July 21/Another record high silver open interest at the comex: 220,600 contracts/gold and silver both do upside outside reversals: these are rare but the bankers like to attack after these events/ Huge increase in the amount of gold standing for July: almost 19 tonnes/Japan’s Kuroda stuns markets by stating “helicopter money” is off the table/Draghi less accommodating but hints at public bailout for Italian banks/

Gold:1330.50 UP $11.70

Silver 19.78   UP 20 cents

In the access market 5:15 pm

Gold: 1331.10

Silver: 19.80

.

For the July gold contract month,  we had a huge 739 notices served upon for 73,900 ounces. The total number of notices filed so far for delivery:  6068 for 606,800 oz or 18.874 tonnes

In silver we had 28 notices served upon for 140,000 oz.  The total number of notices filed so far this month for delivery:  2134 for 10,670,000 oz

Silver today at the comex recorded an all time record for open interest and yet the price is 29 dollars cheaper. It defies commodity law!

 

Last night, I was up again in the early hours when I saw the bankers continue with their raid orchestrated by our crooked banks yesterday.  I took a look at the daily bulletin which is an estimated OI and then I knew the reason for the raid:

  1. the high open interest for silver (and a record high) despite silver being 29 dollars cheaper when it had its former high OI in 2011. (Oi 220,587)
  2. the front July contract month in gold saw a huge gain in an amount standing.  Now we have close to 19 tonnes standing in this a non active month.It sure looks like August will be exciting.

 

We are now entering options expiry month for gold and silver:

The comex options expiry on Tuesday July 26.

The OTC options in London expire Friday at noon July 29.

So expect downward drafts in gold and silver trading until both of these contracts expire.

 

 

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 311.801 tonnes for a gain of 9  tonnes over that period

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY 1,391 contracts UP to 220,587, AND A NEW ALL TIME RECORD. THE OI ROSE IN CONTRAST TO THE  PRICE OF SILVER WHICH FELL BY 40 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.102 BILLION TO BE EXACT or 158% of annual global silver production (ex Russia &ex China).

In silver we had 38 notices served upon for 140,000 oz.

In gold, the total comex gold FELL BY 2,990 contracts as gold FELL in price YESTERDAY to the tune of $12.70. The total gold OI stands at 614,079 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

we had a large withdrawal  in gold inventory. to the tune of 2.08 tonnes/

Total gold inventory rest tonight at: 963.14 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 1,381 contracts UP to 220,587 as the price of silver FELL BY 40 cents with YESTERDAY’S trading. The gold open interest FELL by 2990 contracts DOWN to 614,079 as  the price of gold FELL by $12.70  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 UP 11.11 POINTS OR 0.37%/ /Hang Sang closed UP 118.01 OR 0.54%. The Nikkei closed UP 128.33 POINTS OR 0.77% Australia’s all ordinaires  CLOSED UP 0.41% Chinese yuan (ONSHORE) closed UP at 6.6761 /Oil ROSE to 45.85 dollars per barrel for WTI and 47.12 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.6788 yuan to the dollar vs 6.6761 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY AS TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES. 

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

It sure looks like helicopter money is off the table.  Thus the entire global rally is a lie?

( Phoenix  Research Capital)

b) REPORT ON CHINA

NONE TODAY

4 EUROPEAN AFFAIRS

i)Draghi less accommodating as the 10 yr German bund drops again below 0%.Draghi decides to leave the QE program unchanged and thus less dovish;

( zero hedge)

ii)Draghi hints at a public backstop to bring aid to the ailing Italian and other European banks: Germany is not happy@!!

( zero hedge)

iii)George Soros  proposal will bankrupt Europe tenfold: he is asking to accept 300,000 refugees a year at an additional cost of 30 billion dollars or face an EU collapse!

( zero hedge)

iv)The following illustrates how sharia law is practiced in Denmark and what the government is trying to counter its offensive beliefs

( Judith Bergmann/Gatestone Institute)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6.GLOBAL ISSUES

Brandon Smith illustrates 6 possible black swan events that may surface:

( Brandon Smith/AltMarket.com)

7.OIL ISSUES

i)Why oil was fall

( Nick Cunningham/Oil Price.com)

8.EMERGING MARKETS

9.PHYSICAL STORIES

i)Bank of England considers cutting commercial banks  out of the payment systems

( Jon Sindreu/WallStreet Journal)

ii)The pros and cons of central banks buying equities

( Lynn/London Telegraph)

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

i)The Philly mfg index slumped to a 6th month low totally negated last month’s rise.  The Chicago national manufacturing activity remains in negative territory for the 17th straight month:

( zero hedge)

 

ii)This may turn out to be very interesting as Johnson is HSBC’s key FX trader and commodity trader.  Even though he was “cleared” of its own internal probe, the USA has an iron clad case against HSBC for front running and causing damage to its client.  This is a criminal action:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest  FELL TO AN OI level of 614,079 for a  LOSS of 2990 contracts AS  THE PRICE OF GOLD FELL BY $12.70 with respect to YESTERDAY’S TRADING We are now in the non active month of July. As I stated yesterday: “Somebody big is continually standing for the gold metal even though July is  generally a poor delivery month. The open interest for the front July contract stands at 803 for a GAIN of 459 contracts. We had 269 notices filed on yesterday, so we gained 728 contracts or an additional 72,800 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 21,065 contracts down to 273,673  as this month continues its wind down until first day notice for the August contract, Friday,July 29/2016: 1 week a way.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was  good at 218,673. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was GOOD at 266,806 contracts.The comex is not in backwardation.
Today, we had a huge 739 notices filed for 73900 oz in gold
And now for the wild silver comex results. Total silver OI ROSE by 1381 contracts from 219206  up to 220,587.  We are now at an all time record high for silver open interest set today (220,587). The front active delivery month is July and here the OI fell BY 47 contracts down to 381. We had 38 notices served on YESTERDAY so we lost 9 silver contracts or an additional 45,000 oz that will not stand for delivery. The next non active month of August saw it’s OI fell by 10 contracts down to 467. The next big active month is September and here the OI ROSE by 813 contracts UP to 159,957. The volume on the comex today (just comex) came in at 56,914 which is excellent. The confirmed volume yesterday (comex + globex) was EXCELLENT at 66,013. Silver is not in backwardation. London is in backwardation for several months.
We had 28 notices filed for 140,000 oz. in silver JULY contract month
:INITIAL standings for JULY
July 21.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
3215.000  oz
SCOTIA
 100 kilobars
Deposits to the Dealer Inventory in oz  100,308.000 oz

brinks

3120 kilobars

Deposits to the Customer Inventory, in oz 
 nil
No of oz served (contracts) today
739 notices 
73,900 oz
No of oz to be served (notices)
64 contracts
6400 oz
Total monthly oz gold served (contracts) so far this month
6068 contracts (606,800 oz)
(18.874 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month   595,321.8 OZ

 MORE FARCICAL ENTRIES TODAY

Today we had 1 dealer DEPOSIT
i) Into Brinks:  100,308.000 oz
 (3120 kilobars)
total dealer deposit: 100,308.000   0z
Today we had 0 dealer withdrawals:
total dealer withdrawals:  nil oz
We had 0 customer deposit:
Total customer deposits: nil oz
Today we had 1 customer withdrawal:
i) Out of Scotia:  3215.000 oz
100 kilobars
Total customer withdrawals 3215.000   oz
Today we had 1  adjustment:
i) Out of Brinks:
we had 3,858.000 oz (120 kilobars) were transferred out of the customer and this landed into the dealer account of Brinks
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 269 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 255 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 (6068) x 100 oz  or 606,800 oz , to which we  add the difference between the open interest for the front month of JULY  (803 CONTRACTS) minus the number of notices served upon today (739) x 100 oz   x 100 oz per contract equals 603,200 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 (6068) x 100 oz  or ounces + {OI for the front month (803) minus the number of  notices served upon today (739) x 100 oz which equals 6032 oz standing in this non   active delivery month of JULY  (18.762 tonnes).
We  gained 72,800 gold ounces that will stand for metal in this non active month of July.
SOMEBODY WAS IN URGENT NEED OF PHYSICAL GOLD TODAY.
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 +  18.236 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 = 49.194 tonnes still standing against 50.893 tonnes available.
 Total dealer inventor 1,636.227.922 tonnes or 50.893 tonnes
Total gold inventory (dealer and customer) =10,024,405.843 or 311.801 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 311.801 tonnes for a  gain of 9  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!!

To me, the only thing that makes sense is the fact that “kilobars” are entries or hypothecated gold sent to other jurisdictions so that they will not be short in their derivatives like in England.  This would be similar to the gold used by Jon Corzine. If this is the case, this would be the greatest fraud perpetrated on USA soil.

 

 
 end
GOOD ACTIVITY AGAIN INSIDE THE SILVER COMEX
And now for silver
 
JULY INITIAL standings
 July 21.2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
 176,098.600 OZ
(DELAWARE)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
 907,495.694 OZ
HSBC, DELAWARE
No of oz served today (contracts)
28 CONTRACTS 
(140,000 OZ)
No of oz to be served (notices)
359 contracts
1,795,000 oz)
Total monthly oz silver served (contracts) 2134 contracts (10,670,000 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  5,418,919.9 oz
today we had 0 deposit into the dealer account
total dealer deposit NIL oz
we had 0 dealer withdrawal:
:
total dealer withdrawals:  NIL oz
we had 1 customer withdrawals:
i)Out of Delaware:  176,098.600 oz
Total customer withdrawals: 176,098.600 oz
We had 2 customer deposit:
i)Into HSBC: 904,393.710 oz
ii) Into Delaware: 3101.984 oz
:
total customer withdrawals:907,495.694. oz
 
 
 
 we had 2 adjustments
i) Out of Delaware:  9970.65 oz was removed from the customer and this landed into the dealer account of Delaware
ii) Out of jpm:  60.30 oz was removed from the customer account as an accounting error.
The total number of notices filed today for the JULY contract month is represented by 28 contracts for 140,000  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 (2134) x 5,000 oz  = 10,670,000 oz to which we add the difference between the open interest for the front month of JULY (381) and the number of notices served upon today (28) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the JULY contract month:  2134(notices served so far)x 5000 oz +(381 OI for front month of JULY ) -number of notices served upon today (28)x 5000 oz  equals  12,465,000 oz  of silver standing for the JULY contract month.
We lost 19 contracts or 95,000 ounces will not stand in this active month of July.
 
Total dealer silver:  28.370 million (close to record low inventory  
Total number of dealer and customer silver:   155.021 million oz (close to a record low)
The total open interest on silver is NOW AT its all time high with the record of 220,587 being set July 21.2016.  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 21/ a large withdrawal of gold inventory to the tune of 2.08 tonnes/Inventory rests at 963.14 tonnes
July 20./no changes in gold inventory at the GLD/Inventory rests at 965.22 tonese
July 19/no change in gold inventory at the GLD/Inventory rests at 965.22 tonnes
July 18./ a good sized deposit of 2.37 tonnes of gld into GLD/this is a paper gold entry/inventory rests at 965.22 tonnese
July 15./no change in gold inventory at the GLD/Inventory rests at 962.85 tonnes
July 14/a good sized withdrawal of 2.37 tonnes from the 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 21 / Inventory rests tonight at 963.14 tonnes

end

Now the SLV Inventory
July 21/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz
July 20/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz
July 19/no change in silver inventory at the SLV/Inventory rests at 348.580 million oz
July 18/no change in silver inventory at he SLV/inventory restss at 348.580 million oz
July 15/ no change in  silver inventory at the SLV/Inventory rests at 348.580 million oz
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 21.2016: Inventory 348.580 million oz
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 3.2 percent to NAV usa funds and Negative 3.0% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.4%
Percentage of fund in silver:39.3%
cash .+1.3%( July 21/2016). 
2. Sprott silver fund (PSLV): Premium rises  to +0.39%!!!! NAV (July21/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.61% to NAV  ( July 21/2016)
Note: Sprott silver trust back  into NEGATIVE territory at -+39% /Sprott physical gold trust is back into positive territory at +0.61%/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)

Why Italy’s bank crisis could be a ‘ticking time bomb’

GoldCore's picture

Just as the dust begins to settle on Brexit, Italy’s banking system looms as the next threat to global financial markets.

Previous attempts to resolve Italy’s banking sector woes have proven to be less than effective. Non Performing Loans on the balance sheets of Italian banks represent over 8% of the total loan portfolios. However some analyst fear that this is set to grow to a whopping 15% in the near future.

Results of a stress tests by the European Banking Authority due on July 29 are expected to shed more light on the capital needs of the Italian banking sector, potentially serving as a spark to renewed financial turmoil.

While foreign exposure to Italian banks is relatively low, the bigger worry is that a backlash over a bailout leads voters to revolt, empowering the euroskeptic 5 Star Movement, a political party that is growing in poularity, which has called for a referendum on eurozone membership.

Could we be moving from Brexit to Italeave?

You can read the full article here 

7RealRisksBanner

 

Gold and Silver Bullion – News and Prices

Gold hits 3-week low as equities rise; ECB in focus (Reuters)

Brexit Altering the Landscape for Gold: BofA’s Blanch (Bloomberg)

Chart of The Day – Gold DCL Still Several Days Away (24hgold)

HSBC Bankers Are First Individuals Charged in U.S. Currency Case (Bloomberg)

Gold miner Newmont cuts cost forecast, beats market (Reuters)

Silver Price Ignition or Money Reasserting: When Silver Investment Demand Merges with Industrial Demand (Silverseek)

Gold, Guns, and the New Silk Road – Rory Hall (24hgold)

Why gold’s bond with the dollar has broken (Marketwatch)

Gold Prices (LBMA AM)

21 July: USD 1,322.00 ., EUR 1,199.318 & GBP 1,000.754 per ounce
20 July: USD 1,325.60, EUR 1,204.308 & GBP 1,005.865 per ounce
19 July: USD 1,332.20, EUR 1,203.376 & GBP 1,009.042 per ounce
18 July: USD 1,326.15, EUR 1,200.298 & GBP 1,000.050 per ounce
15 July: USD 1,330.50, EUR 1,194.789 & GBP 994.150 per ounce
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

Silver Prices (LBMA)

21 July: USD 19.34, EUR 17.55 & GBP 14.66 per ounce
20 July: USD 19.70, EUR 17.88 & GBP 14.95 per ounce
19 July: USD 19.99, EUR 18.07 & GBP 15.18 per ounce
18 July: USD 19.72, EUR 17.83 & GBP 14.89 per ounce
15 July: USD 20.14, EUR 18.08 & GBP 15.06 per ounce
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


Recent Market Updates

– Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data
– Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500
– Gold Lower After Central Bank’s Surprise Move
– “We Are On the Cusp of an Explosion in the Silver Price” – John Embry

– 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%

end

Bank of England considers cutting commercial banks  out of the payment systems

(courtesy Jon Sindreu/WallStreet Journal)

Bank of England considers cutting commercial banks out of the payments system

Section:

The Central Bankers’ Bold New Idea: Print Bitcoins

By Jon Sindreu
The Wall Street Journal
Tuesday, July 19, 2016

When it comes to bitcoin and digital currencies, central banks might be considering the adage: “If you can’t beat them, join them.”

In a research paper published on Monday, economists at the Bank of England advocated that central banks issue their own kind of digital currency. Using the U.S. as a case study, they argued it could give a permanent boost to the economy of around 3%, as well as providing policy makers with more effective tools to tame financial booms and busts. …

But the main appeal of bitcoin isn’t that it’s electronic. In fact, most money already is: Only about 5% of money in the economy is physical cash; the rest is bank deposits.

Rather, a digital currency offers a decentralized way to make payments without needing commercial banks to stand in the middle and record the transaction. Payments are validated by other users in a global network of computers and then updated in a shared record known as the blockchain.

Central banks across the developed world, including the Bank of England and the Bank of Canada, are now studying the potential of this technology. Were central banks to issue digital cash and make it available to the public, money would exist electronically outside of bank accounts in digital wallets, much as physical bank notes do. This means households and businesses would be able to bypass banks altogether when making payments to one another. …

… For the remainder of the report:

http://www.wsj.com/articles/the-central-bankers-bold-new-idea-print-bitc…

… For the Bank of England research paper cited in this report:

http://www.bankofengland.co.uk/research/Documents/workingpapers/2016/swp…

end

The pros and cons of central banks buying equities

(courtesy Lynn/London Telegraph)

Analyze THIS (technically): We don’t need back-door nationalization by central banks

Section:

Central Banks Must Realise the Last Thing We Need Is Nationalisation by the Back Door

By Matthew W. Lynn
The Telegraph, London
Wednesday, July 20, 2016

http://www.telegraph.co.uk/business/2016/07/20/central-banks-must-realis…

Would you feel comfortable lending money to the mining conglomerate Glencore, a company that only last year came perilously close to imploding? Or Telecom Italia, with its massive exposure to the weakest major economy in the world? Or to Lufthansa, a lumbering beast of an airline just waiting to be eaten alive by new and aggressive low-cost carriers?

Well, perhaps you would, and perhaps you wouldn’t. If you are part of the eurozone, however, you don’t have any choice.

This week we learned that the European Central Bank (ECB) has been buying bonds in all those companies as part of its latest round of quantitative easing. It is far from alone in pumping money directly into corporations. Over the last few years, the Bank of Japan has been buying equities so furiously it is now one of the biggest stakeholders in Japan Inc. All it will take is one downturn, and it would be no surprise if the Bank of England and the Federal Reserve followed suit.

But is that really wise? Central banks, which are owned by the state, are going to end up controlling huge swathes of private industry. That is sold as a way of stimulating growth. But it could end up as nationalisation by the back door — and everything we know about economic history tells us that always ends in disaster.

Having exhausted just about every other way of stimulating some life into the moribund eurozone economy, the ECB has now resorted to pumping cash directly into the corporate sector. It tried loading the banks up with cash, but they are so reluctant to lend it out that the ECB has now started buying corporate bonds instead. It is currently doing so at a rate of 300 million euros a day — serious money even for the ECB.

Earlier this week it published details of what it has been buying. Most of the major eurozone corporations are there. So are companies from elsewhere, which are eligible so long as the debt is issued through a unit within the euro area. Such is the scale of the programme that prices are dropping and it is getting a lot easier for big corporations to tap the markets for money.

The ECB is far from alone. The Bank of Japan has been buying equities on a massive scale for several years now. It is now a Top 10 shareholder in 90 percent of the companies listed on the Nikkei 225. It is a Top 10 holder of Fast Clothing, which owns the Uniqlo chain, and a Top 3 holder of Yamaha, one of the world’s biggest instrument makers.

Plenty of economists will tell you that is simply a clever way of stimulating the economy when interest rates are already zero. The trouble is this, however. Even though the central banks claim they will be completely neutral with their holdings, it is hard to see how that can be true. In fact, there are two problems.

First, what happens in a crisis? Some of the bonds come with what the market makers call “event risk,” and the rest of us would describe as “terrible stuff about to happen at any moment.”

For example, the ECB now owns bonds in Volkswagen. As we know, the German car maker is still embroiled in a scandal over cheating on diesel emissions. Where will that end up, and can the business withstand the potential legal costs? No one yet knows. But one thing is clear. If it runs into serious trouble, then the bondholders will end up taking control. And yet the ECB has no mandate to get involved in sorting out VW or any other company.

Next, surely the ECB’s choice of purchases is a form of intervention. If it buys a Lufthansa bond, it lowers the cost of capital for that company. That gives it an advantage over its rivals — say, another EU-based airline such as Ryanair. In many industries, such as airlines or utilities, cheap capital is one of the most crucial factors in whether the business is a success or not.

Whether it likes it or not, the ECB is favouring one or another. Even worse, over time it opens up the bank to cronyism. How long before French or Italian politicians demand that some tottering conglomerate be propped up with cheap cash? It will probably happen before Christmas.

State control of the economy has always been a bad idea. It distorts the playing field, favours political lobbying over competitive excellence, and stops the market from allowing the best-managed businesses with the best products to flourish. Central banks are pushing it through the back door. They argue they are doing so to help revive demand and keep the economy alive. But as with so many of their recent innovations, from zero rates to printing money, the medicine is starting to look a lot worse than the disease.

 

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 SLIGHTLY DOWN to 6.6761 (  SMALL DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.6788) / Shanghai bourse  UP 11.11 OR 0.37%   / HANG SANG CLOSED UP 118.01 OR 0.54% 

2 Nikkei closed /USA: YEN RISES TO 106.36

3. Europe stocks opened ALL IN THE RED    /USA dollar index DOWN to 97.02/Euro UP to 1.1017

3b Japan 10 year bond yield: RISES AT  -.222%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.36

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  45.85  and Brent: 47.12

3f Gold UP  /Yen UP

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW

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 UP for WTI and UP 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 +.011%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.40%/: 

3j Greek 10 year bond yield RISE to  : 8.01%   (YIELD CURVE NOW  FLAT TO INVERTED)

3k Gold at $1320.40/silver $19.41(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 14/100 in  roubles/dollar) 63.91-

3m oil into the 45 dollar handle for WTI and 47 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a 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 106.36 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 .9869 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0873 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 POSITIVE territory with the 10 year RISES to  +.011%

/German 10+ year rate BASICALLY  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 1.588% early this morning. Thirty year rate  at 2.308% /POLICY ERROR)

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

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

HELICOPTER MONEY COMING!

Yen Soars, Stocks Slide After Kuroda Says “No Need Or Possibility For Helicopter Money”

The main catalyst that has pushed stocks to new all time highs, and sent the Yen plunging the most in the 21st century last week, were reports that Ben Bernanke was urging Japan to unleash helicopter money. Indeed, just yesterday, the USDJPY hit new two month highs on reports Japan was considering doubling the previously rumored fiscal stimulus of JPY10 trillion to 20, with the implication that the BOJ would provide the funds. It appeared that Japan had found just the jawboning tagline to keep stocks levitating and the Yen dropped: just hint every other day that more helicopter-funded stimulus is coming and jawbone assets, the same way verbal hints of more BOJ QE worked in 2015.

Which is why we were surprised to read this morning that BOJ governor Kuroda had shut down Bernanke, saying there is no need and no possibility of helicopter money in Japan, increasing speculation about the course of monetary and fiscal policy in the world’s third-largest economy. Given the current institutional setting, there is “no need and no possibility for helicopter money,” Kuroda said in a BBC Radio 4 program that was broadcast Thursday. “At this moment, the Bank of Japan has three options with quantitative and qualitative easing with negative interest rates.”

These current policies can be expanded, he said. Kuroda also repeated that he is determined to rid Japan of its deflationary mindset, and that there are no significant limitations to further monetary stimulus if needed by the BOJ.

Which, however, is not true: like the ECB, the BOJ is rapidly running out of willing bond sellers as its universe of eligible bonds gets smaller, while NIRP has proven to be far more deflationary than anyone had expected. In fact, the only way the BOJ’s policies can continue is if the government opens the debt issuance spigot, which is all that helicopter money really is. We are confident that Kuroda gets this, and we are confident that despite his reverse-jawboning today, helicopter money is precisely what will happen.

But first there needs to be a crisis. As BofA’s Athanasios Vamvakidis said, “markets had run ahead of themselves, expecting too much. Helicopter money is the inevitable end game in Japan, but we aren’t there yet, it will be the bazooka that the BOJ will use after a crisis.” So we just need the crisis. For now however, there is none, and immediately after Kuroda’s interview, the Yen soared, strengthening against all 16 of its major peers. The USDJPY tumbled more than 1% in the minutes after Kuroda’s interview was releaesed.

“Kuroda has just given investors a bit of a disappointment,” said Peter Garnry, head of equity strategy at Saxo Bank A/S in Hellerup, Denmark. The market had actually changed its sentiment and pricing based on the assumption that we would get something big on the fiscal stimulus side, and that Japan would be the first wave.”

Meanwhile, almost $5 trillion has been added to the value of global equities since June 27 amid signs central banks including the BOJ will boost stimulus to shore up economies after the U.K. voted to leave the European Union.

Elsewhere, the euro hovered near a three-week low amid speculation the European Central Bank will leave rates unchanged and signal further easing for later in the year when Mario Draghi speaks in two hours.

The Stoxx Europe 600 Index slipped 0.4%, with share of airlines sliding after Deutsche Lufthansa AG cut its earnings forecast. Lufthansa tumbled 8.4 percent, and EasyJet Plc slid 5 percent after posting a drop in quarterly revenue. Tele2 AB lost 6.4 percent as its earnings missed estimates. Hermes International SCA gained 3.4 percent as the luxury clothing and handbag maker said its profitability improved. Miners in the Stoxx 600 advanced for the first time in three days.

Turkish stocks fell the most worldwide after the president called for a state of emergency and S&P Global Ratings cut the country’s credit score. S&P 500 futures expiring in September lost 0.2 percent, while the MSCI All-Country World Index gained 0.1 percent, trading at its highest level since November. In the U.S., Intel Corp. slipped 2.8 percent in early New York trading after reporting slower growth in its server-chip division, while Qualcomm Inc. gained 6.5 percent as its results showed the chipmaker is overcoming hurdles in China. Joy Global Inc. rallied 20 percent after Japan’s Komatsu Ltd., the world’s second-biggest mining and construction equipment maker, agreed to buy it. Komatsu added 2.3 percent.

The Borsa Istanbul 100 Index slumped 3.8 percent. Turkey imposed a three-month state of emergency as the government pursues those responsible for last week’s failed military coup, detaining thousands of army officers, judges and prosecutors. A wider purge is under way that encompasses universities, schools and the civil service. The country won’t be under military rule, with army units taking orders from provincial governors, President Recep Tayyip Erdogan said in Ankara on Wednesday.

Germany’s 10-year bond was little changed, with the yield at minus 0.005 percent. The yield on similar-maturity U.S. Treasuries was 1.58 percent. It sank to a record 1.32 percent on July 6 and analysts see it ending the year at 1.74 percent, a Bloomberg survey shows.

Market Snapshot

  • S&P 500 futures down 0.2% to 2164
  • Stoxx 600 down 0.4% to 340
  • FTSE 100 down 0.4% to 6703
  • DAX down 0.2% to 10117
  • German 10Yr yield up less than 1bp to -0.01%
  • Italian 10Yr yield up less than 1bp to 1.25%
  • Spanish 10Yr yield down 2bps to 1.14%
  • S&P GSCI Index up 0.1% to 355.4
  • MSCI Asia Pacific up 0.9% to 135
  • Nikkei 225 up 0.8% to 16810
  • Hang Seng up 0.9% to 22090
  • Shanghai Composite up 0.3% to 3036
  • S&P/ASX 200 up 0.4% to 5512
  • US 10-yr yield down less than 1bp to 1.58%
  • Dollar Index down 0.28% to 96.93
  • WTI Crude futures up less than 0.1% to $45.79
  • Brent Futures unchanged at 47.17
  • Gold spot up 0.5% to $1,322
  • Silver spot up 0.4% to $19.48

Global Headline News

  • Kuroda Says No Need and No Possibility for Helicopter Money: Central bank Governor Haruhiko Kuroda spoke in BBC Radio 4 program
  • Japan’s Komatsu to Buy U.S. Joy Global for $2.89b: Komatsu to pay $28.30 a share in cash, 20% premium to close
  • Tesla’s Musk Sees Building Semi Truck in New ‘Master Plan’: CEO plans business expansion to include ride-sharing, buses
  • Singapore Seizes S$240m in Assets Related to 1MDB Probe: U.S. seeks also to seize assets linked to 1MDB
  • Shenhua Said to Seek CGN Merger to Form $204b Giant: China’s top coal miner said to submit proposal to regulators
  • Exxon in Catbird’s Seat for InterOil as Oil Search Drops Out: Exxon bid values Papua New Guinea gas explorer at $2.5b
  • Qualcomm Shows China Progress While Intel Stokes Server Fears: Intel’s data center business lags behind growth target, Qualcomm gets catch-up licensing payments, more chip orders
  • Oil Extends Gains as U.S. Stockpiles Fall, Refinery Rates Rise: September futures added 0.5% in New York after gaining 0.7% Wednesday
  • Trump Chooses War With Cruz at Convention Aimed at Unification
  • LVMH Said to Be in Talks to Sell DKNY, DKI: New York Post

* * *

Looking at regional markets, we start in Asia where a positive picture was observed, following the latest record advance seen on Wall Street after a rally in WTI and strong financials led US higher. Nikkei 225 (+0.8%) was catapulted back into positive territory by reports that the government are preparing an additional JPY 9trl in fiscal spending to accompany the earlier reported JPY 10TRN package, however after the close Kuroda dashed Nikkei futures with his statement that helicopter money is “not possible.” ASX 200 (+0.6%) extended on its progress from yesterday’s session with widespread gains seen across sectors, although materials still lagged behind. Elsewhere, Chinese markets conformed to the upbeat tone with the Hang Seng (+0.5%) in the green, while new measures to boost the economy in China bolstered the Shanghai Comp (+0.4%). 10yr JGBs trade flat as the benefits from the BoJ entering the market to acquire JPY 1.135tr1 of government debt was capped by the bullish pressure in Japanese equities. According to sources, the Japanese government is said to be preparing an additional JPY 9trl in fiscal spending to accompany the reported JPY 10trl package and could be given the green light before the August 2nd cabinet is approved.

Top Asian News

  • China Factory Gauge Suspended Again, This Time ‘Indefinitely’: Two indicators of Chinese economy have been discontinued
  • PBOC Strengthens Yuan Fix Most in Three Weeks Amid Support Bets: Yuan trade-weighted basket advances most since February
  • Yen Collapse Seen by Kuroda Critic Pitching Perpetual Bond Plan: Japan addicted to stimulus that isn’t working, Mitsuru Iwamura says
  • Chinese-Owned Key Safety Systems Said to Plan Bid for Takata: Japanese co. is seeking buyers to tide over record air-bag recall
  • RBNZ Says Likely That Further Policy Easing Will Be Required: Reserve Bank of New Zealand says decline in exchange rate is needed

Comments from BoJ’s Kuroda have shaped the European morning, with the central bank head stating that there is no need or possibility for helicopter money. In terms of a sector breakdown, airlines were among the worst performers in Europe after downbeat updates from both EasyJet and Lufthansa, while energy names also softened. Although USTs saw upside in the wake of Kuroda’s comments to head into mid-morning outperforming their European counterparts, with Bunds remaining relatively stable as participants await the ECB rate decision. Some have speculated that the ECB could alter the makeup of their asset purchases given the recent increase of bond yields slipping lower.

Top European News

  • Draghi May Flag Action Ahead for ECB Under Brexit’s Shadow: President will likely address fallout from U.K. referendum
  • Brexit to Halt U.K. Growth Streak With Mild Recession Seen: Survey of economists shows economy shrinking from this quarter
  • Lufthansa Cuts Profit Forecast After European Terror Attacks: Terror fears depress demand for long-haul trips to Europe
  • Publicis Chief Levy Sees Clear Improvement in 2017; Shares Rise: 30 years at the helm of ad firm, Levy plans to step down
  • U.K. Retail Sales Fall 0.9% in Month of Brexit Referendum: Monthly survey captures week following shock vote to leave EU
  • Daimler’s Mercedes Sustains Margins and Sees Boost From E- Class: Adjusted profit margin was 10% at Mercedes-Benz Cars division

In FX, the yen jumped 1.3 percent to 105.54 per dollar after Kuroda’s no helicopter money remarks. Speaking in a BBC Radio 4 program broadcast Thursday, Kuroda also repeated that he is determined to rid Japan of its deflationary mindset and that there are no significant limitations to further monetary easing if needed by the Bank of Japan. The euro was little changed at $1.1020. ECB President Mario Draghi has predicted that euro-area growth will slow as a result of Brexit, suggesting a response is needed. “Draghi will keep his options open for further easing,” helping fuel a gradual decline in the euro amid broad dollar strength, said David Forrester, a foreign-exchange strategist at Credit Agricole SA’s corporate and investment-banking unit in Hong Kong. “The yen has already sold off a lot in anticipation of the government’s fiscal stimulus package and next week’s BOJ meeting. We’re looking for it to continue tracking lower.” The Bloomberg Dollar Spot Index fell 0.2 percent, after four days of gains. A Citigroup gauge that tracks the degree to which American economic data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve interest-rate increase this year at 47 percent, up from 9 percent at the end of June.

In commodities, oil for September delivery was little changed at $45.78 a barrel in New York after weekly U.S. government data showed crude stockpiles fell for a record ninth week and refining activity climbed to a 2016 high. Gold rose 0.5 percent to $1,322.34 an ounce

Bulletin Headline Summary from RanSquawk and Bloomberg

  • There is no need and no possibility of helicopter money in Japan,
    central bank Governor Haruhiko Kuroda said; An increasing number of
    officials at the Bank of Japan are concerned about the sustainability of
    the current framework for massive monetary stimulus, according to
    people familiar with the discussions
  • Treasuries little changed in overnight trading as Asian equities rise on Koruda’s dismissal of “helicopter money,” European stocks fall prior to ECB policy meeting.
  • While action isn’t seen as likely straight away, when Draghi addresses reporters after the ECB meeting he might signal more stimulus to be deployed in September
  • BOE’s Kristin Forbes said there’s no need to hurry to add stimulus after the U.K.’S vote to exit the European Union, citing a moderation of the immediate market turmoil, calm consumers and “quite solid” growth before the referendum
  • More Fed officials are making it clear with greater urgency that they need help from elected lawmakers. In June, Fed Chair Janet Yellen told the Senate Banking Committee that fiscal policy had “not played a supportive role”
  • Goldman Sachs, JPMorgan Chase and Morgan Stanley collectively reduced the amount of money they set aside for employee pay in the first and second quarters by 17%, the most in at least four years, to $19 billion
  • Terrorism in France, Brexit in Britain, a coup in Turkey — political convulsions everywhere. So where’s the hot money going? It’s going to the world’s riskiest markets, where at least investors are getting paid for the risks
  • Singapore vowed to take action against four banks for what it called serious lapses in their anti-money laundering controls and seized S$240 million ($177 million) in assets linked to the financial institution known as 1MDB
  • The political instability in Turkey threatens to add to an already difficult year for the nation’s banks as they contend with a 33% surge in bad loans and soaring bankruptcy filings

DB’s Jim Reid concludes the overnight wrap

With little else to feed off, a steady stream of better than expected corporate earnings results continues to keep the tone in markets on the positive side for now. Reports out of Microsoft (post Tuesday’s close) and Morgan Stanley (prior to the open yesterday) kept the train chugging yesterday and once again helped Wall Street and the S&P 500 (+0.43%) and Dow (+0.19%) to new record highs. That said the actual intraday moves have been incredibly small recently – perhaps also reflecting a bit of early summer fatigue – with the intraday high to low range for the S&P 500 yesterday just 0.50%. In fact since the 11th July the average daily intraday range has been just 0.51% despite the index closing up in six of the eight sessions. This month the index has actually only had a daily range above 1% on two occasions. Compare that to the excitement in June where the average daily range over the entire month was 1.06%.

The ECB has the potential to shake things up today though when we’ll get the outcome of their policy meeting at 12.45pm BST. In a nutshell our European economists believe that it’s a close call, but on balance the ECB will wait until the September meeting before easing again, with the focus on extending QE. A few factors lead them to this. Firstly, they note that based on press reports, the ECB sees a smaller impact from Brexit than they do and that it would require negative data surprises if the ECB is to converge to our economists view, for which the data generally hasn’t been available since the Brexit vote. Secondly, the ECB is confident about the benefits of the policies it has implemented and believes the benefits from recent policy announcements like the TLTRO2 and CSPP will be slow to accrue. Thirdly, by waiting until September the ECB will have the benefit of additional information on the Brexit impact and the benefits of its new policies. It will also have the benefit of updated staff forecasts. They note that the ECB dislikes being under pressure to reconsider the policy stance at every meeting and has a tendency to coordinate action with the analysis accompanying new staff forecasts.

That said the scale of the Brexit impact is uncertain but negative. The ECB’s room for manoeuvre on policy is constrained by the political nature of the Brexit shock and the side-effects of further easing. In that case, the sooner the ECB acts the better. On top of this, the decline in European bank equity is a concern and another important factor to consider. So this makes the call a bit of a closer one.

Staying on this subject, yesterday our strategists published a note taking a look at the potential technical changes in QE purchases which could be introduced alongside an extension, including increasing issuer limits, removing the yield floor and deviating from capital keys. They assess how this could impact bund and peripheral spreads in particular should Draghi provide some meaningful indication at the press conference.

Elsewhere, the fallout from the failed coup in Turkey on the weekend continues. Yesterday evening President Erdogan declared a three-month state of emergency in the country. According to the FT officials in Turkey have said that this will allow the government to pass laws rapidly, however there will be no financial or commercial activity restrictions. Meanwhile the Turkish Lira weakened another -1.56% yesterday and to a fresh historic low after S&P cut the sovereign’s rating by one notch to BB with a negative outlook. The start of the week also saw Moody’s put Turkey’s Baa3 rating on review for downgrade. With Fitch (BBB-/Stable) still at IG that Moody’s move is the most important development given the possibility now of Turkey losing its IG status (with most global indices/index trackers requiring at least 2 IG ratings for a credit to be classified as IG). DB’s Seb Barker published an interesting note yesterday discussing the implications for the credit following this news.

Switching over to the latest in Asia this morning where bourses are generally following the lead from Wall Street last night. The Nikkei (+0.71%) in particular has bounced back, with a weaker Yen (-0.50%) this morning helping. Meanwhile the Hang Seng (+0.75%), Shanghai Comp (+0.69%) and ASX (+0.60%) are also up. US equity index futures are also a smidgen higher, helped by eBay’s better than expected results after the closing bell last night which saw shares climb as much as 8% in extended trading. In the FX space the Kiwi Dollar is down half a percent or so after the RBNZ strengthened its easing bias in an economic update overnight.

Moving on. In terms of the rest of markets yesterday, European equities also had a decent day yesterday with some corporate earnings results there also helping. German software maker SAP stood out while Volkswagen also provided some positive earnings guidance which helped sentiment to remain fairly positive. The Stoxx 600 closed up +1.03% while sovereign bond markets eased off, with yields edging up a few basis points.

Meanwhile, in what was another fairly quiet day for data yesterday the notable release was the European Commission’s flash consumer confidence report for July which weakened 0.7pts to -7.9 and more or less in line with expectations. Unlike the German ZEW survey from earlier in the week it’s hard to argue that the Brexit result has had a material detrimental impact on confidence given that data. Indeed the absolute value of the index was weaker in February-April earlier in the year. Elsewhere there was also some data out of the UK, albeit pre-Brexit. The ILO unemployment rate was reported as nudging down one-tenth to 4.9% (expectations had been for no change). The last time unemployment was this low was in 2005. Average weekly earnings including bonuses rose +2.3% yoy in the three months to May (from +2.0%) however ex bonus earnings were down one-tenth to +2.2%.

Before we look at the day ahead, there was a bit more chatter out of the BoE yesterday too. In an article on the Telegraph website, policy maker Kristin Forbes said that ‘given the substantial uncertainty and likelihood that growth slows, there is a valid case to ease monetary policy to support demand’. She did however go on to say that ‘but until more hard data is available, I believe this is a good time to keep calm and carry on’.

Looking at today’s calendar, this morning we’re kicking things off in France where we’ll get the latest confidence indicators for July. The UK will then report June retail sales data before focus of course turns to the ECB meeting just after midday, with Draghi scheduled to speak after at 1.30pm BST. Meanwhile there’s a bit of data to highlight out of the US this afternoon. Initial jobless claims is the early release along with the Philly Fed manufacturing survey for July. Existing home sales data and the FHFA house price index reading are also due out, along with the Conference Board’s leading index for June. In terms of corporate earnings we’re due to hear from 35 S&P 500 companies including General Motors (before market), AT&T (after market) and Schlumberger (after market). We’ll also get reports from 12 Stoxx 600 companies.

Draghi hints at a public backstop to bring aid to the ailing Italian and other European banks: Germany is not happy@!!

(courtesy zero hedge)

European Banks Soar As Draghi Hints At “Public Backstops”

If ever there was a reason for more European nations to ‘exit’ the sinking ship, Mario Draghi just spewed one. Having sent European bank stocks sliding with earlier calls for reforms, Draghi’s wishful-thinking sent bank stocks soaring (especially Italian banks) after he noted a “public backstop is a measure that would be very useful and should be agreed with the Commission according to the existing rules.” We can only imagine Herr Schauble’s face when he heard this… and what about the Dijsselblom “template”?

Draghi’s wish-list…

  • *DRAGHI SEES NEED TO ADDRESS NON-PERFORMING LOANS IN EURO AREA (umm yeah!)
  • *DRAGHI: PROBLEM FOR BANKS IS WEAK PROFITABILITY, NOT SOLVENCY (bwuahahah!!! even if that were true, you did it! NIRP!)
  • *DRAGHI SAYS PUBLIC NPL BACKSTOP POSSIBLE IN EXCEPTIONAL TIMES (rules change)
  • *DRAGHI SAYS NPL PUBLIC BACKSTOP WOULD BE VERY USEFUL (indeed)

And Italian bank stocks loved the wishes…

end

George Soros  proposal will bankrupt Europe tenfold: he is asking to accept 300,000 refugees a year at an additional cost of 30 billion dollars or face an EU collapse!

(courtesy zero hedge)

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   1.1017 UP .0002 (STILL  REACTING TO BREXIT/

USA/JAPAN YEN 106.36  DOWN 0.812(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/KURODA HELICOPTER MONEY NOT ON THE TABLE

GBP/USA 1.3194 DOWN .0050(MORE STIMULUS PLANNED)

USA/CAN 1.3066 DOWN .0003

Early THIS THURSDAY morning in Europe, the Euro ROSE by 2 basis points, trading now JUST above the important 1.08 level RISING to 1.1012; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite  CLOSED UP 11.11 POINTS OR 0.37%   / Hang SanG CLOSED UP 118.01 OR 54% /AUSTRALIA IS HIGHER BY .41%/ EUROPEAN BOURSES ARE ALL IN THE RED   as they start their morning

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

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

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

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

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

The NIKKEI: this THURSDAY morning: closed UP 128.23 OR 0.77% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 118.01 OR 0.54%  ,Shanghai CLOSED UP 11.11 OR 0.37%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED UP 128.33 OR 0.77%/India’s Sensex IN THE RED  

Gold very early morning trading: $1318.90.00

silver:$19.37 

Early THURSDAY morning USA 10 year bond yield: 1.588% !!! UP 1 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.308 UP 1 in basis points from WEDNESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early THURSDAY morning: 97.02 DOWN 13 CENTS from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

END

 

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  3.05% DOWN 2 in basis points from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.216% DOWN 2  in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD: 1.12%  DOWN 4 IN basis points from WEDNESDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.25 par IN basis points from WEDNESDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 13 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.017% DOWN 1 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 1.1020 UP .0004 (Euro =UP 4 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 105.71 DOWN 1.405(Yen UP 141 basis points/HELICOPTER MONEY OFF THE TABLE )

Great Britain/USA 1.3201 DOWN 0.0041 ( Pound DOWN 41 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/

USA/Canada 1.3092-UP 0.00231 (Canadian dollar DOWN 23 basis points AS OIL FELL (WTI AT $44.67). Canada keeps rate at 0.5% and does not cut!

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This afternoon, the Euro was UP by 4 basis points to trade at 1.1020

The Yen ROSE to 105.71 for a GAIN of 141 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY NOW OFF THE TABLE

The POUND was DOWN 41 basis points, trading at 1.3201 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CONCERNS ON BREXIT

The Canadian dollar FELL by 23 basis points to 1.3092, WITH WTI OIL AT:  $44.67

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6745

the 10 yr Japanese bond yield closed at -.216% DOWN 2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 2 IN basis points from WEDNESDAY at 1.557% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.294 PAR  in basis points on the day 

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

Your closing USA dollar index, 96.98 DOWN 21 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 DOWN 29.10 OR 0.43%
German Dax :CLOSED UP  14.20 OR  0.14%
Paris Cac  CLOSED DOWN 3.51  OR 0.09%
Spain IBEX CLOSED UP 8.10 OR 0.09%
Italian MIB: CLOSED UP 41.58 OR 0.254%

The Dow was DOWN 77.80 points or 0.42%

NASDAQ  DOWN 16.03 points or 0.31%
WTI Oil price; 44.62 at 4:30 pm;

Brent Oil: 46.10

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.37 (ROUBLE DOWN  54/100 ROUBLES PER DOLLAR FROM TUESDAY) 

TODAY THE GERMAN YIELD FALLS TO -.017%  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:44.57

BRENT: 46.06

USA 10 YR BOND YIELD: 1.554% 

USA DOLLAR INDEX: 96.90 down 26 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.32338 down .0019 or 19 basis pts.

German 10 yr bond yield at 5 pm: -.017%

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

 

Americans Stunned As Stocks… Fall

 

Seemed appropriate…

As Ryan Detrick (@RyanDetrick) noted, The Dow is up nine straight days. Going back 20 years this has happened only twice. Both times it was up day 10… So today is a historic #fail… Leaving Dow Futs at crucial support… with VIX surging back to a shocking 13 level before it was quickly squelched into the close… “off the lows”

 

Stocks had their worst day since Brexit today… Trannies were clubbed like a baby-seal out of the gate and no bounce (SouthWest)…and when Europe closed things got worse…

 

Leaving The Dow, S&P, and Small Caps unchanged-ish for the day…

 

Of course this is merely “the pause that refreshes” or the “healthy correction” that leads to the next leg higher. Although we note that the S&P is at record richness to The Fed balance sheet…

 

But global central banks saved the world (for US stock investors) – but note the last 2 weeks have seen central bank balance sheets shrink in USD terms…

And S&P valuations are at 14 year highs… “it’s probably nothing”

 

Elon Musk is losing his touch…

 

Bank stocks have recovered mightily off the Brexit lows BUT…Citi and JPM are unch from Brexit

 

But financials remain full of exuberance relative to the yield curve…

 

Energy stocks began to catch down to crude..

 

Post-Brexit, Gold remains the biggest winner and bonds overtook stocks again today…

 

And off the Brexit bounce..

 

The decoupling continues in credit land as HY spreads are nowhere near record lows as stocks push ever higher…(note the break began when The Fed started to taper QE3)…

 

Treasury yields tumbled from the US open… 4th day in a row of Treasury selling into the US open, but notable bond buying after Draghi disappointed… the belly of the curve is at Turkey coup low yields…

 

FX markets were volatile with the USD index drifting lower amid Kuroda and Draghi comments…

 

As USDJPY dropped 1% –  the most in a month… (after Kuroda spoiled the helicopter money party)

 

Commodities were mixed today with PMs rallying after Draghi and Kuroda disappointed, crude weaker and copper flat to modestly higher…

 

Slamming WTI to 3-month lows…

 

As 2015 analogs move to top of mind…

 

And finally, yesterday’s PM plunge was entirely reversed today…

 

Charts: Bloomberg

Bonus Chart: Fool me once, shame on you; Fool me twice, shame on me, Fool me a third time, I must be a bloody idiot…

end

The Philly mfg index slumped to a 6th month low totally negated last month’s rise.  The Chicago national manufacturing activity remains in negative territory for the 17th straight month:

(courtesy zero hedge)

Philly Fed Slumps To 6-Month Lows As National Activity Index Jumps To 6-Month Highs

In the first wave of macro data today, initial claims beat expectations, dropping to 253k near record lows (but remains wildly divergent from tumbling consumer confidence). Following June’s rebound in Philly Fed, July missed expectations tumbling to six-month lows, back to a contractionary -2.9 (against expectations of a flat print of +4.5). Finally, Chicago Fed’s National Activity Index surged unexpectedly to six-month highs (+0.16 vs -0.20 exp) but the smoother 3-month avg remains in contraction for its 17th straight month.

If the jobs market is so awesome, judging by initial claims near historic lows, then why is US consumer’s economic confidence collapsing?

Philly Fed’s bounce into the green in June is over with July printing back to its lowest since Jan 2016…

Which is odd given that almost all the subindices improved…

And finally The Chicago Fed’s National Activity Index surged back into positive territory (the highest since January) but the 3-month average remains in negative territory for 17 months…

So take your pick – bias confirming data abounds.

Charts: Bloomberg

end

This may turn out to be very interesting as Johnson is HSBC’s key FX trader and commodity trader.  Even though he was “cleared” of its own internal probe, the USA has an iron clad case against HSBC for front running and causing damage to its client.  This is a criminal action:

(courtesy zero hedge)

Arrested HSBC FX Trader Had Been Cleared In Bank’s Own Internal Probe

While Wall Street was shocked yesterday after the announcement that HSBC’s global head of cash FX trading, Mark Johnson, was arrested at JFK on charges of frontrunning a Cairn Energy trade of $3.5 billion pounds, perhaps nobody was more surprised than his employer, HSBC. According to Bloomberg, the Johnson was about to move to the U.S. to take
up a broader position in the firm’s trading division. His arrest therefore, came as a shock to HSBC which wanted to promote the arrested trader to head of the bank’s foreign exchange and
commodities business for the Americas.

The reason for HSBC’s surprised was revealed by the FT earlier, which reported that according to HSBC’s own internal “investigation” three years ago into a $3.5bn currency trade that US prosecutors now believe was criminally fraudulent, it found nothing wrong with the transaction.


Mark Johnson, HSBC global head of forex cash trading

The HSBC review, conducted in the wake of a sweeping foreign exchange rigging scandal that erupted in 2013, was led by an external lawyer and found no breach of its code of conduct. HSBC declined to comment. The bank was on Thursday reviewing its own investigation of the $3.5bn forex trade to decide whether to support Mark Johnson, its global head of forex cash trading, who was arrested on Tuesday evening at New York’s John F Kennedy airport.

As the FT adds, a solicitor for Mr Scott in London strongly denied the allegations on behalf of her client, who is UK-based. While a warrant for Mr Scott has been issued, US authorities are yet to apply formally for his extradition.

HSBC reviewed its $3.5bn purchase of sterling for Cairn Energy in 2011 along with many other forex trades as part of an internal remediation exercise that it carried out at the request of regulators when the wider forex rigging scandal erupted in 2013.

People briefed on the matter said the bank’s internal investigation found no breach of its code of conduct when it reviewed the trade carried out for Cairn by Mr Johnson and Mr Scott.

How unexpected: a bank looked at its own trades, and found nothing strange despite clear evidence, as revealed by US authorities, showing that Johnson had an explicit intention of frontrunning the client order. It took a DOJ review three years later to stubmel on the smoking gun. As a reminder, the DOJ alleged the traders used a technique known as “ramping” that caused the price of pounds to spike. That spike benefited the bank’s trading book at the expense of the client, who then paid a higher price for the sterling.

When Cairn challenged HSBC about spikes in sterling ahead of the trade, an unnamed supervisor, working with the bankers, then allegedly misled the client by blaming the price increase on a “Russian” bank in the market. The complaint adds that Mr Johnson was surprised Cairn went ahead with the transaction. When told of the company’s commitment, he responded “Ohhh, f***ing Christmas,” using an expletive as an adjective.

Meanwhile, HSBC thought the storm had passed. After banks paid $10bn in fines to US and UK authorities, they complained that spot forex was not included at the time within the UK’s criminal market-abuse regime. A decision by the UK’s Serious Fraud Office earlier this year to drop its criminal investigation into forex-rigging seemed to bolster that argument. However, the Justice Department is accusing the pair of breaching a far more sweeping law: that of wire fraud. The authorities basically accuse them of deceiving their clients for gain. The evidence appears to confirm this allegation.

Roger Burlingame, a former chief prosecutor at the New York office that is bringing the case, and who is now based at law firm Kobre & Kim, explained: “The defendants are charged with wire fraud. This simply means the government has alleged that they’ve used an electronic communication in the US to commit a fraud. “The statute uses the broad, standard definition of fraud; it’s not a technical scheme targeting market abuse in particular. The same statute is used to prosecute any kind of fraud that involves email, phone calls or texts.”

The allegedly criminal trade also slipped through the fingers of the UK’s SFO: “a person familiar with the SFO’s thinking told the FT that the agency had not looked at the $3.5bn trade for Cairn and instead was focused on more generalised collusion and rigging within the $5tn-a-day forex market.”

Legal experts said that even under UK law, if a bank acting as an agent for its clients can be proven to have defrauded them through deceit then this would be illegal in the UK too. That is important as in order to extradite Mr Scott, the US must persuade a UK court that the alleged wrongdoing was illegal both in the UK and the US at the time.

What are the implications of this arrest for HSBC? The FT concludes that there is a chance it could “cause reputational damage to the global bank’s forex trading business and fuel more calls for HSBC to face full criminal charges. The DoJ has already been criticised for failing to prosecute HSBC after it paid $2bn in 2012 over laundering billions of dollars for Mexican and Colombian drug gangs.”

On the other hand considering current HSBC’s reputation, this doesn’t seem like much of a risk. More importantly, since the alleged wrongdoing happened before it signed a deferred prosecution agreement in 2012 bank insiders think it is unlikely to put it in breach of the deal to avoid prosecution that is due to expire next year.

In other words, while a trial of Johnson may or may not happen, and he may ultimately be found guilty – of wire fraud – the real message here is that perhaps it is time to stop the farce that is internal bank “self reviews” of alleged fraud, which as this incident confirms are merely a waste of time and shareholder funds.

all the best

h

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