August 17/FOMC in a slight hawkish mood yet market interprets as dovish/China has massive amount of ships into disputed waters/Russia engages in armoured war games/Dund and Bradstreet may lower the boom on Portugal’s sovereign debt : if they downgrade then ECB cannot purchase any of their bonds/Cisco systems lays off 5,500 workers/Target slashes 2nd half earnings and sales/

Gold:1342.70 down $7.80

Silver 19.63  DOWN 22  cents

In the access market 5:15 pm

Gold: 1349.00 post FOMC

Silver: 19.70


For the August gold contract month,  we had a small sized 11 notices served upon for 1100 ounces. The total number of notices filed so far for delivery:  12,857 for 1,285,700 oz or  tonnes or 39.999 tonnes.  The total amount of gold standing for August is 42.82tonnes.

In silver we had 119 notices served upon for 595,000 oz. The total number of notices filed so far this month:  393 for 1,965,000 oz.



Let us have a look at the data for today



In silver, the total open interest ROSE BY A TINY 5 contracts UP to 205,905 AND  MOVING AWAY FROM ITS AN ALL TIME RECORD AS  THE  PRICE OF SILVER ROSE  BY 3 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.029 BILLION TO BE EXACT or 147% of annual global silver production (ex Russia &ex China).

In silver we had 0 notices served upon for nil oz

In gold, the total comex gold FELL 7,819 contracts despite the fact that the price of gold ADVANCED YESTERDAY by $10.20 . The total gold OI stands at 572,496 contracts.


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


we had no change the GLD/

Total gold inventory rest tonight at: 962.23


we had a huge addition of 1.519 million oz  into the SLV, /   THE SLV/Inventory rests at: 353.284 million oz.

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

1. Today, we had the open interest in silver ROSE by 5 contracts UP to 205,905 as price of silver ROSE BY 3 cents with YESTERDAY’S trading.The gold open interest FELL 7,819 contracts DOWN to 572,496 as the price of gold ROSE by $10.20 WITH YESTERDAY’S TRADING.

(report Harvey).


2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge


 i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 0.48 POINTS OR 0.02%/ /Hang Sang closed DOWN 111.06 points or 0.48%. The Nikkei closed UP 149.13 POINTS OR 0.90% Australia’s all ordinaires  CLOSED UP 0.06% Chinese yuan (ONSHORE) closed DOWN at 6.63445/Oil FELL to 46.35 dollars per barrel for WTI and 48.90 for Brent. Stocks in Europe:  in the RED . Offshore yuan trades  6.6392 yuan to the dollar vs 6.63445 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES



Interesting!  The Nikkei 225 is now higher than the Topix due to Bank of Japan purchases of stocks and ETF’s

( zero hedge)


Is this the reason why China is standing for a huge amount of silver contracts at the comex:  Are they willing to take on the west? China has massive ships in the disputed South China seas.

( zero hedge)



i)Deutsche bank not doing too good;  One of its executives is suggesting that the company scrap its top level bonuses  on top of the scrapping of the dividends to its shareholders.

Interestingly, he claims that the bank is better than what it seems as the bank past its ECB stress test. He ignores the German ZEW stress test of which the bank failed and needs 19 billion in capital

( zero hedge)


You will recall that Dun and Bradstreet is the only rating agency that gave Portugal the minimum BBB grade such that the ECB could still continue to buy their junk sovereign bonds.

Well it looks like D & B might lower the boom on Portugal setting the stage for some fireworks;

( zero hedge)



A terrific commentary on what is happening behind the scenes in Turkey.  At first many thought that Erdogan was behind his own plot  to “remove” him, but on closer examination it seems that it may have been a poor execution of the west.  This is why he is seeking a partnership with Putin of Russia. Putin will win as he gets back the Turkish stream pipeline and he will still control much of the happenings in Turkey much to the chagrin of the west.

a must read…

( Bohm Bawerk/


The following does not look good as Russia conducts armoured train drills for the first time in 15 years:

(courtesy MacSlavo/


The Rothschilds join the bearish crowd as they increase their gold holdings up to 8%

( zero hedge)


i)The Saudis are now set to increase their output to record levels. Qatar is angry!(courtesy (zero hedge)

ii)Then at 11:25 am oil jumps on an inventory decline.  However the industry has experienced its biggest production increase in 15 months;

( zero hedge)



In the surreal category, police have seized Ryan Lochte’s passport stating he cannot leave the country because they state that he lied about being robbed

(courtesy zero hedge)


i)Peter Grandich, former mining company adviser states that we are in the beginning of a huge gold bull market:

( Peter Grandich/)

ii)Jim Richards tells of the “paper gold” fraud game and how this will end badly for our bankers:( Jim Rickards)


iii)Koos Jansen is the only one you should follow with respect to demand of gold from China:

( Koos Jansen)

iv)Good question:  find out what Eric thinks on whether the current gold price justifies the big gains in all gold/silver stocks(courtesy Eric Sprott/Sprott Asset Management)


v) Dave Kranzler discusses the gold/silver trading at the comex:


(Dave Kranzler IRD)

vi)Just look what insurance companies and banks are doing to store cash in vaults to avoid negative interest rates

( Clair Jones/London’s Financial times)



i) aThis is a huge Bellwether:  the giant Cisco is reportedly firing 20% of its workforce: 14,000 workers

( zero hedge)

1b)Then with the announcement of only 5500 being fired, the market is very disappointed and Cisco falls even more

( zero hedge)

ii)The gloves come off as Trump hires Breitbart Chairman: expect fireworks on Hillary

( zero hedge)

iii)Then early this morning, the street did not like this:  Target slashes earnings estimates for the second half of 2016:

( zero hedge)

iv)Last month we highlighted to you 3 ref flags which show that the USA housing sector is in a massive slowdown. Today those red flags are flashing an even brighter red:

( zero hedge)


Let us head over to the comex:

The total gold comex open interest FELL TO AN OI level of 572,496 for a LOSS of 7,819 contracts DESPITE THE FACT THAT THE PRICE OF GOLD ROSE BY $10.30 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 FALL by 283 contracts DOWN to 922,  We had 22 notices filed upon yesterday so we LOST A HUGE 261 contracts or an additional 26,100 oz will not stand for delivery in August AND THESE GUYS WERE WITHOUT A DOUBT CASH SETTLED FOR A FIAT BONUS. The next contract month of Sept saw it’s OI fall by 372 contracts down to 4581.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 ROSE by 156 contracts UP to 46,538. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was FAIR at 153,489.  The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was GOOD at 235,749 contracts.The comex is not in backwardation.
Today, we had  11 notices filed for 1100 oz in gold
And now for the wild silver comex results. Total silver OI ROSE by 5 contracts from 205,900 UP TO 205,905 with the RISE in price of silver to the tune of 3 cents.  We are moving away from the all time record high for silver open interest set ON Wednesday AUGUST 3: (224,540). The non active month of August saw it’s OI RISE BY 5 CONTRACTS UP TO 203. We had 0 notices served yesterday so we GAINED 5 contracts or an additional 30,000 oz will  stand in this non active delivery month of August. The next big active month is September and here the OI fell by ONLY 2253 contracts down to 104,058  and that would alarm our bankers to no end. The volume on the comex today (just comex) came in at 78,603 which is HUGE and small rollovers..The confirmed volume yesterday (comex + globex) was HUGE at 79,106 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months.
We had 119 notices filed for today for 595,000 oz
INITIAL standings for AUGUST
 August 17.
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
1890.27 oz
Deposits to the Dealer Inventory in oz nil


Deposits to the Customer Inventory, in oz 
 2893.500 oz
90 kilobars
No of oz served (contracts) today
11 notices 
1100 oz
No of oz to be served (notices)
911 contracts
(91,100 oz)
Total monthly oz gold served (contracts) so far this month
12,857 contracts (1,285,700 oz)
(39.999 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month    433,771.4 OZ
Today:  TINY activity at the gold comex AND 1 KILOBAR ENTRY
Today we had 0 dealer DEPOSITS
total dealer deposit: NIL    0z
Today we had  0 dealer withdrawals:
total dealer withdrawals:  nil oz
We had 1 customer deposit:
 i) Into Scotia:  2893.500 oz (90 kilobars)
Total customer deposits: 2893.500 oz (90 kilobars)
Today we had 1 CUSTOMER withdrawals
 i) Out of SCOTIA:  1,890.27 OZ
Total customer withdrawals  1,890.27 OZ
Today we had 1 adjustment:
 i) Out of Scotia:  20,634.709 oz was adjusted out of the dealer and this landed into the customer account of Scotia:  (.6418 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 11 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 8 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 (12,857) x 100 oz  or 1,285,700 oz , to which we  add the difference between the open interest for the front month of AUGUST  (922 CONTRACTS) minus the number of notices served upon today (11) x 100 oz   x 100 oz per contract equals 1,376,000 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 (12,857) x 100 oz  or ounces + {OI for the front month (922) minus the number of  notices served upon today (11) x 100 oz which equals 1,406,200 oz standing in this non  active delivery month of AUGUST  (42.820 tonnes).
We lost 261 contracts or additional 26,100 oz will not stand for metal in this active month of August.
Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you. 
We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  21.452 TONNES FOR JULY + 12.3917 + 42.82 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// 0.219 TONNES/August 11: .3619 TONNES/ AUG 12/.05878/ aug 17. 6418 tonnes/THEREFORE 91.956 tonnes still standing against 72.789 tonnes available.
 Total dealer inventor 2,340,177.522 oz or 72.789 tonnes
Total gold inventory (dealer and customer) =11,003,691.685 or 342.26 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 342.26 tonnes for a  gain of 39  tonnes over that period. 


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


And now for silver
 august 17.2016
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
74,733.97 oz
Deposits to the Dealer Inventory
Deposits to the Customer Inventory
1,184,572.694 oz
No of oz served today (contracts)
(595,000 OZ)
No of oz to be served (notices)
84 contracts
420,000 oz)
Total monthly oz silver served (contracts) 393 contracts (1,965,000 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  8,424,966.0 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 2 customer withdrawals:
i) Out of SCOTIA:  70,532.800 oz
ii) Out of BRINKS: 4201.17 OZ
Total customer withdrawals: 74,733.97 oz
We had 2 customer deposits:
i) Into CNT: 599,848.48 oz
ii) Into Delaware: 584,674.214 oz
total customer deposits:  1,1184,572.694  oz
 we had 1 adjustments
ii) Out of CNT:
we had a transfer of 4,906.900 oz from the dealer to the customer account of CNT
The total number of notices filed today for the AUGUST contract month is represented by 119 contract for 595,000 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 (393) x 5,000 oz  = 1,965,000 oz to which we add the difference between the open interest for the front month of AUGUST (203) and the number of notices served upon today (119) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the AUGUST contract month:  393(notices served so far)x 5000 oz +(203 OI for front month of AUGUST ) -number of notices served upon today (119)x 5000 oz  equals  2,385,000 oz  of silver standing for the AUGUST contract month.
we gained 5 contracts or an additional 25,000 oz will stand for delivery in this non active month of August.
Total dealer silver:  26.446 million (close to record low inventory  
Total number of dealer and customer silver:   157.459 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.
And now the Gold inventory at the GLD
August 17/no change in gold inventory at the GLD/inventory rests at 962.23 tonnes
August 16/ a deposit of 1.78 tonnes of “paper gold” into the GLD/Inventory rests at 962.23 tonnes
August 15/what a farce!! a huge “paper gold’ withdrawal of 12.17 tonnes/inventory rests at 960.45 tonnes
August 12/no change in gold inventory at the GLD/Inventory rests at 972.62 tonnes
August 11/no changes in gold inventory at the GLD/Inventory rests at 972.62 tonnes
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
August 16/ Inventory rests tonight at 962.23 tonnes


Now the SLV Inventory
August 17/ we had a huge deposit of 1.519 million oz into the SLV/Inventory rests at 353.284 million oz/
August 16/no change in inventory/rests tonight at 351.765 million oz
August 15./amazing, we have a huge withdrawal in gold and yet nothing moves out of silver: no change in silver inventory at the SLV/Inventory rests at 351.765 million oz.
August 12/no change in silver inventory at the SLV/Inventory rests at 351.765 million oz
August 11/no change in silver inventory at the SLV/Inventory rests at 351.765 oz
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
August 17.2016: Inventory 353.284 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 4.9 percent to NAV usa funds and Negative 5.0% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.6%
Percentage of fund in silver:39.2%
cash .+1.2%( August 17/2016).
2. Sprott silver fund (PSLV): Premium falls to +1.15%!!!! NAV (august 17/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.05% to NAV  ( august 17/2016)
Note: Sprott silver trust back  into POSITIVE territory at +1.15% /Sprott physical gold trust is back into positive territory at 0.05%/Central fund of Canada’s is still in jail.


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

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

45th Anniversary Of Nixon Ending The Gold Standard

This week 45 years ago, August 15th 1971 to be exact, President Nixon suddenly declared the end of the Gold Standard. He ushered in the modern monetary system based on fiat paper and digital currency that works so poorly for us today and led to the global financial crisis.

The dramatic announcement by ‘Tricky Dicky’ is a must watch and you can see it here:

“Your dollar will be worth tomorrow what it is today… ”  

This was one of the most important events in modern financial, economic and monetary history and is a seminal moment in the creation of the global debt crisis which has confronted the U.S., Europe and the world in recent years and continues to this day.

Nixon ushered in an era of floating fiat currencies not backed by gold or silver but rather deriving value through government “fiat,” diktat or order of the government.

While Nixon justified the “technical” and “temporary” move as necessary to combat malign “international money speculators” who were “waging an all out war on the American dollar.” The George Soros’ of their day.

The real reason for the move was that the U.S. , then as today, was living way beyond its means with the Vietnam war and rapidly escalating military spending leading to large budget deficits and inflation.

Imperial overstretch had begun…


Governments internationally including the French and their President Charles de Gaulle were concerned about the debasement of the dollar and began to exchange their dollar reserves for gold bullion bars.

Nixon tried to reassure the American public about the value of their currency by declaring incorrectly that

“Your dollar will be worth tomorrow what it is today… ”  

Subsequent to Nixon’s decision 45 years ago, the U.S. dollar fell very sharply. Gold surged in the coming 9 years and rose from $35/oz to $850/oz by January 1980. Since 1971, gold has fallen from 1/35th of an ounce of gold to 1/1350th of an ounce of gold today.

This is not the fault of “speculators”, rather it is the fault of irresponsible governments and central bankers debasing the U.S. dollar since 1913 and indeed since 1971. With the notable exception of Federal Reserve Chairman Paul Volcker.

Today, U.S. dollars and all paper and digital money is declared by governments to be legal tender, despite the fact that neither paper nor digital currency has any intrinsic value and is not backed by gold reserves.

Historically, currencies were based on precious metals such as gold or silver, but fiat money is based on faith and on the performance of politicians, bankers and central bankers.

Because today’s fiat money is not linked to physical reserves of gold and silver, it is becoming worth less with each passing month and risks becoming worthless should hyperinflation take hold as has been seen in many nations in recent years including Zimbabwe and as being seen in Venezuela today. Indeed, Nigeria appears to be in the early stages of an inflationary spiral.

If people lose faith in a nation’s paper currency, they exchange it rapidly for real things and hard assets. Their ‘money’ no longer holds value. People who own real assets are protected. Those who are dependent solely on income and wages see their income and their standard of living fall. We appear to be in the end phase of this cycle:

Source Source: via

Throughout history most fiat currencies have not survived more than a few decades and have succumbed to hyperinflation.

The fiat currency or paper and digital based international monetary system has survived 45 years but is in terminal decline with many astute commentators now questioning whether it will survive the coming global financial crisis.

Gold’s role as a store of value and important monetary asset is being increasingly appreciated. Although some less informed commentators still view gold as a “barbaric relic,” the biggest market participants are again using gold as an alternative monetary asset today.

These include the largest central banks in the world, the largest banks in the world, the largest insurance companies in the world, the largest hedge funds in the world, the largest pension funds in the world and indeed the wealthiest investors in the world.

Currency debasement has without fail ended in disaster throughout history and in recent years. As faith is lost in the debased currency, inflation surges and the economy collapses.

We have been warning of the real risk of an international monetary crisis and a currency reset which sees all fiat currencies devalued against gold. While hyperinflation remains a worst case scenario, stagflation and a virulent bout of inflation looks almost certain in the coming months in debt laden economies globally.

Gold and silver will protect against currency devaluations as is being seen in the UK since Brexit.

Gold and Silver Bullion – News and Commentary

Gold up as U.S. rate hike expectations cool (Reuters)

Japanese Shares Drop as Yen Surges Amid Dollar Slump; Gold Gains (Bloomberg)

Dollar Slumps on Fed Rates Bets as European Equities Retreat (Bloomberg)

Paulson Maintains SPDR Gold ETP Stake as Metals Prices Rally (Bloomberg)

Soros Fund Management slashes gold shares in second quarter (Reuters)


London new-build sales plunge thanks to sky-high prices (City AM)

Buy physical gold; central banks are on its side, Jim Rickards says (CNBC)

Time to Buy Gold, Silver and Mining Stocks (

U.S. Dollar Hasn’t Been Linked to Gold for 45 Years. Here’s Why (Time )

Go Gold! To Preserve Value In Turmoil (Goldseek)

Gold Prices (LBMA AM)

16Aug: USD 1,349.10, GBP 1,039.89 & EUR 1,197.33 per ounce
15Aug: USD 1,339.20, GBP 1,037.21 & EUR 1,198.85 per ounce
12Aug: USD 1,336.70, GBP 1,032.60 & EUR 1,199.02 per ounce
11Aug: USD 1,344.55, GBP 1,037.05 & EUR 1,206.06 per ounce
10Aug: USD 1,351.85, GBP 1,035.11 & EUR 1,209.23 per ounce
09Aug: USD 1,332.90, GBP 1,025.80 & EUR 1,201.74 per ounce
08Aug: USD 1,330.00, GBP 1,019.84 & EUR 1,198.86 per ounce

Silver Prices (LBMA)

16Aug: USD 20.04, GBP 15.43 & EUR 17.77 per ounce
15Aug: USD 19.90, GBP 15.40 & EUR 17.81 per ounce
12Aug: USD 19.87, GBP 15.33 & EUR 17.81 per ounce
11Aug: USD 20.21, GBP 15.56 & EUR 18.13 per ounce
10Aug: USD 20.34, GBP 15.55 & EUR 18.19 per ounce
09Aug: USD 19.70, GBP 15.18 & EUR 17.77 per ounce
08Aug: USD 19.66, GBP 15.04 & EUR 17.74 per ounce

Recent Market Updates

– Will Ireland Be First Country In World To See Bail-in Regime?
– Money “Madness” Negative Interest Rates Sees Gold Buying Surge
– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market
– Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
– “Could Not Invent A More Bullish Story For Gold Bullion”
– Gold In Bull Market – “Every Reason For It To Continue” – Frisby In Money
– Is Gold Set To Hit $1,500 Per Ounce?

Mark O’Byrne
Executive Director
Koos Jansen is the only one you should follow with respect to demand of gold from China:
(courtesy Koos Jansen)

Posted on 17 Aug 2016 by Koos Jansen

Spectacular Chinese Gold Demand 2015 Fully Denied By GFMS And Mainstream Media

Debunking the Thomson Reuters GFMS Gold Survey 2016 report. New information provides a more detailed perspective on the Chinese domestic gold market.

In the Gold Survey 2016 report by GFMS that covers the global gold market for calendar year 2015 Chinese gold consumption was assessed at 867 tonnes. As Chinese wholesale demand, measured by withdrawals from Shanghai Gold Exchange designated vaults, accounted for 2,596 tonnes in 2015 the difference reached an extraordinary peak for the year. In an attempt to explain the 1,729 tonne gap GFMS presents three brand new (misleading) arguments in the Gold Survey 2016 and reused one old argument, while it abandoned five arguments previously put forward in Gold Survey reports and by GFMS employees at forums. Very few of all these arguments have ever proven to be valid, illustrated by the fact that GFMS perpetually keeps making up new ones, and thus gold investors around the world continue to be fooled about Chinese gold demand. For some reason GFMS is restrained in disclosing that any individual or institution in China can directly buy and withdraw gold at the Shanghai Gold Exchange, which is the most significant reason for the discrepancy in question.

According to my estimates true Chinese gold demand in 2015 must have been north of 2,250 tonnes… jansen/





Good question:  find out what Eric thinks on whether the current gold price justifies the big gains in all gold/silver stocks


(courtesy Eric Sprott/Sprott Asset Management)


Peter Grandich, former mining company adviser states that we are in the beginning of a huge gold bull market:
(courtesy Peter Grandich/)

Peter Grandich: Why the mother of all gold bull markets has begun


10:36a ET Tuesday, August 16, 2016

Dear Friend of GATA and Gold:

Market analyst and former mining company adviser Peter Grandich can’t quite stay out of the business, writing today that while the financial industry and mainstream news media will always be hostile to gold, there are many reasons to think that “the mother of all bull markets” for gold has begun. Grandich’s commentary is posted at his Internet site here:…

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



Jim Richards tells of the “paper gold” fraud game and how this will end badly for our bankers:

(courtesy Jim Rickards)

Rickards details the ‘paper gold’ fraud and speculates on its demise


7:39p ET Tuesday, August 16, 2016

Dear Friend of GATA and Gold:

In a new promotional video for his financial letter Strategic Intelligence, fund manager and geopolitical strategist James G. Rickards wonderfully exposes the fraud of “paper gold” and “paper silver” and speculates on the circumstances that will cause their demise and the explosion in the price of real metal.

More than 90 percent of gold and silver investments are not backed by real metal, Rickards says, and their owners won’t have metal when they most want it.

In the video Rickards interviews someone he says is an expert in the Swiss gold refinery business who concurs about the paper gold hoax and whose identity is withheld and whose face is obscured by fuzzing of the video. What the supposed expert asserts is only what GATA has been telling people for years, but the effect is theatrical and dramatic.

While GATA has followed a policy of strict attribution and has abjured anonymous sources in the belief that this is necessary for credibility, a high principle of honest journalism, maybe GATA Chairman Bill Murphy and your secretary/treasurer would have been more persuasive all this time if we had put paper bags over our heads. (We’d probably have had more luck in dating anyway.)

But anything that truthfully impugns what Rickards calls the great gold hoax is perfectly jake, so while it’s a commercial promotion, his video is still a great service. It’s about a half hour long and can be watched at the Agora Financial Internet site here:

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




Just look what insurance companies and banks are doing to store cash in vaults to avoid negative interest rates

(courtesy Clair Jones/London’s Financial times)

Banks look for cheap way to store cash piles as rates go negative


By Claire Jones and James Shotter
Financial Times, London
Tuesday, August 16, 2016

FRANKFURT, Germany — The idea of keeping piles of cash in high security vaults may sound like something from an old movie plot, but some banks and insurers have recently started considering the idea as interest rates sink below zero across much of Europe.

Europe’s highways are not yet jammed with heavily guarded trucks transporting money to top-secret locations, but if it becomes financially sensible for banks to hoard cash as rates are cut even further, the practice could undermine central banks’ ability to use negative rates to boost growth.

After the European Central Bank’s most recent rate cut in March, private-sector banks are paying what amounts to an annual levy of 0.4 percent on most of the funds they keep at the eurozone’s 19 national central banks. This policy, which has cost banks around E2.64 billion since ECB rates became negative in 2014, is intended to spark economic growth by giving banks the incentive to lend money to businesses instead of holding on to it.

European central bankers say they could cut rates again should economic conditions worsen, but private bankers and insurers are already thinking of creative ways to avoid those charges altogether.

One way is by turning the electronic money they keep at central banks into cold, hard cash. Munich Re has experimented successfully with storing a double-digit million sum of euros in cash at what the insurer describes as a manageable cost. A few other German banks, including Commerzbank, the country’s second-biggest lender, have also considered taking the step. But when a Swiss pension fund attempted to withdraw a large sum of money from its bank in order to store it in a vault, the bank refused to provide the cash, according to local media reports. …

… For the remainder of the report:



v) Dave Kranzler discusses the gold/silver trading at the comex:

(Dave Kranzler IRD)


Gold And Silver: Patience Required

I wanted to share a discussion on the metals that I had with GATA’s Bill “Midas” Murphy this morning.  I had emailed him to ask him if he knew of any reasons the metals were getting slammed today because the dollar was down a bit, the economic reports were poor  and the stock market was selling off –  all three occurrences of which are precious metals-friendly.

As Bill suggested, silver is under more pressure today than gold, with JPM going all out to get the speculative traders to sell, which helps JPM push the price down.  If you look at short term chart, it would appear that silver is forming a head and shoulders “top” formation, something which JPM is trying achieve, as Bill correctly pointed out.

However, technical formations almost NEVER work in the metals. Typically doing the opposite of the what the  formation is indicating works the best over the last 15 years. That would imply a big upleg coming, which supports my view based on the fundamentals, which would support the view of another big move higher on the horizon.

I think JPM is doing whatever it can to minimize the damage from the inevitable. The biggest seasonal physical buying period starts in another couple weeks. Next week is options expiry for Sept silver. They probably want to push silver below $19.50 if they can because the Sept silver put/call structure currently is favorable to the call-writers (i.e. JPM) is silver closes below $19.50 on the 25th. The problem is, the way the economy and the political system is melting down, they can’t control the possibility of a random news event hitting the tape that would send the metals soaring. I believe there’s high probability a news event like that could happen at any time.

Interestingly, the o/i for gold is coming down a bit earlier than usual for the typical contract “roll” period (for Aug) and the Sept silver o/i is coming down. They are covering for a reason, I believe.  (click image to enlarge)

UntitledSilver is up 42.4 % since Dec 14, 2016. That is a HUGE run.  If you look at a 1-yr graph, silver is trending sideways consolidating that gargantuan move it made in just 7 months.  JPM and all of the other technical analysis cretins out there want us to believe that silver is forming a head n shoulders top formation. But it’s not.  It was in danger of going parabolic, something we DON’T want to have happen. Yes, silver could go parabolic up to $50 and still be insanely undervalued relative to the supporting fundamentals, but the huge hedge fund trading algos would not treat it that way.

Silver looks like it will pullback to its 50 dma, which is around $19.15 right now. As long as it holds that level – and they may crush it below that level with A LOT of paper for a few days, it will be ready for the next upleg. Since mid-Dec, we have been in an uptrend that is bouncing off of the 50 dma and moving higher.  The RSI and MACD momentum indicators are signalling the probability that the current move is becoming “exhausted,” with probability weighted toward a move higher soon.

At some point we might see a 200 dma correction. But silver could correct to its “chart” uptrend line around the $17 and still be up 24% since Dec 14.  Anyone who would sneer at that ROR belongs in an asylum or is an internet blog terrorist.

Both gold and silver are in the process of making an eventual move that will shock and awe.  We’re now aware that some of the biggest, most influential money manipulators in the world are shoveling fiat currency confetti into big positions in gold and silver – including the nefarious Rothschild clan:  LINK.  These guys are not buying gold for just a double or triple. They’re buying it because they know that the global fiat paper currency experiment is coming to an end.  And along with it so is the debt-fueled lifestyle America has enjoyed since 1971…

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




2 Nikkei closed /USA: YEN RISES TO 100.65

3. Europe stocks opened  IN THE RED,     /USA dollar index UP to 94.95/Euro DOWN to 1.1270

3b Japan 10 year bond yield: RISES TO  -.07%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 100.65

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  46.40  and Brent: 48.90

3f Gold DOWN  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.033%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 7/09%/: 

3j Greek 10 year bond yield RISE to  : 8.12%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1342.85/silver $19.64(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 25/100 in  roubles/dollar) 64.09-

3m oil into the 46 dollar handle for WTI and 48 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 DEVALUATION UPWARD from POBC.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9605 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0849 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -0.07%

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


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

4. USA 10 year treasury bond at 1.578% early this morning. Thirty year rate  at 2.296% /POLICY ERROR)

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

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


European Stocks Drop, Futures Flat As Rising Dollar Pressures Oil, EMs: All Eyes On The Fed Minutes

European stocks are down led by tech, chemicals, alongside EM stocks which retreated from near a one-year high and oil fell for the first time in a week after hawkish comments from Federal Reserve officials revived bets on U.S. interest rate rises this year, and pushed the dollar higher from 7 week lows ahead of today’s Fed Minutes. S&P 500 futures were little changed following yesterday’s drop from record highs.

The Stoxx Europe 600 Index fell for a fourth day, while MSCI’s gauge of developing-nation shares also declined, having halted an eight-day winning streak on Tuesday.

Crude pulled back from a five-week high as the Bloomberg Dollar Spot Index rebounded from near a three-month low after two regional Fed chiefs indicated interest rates could be increased at least once this year. South Korea’s won tumbled by the most since Britain voted to leave the European Union and gold declined. After sliding as low as 99.50 yesterday, a rebound in the USDJPY to 101 overnight pushed the Nikkei higher by 0.9%, closing at 16,746.

The rebound in the dollar was catalyzed by comments from Fed President William Dudley and Dennis Lockhart who jolted markets yesterday by indicating a rate hike in 2016 remained possible despite uneven growth in the world’s largest economy. Their comments helped push the probability of a Fed move above 50 percent in the futures market for the first time since the June 23 Brexit vote. Before their comments, global equities had climbed to a one-year high and the dollar index sank to levels last seen in May amid conflicting signals over the U.S. labor market and growth.

“A pull-back is following through in European stocks today after the Fed raised the possibility of a September rate hike,” said William Hobbs of Barclays in London. “It seems like expectations had become too muted.”

Today it will be all abaout the Fed again: Group head of multi-asset portfolios at GAM, Larry Hatheway, said attention was firmly on the Fed minutes and particularly why the bank’s last meeting ended with a notably cautious statement. “It wasn’t really about Brexit. It is not even about the world economy which isn’t in great shape but is somewhat improved from the first quarter fears and its surely not about the cost of capital,” Hatheway said. “So one presumes the caution reflects a thought process about a much lower equilibrium real interest rate …or possibly the fact that inflation is just not accelerating, which was corroborated to a degree by CPI data yesterday.”

But before the Fed we will get another dovish blast as St. Louis Fed chief James Bullard – the Fed’s latest uberdove – is due to speak Wednesday at 1pm, one hour ahead of the Minutes release which are scheduled for release at 2 p.m. in Washington.

In Asia overnight, the MSCI’ Asia-Pacific index ex-Japan dipped 0.3% while Japan’s Nikkei closed 0.9 percent higher, paring some of Tuesday’s sharp losses thanks to a weaker yen as it dropped back below the 100 yen per dollar level. China’s CSI 300 index and the Shanghai Composite both erased earlier losses to end the day flat after authorities approved the launch of a long-awaited scheme to allow stock trading between Shenzhen and Hong Kong.

European yields nudged 2-4 basis point lower with Spanish bonds boosted ahead of a meeting later that could pave the way for a new government in Madrid after eight months of limbo. Interim prime minister Mariano Rajoy is to hold a meeting of his Conservative People’s Party (PP) to consider a reforms-for-support offer from centrist rivals Ciudadanos. “I still have doubts about political progress in Spain and negotiations could still go on for weeks,” said DZ Bank strategist Christian Lenk. “But markets do seem to like what’s coming out of Madrid.

It has been a quiet session in European equities where the Stoxx 600 slipped 0.3% for a fourth day without gains. The volume of Stoxx 600 shares traded was 27% lower than the 30-day average. S&P 500 Index futures were little changed, after U.S. equities fell on Tuesday. ASML Holding NV dragged technology shares to the biggest decline on the equity benchmark, dropping 5 percent after Intel surprised the market when it said it won’t use the semiconductor-equipment maker’s lithography technology to make some of its chips. Carlsberg A/S slid 4.6% after the Danish brewer reported first-half profit that missed analysts’ estimates as the weakness of Russia’s ruble eroded earnings.

The MSCI Emerging Markets Index was down 0.9 percent, trimming this
quarter’s advance to less than 9 percent. In Hong Kong, small-cap shares
were the brightest
part of China’s stock markets after an exchange trading link between
the city and Shenzhen was unveiled. The Hang Seng Composite Small Cap
Index climbed 0.5 percent to four-month high.

Tyco International Plc and Johnson Controls Inc. have shareholder meetings lined up to vote on their proposed $16 billion merger, while Target Corp. and Cisco Systems Inc. are among U.S. companies reporting results.

Market Snapshot

S&P 500 futures down less than 0.1% to 2176
Stoxx 600 down 0.3% to 342
FTSE 100 down 0.1% to 6887
DAX down 0.8% to 10592
German 10Yr yield down less than 1bp to -0.04%
Italian 10Yr yield up 2bps to 1.13%
Spanish 10Yr yield up 2bps to 1%
S&P GSCI Index down 0.6% to 360.9
MSCI Asia Pacific down less than 0.1% to 139
Nikkei 225 up 0.9% to 16746
Hang Seng down 0.5% to 22800
Shanghai Composite down less than 0.1% to 3110
S&P/ASX 200 up less than 0.1% to 5535
US 10-yr yield up less than 1bp to 1.58%
Dollar Index up 0.19% to 94.97
WTI Crude futures down 0.9% to $46.14
Brent Futures down 1% to $48.75
Gold spot down 0.2% to $1,343
Silver spot down 0.9% to $19.61
Top Global News

Och-Ziff Bribery Settlement Said to Spare Firm as Unit Convicted: Hedge fund is in talks to resolve probe of dealings in Africa. Gabonese ‘fixer’ with links to firm arrested on Tuesday
Cisco Plans to Cut Up to 14,000 Jobs Within Weeks, CRN Says: CEO Robbins is shifting to emphasize software as growth slows. Cuts could account for up to 20 percent of 73,000 employees
JPMorgan Hires Sakagami as Chief Japan Equity Strategist: Fills position left vacant since Jesper Koll left last year. Top-ranked Japan equity strategist according to Nikkei Veritas
Deutsche Bank Must Consider Scrapping Bonuses, Sewing Tells Bild: Lender scrapped 2015 management bonuses following annual loss. No dividend means bonuses should be up for debate, Sewing says
BOJ Firepower Falls Short as Yen Climb to 100 Dares Japan to Act: Bank of Tokyo-Mitsubishi, Morgan Stanley see further gains
Hong Kong Exchange Sees Second Link Cementing China Gateway Role: Shenzhen link expands Chinese investor access to Hong Kong
Barnes & Noble Ousts Its CEO After Less Than a Year on the Job
FOMC releases minutes from July 26-27 meeting; follow TOPLive for blog coverage at 2pm
Hyundai Motor Says It’s Discussing Partnerships With Google
Citadel to KCG Tell SEC New Treasuries Rules Don’t Go Far Enough
Univision Said to Buy Gawker Media for $135m: Recode
U.S. Senator Seeks Multiple Reviews for Major Chem Mergers: FuW
Madison Square Garden Said to Take 12% Stake in Townsquare: WSJ
* * *

Looking at regional markets, Asia equity markets slightly shrugged off the weak lead from US markets where hawkish Fed comments weighed on risk-appetite, with Asia mixed and Japan leading as JPY pared some of its recent considerable gains. Energy names were among the outperformers in Nikkei 225 (+0.9%) on the continued advances in oil prices, with the materials sector also reflecting the strength seen across its global counterparts. Conversely, ASX 200 (flat) was initially weighed by some lacklustre earnings reports before paring loses to close flat. Chinese markets were mixed with the Shanghai Comp (flat) indecisive and Hang Seng (-0.4%) pared gains after initially being bolstered after China approved the Shenzhen¬HK stock connect which would provide wider investment options and allow foreign investors access to the world’s 7th largest stock exchange via Hong Kong. 10yr JGBs traded marginally lower amid increased demand for riskier assets in Japan, while today’s BoJ market operations were for a relatively reserved JPY 750b1n in government debt. PBoC set CNY mid-point at 6.6056 (Prey. 6.6305); strongest fix by the PBoC since June 24th. PBoC injected CNY 100bIn via 7-day reverse repos.

Top Asia News

BOJ Firepower Falls Short as Yen Climb to 100 Dares Japan to Act: Bank of Tokyo-Mitsubishi, Morgan Stanley see further gains
Hong Kong Exchange Sees Second Link Cementing China Gateway Role: Shenzhen link expands Chinese investor access to Hong Kong
Hong Kong Small Caps Rise, Brokerages Fall on Shenzhen Link News: There’s profit-taking in main beneficiaries, CMB analyst says
Aussie Rides Out RBA Cuts as World-Beating Yields Lure Funds: Options traders become least bearish on currency since 2014
Cathay Shares Drop as Profit Slumps 82% on Fuel Hedge Losses: Co.’s yields under pressure as Chinese carriers expand
Modi Sends Warning Shot to China, Pakistan on Territory Spat: Comments come after weeks of violence and tension in Kashmir
European equities extend on yesterday’s losses following hawkish comments from Fed’s Dudley and Lockhart while newsflow has been relatively light as participants await the FOMC minutes release. In terms of a sector breakdown, financial and IT names have been the notable drags, with chip maker ASML (-4.8%) one of the laggards following a negative broker move. However, equities saw a minor bounce after the UK Jobs report, in particular the Jobless Claims which showed little signs of Brexit jitters. Elsewhere, in credit markets, Portuguese bonds yet again decline amid the recent commentary from the DBRS stating that they may consider downgrading the countries rating, which could have serious implications as the ECB uses the DBRS to decides if countries are eligible for QE.

Top European News

Carlsberg 1H Organic Rev. Beats Ests., Keeps 2016 Outlook
Admiral Group Biggest SXXP Decliner As Solvency Ratio Drops
ABN Amro Says 2Q Net Profit Impacted by Derivatives Provision
Deutsche Bank Must Consider Scrapping Bonuses, Sewing Tells Bild: Lender scrapped 2015 management bonuses following annual loss. No dividend means bonuses should be up for debate, Sewing says
U.K. Dividends at Risk as BOE Action Swells Pension Hole: Rate cut lowers yields, piling pressure on retirement plans. Some investors dump shares as dividend reductions loom
Credit Suisse Joins War for Quants, Hiring Rothman to Build Team: He’ll assemble equity researchers to hone strategies, products. Banks and fund managers are snapping up quants to sift data
In FX, the Bloomberg Dollar Spot Index rose 0.4 percent, after sliding 1 percent over the past three days. “While Dudley was at least able to stem the bleeding for the dollar index, price action is not encouraging for the dollar near term,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Still, so long as a rate hike seems more likely than not as the Fed’s next move, we wouldn’t get super bearish on the dollar.” The yen was down 0.5 percent at 100.76 per dollar, after strengthening beyond 100 on Tuesday for only the second time this year. The currency is still up 19 percent for the year and Japanese Vice Finance Minister Masatsugu Asakawa said policy makers are prepared to intervene if exchange-rate moves are extreme. South Korea’s won slumped 1.5 percent, its steepest slide since June 24. The currency climbed to its strongest level in more than a year last week and its 14-day relative strength index ended the last session below 30, a sign to some investors that a retreat was likely. The MSCI Emerging Markets Currency Index lost 0.6 percent, headed for the biggest drop in seven weeks on a closing basis.

In commodities, oil halted its advance after the biggest four-day gain since April as weekly industry data showed U.S. gasoline stockpiles expanded, keeping supplies at the highest seasonal level in more than two decades. West Texas Intermediate crude slipped 0.9 percent to $46.15 a barrel, ending a 12 percent rally over the preceding four days after Saudi Arabia said it is prepared to act to stabilize markets. U.S. inventories of motor fuel increased by 2.18 million barrels last week while crude stockpiles dropped by 1 million barrels last week, the American Petroleum Institute was said to report Tuesday. Government data Wednesday is forecast to show a drop in gasoline supplies and an increase for crude. Gold’s two-day gain stalled on the Fed rates speculation. Bullion for immediate delivery slipped 0.3 percent to $1,342.63 an ounce. Silver lost 1 percent. U.S. natural gas futures rose 1.1 percent to $2.645 per million British thermal units, a fourth day of gains and the longest rally since the start of June. Temperatures may be above average in the East and Northwest, boosting demand for electricity for cooling.

It’s quiet on the US calendar today where the focus will be on the FOMC minutes tonight, while the DOE will release the official weekly inventory data at 10:30am ET.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

European equities enter the North American crossover lower amid yesterday’s hawkish Fed rhetoric with newsflow otherwise light
GBP/USD was lent some support by the latest jobs report, although gains have now been pared with the data not providing too much insight into the post-Brexit fallout
Looking ahead, highlights include FOMC Meeting Minutes, DoE crude oil inventories and comments from Fed’s Bullard
Treasuries lower in overnight trading with global equities, oil and gold; FOMC minutes at 2pm ET may “reflect greater confidence in labor mkt and domestic economic growth than in June.”
The U.K. labor market showed signs of continued resilience after the country’s referendum on EU membership, as jobless claims unexpectedly fell 8,600 in July after increasing 900 in June
Norway’s $890 billion sovereign wealth fund, the world’s biggest, took the step of independently cutting the value of its massive U.K. real estate portfolio by 5% after Britain voted to leave the European Union
Russia is delaying what would have been its biggest asset sale in a decade after renewed weakness in global oil markets and tensions among potential buyers upended plans to offer a stake in Bashneft PJSC
ABN Amro jumped the most in almost six months after second- quarter profit beat estimates and Chief Executive Officer Gerrit Zalm announced plans to cut costs by about 200 million euros ($225 million)
Chinese authorities said 450 suspects have been arrested this year in a crackdown on using offshore companies and “underground banks” to transfer money illegally
Cisco Systems, the largest maker of networking equipment, will cut as many as 14,000 employees worldwide, or 20% of its workforce, CRN reported, citing people close to the company
US Event Calendar

7am: MBA Mortgage Applications, Aug. 12 (prior 7.1%)
10:30am: DOE Energy Inventories
1pm: Fed’s Bullard speaks in St. Louis
2pm: FOMC Minutes
DB’s Jim Reid concludes the overnight wrap

The FOMC minutes (from the July 26-27 meeting) will be a little more interesting than previously thought after the influential and usually relatively dovish NY Fed President Dudley’s unscheduled comments yesterday. He suggested that a September hike was “possible” and that “we’re edging closer towards the point in time where it will be appropriate to raise rates further.” He added that 10y Treasuries were “pretty low given the circumstances” and that the Fed funds futures market was underpricing rate hikes. We’ve heard this sort of thing a lot in recent years from FOMC members without much eventual action so we shouldn’t over interpret but it was inevitable that it would impact rates pricing yesterday.

Indeed while 10y Treasury yields only ended up climbing 1.7bps yesterday to close at 1.575% they were up some 6bps from the intraday lows just prior to Dudley’s comments. The same can be said for 2y yields which were at 0.681% prior to the comments and 0.746% by the end of the session (+2.0bps on the day and +6.4bps from the session low). September rate hike expectations edged up to 22% from 18% the day prior while December expectations rose from 45% to 51%. European government bond markets also followed the lead. 10y Bund yields ended up climbing 4.4bps to -0.031% which is the highest yield since August 4th, while the peripherals were up anywhere from 5bps to 15bps in yield. We’ve seen a similar move in Asia this morning where 10y JGB’s are +3.0bps and similar benchmark bonds in the Australian, NZ and China are 2-4bps higher.

Staying with bonds, yesterday we saw the latest long-dated reverse Gilt auction which was hotly anticipated after last week’s failure from the BoE to buy the desired amount. With a week of press and publicity it was expected that they would have more success this week and indeed they did. However the £3.12bn tendered vs. the £1.17bn desired (2.67 covered) was still less than for any of the other non long-end auctions so far (3.54 times being the lowest cover). We also have a 2055 Gilt auction today which may have encouraged more sellers than last week. 30 year gilts sold off 5.6bps yesterday but this was in line with international equivalents. Given the BoE will be buying these bonds every week this story will continue to be a big theme for many months and we’d expect the supply/demand dynamics at the long end to continue to be tough for the Bank.

Meanwhile, there was little evidence that the big post-referendum decline for Sterling has fed through to headline consumer prices yet as the July headline CPI reading came in as expected at -0.1% mom. The YoY rate did however nudge up one-tenth to +0.6% while the core reading was down one-tenth to +1.3%. That said the more interesting read-through was in producer prices where PPI input rose a significant and more than expected +3.3% in July (vs. +1.0% expected). That was most since 2011 while the YoY rate is now up to +4.3% from -0.5% and so ends 32 consecutive months of deflation in input costs.

Risk assets ended up spluttering yesterday following Dudley’s comments with US equity markets in particular retreating from Monday’s record high marks. The S&P 500 (-0.55%), Dow (-0.45%) and Nasdaq (-0.66%) all closed lower while in Europe the Stoxx 600 (-0.79%) also ended up weakening as automakers in particular came under pressure. The rally for emerging markets also finally came to a halt with the MSCI emerging markets index (-0.03%) just about closing in the red following eight consecutive daily gains which had seen it surge over 5%. Notably the weaker performance for equity markets also came despite another +1.84% rally for WTI where some pre-Dudley weakness for the USD (-0.88%) supported gains.

This morning in Asia it’s been another relatively mixed start. Currently in the red is the Shanghai Comp (-0.52%), Kospi (-0.66%) and ASX (-0.08%), however the Nikkei (+0.50%) and Hang Seng (+0.21%) are both up in early trading. The Shenzhen is also a touch higher after Beijing yesterday approved the long awaited Shenzhen and Hong Kong trading link. Meanwhile gains for Japanese equities this morning have come about following a slightly weaker morning for the Yen which has been a big focus in the last couple of days. After breaking below 100 yesterday, the Yen is -0.32% weaker this morning at 100.62. Japan’s Vice Financial Minister said earlier that he is watching with ‘a strong sense of concern’ about moves in the currency and would look to act if needed.

Moving on. Despite playing second fiddle to Dudley yesterday, the Atlanta Fed’s Lockhart also attracted a bit of attention when he said that ‘I’m not locked in to any policy position at this stage, but if my confidence in the economy proves to be justified, I think at least one increase of the policy rate could be appropriate later this year’.

The hawkish Fedspeak largely overshadowed what was a mixed batch of economic data in the US yesterday. Of most focus was the July CPI report where headline inflation printed at 0.0% mom as expected although the YoY rate rounded down to a slightly lower than expected +0.8% from +1.0% in June. The core (+0.1% mom vs. +0.2% expected) also rose less than the market had forecasted resulting in the YoY rate dipping one-tenth to +2.2%, driven primarily by an unusual plunge in airfares.

There was better news in the latest activity indicators however where industrial production rose a bumper +0.7% mom last month (vs. +0.3% expected). Capacity utilization was up half a percent to 75.9% (vs. 75.6% expected) while manufacturing production also rose a robust +0.5% mom (vs. +0.3% expected). Finally the latest housing starts data covering July revealed starts rose +2.1% mom in July (vs. -0.8% expected) leaving the annualised level of starts at the highest since February. Building permits (-0.1% mom vs. +0.6% expected) were a bit weaker than expected however. The only other data to note came in Germany where the August ZEW current situations index bounced back from its post-Brexit decline to rise nearly 8pts to 57.6 (vs. 50.2 expected). That actually left the index at the highest level since January while the expectations component rose over 7pts to +0.5.

Looking at the day ahead, this morning in the UK we’ll get the next slug of data with the latest employment numbers. We’ll get the claimant count and jobless claims change data for July (i.e. post referendum) along with the ILO unemployment rate and average weekly earnings data in the three months to June. It’s quiet in the US this afternoon where the focus will be on the FOMC minutes tonight. Away from the data we’ll also hear from the Fed’s Bullard again this evening at 6pm BST where he’s due to speak on the US economy and monetary policy\



i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 0.48 POINTS OR 0.02%/ /Hang Sang closed DOWN 111.06 points or 0.48%. The Nikkei closed UP 149.13 POINTS OR 0.90% Australia’s all ordinaires  CLOSED UP 0.06% Chinese yuan (ONSHORE) closed DOWN at 6.63445/Oil FELL to 46.35 dollars per barrel for WTI and 48.90 for Brent. Stocks in Europe:  in the RED . Offshore yuan trades  6.6392 yuan to the dollar vs 6.63445 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  



Interesting!  The Nikkei 225 is now higher than the Topix due to Bank of Japan purchases of stocks and ETF’s

(courtesy zero hedge)

Bank Of Japan Buying Sends Nikkei 225 To Richest Since Dot-Com Crash

Having noted the farcical share ownership of The Bank of Japan (biggest shareholder in 55 companies) as Kuroda’s ETF-buying goes to ’11’, we thought it interesting that the distortion caused by these “pick a winner” purchases has sent Japan’s Nikkei 225 to its richest relative to Japan’s Topix index in 17 years.

As Bloomberg notes, Japan’s two major equity benchmarks have moved mostly together over the years. That changed this month following the latest meeting by the Bank of Japan, which boosted its purchases of exchange-traded funds as part of its easing program.

The BOJ’s heavier allocation to ETFs tracking the Nikkei 225 has helped push the gauge to its highest level versus the Topix index in 18 years.

Which – as we noted previously – leaves one big question… just how will the BOJ ever unwind its unprecedented holdings of not only bonds, which are now roughly 100% of Japan’s GDP, but also of stocks, without crashing both the bond and the stock market. And then we remember, that the BOJ will simply never unwind any of its “emergency” opertions just because nobody actually thought that far, plus the whole point of the exercise is hyperinflation or bust, as the sheer lunacy of Japan’s authorities is exposed for the entire world to see, leading to the terminal collapse of faith in the local currency. With every passing day, we get that much closer to said terminal moment.

“probably nothing”



Is this the reason why China is standing for a huge amount of silver contracts at the comex:  Are they willing to take on the west?

(courtesy zero hedge)

Japanese Coast Guard Releases Video Showing Hundreds Of Chinese Ships Near Disputed Islands

One week after Japan vocally complained to China over what it alleged was a fleet of 300 Chinese vessels spotted near the disputed territory of the Senkaku Islands in the East China Sea, with Vice Foreign Minister Shinsuke Sugiyama summoning and complaining to China’s Ambassador Cheng Yonghua that the incident had infringed on Japan’s sovereignty, the Japanese coast guard released a video showing hundreds of Chinese vessels sailing in the contentious territory. The aerial footage indicates the high level of tension in the area.

The video, which was shot from inside a low-flying patrol aircraft, has been released online by the Japanese Coast Guard, the Japan Times reported on Tuesday.  The footage shows 200 to 300 Chinese fishing boats accompanied by 28 Chinese patrol ships spotted in areas just outside Japanese territorial waters around the Senkakus, as well as Japanese patrol ships trying to prevent the Chinese ships from advancing into the disputed area.

Toward the end of the video, the 1,500-ton Japanese patrol ship Aguni, armed with 20mm cannon, approaches a Chinese Coast Guard vessel and a fishing boat. The Aguni then flashes a warning: “Your ship has intruded into the territorial waters of our country …  passage in Japanese waters is not allowed. Get out of this area immediately,” according to Japanese captions to the video cited by the newspaper.

As RT reports, the Japanese Coast Guard later claimed that seven out of 18 Chinese patrol vessels spotted around the Senkakus were equipped with what “looked like machine guns,” according to the Japan Times. “Actions by the Chinese side like this, which will escalate the situation, are not tolerable,” the Japanese Coast Guard said in a statement.

The Senkaku Islands are administered by Japan but are claimed by China. The incident added fuel to tensions between Tokyo and Beijing.

The heated dispute between Beijing and Tokyo over the national affiliation of the Senkaku/Diaoyu Islands dates back to 2012, when the Japanese government nationalized the islands’ ownership. Beijing has never recognized the move, claiming Chinese authority over the islands. Chinese ships, mostly fishing boats, have frequently sailed in the disputed area since the islands came under Japanese-claimed authority.

In another notable escalation, over the weekend, the Japanese government announced it would develop land-to-sea missiles with a range of 300 kilometers (186 miles) to protect the nation’s isolated islands, including the Senkaku, the Yomiuri newspaper reported, without saying where it got the information. Costs for development will be part of the defense ministry’s budgetary request for the fiscal year ending March 2018, according to the Yomiuri. The government will aim for deployment around the year ending March 2024, it said.

China’s nationalist Global Times paper immediately responded, saying :”Japan’s decision to develop surface-to-sea missiles with a range of 300 kilometers to cover the disputed islands shows the country may be eyeing a shift to an offensive posture, analysts said.

“Japan is trying to use the missile system to lock down the Miyako Strait and prevent Chinese forces from entering the Western Pacific Ocean,” Zhou Yongsheng, a professor at the Institute of International Relations of China Foreign Affairs University, told the Global Times.

Da Zhigang, director of the Institute of Northeast Asian studies at the Heilongjiang Academy of Social Sciences, said the 300-kilometer range missiles could target China’s coastal areas. He said if the reported 300-kilometer range is true, it would mean Japan is ready for a hard fight. “The range is higher than that of Russia’s S-300 surface-to-air missile system, and better than China’s current surface-to-air missile system.”

As a reminder, in the latest military development, yesterday China disclosed it had sent a military liaison to Syria where he announced China would provide Syria with military training and supplies, effectively siding with Russia in the ongoing Syrian conflict.



Deutsche bank not doing too good;  One of its executives is suggesting that the company scrap its top level bonuses  on top of the scrapping of the dividends to its shareholders.

Interestingly, he claims that the bank is better than what it seems as the bank past its ECB stress test. He ignores the German ZEW stress test of which the bank failed and needs 19 billion in capital

(courtesy zero hedge)

Deutsche Bank Exec Suggests Scrapping Top Bonuses; Vows Bank Is “Better Than It Seems”

In another reminder that the turmoil shaking up Deutsche Bank is not limited to its stock price, but stretches as far as its top decisionmakers, overnight the bank’s consumer banking chief and member of its 10-member management board, Christian Sewing, told Bild that the German bank’s board should discuss scrapping bonuses for top executives for a second year after Germany’s largest bank put dividend payments on hold.

“It’s clear that if we don’t pay our shareholders a dividend, then our own bonus needs to be up for debate as well,” Sewing told Bild-Zeitung in an interview.

Sewing, who leads the private, wealth and commercial clients unit, stood to earn a 2.4 million-euro ($2.7 million) salary and as much as 5.9 million euros in bonuses for this year, the company said in March.  While CEO Cryan’s theoretical “maximum” compensation under the bank’s formula is 12.5 million euros, he can’t actually receive that amount, as pay for management board members was capped to 9.85 million euros for 2016. According to Bloomberg, a spokeswoman for the Frankfurt-based bank said the comments were reported accurately.

In an aggressive attempt to delever Europe’s biggest, and the world’s most systemically risky bank, Deutsche Bank CEO John Cryan has been selling risky assets, unwinding trillions in CDS and eliminating thousands of jobs to bolster capital buffers and boost profitability, hurt by mounting legal costs and tougher regulation. The CEO scrapped bonus awards for top management and suspended dividends after the lender posted its first annual loss since 2008 last year.

However, while earnings have been crashing, and the company has lost about 44 percent of its market value this year, Cryan has signaled that there’s no immediate need to raise capital. “The question of a capital increase isn’t an issue at the moment,” Sewing, 45, told Bild-Zeitung. “The share price is very low but our aim is to return the bank to profitability in the long term. That would also boost the share price.”

Because Deutsche Bank has cut assets, built up equity and liquidity since the financial crisis, “regulators don’t see any immediate need for us to raise our capital,” he said. Shareholders continue to disagree.

And since slashing bonuses tends to leave a bitter taste in the mouths of shareholders, Sewing tried to spin recent speculation about the bank, telling Bild its “condition is significantly better than it seems.”

Sewing also defended the closure of 188 of 723 Deutsche Bank branches in Germany, and said that the bank has to adapt offer to customer behavior and reduce costs at the same time; almost half of customers come into branch only once a year. The good news is that he vowed the bank won’t impose negative interest rates on private customers, though zero interest rates may force many German banks to raise fees.

Finally, he commented on the recent stress test, saying “we don’t want to rank 43rd in long term, but the stress test can’t be read as a Bundesliga table; regulators saw no acute need for more capital.” It was unclear if he was referring to the ECB’s stress test which the bank passed, or the subsequent ZEW test which found that DB has a €19 billion capital shortfall, largeer than its entire market cap.


You will recall that Dun and Bradstreet is the only rating agency that gave Portugal the minimum BBB grade such that the ECB could still continue to buy their junk sovereign bonds.

Well it looks like D & B might lower the boom on Portugal setting the stage for some fireworks;

(courtesy zero hedge)



Portuguese Bonds Slump As Last-Investment-Grade-Standing Falters

The only thing standing between Portugal’s insanely decoupled low bond yields and the ugly fundamental reality is a BBB rating from DBRS which enables The ECB to keep buying the nation’s bonds. The problem is, pressure is mounting on DBRS (the only 1 of 4 raters to maintain Portugal as investment grade) to drop the hammer… and Portuguese risk is rising.

And in response to these concerns, the last 2 days have seen the biggest surge in Portugal sovereign credit risk in 2 months…

As Reuters reports, pressures are building on Portugal’s creditworthiness as its low-growth economy battles to contain high levels of government and corporate debt and amid banking sector strains, the head of sovereign ratings at credit agency DBRS said.

DBRS’s BBB (low) rating has been a vital prop for Portugal, allowing its bonds to remain part of the European Central Bank’s 1.7 trillion euro buying program and as eligible collateral for the Bank’s unlimited and now free bank funding.

The rating, next due for review on October 21, carries a ‘stable’ outlook, giving Lisbon some breathing space, but Fergus McCormick told Reuters that the picture was deteriorating.

“Friday’s Q2 GDP release (which showed growth at just 0.2 percent) raised our concerns about growth prospects, which appear to be slowing into the third quarter,” he told Reuters in an interview.

“Therefore, the outlook remains stable, but pressures appear to be mounting from these various fronts,” he added, also citing European Commission demands that an unwilling Lisbon implement more spending cuts.

DBRS’s October review will come just a week after Portugal is scheduled to provide the Commission with a list of those new cuts to get its budget deficit back under 3 percent of GDP. Uncertainties over the make-up of those measures and their impact on the delicate political balance were a concern McCormick said, as was the possibility that more taxpayer money may be needed to prop up banks including Caixa Geral de Depositos and BCP.

“Will the far-left parties support these two initiatives? This is unclear.”

DBRS’s view is closely watched because it is the only one of the four ratings agencies recognized by the ECB to have an investment grade rank for Portugal.

It needs a rating of that category to qualify for the central bank’s quantitative easing program and for the ECB to accept Portugal’s bonds as loan collateral.

A downgrade could therefore cause havoc for Portugal’s borrowing costs and its banks which rely heavily on the ECB’s funding, and analysts warn it would almost inevitably trigger a significant market selloff.

As an interesting sidenote, we add that DBRS, whose grades are currently crucial for Portugal and Italy getting a range of support from the European Central Bank, said on Wednesday it had appointed a new head of its European sovereign ratings team.

Nichola James has been appointed co-head of sovereign ratings, alongside Fergus McCormick who also takes the role as chief economist.

James will be based in London and will manage DBRS’s growing European team while New-York based McCormick, who has been head of sovereign ratings since 2010, will oversee countries outside Europe.

James joins DBRS from MUFG Group, where she spent the past six years as director, country risk team, EMEA. Prior to that, she was a senior manager/economist, for foreign exchange and fixed income sales and trading at Lloyds Bank. James holds BA and MA degrees from University College London and an MBA from Warwick Business School.

Question is – was this move a response to a tap on the shoulder from Draghi et al. that the ratings should not be cut? If they do cut, of course, it will be time for a rule change at The ECB… or crisis looms…



The following does not look good as Russia conducts armoured train drills for the first time in 15 years:

(courtesy MacSlavo/


Expecting War? Russia Conducts Armored Train Drills For First Time In 15 Years

Submitted by Mac Slavo via,

One could only conclude that Putin is not playing around anymore.

Instead, Russia is out and out prepared for war. It is likely enough that we should expect it, too. Can you feel things heating up?

These drills appear to be very serious training for the mobilization of a major force that intends to bring in vast numbers and superior equipment under cover from fire.

Watch carefully as this force readies to protect Putin’s army during transport to the point of conflict:

The Russians have been flaunting their latest equipment for communications jamming, which allows them to literally dominate and control an area; they have been flexing their ICBM mobile trucks and they have been giving every sign that they will not be pushed around by NATO, rightly or wrongly.

They will be rolling out their carefully regulated, exercised and trained 21st century army ready to engage in electronic warfare.

Ukraine and Syria are both still open proxies, and attempts to bring Ukraine into NATO could provoke open war:

Much of this comes as NATO and the IMF continue to attempt to garner Ukraine into the EU and make the country a full-fledged NATO member.  Such an action will not come without a price, however, and an excellent example of this can be found in an article entitled“Ukraine joining NATO would be trigger for war with Russia,” by Debra Killalea


The red line in the sand is if NATO makes Ukraine a member.  That will be seen as a call for war.”

Dibbs also added that a nuclear war with Russia was “not an impossibility.”

Perhaps these world events coincide with clear signals from the American election cycle that Hillary will be inserted as president whether the public likes it or not, and whether or not her corruption and dirty laundry have been hung out in full display to all passersby.

The establishment has chosen Hillary, and Hillary has signaled for war with Iran. Russia and Syria have also been named as enemies on the new, updated ‘axis of evil.’ Basically the worst parts of the Bush regime and the Old Testament have been mixed together in a blender from hell and put into Hillary’s group of advisors and cabinet-members-to-be.

George Schultz and Henry Kissinger are almost certain both lucky just to be alive at their advanced ages, and both are pissed off at the possibility that they might die before they get to see war in Iran, or even conflict with the queen piece in Russia.

Regardless, the forecast has darkened significantly. Tensions in the middle east are being stoked once again for a new season, and old flames of war will be started up again.



A terrific commentary on what is happening behind the scenes in Turkey.  At first many thought that Erdogan was behind his own plot  to “remove” him, but on closer examination it seems that it may have been a poor execution of the west.  This is why he is seeking a partnership with Putin of Russia. Putin will win as he gets back the Turkish stream pipeline and he will still control much of the happenings in Turkey much to the chagrin of the west.

a must read…

(courtesy Bohm Bawerk/

Turkish Turmoil: Let The Politics Begin

Submitted by Eugen von Bohm-Bawerk via,

A month on from Turkey’s failed coup attempt, and you’ll find endless op-eds opining the supposed strategic implications of Erdogan’s rear-guard offensives. In a nutshell, it breaks down into four key arguments

  • The first is that Erdogan will oversee a ‘brutal crackdown’ to consolidate power wherever and whenever possible out to 2019 against any form of political opposition (Gulenist or not). The net result supposedly secures Erdogan’s tenure towards 2023 ‘Ataturk’ landmarks, and beyond.
  • The second facet is that Mr. Erdogan will continue to inflict collateral Kurdish damage to secure internal gains along the way. PKK-Ankara relations basically go back to square one, while the slightly more politically savvy HDP gets caught in Erdogan’s crossfire, undermining consistent Kurdish supplies through Turkey.
  • The third factor is Ankara turning towards Russia as a new ‘strategic’ axis against NATO interests, and indeed Turkey’s vexed relations with the transatlantic military body. A relationship that’s likely to go from bad to worse given Mr. Erdogan’s underlying belief that ISIS gains remain the lesser of two evils compared to Kurdish consolidation on his Southern border. Not to mention the minor fact that most AKP members think the US was all in on the ‘Gulenist’ plot to oust the sitting President.
  • Beyond other blindingly obvious points that Turkey’s now subject to far more terror attacks by failing to ride two competing ‘ISIS / Kurdish camels’, that doesn’t really leave us much beyond point four: The failed Turkish mutiny still supposedly portends a major trigger point for another ‘Arab Autumn’, where MENA states are susceptible to enhanced political risk on the back of depressed benchmark prices. While all these arguments have elements of truth, our position is they don’t constitute a serious discussion of the Turkish question, at least without significant caveats raised across all four points. Those same caveats also happen to have sharp resonance for how tangible any KSA-Turkish relations are in future.

But enough with all the pre-amble stuff, what about the political facts here? The first point to raise on ‘internal political consolidation’, is although Erdogan will continue to wield heavy sticks – probably with fresh elections in 2017 to ram through a two-thirds AKP parliamentary majority to pave the way for a strong arm executive branch on the back of Constitutional reforms – Mr. Erdogan’s not in a credible position to oversee ‘total crackdowns’ across the board. This is still a political game he has to play in a politically sensitive manner to get the consolidation he wants. Part of that’s to prevent another ‘coup 2.0 scenario’ that remains a real concern in Turkey. Hence, while the AKP has locked up vast numbers of military staff and public servants (50,000 and counting), the President wasn’t allowed to resurrect military barracks in Gezi park despite declaring ‘emergency rule’ to do so. Erdogan’s also been forced to play nicer with opposition MHP and CHP factions to present a united ‘anti-Gulenist’ front. The longer Erdogan keeps opposition consent in play, the further anti-Gulenist purges can go, in what’s basically going to be a long term cycle of ‘part of reconciliation, part crackdown’ for secular (long term) consolidation. Ultimately Mr. Erdogan will get his way, creating a strong executive to dominate all branches of government into 2017-18. But that’s not driven by crude ‘crackdowns’, but far more politically intricate games the President will play. Presidential apotheosis yes, but secured through politically nuanced means.

Unsurprisingly, the same nuances play into Kurdish questions, and especially with the PKK. Recent attacks in the South East were probably inspired by Ocalan to highlight just how weak a post-purge Turkish army has become. Yet that’s not necessarily with a ‘hard-baked’ view of returning to violence for violence sake, but purely to start playing the political game with Erdogan instead. Although very poorly understood by Western analysts, the PKK remains sharply opposed to Gulenist nationalist trappings, and actually holds them responsible for some of the blunter military tactics deployed in South East Turkey last year. To be clear, we’re not saying that anti-Gulenist positions are anywhere enough to consistently bring Ankara and Ocalan to the table for long term accommodation, but it’s probably still sufficient for both sides to play the political game of tactical ‘on-off’ discussions to secure proximate political aims. The PKK wants to remain the ‘go to’ Kurdish group to eclipse growing HDP influence, and more importantly, keep one step ahead of intra-Kurdish contests between the KRG (KDP, Goran and PUK), and YPG / PYD (Rojava) in Syria for regional leadership. Speaking to Erdogan helps secure that status on ‘diplomatic paper’, with ongoing attacks on the Iraq-Turkey (Kirkuk-Ceyhan) the parallel ‘physical insurance policy’ to remind Ankara’s who’s ultimately calling the transit shots, not to mention keeping the KDP in a very difficult spot trying to monetise Kurdish crude. Exactly like our internal crackdown commentary, expect Ankara-PKK relations to keep shifting between ‘jaw-jaw’ and ‘war-war’ calculations on this, purely depending on where the political points can be scored.  Even though the long term ‘Presidential’ prognosis is anything but good for the PKK.

Turn to Russia and that’s where the entire ‘Turkish thesis’ becomes far more tenuous. Despite the clear political aesthetics of Erdogan’s first ‘post-coup’ trip to St Petersburg, this is ultimately a relationship that both Presidents’ want to dominate on key strategic issues, not share. Don’t forget, from President Putin’s perspective, Turkey was always ear marked as a ‘Eurasian Union’ state that basically relegates Ankara to a Russian satellite interest, while Mr. Erdogan clearly thinks Turkey has far more regional clout in the Levant when it comes to shaping Middle East results. With that said, both sides understand that Russia is increasingly well placed to prevent the emergence of a Kurdish state in Norther Syria, given Washington doesn’t have any other anti-Assad cards to play. But whether Russia and Turkey ever truly see eye to eye on Damascus is a less certain prospect. Erdogan won’t like it, but if he genuinely wants Russia on-board as a consistent ‘partner’, that probably means toning down the anti-Assad rhetoric in Syria; it certainly means being more ‘flexible’ over Russian naval presence in the Black Sea. It means scaling down residual support for Crimean Tatars; but most of all, it means increasing Turkish import dependence on Russian energy supplies, where gas is the most politically tradable commodity in play. Putting Turk Stream back on the table with Ankara (as a footnote for our readers, it’s basically a modest version of previous South Stream designs) tries to kill two birds with one pipeline for President Putin.

a) It regains the political initiative over Ukraine, where Mr. Putin’s long lost the Donetsk war, but could still win the political peace ahead of 2018 Presidential polls in Russia, provided he can cut Kiev out of Wester European transit routes.

b) It makes life far harder for President Aliyev to bring competing Azeri gas to European markets, reducing Baku to its historical status of a Russian outpost. BP merely raises the ‘red flag’ over SOCAR HQ on a daily basis by Caspian / Rosneft proxy.

Pipelines Turkey

But unfortunately for Ankara, that rather reinforces the fundamental problem they have with Russia here. This is all one-way political traffic for President Putin to gain the upper hand over Mr. Erdogan, where Moscow rightly sees that a post-coup Turkey is absolutely prime for ‘political plucking’. Whether Erdogan is willing to be stripped to the ‘bare bones’ remains highly unlikely. At best, Turkey and Russia make for politically promiscuous ‘frenemies’. At worst, they’re at strategic cross-purposes on all points of the map, with mismatching vectors inexorably starting to show. In a truly worst case scenario, Mr. Erdogan might even find himself caught in collateral NATO-Russia crossfire, where everyone decides if Turkey can’t be part of a regional ‘solution’, it’s much easier to make them part of the ‘problem’.

On that final note, nobody’s quite said it yet, but that’s precisely what’s already on Erdogan’s mind.Behind all the ‘CIA’ coup bluster, the President’s real concern is how many regional players might have played a part in the coup antics. GCC states are undoubtedly on his ‘list’ of suspects, where Turkish realignment hasn’t exactly played through the way major Sunni states hoped over the past few months. Whatever your particular take on that one, the fourth (and final) analytical point to register over any supposed ‘Arab Autumn’ ideas here, isn’t so much that military leaders start getting nervous to make internal MENA moves in a low price environment, but whether regional power grabs start destabilising internal political interests as a new trend. Admittedly, that’s normally the stuff off Iranian intrigues, but in the current political environment, any wrong moves – or perceived wrong moves – will assuredly come with very high political costs.

Bottom line, Mr. Erdogan will be around for a long time to come in Turkey. But his interim answers don’t look particularly convincing right now. If anything, they’re merely laying the ground for more costly mistakes in future. Probably circa 2023, when Turkey celebrates 100 years from its modern incarnation, but before Erdogan gets ‘quite that far’, he has the minor issue of growing external debt problem to deal with.

As everyone knows, Turkey has relied on FX denominated debt, a large tranche of which happens to be short term to fund its persistent current account deficit.

Turkey External Debt

While the debt load may seem sustainable in ‘boom times’, calculations from the IMF shows that a 30 per cent depreciation of the lira would push Turkey’s external debt stock to more than 80 per cent of GDP by 2020. In 2016 Turkey’s gross financing need is likely to exceed 25 per cent of GDP and could quickly spiral out of control if the FX mismatch carried by Turkey’s banks becomes acute. Right on cue, with tanks rolling down the streets of Istanbul, who in their right mind would willingly fund Mr. Erdogan’s adventure toward more red ink and inexorable Turkish turmoil.



The Rothschilds join the bearish crowd as they increase their gold holdings up to 8%

(courtesy zero hedge)

Lord Rothschild: “This Is The Greatest Experiment In Monetary Policy In The History Of The World”

Two months ago, the bond manager of what was once the world’s biggest bond fund had a dire prediction about how “all of this” will end (spoiler: not well).

Gross: Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day

Now, it is the turn of another financial icon, if from a vastly different legacy –  and pedigree – that of Rothschild Investment Trust Chairman himself, Lord Jacob Rothschild, who appears to be the latest entrant to the bearish billionaire club.

We were surprised to find his summary of recent events downright gloomy, and certainly non-conforming with a stock “market”, manipulated by central banks as it may be, trading at all time highs. Here are the key excerpts:

The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale.

To date, at least in stock market terms, the policy has been successful with markets near their highs, while volatility on the whole has remained low. Nearly all classes of investment have been boosted by the rising monetary tide. Meanwhile, growth remains anaemic, with weak demand and deflation in many parts of the developed world.

Many of the risks which I underlined in my 2015 statement remain; indeed the geo-political situation has deteriorated with the UK having voted to leave the European Union, the presidential election in the US  in November is likely to be unusually fraught, while the situation in China remains opaque and the slowing down of economic growth will surely lead to problems. Conflict in the Middle East continues and is unlikely to be resolved for many years. We have already felt the consequences of this in France, Germany and the USA in terrorist attacks.

As a result, Rothschild has put his money where his mouth is: “we have reduced our exposure from 55% to 44%. Our Sterling exposure was significantly reduced over the period to 34%, and currently stands at approximately 25%. We increased gold and precious metals to 8% by the end of June.

* * *

Not surprising, RIT’s investment portfolio continues do quite well, and has now returned roughly 2,000% since inception

Here is the full section from the RIT Capital Partners’ latest half-year financial report.

The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale.

To date, at least in stock market terms, the policy has been successful with markets near their highs, while volatility on the whole has remained low. Nearly all classes of investment have been boosted by the rising monetary tide. Meanwhile, growth remains anaemic, with weak demand and deflation in many parts of the developed world.

Many of the risks which I underlined in my 2015 statement remain; indeed the geo-political situation has deteriorated with the UK having voted to leave the European Union, the presidential election in the US  in November is likely to be unusually fraught, while the situation in China remains opaque and the slowing down of economic growth will surely lead to problems. Conflict in the Middle East continues and is unlikely to be resolved for many years. We have already felt the consequences of this in France, Germany and the USA in terrorist attacks.

In times like these, preservation of capital in real terms continues to be as important an objective as any in the management of your Company’s assets. In respect of your Company’s asset allocation, on quoted equities we have reduced our exposure from 55% to 44%. Our Sterling exposure was significantly reduced over the period to 34%, and currently stands at approximately 25%. We increased gold and precious metals to 8% by the end of June. We also increased our allocation to absolute return and credit, which delivered positive returns over the period, benefiting from a number of special situations. Within this category our new association with Eisler Capital had an encouraging start. We expect this part of the portfolio to be an increasingly important contributor to overall returns.

On currencies, we reduced our exposure to Sterling in anticipation of Brexit and the generally unsettled UK political environment. Our significant US Dollar position has now been somewhat reduced as, following the Dollar’s rise, we saw interesting opportunities in other currencies as well as gold, the latter reflecting our concerns about monetary policy and ever declining real yields

Below is a snapshot of where every hedge fund wants to end up: the Rothschild investment portfolio.

Finally, for all those wondering where the Rothschild family fortune is hiding, here is the answer.




In the surreal category, police have seized Ryan Lochte’s passport stating he cannot leave the country because they state that he lied about being robbed

(courtesy zero hedge)



Over the weekend, a surprising – and confusing – story emerged out of the Rio Olympics, when US olympic gold medal winner Ryan Lochte said he had been robbed at gunpoint by Brazilian police, something the International Olympic Committee fervently denied.

As Lochte said in an NBC interview, “We got pulled over, in the taxi, and these guys came out with a badge, a police badge, no lights, no nothing just a police badge and they pulled us over,” Lochte said. “They pulled out their guns, they told the other swimmers to get down on the ground — they got down on the ground. I refused, I was like we didn’t do anything wrong, so — I’m not getting down on the ground. And then the guy pulled out his gun, he cocked it, put it to my forehead and he said, “Get down,” and I put my hands up, I was like ‘whatever.’ He took our money, he took my wallet — he left my cell phone, he left my credentials.”

The confusing situation left us wondering “who is lying here – Lochte’s mother or the IOC… and why.”

While we still don’t know the answer, the latest bizarre development in this saga took place moments ago when an order was made to seize American swimmer Ryan Lochte’s passport by Brazilian authorities after claims he “lied about being robbed” according to the Mirror.

Brazilian Justice seized Ryan Lochte’s passport saying that he lied about robbery at

Below is the official statement issued from the Rio court ordering the seizure of Lochte’s passport:

: Official statement from the Rio court re: order Lochte/Feigen passports be seized.

Earlier, the local police had further questions for the swimmer – a 12-time Olympic medallist – about the supposed robbery and found ‘little evidence’ that it had taken place. Lochte claims that he and three of his team-mates were robbed at gunpoint in a taxi, but police say the swimmers were unable to provide key details in police interviews.

Lochte’s attorney, Jeff Ostrow, said there was no question the robbery happened and that the swimmer had 24-hour security hired after the incident.

Apparently Brazilian judges have seized the passports of American swimmers who they claim “lied” about the theft, including Ryan Lochte.

He had been staying in his hotel room and intended to go back to the US soon. “This happened the way he described it,” Ostrow told the NY Post.

Pictures and CCTV have emerged of the swimmer returning to the Olympic complex and passing security on the night of the alleged robbery – with the wallets and watches the men claim were stolen. Protocol requires that athletes go through a metal detector before entering the village, with athletes putting their belongings in plastic trays.

But images contradict the version of the swimmers and because of this Judge Keyla Blank, the Special Court of the Fan and Major Events banned the athletes from leaving the country.

The Mirror also adds that there was also a warrant issued for search and seizure to the Olympic Village, where passports would be seized. However it is thought that the swimmers have already have left the country.

“There was no effort to detain anyone, but police did have further questions this a.m. It is a matter for our consulate and U.S. citizen services and we will continue to cooperate with all involved,” USOC spokesman Patrick Sandusky said in a statement amid reports Wednesday that arrest warrants were issued for the swimmers.

It appears that, unless Lochte is egregiously lying for reasons unknown about the robbery, Brazil is now in meltdown mode, desperate to prove that it is a “safe” country for olympics, and in order to prove it, it is willing to go as far as to arrest a US national icon, an arrest however which may not happen.




The Saudis are now set to increase their output to record levels. Qatar is angry!

(courtesy zero hedge)

Oil Slides To $45 Handle After Saudis Set To Increase Output To Record High: Qatar Warns OPEC “Do Something”

Following last night’s major build in gasoline inventories, the bullish exuberance in crude took another spill this morning as sources say Saudi Arabia is set to increase output yet again to a new record high. Furthermore, Qatar’s energy minister urged OPEC and NOPEC to “do something” warnings that another failed meeting would “cause more damage than good.”

Saudi Arabia was “quietly telling” the market output could rise in Aug. to as high as 10.8m-10.9m b/d, Reuters reports, citing one unidentified person from outside OPEC familiar with the matter.

Qatar’s Al-Attiyah Says OPEC and Non-OPEC ‘Need to Do Something’

It’s “hard to say” whether OPEC will reach freeze deal w/ non-OPEC producers, Qatar’s former energy minister Abdullah Bin Hamad Al Attiyah says in phone interview.

Another failed meeting would “cause more damage than good”

“OPEC and non-OPEC should be very careful on holding a new meeting without proper consent and preparation”

Freeze deal wouldn’t have huge impact on fundamentals but would boost mkt sentiment

Mkt still oversupplied by ~1.2m b/d-1.5m b/d, may need until end-2017 to fully rebalance

And now all eyes will be on DOE data at 1030ET


Then at 11:25 am oil jumps on an inventory decline.  However the industry has experienced its biggest production increase in 15 months;

(courtesy zero hedge)

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




USA/CAN 1.2883 UP .0018

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 5 basis points, trading now well above the important 1.08 level FALLING to 1.1270; 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 0.482 POINTS OR 0.02%    / Hang Sang CLOSED DOWN 111.06 POINTS OR 0.48%     /AUSTRALIA IS HIGHER BY .06% / 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 UP 149.13 POINTS OR 0.90%  

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


Gold very early morning trading: $1342.70


Early WEDNESDAY morning USA 10 year bond yield: 1.578% !!! PAR  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 RISES SLIGHTLY to 2.96 UP 1/10   in basis points from TUESDAY night. 

USA dollar index early WEDNESDAY morning: 94.96 UP 18 CENTS from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING


And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield:  2.873% UP 3 in basis points from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.07% UP 2 in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD:0.973% DOWN 1 IN basis points from TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.116 DOWN 1 in basis points from TUESDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 14 points HIGHER than Spain.





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


Euro/USA 1.1290 UP .0015 (Euro UP 15 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.23 UP .0640(Yen DOWN 6 basis points/


USA/Canada 1.2847-DOWN 0.0017 (Canadian dollar UP 17 basis points AS OIL FELL(WTI AT $46.83). Canada keeps rate at 0.5% and does not cut!


This afternoon, the Euro was UP by 15 basis points to trade at 1.1290

The Yen FELL to 100.22 for a LOSS of 6 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 


The Canadian dollar ROSE by 17 basis points to 1.2847, WITH WTI OIL AT:  $46.82


The USA/Yuan closed at 6.6328

the 10 yr Japanese bond yield closed at -.07% UP 2 IN  points / yield/

Your closing 10 yr USA bond yield:DOWN 1 IN basis points from TUESDAY at 1.561% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.274 DOWN 2 in basis points on the day /


Your closing USA dollar index, 94.67  DOWN 11 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 DOWN 34.77 OR 0.50%
German Dax :CLOSED DOWN 138.98 OR  1.30%
Paris Cac  CLOSED DOWN 42.76  OR 0.96%
Spain IBEX CLOSED DOWN 134.30 OR 1.56%
Italian MIB: CLOSED DOWN  264.60 POINTS OR 1.58%

The Dow was UP 21.92 points or 0.12%

NASDAQ UP  1.55 points or 0.02%
WTI Oil price; 46.82 at 4:30 pm;

Brent Oil: 49.79




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

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


BRENT: 49.82

USA 10 YR BOND YIELD: 1.5552% 

USA DOLLAR INDEX: 94.75 down 4 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.30384 up .0009 or 9 basis pts.

German 10 yr bond yield at 5 pm: -0.05%


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


Bonds & Stocks Surge After Fed’s Equity Valuation Warning

As J-Hole looms and Fed minutes fade, this is all we had…


Post-Fed Minutes, Rate Hike Odds plunged…


And traders bought everything from bonds to stocks and gold to crude… (oil ramped into NYMEX close) as USD dumped


Buy Bonds, Buy Gold, Buy Stocks, Sell USDs… and down the drain goes Fed Cred…


Stocks initially dumped after the Minutes before all ripping higher… despite this…. “during the discussion, several participants commented on a few developments, including potential overvaluation in the market for CRE, the elevated level of equity values relative to expected earnings, and the incentives for investors to reach for yield in an environment of continued low interest rates. “


To ensure The Dow was green for the week…but reality bit into the close and The Dow ended red on the week…


The Market broke shortly after the minutes were unleashed – as VIX was crushed – but VIX was not done with yet as desperation struck into the close to get S&P green above 2178 (we highlighted the BROKEN MARKET segment o fthe day for your entertainment)


But some have blamed today’s price action Dennis Gartman – who went short bonds and short oil this morning…


Treasury yields tumbled after Fed Minutes, flattening 5s30s to cycle lows…


But the flatness of the curve didn’t worry financials…


The USD Index dumped on Fed Minutes before starting to bounce back…erasing yesterday’s Dudley-driven bounce…


Notice the kneejerk run higher in USD Index as the minutes hit (which fits with the seemingly hawkish narrative)…


Commodities were mixed with Gold unch today but silver and copper lower – despite the weak USD – crude ripped…


Notably, Gold ETFs have seen their largest withdrawals this year in the last week…


Charts: Bloomberg



The official FOMC minutes from two weeks ago:

Highlights! in plain English: they were hawkish!

(courtesy zero hedge)


FOMC Minutes Show Fed Members Split Over July Rate-Hike, Fear Financial Risks From Low Rates

With Fed speakers attempting to jawbone the current narrative back from the uber-dovish record-high-creating Fed statement, all eyes today were glued on how hawkish the statement would be with regard 2016 hikes – few, some, or many? Since The Fed statement, GDP expectations have crashed to cycle lows but that has not seemed to stop The Fed:


But perhaps most notably, several Fed officials are concerned of financial risks from too low rates.

*  *  *

Pre-FOMC Minutes: Sept Odds 28%, Dec Odds 55%, S&P Futs 2173, 10Y 1.56%

Rate hike odds have risen again as the stock market rallied…


And since The fed meeting, stock-strength-driven rate-hike odds have mirrored the collapse of economic growth expectations…


But we note that despite a 14bps range, Treasury yields – across the entire complex – are practically unchanged from The Fed statement…


Some additional headlines from the minutes:


And finally, Jim Bullard dropped this…


All it took was 667 rate cuts and printing $10 trillion…? But we presume will keep doing the same stuff expecting a different result?

* * *

Here are the key sections breaking down the Fed’s intentions:

On the “prudent” to wait front:

Members generally agreed that, before taking an-other step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity.

“Couple” wanted more evidence for 2% inflation, but “Some” anticipated a sooner rate hike:

A couple of members preferred also to wait for more evidence that inflation would rise to 2 per-cent on a sustained basis. Some other members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation.

And the dissenter, Esther George:

One member preferred to raise the target range for the federal funds rate at the current meeting, citing the easing of financial conditions since the U.K. referendum, the return to trend economic growth, solid job growth, and inflation moving toward 2 percent.

A notable tangent on upcoming money market reform (rising Libor rates):

Although upcoming regulatory changes were expected to improve the stability of money market funds in the longer run, the staff noted the potential for large withdrawals by investors in anticipation of those changes to lead to some disruptions in the short run.

On asset valuations:

Vulnerabilities emanating from leverage in the nonfinancial private sector remained moderate: While business debt ratios stayed elevated, household debt-to-income ratios continued to inch down. Valuation pressures also remained at a moderate level. Although term premiums on Treasury securities became more deeply negative and CRE valuation pressures remained appreciable, corporate bond and equity risk premiums were unchanged on net.

On Brexit:

“Some noted that the Brexit vote had created uncertainty about the medium- to longer-run outlook for foreign economies that could af-fect economic and financial conditions in the United States. Participants generally agreed that the Committee should continue to closely monitor inflation indicators and global economic and financial developments.”

* * *

Another key observation: the Fed is starting to be concerned about tight lending conditions, because while the word SLOOS (aka Senior Loan Officer Opinion Survey on Bank Lending Practices) was mentioned precisely zero times in June, it saw a substantial 7 mentions in the July minutes.

Finally, the number of times “global” was mentioned in the minutes: 14x, one less than in June.


Full FOMC Minutes below:

(see zero hedge if you want to see the FOMC garbage)




Immediate reaction: Markets break:


And The Market Breaks…

Bond yields are plunging, the USD is tumbling, and precious metals are surging after the unquestionably hawkish fed minutes… and so, how do you stop the market melting down? Break The Market…


Source: BATS

And miraculously, stocks soar…


And having got the S&P green, the market unbreask…




And when the dust settled, here is where everything stands:


Traders Buy Everything After Fed Minutes Send USD Lower

Despite what seemed somewhat more hawkish than the July Statement, Fed Minutes sparked a dovish reaction sending the USDollar reeling, rate hike odds falling, and in turn bonds, gold, oil, and stocks higher…

The initial reaction seemed hawkish… (Oil helped by the ubiquitous NYMEX close ramp)


But rate-hike odds crashed…


As The Dollar dropped so the entire yields curve also fell..




This is a huge Bellwether:  the giant Cisco is reportedly firing 20% of its workforce: 14,000 workers

(courtesy zero hedge)

Global Economic Bellwether Cisco Reportedly Fires 20% Of Workforce

It’s easy to shrug off the sharpest productivity decline in 40 years and the worst non-recessionary industrial production contraction in US history because… well it’s the new economy, stupid and you just don’t get it. But when ‘new economy’ networking giant Cisco is reportedly set to announce it is laying off a record number of employees – 14,000 representing 20% of its global workforce – surely it is time to question the “everything is awesome” narrative.

As CRN reports,

Cisco Systems is laying off upward of 14,000 employees, representing nearly 20 percent of the networking giant’s global workforce, according to multiple sources close to the company.

San Jose, Calif.-based Cisco is expected to announce the cuts within the next few weeks, as many early retirement package plans have already been offered to employees, said sources.

The excuse for the heavy cuts, which sources said will range between 9,000 and 14,000 employees worldwide, is that they stem from Cisco’s transition from its hardware roots into a software-centric organization…

“They need different skill sets for the software-defined future than they used to have,” said one source familiar with the situation, who declined to be identified.

“In theory the addressable market could be higher and margins richer, but it will take some time to make this transition.”

Cisco declined to comment, and is set to announce its fourth fiscal quarter results after the market closes tomorrow.

The networking leader has a history of announcing layoffs at the end of its fiscal year each summer. In August 2014, Cisco revealed plans to cut 6,000 jobs, roughly 8 percent of its total workforce at the time. In August 2013, the company cut 4,000 employees, about 5 percent of its global workforce at the time. Cisco also cut 1,300 positions in July 2012. One of Cisco’s largest layoffs came in July 2011, when the company cut 6,500 employees, representing about 9 percent its global workforce. Cisco had no layoffs in the summer of 2015, coinciding with Chuck Robbins’ ascension to CEO that July.

But this massive layoff is the company’s largest ever…

And, as everyone who has traded markets and followed global economic trends knows, Cisco is among the clearest global economic recession indicators (combining the real economy and imaginary-tech economy) there is… and this is the biggest collapse in Cisco’s headcount… ever.

Cisco is trading back at its highest since Nov 2007…

Charts: Bloomberg




Then with the announcement of only 5500 being fired, the market is very disappointed and Cisco falls even more

(courtesy zero hedge)


Cisco Fires 5,500; Market Disappointed It Wasn’t More – Shares Fall

After yesterday’s leak by CRN that Cisco would terminate some 14,000 workers, or about 20% of its 73,000 workforce, investors were looking forward to today’s earnings announcement by the tech giant not so much for whether it would beat expectations (it did not on a GAAP basis, with $0.56 in GAAP EPS, however it did beat on a non-GAAP basis, reporting $0.63, above the $0.60 expected), but whether it would indeed reduce its workforce to a level not seen in a decade.



We got the answer moments ago, when Cisco indeed announced the latest mass layoff, which however was “only” 5,500 people, a mere 7% of its workforce.

Today’s market requires Cisco and our customers to be decisive, move with greater speed and drive more innovation than we’ve seen in our history. Today, we announced a restructuring enabling us to optimize our cost base in lower growth areas of our portfolio and further invest in key priority areas such as security, IoT, collaboration, next generation data center and cloud. We expect to reinvest substantially all of the cost savings from these actions back into these businesses and will continue to aggressively invest to focus on our areas of future growth. The restructuring will eliminate up to 5,500 positions, representing approximately 7 percent of our global workforce, and we will take action under this plan beginning in the first quarter of fiscal 2017.

And, with the market hoping to see nearly three times more workers fired, despite the top and bottom line beat by CSCO, the stock is no lower in the after market, as algos punish management for not being a bunch of inconsiderate monsters.

However, don’t despair CSCO longs: as CRN reported, “Cisco is expected to announce the cuts within the next few weeks, as many early retirement package plans have already been offered to employees, said sources.” This likely means that once the initial shock of the first round of layoffs passes, the company will proceed with rounds 2 and 3, sending the stock right back up.

Then early this morning, the street did not like this:  Target slashes earnings estimates for the second half of 2016:


(courtesy zero hedge)

Retail Giant Target Slashes Earnings Estimates For 2H16 Citing “Challenging Environment”

After reports yesterday that Tech Bellwether Cisco plans to layoff up to 20,000 people (see “Global Economic Bellwether Cisco Reportedly Fires 20% Of Workforce“) this morning retail giant Target also guided lower for 2H 2016 on the back of a “challenging environment in the back half of the year.”

And the market is not happy…

Target beat earnings for 2Q 2016 at $1.23 adjusted EPS vs. consensus $1.13 but slashed guidance for 3Q and the 2nd half of the year with CEO, Brian Cornell, saying the company is facing a “difficult retail environment.”  Comp store sales for 2Q 2016 declined 1.1% on a 2.2% decline in volume and offset by a 2.6% price increase per unit.  The company noted on it’s earnings call that sales of Apple products were down 20% in 2Q.


The company called for comp store sales in 2H 2016 of -2% – 0%.  Full year 2016 guidance was slashed $0.30 to $4.80 – $5.20 vs. prior guidance of $5.20 – $5.40.  That said, the company beat their 2Q 2016 forecast which called for a midpoint adjusted EPS of $1.10 so when you factor in the beat this quarter the guide down is really more equivalent to about $0.43 or about 8%.

“While we recognize there are opportunities in the business, and are addressing the challenges we are facing in a difficult retail environment, we are pleased that our team delivered second quarter profitability above our expectations,” said Brian Cornell, chairman and CEO of Target. “Looking ahead, we remain focused on our enterprise priorities as we continue to see the benefits of investing in Signature Categories, store experience, new flex-format stores and digital capabilities. Although we are planning for a challenging environment in the back half of the year, we believe we have the right strategy to restore traffic and sales growth over time.”

While Target has plans in place to strengthen results over time, based on the current retail environment the Company believes it is prudent to lower its expectations for comparable sales in the second half of the year. In both the third and fourth quarters of 2016, Target now expects comparable sales growth in the range of (2.0) percent to flat.

In third quarter 2016, Target expects both GAAP EPS from continuing operations and Adjusted EPS of $0.75 to $0.95.  For full-year 2016, Target now expects GAAP EPS from continuing operations of $4.36 to $4.76, compared with prior guidance of $4.76 to $4.96. The Company expects full-year 2016 Adjusted EPS of $4.80 to $5.20, compared with prior guidance of $5.20 to $5.40. The 44-cent difference between the guidance ranges for GAAP EPS from continuing operations and Adjusted EPS primarily reflects early debt retirement losses already reported in 2016.

Guess it’s time to put that rate hike on hold again.



Last month we highlighted to you 3 ref flags which show that the USA housing sector is in a massive slowdown. Today those red flags are flashing an even brighter red:

(courtesy zero hedge)


Three “Red Flags” That The US Housing Slowdown Is Accelerating

One month ago, we showed three prominent “red flags” that the US housing market was starting to roll over.

Among these were a report by real-estate advisory RealtyTrac, which cited by Bloomberg, said that “almost nine years after the housing-market bust helped trigger the most recent recession, RealtyTrac senior vice president Daren Blomquist sees the industry waving a red flag.” He was referring to house flipping by third party investors at auction which was back with a vengeance, and what’s worse, the share of foreclosures snapped up by inexperienced mom-and-pop buyers at auction had hit a record 31% in June. As he said, “this a redux of the same fervent speculation that pushed the housing bubble.”

The second warning came as a result of the latest sharp decline in spending on furniture and home goods stores, which according to Bank of America credit and debit card spending data, showed that the yoy drop had reached the lowest since the recession period. As BofA said then, “this shows that consumers have delayed spending on housing-related items, which could be a sign of weakness for the housing market.”

The third red flag was revealed in the then-latest Credit Suisse survey of real estate agents: “Our Buyer Traffic Index took a sizeable step back in June, slipping to 41 from 52 in May, indicating traffic levels decidedly below agents’ expectations…. Prospective buyers also continue to be deterred by a persistent shortage of affordable inventory across markets, with agents frequently highlighting buyer pushback to rising home prices. On the other hand, agents repeatedly mentioned that low mortgage rates were crucial to supporting demand.”

* * *

Fast forward one month and we find that the adverse trends observed in early July have gotten progressively worse, and we can now add one more.

First, as we showed last week – and correctly warned that last Friday’s retail sales report would disappoint – the latest “BofA Internal Card Data Shows Significant July Spending Slowdown” showed in addition to another broadly week month of consumer spending, that “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.”  As BofA said last week, this would be a key advance indicator that the US housing recovery has stalled.

* * *

Second, following up to last month’s disappointing Credit Suisse survey of Real Estate Agents, for July the Swiss bank found even more of the same disappointing trends, noting that there has been “No bounce after last month’s pullback as buyers remain hesitant.

This is what survey author Michael Dahl wrote:

Traffic Down Slightly: Our Buyer Traffic Index edged down 1 pt to 40 in July (vs. 41 in June), indicating traffic levels remaining below agents’ expectations following the June pullback. Our Weighted Traffic Index was also down 1 pt m/m. Agents broadly cited a lack of inventory in many markets, particularly at affordable levels. Incrementally, buyers seemed more resistant to higher home prices with some willing to move to the sidelines. Consistent with last month, many buyers also remain hesitant and cautious due to broad economic concerns. Quite a few agents were surprised how quickly demand faded through the Summer, suggesting some payback following stronger Spring trends. On the other hand, many agents noted that favorable mortgage rates continue to support demand, though still not much of an urgency factor. In many markets, comments still pointed to sluggish high-end trends vs. healthy demand at lower price points. Regionally, the Pacific Northwest slowed and now sits in-line with national averages. Parts of Texas and the Southwest improved, while the Northeast, Midwest and California all worsened.

More Markets Fall Below Expectations: In July, 7 of the 40 markets we survey saw higher than expected traffic (8 in June), 4 saw traffic in-line (7 in June), and 29 saw lower than expected traffic (25 in June). Portland, Seattle and New York experienced sharp declines. In TX, Austin deteriorated and Houston remained challenged, offset by improvement in San Antonio and Dallas. FL markets remain depressed, led by weakness in Miami, Fort Meyers and Sarasota. California was dragged down by lower readings in Los Angeles and San Diego, while San Francisco ticked higher. Las Vegas and Minneapolis were both strong.

Prices Move Higher, but Less Broadly than in Recent Months: Our Price Index slipped 5 pts in July to 66 from 71 June, indicating broad price appreciation. Despite the choppy traffic and growing buyer price sensitivity, tight supply has thus far continued to favor sellers. Of the 40 markets we survey, 28 saw higher prices in July (34 in June), 10 were flat (3 in June) and 2 declined (3 in June). Strongest readings were seen in Dallas, Raleigh, Seattle, Austin, Kansas City, Los Angeles and Charlotte. Houston prices continue to face pressure, declining for the third consecutive month.

Summary: if the real estate agents, those who are most familiar with the nuances of the housing market, are this gloomy,

* * *

Finally, the third red flag was revealed today when the Mortgage Bankers Association reported that mortgage demand to buy homes just hit a new 6-month low, despite mortgage rates hovering near all time lows.  

The Mortgage Bankers Association said its seasonally adjusted index of mortgage activity for home purchases, a leading indicator of housing sales, fell 4% in the week ended Aug. 12, according to Reuters.  This took places despite the average rate on “conforming” 30-year home mortgages, dipped to 3.64% last week from 3.65%, the Washington-based group said.

The average 30-year rate touched 3.60 percent in the week ended July 8, which was the lowest since May 2013 and not far from the historic low of 3.47 percent struck in December 2012, according to MBA data. Weekly mortgage activity on home purchases reached an eight-month peak in early June before a decline since even as 30-year mortgage rates hovered near their lowest in over three years.

This suggests that even with near-record low mortgage yields, demand for new home purchases is simply not materializing, and indicates that in addition to a potential lack of supply problem (as per the Credit Suisse report), there is also not enough demand.

* * *

Ironically, as the Fed remains desperate to push rates higher (but not too high) to signal a recovery, the direct impact would be to make housing even more unaffordable for most buyers who, if CS is correct, are increasingly on the fence about jumping into a purchase; it would also result in an even faster drop in demand for mortgage purchase applications, leaving on “all cash” buyers on the margin of housing demand.

Which, as we asked one month ago, begs the (repeat) question: has the Fed thrown in the towel on reflating US housing – the one asset in which the US middle class has historically invested the bulk of its net worth – and is now focusing solely on the S&P which remains the playground of the 1%? If so, the surge in populist anger witnessed around the globe in the past year is certain to get even worse in the US, just as racial and class tensions in the country have never been worse, as the Fed gives up on America’s middle class

The gloves come off as Trump hires Breitbart Chairman: expect fireworks on Hillary

(courtesy zero hedge)

Trump Hires Breitbart Chairman As Campaign CEO In Latest Shake Up To “Boost Sagging Polls”

Well that about does it for tonight

I will see you tomorrow night


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