July 22/Huge increase in amount of gold standing at the comex for July at 20 tonnes: sets the stage for a wild August/Open interest rises to a record 221,246 for the entire complex/COT very bullish for gold as commercials try and rein in their shorts/In silver COT, commercials are trapped!/British pound pummeled as PMI crashes/Euro also tumbles to below 1.10/Oil crashes into the 43 dollar column/GE reports horrific results/

Gold:1323.10 down $7.40

Silver 19.66  down 12 cents

In the access market 5:15 pm

Gold: 1322.50

Silver: 19.63


For the July gold contract month,  we had ANOTHER HUGE 323 notices served upon for 32,300 ounces. The total number of notices filed so far for delivery:  6391 for 639,100 oz or 19.878 tonnes

In silver we had 125 notices served upon for 625,000 oz.  The total number of notices filed so far this month for delivery:  2259 for 11,295,000 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.   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. (31,000 oz). Now we have close to 20 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 311.898 tonnes for a gain of 9  tonnes over that period


In silver, the total open interest ROSE BY 659 contracts UP to 221,246, AND A NEW ALL TIME RECORD. THE OI ROSE WITH  THE  PRICE OF SILVER WHICH ROSE BY 20 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.106 BILLION TO BE EXACT or 158% of annual global silver production (ex Russia &ex China).

In silver we had 125 notices served upon for 625,000 oz.

In gold, the total comex gold FELL BY 6,536 contracts despite the fact that gold ROSE in price YESTERDAY to the tune of $11.70. The total gold OI stands at 607,543 contracts.


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


we had no change  in gold inventory. /

Total gold inventory rest tonight at: 963.14 tonnes


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 659 contracts UP to 221,246 as the price of silver ROSE BY 20 cents with YESTERDAY’S trading. The gold open interest FELL by 6536 contracts DOWN to 607,543 as  the price of gold ROSE by $11.70  YESTERDAY. As is their customer the open interest starts to obliterate as we approach the active contract month.

(report Harvey).


2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

2b) COT report



 i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 26.19 POINTS OR 0.86%/ /Hang Sang closed DOWN 36.22 OR 0.16%. The Nikkei closed DOWN 182.97 POINTS OR 1.09% Australia’s all ordinaires  CLOSED DOWN 0.241% Chinese yuan (ONSHORE) closed UP at 6.6745 /Oil ROSE to 44.84 dollars per barrel for WTI and 46.29 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.6716 yuan to the dollar vs 6.6745 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES. 



none today




i)The British pound was pummeled today almost 200 basis points as its PMI crashed from 52.1 down to 491 suggesting a .4% GDP contraction.

( zero hedge)

ii)Then the Euro crashes to post BREXIT lows: as investors are losing faith in the European economies:

( zero hedge)

iii)This is awful:  a shooting rampage in Munich with now 9 dead

( zero hedge)




i)With expectations of drilling and fracking forecasting to decline, service sector Schlumberger fires another 8,000 workers siting market conditions have worsened in second quarter.

( Schlumberger/zero hedge)

ii)Oil had a bad week culminating in at one point the WTI contract breaking into the 43 dollar handle.  We have outlined to you the huge glut on gasoline and that seems to be the central theme these past few days:

( zero hedge)

iii)This caused further deterioration in the oil fundamentals as more USA rigs entered the scene.  This is the highest jump in rigs since the crisis of 2008.

( zero hedge)


none today


i)Craig Hemke describes the options expiry week and how the bankers always raid on gold and silver.  However Craig believes that their number is up

( Craig Hemke)


ii)Alasdair Macleod’s commentary for the week:

Is the rise in prices on stocks due to collapse in the purchasing power of money (currencies)  Find out in this incredible commentary!

( Alasdair Macleod)

iii)Academics now prove gold market rigging

( Chris Powell/GATA)

iv)Chris Powell debunks Gold seek’s article on no manipulation in the gold market:

( Chris Powell/GATA)

v)Russia adds 18.7 tonnes to its official reserves but China “added” 15 tonnes.

The Chinese addition is really gold held at Chinese banks that change their status each month to official.

(courtesy Lawrence Williams/Sharp’s Pixley)



i)After England reported a huge decline in PMI, surprisingly the USA showed a gain in manufacturing with the PMI rising to 52.9 form 51.3 on expectations of 51.9.

Surprisingly this was done with a higher USA dollar.  This is the first estimations known as the flash July PMI.  The more important data is the confirmed July PMI which comes next month.

( zero hedge)


ii)General Electric reports horrific numbers:

1.organic orders down 16%

2.equipment orders down 30%

3.aviation orders down 37%

4.power down 27%

and yet these “clowns” beat expectations.  Take a look and see how they mal-reported

( zero hedge)


iii) this week’s wrap up with this offering from Greg Hunter and Greg Mannarino:

( Greg Hunter/USAWatchdog)

Let us head over to the comex:

The total gold comex open interest  FELL TO AN OI level of 607,543 for a LOSS of 6,536 contracts DESPITE THE FACT THAT  THE PRICE OF GOLD ROSE BY $11.70 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 374 for a LOSS of 429 contracts. We had 739 notices filed on yesterday, so we gained 310 contracts or an additional 31,200 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 30,663 contracts down to 243,010 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 275,618. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was VERY GOOD at 329,493 contracts.The comex is not in backwardation.
Today, we had a huge 323 notices filed for 32,300 oz in gold
And now for the wild silver comex results. Total silver OI ROSE by 659 contracts from 220,587  up to 221,246.  We are now at an all time record high for silver open interest set today (221,246). The front active delivery month is July and here the OI fell BY 33 contracts down to 348. We had 28 notices served on YESTERDAY so we lost 5 silver contracts or an additional 25,000 oz that will not stand for delivery. The next non active month of August saw it’s OI fell by 0 contracts down to 467. The next big active month is September and here the OI FELL by 33 contracts DOWN to 159,924. The volume on the comex today (just comex) came in at 47,544 which is VERY GOOD. The confirmed volume yesterday (comex + globex) was EXCELLENT at 66,760. Silver is not in backwardation. London is in backwardation for several months.
We had 125 notices filed for 625,000 oz. in silver JULY contract month
:INITIAL standings for JULY
July 22.
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
Deposits to the Dealer Inventory in oz  NIL


Deposits to the Customer Inventory, in oz 
 3,118.550 OZ
No of oz served (contracts) today
323 notices 
32300 oz
No of oz to be served (notices)
51 contracts
5100 oz
Total monthly oz gold served (contracts) so far this month
6391 contracts (639100 oz)
(19.878 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
Today we had 0 dealer DEPOSITS
total dealer deposit:NIL   0z
Today we had  0 dealer withdrawals:
total dealer withdrawals:  nil oz
We had 1 customer deposit:
i) Into Brinks:  3118.550 oz
Total customer deposits: 3118.550 oz
Today we had 0 customer withdrawal:
Total customer withdrawals nil  oz
Today we had 0 adjustment:
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 323 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 320 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 (6391) x 100 oz  or 639,100 oz , to which we  add the difference between the open interest for the front month of JULY  (374 CONTRACTS) minus the number of notices served upon today (323) x 100 oz   x 100 oz per contract equals 644,200 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 (6391) x 100 oz  or ounces + {OI for the front month (374) minus the number of  notices served upon today (323) x 100 oz which equals 644,200 oz standing in this non   active delivery month of JULY  (20.037 tonnes).
We  gained  31,000 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 +  20.034 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 = 51.004 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) =10,027,524.393 or 311.898 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 311.898 tonnes for a  gain of 9  tonnes over that period. 


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.


And now for silver
JULY INITIAL standings
 July 22.2016
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
 250,011.200 OZ
Deposits to the Dealer Inventory
596,740.600 oz
Deposits to the Customer Inventory
 nil OZ
No of oz served today (contracts)
(625,000 OZ)
No of oz to be served (notices)
223 contracts
1,115,000 oz)
Total monthly oz silver served (contracts) 2259 contracts (11,295,000 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  5,668,931.1 oz
today we had 1 deposit into the dealer account
i) into CNT:  596,740.600 oz
total dealer deposit 596,740.600 oz
we had 0 dealer withdrawal:
total dealer withdrawals:  NIL oz
we had 1 customer withdrawals:
i)Out of JPM:  250,011.200 oz
Total customer withdrawals: 250,011.200 oz
We had 0 customer deposit:
total customer withdrawals:nil. oz
 we had 0 adjustments
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 (2259) x 5,000 oz  = 11,295,000 oz to which we add the difference between the open interest for the front month of JULY (348) and the number of notices served upon today (125) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the JULY contract month:  2259(notices served so far)x 5000 oz +(348 OI for front month of JULY ) -number of notices served upon today (215)x 5000 oz  equals  12,410,000 oz  of silver standing for the JULY contract month.
We lost 5 contracts or 25,000 ounces will not stand in this active month of July.
Total dealer silver:  28.967 million (close to record low inventory  
Total number of dealer and customer silver:   155.368 million oz (close to a record low)
The total open interest on silver is NOW AT its all time high with the record of 221,246 being set July 22.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
And now the Gold inventory at the GLD
July 22/ no change in gold inventory at the GLD/Inventory rests at 963.14 tonnes
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 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
July 22 / Inventory rests tonight at 963.14 tonnes


Now the SLV Inventory
July 22/we had no change in silver inventory at the SLV.Inventory rests at 348.580 million oz/
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 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 22.2016: Inventory 348.580 million oz
At 3:30 pm we receive the COT report
First let us head over to the gold COT
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
366,871 80,960 75,151 119,433 434,910 561,455 591,021
Change from Prior Reporting Period
-11,210 342 -3,977 -3,825 -13,800 -19,012 -17,435
197 95 98 54 58 309 206
Small Speculators  
Long Short Open Interest  
55,614 26,048 617,069  
3,061 1,484 -15,951  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, July 19, 2016
A rather good COT report:
Our large specs;
Those large specs that have been long in gold pitched a huge 11,210 contracts and were fleeced again by the crooked bankers
Those large specs that have been short in gold added 342 contracts to their short side.
Our commercials;
Those commercials that have been long in gold pitched 3825 contracts from their long side
Those commercials that have been short in gold covered a huge 13,800 contracts from their short side.
Our small specs:
Those small specs that have been long in gold added 3061 contracts to their long side
Those small specs that have been short in gold added 1484 contracts to their short side
Conclusions; commercials go net long by another 9975 contracts/ and thus very bullish for gold. Something is bothering our commercials
And now for the silver COT:
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
120,839 26,449 21,362 50,379 156,634
6,463 -275 1,747 -3,656 2,479
119 60 42 34 43
Small Speculators Open Interest Total
Long Short 219,206 Long Short
26,626 14,761 192,580 204,445
35 638 4,589 4,554 3,951
non reportable positions Positions as of: 174 128
Tuesday, July 19, 2016   © Silve
Our large specs:
Those large specs that have been long in silver added 6463 contracts to their longs
Those large specs that have been short in silver covered a tiny 275 contracts from their short side.
Our commercials;
Those commercials that have been long in silver pitched a huge 3656 contracts from their long side.
Those commercials who are short in silver added 2479 contracts to their short side as silver headed for a record OI of 219,206.
Our small specs:
Those small specs that have been long in silver added a tiny 35 contracts to their long side
Those small specs that  have been short in silver added 638 contracts to their short side.
Our commercials had no choice but to add to their net shortfall as the OI got to record levels..However it is bearish that the bankers must continue to raid so they can excise their huge OI.

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 4.5 percent to NAV usa funds and Negative 4.6% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.0%
Percentage of fund in silver:39.8%
cash .+1.2%( July 22/2016). 
2. Sprott silver fund (PSLV): Premium falls  to -0.04%!!!! NAV (July22/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.63% to NAV  ( July 22/2016)
Note: Sprott silver trust back  into NEGATIVE territory at -0.04% /Sprott physical gold trust is back into positive territory at +0.63%/Central fund of Canada’s is still in jail.


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

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

Is Gold Set To Hit $1,500 Per Ounce?

GoldCore's picture

Rising macroeconomic risks, low real interest rates, and a decline in the dollar versus emerging market currencies are major price catalysts for gold.

Since hitting its high of over $1,900 an ounce in 2011 after a 12 year bull run, gold fell steadily until 2015 when it reached a low near $1,000. However, this year alone we have seen a 25% increase in the yellow metal. It hit a high of $1,370 pre-Brexit and while this new bull run seems to be currently taking a breather, many analysts feel that there is still plenty of steam left in this rally.

An article in Forbes today cites continued stimulus measures by Central Banks and the current under-bought nature of gold as being indicative of a prolonged rally to come for gold.

You can read the full article here 



Gold and Silver Bullion – News and Prices

Gold holds on to overnight gains as stocks, dollar retreat (Reuters)

Gold Rebounds as BoJ, ECB Eye Further Easing (Marketpulse)

Gold futures settle higher after touching a 1-month low (Marketwatch)

Strong U.S. home sales, low layoffs highlight economy’s strength (Reuters)

Gold Daily and Silver Weekly Charts – Comex Options Expiry and FOMC Next Week (24hgold)

How low interest rates are crippling capitalism (Moneyweek)

China’s Plan B Is About To Shock The World And The Gold Market (Kingworldnews)

SILVER TODAY – Room seen below while prices attempt to form a base (Bulliondesk)

Gold Prices (LBMA AM)

22 July: USD 1,323.20 ., EUR 1,199.216 & GBP 1,005.103 per ounce
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

Silver Prices (LBMA)

22 July: USD 19.70, EUR 17.87 & GBP 15.03 per ounce
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

Recent Market Updates

– Why Italy’s bank crisis could be a ‘ticking time bomb’
– Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data
– IMF Scraps Forecast for Global-Growth Pickup on Brexit Fallout
– 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”




Craig Hemke describes the options expiry week and how the bankers always raid on gold and silver.  However Craig believes that their number is up

(courtesy Craig Hemke/)


A Timeline For The Next Rally In Gold

We’ve been watching for two weeks as prices have once again been pushed backward into expirations. However, the pattern calls for a renewed up trend to begin as soon as next week. Is it possible to connect the dots and project that far out? Yes!

As we’ve been following for the past two weeks, the USDJPY has now rallied seven points or 7% in just eight days as Krazy Kuroda in Japan has promised to buy 1T yen worth of new government debt and perhaps even begin the “helicopter money” plan of direct government debt monetization going forward.

The correlation between the yen and gold has been present for years and we have monitored it closely since 2014. As a reminder, here’s how it looks in 2016:

This unexpected rally in the USDJPY (the inverse of the yen shown above) has conveniently helped the market-making Bullion Banks to manage their positions into the front-and-delivery month August gold expirations next week. Here’s the calendar:

Tuesday, July 26 August gold option expiration

Thursday, July 28 – August gold contract “expiration” as it goes “off the board”

Friday, July 29 – August gold First Notice Day as August gold trades only with 100% margin and in its “delivery” phase

Previously in 2016, there’s a clear pattern of price management and selloffs as front-and-delivery month contracts moved toward expiration. As you can see below, the latter stages of March (ahead of April) and May (ahead of June) saw declines similar to what are seeing now:

But more importantly, look at the price action while “deliveries” were taking place this year. During the calendar months of February, April and June, gold has soared anywhere from 7% to 12%! Could August be setting up for a similar move? Yes!

And what, besides the end of the August expirations next week could prompt such a turnaround? Most likely, another change in sentiment and trend in the USDJPY. And what might cause that shift? Two events that will occur within 36 hours of each other next Wednesday and Friday:

Wednesday, July 27 – FOMC meeting ends with “Fedlines” announced at 2:00 pm EDT. No rate changes!

Friday, July 29 – The Bank of Japan meets and releases its latest QE plans. However, with the USDJPY already having moved over 7% ahead of this “news”, this sets up as a classic “buy-the-rumor, sell-the-news” event. The thought here is that the USDJPY then will resume its downtrend in early August. See link here: http://www.reuters.com/article/us-boj-markets-idUSKCN10032J

And the USDJPY has already reached a major point of resistance on its chart. This, too, hints at a turnaround soon and continuation of the downtrend:

So, if we’re looking at a reversal and continuation of gold’s 2016 uptrend in August, how far might the next leg up take price. For an answer, we’re going to consult another chart.

Back in February, we started following an important breakout on gold’s weekly chart. The chart below is from Friday, March 7 and shows gold finally breaking out from its nearly 3-year downtrend:

What happened next? Well, as noted above, March was an “expiration” month for the April Comex contract AND, even more importantly, a breakout of this 3-year trend was something that The Banks wanted to avoid. By the end of the month, the chart looked like this:

Eventually, though, the falling USDJPY and the surging amount of global debt with negative interest rates served to drive gold even higher. By the middle of June, it became clear that The Banks were going to lose this fight. The Brexit vote that followed only served to seal their fate:

The last remaining line of defense for The Banks and their maintenance of a downtrend in gold was violated with the weekly close back on Friday, July 8. (Again, what an interesting coincidence that Kuroda’s unexpected announcements came before trading resumed the following Monday, July 11.) Here’s a chart we posted with that day’s podcast review:

As you can see, it should have been clear to any objective observer that gold had bottomed and a renewed bull market had begun. That The Banks have used the USDJPY strength and the Spec liquidation surrounding August contract expirations to their advantage should, therefore, come as no surprise. They are attempting the same block-and-stall routine that they put on gold back in March when it broke out of its 3-year down channel. Therefore, expect the same fight now. Though we should expect price improvement and a renewed rally in August, do not be surprised if it takes until October for gold to really get cooking to new highs. Again, the March to May action around the earlier breakout is your guide.

So, summing up, what should we expect going forward:

  • Further choppy to downward price action into late next week. It’s still possible that gold could trade as low as $1285 and back near its 50-day moving average before bottoming. This area has proven as support all year.
  • A renewed rally in August back to near, but likely not exceeding much, the highs of late June and early July. Something between $1370 and $1390. Talk will begin to spread that gold has seen a “double top”.
  • Another tumble in mid-late September as the next front and delivery month (October) comes off the board, However, October is never a big volume or big “delivery” month. Instead, most of the action after August typically shifts into the December contract. Therefore, following the 2016 pattern, any dropoff in September should be more shallow than what we’re seeing at present.
  • Then, finally, a breakout to new 2016 highs in October and November. This year-end rally  should take gold all the way back to near the April 2013 manipulated breakdown level of $1525. Let’s call it $1475-$1525.

So there you go. That’s what we expect. If I’m proven correct, I’ll gladly take all the adulation that comes this way. If we’re wrong…well, I’m not eating my hat again. That almost killed me last time.

Have a great day,



Alasdair Macleod’s commentary for the week:

Is the rise in prices on stocks due to collapse in the purchasing power of money (currencies)  Find out in this incredible commentary!

(courtesy Alasdair Macleod)

The real message from asset inflation

The earliest signs are developing of hyperinflation, more correctly described as a collapse of the purchasing power of all the major government currencies.

Central bankers are almost certainly unaware of this danger, partly because their chosen statistics fail to capture it, but mostly because conventional monetary economic theory is lacking in this regard.

This article draws on the evidence of extreme overvaluations in equities and bonds worldwide, and concludes the explanation lies increasingly in a greater perception of risk against holding cash, or bank deposits. Risk relationships between cash and assets are inverting, due to failing monetary policies and escalating counterparty risk with the banks.

There are of course subplots involved, such as the real and imagined rigging of markets by central banks, and the bullish confidence that gives to buyers and holders of investments. Then there is the unanimous assumption that interest rates must not and therefore will not be permitted to rise.

Extreme one-way bets aside, the overriding reason for valuation disparities is becoming more consistent with the downgrading of cash, rather than a revaluation of assets. If this was happening to money’s relationship with goods and services, economists would begin to worry about inflation, stagflation, and even hyperinflation.

Why asset inflation matters

Because today’s price inflation is mainly confined to assets, no one worries. Instead investors rejoice in the wealth effect. Assets are excluded from the consumer price indices, so the danger of a fall in the purchasing power of money in respect of assets does not appear to exist. This does not mean that the problem can be ignored. But if the reason behind rising markets is a flight from cash, we should begin to worry, and that point in time may have arrived. If so, we should stop rejoicing over our increasing wealth, and think about the future purchasing power of our currencies.

Confining the estimation of price inflation to selected finished goods and services is a myopic mistake. It was originally for econometric convenience that consumer purchases became so categorised, but it is misleading to assume that for the consumer there is any such clear categorisation between the purchase of different items. In pure economics there can be no distinction between the purchase of an item of food, a capital good, or the lending of money which is used by someone else to purchase capital assets and use as working capital. The exclusion of partially depreciated second-hand goods is equally illogical. All purchases are purchases, full stop.

Not only do the neo-Cambridge economists and econometricians of today ignore this fundamental error in their attempts to construct measures of price inflation, central bankers and the whole investment community make a further omission without even realising it, and that is to assume that money has a constant value in all transactions. This is hardly surprising, because we account in money, and we pay our taxes on profits measured in it.

These two important errors distort all economic analysis and can have serious consequences.

Asset inflation is increasingly spilling over into commodities, the feedstock for final goods. It has also been inflating services, for example driving up the wage rates in building trades and raising agency commissions. This effect has been developing since the last financial crisis began to recede, and has accelerated with the reversal of falling commodity prices. The official line, that there is almost no price inflation, is misleading markets, the general public, and economic planners themselves as well.

Investors act rationally

It is becoming clear that some investors are showing a growing preference for investment assets over bank deposits. Analysts unquestioningly believe that this preference is not a vote against money, but is driven by a desire to profit from investment. This is correct for regulated managers of mutual funds, who are required by their mandates to generate valuation profits in absolute or relative performance terms.

Others, particularly the very rich with a close eye on their own finances, are beginning to take a different view. They observe the share prices of the banks that owe them money, and worry. Private bankers in Europe are reportedly trying to persuade their very-rich customers not to withdraw substantial funds. Anyway, transferring deposits from one bank to another doesn’t protect you against systemic risk, so you must buy something, such as a short-dated government bond or gold, to get rid of your money and transfer the risk to others.

The principal danger to these wealthy investors is a pick-up in the inflation rate, but at the moment, talk is exclusively of deflation and systemic risk, not inflation. However, raw material prices have been rising noticeably this year, reversing the trend of the last few. Unless commodity prices start falling materially and soon, they are certain to drive up recorded price inflation, despite the lack of economic activity in the advanced economies. Eventually, central banks will have to respond by raising interest rates, undermining government bond markets and the valuation of all asset classes that refer to them.

The flight from cash, for the moment at least, reflects in large part systemic risks. However, we cannot say that a collapse of the banking system will definitely happen unless interest rates rise to reflect the falling purchasing power of fiat currencies. Only then can we be much more certain of a general financial immolation, accelerating the flight from bank deposits.

For the moment, markets have gone nap on deflation. Deflationary conditions are necessary for the future monetary expansion required to rescue the banks, the economy, or both. Most investors appear to be as sure of this outcome as they were that the UK would choose to remain in the EU. The error here is to have little or no understanding that price inflation can coexist with contracting business activity.

Monetary inflation, particularly when it becomes extreme, actually guarantees a contraction in economic activity, because it withdraws purchasing power from the masses. This is why the early warning signs of asset price inflation from a declining preference for money should be taken very seriously. And as the effect spreads into the consumer price index, so too will a wider rejection of money in favour of goods.

It could easily develop into what the Austrian economist, Ludwig von Mises, described as a crack-up boom, the final flight out of money in preference for goods. We are not yet hoarding toilet paper and baked beans, but the prospect that we will be driven to do so has already been signalled to us.


Academics now prove gold market rigging

(courtesy Chris Powell/GATA)

Vindicating GATA, academic study says central banks rig markets with gold lending


2:10p ET Thursday, July 21, 2016

Dear Friend of GATA and Gold:

Dirk Baur, formerly a finance professor at the University of Technology in Sydney, now professor of accounting and finance at the University of Western Australia in Perth, this month updated his 2013 study about gold market manipulation —


— and has incorporated much of GATA’s documentation. With that documentation in hand, Baur cites GATA and vindicates GATA’s work, concluding that secret gold lending by central banks has become their primary mechanism of controlling the gold market.

Baur’s study is titled “Central Banks and Gold” and he concludes it this way:

“The theoretical arguments for central bank gold price management are based on the connection of gold with fiat currency. Gold reserves are designed to build confidence in fiat currency. This confidence would be jeopardized if the price of gold increased by too much, which is the theoretical basis for control and management of the price.

“There is also an incentive for central banks to control the downside of gold prices and thus preserve the value of their gold reserves.

“The Central Bank Gold Agreement is clear acknowledgement of central banks’ potential price impact and evidence of coordinated and mostly hidden price and reserves management. In addition, the European Central Bank’s gold reserves and recent increases of emerging market central banks’ gold reserves are further evidence of the role of gold in central bank monetary policy beyond the ‘legacy’ gold holdings of the United States and many, mostly European central banks.

“Furthermore, the gold lending activities of central banks implicit in the gold leasing rate establish a link between central banks, bullion banks, and gold mining companies and imply an indirect and transferred gold price management. Gold lending is the basis for the gold carry trade, which is profitable in stable gold price regimes and provides market-based incentives to stabilize or control the gold price.

“In other words, the gold carry trade represents a market-driven suppression of the gold price based on the gold lending of central banks.

“Whilst there are strong economic arguments for central bank gold price management following the high inflation episode and the rising price of gold in the late 1970s, it is less clear why central banks would have ended such strategies rather abruptly in the 2000s.

“In contrast, the unwinding of the gold carry trade in the early 2000s offers an explanation for the significant price change between 2003 and 2011. Remarkably, whilst central bank gold lending can stabilize gold prices and the gold carry trade is creating a self-sustaining environment, gold lending is not effective in rising gold price regimes as in such regimes there is no market-based borrowing demand and the creation of such a demand would be too costly.

“This asymmetry in the ability to influence the price of gold does not only apply to gold lending but also to actual gold reserve sales and purchases. The empirical analysis of global central bank gold reserves changes illustrates that central banks can enforce a price floor but not enforce a price ceiling.

“There is also an explanation for the apparent lack of transparency regarding central bank gold reserve management including gold lending. If central banks disclosed planned gold reserve changes or gold lending activities, they would provide signals to the market that would make the changes more costly or increase the volatility and uncertainty in the gold market. The disclosure of the Bank for International Settlements about a gold swap in 2010 and a subsequent fall in the price of gold is a good example for the effects of such announcements.

“This study demonstrated that central banks have an economic interest in gold prices and directly and indirectly influence the price of gold. It also illustrated that central banks can only stabilize a falling gold price but not a rising gold price and that the stabilization can work only if it is hidden from the public and coordinated among central banks.”

Baur’s study is posted at the Social Science Research Network’s Internet site here —


— and has been copied onto GATA’s Internet site here:


Your secretary/treasurer will send Baur’s study to major financial news organizations so it can be added to the long list of market-rigging documentation they suppress in order to ingratiate themselves with governments and financial institutions, thereby disgracing journalism and subverting democracy.

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




Chris Powell debunks Gold seek’s article on no manipulation in the gold market:

(courtesy Chris Powell/GATA)

The magic charts of technical analysis can’t penetrate central bank trading rooms


4:42p ET Thursday, July 21, 2016

Dear Friend of GATA and Gold:

With his commentary written yesterday, “Damn Manipulators,” posted today at GoldSeek and Gold-Eagle —



— was Elliott Wave Trader’s Avi Gilburt sneering about GATA?

Gilburt wrote of yesterday’s trading: “As the metals market dropped today, I am quite certain that the evil manipulators have become the talk of the town once again. No one speaks of them when we are rising, because that is how the market is supposed to move (cough, cough). But now that we have dropped, it is ‘clear’ that it must be manipulation.”

Gilburt adds that yesterday’s smashing of gold and silver was ordinary market action predicted by his magic charts of technical analysis — and maybe it was. But how does he or anyone outside central banking know that the market action had nothing to do with government intervention? Can Gilburt’s charts penetrate the trading rooms of the Federal Reserve Bank of New York, the Bank of England in London, the Banque de France in Paris, the International Monetary Fund in Washington, and the Bank for International Settlements in Basle?

Of course GATA has no entree into those trading rooms either. But we have compiled some documents from the institutions that run the trading rooms, confirming that they are heavily and surreptitiously intervening in the gold market or facilitating the surreptitious intervention of other central banks and government agencies:


According to the director of market operations for the Banque de France, Alexandre Gautier, this surreptitious trading occurs “nearly on a daily basis”:


Since central banks have the power to create infinite money, why would they bother holding and trading gold, except as has been confirmed candidly by the annual reports of the Reserve Bank of Australia — “primarily to facilitate policy operations in the foreign exchange market”?:


Gilburt is mistaken again when he writes that “no one” speaks about gold market manipulation when the price is rising. For many years, with the price rising and the price falling, GATA has addressed the possibility of an upward revaluation of gold by central banks, another form of market manipulation.

For example, since 2007 GATA often has called attention to the 2006 paper on this subject by the Scottish economist Peter Millar, who argued that central banks will have to revalue gold upward by as much as 700 percent to avert a catastrophic debt deflation:


We also often have called attention to the 2012 study by the American economists and fund managers Paul Brodsky and Lee Quaintance, who maintain that the major central banks are engaged in redistributing world gold reserves among themselves in advance of such an upward revaluation:


And we often have called attention to the 2008 appearance on Business News Network in Canada by former Federal Reserve Governor Lyle Gramley, in which he asserted that the Fed might reliquefy itself by upwardly revaluing gold:


Yes, manipulation of the gold market by central banks can be up as well as down, and since it defeats free markets either way, it’s objectionable either way.

Odds are that since they are the biggest participants in the gold market, central banks know a lot more about the origin of yesterday’s price smash than Gilburt’s magic charts know. The central banks aren’t telling and Gilburt isn’t asking them and making a point of their refusal to answer, since it might be very bad for his newsletter business if anyone outside central banking knew exactly how central banks were intervening at any moment. For then people also would know that the data Gilburt is analyzing is no more genuine than Pokemon characters.

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




Russia adds 18.7 tonnes to its official reserves but China “added” 15 tonnes.

The Chinese addition is really gold held at Chinese banks that change their status each month to official.



(courtesy Lawrence Williams/Sharp’s Pixley)


Central Bank Gold Buying Back On Track

Jul. 21, 2016 9:20 AM ET


The Russian central bank has announced an 18.7 tonne increase in its gold reserves in June after only expanding them by 3 tonnes in May.

This follows on from China announcing a 15 tonne rise in its central bank gold reserve in June following a zero increase in May.

Overall rises in central bank gold holdings for the full year look like coming in at around 300-350 tonnes, down from over 560 tonnes in 2015.

Central Bank gold buying has been put forward as one of the key gold demand elements in the metal’s supply/demand fundamentals. In reality, though, for the past couple of years or so there have only been two central bank gold buyers of any real significance – Russia and China – which between them had been announcing month-on-month purchases equivalent to around 400 tonnes a year, ever since China started announcing its monthly gold holding increases from the middle of 2015. There have been some other buyers, which have reported sporadic rises, or falls, in their reserves, while the only other regular gold buyer has been Kazakhstan, taking in about 2.5-3 tonnes a month which amounts to approximately the monthly production from its own gold mining industry.

So when in May Russian gold buying fell to a paltry 3 tonnes and China announced a zero increase in its reserves, analysts wondered whether this signified an almost total cutback from the world’s principal central bank gold buyers, which would throw their supply/demand projections for the year into total disarray.

However, in June things seem to be getting back on track with respect to Chinese and Russian gold buying. First China announced a return to increasing its gold reserves by 15 tonnes that month – see:Chinese Central Bank Gold Buying Is Back – and now the Russian central bank has announced a good increase in its gold reserves too, also for June. Analysts may still have to reduce their overall central bank buying forecasts for the year, though – particularly as Venezuela has been having to sell a significant proportion of its gold to meet its international debt commitments. (So far this year it has reported sales of around 67 tonnes.) At this stage of the year we would estimate net central bank gold buying for the year at perhaps only 300-350 tonnes, somewhat below previous analyst forecasts of perhaps 490 tonnes. By comparison, gold consultancy Metals Focus, which provides the World Gold Council with its supply/demand statistics, estimated 2015 central bank gold purchases at 566 tonnes.

After only increasing its gold reserves by a paltry 3 tonnes in May, giving rise to some doubts as to whether its recent high gold purchase levels would be continuing, the Russian central bank has thus allayed some of those fears with its announcement yesterday of a 600,000 troy ounce (18.7 tonnes) rise in its gold holdings in June. This brings its year to date announced gold purchases to around 84 tonnes for the half year with a total of 1,499 tonnes held – maintaining its 6th place amongst the world’s national holders of gold.

So, both Russia and China are increasing their central bank gold holdings – believed to be in part to diversify an important proportion of their foreign reserves away from the US dollar, but also as both nations see an increased role for gold in any future realignment of the global financial system. This may not be a universally shared opinion, but it may also account for the large amounts of gold retained in the central banking system – particularly by some of the world’s largest economies. Notably this applies to the USA, which according to the IMF, holds some 75% of its forex reserves in gold and Germany which holds around 69%. By contrast China only holds a reported 2% of its forex reserves in gold, although there is a strong belief that its gold holdings position is substantially understated through holding gold in non-reported accounts and in the state- controlled commercial banking system.

Nevertheless, even if some of the wildest estimates of the true Chinese gold holdings are correct (unlikely), the overall percentage of its forex reserves held in gold would still be tiny in relation to the percentage holdings by many of the most financially dominant Western nations. Russia comes slightly higher up the list in terms of the percentage of its forex holdings in gold – around 15% – but that is still at a much lower level than that for the major Western economies. Hence the perceived need for both countries to continue building their gold reserves at a reasonable rate.

We would thus anticipate both China and Russia continuing to increase their gold reserves at a combined monthly rate of perhaps between 30-40 tonnes a month through the remainder of the year. Apart from Kazakhstan we don’t see any other regular central bank buying emerging.

http://seekingalpha.com/article/3990143-central-bank- gold-buying-back-track


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




2 Nikkei closed /USA: YEN RISES TO 106.09

3. Europe stocks opened ALL IN THE GREEN    /USA dollar index UP to 97.12/Euro DOWN to 1.1015

3b Japan 10 year bond yield: RISES AT  -.221%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 106.09

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  44.73  and Brent: 46.29

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./“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 FALLS to -.004%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.41%/: 

3j Greek 10 year bond yield FALL to  : 7.99%   (YIELD CURVE NOW  FLAT TO INVERTED)

3k Gold at $1326.20/silver $19.77(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 21/100 in  roubles/dollar) 64.52-

3m oil into the 44 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.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9861 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0861 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  -0.004%

/German 10+ year rate BASICALLY  negative%!!!


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

4. USA 10 year treasury bond at 1.580% early this morning. Thirty year rate  at 2.307% /POLICY ERROR)

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

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


US Futures Rebound Despite Global Stock Weakness As USDJPY Ramps HIgher

After breaking a multi-year stretch of 9 daily record highs in the Dow Jones, overnight global markets saw some early weakness with Asian stocks retreating after BOJ chief Kuroda dashed hopes for so-called helicopter money, triggering yen’s steepest rally in a month and pulling the Nikkei lower by 1.1%. This however did not last long, and around the European open the traditional ramp in the USDJPY helped European equities shrug off early downside, while US equity futures have already recovered half of yesterday’s losses.

In another case of bad news is good news, Europe indices were led higher by the FTSE 100, which strengthened in the wake of terrible UK PMIs, which saw the Service PMI tumble from 52.3 to 47.4, missing expectations and printing at the lowest in 87 months, while the manufacturing PMI dropped from 52.1 to 49.1, the worst in 41 months. The poor figures increased the call for stimulus from the Bank of England, and pushed the FTSE 100 higher by 0.3%.

“The concern about global central banks withdrawing from providing further stimulus definitely affects markets across the board,” Ang Kok Heng, chief investment officer at Phillip Capital Management told Bloomberg. “That’s why we see some investors selling down their assets. Profit-taking that happened in the U.S. also triggered selling.”

Equity markets had been on a roll, gaining more than $4.5 trillion in three weeks amid speculation central banks in Asia and Europe will add stimulus to stoke inflation and growth, while positive surprises in U.S. corporate results also supported the rally. The gains drove global stock valuations to a one-year high, leaving the securities vulnerable to disappointments on the policy and earnings fronts. A growing number of officials at the Bank of Japan are said to be concerned about the use of massive monetary easing and traders are pricing in a growing likelihood of a U.S. interest-rate increase this year.

As noted yesterday, with conventional valuations already massively stretched, and allowing little upside to stocks, analysts are increasingly pointing to the last “model” they have, the “Fed Model”, and namely the equity risk premium upside as implied by near record low global bond yields: “Extraordinary monetary policy has compressed risk premia in global fixed income markets, but it has not done the same for equities,” Citi says in global equity strategy note. “We estimate that the current ex-ante global equity risk premium is 5.3%, which is high compared to the historic median of 3.0%”

Meanwhile, ignoring the soft tone in global stocks, US equity futures recovered half of their yesterday’s losses, rising 0.2% after the index lost 0.4% in the last session. So far, 115 of the benchmark’s members have
released quarterly results and 81 percent of those beat analysts’
profit estimates. Earnings are nonetheless falling for the fifth quarter
in a row, the longest streak since 2009.

U.S. Treasuries stabilized this week with the 10-year yield hovering around 1.55 percent. That compares with an all-time low of 1.32 percent on July 7. Ten-year sovereign bonds in Australia and New Zealand extended their weekly gains on Friday as prospects for monetary easing bolstered demand for the securities. Australia’s yield dropped by seven basis points this week to 1.91 percent and New Zealand’s slid 14 basis points to 2.22 percent.

Market Snapshot

  • S&P 500 futures up 0.2% to 2162
  • Stoxx 600 little changed at 340.7
  • FTSE 100 up 0.3% to 6718
  • DAX down less than 0.1% to 10149
  • German 10Yr yield up 1bp to -0.01%
  • Italian 10Yr yield up 1bp to 1.26%
  • Spanish 10Yr yield up 2bps to 1.15%
  • S&P GSCI Index down 0.5% to 349.2
  • MSCI Asia Pacific down 0.5% to 134
  • Nikkei 225 down 1.1% to 16627
  • Hang Seng down 0.2% to 21964
  • Shanghai Composite down 0.9% to 3013
  • S&P/ASX 200 down 0.3% to 5498
  • US 10-yr yield up less than 1bp to 1.56%
  • Dollar Index up 0.02% to 97.02
  • WTI Crude futures down 0.6% to $44.48
  • Brent Futures down 0.2% to $46.09
  • Gold spot down 0.5% to $1,325
  • Silver spot down 0.6% to $19.67

Top Global News

  • Goldman Said to Plan Buyout Fund Wielding Up to $8 Billion: Some employees may participate, helping align interests
  • Boeing Sees $2.1 Billion Cost on 787 Dreamliners, Air Tanker: Dimming prospects for 747 freighter also contribute to loss
  • PayPal and Visa End Battle, Unveiling Pact on Fees and Data: PayPal agrees to stop steering business away from Visa, Visa offers some certainty on what fees it will charge PayPal
  • Brexit Vote Wreaks Havoc on U.K. Economy, Flash Estimates Show: Purchasing Managers’ Index combining flash estimates of services and manufacturing slumped to 47.7 in July, its lowest since April 2009
  • Schlumberger Joins Halliburton in Calling Bottom of Oil Downturn: Paal Kibsgaard says worst is over for oil services industry
  • Trump’s America Grows More Ominous Over 13-Month Run

* * *

Looking at regional markets, we start in Asia which opened in negative territory and tracked US losses following the ECB’s decision to hold fire on any further action. ASX 200 (-0.3%) and Nikkei 225 (-1.1%) both traded in negative territory with the latter underperforming in reaction to yesterday’s BoJ Kuroda comments regarding the lack of interest in helicopter money, whilst reservations over current policy measures from some current BoJ members also dampened sentiment. Elsewhere, Chinese markets were weighed by renewed reports of debt concerns in the property sector and SMEs as the Hang Seng (-0.2%) & Shanghai Comp (-0.9%) completed the negative picture. Finally, 10yr JGBs have seen muted price action overnight in spite of the risk-averse sentiment in Japanese equities.

Top Asian News

  • Singapore Puts 1MDB-Linked Banks on Notice: We’re Not Done: Regulator says it’s still examining other financial cos.
  • China Sovereign Fund Posts Loss on Commodities, Negative Rates: CIC had loss of 2.96% in year ended Dec.
  • Hong Kong Bears Pile Record Short Bets on China Consumer Stocks: Bearish wagers in Tingyi, Want Want have risen to record
  • Yen Bulls Dig In Seeing Fed Outweigh BOJ Helicopter Money Debate: Strategists turned bullish on the yen for the first time in more than a year
  • Pokemon Go Debuts in Japan as Viral Monster-Hunt Game Comes Home: Game is available for download in Android, Apple stores
  • Samsung Invests $449 Million in Buffett-Backed Carmaker BYD: Chinese co. to use proceeds from placement to fund battery production

European equities shrugged off early downside to head into the North American crossover in positive territory. Europe indices were led higher by the FTSE 100, which strengthened in the wake of downbeat UK PMIs as the poor figures increases the call for stimulus from the data dependent Bank of England. However, gains have been capped amid single stock earnings, with Banca Sabadell and Dassault Aviation among the worst performers in Europe. In Fixed income markets, Bunds have pared the entirety of its gains amid the better than expected PM! readings from Germany and France, while the German 10-yr benchmark has also been weighed by the rise in yields. In tandem with the move higher in equities amid expectations for easing, Gilts outperform their European counterparts in the wake of the aforementioned data.

Top European News

  • Vodafone Service Revenue Beats Estimates on European Rebound: Shares gain after organic service revenue increases 2.2%
  • ‘Sluggish’ Euro Area Sees Initial Brexit Fallout in Services: PMI for service sector slipped to to 52.7, an 18- month low
  • Syngenta Says U.S. Talks Over ChemChina Bid ‘Constructive’: CEO confident in closing the transaction by end of the year
  • Anglo American Coal Bidders Said in Talks for Acquisition Loans: Coking coal mines in Queensland may fetch up to $1.5 billion

In FX, The yen fell 0.4 percent to 106.20 per dollar. It surged 1 percent in the last session as Kuroda, in a BBC Radio interview recorded on June 17 and aired on Thursday, said there was no possibility of introducing helicopter money, which would involve the BOJ’s direct financing of government spending. Kuroda’s “comments will disappoint investors who had been selling the yen in anticipation of the Bank of Japan announcing helicopter money at its meeting next week,” said Jasper Lawler, a London-based analyst at CMC Markets Plc. “After the failure of its current quantitative easing program to boost inflation, helicopter money is one of the few remaining tools in the Bank of Japan’s arsenal,” he said, noting that Kuroda may have changed his opinion since he made the remarks on June 17.

The Bloomberg Dollar Spot Index was poised for a third weekly gain as signs of improvement in the U.S. economy revive expectations for interest-rate increases. A report on Thursday showed sales of previously owned homes climbed to a nine-year high and futures traders are pricing in a 45 percent chance the Federal Reserve will increase borrowing costs by December, up from 12 percent at the start of the month.

The yuan strengthened 0.1 percent, headed for its first weekly gain in seven weeks amid speculation the central bank was seeking to limit losses. Chinese Premier Li Keqiang said Friday the nation’s economy is growing steadily and the exchange rate will be kept stable at a reasonable level. The Australian and New Zealand dollars were headed for weekly declines amid speculation central banks in both countries will cut interest rates from record lows. The Reserve Bank of New Zealand said Thursday further monetary easing is probably needed to boost inflation, while the Reserve Bank of Australia noted on Tuesday that the economy probably cooled last quarter and inflation is set to remain weak. The Aussie and the kiwi retreated at least 1.4 percent this week, the biggest declines among 16 major currencies.

In commodities, The Bloomberg Commodity Index fell for a sixth day, its longest losing streak in three months. Oil dropped to a two-month low as the U.S. heads toward the end of its summer-driving season with ample crude and motor fuel stockpiles. The price dropped 0.8 percent to $44.40 a barrel in New York. “It’s an inventory story,” said Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney. “The summer drive-time hasn’t been as strong as some had expected. There’s more supply coming on and there are indications that the strength of the global economy is not there.”Copper fell 0.6 percent, trimming its weekly advance to 0.5 percent, and nickel retreated 1.8 percent from an 11-month high on the London Metal Exchange, where the start of trading was delayed owing to a technical problem. Gold fell 0.6 percent, set for a second weekly loss.  Iron ore in China had its biggest weekly drop in two months, sliding 7.2 percent on concern a global supply glut will endure.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Downbeat UK PMI’s dictate play in Europe, sending GBP/USD below 1.3150 and supporting FTSE and Gilts
  • USD/JPY retakes 106.00 as participants await official details of any fiscal stimulus package
  • Highlights include US PMI’s, Canadian Retail Sales and CPI as well as earnings from General Electric
  • Treasuries lower in overnight trading, European equities rise, Asia’s drop along with WTI crude oil and gold; in Japan it seems as if hopes for “helicopter money” are for naught.
  • The U.K.’s decision to leave the European Union inflicted an immediate blow on the economy as business activity shrank at its fastest pace since the last recession seven years ago as a gauge of the private-sector economy plunged to 47.7
  • Germany’s manufacturing output reached the highest level since early 2014 in a survey of purchasing managers this month as the economy was supported by a strong labor market and increasing demand
  • Mario Draghi is part of a growing club of central bankers who are just fine with admitting they’re uncertain what’s going on right now — and that’s no barrier to action
  • The cost of trading Europe’s corporate debt is higher than at any time since April 2013, according to a gauge of the difficulty traders have in buying and selling, likely a result of Mario Draghi’s buying spree
  • Don’t count on the world’s No. 2 economy to ride to the rescue. That was the message from China’s Premier Li Keqiang on the eve of a gathering of finance chiefs from the top emerging and developed economies
  • China’s weakening currency has triggered an increase in the amount of cash leaving the country, to $49 billion in June compared to $25 billion in May, according to Goldman Sachs estimates
  • Goldman Sachs is about to start raising money for its first private-equity fund since the financial crisis, potentially gathering $5 billion to $8 billion, according to a person with knowledge of the matter
  • HSBC Holdings is selling $2.7 billion of loans as part of a plan to cut risk-weighted assets by $290 billion over the next three years, according to two people with knowledge of the sale

* * *

DB’s Jim Reid concludes the overnight wrap

In markets we’re all obsessed with the next round of global stimulus at the moment but the more markets rally and the more the immediate post Brexit fall out risk recedes the less in a hurry central banks seem to be. Last week the BoE held steady while it reviewed the landscape and yesterday the ECB replicated the move. It’s fair to say the above two are likely to ease further in 2 weeks and 7 weeks respectively but stable markets confuses the issue a little. Also confusing yesterday were comments from Japan. In an interview on BBC’s Radio 4, the BoJ’s Kuroda ruled out the idea of using helicopter money, or directly underwriting the budget deficit in a bid to combat deflation. Kuroda said instead that the BoJ has ‘three options with quantitative and qualitative easing with negative interest rates’ and that these current policies can be expanded if needed. The Yen immediately strengthened nearly 2% with the news before there was a bit of confusion in markets as it turned out that the interview was actually recorded on June

17th and prior to Bernanke’s visit this month which of course reignited the helicopter money chatter. Anyway the 1 week countdown to the BoJ meeting starts today.
Meanwhile in terms of the ECB, Draghi did seem more concerned about Italian banks than Brexit but he helped the whole banking sector by suggesting that a state backstop was a ‘very useful’ way of dealing with NPLs. He also suggested that there was room to offer state aid thus offering some confidence that a deal in Italy can be done. I was at a big DB macro client dinner on Wednesday night and it’s fair to say the question that came up most was how the Italian banking issues would be resolved so this is a big theme at the moment. Japan was probably the next most discussed topic. Brexit was only discussed a little and China not at all. So this shows the biases at the moment.

Back to Draghi, in terms of further monetary policy he certainly left the door ajar without pre committing. Our economists’ expectations remain unchanged. They feel that post the Brexit vote there are new downside risks to the economic recovery and the normalization of inflation. They don’t think a deposit rate cut is appropriate given the pressures on banks. Instead they expect a 9-12 month extension of the timeframe of the QE programme at the next meeting in September as well as complementary measures to ensure this is credible by making sufficient assets eligible for the programme.

In terms of the market reaction, the bigger moves came in financials and specifically peripheral banks on the back of those NPL comments. The Stoxx 600 (-0.07%) closed marginally lower although the Euro Stoxx Banks index did rise +0.89%. Financials credit also outperformed with the iTraxx Senior and Sub Fins indices 5bps and 14bps tighter respectively, while iTraxx Main closed 2bps tighter.

Back to post Draghi markets and the Euro ended fairly unchanged, while sovereign bond markets were modestly firmer at the margin. Across the pond the tone in markets appeared to be more dictated by a couple of disappointing corporate earnings reports, namely Intel and Southwest Airlines. A drop in energy stocks on the back of a 2% fall for Oil also helped to drag markets lower. The S&P 500 closed -0.36% while the Dow was -0.42%. Amazingly that’s the first daily decline for the Dow since July 7th.

Looking forward, today is global PMI day with the big focus on Europe where we should see the first signs of how Brexit has impacted the wider services and manufacturing sectors in the Euro area. Importantly, the UK will also release its data. Current consensus is for a 3.4pt drop in the UK flash manufacturing print to 48.7, while the services reading is expected to tumble 3.5pts to 48.8. The composite is expected to edge down to 49.0 from 52.4 as a result. The Euro area indicators are also expected to weaken, although not quite to the same extent. The manufacturing and services prints are expected to fall to 52.0 and 52.3 respectively which if true would represent falls of 0.8pts and 0.5pts respectively.

Before we get there, let’s take a look at markets overnight where that weaker tone on Wall Street appears to be setting the pace in Asia. The Nikkei (-0.90%) in particular has dropped reflecting that rally for the Yen yesterday, while the Hang Seng (-0.35%), Shanghai Comp (-0.41%) and ASX (-0.31%) are also in the red. US equity index futures are little changed, with weaker than expected earnings after the closing bell from AT&T and Starbucks offset by quarterly reports from Schlumberger and PayPal. Meanwhile an article released in the Nikkei newspaper suggests that Finance Ministry officials in Japan have briefed PM Abe that a stimulus package worth 20t-30t yen is possible if it includes government guarantees and other off-budget measures.

Before we look at the day ahead, a quick wrap up of yesterday’s economic data which, in a nutshell, was a bit of a mixed bag. In the US initial jobless claims continue to stay at low levels with the 253k print for last week down 1k from the week prior and so taking the four-week average down to 258k. In the factory sector the Philly Fed manufacturing survey was disappointing at the headline after printing at -2.9 (vs. +4.5 expected). That represented a 7.6pt decline from June although we did see improvements in both new orders and shipments components. Meanwhile in the housing market existing home sales rose unexpectedly in June (+1.1% mom vs. -0.9% expected). The FHFA house price index rose a slightly below market +0.2% mom in May (vs. +0.4% expected). The final data came in the form of the Conference Board’s leading index which rose +0.3% mom (vs. +0.2% expected) in June.

Prior to this in Europe we learned that business confidence rose marginally in France this month (+2pts to 102). In the UK retail sales were a little bit softer than expected last month. The ex-fuel sales reading declined -0.9% mom which was three-tenths worse than expected. The statistics office reported that the survey period for the data was between May 29th and July 2nd so some post-Brexit impact will have been captured.


i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 26.19 POINTS OR 0.86%/ /Hang Sang closed DOWN 36.22 OR 0.16%. The Nikkei closed DOWN 182.97 POINTS OR 1.09% Australia’s all ordinaires  CLOSED DOWN 0.241% Chinese yuan (ONSHORE) closed UP at 6.6745 /Oil ROSE to 44.84 dollars per barrel for WTI and 46.29 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.6716 yuan to the dollar vs 6.6745 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS CONSIDERABLY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES. 





The British pound was pummeled today almost 200 basis points as its PMI crashed from 52.1 down to 491 suggesting a .4% GDP contraction.

(courtesy zero hedge)


Pound Plummets On Renewed Recession Fears As PMI Shows Fastest Contraction Since 2009

Sterling plummeted nearly 200 pips this morning, after rising in early trade to just shy of 1.33, when the latest July Markit flash PMI surveys suggested the UK is heading for a quick recession in the form of a 0.4% GDP contraction in the third quarter. Manufacturing PMI tumbled from 52.1 to 49.1, modestly beating expectations, if still the lowest in 41 months, but it was the service economy which imploded, with the Service PMI plunging from 52.3 to 47.4, in line with the worst estimate, and the lowest print in 88 months.


While considered “soft data”, and perhaps suggesting that Markit had not gotten the memo that Brexit fearmongering is now a thing of the past and is instead increasingly spun as positive for the local and global economy, the surveys pointed to the worst performance for more than seven years – when the economy was in the depths of a recession – in the aftermath of Brexit. As a result of renewed recession fear, the pound was trading below 1.31 at last check.

Ironically, UK stocks jumped, with the FTSE trading well in the green as traders quickly figured these figures will add to pressure on the Bank of England to cut interest rates next month to cushion the economy from the Brexit blow.

The poor data comes as new Chancellor Philip Hammond indicated the UK could “reset fiscal policy” as data emerges about how the economy has reacted to the vote – indicating a less aggressive approach to cuts aimed at shrinking the deficit than that taken by former chancellor George Osborne.

Markit chief economist Chris Williamson said: “July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early 2009.”

He said the downturn – seen in order cancellations, a lack of new orders and the postponement or halting of projects – was “most commonly attributed in one way or another to Brexit”.

The Service PMI print also saw a record slump in expectations. Markit’s Williamson said it suggested there was “more pain to come in the short term at least”.

He added: “At this level, the survey is signalling a 0.4% contraction of the economy in the third quarter, though much of course depends on whether we see a further deterioration in August or if July represents a shock-induced nadir.”

Mr Williamson said the figures provided “a powerful argument for swift action” from the Bank of England as it weighs up whether to cut interest rates next month.

Cited by SkyNews, Investec economist Chris Hare said: “Our view remains that post-Brexit uncertainty will see the UK flirting heavily with a recession.”

* * *

The full commentary from Markit’s chief economist, Chris Williamson

“July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early-2009.


“The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to ‘Brexit’.


“The one ray of light was an improvement in manufacturing export growth to the best for two years as the weak pound helped drive overseas sales, though producers also suffered the flip-side of a weak currency as import prices spiked higher.


“At this level, the survey is signalling a 0.4% contraction of the economy in the third quarter, though much of course depends on whether we see a further deterioration in August or if July represents a shock-induced nadir. Given the record slump in service sector business expectations, the suggestion is that there is further pain to come in the short-term at least.


“With policymakers waiting to see hard data on the state of the economy before considering more stimulus, the slump in the PMI will provide a powerful argument for swift action.”

David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply: “The UK economy has suffered sharp falls in output and new orders following the EU referendum as uncertainty has taken hold. The overall pace of decline was the strongest since early-2009.


“Weaker sterling has driven a steep rise in input prices for manufacturers but there is a glimmer of positivity with the new exchange rate encouraging a rise in export orders. However, with a subdued global economy, it is not yet clear whether these opportunities will materialise in the long term.


“Supply chain managers must use this uncertainty to demonstrate what they do best – being agile, adaptive, sourcing the best goods and prices to steer their organisations successfully in the months and years ahead.


“The true extent of the impact of this uncertainty still remains to be seen next month. But with optimism in the UK’s service sector at a seven-and-a-half year low, policymakers must take swift action to stop further decline amid political upheaval.”


Then the Euro crashes to post BREXIT lows: as investors are losing faith in the European economies:

(courtesy zero hedge)



EURUSD Plunges To Post-Brexit Lows

Following disappoingly un-dovish commentary from Bank of England and ECB, it appears a dearth of additional monetary exuberance (over and above the current insanity) is prompting capital flight from Europe. EURUSD tumbled to a 1.09 handle this morning, near post-Brexit lows…

EUR at post-Brexit lows…


Sending USD Index to fresh 4-month highs…


So are we now back to pre-“whatever it takes” regime where a weaker EUR is not policy-enduced butrepresents loss of faith in the EU?




This is awful:  a shooting rampage in Munich with now 9 dead

(courtesy zero hedge)


Multiple Casualties Reported After “Shooting Rampage” Attack In Munich, Shooters On The Loose – Live Feed

What is known so far:

  • Shots have been fired at the Olympia shopping mall in Munich, Germany.  Multiple casualties and injuries have been reported, with local police reporting 8 dead and many injured.
  • According to a statement by the Munich police on its facebook page, witnesses report three different people
    with firearms. The number of victims is currently unconfirmed.
  • No perpetrators have been arrested and the search for them continues.  Officers ask everyone in the urban area of Munich to stay indoors.
  • Reuters add that the local police believes it is dealing with a “shooting rampage” following unconfirmed reports of a second shooter
  • Public transportation services have been halted on multiple train, tram and bus lines after the shooting. The main train station in Munich is currently being evacuated.
  • The Munich police has cited an “acute terror threat.”
  • German Magazine Focus says that according to police sources, the one of the perpetrators has shot himself in the head.


Update 27: A police spokesman confirms that the number of dead is now 8.

* * *

Update 26: Below is a translation of the incident captured in the video between the alleged shooter and a man on a balcony:

Man: “You fucking Asshole you…”
Shooter: “Because of you I [unintelligible]…”
Balcony Man: “You cunt you. you’re a cunt”
Shooter: “…and now I have to buy a gun to shoot you”
Balcony Man: “a gun fuck off your head isn’t on right”
Shooter and Balcony man shouting at each other
Balcony Man apparently to people filming: “He’s got a gun here the guy has one”
Unseen voice: “Shit/Fucking Turks!”
Balcony Man: “Shit/Fucking Kanacken” (foreigners basically)
Balcony man to someone else : “EY! HE’S GOT A GUN! He has loaded his gun! Get the cops here!”
Shooter: “I am German.”
Balcony Man: “You’re a cunt is what you are”
Shooter: “Stop filming!”
Balcony Man: “A cunt is what you are, what the fuck are you doing?”
Shooter: “Yeah what, I was born here!”
Balcony Man: “Yeah and what the fuck you think you’re doing???”
Shooter: “I grew up here in the Hartz 4 (unemployment benefits in Germany) area.
Balcony Man and Shooter talk at same time, can’t make it out.
Shooter says something about “Behandlung” which is “treatment” in both medical treatment or just how you treat people,not sure which one he means.
Balcony Man says something like “Yeah treatment is something for you”
Shooter: “I haven’t done anything here for [unintelligible]”
Shooter: “Just shut your fucking face man”
Balcony Man: “You cunt you”
Balcony Man: “HEY! HE’S ON THE UPPER FLOOR HERE [unintelligible]”
Filming man goes into cover, shooter starts firing.
Balcony man calls him a cunt again.
Balcony man shouts something at him about “shooting here” and Shooter replies multiple times “Yeah, that’s where you’re right! Yeah you’re right with that!” Yeah you’re right!”

Video ends.


CNN reports shooter shouted “allahu akbar”, meanwhile everyone else, including police, say no indication it’s Islamist terror.





And now the fun begins as Erdogan formally requests the extradition of Gulen from the USA.  Turkey turns on the power at Incirlik:

(courtesy zero hedge)


Erdogan Formally Requests Gulen Extradition From US, As Power At Incirlik Airbase Restored

One week after the Turkish coup, U.S. officials reported that electric power has been finally restored to the Incirlik air base in southern Turkey.

The base had been operating on a backup generator since July 16, when power was shut off at all military bases in Turkey following a failed military coup. Turkish authorities have alleged that planes involved in the coup attempt were refueled by Turkish planes housed at the base.

The U.S. military’s European Command said Friday there is a steady flow of hot food, water, and fuel to support U.S. service members and civilians in Turkey. EUCOM said it is working with the Turkish military to make sure the base is prepared to carry out its missions. It is used by U.S.-led coalition jets fighting the Islamic State group in Syria and Iraq.

That’s the quid, to what we expected last week would be a bargaining chip in Turkey’s negotiation with the US on extraditing the cleric Fethullah Gulen, who has been blamed for masterminding the coup, and who lives in the US.

Some have speculated that the airbase may be held “hostage” by Ankara as a bargaining chip ahead of demands for the extradition of Erdogan’s arch enemy, Fethullah Gulen, currently a resident of the state of Pennsylvania.

The base is no longer hostage, if only for the time being.

What is the quo? We found out moments ago, when Turkey’s ablassador to the US, Kilic, formally requested the extradition of Gulen:

We have formally submitted the necessary documents” for extradition of Fethullah Gulen, Ambassador Serdar Kilic told reporters in Washington.

WaPo adds that Turkey’s top diplomat urged the United States on Friday to quickly hand over a self-exiled cleric whom Turkish leaders have linked to last week’s coup attempt — an issue that risks causing serious tension between the two allies. Foreign Minister Mevlut Cavusoglu told the state-run broadcaster TRT that Turkey was ready to take part in a commission proposed by Washington to discuss the extradition of Fethullah Gulen. But Cavusoglu insisted there was no need for it to take a long time. “If you want to draw out the Gulen extradition issue, it can take years, but if you are decisive, it can be completed in a short period,” he said, according to the Reuters news agency.

And now the ball is in Obama’s court: does he yield to a person who has clearly made a mockery of the democratic process and hand over a frail 77-year-old man who hardly was the evil mastermind that managed to somehow plan and coordinate with the 60,000+ people detained, arrested or charged in Turkey. Or does he deny, and risk Erdogan’s ira, which could potentially spillover by forcing Turkey to gravitate closer to Moscow’s sphere of influence and maybe even open the European gates for some 2 million Syrian refugees currently held inside Turkey’s borders.

We doubt Obama will rush to resolve this issue and will most likely punt it to Hillary Clinton, who takes over in just 4 months. As America knows, the Secretary of State has an admirable record of resolving foreign diplomatic crises.




With many attacks in France, Germany, Belgium, and the USA no wonder world’s airlines stocks are crashing at the worst at since the crisis of 2008

(courtesy zero hedge)

World’s Airlines Crashing At Worst Rate Since 2008

With ‘terrorist’ incidents breaking out everywhere from San Bernardino to the south of France, it is perhaps no surprise that the world’s airlines are struggling. But, as Bloomberg notes, over-capacity, rising fuel costs (so far this year), and weaker demand have hurt profits and crushed airline stocks to their worst year since 2008

Down over 18% this year…


Troubles keep mounting for the world’s leading airlines. With the group already struggling with overcapacity and weakening global demand, Bloomberg reports that Lufthansa and EasyJet Thursday said terror threats could hurt profits, while Southwest Airlines predicted airfare cuts will accelerate.

The Bloomberg World Airlines Index tumbled 2.8 percent for a third straight loss. The group has posted the worst performance since 2008, dramatically lagging global stocks…


Charts: Bloomberg




With expectations of drilling and fracking forecasting to decline, service sector Schlumberger fires another 8,000 workers siting market conditions have worsened in second quarter.

(courtesy Schlumberger/zero hedge)


Energy Giant Schlumberger Fires Another 8,000 As “Market Conditions Worsened” In Q2

Last quarter, Paal Kibsgaard, the Chairman and Chief Executive Officer the world’s largest oilfield services company, Schlumberger warned that “the decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis. This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity.” He then promptly fired 8,000 workers in the first quarter, and said that he is not expecting a meaningful recovery in the company’s activity until sometime next year.

He was right, because while the oil industry was touted as experiencing a substantial rebound since then, this appears to not have been the case for the energy services giant. This was confirmed in the results reported moments ago by Schlumberger which announced another unexpected loss or $2.16 billion, or $1.56 cents a share, compared with a profit of $1.12 billion, or 88 cents, a year earlier.

As Bloomberg notes, as the downturn dragged on, executives at the world’s largest oilfield services provider have had to push back their expectations for an improvement in drilling and fracking work, with crude prices remaining more than 50 percent lower than their peak in 2014.

As a result, the tone of Paal Kibsgaard this quarter was even gloomier than in Q1:

In the second quarter market conditions worsened further in most parts of our global operations, but in spite of the continuing headwinds we now appear to have reached the bottom of the cycle.

Or so he hopes.

On a pro forma basis, revenue decreased 12% sequentially with North America falling 20% due to the Canadian spring break-up and a 25% drop in the US land rig count,while international revenue decreased 9% due to weaker activity, continued pricing pressure, and a large-scale cutback in our operations in Venezuela. However, our wide geographical footprint and broad technology portfolio continued to offer unique advantages that helped to mitigate these effects.

And the real story behind the recovery, or lack thereof:

As a result of the weakness in activity that will persist through 2016 as expected, we have made another significant adjustment to our cost and resource base, including the release of more than 16,000 employees during the first half of 2016 and a further streamlining of our overhead, infrastructure, and asset base. This has led to $646 million in restructuring charges in the second quarter for the reduction in our workforce, as well as a non-cash $1.9 billion impairment charge for fixed assets, inventory, and multiclient seismic data. We also recognized $335 million in merger and integration charges relating to the Cameron acquisition.

So after firing 8,000 in the first quarter, Schlumberger just laid off another 8,000 workers. It may have been even more because while Schlumberger reported a headcount of 113,000 people at the beginning of this week, in the earnings release it said the company has “approximately 100,000 employees”, so it seems that even more cuts could have come in July.

As a result of the ongoing energy recession, Schlumberger, Houston’s largest energy employer as of a month ago, has now eliminated about 50,000 jobs, or a third of its entire workforce, in the two years of the ongoing oil bust according to FuelFix calculations.




Oil had a bad week culminating in at one point the WTI contract breaking into the 43 dollar handle.  We have outlined to you the huge glut on gasoline and that seems to be the central theme these past few days:

(courtesy zero hedge)


WTI Tumbles To $43 Handle – 3-Month-Lows – As Gasoline Glut Deepens

Mainstream media is beginning to catch on to what we detailed first in February, the gasoline glut is about to bite back. As Bloomberg reports,

Oil’s retreat to a three-month low this week demonstrates that surpluses in other parts of the market, most notably refined fuels like gasoline, are holding back any lasting recovery.


Combined inventories held by industrialized nations of all forms of oil — from crude to refined products to natural gas liquids — reached a record of more than 3 billion barrels last month, data from the Paris-based International Energy Agency shows.



In the U.S., gasoline stockpiles were at the highest for the time of year since 1984 as record consumption failed to drain the glut refiners created when crude was cheap, according to the Energy Information Administration.


Sept 16 WTI has tumbled from over $51 a month ago to a $43 handle today..


Three-month lows… (pre-OPEC plunge and ramp levels)


Tracking last year’s pump-and-dump of hope perfectly.


“In many ways, the bigger issue is the total inventory overhang,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London, said by e-mail. “It is the plight of oil products — in particular the light products such as gasoline — that is slowing the pace of total stock-draws even as crude stocks fall, and of the eventual re-balancing.”




This caused further deterioration in the oil fundamentals as more USA rigs entered the scene.  This is the highest jump in rigs since 2009

(courtesy zero hedge)


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




USA/CAN 1.3119 UP .0047

Early THIS FRIDAY morning in Europe, the Euro FELL by 16 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 DOWN 26.19 POINTS OR .86%   / Hang Sang closed down 36.22 points or .16%  /AUSTRALIA is lower by .24%/ EUROPEAN BOURSES ARE ALL IN THE green (barely   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 FRIDAY morning closed down:  182.97 points or 1.09% 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 36.22 POINTS OR .16%  ,Shanghai CLOSED DOWN 26.19 POINTS OR .86%   / Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED DOWN 182.97 OR 1.09%/India’s Sensex IN THE GREEN  

Gold very early morning trading: $1325.60


Early FRIDAY morning USA 10 year bond yield: 1.580% !!! UP  3 in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.307 UP 1 in basis points from WEDNESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early FRIDAY morning: 97.12 UP 15 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING


And now your closing FRIDAY NUMBERS


Portuguese 10 year bond yield:  3.05% par in basis points from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.222% DOWN 1/2  in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD: 1.11%  DOWN 1 IN basis points from THURSDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.24 down 1 in basis points from THURSDAY (again totally nuts/)

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




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


Euro/USA 1.0978 DOWN .0053 (Euro =DOWN 53 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 106.07 UP 0.285(Yen DOWN 29 basis points/HELICOPTER MONEY OFF THE TABLE )


USA/Canada 1.3143-UP 0.0071 (Canadian dollar DOWN 71 basis points AS OIL FELL (WTI AT $44.18). Canada keeps rate at 0.5% and does not cut!


This afternoon, the Euro was DOWN by 53 basis points to trade at 1.0978

The Yen FELL to 106.07 for a LOSS of 29 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY NOW OFF THE TABLE


The Canadian dollar FELL by 71 basis points to 1.3143, WITH WTI OIL AT:  $44.20


The USA/Yuan closed at 6.6876

the 10 yr Japanese bond yield closed at -.222% DOWN 1/3  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 1 IN basis points from THURSDAY at 1.566% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.282 DOWN 2  in basis points on the day /AND THE DOW RISES??


Your closing USA dollar index, 97.39 UP 42 CENTS  ON THE DAY/4 PM 

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


London:  CLOSED UP 30.59 OR 0.46%
German Dax :CLOSED DOWN  8.75 OR  0.09%
Paris Cac  CLOSED UP 4.95  OR 0.11%
Spain IBEX CLOSED UP 16.30 OR 0.19%
Italian MIB: CLOSED DOWN 26.73 OR 0.16%

The Dow was UP 53.62 points or 0.29%

NASDAQ  UP 26.26 points or 0.52%
WTI Oil price; 44.23 at 4:30 pm;

Brent Oil: 45.73




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

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


BRENT: 45.73

USA 10 YR BOND YIELD: 1.564% 

USA DOLLAR INDEX: 97.39 UP 42 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.30950 down .01400 or 140 basis pts.

German 10 yr bond yield at 5 pm: -.013%


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


After “Pause That Refreshes” ‘Investors’ Panic-Buy Stocks Back To Record Highs


After England reported a huge decline in PMI, surprisingly the USA showed a gain in manufacturing with the PMI rising to 52.9 form 51.3 on expectations of 51.9.

Surprisingly this was done with a higher USA dollar.  This is the first estimations known as the flash July PMI.  The more important data is the confirmed July PMI which comes next month.

(courtesy zero hedge)


Fed Runs Out Of Excuses As US Manufacturing ‘Bounces’ Back To 9-Month Highs


Following this morning’s post-Brexit puke in UK PMI, Markit reports July’s preliminary manufacturing PMI considerably better than expected (up from 51.3 to 52.9 against 51.5 forecast). This follows the modest rebound in Industrial Production and is the highest PMI since Oct 2015. Manufacturing payrolls surged at the fastest pace in 12 months and new business expanded at the fastest since Oct 2015.  



Commenting on the flash PMI data, Chris Williamson, Chief Economist at Markit said:

“July saw manufacturers battle against a strong dollar, the ongoing energy sector downturn and political uncertainty ahead of the presidential election, yet still achieved the best growth seen since last year.


“It remains too early to say if this is the start of a stronger upturn, but this is a welcome and encouraging sign of revival after the second quarter, in which the PMI signalled the sector’s worst performance for over six years.


“In particular, an upturn in hiring which resulted in the strongest job growth for a year suggest companies are feeling brighter about the outlook and starting to expand capacity again.”

So China ‘stable’, Brexit ‘over’, record high stocks, good payrolls, rising inflation, and rebounding manufacturing? Data-dependent Fed is going to need more excuses.

Source: MarkitEconomics.com



General Electric reports horrific numbers:


1.organic orders down 16%

2.equipment orders down 30%

3.aviation orders down 37%

4.power down 27%

and yet these “clowns” beat expectations.  Take a look and see how they mal-reported

(courtesy zero hedge)


The Real Numbers Behind GE’s “Beat”: Organic Orders -16%; Power -27%; Equipment Orders -30%; Aviation -37%

On the surface, this morning’s GE non-GAAP results (defined as follows: “Non-GAAP results excluding acquired Alstom businesses, non-operating pension costs, gains and restructuring & other charges”) were spun as very bullish, with extensively adjusted revenues of $33.5 billion rising 15% and beating expectations of $31.4 billion, while non-GAAP EPS surged 65% to $0.51, well above the $0.46 expected.


Bloomberg immediately praised the result:

General Electric Co. reported second-quarter profit that beat analysts’ estimates as surging sales in energy units helped the industrial giant counter the impact of a sluggish economy.


Adjusted earnings rose to 51 cents a share, boosted by higher profits in the power and renewable energy divisions, GE said in a statement Friday. That exceeded the 46-cent average of analysts’ estimates compiled by Bloomberg. Sales of $33.3 billion compared with $31.9 billion expected by analysts.


“The diversity and scale of our portfolio enabled the company to perform well despite a volatile and slow-growth economy,” Chief Executive Officer Jeffrey Immelt said in the statement. “We expect strong organic growth in the second half of the year.”

What was less, if at all, noted is that any comparisons to prior periods were apples to oranges, as the entire upside contribution came not only from transaction “gains”, which added $3.1 billion to the top line, and restructuring charges but all the inclusion of the recently acquired Alstom.

Read the following as you keep the following assessment from Bloomberg in mind:

“GE is betting on markets such as energy and aviation to help it overcome economic malaise and global uncertainty highlighted by the U.K. vote to leave the European Union. Immelt has sold finance and consumer-focused operations while investing in equipment manufacturing and building a complementary software business.”

So for those curious how the increasingly industrial firm’s organic operations, and especially the abovementioned energy “and aviation” held up in the quarter when excluding the contributions from M&A, GE pointed out that excluding Alstom; organic orders – those attributable solely to GE’s core ops – crashed by -16% organic while industrial operating margins went nowhere, and stayed flat. Even including Alstom, overall orders declined by 2% from $27.1 billion to $26.6 billion, driven by a plunge in equipment orders from $14.5 to $12.9 billion, hinting just how troubled the global manufacturing sector remains.


But the real surprise was in GE’s core-core operations, whose breakdown we had to dig deep inside the presentation to find. It was, in a word, a disaster. Here is the breakdown:

  • Organic equipment, driven by market pressure in oil-and-gas and transportation, plunged 30%. 
  • Power tumbled 27%
  • And perhaps most disturbing was Aviation, despite strong prior results, crashed 37%

And that, in a nutshell, is how a company whose core lines of business are getting crushed, not only reported a 65% surge in “earnings”, but crushed expectations.

Source: GE

Let us wrap up this week with this offering from Greg Hunter and Greg Mannarino:
(courtesy Greg Hunter/USAWatchdog)

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