August 10/Deliveries at the gold comex total almost 44 tonnes/ Amount standing for silver in August also rises/Gold and silver rise during physical time zones (China) but whacked back once London put to bed/England cannot monetize long term bonds because nobody wants to part with them and thus a failure in the gilt market/Deutsche bank failes the ZEW stress test/

Gold:1344.30 UP $5.30

Silver 20.13  up 32  cents

In the access market 5:15 pm

Gold: 1347.00

Silver: 20.17

.

For the August gold contract month,  we had a good sized 102 notices served upon for 10,200 ounces. The total number of notices filed so far for delivery:  11,645 for 1,164,500 oz or  tonnes or 36.221 tonnes

In silver we had 3 notices served upon for 15,000 oz. The total number of notices filed so far this month:  274 for 1,370,000 oz.

Let us have a look at the data for today

.

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In silver, the total open interest FELL BY A LARGE 4,597 contracts DOWN to 210,647 YET  STILL CLOSE AN ALL TIME NEW ALL TIME RECORD DESPITE THE FACT THAT THE  PRICE OF SILVER ROSE  BY 4 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.053 BILLION TO BE EXACT or 150% of annual global silver production (ex Russia &ex China).

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

In gold, the total comex gold ROSE  605 contracts as the price of gold ROSE by $4.60 YESTERDAY. The total gold OI stands at 575,399 contracts.

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

GLD

we had no changes in GLD/

Total gold inventory rest tonight at: 972.62 tonnes

SLV

we had no changes in the SLV, /   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 ROSE BY 4 cents with YESTERDAY’S trading.The gold open interest FELL 2,696 contracts DOWN to 574,794 as the price of gold ROSE by $4.60 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 6.93 POINTS OR 0.23%/ /Hang Sang closed UP 26.82 points or 0.12%. The Nikkei closed DOWN 29.85POINTS OR 0.18% Australia’s all ordinaires  CLOSED DOWN 0.16% Chinese yuan (ONSHORE) closed UP at 6.6318/Oil FELL to 42.58 dollars per barrel for WTI and 44.92 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.6318 yuan to the dollar vs 6.6318 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES

 

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

Two important points here:

  1. the Bank of Japan realizing it is in trouble pre-released a draft for the Sept meeting.
  2. No real tapering of bond purchases
  3. They are probably up against the same problem that England has: offerless bonds from the public as they keep scarce bonds.

the USA/Yen fell badly  (Yen rose) when the street realized that Japan was coming to the end of the road of monetization.

( zero hedge)

b) REPORT ON CHINA

none today

4 EUROPEAN AFFAIRS

i)ENGLAND

This stunned the street last night as the Bank of England could not fulfill its purchase of bonds as the public decided to keep much of their bonds due to their yield.

( zero hedge)

ii)FRANCE

This is to be expected!  French tourism tumbles 10% on average:

(courtesy Mish Shedlock)

iiiGERMANY

If the ZEW calculation is used to calculate stress, then Deutsche bank has some serious problems.  The ZEW calculation shows a capital gap of 19 billion euros and with only 17 billion euros of retained earnings, these guys are in serious trouble
(courtesy zero hedge)
iv) Italy

This is totally nuts:  1 yr Italian paper :  -0.19%.  Italy is a total bankrupt state and you have the privilege of  paying Italy for loaning them  money!

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

It appears that Russia is not so isolated after all.  Turkey makes peace with Russian and now the mothballed Turkish stream gas pipeline is now alive and well.  Turkey warns that west that they may be heading eastward.  The west reminds Ankara that is a NATO member and houses a boatload of nuclear missiles in Incirlik

(courtesy zerohedge)

6.GLOBAL ISSUES

We now have another country joining in on the rate cuts:New Zealand.  However the Kiwi soared to a one year high as everyone expected a bigger cut

( zero hedge)

7.OIL ISSUES

Crude plunges after another surprising build,  Also a good gasoline draw and a production cut did not help

( zero hedge)

8.EMERGING MARKETS

9.PHYSICAL STORIES

i)Gold and silver trading early this morning; As I promised you yesterday, the poor productivity number is having a devastating effect on markets;

(courtesy zero hedge)

ii)We brought this to your attention last night.  It seems that the LME is anxious to get investors to turn real gold into paper gold.  They key line here:  non allocated gold is used for delivery purposes.

First official story!

(reuters)

iii)Second story:

Craig Hemke comments:

We brought this to your attention last night.  It seems that the LME is anxious to get investors to turn real gold into paper gold.  They key line here:  non allocated gold is used for delivery purposes.

( Craig Hemke/TFMetals)

iv)Third story:

Ronan Manly comments!

v)

Bill Holter talks with Greg Hunter:

( Greg Hunter /USAWatchdog/Bill Holter)

 

 

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

i)WOW!! Assange tells the world that murdered DNC staffer was the email leaker and has offered a 20,000 reward for information.  Thus the assassination was politically motivated:

( zero hedge)

ii)Job openings rebound.  Also the number of workers quitting drop

( zero hedge)

iii) The all important report card on the consume filed by Ban of America shows that the consumer finally showed significant slowdown in spending! Remember the consumer is 70% of GDP

(zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE TO AN OI level of 575,399 for a GAIN of 605 contracts as  THE PRICE OF GOLD ROSE BY $4.60 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 ROSE by 80 contracts UP to 2581,  We had 267 notices filed upon yesterday so we GAINED 347 contracts or an additional 34,700 oz will stand for delivery in August. The next contract month of Sept saw it’s OI fall by 511 contracts down to 5,412.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 1112 contracts down to 46,889. 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 238,122.  The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 142,911 contracts.The comex is not in backwardation.
Today, we had  102 notices filed for 10,200 oz in gold
And now for the wild silver comex results. Total silver OI FELL by 4,597 contracts from 215,244 DOWN TO 210,647 despite the RISE in price of silver to the tune of 4 cents.  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 fall by 59 contracts down to 190. We had 61 notices served yesterday so we gained 2 contracts or an additional 10,000 oz will stand in this non active delivery month of August. The next big active month is September and here the OI fell by 7,587 contracts down to 122.-51. The volume on the comex today (just comex) came in at 83,228 which is huge and small rollovers..The confirmed volume yesterday (comex + globex) was excellent at 59,017 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months.
We had 3 notices filed for today for 15,000 oz
INITIAL standings for AUGUST
 August 10.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
385.800  oz
SCOTIA
12 KILOBARS
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 
nil
No of oz served (contracts) today
102 notices 
10,200 oz
No of oz to be served (notices)
2479 contracts
247,900 oz
Total monthly oz gold served (contracts) so far this month
11,645 contracts (1,164,500 oz)
(36.221 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month    99,793.6 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:  385.800    (12 KILOBARS)
Total customer withdrawals  385.800 OZ
Today we had 2adjustmentS:
i) out of DELAWARE:  500.000 oz was adjusted out of the CUSTOMER and this landed into the DEALER account of DELAWARE:?? HOW COULD THIS BE POSSIBLE???
ii) out of SCOTIA: 7052.252oz 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 102 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 76 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 (11,645) x 100 oz  or 1,164,500 oz , to which we  add the difference between the open interest for the front month of AUGUST  (2581 CONTRACTS) minus the number of notices served upon today (102) x 100 oz   x 100 oz per contract equals 1,412,000 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 (11,645) x 100 oz  or ounces + {OI for the front month (2581) minus the number of  notices served upon today (102) x 100 oz which equals 1,361,900 oz standing in this non  active delivery month of AUGUST  (43.9315 tonnes).
We gained 347 contracts or additional 34,700 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 + 43.9315 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/ aUG 10 .219 TONNES/THEREFORE 94.14 tonnes still standing against 73.845 tonnes available.
 Total dealer inventor 2,374,139.901 oz or 73.845 tonnes
Total gold inventory (dealer and customer) =11,348,142.617 or 352.974 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 352.974 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 10.2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
649,540.591 oz
CNT
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
626,095.900 oz
JPM
No of oz served today (contracts)
3 CONTRACTS
(305,000 OZ)
No of oz to be served (notices)
187 contracts
935,000 oz)
Total monthly oz silver served (contracts) 274 contracts (1,370,000 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  7,207,496.1 oz
today we had 0 deposit into the dealer account:
 Total dealer deposits;  NIL oz
we had 0 dealer withdrawal:
:
total dealer withdrawals:  NIL oz
we had 1 customer withdrawals:
ii) Out of CNT:  649,540.591 oz
Total customer withdrawals: 649,540.591 oz
We had 1 customer deposits:
ii) Into JPMorgan:626,095.900
total customer deposits:  626,095.900  oz
 
 
 
 we had 1 adjustment
i)out of DELAWARE:  59,932.148 was adjusted out of the dealer account and this landed into the customer account of DELAWARE
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 (274) x 5,000 oz  = 1,370,000 oz to which we add the difference between the open interest for the front month of AUGUST (190) and the number of notices served upon today (3) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the AUGUST contract month:  274(notices served so far)x 5000 oz +(190 OI for front month of AUGUST ) -number of notices served upon today (3)x 5000 oz  equals  2,305,000 oz  of silver standing for the AUGUST contract month.
we gained 2 contracts or an additional 10,000 oz will  stand for delivery in this non active month of August.
 
Total dealer silver:  27.485 million (close to record low inventory  
Total number of dealer and customer silver:   152.876 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 10/no changes in GLD/Inventory rests at 972.62 tonnes
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 10/ Inventory rests tonight at 972.62 tonnes

end

Now the SLV Inventory
August 10/no changes in silver inventory at the SLV/Inventory rests at 351.765 oz
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 10.2016: Inventory 351.765 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 5.6 percent to NAV usa funds and Negative 5.5% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 58.8%
Percentage of fund in silver:40.1%
cash .+1.1%( August 10/2016).
2. Sprott silver fund (PSLV): Premium rises  to +1.59%!!!! NAV (august 10/2016) 
3. Sprott gold fund (PHYS): premium to NAV  rises TO  1.24% to NAV  ( august 10/2016)
Note: Sprott silver trust back  into POSITIVE territory at +1.59% /Sprott physical gold trust is back into positive territory at 1.24%/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

Peak Gold – Did Gold Production Peak in 2015?

‘Peak Gold’ is happening which has important ramifications for the gold market and is another long term positive fundamental. This is why we were one of the first analysts to consider the peak gold phenomenon back in 2007 and 2008 (see here) and have considered peak gold frequently over the years.

One of the more astute gold analysts today, Frank Holmes also believes that peak gold is happening and may even have occured in 2015. Peak gold and the fact that total annual global gold production is likely to have peaked is an important supply side factor in the gold market. This is one of the bullish factors which will support prices and indeed should contribute to higher prices in the coming years.

Holmes latest article is a must read:

The Last Known Gold Deposit

Goldcorp CEO Chuck Jeannes called 2015 the eyar for peak gold, citing the lack of new major gold discoveries. Do the facts line up with his predictions?

Gold is one of the rarest elements in the world, making up roughly 0.003 parts per million of the earth’s crust. (For some perspective, one part per million, when converted into time, is equivalent to one minute in two years. Gold is even rarer than that.) If we took all the gold ever mined—all 186,000 tonnes, from the bullion at Fort Knox to India’s bridal jewelry to King Tut’s burial mask—and melted it down to a 20.5 meter-sided cube, it would fit snugly within the confines of an Olympic-size swimming pool.

The yellow metal’s rarity, of course, is one of the main reasons why it’s so highly valued across the globe and, for most of recorded history, recognized and used as currency. Unlike fiat money, of which we can always print more, there’s only so much recoverable gold in the world. And despite the best efforts of alchemists, we can’t recreate its unique chemistry in a lab. The only way for us to acquire more is to dig.

But for how much longer?

Goldman Sachs analyst Eugene King took a stab at answering this question last year, estimating we have only “20 years of known mineable reserves of gold.”

The operative word here is “known.” If King’s projection turns out to be accurate, and the last “known” gold nugget is exhumed from the earth in 2035, that won’t necessarily spell the end of gold mining. Exploration will surely continue as it always has—though at a much higher cost.

(In fact, our insatiable pursuit of gold might one day soon take us to space, as President Barack Obama signed legislation in November that permits commercial mineral extraction on asteroids and the moon. Many near-Earth asteroids are said to contain trillions of dollars’ worth of precious metals and other minerals. But that’s a discussion for another time.)

We’ll probably see a surge in mergers and acquisitions, as I told Kitco News’ Daniela Cambone last week. I think that as long as they have reliable output, mid-cap companies could be gobbled up by the Barricks and Newmonts of the world.

Another consequence of recovering the last known nugget? The gold price could spike dramatically to levels only imagined. My colleague Jim Rickards, in his book “The New Case for Gold,”puts it at $10,000 an ounce. GoldMoney founder James Turk saysit’s closer to $12,000. There’s really no way of knowing how high gold could go.

Did Gold Production Peak in 2015?

What we do know is that global gold output has been contracting since 2013. Last year might have been the tipping point, however, in line with Goldcorp CEO Chuck Jeannes’ prediction that peak gold was within spitting distance.

“There are just not that many new mines being found and developed,” he told the Wall Street Journal in 2014, adding that this was “very positive” for the gold price going forward.

This year, second-quarter mine supply was 2 percent less than the same period in 2015, according to preliminary estimates made by Thomson Reuters GFMS. Some analysts now expect global production to fall 3 percent in 2016, after seven straight years of growth.

world quarterly mine production is trending down
click to enlarge

What’s more, few new projects and expansions are expected to come online this year, writes Thomson Reuters, “and those in the near-term pipeline are generally fairly modest in scale, hence our view that global mine supply is set to begin a multiyear downtrend in 2016.”

Indeed, if we look at projects that opened in just the last two or three years, we see that they’re of lower grade, meaning they don’t produce nearly as much as older, easy-to-mine gold deposits.

new mines are making small contributions to global gold production
click to enlarge

The truth of the matter is, when it comes to discovering new gold deposits, the low-hanging fruit has likely already been picked. Gone are the days when someone could stumble upon an exposed hunk of gold at the bottom of a riverbed, as James Marshall did in 1848, setting off the California Gold Rush. Every year, the pursuit of gold becomes increasingly more challenging—not to mention more expensive—requiring ever more sophisticated tools and technology, including 3D seismic imaging, direction drilling and airborne gravimetry. (A satisfactory “gold fracking” method, however, seems unlikely to become reality any time soon.)

Compounding the issue is the fact that the number of years between discovery of a new major deposit and production is widening, due to the increase in feasibility assessments, compliance, licenses and more—and that’s all before nugget one can be extracted. The average lead time for gold mines worldwide is close to 20 years, though it can sometimes be more, depending on the jurisdiction. This highlights the need for worldwide policy reform to remove many of the barriers that obstruct responsible mining.

number of years between deposit discovery and production is growing
click to enlarge

In The Goldwatcher, the book I co-wrote with John Katz, I expressed the importance of knowing which developmental stage of a mine’s lifecycle a project currently falls into, as this has a strong influence on stock performance. Investing, like life, is all about managing expectations.

lifecycle of a mine
click to enlarge

Few New Mines as Companies Deleverage

What all of this means is we’ll probably continue to see fewer and fewer major discoveries, or those that yield more than a million ounces. As you can see below, new gold discoveries peaked in 1995. Exploration spending peaked nearly 20 years later when the price per ounce averaged $1,600.

Where Have All the Gold Discoveries Gone
click to enlarge

With gold now trading above $1,340 an ounce, up 26 percent for the year, many investors expect producers to begin lifting spending on exploration and production (or dividends).

Instead, most companies are in cost-cutting mode, using this opportunity to pay down debt and liquidate assets. According to Reuters, North American gold producers have managed to lower their debt levels 30 percent since late 2014.

Speaking to Mining.com, Newmont Mining CEO Gary Goldbergsaid his company, the second-largest gold producer in the world, is one of the few that’s currently building new mines—specifically the Merian project in Suriname and Long Canyon in Nevada. Because of the lack of new mines being built, he sees supply falling 7 percent between now and 2021.

Demand for the yellow metal, on the other hand, should remain strong during this period, helping to support prices even more.

Massive Inflows into Gold Funds

Daily Percent Change Following Positive Jobs Report

In the meantime, gold continues to find support from global monetary policy and low to negative government bond yields. Last week the Bank of England cut rates as part of a stimulus package, which both weakened the British pound 1.5 percent and gave the yellow metal a jolt.

These gains were erased, however, following Friday’s better-than-expected U.S. jobs report, which sparked a rally in Treasuries. This contributes to the narrative that gold and government debt are inversely related, a key component of the Fear Trade.

When priced in the local currencies of the U.S., Canada, South Africa or Australia—four of the largest gold-producing countries—bullion is up, which has boosted miners’ profits. Gold stocks, as measured by the NYSE Arca Gold Miners Index, have appreciated 128.92 percent in the last 12 months.

Gold Priced in Local Currencies
click to enlarge

For the first half of 2016, inflows into commodities have been the strongest since 2009. Gold and other precious metals account for about 60 percent of the new money, which has pushed commodity assets under management above $235 billion. Barclays believes 2016 could be the best year on record for gold-related ETFs and other funds, with many big-name hedge fund managers, from Stan Druckenmiller to Paul Singer to Bill Gross, singing the praises of the yellow metal.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content. This news release may include certain “forward-looking statements” including statements relating to revenues, expenses, and expectations regarding market conditions. These statements involve certain risks and uncertainties. There can be no assurance that such statements will prove accurate and actual results and future events could differ materially from those anticipated in such statements.

The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver.  The index benchmark value was 500.0 at the close of trading on December 20, 2002.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 6/30/2016: Barrick Gold Corp., Newmont Mining Corp.

http://www.usfunds.com/

Editors note: The fact that peak gold is taking place at a time when the world is engaged in a risky monetary experiment involving massive fiat paper and electronic money creation on a scale that the world has never seen before, bodes very well for gold’s long term outlook.

Gold and Silver Bullion – News and Commentary

Dollar Weakens as Muted Prospects for Fed Rate Hike Boost Gold (Bloomberg)

Palladium Leads Precious Metals Jump as Gold Gains, Dollar Drops (Bloomberg)

Gold gains in Asia as investors shrug off Fed rate hike views (Investing.com)

Gold climbs as dollar falls on weak U.S. data (Reuters)

Gold futures bounce back on fresh demand, dollar reversal (Marketwatch)

-END-

 

Gold and silver trading early this morning; As I promised you yesterday, the poor productivity number is having a devastating effect on markets;

(courtesy zero hedge)

Gold & Silver Surge, USD Purge As Productivity Plunge Trumps Payrolls Pandemonium

It appears dismal productivity trumps euphoric payrolls data…

Silver has erased payrolls losses…

Gold is catching up…

Copper (and palladium at one year high as stronger Chinese car sales added to concerns over insufficient supply of the commodity used to reduce pollution from vehicles) are also surging…

“Bad news is great news” for commodities.. as it crushes the USD…

Everything is now green post-payrolls…

 

end

We brought this to your attention last night.  It seems that the LME is anxious to get investors to turn real gold into paper gold.  They key line here:  non allocated gold is used for delivery purposes.

(courtesy Reuters)

First official story!

London Metal Exchange to launch gold spot, futures contracts

Section:

London Metal Exchange to Launch Gold Spot, Futures Contracts

By Clara Denina
Reuters
Tuesday, August 9, 2016

LONDON — The London Metal Exchange said today it is planning to launch spot and futures contracts for gold and silver in the first half of 2017, adding to its list of products which includes copper and aluminium.

The 139-year-old exchange is working in collaboration with the World Gold Council, an industry body backed by gold mining companies such as Barrick Gold and Goldcorp, and is supported by five banks and proprietary trader OSTC, which have committed to provide liquidity.

“The initiative has been driven by the need for greater market transparency, to support and aid ongoing regulatory change, provide additional robustness to the precious metals market, broaden market access,” the exchange and its partners said in a statement. …

… For the remainder of the report:

http://www.reuters.com/article/gold-contract-lme-idUSL6N0WR4PI

END

Second story:

Craig Hemke comments:

We brought this to your attention last night.  It seems that the LME is anxious to get investors to turn real gold into paper gold.  They key line here:  non allocated gold is used for delivery purposes.

(courtesy Craig Hemke/TFMetals)

A New Wrinkle In The Paper Gold Con Game

Here’s a story that came out earlier today. Maybe it’s just me but it’s easy to see a Bullion Bank plot here. For months, we’ve documented all of the various points of demand for gold in all its forms. And now, as The Bullion Bank Paper Derivative Pricing Scheme is being stretched to extremes, suddenly the LME wants to offer another form of paper gold with which to screw everyone.

And note who’s involved here…not only is it the LME working in conjunction with the Evil Of Evils Goldman Sachs, they’re all “working in conjunction” with The World Gold Council. IF ANYTHING SHOULD PROVE FOR YOU ONCE AND FOR ALL THE THE WGC IS A SHADY, NASTY AND WORTHLESS ORGANIZATION, THIS SHOULD DO IT! Here’s your link from Reuters detailing the news: http://uk.reuters.com/article/gold-contract-lme-idUKL6N0WR4PI

LONDON, Aug 9 The London Metal Exchange (LME) said on Tuesday it is planning to launch spot and futures contracts for gold and silver in the first half of 2017, adding to its list of products which includes copper and aluminum.

The 139-year old exchange is working in collaboration with the World Gold Council, an industry body backed by gold mining companies such as Barrick Gold and Goldcorp, and is supported by five banks and proprietary trader OSTC, which have committed to provide liquidity.

“The initiative has been driven by the need for greater market transparency, to support and aid ongoing regulatory change, provide additional robustness to the precious metals market, broaden market access,” the exchange and its partners said in a statement.

Financial market transparency has been a major focus for regulators after evidence of price manipulation in lending rates between banks in the Libor scandal in 2012.

As regulators continue to review commodity markets, the bullion industry is braced for further changes that could ultimately include a mandatory central clearing or more expensive bilateral trading.

Banks and bullion operators have looked for ways to preserve London’s role as a major global trading centre, while increasing transparency of a market which can trace its roots back to the 17th century.

The London Bullion Market Association (LBMA), another industry body whose members are mostly banks, refiners and dealers, separately asked exchanges and technology firms in October last year to bid for services such as a gold exchange or a clearing platform.

London currently dominates the global over-the-counter gold trade with an estimated $5 trillion changing hands every year, while New York’s Comex contract sets the benchmark for futures.

The LME plans physically delivered spot, futures and options contracts. The gold will be 100 ounces in size (worth around $133,600 at current prices) and silver 5,000 ounces. All contracts will be cleared through LME Clear, the exchange’s clearing house, which has an annual traded notional value of $12 trillion.

LIQUIDITY

The World Gold Council CEO Aram Shishmanian said that they had initially engaged with around 30 firms, but only Goldman Sachs, ICBC Standard Bank, Morgan Stanley , Natixis and Societe Generale signed up to support the contracts from the launch day.

After the transformation of precious metals benchmarks in 2014, led by a regulatory drive to make them more robust to attempts of manipulation, banks have become more cautious.

Several of them have run into trouble with regulators over misdemeanours in their precious metals trading business.

The benchmarks are widely used by producers, consumers and investors to trade and value the metal. Gold and silver are among the eight major market benchmarks that are regulated by Britain’s watchdog Financial Conduct Authority (FCA).

Frankly, my favorite part of the entire article is this:

Several of them have run into trouble with regulators over misdemeanours in their precious metals trading business.

“Several of them have run into trouble over misdemeanors”….GIVE ME A BREAK. Misdemeanors. That’s pretty funny.

Anyway, the new “gold” contract looks to begin trading by summer of next year. (Maybe the entire fraud will have collapsed by then?) Here are the actual specs. Have a look and see if you notice a rather critical distinction/component of this latest fraud:http://lme.com/metals/precious-metals/gold/

Here, please allow me to help. What word jumps off the page at you from this screenshot below? (Hint: It starts with a “U”.)

So the new, “physically-settled” LME gold contract is one where “seller transfers unallocated gold to…the LPMCL member bank (Goldman)…and buyers receive unallocated gold at any LPCML member bank (Goldman)“. THAT SOUNDS LIKE A GREAT FREAKING DEAL! WHERE DO I SIGN UP?

But, seriously, what a gigantic SCAM this all is! These Banks will do literally ANYTHING to perpetuate their Paper Derivative Pricing Scheme. This latest move to collect gold and fees while scamming investors into believing that they own “physical gold” is just another example. And again, that the WGC is “collaborating” in this con should tell you all you need to know about that organization, too.

You don’t own it unless you hold it. Period, end of story. Sadly, as we’ve come to learn over the years, everything else is just a Banker scheme to screw you.

TF

www.tfmetalsreport.com/subscribe

END

Third story:

Ronan Manly comments!

Ronan Manly: Charade continues as London metal markets get more paper trading

Section:

By Ronan Manly
BullionStar.com, Singapore
Tuesday, August 9, 2016

Today the London Metal Exchange and the World Gold Council jointly jointly announced the launch next year of standardized gold and silver spot and futures contracts that will trade on the LME’s electronic platform LMESelect, will clear on the LME central clearing platform LME Clear, and will be settled “loco London.” Together these new products will be known as “LMEprecious” and will launch in the first half of 2017.

However, although these contracts are described by the LME as delivery type ‘physical,’ settlement of trades on these contracts merely consists of unallocated gold or silver being transferred between LME Clear clearing accounts held at London Precious Metals Clearing Limited member banks (i.e., paper trading via LPMCL’s AURUM clearing system). …

… For the remainder of the commentary:

https://www.bullionstar.com/blogs/ronan-manly/the-charade-continues-lond…

END

 

Bill Holter talks with Greg Hunter:

(courtesy Greg Hunter /USAWatchdog/Bill Holter)

 

Please watch, post or forward my latest interview with Greg Hunter if you wish

Bill Holter-World Facing Very, Very Dangerous Time

So, is the world headed for a “Mad Max” future? Financial writer Bill Holter says, “I think the chances are bett…

Preview YouTube video Bill Holter-World Facing Very, Very Dangerous Time

Bill Holter-World Facing Very, Very Dangerous Time
end

Your early WEDNESDAY 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  UP to 6.6318 ( HUGE REVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6318) / Shanghai bourse  DOWN 6.93 OR 0.23%   / HANG SANG CLOSED UP 26.82 or 0.12%

2 Nikkei closed DOWN 29.85  OR 0.18% /USA: YEN FALLS TO 101.19

3. Europe stocks opened ALL IN THE RED    /USA dollar index up to 95.52/Euro UP to 1.1185

3b Japan 10 year bond yield: FALLS TO  -.095%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 101.19

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  42.59  and Brent: 44.92

3f Gold UP  /Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.096%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 7.14%/: 

3j Greek 10 year bond yield FALL to  : 8.22%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1353.30/silver $20.36(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 26/100 in  roubles/dollar) 64.47-

3m oil into the 42 dollar handle for WTI and 44 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 BIG REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 101.19 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 .9761 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0919 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 FALLS to  -0.096%

/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 1.540% early this morning. Thirty year rate  at 2.249% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS

US Futures Flat; Bonds Rise, Dollar And Oil Slide Over US Productivity Collapse Fears

 Following yesterday’s muted action which saw the S&P500 close unchanged, it has been more of the same listless trading overnight, with US equity index futures little changed as the Nikkei fell on the back of a stronger Yen, while government bonds rose and European stocks reversed early gains following the BOE’s explanation in the aftermath of yesterday’s failed bond monetization operation that the bank will “incorporate the shortfall into the second half of its 6 month program.” WTI dropped for a second day after API data showed U.S. oil inventories resumed expansion, while Saudi Arabia told OPECthat it pumped a record 10.67 million barrels of oil a day, an increase that as Bloomberg puts it, “will do nothing to endear OPEC’s leading exporter to other members seeking output limits to shore up prices.”

The dollar weakened against all its major peers, dragging the Bloomberg Dollar Spot Index down for a second day. Metals were also boosted by the dollar’s retreat, with palladium, tin and zinc rising to the highest in a year. U.K. government bonds extended gains after the Bank of England indicated it will stick with its current quantitative-easing plans. European stocks were little changed and most Asian shares fell.

A reason for the dollar weakness was yesterday’s disappointing economic productivity data which showed an unprecedented, third consecutive quarterly drop. As DB’s Jim Reid said, “with productivity so low not only does it not bode well for growth but the risk is that companies eventually reduce their demand for labour. They could invest in capital instead but waiting for that has proved elusive in recent years. So in spite of the recent payroll boost we still think the US looks late cycle and think profits will continue to be subdued and that employment will edge weaker over the coming months.

So as the light dimmed in one of the few bright spots in the world economy, the United States, demand for bonds firmed – a factor highlighted by the Bank of England’s failure on Tuesday to prise enough debt from investors to meet its bond-buying target under plans to stimulate Britain’s economy. With sub-par global growth and inflation keeping the onus on looser central bank policy, New Zealand, one of the 55 monetary authorities to ease policy since the start of 2015, was broadly expected to cut rates further on Thursday.

Others piled on: “low U.S. productivity growth could suggest the third- quarter growth can’t be fantastic. That in turn would mean the Fed will not need to raise rates,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

As a result, “Central banks look increasingly accommodative and no one seems to be going against that trend … which supports all asset prices,” said Anton Heese, head of European rates strategy at Morgan Stanley in London. “The growth prospects for the U.S. economy are probably weaker than many anticipate.”

So in light of continued slow economic growth how did markets response? Well, the MSCI’s world stock index covering 46 markets advanced to its highest level seen in a year at 419.77, trumping a level hit on Tuesday. MSCI’s broadest index of Asia-Pacific shares excluding Japan rose 0.3 percent to the highest level since August 2015.

With little to do in developed countries, investors have shifted their attention to emerging-market assets where demand is surging, supported by loose DM central bank policy and after the Fed turned more “dovish,” said Owi Ruivivar, managing director in Singapore who helps oversee about $1 trillion for the Wall Street firm. A gauge of emerging-market currencies climbed to the highest level since July 2015.

European stocks reversed earlier gains to fall for first day in six with Norwegian, Finnish, German bourses underperforming, following some notable weak earnings.  The Stoxx Europe 600 Index fell 0.1 percent, after reaching its highest close since Britain’s June vote to leave the European Union. The number of shares changing hands was 34 percent lower than the 30-day average. Germany’s DAX Index slipped 0.1 percent after entering a bull market. 13 out of 19 Stoxx 600 sectors fall with utilities, oil & gas underperforming and insurance, banks outperforming. 55% of Stoxx 600 members decline, 42% gain.

Among the more prominent European moves, EON SE dragged European utility companies to the worst performance of the Stoxx 600’s 19 industry groups, sliding 5.5% as it posted a first-half loss because of charges linked to the listing of its Uniper unit.  Prudential Plc rose 1.9 percent after reporting first-half profit that beat analyst estimates, boosted by higher earnings at its Asia and U.S. units. Danish biotech company Novozymes A/S sank 9.2 percent as it reported profit that missed estimates and cut its sales outlook. Brenntag AG dropped 2.1 percent after the profit forecast of the world’s largest distributor of chemicals missed some analyst projections.

S&P 500 futures rose 0.1% after U.S. equities closed little changed near a record high on Tuesday.

So as stocks went nowhere, bonds were bid and yields on 10- and 30-year U.K. bonds fell to record lows – as expected – after the central bank made no changes to its gilt-purchase plan after its first uncovered QE operation since beginning the program in 2009.  Fixed-income markets are rallying on speculation central banks will continue to keep interest rates low. Japan’s 10-year bond yield fell two basis points to minus 0.11 percent, Germany’s declined one basis point to minus 0.09 percent and that on similar-maturity Treasuries dropped by one basis point to 1.54 percent. The rate on New Zealand’s notes fell five basis points ahead of Thursday’s monetary policy review. Emerging-market bonds rose, with the yield on South Africa’s 10-year security dropping 11 basis points to 8.42 percent, and Turkey’s rate sliding three basis points to 9.58 percent. China sold five-year debt at a 2.43 percent yield, less than the median forecast of 2.51 percent in a Bloomberg survey.

The cost of insuring corporate debt against default rose for the first time in five days. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies climbed one basis point to 66 basis points. It remains near the lowest in a year. The Markit iTraxx Europe Crossover Index of swaps tied to sub-investment grade corporate debt rose three basis points to 308 basis points.

Investors will look to earnings from companies including Ralph Lauren Corp. for indications of the health of corporate America. Stocks have benefited from better-than-forecast earnings this season, particularly among technology companies. With about 90 percent of S&P 500 members having posted results, 78 percent have beaten profit predictions and 55 percent have topped sales projections. The only data of note out of the US is the June JOLTS survey, where number of job openings is expected to hold steady on the month (5.5mn expected; 5.5mn previous).

Market Snapshot

  • S&P 500 futures up 0.1% to 2180
  • Stoxx 600 down less than 0.1% to 345
  • FTSE 100 down less than 0.1% to 6851
  • DAX down 0.2% to 10669
  • German 10Yr yield down 2bps to -0.09%
  • Italian 10Yr yield down 2bps to 1.1%
  • Spanish 10Yr yield down 2bps to 0.98%
  • S&P GSCI Index down less than 0.1% to 345
  • MSCI Asia Pacific up 0.3% to 139
  • Nikkei 225 down 0.2% to 16735
  • Hang Seng up 0.1% to 22492
  • Shanghai Composite down 0.2% to 3019
  • S&P/ASX 200 down 0.2% to 5544
  • US 10-yr yield down less than 1bp to 1.54%
  • Dollar Index down 0.59% to 95.61
  • WTI Crude futures down 1.1% to $42.31
  • Brent Futures down 0.8% to $44.63
  • Gold spot up 0.9% to $1,353
  • Silver spot up 2.3% to $20.31

Top Global Headlines

  • Disney Reshapes TV With $1b Streaming Deal, ESPN Online: Co. said it will pay $1b for a 1/3 stake in BAMTech, a technology, streaming business formed by MLB, and launch new web-based ESPN service this year.
  • Abbott Says Alere Denies Key Access; Not Sure Deal Will Close: Co. provided detailed list of issues that have materialized since purchase agreement was signed on Jan. 30: SEC filing.
  • SolarCity Growth Slows Even More as Musk Details Energy Vision: Co. developing rooftop product that incorporates solar technology, storage system that uses Tesla batteries at customers’ homes to provide power-management services to utilities.
  • SunPower Plunges After Solar Manufacturer Scraps Profit Goal: Co. scrapped a target to at least break even this year, in part because of challenging conditions in its power-plant business.
  • Gold at ‘Rich Level’ to Struggle as Fed May Hike 3 Times: Gold may have met its match after stellar start to 2016 as probable trio of rate hikes from Fed through end-2017 means there’s little room for further rally.
  • SunEdison Gets $144m Bid for Some Assets From NRG Renew: Bankrupt renewable energy co. agrees to sell solar, wind projects in Utah, California, Maine, Hawaii, Texas at auction where NRG would make opening bid.
  • Green Plains May Spend $275m to Get Into Food Business: Distiller signed non-binding agreement to pay $225m-$275m for a “complementary” part of a food ingredients co.
  • Viacom Outlook Cut by Moody’s Due to Poor Performance, Divs.: Co. was spared an immediate downgrade of its Baa2 rating during the ongoing dispute over control.
  • Saudi Said to Pump Record Oil Output to Meet Summer Usage: pumped record 10.67mbbl/d in July to meet a summer surge in domestic demand.
  • ‘Peppa Pig’ Owner Entertainment One Rejects Takeover Offer: Canadian co., owner of popular preschool cartoon character “Peppa Pig,” said in statement that the bidder may come back.
  • NBC Says Olympics Audience Is Bolstered by Counting Web Viewers; 31.5m people tuned in on TV, online to watch Olympics on Monday night, about as those who watched only on TV 4 years ago.
  • BlackRock Targeted by Gay Activists for Investing in Firearms: Gays Against Guns to target BlackRock to kick off campaign pressuring investors to cut ties with firearms industry.
  • Clinton Up 6 on Trump in Two-Way Race in Bloomberg National Poll
  • House Speaker Ryan Defeats Political Unknown in Primary

* * *

Looking at regional markets, we start in Asia which traded mixed following the flat close on Wall St. and weakness in energy, in which NatGas declined nearly 5%. Nikkei 225 (-0.2%) was initially negative as a firmer JPY dampened exporter sentiment but then recovered on short covering ahead of tomorrow’s market closure. ASX 200 (-0.2%) was pressured by energy losses with financials also subdued after Big-4 Commonwealth Bank missed on its earnings, despite posting a record FY net. Shanghai Comp (-0.2%) traded with mild losses, while Hang Seng (+0.1%) outperformed on earnings releases. 10yr JGBs saw minor gains as they tracked T-notes higher amid the indecisiveness seen in the region, while the BoJ were in the market for JPY 1.14trl of government debt.

Top Asian News

  • RBA’s Stevens Urges Budget Fix, Says Monetary Policy Not Enough: Australian central bank governor says inflation target has flexibility to allow undershooting
  • Hong Kong Exchange Profit Falls on Lower Securities Trading: Timing of less critical projects deferred to control costs
  • CBA Profit Growth Slowest Since 2009, Bad-Debt Charges Climb: Bad-debt provisions jump on exposure to commodities sectors
  • DBS Head Fails to Ease Analyst Discomfort on Energy Exposure: Credit Suisse, CIMB downgrade ratings on Singaporean bank
  • India Said to Clarify Apple’s Path to Opening Own Retail Stores: Officials say company can now reapply to open retail outlets
  • Nomura ‘Lost Control’ in Firing Salesman Over $40 Million Loss: Nomura disciplinary process had “multiple defects,” judge says

European equities are trading within a tight range this morning (Euro Stoxx: 0%), with once again not too much in the way of fundamental news flow to drive prices in what has been a week thus far void of tier 1 data releases. In terms of notable movers, earnings have dictated play so far this morning, with DAX heavyweight E.ON among the worst performers (-5.7%) after their pre-market release. On a sector specific basis, material names outperform as upside in the commodities complex remains favourable for the sector while utilities underperform amid E.ON’s aforementioned earnings. Fixed income newsflow has been dictated so far by the fallout of yesterday’s BoE purchases, whereby they failed to hit their target. Gilt yields hit fresh record lows this morning after the central bank announced that they will add yesterday’s shortfall to the second half of their 6-month program and therefore will not write off yesterday’s disappointing operation. Bunds this morning continue to trade above 167.50, with markets having recently digested EUR 5bIn of the Buba’s 0.0% Bund auction which drew a modest b/c of 1.4 but above the previous of 1.2.

Top European News

  • Brexit Bites Back as Peugeot Joins Dell in Lifting Prices: British consumers starting to bear costs of Brexit, with cos. raising prices of everything from cars to carpets to counter weaker pound.
  • Prudential Rallies After Asia Drives 1H Profit Beat: Co. delivered good progress “in a period of heightened macro- economic, geo-political and investment market uncertainty and volatility,” CEO Mike Wells said.
  • EON Posts Loss After Writing Off Billions on Plants, Storage: Impairments, contingency losses for its hydrocarbon-based power stations, natural gas storage assets led to net loss of EU3b.
  • Novozymes Shares Plunge as Danish Enzyme Maker Cuts Outlook: World’s biggest supplier of enzymes used in everything from detergent to biofuel plunged as much as 9.8%.
  • Eurostar U.K. Union Plans Seven Days of Strikes Over Schedules: A 4-day walkout will begin in early hours of Friday, last through midnight on Monday, union said in statement.
  • Fired Deutsche Bank Manager Says Superiors OKed Deal Lists: Former Deutsche Bank executive who’s suing bank for unfair dismissal arguing that payments to Chinese JV which got him fired were based on approvals by other top managers in Asia.
  • BOE to Include Shortfall From Uncovered Auction in 2H of Plan: Details of these purchases to be announced on Nov. 3.
  • Italian Banks Reel; Monti Has No Regrets for Avoiding Bailout: Immediate problem is EU360b of bad debt on Italian banks’ books.
  • Spain Yield Gap Tightest in More Than a Year on ECB Stimulus: Spread between Spain’s 2-, 30-yeargovt bonds narrowed to least since April 2015.

In FX, the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, fell 0.5 percent in early trade. The yen added 0.5 percent to 101.40 per dollar. New Zealand’s dollar strengthened 0.9 percent, while Australia’s currency advanced 0.6 percent. “The U.S. dollar is unlikely to rally significantly against the commodity-sensitive currencies,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney. “Monetary policy settings around the world are going to be loose or looser going forward, and fiscal policy is expected to be more accommodative. That will support the global economic recovery and underpin commodity prices.” The MSCI Emerging Markets Currency Index rose 0.6 percent, extending its five-day gain to 1.7 percent. The gauge has climbed 10 percent from this year’s low set in January. The won led gains on Wednesday, appreciating 1.1 percent to the strongest since May 2015, followed by gains of at least 0.8 percent for Malaysia’s ringgit and Taiwan’s dollar.

In commodities, the Bloomberg Commodity Index, which measures returns on raw materials, climbed 0.3 percent as metals advanced on the weaker dollar. Gold rose 0.9 percent to $1,352.41 an ounce, while silver and platinum added at least 2.3 percent. Palladium, used in the pollution control systems of cars, jumped as much as 7.7 percent, the most since May 2010, after data showed Chinese vehicle sales accelerated by the most in 17 months. On the London Metal Exchange, copper for delivery in three months rose 0.9 percent to $4,824 a ton, while zinc, lead and tin rose at least 0.9 percent. Crude oil fell 1.1 percent to $42.30 a barrel in New York on signs of higher supply. It slid 0.6 percent on Tuesday as American Petroleum Institute data indicated U.S. stockpiles rose by 2.09 million barrels last week. Saudi Arabia pumped 10.67 million barrels of oil a day in July to satisfy the summer surge in domestic demand, according to two people with knowledge of the data.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade with little firm direction amid another quiet session and lack of tier 1 data releases across the continent
  • In FX markets, USD has seen some selling pressure in recent trade as participants continue to raise concerns over US productivity ahead of Friday’s key US data releases
  • Looking ahead, highlights include RBNZ Rate Decision and Press Conference, DOEs and the OPEC Monthly Report
  • Treasuries higher in overnight trading while global equities mixed and gold surges as Germany auctions 10Y debt at record low yield of -0.09%; UST auctions continue with $23b 10Y notes, WI 1.535%; last sold at 1.516% in July, lowest auction stop since 1.459% in July 2012.
  • The Bank of England’s plan is to keep calm and carry on buying. The central bank said Wednesday it will deal with a 52 million-pound shortfall ($60.8 million) in an operation on Tuesday at a later date
  • Pimco’s Total Return Fund increased its stake in U.S. government debt to a 25-month high in July as a rally in Treasuries pushed yields to an all-time low and then fizzled
  • China’s official bad-loan ratio held at 1.75% in the second quarter after almost three years of increases, suggesting some progress as President Xi Jinping’s officials try to defuse risks from the nation’s explosion in credit
  • China’s central bank said it plans to push the yuan’s global use by seeking more cooperation with other countries and improving the infrastructure needed to support wider use of the currency
  • Brazil’s Senate voted 59 to 21 to put suspended President Dilma Rousseff on an impeachment trial that could seal her downfall and strengthen her successor’s hand as early as this month
  • Saudi Arabia told OPEC that it pumped a record 10.67 million barrels of oil a day in July to meet a summer surge in domestic demand, an increase that will do nothing to endear OPEC’s leading exporter to other members

DB’s Jim Reid concludes the overnight wrap

It remains a bit dull out there with no market double flips to get excited about but there were a few more things of interest yesterday with poor US productivity numbers and the BoE failing on only day 2 of their new QE program to buy all the securities they wanted.

On the former, both ourselves and our US economist Joe LaVorgna have been looking forward to yesterday’s productivity and ULCs numbers. Q2 nonfarm productivity estimates indicated a weaker than expected drop (-0.5% vs. +0.4% expected; -0.6% previous). It was the 3rd quarterly decline something we haven’t seen for 37 years. Joe once again noted that this slowdown in productivity growth will weigh on the US economy, with the year-over-year rate slipping to -0.4% which is the slowest rate since Q2 2013 (-0.6%). The Q2 estimates for unit labor costs came in marginally above expectations (+2.0% vs. +1.8% expected) but was largely offset by the previous quarter being revised down from a gain of +4.5% to a drop of -0.2%.

With productivity so low not only does it not bode well for growth but the risk is that companies eventually reduce their demand for labour. They could invest in capital instead but waiting for that has proved elusive in recent years. So in spite of the recent payroll boost we still think the US looks late cycle and think profits will continue to be subdued and that employment will edge weaker over the coming months.

We’ll see more on employment today with the BLS releasing the JOLTS series. It’s only for June so it will probably be decent given the payrolls summer surge and doesn’t necessary say much for the future but given its one of Yellen’s favourite series it’s always closely watched. DB expect a rebound in the hiring rate, which was down three tenths from its post-recession peak (3.8%) in May. The quits rate is interesting as it has been a lead indicator of wage pressure in the past.

Global equity markets ticked up yesterday despite little in terms of positive economic data (more on Europe below). The STOXX 600 (+0.92%) ended the session in the green for the fifth consecutive day, while the DAX rallied by +2.5% on the day to nearly break even on a YTD basis. The FTSE shrugged off relatively weak industrial production and trade numbers to rise by +0.62% following some dovish comments by BoE policymaker Ian McCafferty suggesting that further rate cuts and additional QE may be required. This raised eyebrows as he was in favour of a hike at the start of the year and voted for one at every meeting since last August. Sterling fell for the 5th day and was back below $1.30 intraday for the first time for a month but closed just above and had climbed back a bit this morning to $1.307.

Government bond yields continued to drop, with German and US 10Y yields falling by -1bps and -4bps respectively. Gilts rallied as 10Y and 30Y yields fell by -3bps and -5bps to all time lows initially following soft data and BoE McCafferty’s comment discussed above. The BoE also struggled to buy as much long Gilts (over 15 years) as it had planned despite higher than market prices in its new QE program. Only £1.118bn was bought rather than the £1.17bn planned. Monday’s purchases were 3.63 times covered but were in the 3-7 year area. Today sees the 7-15 year part of the curve targeted. Yesterday’s struggle, albeit at the notoriously technical long end, is a worry for the BoE given that it was only the second day of their new program, especially as they are already talking about having the room to increase it if required. 30 year Gilts are currently at 1.38% and if we have more days like yesterday then they start to look ‘cheap’ against 30 year Bunds (0.419%) and OATs (0.912%) and that’s before we even talk about the Swiss equivalent at -0.1%.

Over in the US the S&P 500 (+0.04%) ticked up slightly. Price action was fairly subdued in credit markets with iTraxx Main largely unchanged on the day although Crossover tightened by -4bps. Over in the US CDX IG and HY were both flat on the day.

The Asian session is again quiet with the Nikkei +0.31%, the Hang Seng +0.41% and the Shanghai Comp -0.1%. There’s not been a lot of data with June Japanese machine orders the highlight coming in at +8.3% mom against +3.2% expected. July PPI was flat against -0.1% expected. The Yen is up around 0.6% against the Dollar.

Now for the remainder of the data yesterday. In the US the NFIB small business optimism reading barely budged in July, coming in a hair above expectations of no change (94.6 vs. 94.5 expected; 94.5 previous). Wholesale inventories grew more than expected in June (+0.3% vs. +0.0% expected) and we also saw May’s number being revised up to +0.2% as well (+0.1% before revision).

In Europe we saw some numbers that painted a gloomy picture of the UK economy in the period straddling the referendum. Industrial production barely grew in June (+0.1% mom vs. +0.1% expected; -0.6% previous) while manufacturing production declined for a second straight month and actually fell by more than expected (-0.3% vs. -0.2% expected; -0.6% previous). The trade balance number for June (-£5.084bn vs. -2.55bn expected) also indicated a sharply widening trade deficit despite a weaker pound. Away from the UK we also got the German trade balance number for June that saw the surplus increase more than expected (24.9bn vs. 23.0bn expected; 21.0bn previous).

It’s a quiet day ahead across the globe in terms of data releases today. In Europe the only notable data points are the June industrial (+0.1% mom expected; -0.5% previous) and manufacturing production (+0.2% mom expected; +0.0% previous) numbers from France, where growth is expected to be marginally positive. The only data of note out of the US is the previously discussed June JOLTS survey, where number of job openings is expected to hold steady on the month (5.5mn expected; 5.5mn previous).

ASIA MARKETS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 6.93 POINTS OR 0.23%/ /Hang Sang closed UP 26.82 points or 0.12%. The Nikkei closed DOWN 29.85POINTS OR 0.18% Australia’s all ordinaires  CLOSED DOWN 0.16% Chinese yuan (ONSHORE) closed UP at 6.6318/Oil FELL to 42.58 dollars per barrel for WTI and 44.92 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.6318 yuan to the dollar vs 6.6318 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS CHINA TRIES TO STOP MORE USA DOLLARS LEAVING THEIR SHORES  

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

Two important points here:

  1. the Bank of Japan realizing it is in trouble pre-released a draft for the Sept meeting.
  2. No real tapering of bond purchases
  3. They are probably up against the same problem that England has: offerless bonds from the public as they keep scarce bonds.

the USA/Yen fell badly  (Yen rose) when the street realized that Japan was coming to the end of the road of monetization.

(courtesy zero hedge)

BOJ Leaks September Statement To Ease Investor Concerns That It May Be Tapering QE

In the aftermath of the BOJ’s unexpected lack of action on July 28, fears emerged that the central bank may be on pace to scrapping or at least revamping its entire QE program when it announced it would conduct a “comprehensive assessment” of its monetary program. This in turn sent the Yen surging back to levels where it was before scattered reports emerged that Ben Bernanke was pushing Abe and Kuroda to unleash helicopter money.

So in order to quell any further such speculation, moments ago the BOJ appears to have “leaked” what its September statement would be, and as Reuters reported the BOJ has “already prepared a preliminary outline of a “comprehensive” assessment of its policies due next month that will maintain a pledge to hit its 2 percent inflation target at the earliest date possible, sources familiar with its thinking said.”

The draft focused on the traditional mitigating factors which have hindered its attainment of its 2% inflation target, stating that the BOJ identifies sharp falls in oil prices, a prolonged hit to growth from a sales tax hike in 2014 and Japan’s inability to shake off its deflationary mindset as hampering achievement of its inflation target. Officials had been drafting the outline weeks before the BOJ announced late last month that it will conduct the assessment at its next rate review on Sept. 20-21, sources said.

The draft is subject to change depending on debate by the nine-member board.

The preliminary outline appears to make no direct recommendations on the future direction of monetary policy, though the general tone would suggest that a tapering of the BOJ’s massive stimulus program is unlikely.

The BOJ eased policy in July but was not as aggressive as financial markets had expected, sending the yen higher and triggering a sell-off in the Tokyo stock market. Many analysts and traders fear it has little ammunition left and that monetary policy may be reaching its limits in terms of reviving the long-moribund economy.

The BOJ said it will conduct a thorough assessment in September of the pros and cons of its current stimulus program, which combines negative interest rates with a massive asset-buying scheme – dubbed “quantitative and qualitative easing” (QQE) – adopted in 2013.

So with little chance of a change in the BOJ’s program, we now look forward to the first “uncovered” POMO by the BOJ, very much comparable to what the BOE experienced yesterday when it suddenly found itself in an “offerless” market as it was unable to find enough sellers to fulfill its daily gilt monetization quota of GBP1.17 billion in an operation that has stunned the European bond market and sent British yields to new record lows, and pushed short-term rates to negative levels. This also means that any speculation that central banks are taking their foot off the QE pedal will quietly fade away, if only for the time being.

What is more troubling perhaps is that instead of easing at least modestly, the Yen promptly rose, with the USDJPY declining the session lows on the news, suggesting the BOJ may be on the verge of losing jawbone control over the Japanese currency, as skeptical traders demand action, not soothing promises

END

b) REPORT ON CHINA

EUROPEAN AFFAIRS

ENGLAND

This stunned the street last night as the Bank of England could not fulfill its purchase of bonds as the public decided to keep much of their bonds due to their yield.

(courtesy zero hedge)

Bank Of England Suffers Stunning Failure On Second Day Of QE: “Goodness Knows What Happens Next Week”

It started off well enough.

On the first day of the Bank of England’s resumption of Gilt QE after the central bank had put its monetization of bonds on hiatus in 2012, bondholders were perfectly happy to offload to Mark Carney bonds that matured in 3 to 7 years. In fact, in the first “POMO” in four years, there were 3.63 offers for every bid of the £1.17 billion in bonds the BOE wanted to buy.

However, earlier today, when the BOE tried to purchase another £1.17 billion in bonds, this time with a maturity monger than 15 years, something stunning happened: it suffered an unexpected failure which has rarely if ever happened in central bank history: only £1.118 billion worth of sellers showed up,meaning that the BOE’s second open market operation was uncovered by a ratio of 0.96.  Simplystated, the Bank of England encountered an offerless market.

What makes this particular failure especially notable – and troubling – is that while technically uncovered sales of government securities happen frequently, and Germany is quite prominent in that regard as numerous Bund auctions have failed to find enough demand in the open market in recent years forcing the “retention” of the offered surplus, when it comes to a central bank’s buying of securities, there should be, at least in practice, full coverage of the operation as the central bank is willing and able to pay any price to sellers to satisfy its quota.

For example, in today’s operation, the scarcity led to the BOE accepting all submissions, even as some investors offered prices above the prevailing market. The highest accepted price for the 4 percent bond due in 2060, for example, was 194.00, compared with a weighted average of 192.152, which means that the happy seller obtained a yield well in excess of that implied by the market.

And yet, despite having a completely price indiscriminate buyer, some £52 million worth of bond sellers simply refused to sell to the BOE at any price!

The QE failure quickly raised alarm signals among the bond buying community. In a Bloomberg TV interview, Luke Hickmore, an Edinburgh-based senior investment manager at Aberdeen Asset Management said that “lots of people are bidding us for bonds — Mark Carney is now bidding me for bonds and he still can’t have them. The problem is he was trying to buy 15-year plus bonds today in the gilt market. That’s a really difficult area.”

Needless to say, immediately after the news that not even the BOE can buy all the bonds it needs to buy at any price, yields on 10 and 30-year gilts quickly dropped to new record lows. “Yesterday we saw a 3.63 cover in the short APF so this is a sharp difference that has really caught the market off guard,” said Daniela Russell of Legal & General Group in London, cited by Bloomberg.

We were surprised they didn’t slide even lower. After all, if even the central bank is met with an offerless market, there is simply no price that is high enough, as ludicrous as that may sound, for longer-maturity gilts because the last marginal seller can demand any price from the BOE and they will get it.

As Bloomberg notes, the BOE’s failure to reach its target on Tuesday is an early warning of the challenges it may face in expanding its QE plan. A big part of the problem for the central bank is that it already scooped up about a third of the U.K. government bond market as part of a program that started in March 2009. And, with yields already at all time lows, it has just run into the same problem that wewarned back in 2014 will haunt the BOJ: a lack of willing sellers. Ironically, even as the BOJ has stumbled from one monetary policy embarrassment to another, it never had a failed POMO. It was up to the Bank of England to demonstrate what a bond shortage really means.

But why the lack of sellers? Well, since the BOE paused purchases in 2012, global bond yields have tumbled, meaning investors may be less willing to part with longer-term bonds that tend to offer higher yields than their shorter-dated equivalents. Long-dated U.K. bonds are in particular demand from pension companies that hold the securities to match their liabilities.

“You’d understand why investors might not be keen to offload longer bonds – if you are looking for yields that’s the only place on the curve to be,” said Jason Simpson, a London-based fixed-income strategist at Societe Generale SA.

Longer-dated bonds are “an area where people are hunting down what yield is left – you have to extend out into that area to get anything really,” Aberdeen’s Hickmore said. Carney “is going to say ‘it’s very early days, this is day one of the long-end purchasing.’”

Whatever the reason, and however the BOE will try to justify this striking failure, Mark Carney has a major problem on his hands: according to last week’s announcement, the BOE hopes to increase its holdings of government securities by 60 billion pounds ($78 billion) to 435 billion pounds over the next six months. However, if today is any indication, it will fail.

Tomorrow the market’s attention will be fixated on the BOE’s Asset Purchase Facility website (link) then another open market operation, this time in the seven- to fifteen-year sector, is scheduled to take place. Another uncovered failure like today, and alarm bells will be going off everywhere, not to mention that Gilt yields will implode.

Just as importantly, the BOE has said that “the Bank will announce its response to the shortfall in today’s uncovered operation at 9am tomorrow.”

We can’t wait, and neither can SocGen’s Jason Simpson: “It is a bit of a surprise that this went uncovered in the first week of the operation, goodness knows what happens next week.”

GLOBAL ISSUES

We now have another country joining in on the rate cuts:New Zealand.  However the Kiwi soared to a one year high as everyone expected a bigger cut

(courtesy zero hedge)

Kiwi Soars To One Year High After New Zealand Cuts Rate By To 2.00%

Moments ago, in what would be a very undemonic rate cut, the 667th since the Lehman bankruptcy, the Reserve Bank of New Zealand cut its Official Cash Rate by 25 bps to 2.0% in what was a widely expected move.

This is what the RBNZ said:

Statement by Reserve Bank Governor Graeme Wheeler:

 

The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 2.0 percent.

 

Global growth is below trend despite being supported by unprecedented levels of monetary stimulus.  Significant surplus capacity remains across many economies and, along with low commodity prices, is suppressing global inflation.  Some central banks have eased policy further since the June Monetary Policy Statement, and long-term interest rates are at record lows.  The prospects for global growth and commodity prices remain uncertain.  Political risks are also heightened.

 

Weak global conditions and low interest rates relative to New Zealand are placing upward pressure on the New Zealand dollar exchange rate.  The trade-weighted exchange rate is significantly higher than assumed in the June Statement. The high exchange rate is adding further pressure to the export and import-competing sectors and, together with low global inflation, is causing negative inflation in the tradables sector.  This makes it difficult for the Bank to meet its inflation objective.  A decline in the exchange rate is needed.

 

Domestic growth is expected to remain supported by strong inward migration, construction activity, tourism, and accommodative monetary policy.  However, low dairy prices are depressing incomes in the dairy sector and reducing farm spending and investment.  High net immigration is supporting strong growth in labour supply and limiting wage pressure.

 

House price inflation remains excessive and has become more broad-based across the regions, adding to concerns about financial stability.  The Bank is consulting on stronger macro-prudential measures that should help to mitigate financial system risks arising from the rapid escalation in house prices.

 

Headline inflation is being held below the target band by continuing negative tradables inflation.  Annual CPI inflation is expected to weaken in the September quarter, reflecting lower fuel prices and cuts in ACC levies. Annual inflation is expected to rise from the December quarter, reflecting the policy stimulus to date, the strength of the domestic economy, reduced drag from tradables inflation, and rising non-tradables inflation.  Although long-term inflation expectations are well-anchored at 2 percent, the sustained weakness in headline inflation risks further declines in inflation expectations.

 

Monetary policy will continue to be accommodative.  Our current projections and assumptions indicate that further policy easing will be required to ensure that future inflation settles near the middle of the target range.  We will continue to watch closely the emerging economic data.

There is just one problem with this widely telegraphed rate cut (which promised that monetary police will continue to be accommodative) – it was too widely telegraphed, and the market had fully priced it in (with a 20% probability of a 50 bps rate cut) so much so that instead of weakening the currency, the shorts which had been piling in and hoping for even more from New Zealand central bank governor Wheeler, were disappointed, unleashing a massive short squeeze and stop-triggering cascade, which has as of this moment pushed the Kiwi to the highest level in the past year!

That is one explanation. The other, that central bank easing now leads to even greater FX strength, is simply too disturbing to consider.

OIL ISSUES

Crude plunges after another surprising build,  Also a good gasoline draw and a production cut did not help

(courtesy zero hedge)

Crude Plunges After Surprising Builds Despite Gasoline Draw And Production Cut

Following last night’s unexpected build in crude (and Cushing) inventories, DOE data confirmed the surprising build in Crude (+1.05mm – 3rd weekly rise) and Cushing’s 1.2mm build is the most in 3 months. Gasoline inventories drewdown less than API reported but Distillates saw an unexpected build. Crude is whipsawing around as the bullish gasoline draw (and production cut) battles with bearishly unexpected builds in Crude, Cushing, and Distillates.

API

  • Crude +2.09mm (-1.5mm exp) – biggest in 3 months
  • Cushing +1.2mm (-1.3mm exp) – biggest in 3 months
  • Gasoline -3.9mm (-1.3mm exp)
  • Distillates -1.5mm

DOE

  • Crude +1.055mm (-1.5mm exp)
  • Cushing +1.16mm (-1.3mm exp) – biggest in 3 months
  • Gasoline -2.8mm (-1.3mm exp)
  • Distillates +1.15mm

This is the 3rd weekly crude build in a row and Cushing’s biggest build in 3 months… but all eyes are on the Gasoline draw (even though it is less than the API print)

US Crude production fell for the second week after 3 weeks of rising…

“This morning was moved by the headlines about Saudi Arabia and since then we’ve bounced back trying to regain the $45 level on Brent, but not really making it,” says Petromatrix analyst Olivier Jakob, and the reaction in crude after the DOE data is mixed to higher…

But the machines appear to have run out of ammo…

Some of the key charts watched by market participants remains gasoline stocks, which fell modestly by 2.8 million to 235 million bbls, the second consecutive drawdown…

… however as last week, a question is how much of this is due to gasoline being currently in transit. As Bloomberg reported overnight, Overseas Long Beach was seen moving a 3rd products tanker to Jacksonville, Fla., from N.Y. Harbor after deviating from typical U.S. Gulf Coast-to-Fla. route, according to vessel-tracking data compiled by Bloomberg. Tanker loaded at Carteret, N.J., terminal operated by Kinder Morgan; showed deeper draft Aug. 9, suggesting that even more PADD1 gasoline is simply being shifted around.

Looked at differently, gasoline stocks were still some 20 million bbls compared to 2015, even though the surplus has shrunk modestly from 25.5 mm two weeks ago.

Keeping an eye on PADD 1, aka the East Coast, shows that stocks dropped just marginally by 0.4 million to 70.9mm bbl in the past week, remaining near all time highs.

Finally, east coast gasoline were still 11.7mm bbl, or 20%, higher than a year ago, and the surplus has yet to show any notable decline.

Finally, something notable: east coast imports surged by 200,000 b/d to 794,000 compared to the prior week. It appears the glut isnt going away any time soon. Indeed, as Reuters’ John Kemp notes, PADD 1 gasoline imports are running at one of the fastest rates this year.

Charts: Bloomberg, Reuters

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

Euro/USA   1.1185 UP .0068 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 101.19  DOWN 0.776(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 1.3081 UP .0069(CARNEY CUTS BR. INTEREST RATES TO .25%)

USA/CAN 1.3006 DOWN .01106

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 68 basis points, trading now JUST above the important 1.08 level RISING to 1.1185; 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 DOWN 6.93 POINTS OR .23%    / Hang Sang CLOSED UP 26.82 POINTS OR 0.18%     /AUSTRALIA IS LOWER BY .16% / EUROPEAN BOURSES  ALL IN THE RED

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 WEDNESDAY morning CLOSED DOWN 29.85 POINTS OR 0.18%  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 26.82 POINTS OR .12%  ,Shanghai CLOSED DOWN 6.93  POINTS OR .23%    / Australia BOURSE IN THE RED: /Nikkei (Japan)CLOSED DOWN 29.85 OR 0.18%  /INDIA’S SENSEX IN THE RED 

Gold very early morning trading: $1351.90

silver:$20.31

Early WEDNESDAY morning USA 10 year bond yield: 1.540% !!! DOWN 1/3  in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.249 DOWN  1/2 in basis points from TUESDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early WEDNESDAY morning: 95.52 DOWN 61 CENTS from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

END

And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield:  2.75% DOWN 5 in basis points from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.097% DOWN 2 in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD:0.97% DOWN 3 IN basis points from TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.07 DOWN 5 in basis points from TUESDAY (again totally nuts/)

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

GERMAN 10 YR BOND YIELD: -0.097% DOWN 2 IN  BASIS POINTS ON THE DAY

END

IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.1174 UP .0057 (Euro UP 57 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 101.32 DOWN 0.604(Yen UP 60 basis points/

Great Britain/USA 1 3002 DOWN 0.0010 ( Pound DOWN 10 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.3057-DOWN 0.0060 (Canadian dollar UP 60 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 57 basis points to trade at 1.1089

The Yen FELL to 101.32 for a GAIN of 60 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was DOWN 10 basis points, trading at 1 .3002 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar ROSE by 60 basis points to 1.3057, WITH WTI OIL AT:  $41.49

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6345

the 10 yr Japanese bond yield closed at -.097% DOWN 2  IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 4 IN basis points from TUESDAY at 1.505% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.249 DOWN 1 in basis points on the day /

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

Your closing USA dollar index, 95.64  D0WN 49 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED UP 15.12 OR 0.22%
German Dax :CLOSED DOWN 42.01 OR  0.39%
Paris Cac  CLOSED DOWN 16.06  OR 0.36%
Spain IBEX CLOSED DOWN 6.50 OR 0.08%
Italian MIB: CLOSED DOWN 4.59 OR 0.03%

The Dow was DOWN 37.39 points or 0.20%

NASDAQ  DOWN 20.89 points or 0.40%
WTI Oil price; 41.49 at 4:30 pm;

Brent Oil: 43.85

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.74 (ROUBLE DOWN  1/100 ROUBLES PER DOLLAR FROM THURSDAY) 

TODAY THE GERMAN YIELD FALLS TO -.097%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:41.49

BRENT: 43.85

USA 10 YR BOND YIELD: 1.505% 

USA DOLLAR INDEX: 95.64 down 49 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.30106 DOWN .0007 or 7 basis pts.

German 10 yr bond yield at 5 pm: -.0097%

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

Traders Stunned As Stocks Fail To Reach Record Highs, Bonds & Bullion Bid

Good ‘payrolls’ news is bad news again… Or is bad ‘productivity’ news also bad news?

 

Futures show us the Deja Deja Vu all over again today – US pre-open pump… to dump…

 

On the day, Small Caps underperformed but the late day panic bid erased a lot of the losses…

 

Surprise!! Financials started to catch down to the flattening post-payrolls yield curve… BUT BUT BUT the clever man on TV said that this was the big rotation into financials??

 

Bonds rallied back into the green post-payrolls as crude and stocks tumbled…

 

VIX ‘soared’ over 12…(up 3 days in a row) pushing S&P back into The Twlight Zone…

 

Stocks recoupled lower with oil as it fell… though the late-day meltup was all stock algos…

 

Treasury yields kept tumbling (erasing losses post-payrolls)…

 

The USD Index slipped lower once again as everything strengthened against it aside from Cable…

 

With the USD erasing all payrolls gains…

 

Despite the USD weakness, Crude still lagged badly but PMs and Copper were bid…

 

Gold and Silver erased the payrolls plunge…

 

Crude legged lower after machines ran high stops first after DOE data showed builds for crude and distillates (and at Cushing)…and Saudi output at record highs did not help. Note the big volume flush across the NYMEX close…WTI ended 4.6% off ovenight highs…

 

Charts: Bloomberg

end

 

Job openings rebound.  Also the number of workers quitting drop

(courtesy zero hedge)

Job Opening Rise As Hiring Rebounds After Sharp Drop; Number Of Workers Quitting Drop

Moments ago the BLS reported Janet Yellen’s favorite labor market indicator, the JOLTS survey, which showed that in June (recall this report is 1 month delayed to the payrolls report), the number of job opening rebounded from a revised 5.514 million to 5.624 million, modestly missing expectations of 5.675 million largely in line with the range.

The June job opening rate (job openings as a % of total employment plus openings) rose to 3.8% vs 3.7% prior month.

From a net turnover standpoint, the number of hires less separations continued to track the BLS payrolls number closely, jumping to 292K in the past month, catching up to recent shortfalls.

There was some good news in the pace of hiring, which after three months of declines, finally rebounded from 5.047MM to 5.131MM.

However, as the annual rate of change shows, the hiring pace continues to slowdown compared to a year ago…

… hinting that the US jobs market may have peaked.

Finally, the closely watched quits data showed a modest slowdown of 33K, to 2.909MM, suggesting that at least superficially, there is no scramble by workers to leave their jobs, and further hinting that upward wage prssures are at best muted.

end

 

The all important report card on the consume filed by Ban of America shows that the consumer finally showed significant slowdown in spending! Remember the consumer is 70% of GDP

 

(zero hedge)

Did US Consumers Finally Tap Out? BofA Internal Card Data Shows Significant July Spending Slowdown

Ahead of this Friday’s retail sales report, which bulls are hoping will show a continuation of the strong spending trends revealed in last month’s data, Bank of America is once again the bearer of bad news.

As BofA reports in a note released this morning, according to the bank’s internal aggregated credit and debit card data, consumer spending slowed in July, with retail sales ex-autos down 0.3% mom on a seasonally adjusted basis. This follows the flat pace in June for retail sales ex-autos. As chief economist Michelle Meyer points out, “we think the recent  weakening in consumer spending is largely a cooling down after the exceptionally strong gains from March through May (Chart 1).

Looking at the full year, BofA finds that retail sales ex-autos are only up 0.7% yoy, and points out that Census Bureau data have closely followed the trend in the BAC data, suggesting that the market should prepare for either a downward revision to the June data and/or disappointing July figures: “In our view, this sets up for a softer Census Bureau retail sales report on  Friday – we would not be surprised to see either disappointing July sales and/or a downward revision to June.

It’s not all bad news: based on the BAC card data, BofA found that spending on staples slowed over the course of last year with a slight recovery this year.

  • The S&P consumer staples index showed a similar slowing over last year, but a somewhat faster recovery than the card data.
  • This is in contrast to the data on discretionary spending where the BAC aggregate showed continued strength – with a pickup in growth this year – while the S&P consumer discretionary index weakened

However, this appears to be offset by a notable slowdown in spending at restaurants and bars. Based on the BAC aggregated card data, spending at restaurants and bars is increasing at a roughly 5% yoy pace, down from the recent peak in early 2015. The BAC data has been consistent with the trends in the Census data. It also adds:

  • This strength contrasts with the views of BofA Merill Lynch restaurant analyst, Joe Buckley, who has expressed concern about weakening sales. Joe and team reference the Knapp-Track casual dining same store sales figures which have been decelerating, showing weaker sales and guest counts.
  • We suspect that the BAC card data is receiving a boost from a shift toward greater spending on cards at the expense of cash.

Digging deeper into the BAC composite shows that there has been relative strength in card spending at bars and caterers. However, combined, this only makes up a tiny 3.5% of the aggregate. BAC card spending on fast food has seen a secular slowing since the recession hit and is now growing at a slower pace than eat-in restaurants. It seems that there has been some shift away from “fast food” options. This is consistent with the theories that consumers are prioritizing healthy eating, emphasizing natural and organic food.

What is more troubling is that for the past 3 years, “waiters and bartenders” has been one of the fastest growing job categories within the US labor market. If the slowdown in end demand continues, it is only a matter of time before hiring in the affected industry likewise slows down if not outright reverses.

Finally, and most disturbing, is the dramatic slowdown in spending on home improvement and home goods: traditionally the most visible concurrent and slightly lagging indicator to the US housing sector.

As BofA notes here, “we are seeing a continuation of the theme that we flagged in last months’ report – sales at home improvement and home goods stores are weakening based on the BAC card data. After a brief gain last month, sales at home improvement stores tumbled in July, leaving sales down 3.4% yoy. Sales at home goods stores continue to weaken as the yoy rate reached a new cyclical low in July. We see a similar weak trend with sales at furniture stores.”

Needless to say, if confirmed by the Department of Commerce, this will be the most direct indicator that the US housing recovery has stalled.

Which brings us to this Friday’s jobs report: if BofA’s internal credit card data is indicative of overall spending trends, then we are about to see a very disappointing retail spending report. On the other hand, it will be difficult to square such disappointment with the recent GDP data which shows that only the “strong” consumer is keeping the US economy out of recession

 

… not to mention the past two months of very strong jobs data. As such, we eagerly look forward to seeing just how much of an outlier this Friday’s seasonal adjustment factor will be to keep the recovery narrative going. it won’t be the first time seasonals have come to the last minute rescue as we showed back in February, when the adjusted print was more than double the actual number.

Alternatively, if the government does report the unvarnished truth, beware the whiplash move in the dollar and Treasury yields, both of which would promptly tumble as any hopes of a December, and certainly September (and perhaps 2017 as well) rate hike is quickly and permanently extinguished.

 

end

WOW!! Assange tells the world that murdered DNC staffer was the email leaker and has offered a 20,000 reward for information.  Thus the assassination was politically motivated:

(courtesy zero hedge)

Wikileaks’ Assange Hints Murdered DNC Staffer Was Email-Leaker, Offers $20k Reward For Info

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