July 29/A huge 44.7 tonnes of gold standing for the August contract month/OI for silver remains at lofty levels: 222,909 contracts close to record set yesterday/Thursday night-Friday morning turmoil in Japan as they disappoint the street/Yen rises/USA 2nd quarter, GDP adjusted to only 1.2% which sends the dollar tanking and gold rising/Germany repatriates over 30 tonnes of gold onto its shores!

Gold:1349.00 up $16.70

Silver 20.31  up 14 cents

In the access market 5:15 pm

 

Gold: 1351.00

Silver: 20.33

.

For the August gold contract month,  we had a gigantic  5028 notices served upon for 502,800 ounces on first day notices. The total number of notices filed so far for delivery:  5058 for 502,800 oz or  tonnes or 15.63 tonnes

In silver we had 3 notices served upon for 15,000 oz to finish the July contract month.  The total number of notices filed so far this month for delivery:  2474 for 12,370,000 oz and that completes July.

In August we had 0 notices filed

We have now finished options expiry month for gold and silver:

ii)The OTC options in London expired Friday at noon July 29.

Today is First day notice for the gold contract and we have a monstrous 44.7 tonnes of gold standing.  And if we have the same modus operandi as previous months,the final standing at the end of the month will see greater amounts added.  We may have greater than 50 tonnes of gold eventually standing for the August contract month.

Also in silver we see the OI remain at lofty levels trapping our bankers who cannot escape as OI long holders refuse to pitch their longs.

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest fell BY A tiny 292 contracts DOWN to 222,909 AND CLOSE TO ITS NEW ALL TIME RECORD AS THE  PRICE OF SILVER ROSE  BY 20 CENTS IN YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.114 BILLION TO BE EXACT or 159% of annual global silver production (ex Russia &ex China).

In silver we had 3 notices served upon for 15,000 oz  to complete July

and zero notices filed upon for August..

In gold, the total comex gold fell BY A CONSIDERABLE 5058 contracts despite the fact that the price of gold ROSE by $5.90 yesterday. The total gold OI stands at 563,612 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

we had a big deposit of 3.86 tonnes in gold inventory . /

Total gold inventory rest tonight at: 958.09 tonnes

SLV

we had no changes, into the SILVER INVENTORY TO THE SLV

Inventory rests at 349.720 million oz.

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

1. Today, we had the open interest in silver FELL by 292 contracts DOWN to 222,909, as the price of silver ROSE BY 31 cents with YESTERDAY’S trading. The gold open interest FELL by A CONSIDERABLE  5058 contracts DOWN to 563,612 despite the fact that  the price of gold ROSE by $5.90 IN YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

2c) COT report

Harvey

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 14.98 POINTS OR 0.50%/ /Hang Sang closed DOWN 282.97 OR 1.28%. The Nikkei closed UP 92.43 POINTS OR 0.56% Australia’s all ordinaires  CLOSED up 0.10% Chinese yuan (ONSHORE) closed UP at 6.6505/Oil fell to 41.04 dollars per barrel for WTI and 42.28 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.6587 yuan to the dollar vs 6.6505 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS SLIGHTLY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES  

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

i)Last night and early this morning turmoil was the order of the day for Japan

Let’s start with a chronological order of events:

First:  Japanese bond futures were halted at 9:30 pm est (8:30 am Japanese time zone) without warning: Dealers claim that the Bank of Japan killed the Japanese bond market:

( zero hedge)

ii)Then: Second:  10 pm est

USA/JPY plunges again to the 104. mark:

( zero hedge)

iii)Then:  the Bank of Japan shocks the market by basically doing nothing and they now question the policy effectiveness. The Yen soars in value/markets initially tumble:

( zero hedge)

iv)And what last night’s announcement means to the Japanese market:

( zero hedge)

v)Finally late in the morning 10 am est, the yen rises again:

( zero hedge)

b) REPORT ON CHINA

The following should get on the nerves of USA policy folk:  Russia and China will hold joint naval drills in the South China Sea

( zero hedge)

4 EUROPEAN AFFAIRS

i)Interesting! the IMF admits it’s policy was responsible for the Greek depression.

Also in its analysis,  why did this happen?

“If indeed final restructurings are important for growth, why has the Troika (IMF, ECB, and European Commission) essentially condemned Greece to a vicious cycle of debt re-negotiations, austerity and unsustainable expectations?”

( zero hedge)

 

ii)Monte de Paschi is only bank to fail the latest stress test:

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

TURKEY

The USA remains silent as Turkey creates a “Traitors Cemetery for dead coup plotters. An edict states that no one is allowed to pray for them:

( zero hedge)

6.GLOBAL ISSUES

none today

7.OIL ISSUES

i)This fully integrated oil company is providing a Bellwether into its industry:

Exxon:Mobil

( zero hedge)

ii)Oil rises today despite higher OPEC production.  The reason why?  the lower dollar!

( zero hedge)

8.EMERGING MARKETS

Venezuela which is rich in resources has now been reduced to a new “forced labour” law

( zero hedge)

9.PHYSICAL STORIES

i)Fascinating:  we now see TD wealth management specialist Bruce Cooper go maximum with gold!!

( Bloomberg/Lam/Cooper)

ii)A must read….

Wisenthal has changed his tune on gold and now states that he is very bullish on the metal and it is all because of Donald Trump..gold signifies power!!

( Joe Weisenthal/Bloomberg/GATA)

iii)Former major hedger and a major pain in the ass for us gold investors has now decided to exit completely from Australia as it needs to raise 2 billion usa to pay off debt.  Newmont will purchase its 50% interest in the big Super Pit mine in Kalgoorlie:

( Evans/West Australian/GATA)

 

iv)Ambrose Evans Pritchard discusses the latest IMF commentary where it admits its disastrous love affair with the euro has destroyed Greece:

( Ambrose Evans Pritchard/UKTelegraph)

v)Maybe these executives saw the light that there is nothing behind the GLD but pieces of paper?

( Ronan Manly/Bullionstar)

vi)Gold prices have risen so fast that South African Sibanye sees few chances for a deal”

(Crowly/Bloomberg/GATA)

 

vii)Dave Kranzler is in my camp as we both agree that GLD and SLV are frauds

( Dave Kranzler/IRD/

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

i)The following should shake up the Street:  The USA 2nd quarter GDP instead of rising by 2.6% rose by only 1.2%.  Not only that but first quarter GDP was revised from the already low 1.2% down to .8%

( zero hedge)

ii)The national Chicago manufacturing PMI remains flat.  However we witness a drop in production as well as a drop in new orders;

( Chicago PMI/zero hedge)

 

Let us head over to the comex:

The total gold comex open interest  WAS OBLITERATED TO AN OI level of 563,612 for a LOSS of 5,058 contracts DESPITE THE FACT THAT  THE PRICE OF GOLD ROSE BY $5.60 with YESTERDAY’S TRADING..  We have been witnessing for the past two years, the OI obliterates rather than roll into a future month. 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. 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 27,873 contracts down to 14,402 AND THUS 1,440,200 OZ OF GOLD WILL STAND FOR DELIVERY OR 44.7 TONNES. The next contract month of Sept saw it’s OI rise by 862 contracts up to 10,232.The next active delivery month is October and here the OI rose by 2274 contracts up to 46,459. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was  GOOD at 263,343. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was VERY GOOD at 272,567 contracts.The comex is not in backwardation.
Today, we had  5028 notices filed for 502800 oz in gold
And now for the wild silver comex results. Total silver OI FELL by TINY 292 contracts from 223,201 DOWN TO 222,909.  We are now near  an all time record high for silver open interest set ON THURSDAY jULY 28.: (223,201). Yesterday I wrote the following: “The front active delivery month is now off the board BUT WE STILL HAVE ABOUT 3 NOTICES LEFT TO BE FILED UPON. THEY HAVE UNTIL TOMORROW NIGHT TO FILE.”  And lo and behold 3 notices were filed.  It took the entire month to settle upon those silver July longs.  The next non active month of August saw it’s OI fell by 9 contracts down to 415. The next big active month is September and here the OI fell by 2287 contracts down to 156,312. The volume on the comex today (just comex) came in at 68,554 which is HUGE. The confirmed volume yesterday (comex + globex) was huge at 1,781 with no rollovers.. Silver is not in backwardation. London is in backwardation for several months.
We had 3 notices filed for 15,000 oz. in silver JULY contract month.
We had 0 notices filed for the beginning of the AUGUST CONTRACT MONTH
INITIAL standings for AUGUST
July 29.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
 NIL
Deposits to the Dealer Inventory in oz  NIL
Deposits to the Customer Inventory, in oz 
 144,395.639 OZ
 (HSBC
SCOTIA)
INCL 2500 KILOBARS
No of oz served (contracts) today
5028 notices 
502,800 oz
No of oz to be served (notices)
9344 contracts
934,400 oz
Total monthly oz gold served (contracts) so far this month
5028 contracts (502800 oz)
(15.63 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month    NIL OZ
My goodness we had aNOTHER huge amount of gold enter the vaults of the comex.
Today we had 0 dealer DEPOSITS
total dealer deposit:NIL   0z
Today we had  0 dealer withdrawals:
total dealer withdrawals:  nil oz
We had 2 customer deposits:
i) Into SCOTIA: 64,018.139 oz
ii) into HSBC:80,377.500 oz  2500 KILOBARS
Total customer deposits:144,395.639 OZ  (4.49 TONNES)
Today we had 0 customer withdrawals:????
Total customer withdrawals  NIL OZ ??
Today we had 2 adjustment:
i) Out of the HSBC vault:  4,147.479  oz was adjusted out of the DEALER and this landed into the CUSTOMER account of HSBC and will be deemed a delivery settlement  (.128 TONNES
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 5028 contracts of which 215 notices was stopped (received) by JPMorgan dealer and 852 notices was stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the AUGUST  contract month, we take the total number of notices filed so far for the month (5028) x 100 oz  or 689,700 oz , to which we  add the difference between the open interest for the front month of AUGUST  (14,402 CONTRACTS) minus the number of notices served upon today (5028) x 100 oz   x 100 oz per contract equals 1,440,200 oz, the number of ounces standing in this active month. 
 
Thus the INITIAL standings for gold for the AUGUST contract month:
No of notices served so far (5028) x 100 oz  or ounces + {OI for the front month (14,402) minus the number of  notices served upon today (5028) x 100 oz which equals 1,440,200 oz standing in this non   active delivery month of AUGUST  (44.7 tonnes).
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 +  21.452 TONNES FOR JULY + 12.3917 + 44.7 tonnes Aug +  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 1778 tonnes, JULY 28 .089 TONNES / JULY 29 .128 TONNES/ THEREFORE 96.142 tonnes still standing against 66.082 tonnes available.
 Total dealer inventor 2,124567.636 oz or 66.082 tonnes
Total gold inventory (dealer and customer) =10,718,772.139 or 333.39 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 333.39 tonnes for a  gain of 30  tonnes over that period. 
 

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

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

 

 
 end
And now for silver
 
AUGUST INITIAL standings
 July 29.2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
956,196.022 oz
SCOTIA
CNT,HSBC
Deposits to the Dealer Inventory
 nil
Deposits to the Customer Inventory
NIL
No of oz served today (contracts)
0 CONTRACTS 
(NIL OZ)
No of oz to be served (notices)
415 contracts
2,075,000 oz)
Total monthly oz silver served (contracts) 0 contracts (NIL 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  956,196.022 oz
today we had 0 deposit into the dealer account:
total dealer deposit nil oz
we had 0 dealer withdrawal:
:
total dealer withdrawals:  NIL oz
we had 3 customer withdrawals:
i) Out of Scotia: 50,060.620 oz
ii) Out of CNT:  299,327.952 oz
iii) Out of HSBC: 606,807.45 oz
Total customer withdrawals: 956,196.022 oz
We had 0 customer deposit:
total customer deposits:  nil oz
 
 
 
 we had 2 adjustments
i) Out of CNT:  2,469,432.01 oz was adjusted out of the dealer and into the customer account of CNT and that would probably be a settlement
ii) Out of Delaware: 5,219.158 oz was adjusted out of the customer and this landed into the dealer account of Delaware.
The total number of notices filed today for the AUGUST contract month is represented by 0 contracts for NIL  oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (0) x 5,000 oz  = NIL oz to which we add the difference between the open interest for the front month of AUGUST (415) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the AUGUST contract month:  0(notices served so far)x 5000 oz +(415 OI for front month of AUGUST ) -number of notices served upon today (0)x 5000 oz  equals  2,075,000 oz  of silver standing for the AUGUST contract month.
 
Total dealer silver:  26.829 million (close to record low inventory  
Total number of dealer and customer silver:   154.089 million oz (close to a record low)
The total open interest on silver is NOW close to its all time high with the record of 223,201 being set July 28.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
END
And now the Gold inventory at the GLD
July 29/ we had a huge deposit of 3.86 tonnes into the GLD/inventory rests at 958.09 tonnes
July 28/no changes in gold inventory at the GLD/Inventory rests at 954.23 tonnes
July 27/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 954.23 TONNES
jULY 26./ANOTHER HUGE PAPER WITHDRAWAL OF 4.46 TONNES FROM THE GLD/INVENTORY RESTS AT 954.23 TONNES
JULY 25/ A HUGE PAPER WITHDRAWAL OF 4.45 TONNES FROM THE GLD/INVENTORY RESTS AT 958.69 TONNES
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 6/WHAT A FRAUD!! A MASSIVE 28.53 TONNES OF PAPER GOLD ADDED INTO THE GLD
July 5/no change in inventory/rests tonight at 982.44
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
July 29/ Inventory rests tonight at 958.09  tonnes

end

Now the SLV Inventory
July 29/we had no change in silver inventory/inventory rests at 349.720 million oz
July 28/we had 1.14 million oz of additional silver added to the SLV/Inventory rests at 349.720 million oz
July 27/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.580 MILLION OZ
jULY 26/NO CHANGE IN SILVER INVENTORY AT THE slv/INVENTORY RESTS AT 348.580 MILLION OZ
JULY 25/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.580 MILLION OZ
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 6/AND ANOTHER FRAUD!! A MASSIVE 7.909 MILLION OZ ADDED INTO THE SLV/INVENTORY RESTS AT 341.453 MILLION OZ
july 5/no change in silver inventory/inventory rests at 333.554 milllion oz
.
July 29.2016: Inventory 349.720 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 2.0 percent to NAV usa funds and Negative 2.3% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.0%
Percentage of fund in silver:39.8%
cash .+1.2%( July 29/2016). 
2. Sprott silver fund (PSLV): Premium rises  to +1.55%!!!! NAV (July29/2016) 
3. Sprott gold fund (PHYS): premium to NAV  rises TO  1.21% to NAV  ( July 29/2016)
Note: Sprott silver trust back  into POSITIVE territory at +1.55% /Sprott physical gold trust is back into positive territory at 1.21%/Central fund of Canada’s is still in jail.
 
 
 

end

 

At 3;30 pm we receive the COT report which gives position levels of our major players.

Let us head over to the gold COT:

 

 

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
347,426 68,471 55,650 117,420 426,443 520,496 550,564
Change from Prior Reporting Period
-19,445 -12,489 -19,501 -2,013 -8,467 -40,959 -40,457
Traders
185 79 98 55 60 289 200
 
  Small Speculators      
  Long Short Open Interest    
  55,829 25,761 576,325    
  215 -287 -40,744    
  non reportable positions Change from the previous reporting period  
COT Gold Report – Positions as of Tuesday, July 26, 2016

 

end

 

Our large specs:

Those large specs who have been long in gold were fleeced once again to the tune 19,445 contracts as those specs just pitched away their longs.

Those large specs who have been short in gold covered a huge 12,489 contracts from their short side.

 

Our commercials;

those commercials who have been long in gold pitched 2013 contracts from their long side

those commercials who have been short in gold covered 8467 contracts from their short side.

 

Our small specs:

those small specs that have been long in gold added 215 contracts from their long side

those small specs that have been  short in gold covered 287 contracts from their short side.

Conclusions:  the commercials go net long again by 8454 contracts and that should be very bullish for gold

And now for silver COT:

 

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
123,737 27,660 21,323 48,115 155,238
2,898 1,211 -39 -2,264 -1,396
Traders
118 60 34 33 43
Small Speculators Open Interest Total
Long Short 218,299 Long Short
25,124 14,078 193,175 204,221
-1,502 -683 -907 595 -224
non reportable positions Positions as of: 169 122
  Tuesday, July 26, 2016   © SilverSeek.c

Our large specs:

Those large specs who have been long in silver added another 2898 contracts to their long side

Those large specs who have been short in silver added 1211 contracts to their short side.

 

Our commercials;

Those commercials who have been long in silver pitched 2264 contracts from their long side

those commercials who have been short in silver covered 1396 contracts from their short side.

 

Our small specs:

Those small specs that have been long in silver pitched 1502 contracts from their long side

Those small specs that have been short in silver covered 683 contracts from their short side.

 

Conclusions: commercials go net short again by almost 4,000 contracts and are definitely trapped and cannot escape the noose.

 

end

 

FEDERAL RESERVE BANK OF NEW YORK EAR MARKED GOLD REPORT:

Late tonight we received the report of movement of gold from the Federal Reserve Bank of New York:

In the previous month we had 7951 million dollars worth of gold in inventory valued at 42.22 dollars per oz.

Tonight the FRBNY reports that we had 7910 million dollars worth of gold inventory valued at $42.22 per oz.

Thus a total of 41 million dollars worth of gold left New York shores valued at 42.22 dollars per oz.

Thus in oz, the amount exported out of NY:

971,103.7 oz  or 30.205 tonnes

Since Germany is the only official country to have asked for the gold back you can be safe to assume that it is this country that is the recipient of the gold.

 

Germany must have sent out an extra SOS to get their gold back!!.

 

 

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

Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market

The Trump and Clinton election is set to be one of the “ugliest” and “messiest” U.S. elections ever, astute gold analyst Frank Holmes warned this week. He believes this is a reason to own gold and will be one of the factors that will see a resumption of gold’s bull market after the summer doldrums which we explore below.

CLEVELAND, OH - JULY 21: Republican presidential candidate Donald Trump delivers a speech during the evening session on the fourth day of the Republican National Convention on July 21, 2016 at the Quicken Loans Arena in Cleveland, Ohio. Republican presidential candidate Donald Trump received the number of votes needed to secure the party's nomination. An estimated 50,000 people are expected in Cleveland, including hundreds of protesters and members of the media. The four-day Republican National Convention kicked off on July 18. (Photo by John Moore/Getty Images)

Gold is now in the “summer doldrums” prior to the seasonally stronger period of the Autumn when gold tends to perform best – especially in the month of September (see seasonal chart below). Holmes believes the bull market will resume soon due to the very strong fundamentals including “low-to-negative bond yields around the world. (Between $11 trillion and $13 trillion worth of global sovereign debt currently carries a negative yield.)” and of course heightened geopolitical risk including in the U.S.

He writes:

“Looking more Las Vegas casino than Oval Office, the stage Donald Trumpdelivered his nomination acceptance speech from Thursday was all gold, from the stairs to the podium, completely befitting of his showman-like style. Whether you support or oppose Trump, it’s time to face reality. This is really happening, and we should all brace ourselves for what will surely be one of America’s messiest, ugliest general election seasons.

Only time will tell which candidate will be triumphant in November, but in the meantime, one of the winners might very well be gold, which has traditionally attracted investors in times of political and economic uncertainty. In the United Kingdom, which voted one month ago to leave the European Union, gold dealers are seeing “unprecedented” demand, especially from first-time buyers. Some investors are reportedly even converting 40 to 50 percent of their net worth into bullion, though that’s not advisable. (I always suggest a 10 percent weighting, diversified in physical gold and gold mining stocks.) In Japan, where government bond yields have fallen below zero and faith in Abenomics is flagging, gold sales are soaring.

It’s not unreasonable to expect the same here in the U.S. between now and November (and beyond).”

GoldCore: Seasonality of Gold and Silver

GoldCore have long pointed out that the summer months frequently see seasonal weakness as has been the case in recent years and since gold became a traded market in 1971. Gold and silver often see periods of weakness in the summer doldrum months of May, June and July.

Gold’s traditional period of strength is from early August into the autumn and early winter. Thus, early August is generally a good time to buy after the seasonal dip.

Next week, we commence August trading and August along with September and November, are some of the best months to own gold.

Late summer, autumn and early New Year are the seasonally strong periods for the gold market due to robust physical demand internationally. This is the case especially in Asia for weddings and festivals and into year end and for Chinese New Year when voracious China stocks up on gold.

Gold’s weakest months since 1975 have been June and July. Buying gold in early August has been a good trade for most of the last 40 years and especially in the last eleven years, averaging a gain of nearly 11% in just six months after the summer low.

Thackray’s 2011 Investor’s Guide notes that the optimal period to own gold bullion is from July 12 to October 9.

Holmes is the CEO and chief investment officer of U.S. Global Investors and is one of the better gold analysts out there. He shares our view regarding the summer being an optimal time to buy gold. He is always worth a read and his latest article can be read on Gold Seek here

Discounted Bullion For Storage (Allocated and Segregated) In London, Zurich and Singapore

London
Gold Bars (1 oz) x 100

Zurich
Gold Bars (1 oz) x 50
Gold Krugerrands (1 oz) x 10
Silver Bar (1051.2 oz Engelhard) x 1
Platinum Eagle  (1 oz) x 1

Singapore
Gold Bars (1 oz) x 50
Gold Eagles (1 oz) x 5
Silver Maples (1 oz) x 455
Silver Eagles (1 oz) x 455
Silver Bars (100 oz) x 15

Call for discounted prices  +353 1 632 5010 (IRL)    +44 (0) 203 086 9200 (UK)    +1 302 635 1160 (US/ Canada)

Gold and Silver Bullion – News and Commentary

Gold up slightly in Asia ahead of BoJ policy review, rate decision (Investing.com)

Gold futures score a 2-week high as Fed inaction fuels bulls (Marketwatch)

Gold inches up, set for monthly rise as markets await BoJ decision (Reuters)

U.S. jobless claims rise; labor market still strong (Reuters)

TD’s $230 Billion Man Goes Maximum Gold as Volatility Mounts (Bloomberg)

7RealRisksBlogBanner

World heading for shortage of physical gold – DRDGold (Mining Weekly)

‘Joe Weisenthal: How Donald Trump changed my mind about gold (Bloomberg)

IMF admits disastrous love affair with euro, apologizes for immolating Greece (Telegraph)

Monetary sledgehammer to nut of Britain’s post Brexit economy? (Telegraph)

Stockman Warns “2008 Was Just Spring-Training For What Comes Next”(Zerohedge)

 

Gold Prices (LBMA AM)

29 July: USD 1,332.50, EUR 1,200.18 & GBP 1,012.03 per ounce
28 July: USD 1,341.30, EUR 1,208.78 & GBP 1,017.64 per ounce
27 July: USD 1,320.80, EUR 1,200.21 & GBP 1,007.77 per ounce
26 July: USD 1,321.25, EUR 1,199.56 & GBP 1,006.40 per ounce
25 July: USD 1,315.00, EUR 1,196.91 & GBP 1,000.32 per ounce
22 July: USD 1,323.20, EUR 1,199.22 & GBP 1,005.10 per ounce
21 July: USD 1,322.00, EUR 1,199.32 & GBP 1,000.75 per ounce

Silver Prices (LBMA)

29 July: USD 20.04, EUR 18.03 & GBP 15.20 per ounce
28 July: USD 20.41, EUR 18.42 & GBP 15.52 per ounce
27 July: USD 19.58, EUR 17.81 & GBP 14.95 per ounce
26 July: USD 19.68, EUR 17.89 & GBP 15.00 per ounce
25 July: USD 19.41, EUR 17.66 & GBP 14.77 per ounce
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


Recent Market Updates

– Gold Bullion Up 1.6%, Silver Surges 3.7% After Poor U.S. Data and Dovish Fed
– Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
– “Could Not Invent A More Bullish Story For Gold Bullion”
– Gold In Bull Market – “Every Reason For It To Continue” – Frisby In Money
– Is Gold Set To Hit $1,500 Per Ounce?
– 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”
– Stocks Rally – Is Brexit Systemic Risks Contained?
– Britain has a new prime minister – here’s what that means for you

 

Mark O’Byrne
Executive Director

END

Fascinating:  we now see TD wealth management specialist Bruce Cooper go maximum with gold!!

(courtesy Bloomberg/Lam/Cooper)

TD’s $230 billion man goes maximum gold as volatility mounts

Section:

By Eric Lam and Allison McNeely
Bloomberg News
Thursday, July 28, 2016

In a world flush with central bank stimulus and swirling with volatility, Bruce Cooper is pushing for the one asset he says he can count on: gold.

TD Asset Management’s chief investment officer is adopting a more conservative approach to focus on capital preservation. Cooper sees gold as the best bet with the global economy stuck in neutral, and as loose central bank policy, the U.K. Brexit vote, and a looming U.S. presidential election stoke demand for havens. The firm shifted to “maximum overweight” in gold for its portfolios during the second quarter from a “modest overweight,” according to Cooper’s latest market outlook report. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2016-07-28/td-s-230-billion-man-g…

 

END

 

A must read….

Wisenthal has changed his tune on gold and now states that he is very bullish on the metal and it is all because of Donald Trump..gold signifies power!!

(courtesy Joe Weisenthal/Bloomberg/GATA)

Joe Weisenthal: How Donald Trump changed my mind about gold

Section:

By Joe Weisenthal
Bloomberg News
Thursday, July 28, 2016

If you poke around on the internet, you’ll find a lot of people who have criticized me for being a “gold hater.” Here are two different pieces that took me just a few seconds to find:

http://www.bullionbaron.com/2015/08/the-religion-of-gold-hating.html

There are plenty of tweets out there saying the same thing.

These people have been basically right. Over the years I’ve said a lot of bad stuff about gold — how it’s a lousy currency, how it’s just a rock that shouldn’t have any value, how love of it is primitive and irrational, how it has no justifiable basis in the economy.

But I’m changing my mind, and it’s all due to Donald Trump.

The other day Timothy O’Brien published a brilliant photo gallery here on Bloomberg View showing Trump’s love of all things gold. Trump’s stage at the convention was gold-colored. Trump events often feature pretend miniature gold bars. The logo on Trump Tower is gold-hued. And Trump has lots of gold-plated furniture. …

… For the remainder of the commentary:

http://www.bloomberg.com/view/articles/2016-07-28/how-donald-trump-chang…

 

END

 

Former major hedger and a major pain in the ass for us gold investors has now decided to exit completely from Australia as it needs to raise 2 billion usa to pay off debt.  Newmont will purchase its 50% interest in the big Super Pit mine in Kalgoorlie:

(courtesy Evans/West Australian/GATA)

Barrick puts Super Pit stake on the market

Section:

By Nick Evans
The West Australian, Perth
Thursday, July 28, 2016

Barrick Gold has put on the market its half of Kalgoorlie’s iconic Super Pit gold mine, finally confirming it intends to complete its exit from Australia.

The sale of its half of Kalgoorlie Consolidated Gold Mines has been mooted since Barrick began selling its Australian gold mines two years ago, and the global gold major handed over operational control of the Super Pit to partner Newmont Mining just over a year ago.

But Barrick finally confirmed early this morning in its June quarter production report that it is looking to quit is stake, saying it intends to “initiate a process to explore the sale” of its half-share in the storied mine. …

… For the remainder of the report:

https://au.news.yahoo.com/thewest/wa/a/32175847/barrick-puts-super-pit-s..

END

 

Ambrose Evans Pritchard discusses the latest IMF commentary where it admits its disastrous love affair with the euro has destroyed Greece:

(courtesy Ambrose Evans Pritchard/UKTelegraph)

IMF admits disastrous love affair with euro, apologizes for immolating Greece

Section:

By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, July 28, 2016

The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.

This is the lacerating verdict of the IMF’s top watchdog on the Fund’s tangled political role in the eurozone debt crisis, the most damaging episode in the history of the Bretton Woods institutions.

It describes a “culture of complacency,” prone to “superficial and mechanistic” analysis, and traces a shocking breakdown in the governance of the IMF, leaving it unclear who is ultimately in charge of this extremely powerful organisation.

The report by the IMF’s Independent Evaluation Office (IEO) goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way EU insiders used the fund to rescue their own rich currency union and banking system. …

In an astonishing admission, the report said its own investigators were unable to obtain key records or penetrate the activities of secretive “ad-hoc task forces”. Mrs Lagarde herself is not accused of obstruction.

… For the remainder of the story:

http://www.telegraph.co.uk/business/2016/07/28/imf-admits-disastrous-lov…

… For the IMF report described here:

http://www.ieo-imf.org/ieo/pages/CompletedEvaluation267.aspx

 

end

 

Maybe these executives saw the light that there is nothing behind the GLD but pieces of paper?

(courtesy Ronan Manly/Bullionstar)

Ronan Manly: Executives keep fleeing GLD

Section:

By Ronan Manly
BullionStar.com, Singapore
Friday, July 29, 2016

A remarkable but little-noticed development has occurred behind the scenes of the SPDR Gold Trust (GLD) over the last three years. This development concerns the very high level of executive staff turnover at World Gold Trust Services, the New York based “sponsor” of the mammoth GLD gold-backed exchange-traded fund that is listed on the New York Stock Exchange.

For within less than three years, World Gold Trust Services has gone through four chief executive officers and three chief financial officers. By any standard this is a huge amount of senior executives moving through the roles, and would normally ring alarm bells in the corporate governance departments of major institutional investors. Perhaps it has caused concern among institutional investors of the GLD, but if it has, it has gone unreported. …

… For the remainder of the report:

https://www.bullionstar.com/blogs/ronan-manly/execs-flee-gld-the-revolvi…

 

end

 

Gold prices have risen so fast that South African Sibanye sees few chances for a deal”(Crowly/Bloomberg/GATA)

Gold bargains gone as Sibanye sees few chances for a deal

Section:

By Kevin Crowley
Bloomberg News
Friday, July 29, 2016

The gold market shot up so fast that opportunities to make a big acquisition are now scarce, according to Sibanye Gold Ltd.

The South African miner said just two months ago that it wanted to buy a gold-producing asset this year. Now those doors have closed, according to Chief Executive Officer Neal Froneman. He is no longer considering acquiring Acacia Mining or Barrick Gold Corp.’s stake in the company. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2016-07-28/gold-bargains-gone-as-…

 

end

 

Dave Kranzler is in my camp as we both agree that GLD and SLV are frauds

(courtesy Dave Kranzler/IRD/

 

Think GLD Is Legit? Better Twice About That

Readers who have followed my work for several years know that I have been quite vocal about the illegitimacy of the GLD gold ETF.   James Turk was the first analyst in 2004 to bring attention to flagrant legal loopholes which enable the GLD custodian (HSBC) to play the “shell game” with GLD’s gold bars.

Certainly highly illegal activities by HSBC are de rigueur, as evidenced by its conviction for laundering drug money – for which a $1.9 billion settlement with the Justice Department failed to deter HSBC’s money laundering activities – LINK. What the heck, $1.9 billion is merely the cost of conducting a high-margin business endeavor.  Just ask the big banks funding Hillary Clinton’s Presidential campaign.

In 2009 I published an extension of Turk’s 2004 GLD evisceration – one which Turk actually helped me edit – in which I concluded:

I have no problem with the concept of using GLD for daytrading to make directional bets, long or short, on the short term swings in the price of gold. But if you invest in GLD with the intent of making a long term investment in gold, please be aware that GLD is NOT an investment in actual physical gold. GLD is nothing more than a piece of paper which proclaims, but does not promise, to have gold on the other side of its highly structured legal barriers. Furthermore, for the reasons shown above, there is the possibility that you might wake up one day to find out that the price of GLD has suddenly dropped well below the spot price of gold and that GLD could even end up worthless.

At some point I will update this research piece because GLD has made some changes to the prospectus which widened the legal loopholes into  legal sewage holes.

The bottom line is that GLD (and SLV) was created to “trap” billions of institutional cash that might otherwise have been used to purchase actual physical bars.  It was a tool to enhance the price manipulation of gold using paper derivatives.  I have no doubt that at some point in time GLD held a lot gold bars in its vault.  But I think it’s also pretty clear to anyone who has been through the prospectus with fine-tooth comb that GLD was set up as a “holding pen” of sorts for gold bars that would eventually be used to put out physical demand fires once the Central Banks ran low on or out of gold bars used in Central Bank leasing activities.

I mentioned to a colleague yesterday that the information about the economy and the markets published by “official” sources is not interesting.  The Government and big banks report the information they want us to see.  It’s the information content “behind” the official reports that is of interest.

Unfortunately we end up having to connect a lot of “dotted lines” in order to draw reasonable inferences about the truth that lies beneath the surface.   With GLD, the prospectus itself is a treasure trove of “dotted lines.”  So too is the fact  that the Bank of England is now a vault “sub”- custodian for GLD.  Yes, the Bank of England that is one of the original participants in the development of the gold leasing market.  My GLD research piece explains why the “sub-custodian” mechanism in the GLD legal structure readily enables gold bar leasing.

Adding to the intrigue is the fact that GLD’s “Sponsor,” World Gold Trust Services – a subsidiary of the World Gold Council – has had four different CEO’s in less than three years from 2013-2016.  The CEO previous to these three CEOs had been in place for four years, from 2009-2013.  BullionStar’s Ronan Manly is the first to report this strange event – LINK.

While I laud Manly for his diligent research of the events, I find his rationale for the CEO revolving door at GLD to be circumspect.   For me the dotted lines connecting the CEO revolving door at GLD are threefold – all of which point to the accelerated use of GLD as a source for leasing and hypothecating gold bars since 2012 in order to manipulate the price of gold:  1) the 2012 alteration of the prospectus which further loosened the already tenuous degree of legal accountability of the custodial vaults;  2) the massive draw-down and subsequent “replenishment” of gold bars reported to be in held by the ETF;  3) the inclusion of the Bank of England as one of the highly unaccountable vault sub-custodians.

My “dotted line” view is that each CEO was in the position long enough to understand the true nature of GLD’s dealings and decided they were not getting paid enough to hang around long enough to go down with the ship.

The final  conclusion for me is that GLD (and SLV) is the precious metals market’s equivalent of Enron or MF Global.  The 3-yr CEO revolving door at GLD since 2012 likely reinforces this viewpoint.   When the real scramble for physical gold that can be possessed immediately takes place – an eventuality we all know is coming sooner or later – the truth about GLD will be revealed and the clueless, hope-strangled GLD shareholders will be helpless as they watch the value of GLD plummet while the market price of gold goes parabolic.

end

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

 
 

:

1 Chinese yuan vs USA dollar/yuan SLIGHTLY UP to 6.6505 (  SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6587) / Shanghai bourse  DOWN 14.98 OR 0.50%   / HANG SANG CLOSED DOWN 282.97 OR 1.28% 

2 Nikkei closed UP 92.43  OR 0.56% /USA: YEN FALLS TO 103.44

3. Europe stocks opened ALL IN THE GREEN    /USA dollar index DOWN to 96.29/Euro UP to 1.1109

3b Japan 10 year bond yield: RISES TO  -.19%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 103.44

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  41.04  and Brent: 42.28

3f Gold UP  /Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.071%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 8.16%/: 

3j Greek 10 year bond yield FALL to  : 7.28%   (YIELD CURVE NOW  FLAT TO INVERTED)

3k Gold at $1334.75/silver $20.05(6:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 72/100 in  roubles/dollar) 66.42-

3m oil into the 41 dollar handle for WTI and 42 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 103.44 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9855 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0838 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -0.0710%

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

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

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

4. USA 10 year treasury bond at 1.523% early this morning. Thirty year rate  at 2.249% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS

Despite Huge BOJ Disappointment, Global Stocks Rise, US Equity Futures Flat As Yen Soars

European stocks and Asian shares rose, U.S. equity futures were unchanged and the yen surged after the BOJ shocked markets and kept its QE program unchanged, defying market expectations of a big boost to its monetary stimulus program.

The session’s key event, last night Bank of Japan policy announcement, the most anticipated in years, was – as we predicted yesterday when we said that it would be impossible for the central bank to meet market expectations – a dud, one which sparked a surge in the yen and sending government bonds and emerging-market stocks lower.

Japan’s currency soared against all of its 31 major peers after the BOJ effectively punted to the next meeting, keeping its government-bond buying target and policy interest rate unchanged, opting instead to double exchange-traded fund purchases to 6 trillion yen ($58 billion) a year, the BOJ said. The result was a 1.5% spike in the yen, bringing its gain this year to about 16 percent.

The BOJ’s expanded stimulus “was as minimal as possible,” said Stefan Worrall, director of equity cash sales at Credit Suisse Group AG in Tokyo. “The tension was extremely high going into the announcement, and the market has reacted in a way that has perhaps reflected that.”

Yields on 10-year JGBs climbed the most since 2013, while rates on similar-maturity Treasury notes increased from a two-week low. As shown below, JGB futures tumbled the most in two years.

Many expected the disappointing BOJ announcement to send equities lower: “the yen’s move shows how the market is disappointed,” Nicholas Teo, a strategist at KGI Fraser Securities, said. “That’s got to trigger a risk-off move in equities. The market had expected very generous stimulus from the BOJ.” However, while the market soared in the past several weeks on expectations of helicopter money, it has failed to retrace any part of the move on the news.

Indeed, while the BOJ announcement sent volatility in FX and rates soaring, after an initial plunge in the Nikkei as much as 2% lower, then rebound, then another plunge, Japan’s stock index rose, and finally closed up 0.6% mostly on the back of a relief rally in the banks which were bought after the BOJ did not cut its negative interest rate even more. “The ETF purchase is directly good for the market,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo. “The BOJ didn’t go further into negative rates, so it’s good for the financial stocks.”

In Europe, better-than-estimated earnings from Barclays Plc and UBS Group AG helped stocks extend their biggest monthly advance since October. Meanwhile, oil continued to sell off, and is now headed for a bear market, while gold pared a second month of gains.

As Bloomberg reports, a month of big swings in the $5.3 trillion-a-day foreign exchange market is set to end with a bang as markets digest the BOJ’s decision, and in a few hours the U.S. is set to report Q2 GDP, where it is expected to show a pickup in economic growth and results of bank stress tests in Europe. Earlier today Europe reported its own Q2 GDP which came in line with expectations at 0.3%, half of the growth rate seen in the first half.

Ignoring the BOJ disappointment, the Stoxx Europe 600 Index climbed 0.4%, taking its monthly increase to 3.2%. The rebound hasn’t been enough for the gauge to recoup its losses following the U.K. vote to quit the European Union. Barclays jumped 6% as its core units posted adjusted pretax profit that topped projections and UBS climbed 2.8 percent. Italy’s Banca Monte dei Paschi di Siena SpA rallied 7.1 percent after it received a proposal. Stress-test results are due at 10 p.m. Milan time on Friday. Electricite de France SA surged 9.4 percent as its earnings beat projections and it maintained its 2016 objectives. The British government cast doubt on the future of a nuclear-power project in the U.K. ArcelorMittal rose 5.1 percent after posting its highest quarterly profit since 2014.

While the S&P 500 Index futures slipped 0.2 percent, we expect initial weakness to be bought and US stocks will close well in the green, adding to July’s 3.4% gains. Google parent Alphabet advanced 3.5 percent in early trading after reporting second-quarter earnings and sales that beat analysts’ estimates as growth in cloud-computing and corporate software businesses improved. Amazon.com Inc. rose 1.4 percent as profit topped projections.

The MSCI Emerging Markets Index slid 0.7 percent, leaving it 4.3 percent higher on the month. Both gauges are headed for the best month since March.

The yield on Japan’s 10-year bonds jumped eight basis points to minus 0.19 percent, set for the steepest increase May 2013, based on closing prices. Yields on Treasuries with a similar maturities rose two basis points to 1.53 percent, having been at 1.48 percent earlier, the lowest since July 14. Treasury yields are still set for a weekly drop after Fed officials signaled this week they are in no rush to raise interest rates, even as they noted that near-term risks to the economic outlook have diminished. The economy probably grew at a 2.5 percent annualized rate from April through June, according to the median estimate of 76 forecasters before Friday’s release.

On today’s calendar, the US Q2 GDP report is front and center however there’s also other important data in the form of the employment cost index (expected to be +0.6% qoq), Chicago PMI for July (expected to decline 2.8pts to 54.0) and the final revisions to the July University of Michigan consumer sentiment report. There’s also a bit of Fedspeak to contend with with Williams and Kaplan  both scheduled.  Investors are also watching earnings from companies including Merck & Co., Exxon Mobil Corp. and Chevron Corp. for further clues on how global monetary stimulus is filtering through the economy. A potential key risk event will the be the European stress test announcement which may impact Italy’s insolvent Monte Paschi, which is rushing to arrange a last minute bailout plan.

* *  *

Market Snapshot

  • S&P 500 futures down 0.1% to 2163
  • Stoxx 600 up 0.4% to 341
  • FTSE 100 down 0.2% to 6708
  • DAX up 0.5% to 10325
  • German 10Yr yield up 2bps to -0.07%
  • Italian 10Yr yield up less than 1bp to 1.21%
  • Spanish 10Yr yield down less than 1bp to 1.09%
  • S&P GSCI Index down 0.9% to 333.5
  • MSCI Asia Pacific up 0.5% to 136
  • Nikkei 225 up 0.6% to 16569
  • Hang Seng down 1.3% to 21891
  • Shanghai Composite down 0.5% to 2979
  • S&P/ASX 200 up 0.1% to 5562
  • US 10-yr yield up 2bps to 1.53%
  • Dollar Index down 0.37% to 96.38
  • WTI Crude futures down 1.3% to $40.62
  • Brent Futures down 1.9% to $41.89
  • Gold spot down 0.3% to $1,332
  • Silver spot down 0.6% to $20.05

Top Global Headlines

  • Hillary Clinton Accepts Democratic Nomination, Attacks Trump: Democratic nominee reaches out to supporters of Bernie Sanders, calls Trump’s vision for nation “Midnight in America”
  • BOJ Opts for Limited Stimulus Expansion, Plans Policy Review: board expands ETFs; no change to bond purchases, negative rate; Kuroda calls for assessment of effectiveness of BOJ policy
  • Google Results Show Signs of Cloud Progress Under Greene: “other revenue” jumps 33% to record on cloud and apps momentum; Alphabet Beats Analysts’ Estimates on Mobile Ads, Cost Controls
  • Amazon Cloud Unit Helps It Stay Profitable While Investing: co. takes on Netflix, Wal-Mart and Flipkart at once; co. forecasts sales that may beat estimates on Prime Day
  • Facebook Gets $3-5b IRS Tax Notice Over Ireland Move: IRS issues notice for 2010 tax year over operations transfer; co. plans to challenge notice in federal tax court
  • UBS Scraps Near-Term Targets as 2Q Profit Declines: scraps near-term guidance after 2Q profit slipped 14%
  • Sanofi Ready for Swift Action on Medivation as Earnings Drop: co. ready to act swiftly to reach a deal with Medivation as 2Q profit and sales declined
  • Chubb Promotes Kessler to Reinsurance Chief; O’Farrell Exits: Kessler was previously chief actuary of an international unit
  • America Movil Profit Misses Estimates as Revenue in Mexico Dips: carrier’s Mexico margins narrow amid stiff competition
  • TerraForm Power Said to Plan September Auction of Its Shares
  • Thoma Bravo Said to Seek Sale of Deltek for Up to $3b: Reuters
  • N.Y. Fed Said to Be Moving On-Site Examiners Out of Banks: WSJ
  • Ex-Goldman Exec Sues Bank Seeking Legal Fees in Fed Probe: WSJ

* * *

Looking at regional markets, Asia stocks traded mostly lower following disappointment from the BoJ policy decision after the central bank refrained from cutting rates deeper into negative territory and also kept its rise in monetary base unchanged. This initially pressured the Nikkei 225 (+0.6%) although banking names benefitted from the pause in rates. ASX 200 (+0.1%) saw upside capped by energy weakness following the continued drop in WTI Crude prices, which tested USD 41/bbl to the downside while Chinese markets were in the red with Hang Seng (-1.3%) weighed on by subdued earnings from CNOOC while losses in Shanghai Comp (-0.5%) were stemmed by a larger net-weekly liquidity injection. 10yr JGBs are lower with prices declining by over a point which was the most since 2013, following the BoJ disappointment. BoJ disappointed markets and kept its policy rate unchanged at -0.1% and held the annual rise in monetary base. at JPY 80tIn via 7-2 vote with Sato and Kiuchi as the dissenters. The BoJ instead announced to expand purchases of ETFs to JPY 6.0tIn from JPY 3.3tln and doubled programme of USD lending from USD 12bIn to USD 24b1n.

Top Asian News

  • Japan Bank Shares Are Biggest Winners From BOJ’s Policy Decision: Banks including Mitsubishi UFJ jumped
  • Sony Posts Surprise Profit as Games Outweigh Sagging Sensors: Net income 21.2b yen for 1Q ended June 30 vs est. 39b yen loss
  • Sembcorp Joins Keppel With Profit Plunge as Oil Damps Demand: Slashes FY16 capital expenditure to half of previous year’s
  • Cnooc Warns of $1.2b Loss Amid Canada Oil Sands Writedown: Co. expects first loss since Hong Kong listing in 2000
  • India Lifts Veil on Army as Modi Moves to Spend $150b: Private-sector executives climb on tanks, speak with soldiers

European equities have kicked off the final trading day of the week higher despite some overnight disappointment from the BoJ. Although, financial names have been supported from a lack of further rate reductions which in turn saw Nikkei 225 (+0.6%) finish in the green. Furthermore, this filtered into the upside in European financial names, while gains in Barclays (+5.7%) have also been attributed to their firm earnings update, however the FTSE 100 does remain the notable laggard with the index hampered by lacklustre earnings from the likes of IAG, Pearson and Reckitt Benckiser as well as softness in energy heavyweight Shell. In terms of outperformers, the FTSE MIB (+1.8%) leads the region amid the strength in Monte Paschi (+6.9%) shares as reports have been circulating that the bank may receive an 11th hour rescue ahead of the ECB stress test results at 2100BST. Aside from equities, across fixed income markets, Bunds gapped lower at the open to hover around 167.00 level as the lack of significant action by the BoJ saw JGB yields with their third largest surge on record. However, for much of the morning, Bunds have pulled off its lows as the downside in oil prices, alongside month-end extension buying has led to somewhat of a short squeeze.

Top Asian News

  • Euro-Area Economy Slowed Before Brexit Vote Put Outlook at Risk: growth eased to 0.3% in 2Q, down from 0.6%; inflation in the region unexpectedly picked up to 0.2% in July
  • Barclays Rises as Cost Cuts, Trading Gain Outshine Profit Drop: bank posted $1.4b pretax loss at non-core division; fixed-income trading revenue climbed 10% in quarter
  • AB InBev Rises on Optimism SABMiller Deal Will Get Done: shares gain as much as 2.5% in Brussels after earnings miss
  • BBVA Jumps as Earnings Beat Estimates on Better Lending Returns: net interest income and fees rebounded from slow 1Q
  • Mediaset Rejects Vivendi’s Alternative Offer for TV Alliance: Italian broadcaster seeks to enforce deal to sell Premium unit; board authorizes ‘all necessary measures’ to respect contract
  • Statoil Buys Petrobras Oilfield for $2.5b Amid Crude Rout: biggest Statoil acquisition since 2011 not expensive: analyst
  • British Airways Owner Slashes Targets, Cuts Capacity on Brexit: IAG predicts only “low double-digit” profit increase for 2016
  • EDF 1H Profit Drops After Writing Down Value of Assets: French utility extends depreciation period on nuclear plants

In FX, the yen climbed 1.5 percent to 103.65 per dollar at 10:25 a.m. in London, bringing its gain this year to about 16 percent. BOJ Governor Haruhiko Kuroda led his board in voting to increase its ETF program to 6 trillion yen ($58 billion) a year, the BOJ said. The announcement comes after decisions this month from the Federal Reserve, the European Central Bank and the Bank of England to leave their key interest rates unchanged as they assessed the economic fallout from the U.K.’s vote to leave the European Union. “The BOJ’s disappointment, which also follows the ECB and BOE’s recent decisions to hold off easing, may just cause markets to re-assess whether they had front-run things too much,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore. Away from the yen, foreign-exchange markets were more subdued. South Korea’s won strengthened 0.4 percent against the dollar to lead gains among emerging-market currencies. The Chinese yuan slipped 0.1 percent, paring a weekly gain. The euro increased 0.3 percent.

In commodities, oil headed for the biggest monthly decline in a year as brimming crude and fuel inventories spurred a retreat toward $40 a barrel. West Texas Intermediate crude dropped 1.2 percent $40.64 a barrel, extending declines from a peak in June to more than 20 percent. Brent oil in London slid 1.8 percent to $41.92. Spot gold slipped 0.3 percent to $1,331.95 an ounce after earlier rising in the wake of the BOJ decision. Industrial metals retreated, with copper losing 0.3 percent in London and nickel falling 1.4 percent.

On today’s calendar, the US Q2 GDP report is clearly front and center however there’s also other important data in the form of the employment cost index (expected to be +0.6% qoq), Chicago PMI for July (expected to decline 2.8pts to 54.0) and the final revisions to the July University of Michigan consumer sentiment report. There’s also a bit of Fedspeak to contend with with Williams (2.30pm BST) and Kaplan (6.00pm BST) both scheduled. Away from that, the EU bank stress tests at 9pm BST will draw huge interest over the weekend. On the earnings front it’s another busy day with 18 S&P 500 companies reporting including Merck, Exxon Mobil and Chevron all at or just prior to the open. In Europe both UBS and Barclays will report, along with Monte dei Paschi.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • The BoJ stood pat on rates and their monetary base, although did make adjustments to their ETF and USD lending programmes
  • European equities trade higher as financial names lead the way amid upbeat earnings and the BoJ not delving deeper in to negative territory
  • Looking ahead, highlights include EU Bank Stress Tests, US GDP, PCE and Michigan Sentiment and potential comments from Fed’s Williams

DB’s Jim Reid concludes the overnight wrap

The BoJ continue their fight to take the Japanese economy to higher ground at this morning’s long awaited meeting. As expected, they’ve eased but the extent to which will be seen as a bit disappointing. ETF purchases have been expanded to ¥6tn (almost doubling the prior target), while the -0.1% base rate has been maintained and the pace of QE purchases held at ¥80tn per year. Kuroda has also ordered an assessment of the effectiveness of BoJ policy to be undertaken at the next meeting scheduled for September which is interesting. The Yen is +1.97% stronger following the news at 103. The Nikkei initially plummeted 2%, then rallied all the way, and has now plummeted 2% again. It feels like Kuroda might be doing some damage control come his press conference later this morning.

The announcement follows a bumper set of data out of Japan this morning. The most notable was the CPI report where headline inflation stayed put at -0.4% yoy as expected in June. The core declined one tenth to -0.5% yoy (vs. -0.4% expected) while the core-core declined two-tenths to +0.4% yoy (vs. +0.5% expected). Retail sales rose a below market +0.2% mom (vs. +0.3% expected) and overall household spending tumbled -2.2% yoy in June (vs. -0.4% expected), down from -1.1% in May. On the positive side, industrial production grew more than expected in June (+1.9% mom vs. +0.5% expected) and the jobless rate fell one-tenth to +3.1% in June (vs. +3.2% expected) which is the lowest in 21 years.

The rest of the bourses in Asia are weaker post the BoJ too. The Hang Seng is -0.82%, while the Kospi and ASX are -0.12% and -0.26% respectively. Markets in China are down a smidgen (Shanghai Comp -0.10%). It’s also worth noting that JGB yields have risen steeply. The 10y is 10.3bps higher currently at -0.182% and heading for the biggest one day move higher in yield since May 2013.

Today also sees the EBA bank stress tests released at 9pm BST. On this round there will be no pass or fail, just a host of information with the ultimate test outcomes feeding into supervisors’ review and evaluation process. 51 banks with a minimum of €30bn in assets and representing about 70% of total EU bank assets will be covered. The list also includes five Italian banks, however the total number of banks covered is down from 123 in the 2014 tests. The data released should be vast though and the 12,000 or so data points we got in 2014 should represent a reasonable example of the level of granularity to expect.

One of the criticisms before they’ve even been released the results is that one of the key stresses is what would happen under rising yield scenarios. It doesn’t seem to us that any scenario for prolonged negative yields are being modelled. Most banks would be delighted to see rising yields at the moment!! Also one might ask how much investor’s rely on it as since the last stress test in October 2014, where 99 out of 123 passed, the Euro bank equity index is down 38%. Having said that it will be a mine of information and much attention will focus on the Italian banks. We could still get an announcement on how Monte Paschi’s situation will be dealt with before or after the results. The FT is reporting that veteran Italian businessman Corrado Passero has teamed up with UBS to offer a last minute alternative rescue proposal, so keep an eye on that this morning. For more on explaining the Italian banking situation see my team’s note from Wednesday morning on bank capital from Michal Jezek. It’s not the main purpose of the note but the background is covered. Email him at Michal.Jezek@db.com if you haven’t got a copy.

The third part of the three-pronged attack of big events today is the Q2 GDP report in the US. Yesterday was a pretty important day for data in light of last minute revisions to today’s print. We learnt that the advance goods trade deficit in June widened more than expected to $63.3bn from $61.1bn after an increase in imports more than outweighed the modest increase in exports. Also important was the Census Bureau Report on Advance Economic Indicators which for the first time shed light on wholesale and retail inventories for the last month of a quarter prior to the GDP report. The report showed that wholesale inventories were little changed in June but retail inventories rose +0.5% mom. Given the trade and inventory data, the Atlanta Fed cut their Q2 GDP forecast for the second time in two days and now have growth pencilled in at +1.8% (from +2.3%). Market consensus is +2.5%, however DB’s Joe Lavorgna is at the low end of the forecasts with a +1.0% expectation.

Meanwhile, on the long and winding road towards Brexit it was interesting to see AstraZeneca up +7.19% and at all time highs yesterday. Clearly much of the +29% rally since Brexit is down to it being a dollar earner but a large part of yesterday’s move was put down to speculation (reported on numerous newswires including Bloomberg) that Novartis might be interested in acquiring it. Given the recent fall in sterling it’s fair to say that UK M&A (or talks of it) has picked up. Now it’s not clear that such a move for a multinational company is that relevant for the UK economy but it’s interesting that Brexit isn’t causing a lack of interest in UK based companies. One wonders whether the new UK PM would welcome such a stamp of approval in UK plc if it happened or whether she would be tempted to block it given her comments that the UK should be much more discriminative about selling its major companies to foreign owners. A dilemma.

Bookended by a slightly hawkish Fed reading on Wednesday and the anticipation of today’s BoJ, US GDP and EU stress events, yesterday in markets was all about the bumper release of corporate earnings out on both sides of the pond. Overall the numbers were relatively mixed. Facebook shares closed up +1.5% following the strong results after the close on Wednesday. Google parent company Alphabet rose +0.5% into the close and a further 5% in extended trading after beating both earnings and revenue estimates with some encouraging growth seen in cloud-computing. The other tech heavyweight to report was Amazon which continued the trend of both better than expected earnings and revenue for the quarter. In fact revenues were up an impressive 31% yoy with cloud computing also at the centre of that growth. Shares were up 5% in extended trading.

On the flip side, Ford Motor’s numbers were a little disappointing relative to market expectations, sending shares down 8%. Earnings per share trailed consensus by 8c, while the automaker also painted a bleaker picture for the second half of the year. Interestingly management also provided some quantitative guidance around the Brexit impact (the first that we’ve really seen) saying that they will likely face a headwind of $200m this year and $400-500m in each of 2017 and 2018 as a result.

Meanwhile in Europe Lloyds Bank profit declined less than expected, but shares fell 6% over capital concerns, with the bank also announcing 3000 job cuts after warning of an economic slowdown driven by Brexit. Rolls-Royce shares rallied 14% however after reporting a big beat in earnings, raising hopes that we might be starting to see a turnaround following five profit warnings in less than three years. Shell (-3%) reported the lowest quarterly earnings in 11 years, which also happened to be worse than expected.

European equity markets closed weaker with banks in particular under pressure following the Lloyds results and ahead of today’s stress tests. The Stoxx 600 closed -0.95% and peripheral bourses closed a 2% handle lower. Across the pond equity markets initially started on the back foot but bounced back into the close. The end result was little change on the day with the S&P 500 closing +0.16% and Dow -0.09%. The ongoing tumble for Oil continues to rumble away in the background meanwhile. WTI was down another -1.86% yesterday to close a shade above $41/bbl. It’s down over $3/bbl this week and it means that the -20.5% decline from the June 8th intraday highs puts oil back in a bear market. More data which underscored the pressure on building US inventories was blamed on the latest leg lower. Equity markets have largely ignored or to some extent decoupled from the move lower in oil over the last month or so. Brexit and the overwhelming focus on more central bank stimulus has taken over as the dominating factor.

In terms of the remainder of the data yesterday, in the US initial jobless claims ticked up 14k last week to 266k, although the four-week average continues to hover around a relatively lowly 256k. Meanwhile the Kansas City Fed’s manufacturing survey was a little disappointing with the print falling 8pts to -6 (vs. +2 expected). Elsewhere, Germany reported CPI a little higher than expected in July (+0.3% mom vs. +0.2% expected), which helped to nudge the YoY rate up one-tenth to +0.4%. Finally Euro area confidence indicators were resilient in July post Brexit. The headline economic confidence indicator rose 0.2pts to 104.6 (vs. 103.5) while indicators for business climate, industrial and services sectors all improved relative to June.

Looking at today’s calendar now, this morning in Europe we’re kicking off in France where shortly after we go to print France will report its Q2 GDP report. Germany retail sales follow this before we’re back to France with the July CPI report. The UK then follows this with the June money and credit aggregates data before we then get the July CPI report, June unemployment reading and Q2 GDP report for the Euro area. This afternoon in the US the aforementioned Q2 GDP report is clearly front and centre however there’s also other important data in the form of the employment cost index (expected to be +0.6% qoq), Chicago PMI for July (expected to decline 2.8pts to 54.0) and the final revisions to the July University of Michigan consumer sentiment report. There’s also a bit of Fedspeak to contend with with Williams (2.30pm BST) and Kaplan (6.00pm BST) both scheduled. Away from that, the EU bank stress tests at 9pm BST will draw huge interest over the weekend. On the earnings front it’s another busy day with 18 S&P 500 companies reporting including Merck, Exxon Mobil and Chevron all at or just prior to the open. In Europe both UBS and Barclays will report, along with Monte dei Paschi.

ASIA MARKETS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 14.98 POINTS OR 0.50%/ /Hang Sang closed DOWN 282.97 OR 1.28%. The Nikkei closed UP 92.43 POINTS OR 0.56% Australia’s all ordinaires  CLOSED up 0.10% Chinese yuan (ONSHORE) closed UP at 6.6505/Oil fell to 41.04 dollars per barrel for WTI and 42.28 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.6587 yuan to the dollar vs 6.6505 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS SLIGHTLY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES  

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

Last night and early this morning turmoil was the order of the day for Japan

Let’s start with a chronological order of events:

First:  Japanese bond futures were halted at 9:30 pm est (8:30 am Japanese time zone) without warning: Dealers claim that the Bank of Japan killed the Japanese bond market:

(courtesy zero hedge)

Japanese Bond Futures Halted Without Warning

At 2051ET, Japanese government bond futures suddenly halted trading. There was no limit moves or sudden surge in volume and the Osaka Excchange has confirmed it is investigating the reasons for the halt. Following the earlier flash-crash in USDJPY, one wonders just what is going on.. and what is coming?

  • *TOKYO EXCHANGE CONFIRMS HALT OCCURRED IN 10-YR JGB FUTURES

And sure enough once everyone started to look:

  • *JGB FUTURES RESUMED; HALT BETWEEN 9:51 TO 10:12 A.M. TOKYO

Following this week’s terrible tail in the 2Y JGB auction, and repeated claims by primary dealers that BoJ had killedthe JGB market, it is unsurprising that such a ‘glitch’ could happen… but within an hour of the biggest BoJ announcement in history is too suspicious.

end

Then: Second:  10 pm est

USA/JPY plunges again to the 104. mark:

(courtesy zero hedge)

(courtesy zero hedge)

b) REPORT ON CHINA

The following should get on the nerves of USA policy folk:  Russia and China will hold joint naval drills in the South China Sea

(courtesy zero hedge)

Russia And China Will Hold Joint Naval Drills In Contested South China Sea

When on July 12 we described the symbolic, if utterly meaningless ruling by the Hague’s Permanent Court of Arbitration on July 12, according to which China had no legal claim on most of the South China Sea (obviously, a ruling that China said repeatedly both before and after it would ignore), we said that “Ironically, in attempting to stem China’s territorial expansions in the region, the tribunal will likely just provoke Beijing even more.”

Just over two weeks later we got the first official confirmation that this is precisely what has happened, when overnight China’s Defense Ministry announced that China and Russia would hold “routine” naval exercises in the contested area in the South China Sea this coming September, “adding that the drills were aimed at strengthening their cooperation and were not aimed at any other country.”

Translation: the drills are aimed at the US, whose diplomatic relationship with “uber hacker” Russia is the worst it has been since the cold war, and whose ties with China have been deteriorating over the past several years, and culminating with July’s ruling which clearly pinpointed the biggest geopolitical tension point – the South China Sea.

As Reuters trivially adds, “the exercises come at a time of heightened tension in the contested waters after an arbitration court in The Hague ruled this month that China did not have historic rights to the South China Sea and criticized its environmental destruction there. China rejected the ruling and refused to participate in the case.”

“This is a routine exercise between the two armed forces, aimed at strengthening the developing China-Russia strategic cooperative partnership,” China’s defense ministry spokesman Yang Yujun told a regular monthly news conference.

“The exercise is not directed against third parties.”

Of course, it isn’t.

While China and an isolated by the west Russia, have been developing increasingly closer commercial ties over the past several years, including bilateral currency swaps, a major natural gas pipeline, and joint exploration projects, so far the two countries had not had a chance to demontrate the tight nature of their Eurasian geopolitical “axis.” Furthermore, China and Russia are veto-wielding members of the U.N. Security Council, and have held similar views on many major issues such as the crisis in Syria. This has repeatedly put them at odds with the United States and Western Europe.

Last year, they held joint military drills in the Sea of Japan and the Mediterranean. However, nowhere has the tension been higher than in the South China Sea, which is precisely where China will show the US how is boss. And it will have Russia by its side.


Chinese and Russian naval vessels participate in the Joint Sea-2014 naval drill
in the East China Sea, May 24, 2014.

Naturally, White House spokesman Josh Earnest played down the significance of the exercises even though he conceded that the South China Sea was “a sensitive diplomatic topic right now”.

“I don’t know what exercises they are planning, but in the same way the United States and China have a military-to-military relationship, I’m not surprised that Russia and China are seeking to build upon their military-to-military relationship as well,” he told a regular briefing.

The question then is whose military-to-military relationship is more important to Beijing.

China has recently taken part in U.S.-led multinational naval drills in the Pacific and a U.S. defense official said he did not expect the China-Russia exercises to affect U.S. military activity or behavior in the South China Sea.

“We’re not concerned about the safety of U.S. vessels in the region as long as interactions with the Chinese remain safe and professional, which has been the case in most cases,” the official said. Except for those cases in which it wasn’t.

China claims most of the South China Sea, through which more than $5 trillion of trade moves annually. Brunei, Malaysia, the Philippines, Taiwan and Vietnam have rival claims.

China has repeatedly blamed the United States for stoking tension in the region through its military patrols, and of taking sides in the dispute. The United States has sought to assert its right to freedom of navigation in the South China Sea with its patrols and denies taking sides in the territorial disputes.

And this is why September’s drills are important: Russia has been a strong backer of China’s stance on the arbitration case, which was brought by the Philippines. Yang said China and Russia were comprehensive strategic partners and had already held many exercises this year.

“These drills deepen mutual trust and expand cooperation, raise the ability to jointly deal with security threats, and benefit the maintenance of regional and global peace and stability,” he said.

And, as time goes by, Russia and China will only become closer strategic partners, to the exclusion of the US and Washington’s own Pacific Rim sphere of influence.

end

EUROPEAN ISSUES

Interesting! the IMF admits it’s policy was responsible for the Greek depression.

Also in its analysis,  why did this happen?

“If indeed final restructurings are important for growth, why has the Troika (IMF, ECB, and European Commission) essentially condemned Greece to a vicious cycle of debt re-negotiations, austerity and unsustainable expectations?”

(courtesy zero hedge)

IMF Studies Sovereign Debt Restructurings, Admits Its Policy Was Responsible For Greek Depression

It appears causing an economic depression and significantly deteriorating life expectancy in Greece is not enough for the IMF.

In a paper published this month, the IMF seeks to study the relationship between GDP and sovereign debt restructuring using data from 1970-2010. Its main conclusion may be shocking: “the central finding of this paper is that sovereign debt restructurings with external private creditors can affect per capita GDP growth performance in the years after debt restructuring.“ And these are the people in charge of advising nations on managing their economy…

The paper continues with the following insight “we find that there are bad and good (or “not so bad”) debt restructurings for growth. Growth generally declines following a debt restructuringoperation; however, restructurings that allow countries to exit a default spell (i.e., final restructurings) lead to significant improvements in growth performance in the aftermath of the debt operation, with the effect being persistent over time.

Final restructurings are good for growth because they reduce countries’ debt (in NPV terms), and the lower the post restructuring debt is, the better the post restructuring growth performance for any given level of debt relief.

These results suggest that there is a difference between addressing debt sustainability and debt overhang issues.

While final restructurings supposedly address immediate debt sustainability issues and allow a country to exit default, they are important for growth if they address countries’ debt overhang issues and leave the country with a relative low debt ratio. These results can help to inform the policy debate concerning what to expect from different forms of restructuring”

Two interesting questions arise from this paper in our opinion: 1) Why is the Greece restructuring (2012) excluded from the analysis, especially considering that it is the largest sovereign restructuring in history? 2) If indeed final restructurings are important for growth, why has the Troika (IMF, ECB, and European Commission) essentially condemned Greece to a vicious cycle of debt re-negotiations, austerity and unsustainable expectations?

 

end

 

Monte de Paschi is only bank to fail the latest stress test:

(courtesy zero hedge)

Monte Paschi Fails European “Stress Test” Meant To Restore Confidence In Europe’s Struggling Banks

Moments ago, the European Banking Authority published the 2016 bank stress test results, whose purpose – as every other year –  is to inspire confidence in Europe’s struggling banks; it differs from a market-based assessment of bank stress – that particular “test” can be seen by observing the stock prices of such giant banks as Deutsche Bank and Credit Suisse, both of which recently hit all time lows.

As previewed yesterday, Italy’s 3rd largest, and most insolvent bank, Banca Monte di Siena was the worst performer in European regulators’ stress tests, and the only lender to have its capital wiped out in the exam.  According to Bloomberg, Monte Paschi’s common equity tier 1 capital ratio, a key measure balance sheet strength, would to a negative 2.2% in an adverse economic scenario, the test revealed, which put lenders through a simulation of a severe recession over three years. Another Italian bank, UniCredit, would see its ratio fall to 7.1% , the second-worst result of the five Italian lenders being examined.

Needless, to say, the test – as structured – was a farce from the beginning as it did not account for negative interest rates, something Europe has trillions of, nor did it test for Brexit. Finally, the test did not include any banks from Greece of Portugal, where virtually all banks are currently insolvent.

While the exam of 51 lenders is breaking with past practice by having no pass/fail mark, it’s intended to give supervisors across the European Union a common basis for measuring and bolstering lenders’ financial resilience. The test has taken on additional importance as the Italian government weighs methods to shore up Monte Paschi, and the capital shortfall identified in the test may open the door to public support.

“The EBA’s stress test is not a pass or fail exercise,” Andrea Enria, chairman of the EBA, said in a statement releasing the results Friday. “Whilst we recognize the extensive capital raising done so far, this is not a clean bill of health. There remains work to do.”

The summary of results is shown below:

The detailed breakdown with full capital impairments under an “adverse case”, which does not test for NIRP at all – i.e., Deutsche Bank’s biggest complaint – is below.

 

As shown above, Allied Irish Banks, the second-poorest performer in the adverse scenario, had a CET1 ratio of 4.31%. Deutsche Bank AG’s ratio fell 3.32 percentage points to 7.8 percent through 2018 from its starting point under the adverse scenario. What is most ironic, is that DB’s biggest lament, and the reason why it posted a 98% plunge in profit, namely NIRP, was not even contemplated in the “adverse case.”

The farcical test also revealed that more than three-quarters of the 51 lenders maintained a CET1 ratio of more than 8%.

The legal minimum for all banks is a CET1 ratio of 4.5% , in other words European bank regulators are praying that investors will believe that one Italian bank is the only one that needs an urgent capital injection. Incidentally, just minutes before the announcement of the stress test, Monte Paschi announced that it had managed to obtain the needed €5 billion in fresh outside private capital.

Regulators also ask banks to hold another 3.5% of risk-weighted assets in subordinated debt, as well as a series of buffers, which are made up of common equity. On top of that, supervisors add additional requirements for each lender, while banks deemed systemically important must have an extra cushion of capital to help absorb the damage their failure would cause.

The European Central Bank, which supervises 37 of the lenders in the test, has said it will use a 5.5% ratio in the stressed scenario as an informal benchmark for lenders’ resilience. The final requirement set will move up or down from that level to take account of banks’ individual business models.

* * *

The adverse scenario applies shocks to economic output, interest rates and exchange rates, as well as plunging real estate prices. As noted above, analysts have questioned the reliability of the exam because the scenario doesn’t include flat or negative interest rates, the U.K. decision to leave the EU, and doesn’t include any lenders from Portugal or Greece.

In other words, the test – which in previous years “passed” such failed banks as Spain’s Bankia and Belgium’s Dexia, is mere whitewash, designed to boost confidence in Europe’s banking sector.

And with DB stock recently trading at all time lows, we doubt it will succeed. Notably, Deutsche Bank CEO John Cryan has sent a reassuring note to staff but ends with a somewhat ominous tone:

Our environment is challenging and may become more so in the months ahead. The stress test results indicate that Deutsche Bank is well-equipped for tough times.”

As we reported earlier today, Monte Paschi approved a plan to tap investors for the third time in two years by selling stock to replenish capital, according to a board member. While Monte Paschi is seeking to raise funds through private means, Italy has held talks with the European Commission seeking approval to back the bank’s recapitalization with state funds. Italy’s lenders are saddled with about 360 billion euros of non-performing loans, a legacy of years of economic stagnation. Unlike Spain’s bailout in 2012, the Italian authorities didn’t force banks to resolve the situation. The ECB has now taken over supervision of the country’s biggest lenders and its demands for action have helped bring matters to a head.

* *  *

Here is the official statement from the EBA:

EBA publishes 2016 EU-wide stress test results

  • From a starting point of 13.2% CET1, the stress test demonstrates the resilience of the EU banking sector to an adverse scenario with an impact of 380 bps CET1 on average
  • The stress test does not contain a pass/fail threshold. It will instead inform supervisors’  ongoing review of banks and guide their efforts to maintain capital in the system and support the ongoing repair of balance sheets
  • Exceptional transparency is provided, with over 16 000 data points per bank, to foster market discipline

The European Banking Authority (EBA) published today the results of the 2016 EU-wide stress test of 51 banks from 15 EU and EEA countries covering around 70% of banking assets in each jurisdiction and across the EU.  The objective of the stress test is to provide supervisors, banks and other market participants with a common analytical framework to consistently compare and assess the resilience of large EU banks to adverse economic developments.  Along with the results, the EBA is providing again substantial transparency of EU banks’ balance sheets, with over 16,000 data points per bank, an essential step towards enhancing market discipline in the EU.

The EU banking sector has significant shored up its capital base in recent years leading to a starting point capital position for the stress test sample of 13.2 % CET1 ratio at the end 2015. This is 200 bps higher than the sample in 2014 and 400 bps higher than in 2011.  The hypothetical scenario leads to a stressed impact of 380 bps on the CET1 capital ratio, bringing it across the sample to 9.4% at the end of 2018.  The CET1 fully loaded ratio falls from 12.6% to 9.2%, while the aggregate leverage ratio decreases from 5.2% to 4.2% in the adverse scenario.

The impact is driven by:

  • credit risk losses of €-349 bn contributing -370 bps to the impact on the CET1 capital ratio.
  • operational risk (€-105 bn or -110 bps) of which conduct risk losses contributed -€71 bn or -80 bps to the CET1 impact
  • market risk across all portfolios including CCR (€-98bn or -100bps).

The impact is partially offset by pre provision income flows, although these too are subject to stress factors and constraints in the methodology. For instance net interest income falls 20% in the adverse scenario from 2015 levels.

The 2016 EU-wide stress test does not contain a pass fail threshold. Instead it is designed to support ongoing supervisory efforts to maintain the process of repair of the EU banking sector.

The stress test will therefore be an important input into the supervisory review process in 2016.

As the stress test has a range of constraints designed to ensure comparability and consistency, supervisors will assess mitigating management actions before deciding on the appropriate supervisory action, of which a wide range may be employed. The focus in 2016 will, however, be on setting Pillar 2 Guidance to banks to maintain capital that can support the process of repair and lending into the real economy. Although pillar 2 Guidance is not a legal minimum, and does not impact the threshold for the Maximum Distributable Amount, banks are expected to follow guidance in normal circumstances.

Acting as a central data hub for the entire EU, the EBA is publishing both aggregate results of the EU-wide exercise and granular data for each bank, including detailed information at both the starting and end point of the exercise, under the baseline and the adverse scenarios.

* * *

The full analysis is shown below (link)

RUSSIAN AND MIDDLE EASTERN AFFAIRS

TURKEY

The USA remains silent as Turkey creates a “Traitors Cemetery for dead coup plotters. An edict states that no one is allowed to pray for them:

(courtesy zero hedge)

Turkey Creates “Traitors’ Cemetery” For Dead Coup-Plotters

Following the “credible evidence” provided by Amnesty International on the torture and mistreatment of alleged coup-plotters in Turkey, The Associated Press’ Cinar Kiper and Elena Becatoros report that,tucked in the back corner of a construction site for a new dog shelter in eastern Istanbul lies a freshly dug, unmarked grave — the first in the new “Traitors’ Cemetery,” created specifically to hold the bodies of coup plotters who died in the July 15 abortive putsch.

In the week following the attempted coup in Turkey, which killed about 290 people, the municipality announced it intended to set up a cemetery specifically for those involved — people that officials have branded as traitors undeserving of a proper burial. About 24 coup plotters are believed to have been killed that night.

Authorities would “reserve a spot and call it a traitors’ cemetery. Passers-by will curse them,” Istanbul Mayor Kadir Topbas said in remarks carried by the Dogan News Agency. “May every passer-by curse them and let them not rest in their tombs.”

The creation of the cemetery comes amid a widespread crackdown in the aftermath of the coup. Nearly 16,000 people have been detained, including about 10,000 military personnel; displays of patriotism abound, with many Turks flying national flags from the windows of their apartments or cars; and nightly pro-government rallies are held in cities across the country.

Turkey’s Directorate of Religious Affairs issued a directive denying funeral prayers and services for those who died while trying to overthrow the government. Such prayers, it said, were intended for the faithful as an act of exoneration, “but these people, with the action they undertook, have disregarded not just individuals but also the law of an entire nation and therefore do not deserve exoneration from the faithful.”

Andrew Gardner, Turkey researcher for the Amnesty International rights group, said such moves were “contributing to what is a pretty poisonous atmosphere and a dangerous atmosphere” in the aftermath of the failed coup.

“Denying people religious services and decent burial is a basic denial of people’s rights. In any normal circumstances such statements would be unimaginable,”Gardner said.

Construction was quick. In two days, workers had built a low stone wall around a patch of land in the back of the site that will hold a new shelter for some of Istanbul’s many stray dogs. A black metal sign was put up Monday, with the words “Traitors’ Cemetery” in white.

The first — and so far, only — body arrived in an ambulance Monday, the workers say. No prayers were said and no ceremony was held for the burial beneath a dying pine tree.

The workers aren’t sure who lies beneath the rough mound of earth, stones and broken pine branches, but local media say the first to be interred there was Mehmet Karabekir, a 34-year-old captain and father of two. His mother, they reported, refused to claim his body, so he was taken to the new cemetery.

Next to his lie three more graves — deep, open trenches dug out of the rocky ground with heavy machinery, waiting for new arrivals. The workers haven’t been told when more bodies might come.

All they know, workers said Wednesday, is that they were told to build a dry stone wall in a corner of the construction site, and dig some graves

“Those who disrespect this nation will not be allowed to rest even in their tombs,”Topbas said in a speech Monday night.

Deep within the animal shelter construction site, the cemetery isn’t accessible to the public. But some of those at the existing makeshift dog shelter next door were furious to hear the newly announced cemetery had already been constructed in their area.

“They should have buried them somewhere far from our animals. I wish we didn’t know those traitors were here. We don’t want them,” said Serhan Baturay, a 57-year-old volunteer who also runs animal welfare groups.

“They shouldn’t be placed near our dogs, they shouldn’t be anywhere in Turkey,” she said. “They should be cremated and their ashes tossed into the ocean. There shouldn’t be a trace of them anywhere in the country. As a Turkish citizen I don’t want such a thing.”

And through all of this… Washington has been eerily silent…

end

EMERGING MARKETS

Venezuela which is rich in resources has now been reduced to a new “forced labour” law

 

(courtesy zero hedge)

From Socialist Utopia To Slave-Nation – Venezuela Unveils Shocking “Forced Labor” Law

While we here in the United States debate pressing issues in the wake of the upcoming Presidential election, like the urgent need for gender-neutral bathrooms, the people of Venezuela remain entrenched in a food crisis that continues to sow widespread unrest which has become increasingly violent in recent months (see our post here).  So what do you do if you’re the President of a Socialist government with mounting civil unrest and growing political opposition seeking your ouster via a recall referendum?  Well you enslave your entire nation, of course.  

As Vice News reports, President Nicolás Maduro signed a new law last week that requires “all workers from the public and private sector with enough physical capabilities and technical know-how” to work in agricultural fields on demand.  The new law mandates that citizens can be required to work in the agricultural sector for a period of 60 days which can be extended “if the circumstances require it.”

While we’re “sure” President Maduro’s intentions are good, we’re somewhat skeptical of his plan.  As we recently reported (here), the real issue at hand in Venezuela is, of course, the hyperinflation death spiral gripping the Socialist nation in the wake of the collapse of their oil-dependent economy.  As Miguel Pérez Abad, minister of industry and business, recently told Reuters the decline in domestic production is being exacerbated by plummeting imports which are likely to fall by 60 percent this year, compared to 2015.  As a local baker pointed out, “We cannot make more subsidized bread with the current cost of flour.  We always end up losing, but we cannot afford to stop making bread either.”

Per the FT, local merchants are being forced by an increasingly oppressive military to sell groceries at a loss to avoid civil unrest:

“They went into all the shops in the area, forcing us to sell at a loss,” says Daniel, not his real name, of the incident earlier this month. The army men demanded that Daniel sell his beef at 250 bolívares (roughly $0.25 at black market rates) a kilo, even though he explained it cost 3,000 bolívars to buy from his suppliers.

 

“They told me the beef belonged to the people and stayed seven hours as a huge queue formed outside.”

Not wanting to be outdone by his U.S. counterparts who masterfully utilize complicit media outlets to control news cycles at their will (see our recent post here), President Maduro has repeatedly taken to the airwaves to blame the food shortages in Venezuela on an “economic war” waged by right-wing businesses, and supported by US imperialism, who seek to bring down his Socialist regime.  Just last month, Maduro declared a 60-day state of emergency based on his fears that the U.S. was plotting a coup attempt.  Per Vice News:

He alleges that business owners are sabotaging the economy in an effort to force him out. Maduro accuses them of wanting to bury the socialist legacy of his popular predecessor, President Hugo Chávez, who created a solid base of support among the poor thanks to oil-subsidized social programs and price-controlled food.

Meanwhile, Antonio Pestana, chief of Venezuela’s farming association, indicated that Venezuela’s food crisis was a simple issue related to the underutilization of available ag land, telling reporters last month that only 25 percent of agricultural land is actually being farmed in Venezuela.  While we don’t doubt Mr. Pestana’s figures, we’re not sure how enslaving a nation of people helps to alleviate Venezuela’s food crisis.  Without the ability to import critically important irrigation equipment and fertilizer supplies, due to a useless currency, we’re not sure what use additional ag labor will be.  We’ve heard that singing to plants can help improve yields, perhaps that is the plan?

 

OIL MARKETS/OIL ISSUES

This fully integrated oil company is providing a Bellwether into its industry:

(courtesy zero hedge)

ExxonMobil Tumbles To 2-Month Lows After Earnings Miss Worst Analyst Expectation

But, but, but the dividend yield, the oil recovery? ExxonMobil is down almost 3% in the pre-market to 2-month lows as it misses earnings expectations drastically (+41c vs 64c exp.. below the lowest expectation of +55c). Production levels also missed expectations as it appears the oil glut has trickled down to motor fuels, dragging refinery margins notably lower.

  • *EXXONMOBIL 2Q EPS 41C, EST. 64C; PRODUCTION MISSES EST.
  • *EXXONMOBIL 2Q PRODUCTION 3.96MBOE/D VS EST. 4.1MBOE/D

The market is not happy…

end

 

Oil rises today despite higher OPEC production.  The reason why?  the lower dollar!

(courtesy zero hedge)

Oil Surges After OPEC Production Hits Record High: Here’s Why

Now that the narrative of rising gasoline demand and a “strong summer driving season” is finally over, courtesy of gasoline stocks that just refuse to drop…

… and a glut in PADD1 that has never been greater…

… defenders of the “bull” crude oil thesis are stumped. “Doubts are rife as to whether the oil supply imbalance is indeed slowly drawing to an end,” Stephen Brennock of oil brokerage PVM, said.

So with no fallback “story” both WTI and Brent are down 20% since their last peak in June, as another bear market for oil has arrived.

Worse, earlier today we got confirmation that another parallel narrative, namely that OPEC is cutting its production, is also dead and buried.  According to a Reuters survey, OPEC’s oil output is likely in July to reach its highest in recent history, as Iraq pumps more and Nigeria manages to export additional crude despite militant attacks on oil installations. Top OPEC exporter Saudi Arabia has kept output close to a record high, the survey found, as it meets seasonally higher domestic demand and focuses on maintaining market share rather than trimming supply to boost prices. Supply has been rising since OPEC abandoned in 2014 its role of cutting supply to prop up prices as major producers Saudi Arabia, Iraq and Iran pump more.

According to the survey, OPEC supply rose to 33.41 million barrels per day in July from a revised 33.31 million bpd in June.

There’s more: OPEC’s production could rise even further should talks to reopen some of Libya’s oil facilities succeed. Conflict has been keeping Libyan output at a fraction of the pre-war rate. “This could shortly release more oil into an already abundantly supplied market,” Carsten Fritsch of Commerzbank said, although earlier hopes of a restart have not been realized. “It therefore remains to be seen whether this time will be different.”

It won’t be different.  As Reuters notes, OPEC’s output has climbed due to the return of former member Indonesia in 2015 and another, Gabon, this month, skewing historical comparisons. July’s supply from the remaining members, at 32.46 million bpd, is the highest in Reuters survey records, starting in 1997.

In July, the biggest increase of 90,000 bpd has come from Iraq, which has exported more barrels from its southern and northern ports despite a pipeline leak that restrained southern exports.

Nigeria, where output has been hit by militant attacks on oil facilities, has nonetheless exported slightly more in July than June, the survey found, although crude exports remain significantly below the 2 million bpd seen in early 2016.

Output in two major producers is largely stable. Iran, OPEC’s fastest-growing source of supply expansion this year after the lifting of Western sanctions, has pumped only 20,000 bpd more as the growth rate tops out for now, the survey found.

Saudi output in July was assessed at 10.50 million bpd, close to June’s revised rate and the record 10.56 million bpd reached in June last year.

And yet, despite the return of the record OPEC oil production, crude is now higher on the day, for one simple reason: oil is inversely correlated with the dollar. And thanks to today GDP shock, which showed that the US economy grew far slower than expected, the dollar has crashed.

As Bloomberg further adds, “WTI erases losses as dollar extends declines.

Confused? Don’t be: it adds that “Dollar weakness follows disappointing U.S. GDP data, consumer confidence, according to Phil Flynn, senior market analyst at Price Futures Group in Chicago.”

In other words, the worse the US data, the better for oil.

And with S&P correlation algos today programmed to only track the oil price signal, this means that after sliding shortly after the GDP report, the S&P500 is now back at intraday highs, and on pace to hit new all time highs.

To summarize: bad economic news -> weak dollar -> higher oil -> record S&P500.  Rinse, repeat.

And that’s how terrible news is great news again.

 

end

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

Euro/USA   1.1109 UP .0027 (STILL  REACTING TO BREXIT/

USA/JAPAN YEN 103.44  DOWN 1.383(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA HELICOPTER MONEY  ON THE TABLE BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.3158 DOWN .0003(MORE STIMULUS PLANNED)

USA/CAN 1.3167 UP .0015

Early THIS FRIDAY morning in Europe, the Euro ROSE by 27 basis points, trading now JUST above the important 1.08 level RISING to 1.1091; 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 14.98 POINTS OR .50%   / Hang Sang CLOSED DOWN 282.97 POINTS OR 1.28%    /AUSTRALIA is HIGHER BY .10% / EUROPEAN BOURSES  ALL IN THE GREEN EXCEPT LONDON

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 UP 92.43 POINTS OR 0.56%  

Trading from Europe and Asia:
1. Europe stocks ALL STOCKS IN THE GREEN EXCEPT LONDON

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 282.97 POINTS OR 1.28%  ,Shanghai CLOSED DOWN 14.98 OR .50%    / Australia bourse in the green: /Nikkei (Japan) closed UP 92.43 POINTS OR .56%/INDIA’S Sensex IN THE GREEN  

Gold very early morning trading: $1335.00

silver:$20.09

Early FRIDAY morning USA 10 year bond yield: 1.523% !!! UP 1  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 2.249 UP 1 in basis points from THURSDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early FRIDAY morning: 96.29 DOWN 37 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

END

And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  2.94% DOWN 3 in basis points from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.190% DOWN 8  in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD: 1.02% DOWN 7 IN basis points from THURSDAY( this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.17 DOWN 3 in basis points from THURSDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 15 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -.1120% DOWN 2 IN  BASIS POINTS ON THE DAY

END

IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.1169 UP .0088 (Euro UP 88 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 101.94 UP 2.890(Yen UP 289 basis points/

Great Britain/USA 1.3221 UP 0.0060 ( Pound UP 60 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/

USA/Canada 1.3010-DOWN 0.0141 (Canadian dollar UP 141 basis points AS OIL ROSE (WTI AT $41.38). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 88 basis points to trade at 1.1169

The Yen ROSE to 101.94 for a GAIN of 289 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was UP 60 basis points, trading at 1.3221 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CONCERNS ON BREXIT/CONCERNS ON TERRIBLE PMI

The Canadian dollar ROSE by 141 basis points to 1.3010, WITH WTI OIL AT:  $41.38

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6370

the 10 yr Japanese bond yield closed at -.190% UP 8  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 6 IN basis points from THURSDAY at 1.453% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.185 DOWN 5  in basis points on the day /

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

Your closing USA dollar index, 95.50 DOWN 120 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 2.27 OR 0.06%
German Dax :CLOSED UP  62.57 OR  0.61%
Paris Cac  CLOSED UP 19.23  OR 0.44%
Spain IBEX CLOSED DOWN 108.00 OR 1.27%
Italian MIB: CLOSED DOWN 324.22 OR 1.96%

The Dow was DOWN 24.11 points or 0.13%

NASDAQ  UP 7.15 points or 0.14%
WTI Oil price; 41.38 at 4:30 pm;

Brent Oil: 43.36

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  65.94 (ROUBLE UP  96/100 ROUBLES PER DOLLAR FROM THURSDAY) 

TODAY THE GERMAN YIELD FALLS TO -.112%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:41.38

BRENT: 43.36

USA 10 YR BOND YIELD: 1.453% 

USA DOLLAR INDEX: 95.50 DOWN 120 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3221 UP .0060 or 60 basis pts.

German 10 yr bond yield at 5 pm: -.079%

END

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

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

 

S&P Hits Record Highs After BoJ, GDP Disappointment

This happened…

So this seemed appropriate…

Some high-/low-lights:

  • Nasdaq best month since Oct 2015
  • FANG’s best week since July 2015
  • S&P longest narrow trading streak in 45 years
  • HY Credit’s worst week in 3 months
  • Crude’s worst month in a year
  • USD Index worst week in 3 months
  • Yen’s biggest 2-month surge since Dec 08
  • Gold’s best week in 2 months (up 7 of 9 weeks)

July saw the post-Brexit central-bank-buying-spree-driven surge continue…but it was a month of two halves (early ramp, later ‘stability’),  July was best month since March for the Dow, S&P, Small Caps, and Trannies but Nasdaq was the biggest winner (best month since Oct 2015)…

 

Stocks led the month, despite a collapse in oil (worst month in a year), but bonds and bullion were bid too…

 

While stocks surged to start the months, they end with the longest narrow (<1%) range in 45 years… (Ryan Detrick, senior market strategist at LPL Financial, noted on Twitter that Thursday marked the 11th straight day the S&P 500 closed inside a 1% trading range, the first time this has ever happened, according to records going back to 1970. So for the first time since at least the Nixon administration, stocks have been stuck inside an insanely tight window.)

 

On the week, Trannies are down 2 weeks in a row, The Dow lost for the first time in 5 weeks, S&P battled with 2175 all day to extend the streak of wins to 5 weeks… but Small Caps and Nasdaq comfortably held 5 weeks straight wins…

 

VIX was utterly crushed to 11.77 to desperately get S&P 500 above 2175 for a green close on the week…BUT FAILED

 

FANG stocks were the big driver for NASDAQ… best week in a year…

 

Here is Dow Futures for the last 24 hours – total chaos last night as The BoJ hit but no matter what there was a bid…

 

Dow and Trannies were red on the day…

 

Stocks were maintained by Oil algos…

 

Credit markets suffered this week, despite equity exuberance, with HY’s worst week in almost 3 months…

 

Note that following today’s dismal GDP data (after The BoJ’s disappointment) traders bought everything…

 

The USD Index tumbled today (3rd biggest drop of the year and worst week in 2 months) as Yen surged (most in 6 weeks) after Kuroda’s disappointment (and shitty GDP gives The Fed yet more excuses)…

 

The last 2 months have seen the biggest surge in Yen since Dec 08…

 

Treasury yields crashed over the last 24 hours as BoJ and GDP disappointed… with the yield curve back near cycle flats/lows…

 

Bonds and stocks decoupled at the GDP print…

 

This was Crude’s worst month since July 2015 (down 3 of the last 4 weeks)

 

Ugly week for crude, copper flat, but PMs surged…

 

Crude tracked USD index all day…

 

With Sept 2016 WTI breaking its 200DMA and back below Doha Fail Lows…and YTD red

 

Charts: Bloomberg

end

The following should shake up the Street:  The USA 2nd quarter GDP instead of rising by 2.6% rose by only 1.2%.  Not only that but first quarter GDP was revised from the already low 1.2% down to .8%

(courtesy zero hedge)

GDP Shocker: US Economy Grew Only 1.2% In Second Quarter; Q1 Revised To 0.8%

With Wall Street expecting the US economy to grow 2.6% in the second quarter, there were many shocked faces moments ago when the Census Bureau reported that not only did the US economy grow a paltry 1.2% in the quarter, but Q1 GDP was slashed from an already poor 1.1% to just 0.8%.

A breakdown of the underlying data via Bloomberg:

For the first quarter of 2016, real GDP is now estimated to have increased 0.8 percent; in the previously published estimates, first-quarter GDP was estimated to have increased 1.1 percent. The  0.3-percentage point downward revision to the percent change in first-quarter real GDP primarily reflected downward revisions to residential fixed investment, to private inventory investment, and to  exports that were partly offset by upward revisions to nonresidential fixed investment, to PCE, to state and local government spending, to imports, and to federal government spending.

Just as bad, strong historical GDP reports such as the 3.9% alleged growth in Q2 2015 which served as the springboard for the Fed’s rate hike rhetoric in mid-2015, was slashed to a far lower 2.6%.

As of this moment, the economy has grown at less than a 2% pace for three straight quarters. Since the recession ended seven years ago, the expansion has failed to achieve the breakout seen in past recoveries. The average annual growth rate during the current business cycle remains the weakest of any expansion since at least 1949.

The reason for the dramatic cuts: historical revisions going back to Q1 2013. From the BEA:

Updated estimates of the national income and product accounts (NIPAs), which are usually made each July, incorporate newly available and more comprehensive source data, as well as improved estimation methodologies. This year, the notable revisions primarily reflect the incorporation of newly available and revised source data. The timespan of the revisions is the first quarter of 2013 through the first  quarter of 2016. The reference year remains 2009.

It now appears that at a time when the US economy was said to be approaching escape velocity for a rate hike, it was in fact contracting. According to the latest data, in Q4 when Yellen announced the Fed’s first rate hike, the growth trend economy was in fact decelerating, growing by only 0.9%, the lowest since Q1 2014.

Some more details:

  • Core PCE 1.7%, far below Q1’s downward revised 2.1%
  • GDP deflator: 2.2%, Exp. 1.8%, and up from 0.5%

From the BEA:

Real gross domestic product increased at an annual rate of 1.2 percent in the second quarter of 2016 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 percent (revised).

The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE) and exports that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

The acceleration in real GDP growth in the second quarter reflected an acceleration in PCE, an upturn in exports, and smaller decreases in nonresidential fixed investment and in federal government spending. These were partly offset by a larger decrease in private inventory investment, and downturns in residential fixed investment and in state and local government spending.

There was some good news in the report: In the second quarter, consumer spending rose strongly. Personal consumption, which accounts for more than two-thirds of economic output, expanded at a 4.2% rate, the best gain since late 2014. Outlays on goods advanced 6.8%. Spending on services climbed 3%. As part of the revision, a major adjustment was the contribution from Housing and utilities, which in Q2 supposedly added $43 billion to Personal Consumption, while Healthcare, traditionally the best performing category, only added $28.4 bilion. We are confident this number will be revised shortly again.

However, nonresidential fixed investment, a measure of business spending, declined at a 2.2% pace, the third straight quarterly drop. Companies spent less on buildings and equipment.

It appears capex matters.

Weak business investment is confirmation that firms don’t have confidence in the global economy. Manufacturers especially have been challenged by a strong dollar, which makes U.S.-made goods more expensive overseas. The energy industry has also been constrained with relatively low oil and natural gas prices curtailing investments in mining and wells.

Firms also paired back inventories sharply. The change in private inventories subtracted 1.16 percentage points from overall growth. That was the category’s fifth-straight decline and the largest drag from inventories in two years.

We will breakdown the revised numbers shortly, but with this latest data in the Fed’s hands it looks like any rate hike hopes for September, or any time soon for that matter, were just crushed.

end

The national Chicago manufacturing PMI remains flat.  However we witness a drop in production as well as a drop in new orders;

(courtesy Chicago PMI/zero hedge)

Chicago PMI ‘Steady’ At 18-Month Highs Despite Drop In Production, New Orders Slide

The USA admits that its data in the calculation of GDP is faulty: namely seasonal adjustments when you have central bank interventions creates the distortion:

(courtesy zero hedge)

US Admits It “Found A Problem” In Calculation Of GDP

For years we have complained against both the BLS’ and the BEA’s comical seasonal adjustments, which “serve” just one purpose: to goalseek the data to a desired, politically-mandated outcome, and which culminated last May when the Department of Commerce announced it would seasonally adjust last year’s woeful Q1 GDP data not once but twice in order to get a better result.  Now, it appears this was indeed the case as government statisticians announced that they have found “evidence that efforts to adjust the country’s measure of economic growth for seasonal fluctuations have not been fully successful.”

The Bureau of Economic Analysis said this week that a component-by-component investigation found evidence in quarterly GDP data over different time spans, Reuters reports.

“We did find some evidence of residual seasonality both over the most recent 10-year period and over a 30-year period,” Brent Moulton, associate director for National Economic Accounts at the BEA, told reporters.

What Moulton meant is that in the new normal, where the business cycle itself no longer makes any sense due to central bank intervention, seasonal adjustments are worthless. Confirming this, the BEA said that seasonal effects have lingered in some cases even after the data was seasonally adjusted. Economists believe residual seasonality has been most prevalent in first-quarter GDP data, with growth underperforming in five of the last six years since the recovery started in mid-2009.

Lending credence to that theory, the government sharply revised up the 2015 first-quarter GDP growth estimate to a 2.0 percent annual rate from the previously reported 0.6 percent pace. But it also revised down the second-quarter GDP estimate for the same year to a 2.6 percent rate from 3.9 percent.

Ironically, in revising the data by shifting contributions from one quarter to another, the government economists merely perpetuated the error by using judgment to attribute “growth” to times during the year when they saw these as appropriate, a subjective assessment. Certainly, it does not explain why the Fed proceeded to launch a rate hike in a quarter, Q4 of 2015, that grew at the slowest pace in nearly two years.

More from the BEA:

Moulton said the treatment of monthly data in the derivation of quarterly national income and growth estimates was a pervasive problem. “There are two things that can happen here. One is a series may be tested for seasonality at monthly frequency and may not show any signs of seasonality,” he said.

“What we found in our review is that in some cases those series did at quarterly frequency show significant seasonality, suggesting there is some seasonal factor that needs to be adjusted to at least a quarterly frequency.”

Moulton said even if a series is adjusted at monthly frequency, which is the case with most of the source data for GDP, there may still be residual seasonality in some cases once the figures are combined to produce quarterly data.

The solution, he said, was to test all monthly GDP source data series at both monthly and quarterly frequencies.

The Department of Commerce promised it would work with other agencies to ensure that residual seasonality was removed from historical data by 2018. This is another way of saying that growth that had previously been reported as taking place previously, will be slashed, and reapplied in future times as appropriate, once again depending on the bureau’s political narrative.

Most importantly, the BEA said it would also start publishing nonseasonally adjusted GDP and gross domestic income estimates in 2018. “These estimates will allow users to isolate data revisions more distinctly from revisions to seasonal factors.”

Yes they will, but one wonders why the BEA will wait two years before this critical data is released?

One also wonders even with the underlying data “what difference will it make” – when “fringe websites” such as this one deconstruct the data and show that it is fundamentally wrong or outright manipulated, they get heckled by the same cadre of economists none of whom had any inkling of today’s abysmal data.

Finally, one thing that remains no matter how the seasonal adjustments are allocated: on a year over year basis, the US economy continues to slow dramatically, and as the following chart shows the 2.4% GDP annual growth compared to last year was the lowest since 2010.

end

 

Let us wrap up the week with this offering from Greg Hunter;

Hillary Won’t Win Presidency, DNC and Clinton Exposed for Rigging Democratic Primary, Economic Update and Global War Heating Up

By Greg Hunter’s USAWatchdog.com 

(WNW 248 7.29.16)

It’s now been totally exposed the Democratic National Committee (DNC) rigged the primary in favor of Hillary Clinton. This is a turning point that says no way Clinton can be elected without nearly half the Democrat voters that supported Bernie Sanders.  A WikiLeaks email dump at the beginning of the Democratic National Convention in Philadelphia showed clear evidence the DNC committed fraud and collusion against all candidates and rigged the Primary in favor of Hillary Clinton.  Outraged and disenfranchised Sanders voters are protesting by the thousands, and yet, the mainstream media, by and large, will not cover the protests taking place outside the DNC convention.  These are mostly young people who voted or worked diligently for the Sander’s campaign.  Greg Hunter says Clinton will get only a small percentage of Sander’s voters, and the rest will vote for Donald Trump, another candidate or simply say home.  Hillary is toast and will not become the President of the United States.

A big part of the fraud and rigging of the DNC Primary, which it repeatedly denied, came with the help of the disgraced mainstream media (MSM).  The WikiLeaks email dumped from the DNC servers showed collusion with many MSM outlets.  The Washington Post was trying to do a fundraiser for Clinton.  A Politico reporter was getting script approval from the DNC before his own editors looked at it.  Both NBC and CNN were taking suggestions and direction from the DNC to get favorable coverage for their candidate, Hillary Clinton.  In short, the entire Democrat Party Primary process was rigged from the beginning with the help of the MSM.  This is shameful conduct from groups that tout they are “news organizations” that are supposed to be fair and objective—NOT.

The economy is in terrible shape and headlines this week show that once again. Two headlines in particular that are most disturbing are: Deutsche Bank Profit Plunges 98% And The Worst Is Yet To Come,” and “Ford Plunges After Warning, We Don’t See Growth, Warns US Auto Industry Has Plateaued.”

War drums are beating louder with warnings continually coming for Russia and China against the United States. The Russians and Chinese have announced a joint naval exercise in the disputed waters of the South China Sea.  War tensions are rising and not receding.

Join Greg Hunter as he looks at these stories and more in the Weekly News Warp-Up.

After the WNW:

 

 

end

See you on Monday night:

Have a great weekend

h.

 

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2 comments

  1. Lynn S · · Reply

    I read this report every day and truly appreciate the effort. Lately, however, the material following Jim Reid is presented as a single paragraph and is quite difficult to sort. Could this be sorted, or am I the only one?

    Like

  2. You’re not the only one. It happened once before. Harvey finally fixed it, saying something about having to use another computer. Hang in there with the rest of us. Hopefully he’ll be back to his usual format soon.

    Like

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