August 9/Gold and silver rebound/More gold standing at the comex for August: 42.89 tonnes/Japan on full alert due to missiles falling into their waters from North Korea/Proctor and Gamble to shy away from advertising at Facebook citing non effectiveness!/

 

Gold:1339.00 down $4.60

Silver 19.81  up 4  cents

In the access market 5:15 pm

Gold: 1340.20

Silver: 19.87

.

For the August gold contract month,  we had a good sized 267 notices served upon for 26,700 ounces. The total number of notices filed so far for delivery:  11,543 for 1,154,300 oz or  tonnes or 35.903 tonnes

In silver we had 61 notices served upon for 305,000 oz. The total number of notices filed so far this month:  271 for 1,355,000 oz.

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL BY A LARGE 2,518 contracts DOWN to 215,244 YET  STILL CLOSE AN ALL TIME NEW ALL TIME RECORD AS THE  PRICE OF SILVER FELL  BY 1 CENT WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.076 BILLION TO BE EXACT or 154% of annual global silver production (ex Russia &ex China).

In silver we had 61 notice served upon for 305,000 oz

In gold, the total comex gold FELL  2,696 contracts as the price of gold FELL by $1.00 YESTERDAY. The total gold OI stands at 574,794 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

 

GLD

we had a  withdrawal of 1.18 tonnes

Total gold inventory rest tonight at: 972.62 tonnes

SLV

we had a good sized change in the SLV,  a deposit of 950,000 oz of silver into  THE SLV/Inventory rests at: 351.765 million oz.

 

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

1. Today, we had the open interest in silver FELL by 2,518 contracts DOWN to 215,244 as price of silver FELL BY 1 cent with YESTERDAY’S trading.The gold open interest FELL 2,696 contracts DOWN to 574,794 as the price of gold FELL by $1.00 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 21.41 POINTS OR 0.71%/ /Hang Sang closed DOWN 29.15 points or 0.13%. The Nikkei closed UP 244.40 POINTS OR 0.69% Australia’s all ordinaires  CLOSED UP 0.27% Chinese yuan (ONSHORE) closed DOWN at 6.6610/Oil rose to 43.21 dollars per barrel for WTI and 45.53 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.67000 yuan to the dollar vs 6.6610 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS TRIES MORE USA DOLLARS LEAVING THEIR SHORES  

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

Japan orders its military to a state of alert as North Korean missiles land in Japanese waters. North Korea accuses the USA of seeking a preemptive nuclear strike.  Japan is now on full alert:

( zero hedge)

b) REPORT ON CHINA

none today

4 EUROPEAN AFFAIRS

So far the experts has got it wrong with respect to the BREXIT.  The British economy is not faltering.  One area doing well is travel as international visitors are lining up to see England due to the weaker pound

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Turkey/Russia

The meeting between Turkey’s Erdogan and Russia’s Putin is scaring the USA to no end. Relations between the USA and Turkey are the worst seen in 50 years:

( zero hedge)

( zero hedge)

6.GLOBAL ISSUES

none today

7.OIL ISSUES

i)Morgan Stanley believes oil is heading towards 35 dollars per barrel.  Here is why!

(courtesy Morgan Stanley, Longson/

ii)Late in the session, WTI slides on a large unexpected crude build

(courtesy zero hedge)

8.EMERGING MARKETS

( zero hedge)

9.PHYSICAL STORIES

i)More and more  commentators are realizing the manipulation in the gold market:

the time to hold gold is now!
( Chris Powell/GATA)
ii)James Turk states that the USA is not recovering and highlights that the jobs data is dubious at best.  He warns the USA is heading for stagflation

( James Turk/Kingworldnews)

iii)The best countries to store your gold:

(Peter Diekmeyer/SprottMoney.com)

iv)The London Metal Exchange is creating a new vehicle to deal in deliveries of gold and silver.

The contract will deal only with non allocated metal. The object of the exercise is to take away some physical metals from China and to a lesser extent: the comex.

( Lawrie Williams/Sharp’s Pixley)

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

i)David Stockman on the ten most important things that Trump must do if he is elected:

( David Stockman)

ii)This is not good: the USA productivity plunges for the 3rd consecutive quarter.

no real cap ex spending!

( zerohedge)

iii)Inventory to sales lowers a bit to 1.33 but still in recession mode:

( zero hedge)

iv)The following is a huge story:  Proctor and Gamble the world’s largest advertiser is moving away from Facebook as it questions the ad effectiveness. Ads are Facebook’s sole source of revenue!

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL TO AN OI level of 574,794 for a LOSS of 2696 contracts as  THE PRICE OF GOLD FELL BY $1.00 with YESTERDAY’S TRADING..   We are now in the active month of AUGUST. As I stated this month : “Somebody big is continually standing for the gold metal and continues to do so in August in the same manner as we witnessed in May,  June and July  whereby the front delivery month increases in OI standing for metal or a slight contraction We will no doubt see increases in amount standing in August and probably we will surpass the amount standing on first day notice.  The  big active contract month of August saw it’s OI FELL by 237 contracts down to 2501,  We had 395 notices filed upon yesterday so we GAINED 158 contracts or an additional 15,800 oz will stand for delivery in August. The next contract month of Sept saw it’s OI fall by 388 contracts down to 5,923.The September contract STILL remains extremely elevated and we may have another of those high deliveries rare for a non active month.The next active delivery month is October and here the OI fell by 224 contracts down to 48,001 as these guys took the roll from September as they must have received a good fiat bonus. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was extremely poor at 125,637 (no raid). The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 161,829 contracts.The comex is not in backwardation.
Today, we had  267 notices filed for 26,700 oz in gold
And now for the wild silver comex results. Total silver OI FELL by 2,518 contracts from 517,762 DOWN TO 215,244 with the fall in price of silver to the tune of 1 cent.  We are still close to an all time record high for silver open interest set ON Wednesday AUGUST 3: (224,540). The  non active month of August saw it’s OI rise by 9 contracts up to 249. We had 1 notice served yesterday so we gained 10 contracts or an additional 50,000 oz will stand in this non active delivery month of August. The next big active month is September and here the OI fell by 7,195 contracts down to 129,638. The volume on the comex today (just comex) came in at 35,949 which is fair and small rollovers..The confirmed volume yesterday (comex + globex) was excellent at 62,114 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months.
We had 61 notices filed for today for 305,000 oz
INITIAL standings for AUGUST
 August 9.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
6204.95  oz
SCOTIA
193 KILOBARS
Deposits to the Dealer Inventory in oz nil

 

Deposits to the Customer Inventory, in oz 
nil
No of oz served (contracts) today
267 notices 
26,700 oz
No of oz to be served (notices)
2234 contracts
223,400 oz
Total monthly oz gold served (contracts) so far this month
11,543 contracts (1,154,300 oz)
(35.903 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month    99,407.8 OZ
Today:  SMALL activity at the gold comex AND MANY KILOBAR ENTRIES
Today we had 0 dealer DEPOSIT
total dealer deposit: NIL    0z
Today we had  0 dealer withdrawals:
total dealer withdrawals:  nil oz
We had 0 customer deposits:
Total customer deposits: NIL oz
Today we had one withdrawal
 i) Out of SCOTIA:  6204.95    (193 KILOBARS)
Total customer withdrawals  6204.95 OZ
Today we had 2adjustmentS:
i) out of BRINKS:  15,624.900 oz was adjusted out of the DEALER and this landed into the CUSTOMER account of Delaware:  486 kilobars. ( i will deem this a settlement)
ii) out of SCOTIA: 14,531.71 oz was adjusted out of the dealer and this landed into the customer account of Scotia. (deemed a settlement) total .9376 tonnes
Note: If anybody is holding any gold at the comex, you must be out of your mind!!!
since comex gold storage is unallocated , rest assured any gold stored will be compromised!
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 267 contracts of which 5 notices was stopped (received) by JPMorgan dealer and 177 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 (11,543) x 100 oz  or 1,154,300 oz , to which we  add the difference between the open interest for the front month of AUGUST  (2501 CONTRACTS) minus the number of notices served upon today (267) x 100 oz   x 100 oz per contract equals 1,377,700 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 (11,543) x 100 oz  or ounces + {OI for the front month (2501) minus the number of  notices served upon today (267) x 100 oz which equals 1,361,900 oz standing in this non  active delivery month of AUGUST  (42.8522 tonnes).
We gained 158 contracts or additional 15,800 oz will stand for metal in this active month of August.
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 + 42.3608 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 93.29 tonnes still standing against 74.049 tonnes available.
 Total dealer inventor 2,401,488.463 oz or 74.049 tonnes
Total gold inventory (dealer and customer) =11,348,528.417 or 352.986 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 352.986 tonnes for a  gain of 50  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
 august 9.2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
626,094.149 oz
CNT
Deposits to the Dealer Inventory
nil
 254,265.320 oz
CNT
Deposits to the Customer Inventory
956,423.170 oz
JPM, CNT
No of oz served today (contracts)
61 CONTRACT
(305,000 OZ)
No of oz to be served (notices)
188 contracts
940,000 oz)
Total monthly oz silver served (contracts) 271 contracts (1,355,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  6,557,955.5 oz
today we had 1 deposit into the dealer account:
i) Into CNT:  254,265.320 oz
 Total dealer deposits;  254,265.320 oz
we had 0 dealer withdrawal:
:
total dealer withdrawals:  NIL oz
we had 1 customer withdrawals:
ii) Out of CNT:  626,094.149 oz
Total customer withdrawals: 626,094.149 oz
We had 2 customer deposits:
ii) Into JPMorgan: 610,602.000 oz ???
ii) Into CNT: 345,821.170 oz
total customer deposits:  956,423.170  oz
 
 
 
 we had 1 adjustment
i)out of CNT:  970.000 ?? was adjusted out of the dealer account and this landed into the customer account of CNT
The total number of notices filed today for the AUGUST contract month is represented by 1 contract for 5,000  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 (271) x 5,000 oz  = 1,355,000 oz to which we add the difference between the open interest for the front month of AUGUST (XXX) and the number of notices served upon today (61) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the AUGUST contract month:  271(notices served so far)x 5000 oz +(249 OI for front month of AUGUST ) -number of notices served upon today (61)x 5000 oz  equals  2,295,000 oz  of silver standing for the AUGUST contract month.
we gained 10 contracts or an additional 50,000 oz will  stand for delivery in this non active month of August.
 
Total dealer silver:  27.545 million (close to record low inventory  
Total number of dealer and customer silver:   152.889 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 224,540 being set AUGUST 3.2016.  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
August 9/we had a withdrawal of 1.18 tonnes of gold from the GLD inventory/inventory rests at 972.62 tonnes
August 8/a huge changes in the GLD/Inventory, a withdrawal of 6.54 tonnes of paper gold/ rests at 973.80 tonnes of gold/
August 5/ a huge deposit of 10.69 tonnes of gold (with gold down $22.40??)/GLD inventory rests at 980.34 tonnes
August 4/no change in inventory at the GLD/Inventory rests at 969.65 tonnes
August 3/a big deposit of 5.62 tonnes of paper gold/Inventory rests at 969.65 tonnes
August 2/no change in gold inventory at the GLD/Inventory rests at 964.03 tonnes
August 1/we had a huge paper deposit of 5.94 tonnes of gold into the GLD/Inventory rests at 964.03 tonnes
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
August 8/ Inventory rests tonight at 972.62 tonnes

end

Now the SLV Inventory
August 9/a deposit of 950,000 oz into the SLV/Inventory rests at 351.765 oz
August 8/no change in silver inventory at the SLV/Inventory rests at 350.815 million oz.
August 4/no change in silver inventory at the SLV/inventory rests at 350.815 million oz
August 3/no change in silver inventory/inventory rests at 350.815 million oz
August 2/ we had a tiny withdrawal of 40,000 oz of silver/Inventory rests at 350.815 million oz
August 1/we had a huge paper deposit of 1.235 million oz into the SLV/Inventory rests at 350.955 million oz
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
.
August 9.2016: Inventory 351.765 million oz

NPV for Sprott and Central Fund of Canada

 

1. Central Fund of Canada: traded at Negative 4.1 percent to NAV usa funds and Negative 4.0% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.4%
Percentage of fund in silver:39.4%
cash .+1.2%( August 9/2016).
2. Sprott silver fund (PSLV): Premium rises  to +1.31%!!!! NAV (august 9/2016) 
3. Sprott gold fund (PHYS): premium to NAV  rises TO  1.00% to NAV  ( august 9/2016)
Note: Sprott silver trust back  into POSITIVE territory at +1.31% /Sprott physical gold trust is back into positive territory at 1.00%/Central fund of Canada’s is still in jail.
 
 
 

end

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

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

Financial Times: “Victory For Gold Bulls Is Only Just Beginning”

The Financial Times published an interesting article today in which Diego Parrilla, author, investment expert and precious metals specialist, outlines the positive case for gold and why the gains seen this year are just the beginning of a new gold bull market:

Financial_times_Diego_Parrilla
Parrilla begins:

“Gold prices have rallied more than 30 per cent since the lift-off in US interest rates in December. A sharp reversal in pricing, sentiment and positioning driven by a myriad macro and micro factors has left the gold bears and bulls as polarised as ever.

The bearish camp, which has featured prominent and respected analysts like Goldman Sachs, tends to have a constructive view on the US dollar, the ability to raise interest rates, normalise global monetary policy, and generally a benign view on the global economy and inflationary risks.
The bullish camp, which I subscribe to, tends to have a more pessimistic view on the global economy and the unintended consequences of monetary policy without limits, and sees the recent price action as the beginning of a multiyear bull run in gold.

My view that there is a perfect storm for gold is based on three closely interrelated dynamics, whereby central banks and global markets are both testing the limits of monetary policy and credit markets as well as the boundaries of fiat currencies.”

He concludes:

“Time will tell if central banks and governments will be able to engineer a smooth solution to the challenges ahead, or if the remedy will be worse than the disease.

Monetary policy without limits will lead to a very wild and bumpy ride and a larger crisis than the one we have been trying to resolve: a perfect storm for gold.”

Read the FT article here

Gold and Silver Bullion – News and Commentary

Gold holds steady after recovering from 1-wk low (Reuters)

Pound Sliding on Expanded QE Spurs Dollar Strength on Divergence (Bloomberg)

Gold Hits 1-Week Low as U.S. Resilience Boosts Equities, Dollar (Reuters)

Gold Back to Futures on London Metal Exchange After Thirty Years (Bloomberg)

London Metal Exchange to launch gold spot, futures contracts (Reuters)

7RealRisksBlogBanner

BARCLAYS: Nothing left to fight the coming economic storm (Business Insider)

“World Class Crash Coming No Matter What” – John Williams (John Williams)

Now The Markets Themselves Are Too Big To Fail (DollarCollapse)

One Reason Why Silver Could Hit $50.00 By 2017  (ProfitConfidential)

Bullish on gold for years: Gartman (CNBC)

Gold Prices (LBMA AM)

09Aug: USD 1,332.90, GBP 1,025.80 & EUR 1,201.74 per ounce
08Aug: USD 1,330.00, GBP 1,019.84 & EUR 1,198.86 per ounce
05Aug: USD 1,362.60, GBP 1,036.39 & EUR 1,222.53 per ounce
04Aug: USD 1,351.15, GBP 1,016.61 & EUR 1,213.87 per ounce
03Aug: USD 1,364.40, GBP 1,023.16 & EUR 1,218.96 per ounce
02Aug: USD 1,358.15, GBP 1,025.13 & EUR 1,213.10 per ounce
01Aug: USD 1,348.85, GBP 1,022.97 & EUR 1,207.76 per ounce

Silver Prices (LBMA)

09Aug: USD 19.70, GBP 15.18 & EUR 17.77 per ounce
08Aug: USD 19.66, GBP 15.04 & EUR 17.74 per ounce
05Aug: USD 20.22, GBP 15.36 & EUR 18.14 per ounce
04Aug: USD 20.16, GBP 15.25 & EUR 18.11 per ounce
03Aug: USD 20.59, GBP 15.43 & EUR 18.39 per ounce
02Aug: USD 20.71, GBP 15.65 & EUR 18.51 per ounce
01Aug: USD 20.51, GBP 15.56 & EUR 18.37 per ounce


Recent Market Updates

– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE

– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market
– 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”

abidpasha
end
Gold and silver trading: both metals rebound

Gold & Silver Bounce Back From Payrolls Plunge

The chaotic plungefest in precious metals following Friday’s payrolls print is starting to unwind as today’s dismal productivity sparks gold and silver buying as Fed tightening expectations tumble…

Renewed dollar weakness…

Is sending commodities higher…

end
More and more  commentators are realizing the manipulation in the gold market:
the time to hold gold is now!
(courtesy Chris Powell/GATA)

Somehow the case for gold makes it into the Financial Times

Section:

9:25a ET Monday, August 8, 2016

Dear Friend of GATA and Gold:

There’s nothing terribly profound or incisive about the commentary in today’s Financial Times that is appended here. But simply that the FT published something making the obvious case for gold is nearly astounding. What’s next — the capture of the Loch Ness monster, UFOs landing at Stonehenge, or an FT reporter committing actual journalism by putting an inconvenient question to a central banker about surreptitious intervention in the gold market?

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

* * *

The Victory for Gold Bulls Is Only Just Beginning

By Diego Parrilla
Financial Times, London
Monday, August 8, 2016

http://www.ft.com/cms/s/0/79a88890-5b09-11e6-8d05-4eaa66292c32.html

Gold prices have rallied more than 30 per cent since the lift-off in US interest rates in December. A sharp reversal in pricing, sentiment and positioning driven by a myriad macro and micro factors has left the gold bears and bulls as polarised as ever.

The bearish camp, which has featured prominent and respected analysts like Goldman Sachs, tends to have a constructive view on the US dollar, the ability to raise interest rates, normalise global monetary policy, and generally a benign view on the global economy and inflationary risks.

The bullish camp, which I subscribe to, tends to have a more pessimistic view on the global economy and the unintended consequences of monetary policy without limits, and sees the recent price action as the beginning of a multiyear bull run in gold.

My view that there is a perfect storm for gold is based on three closely interrelated dynamics, whereby central banks and global markets are both testing the limits of monetary policy and credit markets as well as the boundaries of fiat currencies.

Firstly, the limits of monetary policy: In response to the Lehman crisis and in order to combat the threat of deflation, central banks have deployed a wide range of unconventional monetary policies. Quantitative easing and negative interest rates have been game changers and have dramatically distorted the valuation of government bonds, breaking the theoretical ceiling in prices, squeezing shorts and underweight positions, and feeding what, in my view, is one of the largest financial bubbles in history.

The epicentre of the problem is the central banks, but investors and savers around the world, faced with extraordinarily low and even negative yields in their cash and fixed income, have been incentivised — if not forced — to increase the duration in their portfolios, increasing the risk of capital losses, liquidity and volatility beyond what they may be intending or able to tolerate.

Then there’s examining the edges of credit markets. The bubble in government bonds and duration has incentivised risk-taking across equity and credit markets, lending to weaker and weaker credits, often ignoring or underplaying the risk of capital losses, liquidity and volatility. It’s a bull market that feeds on itself and benefits the weakest players most, such as emerging markets or high yield.

In a world with limited investment opportunities, excessive risk-taking can lead to speculation and, of course, bubbles.

The current path of monetary and credit expansion is unsustainable and will eventually burst, leaving investors struggling for “the return of their capital, instead of return on their capital,” an extremely bullish scenario for gold and other real assets.

Thirdly, the limits of fiat currencies are being tested. Unlike the global financial crisis of 2008, this time there won’t be any monetary bullets left. Interest rates are already at record lows, asset purchases suffer from the law of diminishing returns, and competitive currency devaluations only increase underlying problems and global imbalances. A dangerous slippery slope that paper cures miss is that they “eventually converge to their intrinsic value: paper”, as Voltaire warned.

Over the past few years we have witnessed the first stage of Gresham’s law whereby “bad money displaces good money”, and are now at the early stages of the second and final phase, whereby “good money displaces bad money”.

Gold and the US dollar are best placed to play the role of good money, which could result in a substantial appreciation against the bad money currencies. But inability or unwillingness of the US to normalise its monetary policy leaves the door wide open for gold to retake its reserve currency status and put an end to the monetary supercycle that started in 1971 with the end of Bretton Woods. It’s a period that has seen the outstanding volume of paper money grow disproportionately relative to the amount of gold that once upon a time backed it.

Time will tell if central banks and governments will be able to engineer a smooth solution to the challenges ahead, or if the remedy will be worse than the disease.

Monetary policy without limits will lead to a very wild and bumpy ride and a larger crisis than the one we have been trying to resolve: a perfect storm for gold.

—–

Diego Parrilla is co-author of “The Energy World is Flat” and a precious metals specialist.

 

END

 

James Turk states that the USA is not recovering and highlights that the jobs data is dubious at best.  He warns the USA is heading for stagflation

(courtesy James Turk/Kingworldnews)

Jobs report won’t stave off stagflation, Turk tells KWN

7p ET Monday, August 8, 2016Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk tells King World News today that while the latest U.S. jobs report was taken as cause to smash gold, as most such reports are, it really changed nothing about economic conditions and that the country is headed for stagflation. An excerpt from the report it posted at KWN here:

http://kingworldnews.com/james-turk-dont-believe-the-propaganda-here-is-…

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

 

END

 

The best countries to store your gold:

(courtesy Peter Diekmeyer/SprottMoney.com)

Best Countries To Store Gold (How Did America, A Serial Defaulter, Make The Cut?)

Submitted by Peter Diekmeyer via SprottMoney.com,

An era of slowing growth, falling corporate profits, record debt levels, and currency debauchment has many investors buying gold as a bet against global central banks.

Holding that gold outside the banking system, and for some, outside one’s own country, are increasingly popular options. Canada, Switzerland, and four other countries have particularly attractive characteristics.

Those are the conclusions of a new whitepaper produced by Sprott Money Ltd.

Canada and Switzerland are obvious choices. The True North has fabulous natural resources, one of the world’s most stable banking systems and hasn’t been attacked in more than 200 years (the last two times the Americans tried to invade – during the Revolutionary War and the War of 1812 – things did not work out so well for them).

Switzerland, which ranked first on the Tax Justice Network’s Financial Secrecy Index in 2015, has fabulous attractions as an offshore investment locale. These include a long history of offering investors a safe, discreet place to store assets. That applies doubly for gold, which has a better reputation in Switzerland than in almost any other country.

America’s shaky credit history

Surprisingly, America, which many in the hard money community regard as a risky gold storage locale, also made the cut, due to its strong international reputation as a safe haven. The paper nevertheless acknowledges some worrying trends. For example, during the Obama presidency America attacked an average of one country a year, debauched its currency and curtailed freedoms.

Worse, when times are tough, the American government has a record of defaulting on its obligations.

This includes creation of currencies issued during the Revolutionary War – and by the Confederacy during the Civil War – both of which became worthless.

America also defaulted on its international obligations when, in 1971, it reneged on its commitments to back the greenback with gold.

But most importantly for gold investors, the American government also seized all private holdings when the going got tough during the Great Depression. The worry is that this could happen again.

A good place – for Americans – to store precious metals

That said, despite its many faults, America is a great place for at least one category of investors to store gold: Americans themselves.

Gold’s and other precious metals’ properties as an emergency reserve to be accessed when times get really tough imply that most investors will want to keep those assets close – where they can get their hands on them fast.

However in today’s volatile economic conditions, no one can be really be sure about how things will turn out during the coming years – let alone the coming decades.

So, for Americans, diversification by asset class and country appears to be the best risk-adjusted wealth preservation strategy. Many experts increasingly believe that holding some precious metals outside the banking system and outside of the country is a good bet.

Conversely, the paper acknowledges that based on the performance of the U.S. dollar during times of tension, international investors continue to regard America, which ranked third on the Tax Justice Network’s Financial Secrecy Index in 2015, as a safe haven.

Singapore, Germany and the Cayman Islands

The Sprott report also identifies Singapore, Germany, and the Cayman Islands as current good offshore storage jurisdictions.

The paper also acknowledges that many other international jurisdictions such as Dubai, Australia, and Hong Kong are regarded as good locales, but acknowledges that changing geopolitical risks requires constant monitoring of domestic and international investment environments.

For Americans, most of whom have never left the country, the Cayman Islands, where English is widely spoken and which offers excellent attributes as a tourist destination, appears to be a particularly attractive storage locale. After all, there is nothing wrong with combining international investing with a trip to the beach.

You can access a copy of the Sprott Money Report by clicking here.

 

END

 

The London Metal Exchange is creating a new vehicle to deal in deliveries of gold and silver.

The contract will deal only with non allocated metal. The object of the exercise is to take away some physical metals from China and to a lesser extent: the comex.

(courtesy Lawrie Williams/Sharp’s Pixley)

LAWRIE WILLIAMS: Why does gold react so sharply to poss. Fed interest rate rise schedule?AUG
09

First we saw precious metals prices surge after some pretty horrendous US GDP growth figures, which analysts believed would reduce the likelihood of a Fed rate increase at all this year. Then, only a few days later, some much better than expected job creation figures have knocked the gold price back around $30 on the grounds that the more positive data could prompt the Fed to move on interest rates before the end of the year. Some now even put a September rate increase back on the cards again.

Whether or not the Fed will raise interest rates this year should, in my personal opinion, be pretty irrelevant to the gold price anyway. Any rate rise which may or may not happen is only likely to be a maximum of 25 basis points which will leave the US base rate, and bond rates below real inflation. In other words a continuation of real negative yields which, if anything, should remain positive for gold.

Let’s examine, therefore, what happened to gold last time the Fed raised interest rates by 25 basis points – in early December last year. The gold price had come down fairly sharply in expectation of the decision to raise rates and continued to trend sideways and slightly downwards afterwards for two to three weeks on the basis that the Fed was forecasting three or four further rate increases in 2016 Well that is history and just hasn’t happened. From the beginning of this year gold has moved upwards, sharply, and has risen 25% year to date in the US dollar. So much for a negative impact on gold of a small rise in US interest rates!

More important for gold’s progress, or decline, surely are the basic fundamentals affecting the market? Big purchases into the gold ETFs; sharp falls in gold flows into Asia – and into India and China in particular; the likely beginnings of a decline in global new mined gold production; China’s attempts to play a greater part in gold price setting via the Shanghai Gold Exchangeetc. All will likely have an increasing impact and there are views that it is already beginning to smooth out some of the U.S. futures markets induced volatility.

Be this as it may, it is still apparent that the U.S. COMEX paper gold market remains the prime price driver for the gold price – hence the undue impact of Fed interest rate deliberations – although its influence may be beginning to decline. Today, for example, it has been announced that the World Gold Council (WGC) and the London Metal Exchange (LME) are linking up, in collaboration with banks Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis, OSTC and SocGen, to offer spot, daily and monthly futures, options and calendar spread contracts for gold and silver under the LME Precious banner. Future developments will include platinum and palladium contracts. This looks like an attempt to wrest away some of the paper and physical gold business currently conducted on COMEX, thereby further reducing the impact of the U.S. markets on the global gold price, and also to stifle some of China’s ever-increasing influence. Although as far as the latter is concerned with China both the world’s biggest consumer and producer of gold this may all be too little too late.

-END-

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

 
 

:

1 Chinese yuan vs USA dollar/yuan  DOWN to 6.6610 ( TINY DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.67000) / Shanghai bourse  UP 21.41 OR 0.71%   / HANG SANG CLOSED DOWN 29.15 or 0.13%

2 Nikkei closed UP 144.40  OR 0.69% /USA: YEN FALLS TO 102.21

3. Europe stocks opened ALL IN THE GREEN    /USA dollar index up to 96.38/Euro DOWN to 1.1082

3b Japan 10 year bond yield: FALLS TO  -.077%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 102.21

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  43.21  and Brent: 45.53

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 UP for WTI and UP for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.059%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 7.54%/: 

3j Greek 10 year bond yield FALL to  : 8.28%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1333.10/silver $19.70(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 4/100 in  roubles/dollar) 64.65-

3m oil into the 43 dollar handle for WTI and 45 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 DEVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 102.21 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 .9836 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0896 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  -0.059%

/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 1.579% early this morning. Thirty year rate  at 2.296% /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

Futures Flat; Global Stocks, Bonds Rise As Sterling Slides For Fifth Day

S&P500 index futures were unchanged (up less than 0.1%) following another modest, low-volume levitation in European, Asian shares in a mostly eventless overnight session; oil comes off following gaining overnight with WTI trading just around $43.

Government bonds advanced around the world, now that rate locks from the deluge of corporate issuance appear to have been priced in, spurred by central banks’ commitments to boost growth and a dimming outlook for inflation as commodities declined. The pound fell for a fifth day as the Bank of England resumes debt purchases to combat the fallout from Britain’s Brexit vote.

Speaking of inflation, overnight China reported its July CPI, which printed at 1.8% Y/Y, in line with expectations, and just lower than the 1.9% in June, despite concerns that severe summer flooding, which has disrupted public infrastructure and agricultural production, would increase inflationary pressures. Food prices continued to moderate, rising 3.3 percent in July compared with a 4.6 percent gain in June. Prices of pork rose only 16.1% versus a 30.1% increase in June as demand for the Chinese staple meat continued to cool from peaks hit earlier this year. Non-food inflation, however, rose 1.4 percent, compared with June’s 1.2 percent gain.


CPI inflation moderated while PPI inflation was higher in July

Meanwhile, China’s producer prices contracted for the 53rd month in a row at 1.7% on a year-on-year basis in July, modestly better than the -2.0% expected, and up from last month’s -2.6% drop.  Analysts expect producer price inflation to turn positive this year for the first time in more than four years, but the recovery at the factory gate is unlikely to lead to a rebound in private investment, which has fallen to record low growth rates.

While low inflation means Beijing has room to loosen monetary policy if needed, policymakers appear to have disparate views over how much stimulus is needed to stoke economic growth, if any, and what form it should take. Strengthening producer prices mean there is likely less need to ease in the short-term, analysts say. China’s central bank has not adjusted interest rates since October 2015. According to newswires overnight, China is not likely to inject liquidity into the market on a mass scale as policy makers have promised a neutral monetary environment for supply-side reforms.

The subdued inflationary print was seen as favorable for bonds: “Investors are more interested in government bonds as the slowing economy has reduced risk appetite and as default risks were exposed in the corporate debt market,” said Liu Dongliang, senior analyst at China Merchants Bank Co. in Shenzhen. “The bull market will continue for the rest of the year, as supporting factors will continue to exist and as the market may still expect the central bank to ease monetary policy to support growth.” Sure enough, China 10-year government bond yield falls to the lowest level since 2009, as investors prefer safety of sovereign bonds after a second Chinese shipbuilder defaults on bond payment.

There was more action in Europe, where yields on benchmark 10-year debt touched all-time lows in the U.K and Spain and matched the least in seven years in China. They also dropped in India, following a central bank meeting where the RBI kept rates unchanged. Sterling slipped to a four-week low after BOE policy maker Ian McCafferty said more easing is likely to be required, while copper reached its weakest level since July 12. European stocks rose on better-than-estimated results.

According to Janu Chan, senior economist at St. George Bank in Sydney, “We could see some short-term weakness in the pound. It was an extensive stimulus program that the BOE announced. The economy has been hit in the short-term, and could face a minor recession.” As the chart below shows, he is right: the pound sank 0.4 percent to $1.2990,adding to a five-day loss of 2.7 percent.

As Bloomberg puts it, bonds are in demand and volatility in financial markets is sliding as central banks boost quantitative easing and cut interest rates to spur inflation. The BOE resumed gilt purchases on Monday, India’s central bank Governor Raghuram Rajan said its policy stance remains accommodative and analysts forecast the Reserve Bank of New Zealand will lower its benchmark rate later this week. Supportive monetary policy has also pushed Band of America Merrill Lynch’s Market Risk index to the lowest level since early January.

The Stoxx Europe 600 Index added 0.3%. The benchmark has climbed more than 2% since the fresh stimulus measures were announced by the Bank of England. Munich Re rose 3.7 percent after the world’s second-biggest reinsurer reported quarterly net income that was more than double the average analyst projection. Altice rallied 14 percent after its profit increased amid gains in the U.S. and Portugal.  Wm Morrison Supermarkets Plc boosted a gauge of retailers, adding 2.2 percent after extending an agreement with Ocado Group Plc that will enable its online grocery business gain national coverage.  S&P 500 futures were little changed.

In commodities, the Bloomberg Commodity Index fell 0.3%, dragged down by metals. Copper declined as much as 0.8 percent, falling to the lowest in four weeks, while zinc retreated from a one-year high. Gold slipped 0.1 percent to $1,333.74 an ounce.  Crude was little changed at $43.06 a barrel in New York, after jumping 2.9 percent in the last session as the Organization of Petroleum Exporting Countries predicted the current bear market in the commodity would be short-lived.

Meanwhile in bonds, despite recent concerns about an inflationary spike, things are largely back to (ab)normal: “There is so much demand for U.S. Treasuries that it is difficult for the Fed to raise longer-term rates substantially,” Philip Marey, a strategist at Rabobank International in Utrecht, Netherlands, said, referring to the Federal Reserve. Quantitative easing from central banks elsewhere means “there will be increased scarcity of safe assets, including U.S. Treasuries. This will limit the upside potential in yields.”

The yield on Treasuries due in a decade, the global benchmark, declined two basis points to 1.58 percent at 10:48 a.m. London time. While it jumped nine basis points on Friday after better-than-expected U.S. jobs data, it’s still below the year-to-date average of 1.77 percent.

U.K. 10-year gilt yields dropped to a record low of 0.59 percent and Spain’s reached 0.97 percent, having fallen below 1 percent for the first time on Monday. Indian bonds advanced and the rupee weakened after Rajan left benchmark interest rates unchanged at his final review. The yield on sovereign notes due January 2026 dropped six basis points, the most since July 28, to 7.12 percent, prices from the RBI’s trading system show.

Investors will look Tuesday to data on wholesale inventories for June for indications of the strength of the world’s biggest economy and the likely trajectory of interest rates. Earnings will also be in focus, with Walt Disney Inc. among companies reporting.

Market Snapshot

  • S&P 500 futures up less than 0.1% to 2176
  • Stoxx 600 up 0.3% to 342
  • FTSE 100 up 0.3% to 6832
  • DAX up 0.5% to 10489
  • German 10Yr yield down less than 1bp to -0.07%
  • Italian 10Yr yield down less than 1bp to 1.12%
  • Spanish 10Yr yield down 1bp to 0.98%
  • S&P GSCI Index down less than 0.1% to 346.8
  • MSCI Asia Pacific up 0.6% to 138
  • Nikkei 225 up 0.7% to 16765
  • Hang Seng down 0.1% to 22466
  • Shanghai Composite up 0.7% to 3026
  • S&P/ASX 200 up 0.3% to 5553
  • US 10-yr yield down 2bps to 1.57%
  • Dollar Index down 0.05% to 96.35
  • WTI Crude futures down 0.2% to $42.92
  • Brent Futures down 0.3% to $45.24
  • Gold spot down less than 0.1% to $1,334
  • Silver spot down 0.2% to $19.70

Top Global Headlines

  • Randstad to Acquire U.S. Jobs Site Monster for $429m: Randstad will pay $3.40/share in cash for Monster, cos. said in statement Tues.; implies 23% premium to last close.
  • Genesys Said in Talks to Acquire Interactive Intelligence: Genesys, which received $900m investment last month from PE firm Hellman & Friedman, is looking to use recent cash infusion to expand its business.
  • Amazon Japan Office Said to Be Searched by Fair Trade Agency: Japanese antitrust agency looking into whether AMZN sought deals with sellers that gave it more favorable conditions over other e-commerce companies.
  • Twitter Seeks to Sublease Part of San Francisco Headquarters: Co. offering about 1/4 of the space at its S.F. headquarters complex for sublease, adding to growing amount of excess offices available as technology industry cools.
  • Alibaba Offers to Help Global Tech Companies Navigate China: New AliLaunch program makes use of co.’s cloud platform, can help clients with JVs, marketing; it’s biggest customer so far is SAP, which will sell its Hana data-software and services on Alibaba’s cloud.
  • U.S. Bond Retreat Confounds Analysts as Fed Rate Bets Revive: Yield on benchmark 10-year U.S. sovereign debt is above median of year-end ests. compiled by Bloomberg for first time.

* * *

Looking at regional markets, Asia initially traded relatively mixed in the wake of the subdued lead from the US where stocks slightly pulled back from last week’s record highs, amid light news flow and summer-quietened trade. However, price action then staged a turnaround heading into the European session to conform with the tone set by Europe. Nikkei 225 (+0.7%) was higher as it continued to benefit from JPY weakness, while ASX 200 (+0.3%) was led by financials with ANZ shares gaining as much as 3% amid earnings. Chinese markets were mixed with choppy trade seen in Shanghai Comp (+0.7%) and the Hang Seng (-0.1%) following inflation data which suggested weak demand with CPI at a 6-month low and PPI contracted for a 53rd consecutive month. 10yr JGBs traded higher on a rebound from recent losses, while today’s 30yr auction saw mixed results, in which the b/c increased and tail in price narrowed, but the lowest accepted price and average price fell from last month.

Top Asian News

  • Rajan Holds India Rates in Final Move as Inflation Quickens: Decision was predicted by 27 of 29 economists in survey
  • Bank of Japan Limits Foreign Profits on Negative-Yielding Bonds: BOJ boosts dollar funding facility to ease domestic costs
  • China’s Factory Deflation Narrows in Further Stabilization Sign: July PPI -1.7% y/y vs June -2.6%
  • Hong Kong Property Stocks Are Hottest Since Eve of 1997 Collapse: Gains outstrip Hang Seng Index despite supply, rate concerns
  • China Auto Sales Rising Most in 17 Months Spurs Inventory Relief: Passenger-vehicle sales rose 23% to 1.6m units in July
  • ANZ Rises to 7-Month High as Bank Reports Capital, Asset Growth: 9-mo. cash profit drops 3% to A$5.2b

European stocks trade in the green this morning amid quiet newsflow with basic material names outperforming in the wake of Iron ore reaching 2 year highs. The Dax cash trades up around 0.5% with data flow continuing to remain light at the start of the week and as such traders will be looking towards the end of the week whereby markets will see the release of the latest US PPI, retail sales and Uni. Of Michigan data. Markets may be particularly sensitive to these releases given that markets are 50/50 over whether the Fed will hike rates this year and therefore may use the releases as an opportunity to establish a bias on this front. In terms of fixed income markets the Spanish and UK 10 years have hit fresh record low yields with participants overlooking political deadlock in Spain and markets continuing to digest the latest stimulus efforts by the BoE. Furthermore, mounting stimulus expectations for the ECB have also helped to lift peripheral paper and Spanish paper remains preferable to that of Italy amid the concerns surrounding the Italian banking sector.

Top European News

  • Brexit Red Lines Drafted by EU-27 as U.K. Plans Its Strategy: U.K. PM Theresa May faces daunting array of demands from EU nations when time comes to negotiate Britain’s future relationship with bloc, analysis shows.
  • U.K. Regulator’s Bank ‘Shake Up’ With Cap Fails to Create Stir: CMA recommended banks set their own limits on overdraft charges, with grace period for customers to avoid them, rather than have overdraft fees “centrally regulated,” agency said in a statement.
  • Munich Re Profit Beats Estimates on Currency, Investments: 2Q profit beat analysts’ expectations as gains from currencies, investments cushioned higher claims from natural disasters, also restructuring charges at its Ergo primary- insurance unit.
  • Drahi’s Altice Boosts Profit as U.S. Purchases Bring Growth: Earnings were “strong,” and co.’s projection for growth is “reassuring,” says Goldman analyst Andrew Lee.
  • Italy Bank Bad Loans at EU197.9b in June: Bank of Italy: Banks’ gross bad loans rose 1.1% in June from yr earlier

In FX, the pound sank 0.4 percent to $1.2990, contributing to a five-day loss of 2.7 percent. As well as cutting interest rates for the first time since 2009, the Bank of England on Aug. 4 exceeded economists’ expectations with an announcement that it would increase its gilt-purchase program by 60 billion pounds to 435 billion pounds, starting this week. “We could see some short-term weakness in the pound,” said Janu Chan, a senior economist at St. George Bank Ltd. in Sydney. “It was an extensive stimulus program that the BOE announced. The economy has been hit in the short-term, and could face a minor recession.” Taiwan’s dollar gained as much as 0.4 percent to its strongest level in a year after trade data released Monday showed exports increased in July for the first time in 18 months. Global funds boosted their holdings of the island’s shares by about $400 million in the first two trading sessions of this week, according to data compiled by Bloomberg

In commodities, the Bloomberg Commodity Index, which measures returns on raw materials, fell 0.3 percent, dragged down by metals. Copper declined as much as 0.8 percent, falling to the lowest in four weeks, while zinc retreated from a one-year high. Gold slipped 0.1 percent to $1,333.74 an ounce. Crude was little changed at $43.06 a barrel in New York, after jumping 2.9 percent in the last session as the Organization of Petroleum Exporting Countries predicted the current bear market in the commodity would be short-lived. The group said Monday its members will hold informal talks next month and that there are “constant deliberations” over stabilizing the market. “Nobody seriously thinks that OPEC will come up with anything that will tighten supply,” said Michael McCarthy, chief strategist at CMC Markets in Sydney. “Having bounced off the support near $40, and without any further supply coming online, we’re moving toward the middle of the trading range of about $44 to $45.”

Bulletin Headline Summary

  • European equities enter the North American crossover modestly higher amid light newsflow with the FTSE 100 remaining at post-Brexit highs
  • GBP remains out of favour with GBP/USD below 1.300 amid dovish comments from BoE’s McCafferty and disappointing UK data releases
  • Looking ahead, highlights include API Crude Oil Inventories and a US 3yr Auction
  • Treasuries rallied in overnight trading along with global equities as commodities slide and U.K. and Spanish 10Y yields hit all-time lows; week’s auctions begin with $24b 3Y notes, WI 0.855%; sold at 0.765% in July, lowest 3Y auction stop since 0.715% in Feb. 2014.
  • Oil dropped from the highest close in two weeks amid doubts that informal talks between OPEC members next month will lead to any action to tighten supplies. Futures slid as much as 1.2% in New York after rising 2.9% Monday
  • U.K. industrial production barely grew in June as the economy lost momentum before the Brexit referendum. Output rose 0.1% following a 0.6% drop in May, the Office for National Statistics said in London
  • Bank of England policy maker Ian McCafferty said that officials will likely ease policy again if the economy develops in line with the central bank’s forecasts — though they should take a gradual approach
  • European bankers exploited pledges by G20 and European Union finance ministers to avoid boosting capital requirements as they campaigned against the plans during earnings calls in past weeks
  • Presiding over his final interest-rate review, Rajan’s announcement of more open-market debt purchases revived a rally that had been losing steam in recent days after benchmark 10-year notes capped their best month since 2013 in July
  • Chinese bonds advanced, with the 10-year yield dropping to match the lowest levels since 2009, as foreign inflows increase and investors seek safety from a rising number of corporate failures
  • Hong Kong real estate shares haven’t been this hot since the city’s last housing bubble burst almost two decades ago. The industry’s benchmark equity gauge has surged 37% from this year’s low in January

DB’s Jim Reid concludes the overnight wrap

With limited data to respond to yesterday, price action across global equity markets was largely muted. The STOXX (+0.04%) and the S&P500 (-0.09%) were both essentially flat on the day. In Europe banks (+1.4%) and insurance (+1.5%) sectors were two of the top three performing sectors of the day, while basic resources (+1.7%) was the top performer. Oil climbed around +2.5% with some looking to an announcement yesterday that OPEC would have an informal side meeting next month at the International Energy Forum in Algeria with hopes of a renewed push for a production freeze. These things often come to nothing and tend to be discussed after a decent fall in the price but it created some attention.

Oil has given up some of its gains in Asia (-0.8%) but equity market are all fairly quiet with the Nikkei +0.35%, Hang Seng -0.19% and Shanghai Comp +0.29%. The main data has been Chinese inflation with the PPI falling less than expected at -1.7% (-2% forecast) which is actually the highest for nearly 2 years. This number was stuck near -6% in Q4 last year. CPI came in inline with estimates at 1.8%.

Back to yesterday and credit markets over in Europe saw decent performance as iTraxx Main and Crossover tightened by -2bps and -8bps respectively over the course of the day. US credit markets failed to see similar moves as CDX IG and HY were largely unchanged on the day. The latest ECB CSPP numbers (as of Aug 5th) saw purchases holding up impressively in this holiday season with the €1.764bn higher than the previous two weeks and not far off the average weekly number seen since the program started.

The other end of the risk spectrum also saw little action. German 10Y yields held steady on the day, while US 10Y yields edged marginally lower by -1bps after rising significantly on Friday. 10Y Gilt yields saw bigger moves as they fell by -6bps as markets continued to digest BoE’s aggressive policy package unveiled last week. Over in currency markets, the pound (-0.26%) continued to slide for the fourth straight day while the dollar index rose marginally by +0.27%. Gold was unchanged on the day.

In terms of data it won’t surprise you to learn that it was quiet. Over in Europe we saw German industrial production numbers for June rebound back into positive territory and come in marginally above expectations (+0.8% mom vs. +0.7% expected; -0.9% previous). However the bounce only served to reverse the decline seen in May as the demand for capital goods rebounded. It will be more interesting to watch next month’s number to see how production responds to the Brexit vote. Other data points out of Europe included French business sentiment data for July which ticked up marginally to beat expectations at 98 (vs. 97 expected; 97 previous) while the Sentix Eurozone investor confidence indicator for August rose to 4.2 (vs. 3.0 expected; 1.7 previous). There were no material data releases out of the US yesterday.

Turning over to today’s calendar now. In Europe we’ll get the UK industrial (+0.1% expected; -0.5% previous) and manufacturing (-0.2% expected; -0.5% previous) production numbers for June, with data expected to demonstrate little improvement with most of the data pre-Brexit. We’ll also see UK and German trade balance data for June, with the UK trade deficit expected to widen (-£2.55bn expected; -2.263bn previous) while the German trade surplus is expected to increase to EUR23.0bn (21.0bn previous).

ASIA MARKETS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 21.41 POINTS OR 0.71%/ /Hang Sang closed DOWN 29.15 points or 0.13%. The Nikkei closed UP 244.40 POINTS OR 0.69% Australia’s all ordinaires  CLOSED UP 0.27% Chinese yuan (ONSHORE) closed DOWN at 6.6610/Oil rose to 43.21 dollars per barrel for WTI and 45.53 for Brent. Stocks in Europe ALL IN THE GREEN . Offshore yuan trades  6.67000 yuan to the dollar vs 6.6610 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS TRIES MORE USA DOLLARS LEAVING THEIR SHORES  

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

Japan orders its military to a state of alert as North Korean missiles land in Japanese waters. North Korea accuses the USA of seeking a preemptive nuclear strike.  Japan is now on full alert:

(courtesy zero hedge)

Japan Orders Military To ‘State Of Alert’ As North Korea Accuses US Of Seeking ‘Preemptive Nuclear Strike’

Just days after North Korea has accused Washington of planning a preemptive nuclear strike – following the US announcement that it would deploy its B-1 bomber in the Pacific for the first time in a decade – Japan’s increasingly militarist tone just ratcheted up to ’11’ as defense ministry officials have ordered its military to be ready at any time to shoot down any North Korean missiles that threaten to strike Japan, putting its forces on a state of alert for at least three months.

Tensions have been running high since North Korea – officially named the Democratic Peoples’ Republic of Korea (DPRK) -carried out its fourth nuclear test in January, followed by a barrage of missile launches that this month reached Japanese waters directly for the first time (via Military.com)…

Pyongyang accused Washington of “becoming all the more pronounced in their moves to topple down the DPRK by mobilizing all nuclear war hardware,” using North Korea’s official title.

“The enemies are bluffing that they can mount a preemptive nuclear strike on the DPRK by letting fly B-1B over the Korean peninsula within two-three hours in contingency,” said an English-language statement on state media.

“Such moves for bolstering nuclear force exposes again that the US imperialists are making a preemptive nuclear strike on the DPRK a fait accompli.”

On July 29, the U.S. Air Force said it would upgrade its hardware on Guam by sending the B-1 for the first time since April 2006.

“The B-1 will provide U.S. Pacific Command and its regional allies and partners with a credible, strategic power projection platform,” it said in a statement.

Pyongyang has repeatedly warned it may carry out preemptive nuclear strikes against South Korean and U.S. targets.

The secretive state, led by supreme leader Kim Jong-un, warned Saturday it would respond to any aggression by reducing the U.S. to a “sea of flames”.

“The ever-mounting moves of the U.S. imperialists to ignite a nuclear war are pushing the situation on the Korean peninsula into the uncontrollable and catastrophic phase,” said the North Korean statement.

And so, following this outburst, as Reuters reports, Abe has stepped up his military’s preparedness to respond…

Japan ordered its military on Monday to be ready at any time to shoot down any North Korean missiles that threaten to strike Japan, putting its forces on a state of alert for at least three months, a defense ministry official and media said.

Up to now, Japan has issued temporary orders when it had indications of an imminent North Korean missile launch that it has canceled after a projectile had been launched.

However, because some test firings are hard to detect, it has decided to put its military on standby for a longer period. The order will be reviewed after three months, state broadcaster NHK said.

In other words, the next time Kim Jong-un launches, it may start the next war.

*  *  *

An increasingly militaristic Japan is something we’ve been warning about for a while. As Liberty Blitzkrieg’s Mike Krieger previously detailed

In case you aren’t up to speed on your Japanese history, the nation’s post WWII Constitution prohibits military action unless it’s in self-defense. Clearly a sensible approach, which is why the current Japanese government, led by the demonstrably insane and incompetent Prime Minister Shinzo Abe, wants to get rid of it.

This story is very important. Not only will this action increase the likelihood of World War III in the Far East, but it’s another important example of a government acting against the will of the people.

Polling has indicated the Japanese public is against a pivot toward militarization and war, but Prime Minister Shinzo Abe  is pushing forward nonetheless. In fact, the current legislation to allow overseas military intervention has already passed the lower house of government. This prompted many Japanese to emerge from their decades long political apathy and get out into the streets. It’s estimated these protests were the largest in recent memory.

Fast forward a year, and here’s what Abe is up to now.

From the AP article, Japan Picks Defense Chief Who Downplays Wartime Past:

TOKYO (AP) — A woman who has downplayed Japan’s wartime actions and is known to have far-right views was named defense minister in a Cabinet reshuffle on Wednesday, a move that could unsettle relations with Asian neighbors with bitter memories of World War II-era atrocities.

Prime Minister Shinzo Abe changed more than half of the 19-member Cabinet in a bid to support his economic and security policies, as well as push for revising Japan’s postwar constitution.

While keeping the economy as the top priority, Abe said he would do his “utmost to achieve a (constitutional) revision during my term,” which ends in September 2018.

A lawyer-turned-lawmaker with little experience in defense, Inada is one of Abe’s favorites. She regularly visits the Yasukuni Shrine, which honors war dead including convicted war criminals, a gesture seen as an endorsement of Japan’s militaristic past.

She also has defended Japan’s wartime atrocities, including forcing many Asian women into sexual servitude in military-run brothels, and has led a party committee to re-evaluate the judgment of war tribunals by the Allies.

Her link to a notorious anti-Korea group was acknowledged by a court this year in a defamation case she lost. Inada also was seen posing with the leader of a neo-Nazi group in a 2011 photo that surfaced in the media in 2014.

Finance Minister Taro Aso, Foreign Minister Fumio Kishida and Chief Cabinet Secretary Yoshihide Suga were among key Cabinet members who retained their portfolios, while 10 ministers were replaced in the reshuffle. Many are not necessarily experts in their assigned portfolio, prompting opposition lawmakers to criticize Abe for dominating the Cabinet with like-minded supporters of his political views.

While campaigning for last month’s upper house elections, Abe promised to focus on economic revitalization in the short term, and to later seek to revise Japan’s pacifist constitution.

Since he took office in late 2012, Abe has sought to boost growth by pumping massive amounts of money into the world’s third-biggest economy. But lavish monetary easing and public works spending so far have failed to reignite growth as much as hoped.

As is typically the case, when all else fails on the domestic front, politicians look to get a war started.

The question is, Krieger asks ominously, what sort of war will this be? If it happens, it’ll be the first fourth turning level war since the nuclear age began. In a best case scenario, world leaders would be at least sane enough not to deploy nuclear weapons. If that’s the case, the conflict would likely focus on financial and cyber warfare. Things that can be extraordinarily destructive in their own right, but would at least avoid a destruction of the human race. Such topics will be explored further in the years ahead.

b) REPORT ON CHINA

EUROPEAN AFFAIRS

So far the experts has got it wrong with respect to the BREXIT.  The British economy is not faltering.  One area doing well is travel as international visitors are lining up to see England due to the weaker pound

(courtesy zero hedge)

Brexit Bonanza: International Visitors To The UK Jump Thanks To Weaker Pound

end

RUSSIAN AND MIDDLE EASTERN AFFAIRS

Turkey/Russia

The meeting between Turkey’s Erdogan and Russia’s Putin is scaring the USA to no end. Relations between the USA and Turkey are the worst seen in 50 years:

(courtesy zero hedge)

West On Edge As Erdogan Meets With Putin: “Turkey’s Relations With The US Are The Worst In 50 Years”

The bad blood between Turkey and Russia over the November downing of a Russian fighter jet over Turkey is all but forgotten as Turkish president Recep Tayip Ergodan is to meet with “his friend” Vladimir Putin in the latter’s home town of St. Petersburg in hopes of turning a fresh page in the two countries’ relations. It will be their first meeting since diplomatic relations between the two nations turned icy cold late last year. In a slap to the face of its Western friends, as the FT puts it, instead of visiting a Nato ally, Erdogan’s first trip abroad since surviving last month’s coup attempt the Turkish president is going to Vladimir Putin’s Russia.

In a dramatic pivot by Turkey, the summit has taken on broader geopolitical significance. “The west is criticising Erdogan over his crackdown in the wake of the coup, and Erdogan is denouncing them over that,” said Alexei Malashenko, an analyst at the Moscow Carnegie Centre. “This tension between Turkey and its Nato allies is extremely beneficial to Russia.” The rapprochement between Moscow and Ankara began in June, before the coup attempt, when the Kremlin accepted Mr Erdogan’s apology for the downing of the aircraft over Turkey’s shared border with Syria. Within days, officials from both countries had begun talks to roll back sanctions Russia imposed on Turkey following the incident the FT adds.

Since then broader issues have pushed Moscow and Ankara closer together,including the desire to teach the west a lesson and shared interests in dealing with the regional security threat. Ankara also welcomed the fact that Moscow gave its unequivocal backing to Turkey following the failed coup.

“We appreciate the fact that the Russian Federation assumed a clear position on this issue,” Ibrahim Kalin, Mr Erdogan’s spokesman, told Russian news agency Tass last week. This tone contrasts with Ankara’s rhetoric towards its allies. Mr Erdogan has repeatedly lashed out at the US for its response to the coup attempt and its failure to extradite Fethullah Gulen, the 75-year-old former imam accused of masterminding the plot from his self-imposed exile in Pennsylvania — a charge he strongly refutes.

Meanwhile, there has been an inexplicable deterioration in Turkey’s foreign relations with the west. Just hours after a visit to Turkey last week by Joseph Dunford, head of the US military, aimed at soothing tensions, Erdogan unleashed some of his harshest remarks so far. “I’m calling on the US: what kind of strategic partner are we, that you can still host someone whose extradition I have asked for?” he said. He went on to accuse the west of supporting terrorism and said the “script” for the plot “was written outside” Turkey.

One Turkish diplomat in Moscow said: “Our relations with the US are the worst in 50 years  . . .  and that definitely makes engaging Russia an attractive option.”

Needless to say, For Putin, the tension between the Nato allies is welcome — Moscow has for two decades condemned Nato expansion and recently stepped up its criticism that the alliance was a threat to Russia. Mr Malashenko talks of a “revival of the theory that Russia and Turkey should be close because both are former empires . . .  simultaneously European and somehow unique.”

Meanwhile, Ankara appears to expect much from the much anticipated meeting, suggesting that the Kremlin has all the leverage ahead of today’s summit.

“This will be a historic visit, a fresh start. I believe that a new page will be opened [during]… the negotiations with my friend Vladimir [Putin],” President Erdogan told TASS news agency in an exclusive interview ahead of the visit, adding that “there is yet much for our countries to do together.”

Erdogan’s statement was echoed by Turkish ambassador to Russia Umit Yardim, who told RIA Novosti: “I can definitely say that it will be a historic meeting. We were preparing it for nearly one month.” He said the two leaders are expected to meet tête-à-tête and then come out with a “roadmap” to help bring Russia-Turkey relations “to a brand new level.”

While Ankara is obviously eager to improve ties with Moscow, which have seen a dramatic downturn as of late, Russia has maintained a more reserved and pragmatic approach. “The Syrian crisis will be discussed in depth and we hope that Turkey’s position will become more constructive,” Yury Ushakov, Vladimir Putin’s foreign policy aide, told reporters on Friday.

Moscow and Ankara still largely disagree on Syria, as Turkey wants President Bashar Assad to be ousted, while Russia supports him and the Syrian army in their fight against Islamists. Russia’s Defense Ministry has accused Turkey of aiding Islamic State (IS, previously ISIS/ISIL) in the past, citing data indicating that the militants are being re-supplied and re-armed from Turkey. Kremlin spokesman Dmitry Peskov said on Tuesday: “We have a serious conversation ahead on how, at what pace, and in what sequence we will work on restoring our relations.”

The talks will likely center on “current economy-related issues” and the Syrian crisis. “You may feel free to forecast that an in-depth conversation on regional affairs, including Syria, will also take place,” he stressed.

Relations between the two countries began to thaw in late June after Erdogan sent a letter to the Kremlin that was viewed in Moscow as offering an apology for downing Russia’s jet. The letter, quoted by the Kremlin, said Turkey was “ready for any initiatives to relieve the pain and severity of the damage done.” Moscow said it acknowledges that Turkey is serious about restoring closer relations between the two countries. “The Turkish President is coming to St. Petersburg, despite a relatively complicated situation at home,” Ushakov asserted.

* * *

And while Turkey pivots to Russia, the bigger question is what happens to Turkish relations with the west next. Western diplomats, cited by the FT, worry that Ankara could use Russia as a lever in its relations with the west, including over Syria. Turkey cut off power to the Incirlik air base, from which the US launches bombing raids against Isis, for a week after the coup.

Russian and Turkish diplomats said they expected Turkey would now tone down public criticism of Bashar al-Assad, Syria’s president, and privately acquiesce to Moscow’s position that his regime is one of the guarantors of preserving Syrian statehood at least during a transition period. Ankara has backed rebels battling forces loyal to Mr Assad, while Russia supports the Syrian leader’s regime. In return, Turkey will hope that Mr Putin will agree to moderate his support for Syria’s Kurds, although one Russian foreign policy expert said any policy revision would be “tricky” in practice. “Ties with the Kurds run deep throughout Russia’s diplomatic community, and we will never give up this asset,” he said.

Despite shared interest over regional issues, officials in Moscow and Ankara also remain guarded in guessing the outcome of their leaders’ meeting. “One should not expect things to very quickly return to the level where they were before the [fighter jet] incident,” said Dimitry Peskov, Mr Putin’s spokesman who spent eight years as a diplomat in Ankara. “It will take time to restore trust.”

Mr Malashenko said the test of whether the reconciliation was strategic or a tactical ruse would be evident in the pace at which Turkish-Russian economic ties were restored. One European diplomat said:“Erdogan can lash out all he likes but he needs us. He knows he cannot trust Putin. How many Turkish-Russian wars have there been over the last three hundred years? How many did the Turks win?

* * *

Perhaps said diplomats are a tad too optimistic on the legacy ties that bind. Earlier today, Turkey struck a major blow to Europe’s critical migrant deal that is keeping millions of Syrian refugees out of Europe, when it announced that the EU’s demand that Turkey must overhaul its terror laws in return for visa-free travel is “impossible” in the aftermath of last month’s attempted coup, the country’s EU minister has warned.

In an interview with the Financial Times, Omer Celik, dealt a fresh blow to the fragile deal between the EU and Ankara that has helped stem the flow of refugees and migrants to European shores. For the EU to ease visa requirements for 79m Turkish citizens — one of a series of incentives promised in return for Turkey’s help with the refugee crisis — Turkey needs to amend its sweeping terror legislation in line with EU law and guidance from the Council of Europe.

Celik said that Turkey was open to discussions about counterterror law with European partners and could commit to reforms in the longer term. He warned, however, that it was “impossible” in the short term after the government was almost overthrown by alleged supporters of Fethullah Gulen, an exiled cleric who Turkey has branded a terrorist. He strongly denies the accusation. Celik said Turkey had survived “a coup attempt by a terrorist organisation”, adding: “We have the PKK, Daesh [Isis] and other groups launching attacks so it would not be intelligent to make an amendment in the terrorism law at this point.”

The bottom line is that suddenly the migrant deal appears close to collapse, perhaps with the “gentle nudging” of Russia. One EU diplomat based in Ankara said it was not clear that the collapse of the agreement would even make a difference. “It is not the Turks who are stopping the refugees. It is the fact that the Balkan route is closed — and that the processing in Greece is taking so long,” said the source. According to official figures, before the agreement, about 1,740 migrants were crossing from Turkey’s Aegean coast to the chain of nearby Greek islands every day. In June, the daily average was 48.

That said, we may very soon find out just how closed the Balkan route is if and when Erdogan pulls the plug. The last thing Europe already on edge following a surge in refugee terrorism- and certainly Merkel’s tumbling popularity – needs, is another million migrants taking advantage of Germany’s “open door” policy.

(courtesy zero hedge)

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

Euro/USA   1.1082 DOWN .0003 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 102.21  DOWN 0.076(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 1.2975 DOWN .0057(CARNEY CUTS BR. INTEREST RATES TO .25%)

USA/CAN 1.3149 DOWN .0006

Early THIS TUESDAY morning in Europe, the Euro FELL by 3 basis points, trading now JUST above the important 1.08 level RISING to 1.1082; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED UP 21.41 POINTS OR .71%    / Hang Sang CLOSED DOWN 29.15 POINTS OR 0.13%     /AUSTRALIA IS HIGHER BY .27% / EUROPEAN BOURSES  ALL IN THE GREEN

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 TUESDAY morning CLOSED UP 144.40 POINTS OR 0.69%  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 29.15 POINTS OR .13%  ,Shanghai CLOSED UP 21,41  POINTS OR .71%    / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED UP 144.40 OR 0.69%  /INDIA’S SENSEX IN THE GREEN 

Gold very early morning trading: $1333.65

silver:$19.71

Early TUESDAY morning USA 10 year bond yield: 1.579% !!! DOWN 1  in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.296 DOWN  1 in basis points from MONDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early TUESDAY morning: 96.38 UP 9 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

END

And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  2.80% DOWN 2 in basis points from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.077% DOWN 3 in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.00% UP 1 IN basis points from MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.12 PAR in basis points from MONDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 12 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.076% DOWN 1 IN  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR TUESDAY

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

Euro/USA 1.1089 UP .0024 (Euro UP 24 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 101.87 DOWN 0.412(Yen UP 41 basis points/

Great Britain/USA 1 2996 DOWN 0.0036 ( Pound DOWN 36 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.3139-DOWN 0.0016 (Canadian dollar UP 16 basis points AS OIL FELL(WTI AT $42.62). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 24 basis points to trade at 1.1089

The Yen FELL to 101.87 for a GAIN of 41 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was DOWN 36 basis points, trading at 1 .2996 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar ROSE by 16 basis points to 1.3139, WITH WTI OIL AT:  $42.64

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6530

the 10 yr Japanese bond yield closed at -.077% DOWN 3  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 4 IN basis points from MONDAY at 1.543% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.253 DOWN 4 in basis points on the day /

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

Your closing USA dollar index, 96.12  D0WN 22CENTS  ON THE DAY/4 PM 

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

London:  CLOSED UP 42.17 OR 0.31%
German Dax :CLOSED UP 260.54 OR  2.50%
Paris Cac  CLOSED  UP 52.61  OR 1.19%
Spain IBEX CLOSED UP 102.90 OR 1.20%
Italian MIB: CLOSED UP 52.32 OR 1.20%

The Dow was up 3.76 points or 0.02%

NASDAQ  up 12.34 points or 0.24%
WTI Oil price; 42.64 at 4:30 pm;

Brent Oil: 44.80

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.84 (ROUBLE DOWN  22/100 ROUBLES PER DOLLAR FROM THURSDAY) 

TODAY THE GERMAN YIELD FALLS TO -.076%  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:42.76

BRENT: 44.78

USA 10 YR BOND YIELD: 1.5488% 

USA DOLLAR INDEX: 96.13 down 23 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3000 DOWN .0030 or 30 basis pts.

German 10 yr bond yield at 5 pm: -.076%

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

Worst Productivity Data In 37 Years Sends S&P, Nasdaq To Record Highs

Stocks hit new record highs… again!!!!

 

Oil and stocks remain higher post-payrolls, but bonds and bullion are catching up…

 

The machines managed to crush VIX to within a tick (11.02) of a 10-handle and new record highs for the S&P 500…(before it tumbled)…

 

Desperate machines clung Dow and S&P to unchanged…

 

Once again the knee-jerk squeeze higher at the open turned into weakness… leaving Dow and S&P red on the week.,

 

As Nasdaq hit its record highs again, breadth is falling apart quickly…

 

Not helped by Facebook’s flop…

 

Energy credit markets remain entirely decoupled from fundamental reality still… thanks to ECB ‘spillover’…

 

Bonds and stocks decoupled today…

 

Treasury yields tumbled after the productivity debacle… (as the yield curve flattens back towards cycle lows once again)

 

And financials refuse to admit that the curve is flattening…

 

With stocks ignoring the long-end retracing all of the post-payrolls losses…

 

The USD Index tumbled on the shitty productivity data as dreams of a Fed rate hike dissolved on data again…

 

Cable weakened as UK QE started… (back below 1.30)

 

Commodities were initially bid on productvity-driven weak USD but reality set in for crude…

 

Oil and stocks recoupled after EU closed…

 

Charts: Bloomberg

 

 

 

Bonus Chart: in case you hadn’t already seen it, here is another chart to ignore…

 

 

 

end

 

 

 

David Stockman on the ten most important things that Trump must do if he is elected:

(courtesy David Stockman)

Memo To The Donald——–10 Great Deals To Save America

NOTE TO READERS

I am in the throes of finishing a book on the upheaval represented by the Trump candidacy and movement. It is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.

It also delves into the good and bad of the Trump campaign and platform and outlines a more consistent way forward based on free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.

In order to complete the manuscript on a timely basis, I will not be doing daily posts for the next week or two. Instead, I will post excerpts from the book that crystalize its key themes and which also relate to the on-going gong show in the presidential campaigns and in the financial and economic arenas. Another of these is included below.

I am also working with my partners at Agora Financial on a new version of Contra Corner. More information on that will be coming early next month.

Trumped Final

……Unfortunately, it is too late to reverse the tidal wave of system failure that has been brewing for three decades now. It will soon end in a speculator implosion.

Whether that crisis commences before November 8th or soon thereafter is largely immaterial. If the Trump campaign has the good sense to focus on the gathering economic storm clouds, it’s the one thing that could catalyze an out-with-the-bums uprising across Flyover America on Election Day.

So let us reiterate our thesis even more vehemently. The idea that the American economy has recovered and is returning to an era of healthy prosperity is risible establishment propaganda. It’s the present day equivalent of the Big Lie. It’s the reason why Hillary Clinton’s campaign to validate and extend the current malefic Wall Street/Washington regime is so reprehensible.

In fact, the natural post-recession rebound of the nation’s capitalist economy has already exhausted itself after 84 months of tepid advance. Now, the massive headwinds of towering public and private debts, faltering corporate investment and productivity, Washington-based regulatory and tax-barriers and the end of an unsustainable central bank fueled global credit, trade and investment boom are ushering in a prolonged era of global deflation and domestic recession.

Indeed, the only thing that has really recovered from the epochal breakdowns of 2008-2009 is the stock market averages which are now at levels 3X the March 2009 bottom. But as detailed in Chapter 3, the market’s current lofty valuation is an utterly artificial fiction of Bubble Finance.

In fact, the market would be heading for a hefty correction in any circumstance after being fueled for seven years with free money and massive liquidity injections by the central bank. But at a nosebleed 25X reported GAAP earnings, and after an 18% decline from their September 2014 peak already, the broad stock market is more over-valued than any time in history, including the peaks before 2008, 2000 and 1929.

So in the face of the fast oncoming domestic recession and deepening global deflation, Wall Street is set-up for the mother of all crashes. And what makes it so wicked is that the casino gamblers have been rescued by the Fed so many times since 1987 that they have no clue that the nation’s monetary central planners are out of dry powder.

The reasons are explained in Chapter 4, but suffice it here to say that when the stampede for the exits gets underway this time, and there are no monetary fireman at the ready, sheer bedlam will quickly ensue on Wall Street.

Likewise, there will be no possibility of a fiscal rescue, either. That’s because during 84 months of the weakest recovery in history Washington has whiffed entirely on the fiscal front. Not a single thing has been done about the structural deficit and the fast approaching insolvency of the nation’s massive social insurance system.

Indeed, when the $150 billion per year disability trust fund ran out of cash, the cowardly men and women of Capitol Hill merely authorized a raid on the soon to be insolvent OASI trust fund for retirees and their dependents.

Accordingly, as the eventuality of the next recession becomes impossible to deny, the updated budget projections will show a swift return to trillion dollar annual deficits even without any new “stimulus” programs. The Washington fiscal fireman will be hog-tied, and the insouciant breast-beating by Barack Obama about how he has tamed the Federal deficit will be reviled by his successors for decades to come.

It can be said with not inconsiderable certainty, in fact, that under current bipartisan policy and realistic economic forecasts at least $15 trillion will be added to the nation’s current $20 trillion of public debt during the next 10 years.

That is, under economic projections for the world economy as it is, not as the latter day Keynesian devotees of Rosy Scenario who inhabit the Washington budget offices fantasize it to be, the Federal debt ratio will approach 150% of GDP during the next decade. That means, in turn, that when interest rates eventually normalize—-as they must if the monetary system of the world is to survive—-debt service will soar to $1.5 trillion per year.

That happens to represent more than 6% of a prospective nominal GDP that has only grown at 3% annually for most of this century. Another description for that unsustainable equation would be a fiscal doomsday machine.

So there is a perfect storm of calamity brewing, and the rumbling sounds of its arrival are being heard by the plain people of America, even if the bicoastal elites remain clueless in their temporary world of bubble finance prosperity. Even as they harrumph and remonstrate against Trump’s bombastic and politically incorrect style, they are missing entirely the profound economic grievances which have brought Flyover America to the political barricades.

To be sure, The Donald could readily turn into every bit of the scorched earth marauder that the ruling elites are now shrieking about. If he manages to avoid being Goldwatered and actually takes up residence in the White House, we may end up with more of the police state demagogue who harangued the nation during the Republican convention and less of the capitalist insurrectionist who has given hope to tens of millions of voters left behind in Flyover America.

At this late hour, however, it is not even a case of paying your money and taking your chances. There is no chance at all if Hillary Clinton is elected.

There will be war. There will be a crash. There will be fiscal and monetary bedlam.

But there will be no recovery or anything which passes for real capitalism and honest democracy in America—–ever again.

Ten Great Deals For The Donald

But there is a sliver of hope. If Donald Trump is elected, eschews a law and order crusade and does not capitulate to the destructive policies of the Wall Street/Washington/bicoastal establishment, there is a way forward. The political outlaw who considers himself to be the world’s greatest deal-maker would need to do just that.

To wit, a President Trump determined to rid the nation of its mutant regime of Bubble Finance at home and failed interventionism abroad would need to make Ten Great Deals.

Peace Deal with Putin for dismantlement of NATO,  cooperation in the middle east, strangulation of ISIS by the Shiite Crescent and a comprehensive worldwide agreement to end the arms trade and pave the way for general disarmament.

A Jobs Deal based on slashing taxes on business and workers and replacing them with taxes on consumption and imports.

Sound Money Deal to repeal Humphrey-Hawkins, end the Fed’s war on savers and cash, abolish the FOMC and limit the Fed’s remit to passively providing liquidity at a penalty spread over market interest rates based on sound commercial collateral.

A Glass-Steagall Deal to break up the giant financial conglomerates, limit the Fed’s liquidity window to “narrow banks” which only take deposits and make loans and deny deposit insurance to any banking institution involved in Wall Street trading, derivatives and other forms of financial gambling.

A Federalist Deal to turn back most of Washington’s domestic grant and welfare programs to the states and localities in return for a mega-block grant with a 30-year phase-out.

A Regulatory Deal based on an absolute 4-year freeze on every single pending regulation, and then subjecting every existing statute to strict cost-benefit rules thereafter.

A Liberty Deal to get Washington out of the war on drugs, criminal law enforcement and regulation of private conduct and morality.

Health Care Deal based on the repeal of Obamacare and tax preferences for employer insurance plans and their replacement with wide-open provider competition, consumer choice and individual health tax credits.

A Fiscal Deal to slash post-disarmament defense spending, devolve education and other domestic programs to local government and to clawback unearned social security/medicare entitlements benefits from the affluent elderly.

And a Governance Deal to amend the constitution to rescind Citizens United, impose term limits and establish public finance of all Federal elections.

What follows are the facts and analytics which demonstrates why America is fast heading toward ruin under the existing policy regime, and why these ten deals could establish the charter for a new way forward.

 

end

 

This is not good: the USA productivity plunges for the 3rd consecutive quarter.

no real cap ex spending!

(courtesy zerohedge)

US Productivity Plunges For 3rd Quarter In A Row – Longest Losing Streak Since 1979

 

The low productivity number causes markets to fall:

 

 

Inventory to sales lowers a bit to 1.33 but still in recession mode:

(courtesy zero hedge)

Wholesale Inventories Rise, Sales Surge Most In 4 Years

 

 

end

 

The following is a huge story:  Proctor and Gamble the world’s largest advertiser is moving away from Facebook as it questions the ad effectiveness. Ads are Facebook’s sole source of revenue!

(courtesy zero hedge)

Facebook Flops After World’s Largest Advertiser Questions Ad Effectiveness

Facebook tumbled in midday trading after WSJ reported Procter & Gamble – the biggest advertising spender in the world – will move away from advertising on Facebook that targets specific consumers after deciding the practice has limited effectiveness.

Facebook has spent years developing its ability to zero in on consumers based on demographics, shopping habits and life milestones. P&G, the maker of Tide and Pampers, initially jumped at the opportunity to market directly to subsets of shoppers, from expectant mothers to first-time homeowners.

 

Marc Pritchard, P&G’s chief marketing officer, said the company has realized it took the strategy too far.

 

“We targeted too much and we went too narrow,” he said in an interview, “and now we’re looking at: What is the best way to get the most reach but also the right precision?”

 

 

Cincinnati-based P&G spent approximately $8.3 billion on advertising globally in the year that ended June 2015, down 8% from the previous year, according to company filings. P&G said it increased ad spending by 1% in its most recent fiscal year and plans to increase it around 5% for the year that started July 1.

 

P&G’s push to find broader reach with its advertising is also evident in the company’s recent increases in television spending. Toward the end of last year P&G began moving more money back into television, according to people familiar with the matter. During the first quarter of 2016, the company’s ad spending jumped 11% to $429 million from the year earlier, Kantar Media said.

The first two tumbles weighed stocks down but once the machines got hold of the headline and crashed Facebook, the broad indices shrugged…

END

Well that about does it for today

I will see you tomorrow night

h

 

Advertisements

5 comments

  1. raymikeva · · Reply

    Harvey–We seem to have lost the formatting in Firefox once again. Things look fine in IE and Edge though. Keep up the good work

    Like

  2. Harvey,
    Your blog is one big paragraph, no paragraphs, no titles, no spaces. Fix it please!

    Like

  3. Formatting recovered for me several days ago using Firefox. ???????

    Like

  4. Surely, Harvey will loose all of his visitors if he keeps cutting & pasting big blobs like this.

    Besides, apart from formatting issues: Chris Powell of GATA himself said many months ago that any attempts to interpret COMEX data (which was the unique value Harvey used to bring) have lost all meaning and purpose.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: