about to shift from contango into backwardation, we said that the gasoline tanker armada off the coast of Singapore was about to start offloading as it would soon become uneconomical to hold product in offshore storage. This meant one thing: China was about to unleash a wave of accelerated gasoline exports across the entire world.

We pointed out the unprecedented surge in Chinese gasoline stocks…

… and added that as China continues to imports tremendous amounts of both crude and product, far greater than actual demand, this would send “China’s gasoline stocks to even higher record levels. In other words, the global glut is now not only at the crude and distillate level, but also in global gasoline stocks.”

One month later we find out that this was a correct assessment of the situation.

According to the WSJ, while initially China’s demand for oil helped soak up some of the surplus crude sloshing around the world, China is no longer the handy excess supply “buffer” it once was and as a result China’s teapot refiners are now flooding markets with products including diesel and gasoline, in the latest example of how surging Chinese exports are shaking the commodities industry.

China’s total exports of refined fuels jumped 38% on-year to 4.2 million tons, or roughly 1.02 million barrels a day, in June, according to the latest data released Wednesday by the customs administration. Its refined fuel exports are up 45% overall so far this year. Much of the surge is attributable to a leap in China’s shipments of diesel. In May, China’s exports of the fuel mainly used in heavy industry had quadrupled on-year to 1.5 million tons; detailed data for June is due later this month.

The sharp rise is merely a confirmation of what many have said all along: in its relentless bailouts of all enterprises, the Chinese government is unleashing a deflationary wave around the globe, which forces Chine to dump its products to any and every buying around the globe, in the process massively undercutting prices. This mirrors similar increases in China’s exports of processed basic materials like steel in recent months, a trend that has provoked anguished complaints from governments and industry bodies across the world.

Worse, what many thought was stable Chinese domestic demand, ended up being just the filling of every possible container, not to mention the now almost full SPR, in lieu of actual domestic commodity demand. As such, China’s sagging demand as the economy slows once more has left the country’s oil and metal refiners with huge surpluses they are increasingly looking to sell abroad.

“[China’s] demand for diesel continues to disappoint, mainly as a result of slower industrial output compared to [the] same period in 2015,” according to a recent report from the Organization of the Petroleum Exporting Countries.

Thus, unable to sell at home, China is aggressively exporting the latest deflation tidal wave, and the flood of Chinese diesel and other refined products spilling outward is bringing down prices in Asia, hitting China’s regional rivals hard. Refining margins—the difference between what refiners pay for crude versus the prices of the refined products they sell—have dropped by a third to around $4 a barrel since the first quarter across Asia, according to a report by J.P. Morgan.

Gasoline hasn’t proved immune.

Despite relatively strong demand within China as passenger vehicle sales continue to rise, China has been exporting more, with shipments doubling in May from last year to 780,000 tons.  “[Global gasoline] demand was off the chart last year and margins were in the double digits. All the refiners were incentivized to produce gasoline,” said Michal Meidan, a China specialist at Energy Aspects, a London-based energy research firm.“But demand for this year is not as stellar, so you have a surplus of gasoline everywhere,” she said.

That is most certainly true not only for China, but as we noted earlier in our post about oil’s “death spiral” in the US as well, where plunging crack spreads likewise confirm that the US also now finds itself with far too much product (albeit due to different dynamics). As we have explained previously, much of the increase in Chinese refined product exports is due to shifts in the way the industry is regulated at home. Beijing has more than doubled the amount it allows refiners to sell abroad this year, according to Energy Aspects data.  The resurgence of China’s independent crude refiners, known as teapots, has also been key.

Last year, Beijing allowed these teapots to directly import crude from abroad for the first time, rather than having to buy more expensive crude from domestic state-owned oil companies. Their subsequent ramp-up in production has provided big state-owned refiners such as Sinopec and China National Petroleum Corp. with greater competition at home, leading them to sell more abroad.

But the worst news is that this is just the beginning:

Teapot refiners could also soon export more too: Some are aiming to ship 50% of their total output abroad within three years, up from around 10% currently, says Nelson Wang, energy analyst at brokerage CLSA, based on recent conversations with a number of such operators.

But who will they sell too? After all the world is already flooded with gasoline? Well, for a low enough price, they will find buyers. Teapots already often sell refined products at a discount compared to their rivals at home and abroad to attract customers. “This is just the beginning, and the bigger threat [on margins] is yet to come,” Mr. Wang said.

But the worst possible case is if China’s economy were to hit another major snag. As the Chinese government seeks to steer the economy from an industry-heavy focus to a consumption-based one, domestic demand for refined fuels could wane further, in turn stoking more exports of diesel, analysts say. In turn, analysts say China’s crude imports could also decline: they hit a five-month low in June at 30.62 million tons, though that was still up 3.8% on-year.

Chinese refineries’ rising output could keep its gasoline exports high too. The country’s gasoline production could outpace domestic demand growth by 9% this year, according to analysts at energy researcher ICIS.

“Exports are still the main solution for China to mitigate the oversupply of gasoline,” said ICIS, forecasting China’s shipments this year to hit 8 million metric tons, or 160,000 barrels a day, a jump of 40%.

And while Chinese gasoline exports have not hit the US yet (and they well may eventually), the US is already having a major problem with storing all the gasoline the rest of the world has to export. None other than the IEA in its monthly report said that the global gasoline glut is so big that tankers are now storing in New YOrk’s harbor. “Brimming” inventories, concern over gasoline demand in key markets, “weighed down” prices for the fuel in June.  The IEA also adds that some companies “have been forced to turn to floating storage in the New York Harbour area.”

As Reuters reported last week, at least two tankers carrying gasoline-making components have dropped anchor off New York Harbor for nearly a week, unable to discharge their cargoes in the latest sign that storage for the fuel is running out, traders said. Several tankers with gasoline have also been diverted from the New York region to Florida and the U.S. Gulf Coast in recent days, a rare move that underscores oversupply in the pricing hub for the benchmark U.S. gasoline.

The 74,000 tonne tanker EMERALD SHINER , carrying a cargo of alkylite from the west coast of India has been anchored off the New York Coast since June 28, according to Reuters shipping data and traders.

The 37,000 tonne ENERGY PROGRESS , with a cargo of reformate from Turkey, has similarly been waiting outside New York since June 28.

Furthermore, at least three cargoes of gasoline from Europe, which heavily relies on exports to the U.S. East Coast, have been diverted in recent days from New York Harbor to Florida and the U.S. Gulf

Coast, ship tracking showed.

Those include the tankers ENERGY PATRIOT , SEASALVIA and ANCE.

“Tanks are full to the brim in New York Harbor,” a trader said.

There is much more on this topic, but at its core it is a very simple story of too much supply and not enough demand.

And now that the market is finally realizing what happened, the understanding that oil’s “death spiral – edition 2016″ is being catalyzed not just by oil market dynamics, but by oil products such as diesel and gasoline, is finally being appreciated by the market…  just as we predicted would happen back in February.

end

Your first humour story for the day:

60 Different Genders? Leftist LGBTTQQ-Proposal Ridiculed By AfD Politician In German Parliament

 Let’s have a second humour story:
(courtesy Mish Shedlock/Mishtalk.com)

Half Of Municipal Employees In Small Italy Town Arrested For Fraud

Submitted by Michael Shedlock via MishTalk.com,

Roughly half the municipal employees in Boscotrecase, Italy (population 11,000) have been arrested for fraud.

The employees clock in, sometimes for each other (with boxes over their heads), but don’t show up for work.

The arrested are accused of fraud against the state. As a result, there are not enough people to run the town. Services are shut down.
 

Please consider Not Enough Staff to Run Italian Town after Arrests for Bunking Off Work.

The mayor of a small town outside Naples had to shut down most municipal offices after police arrested 23 of his staff in the latest revelations of absenteeism in Italy’s public sector.

Staff were filmed clocking in and then leaving to go about their personal business or using multiple swipe cards to register absent colleagues, police said, in scenes that have become familiar after numerous similar scandals.

A police video showed one man trying to tamper with a security camera and then putting a cardboard box over his head to hide his identity before swiping two cards.

Police arrested around half of all employees in the town hall offices of Boscotrecase following a weeks-long investigation that they said revealed 200 cases of absenteeism involving 30 people.

“I’ll probably have to shut down the town hall,” Pietro Carotenuto, elected a month ago as mayor of the town of 11,000 people, told Sky Italia.

Those arrested, accused of fraud against the state, included the head of the local traffic police and the head of the town’s accounting department.

Warning: Don’t Try This at Home

end

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

Euro/USA   1.1100 UP .0006 (STILL  REACTING TO BREXIT)

USA/JAPAN YEN 105.58  DOWN 1.544(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/NOW WILL INITIATE HELICOPTER MONEY

GBP/USA 1.3234 UP .0123(MORE STIMULUS PLANNED)

USA/CAN 1.2934 DOWN .0041

Early THIS THURSDAY morning in Europe, the Euro ROSE by 6 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 DOWN 6.67 POINTS OR 0.22%   / Hang Sang CLOSED UP 238.69 PTS OR 1.22% /AUSTRALIA IS HIGHER BY 0.39%/ 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 THURSDAY morning: closed UP 154.46 POINTS OR 0.95% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 238.69 OR 1.12%  ,Shanghai CLOSED DOWN 6.67 OR 0.22%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED IN THE GREEN/India’s Sensex IN THE GREEN  

Gold very early morning trading: $1329.00

silver:$20.23 

Early THURSDAY morning USA 10 year bond yield: 1.511% !!! UP  4 in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.209 UP 1 in basis points from WEDNESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early THURSDAY morning: 95.89 DOWN 33 CENTS from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

END

 

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  3.11% UP 1 in basis points from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.257% DOWN 3  in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD: 1.17%  UP 2 IN basis points from WEDNESDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.22 UP 1 IN basis points from WEDNESDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 5 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.040% UP  1/2 IN  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

 

Euro/USA 1.1122 UP .0027 (Euro =UP 27 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 105.43 UP 1.394(Yen DOWN 139 basis points/HELICOPTER MONEY )

Great Britain/USA 1.3335 UP 0.0219 ( Pound UP 219 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY

USA/Canada 1.2886-DOWN 0.0089 (Canadian dollar UP 89 basis points AS OIL ROSE (WTI AT $44.53). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 27 basis points to trade at 1.1122

The Yen ROSE to 105.43 for a LOSS of 139 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY TO COMMENCE

The POUND was UP 219 basis points, trading at 1.3335 AS PRIME MINISTER THERESA MAY TAKES OFFICE

The Canadian dollar ROSE by 89 basis points to 1.2886, WITH WTI OIL AT:  $45.53

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6800

the 10 yr Japanese bond yield closed at -.257% UP 3  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 6 IN basis points from WEDNESDAY at 1.5280% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.246 UP 3  in basis points on the day 

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

Your closing USA dollar index, 96.07 DOWN 14 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 THURSDAY

London:  CLOSED UP 15.93 OR 0.24%
German Dax :CLOSED UP  137.59 OR  1.31%
Paris Cac  CLOSED UP 50.26  OR 1.16%
Spain IBEX CLOSED UP 78.40 OR 0.93%
Italian MIB: CLOSED UP 269.63.12 OR 1.63%

The Dow was UP 134.29  points or 0.73%

NASDAQ UP 28.33 points or 0.57%
WTI Oil price; 45.54 at 4:30 pm;

Brent Oil: 47.19

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  62.89 (ROUBLE UP 1  & 4/100 ROUBLES PER DOLLAR FROM TUESDAY) 

TODAY THE GERMAN YIELD RISES TO -.040%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:45.49

BRENT: 47.13

USA 10 YR BOND YIELD: 1.536% 

USA DOLLAR INDEX: 96.10 DOWN 11 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.33412 UP .02248 or 225 basis pts.

German 10 yr bond yield at 5 pm: -.040%

 

END

 

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

Trading Today in Graph form;  VERY IMPORTANT FOR YOU TO VIEW ALL THE CHARTS TODAY

Stocks Soar Most Since 2011 Fed Rescue As Bernanke’s Masterplan Is Unveiled

Stocks shrugged off Carney’s disappointment and focused on what Bernanke, Mester, Kuroda, and Abe had to say…

 

The S&P 500 is as overbought as at any local high in the last year…

 

Notably the last two days have seen the same opening squeeze of shorts as before but unlike before, “Most Shorted” stocks have faded weaker for the rest of the day…

 

Small Caps underperformed…

 

And Small Caps are lagging post-Brexit while Trannies are soaring…

 

The last 12 days 8-plus percent surge in the S&P is the greatest since Oct 2011 – the last time Bernanke saved the world with FX Swap Lines…

This time he was at it again with a new masterplan…

Bernanke, who met Japanese leaders in Tokyo this week, had floated the idea of perpetual bonds during earlier discussions in Washington with one of Prime Minister Shinzo Abe’s key advisers. Abe advisor Etsuro Honda said that during an hour-long discussion with Bernanke in April the former Federal Reserve chief warned there was a risk Japan at any time could return to deflation. He noted that helicopter money could work as the strongest tool to overcome deflation, according to Honda. Bernanke noted it was an option. The implication, as we said last week when we previewed just this “big thing” is that Japan is indeed set to be the first testing ground of helicopter money in the modern financial system.

JPMorgan sparked some exuberance in financials… which finally snapped the sector green post-Brexit… this is the 7th straight Up-Day for financials – longest streak in 15 months…

 

But the decoupling is becoming farcical again…

 

 

VIX briefly flash-crashed this morning as Carney disappointed – dropping to 12.14 – the lowest since 8/5/15!! (VIX is down 11 of the last 13 days)

 

 

High yields bonds recovered all of the Icahn “Danger Ahead” losses (but not seem to have found resistance at this key level…

 

As HY Energy credit has decoupled notably from Oil prices…

 

But then again so have Energy stocks…

 

Treasury yields rose notably across the entire complex with the long-end underperforming…

 

With desk chatter of considerable 30Y selling which sparked the biggest 2s30s steepening since Dec 2nd 2015…

 

The USD Index limped lower today as GBP strength (Carney didn’t cut) and JPY weakness (more buffoonery) offset each other…

 

 

Commodities had a quiet day with PMs slightly lower and copper and crude marginally higher..

 

Notably this is the 11th day of Up-Down-Up trading in WTI Crude as oil has remained trapped for 6 days between its 100- and 200-day moving average…this also happened last July!!

 

*  *  *

The S&P 500 is now 200 points ‘rich’ to the Fed Balance Sheet – its richest ever…

 

And finally there’s this… the sixth quarterly decline in earnings as we soar to record high stock prices…

 

Charts: Bloomberg

end

 

Initial jobless claims hover at 43 year lows despite awful labour market conditions

Nothing but phony data:

(courtesy zero hedge)

Initial Jobless Claims Hover At 43 Year Lows Despite Labor Market Conditions Slump

Despite six months of deteriorating labor market conditions (based on The Fed’s 19-factor all-sining-all-dancing ‘experimental’ model”) initial jobless claims beat expectations printing a near 43-year low 254k. Once again, providing no excuses for a data-dependent Fed to hike rates…

So who is right – The Fed or The Department of Labor?

 

 

end

 

This leading indicator for consumer inflation came in red hot:  Final PPI demand surges the highest since Sept 2012:

(courtesy zero hedge)

a must read..

(courtesy David Stockman/ContraCorner)

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