August 19/No change in GLD/SLV/August gold standing; 42.815 tonnes/Big news of the day: England to invoke article 50 by April 2017 and leave the EU/two more banks charge clients due to negative interest rates: Ulster and Bank of Ireland/Real estate in Vancouver now imploding/Apple’s orders plunging by 30%/ Dallas police and firemen pension fund now insolvent after FBI raided the pension fund operator in April/ Fascinating; even Wall Street Journal believes the market is a scam: what took them so long/

Gold:1340.40 down $10.80

Silver 19.30  down 42 cents

In the access market 5:15 pm

Gold: 1342.00

Silver: 19.31

.

For the August gold contract month,  we had a good sized 157 notices served upon for 15,700 ounces. The total number of notices filed so far for delivery:  13080 for 1,308,000 oz or  tonnes or 40.684 tonnes.  The total amount of gold standing for August is 42.815 tonnes.

In silver we had 78 notices served upon for 390,000 oz. The total number of notices filed so far this month:  471 for 2,355,000 oz.

The crooks love to raid on Friday’s especially after the Shanghai Fix and London fixes because there is no risk on paper turning into real metal for the rest of the day.  However come Monday, it will become a problem.

Thus it is becoming the norm for them to raid on Friday’s

 

 

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL BY A SMALLISH  647 contracts DOWN to 206,078 AND MOVING AWAY FROM ITS AN ALL TIME RECORD DESPITE THE FACT THAT  THE  PRICE OF SILVER ROSE  BY 9 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.030 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 ROSE 9,616 contracts as the price of gold ADVANCED BY $8.50 yesterday . The total gold OI stands at 579,821 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

we had no changes at the GLD/

 

Total gold inventory rest tonight at: 955.99 tonnes of gold

SLV

we had no changes  into the SLV, /   THE SLV/Inventory rests at: 355.469 million oz.

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

1. Today, we had the open interest in silver FELL by 647 contracts DOWN to 206,078 despite the fact that the price of silver ROSE BY 9 cents with YESTERDAY’S trading.The gold open interest ROSE 9616 contracts UP to 579,821 as the price of gold ROSE by $8.50 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

2c) COT report

(Harvey)

3. ASIAN AFFAIRS

 i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 3.99 POINTS OR 0.13%/ /Hang Sang closed DOWN 85.94 points or 0.37%. The Nikkei closed UP 59.81 POINTS OR 0.36% Australia’s all ordinaires  CLOSED UP 0.34% Chinese yuan (ONSHORE) closed DOWN at 6.6547/Oil FELL to 48.10 dollars per barrel for WTI and 50.67 for Brent. Stocks in Europe: in the RED . Offshore yuan trades  6.6619 yuan to the dollar vs 6.6547 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

b) REPORT ON CHINA

none today

4 EUROPEAN AFFAIRS

i)England: this is a biggy!

Cable (Great Britain Pound/USA dollar) tumbles as May confirms article 50 trigger by April 2017:

( zero hedge)

ii) Germany/Deutsche bank

Wow!! we do not see the following quite often.  This Deutsche bank whistleblower turned down 8.25 million reward because he correctly stated that it was not “Deutsche bank’s”  fault but the leaders of the bank who should be punished and it is they who should pay and not the shareholders.  I wish we had more people like  Ben Artzi..

a must read…

( zero hedge)

iii)France

Another attack by a Muslim radical:
(courtesy zero hedge)

iv/We now have two more banks in Germany charging clients for holding cash: Bank of Ireland and Ulster bank! Negative rates is having a devastating effect on the financial scene.( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6.GLOBAL ISSUES

i)Canada/Vancouver

Boy!! that did not take long.  In one month after the Province of British Columbia initiated a property tax on foreigners, the Vancouver housing market implodes.

(courtesy zero hedge)

 

ii)APPLE/Global orders plummet by 30%

A good Bellwether on the global economy:  Apple demands cuts form suppliers after their orders are plunging by 30%

(courtesy zero hedge)

 

7.OIL ISSUES

i)Record levels of oil, record levels of gasoline and distillates. And yet the price of oil is back to 50$ for Brent and 48 dollars for WTI. EconMatters explains that this will not last

( EconMatters)

 

ii)This is how you know we have a huge glut of gas on the markets:

(courtesy Bloomberg)

iii) We had another rig count rise (for 8 straight weeks) and yet crude rises again:( zero hedge)

8.EMERGING MARKETS

BRAZIL

Brazilian police are recommending charging the swimmers with false testimony.

Is this payback time for the USA’s involvement in the ousting of Roussef?

(courtesy zero hedge)

9.PHYSICAL STORIES

i)Interesting, the Wall Street Journal shows tremendous interest in the rigging of cattle futures and shows no interest in gold/silver comex?

( Gee/Wall Street Journal/GATA)

ii)“Money is gold, and nothing else.”

A great history lesson for us

a must read…

(COURTESY  JAMES TURK/GOLDMONEY)

iii)Gold and silver trading early this morning.  Gold is steadier as the bankers seem to have control of the price of paper silver.

( zero hedge)

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

i)After suffering a huge 15% redemption of funds, Jones is imposing minimum risk levels has he now demands that his traders take on more risk in this zero interest rate environment.

( zero hedge)

ii)You could certainly guess that something like the following will happen when pension funds try for yield in a zero rate environment:

The Dallas Police and Fireman Pension fund is near insolvent in the wake of shady real estate deals and thus the reason for the FBI raid we commented on back in April.

(courtesy zero hedge)

iii)No comment necessary; even the Wall Street Journal thinks the market is a scam:

( WallStreet Journal/zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE TO AN OI level of 579,821 for a GAIN of 9616 contracts AS THE PRICE OF GOLD ROSE BY $8.50 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 70 contracts DOWN to 838,  We had 66 notices filed upon yesterday so we  lost 4 gold contracts OR AN ADDITIONAL 400 oz that will not stand for delivery in August. The next contract month of Sept saw it’s OI fall by 72 contracts down to 4450.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 345 contracts UP to 47,952. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was GOOD at 223,658.  The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 178,230 contracts.The comex is not in backwardation.
Today, we had  157 notices filed for 15,700 oz in gold
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
And now for the wild silver comex results. Total silver OI FELL by 647 contracts from 206,725 DOWN TO 206,725 despite the RISE in price of silver to the tune of 9 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 ROSE BY 10 CONTRACTS UP TO 94. We had 0 notices served yesterday so we  gained 10 silver CONTRACTS  or an additional 50,000 ounces  will stand for silver in this non active delivery month of August. The next big active month is September and here the OI fell by ONLY 7310 contracts down to 92,936 . The volume on the comex today (just comex) came in at 107,452 which is HUGE BUT MANY rollovers..The confirmed volume yesterday (comex + globex) was HUMONGOUS at 94,536 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months.
We had 78 notices filed for today for 390,000 oz
INITIAL standings for AUGUST
 August 19.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil OZ
Withdrawals from Customer Inventory in oz  nil
20,666.859 oz
SCOTIA
MANFRA INCL
1 KILOBAR
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 
nil
 48,226.500 oz
HSBC
15,000.04 KILOBARS ??
No of oz served (contracts) today
157 notices 
15,700 oz
No of oz to be served (notices)
681 contracts
(68,100 oz)
Total monthly oz gold served (contracts) so far this month
13,080 contracts (1,308,000 oz)
(40.684 tonnes)
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL
Total accumulative withdrawal of gold from the Customer inventory this month    462,709.4 OZ
Today:  HUGE 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 HSBC:  48,226.500 OZ
1500.04 KILOBARS!!???
Total customer deposits: 48,226.500 OZ
Today we had 2 CUSTOMER withdrawals
 i) Out of SCOTIA:  20,634.709 OZ
ii) OUT OF MANFRA  32.15 OZ (1 KILOBAR)
Total customer withdrawals  20,666.859 OZ
Today we had 1 adjustment:
 i) Out of BRINKS:  771.600 oz (24 KILOBARS) was adjusted out of the dealer and this landed into the customer account of BRINKS:  (0.024 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 157 contracts of which 1 notices was stopped (received) by JPMorgan dealer and 113 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 (13,080) x 100 oz  or 1,308,000 oz , to which we  add the difference between the open interest for the front month of AUGUST  (838 CONTRACTS) minus the number of notices served upon today (157) x 100 oz   x 100 oz per contract equals 1,376,100 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 (13,080) x 100 oz  or ounces + {OI for the front month (838) minus the number of  notices served upon today (137) x 100 oz which equals 1,376,100 oz standing in this non  active delivery month of AUGUST  (42.802 tonnes).
We lost 4 contracts or an additional 400 oz will not stand for delivery in this  active delivery 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 + 42.802 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 91.889 tonnes still standing against 72.753 tonnes available.
 Total dealer inventor 2,339,026.509 oz or 72.753 tonnes
Total gold inventory (dealer and customer) =11,026,917.458 or 342.98 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 342.98 tonnes for a  gain of 40  tonnes over that period. 
 

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

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

 

 
 end
And now for silver
 
AUGUST INITIAL standings
 august 19.2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
600,017.700 OZ
JPM
Deposits to the Dealer Inventory
 392,343.55 OZ
CNT
Deposits to the Customer Inventory
208,371.700 OZ
CNT
No of oz served today (contracts)
78 CONTRACTS
(390,000 OZ)
No of oz to be served (notices)
16 contracts
80,000 oz)
Total monthly oz silver served (contracts) 471 contracts (2,355,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  9,024,984.3 oz
today we had 1 deposit into the dealer account:
i) Into CNT:  392,343.55 oz
 Total dealer deposits;  393,343.55 oz
we had 0 dealer withdrawal:
:
total dealer withdrawals:  NIL oz
we had 1 customer withdrawal:
i) Out of CNT:  208,371.700 oz
Total customer withdrawals: 208,371.700 oz
We had 1 customer deposit:
i) Into JPMorgan;  60,o17.700 oz
total customer deposits:  600,017.700  oz
 
 
 
 we had 0 adjustments
The total number of notices filed today for the AUGUST contract month is represented by 78 contracts for 390,000 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 (471) x 5,000 oz  = 2,355,000 oz to which we add the difference between the open interest for the front month of AUGUST (94) and the number of notices served upon today (78) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the AUGUST contract month:  471(notices served so far)x 5000 oz +(94 OI for front month of AUGUST ) -number of notices served upon today (78)x 5000 oz  equals  2,435,000 oz  of silver standing for the AUGUST contract month.
we gained 10 contracts or an additional 50,000 oz will stand for silver metal in this non active delivery month of August.
 
Total dealer silver:  27.453 million (close to record low inventory  
Total number of dealer and customer silver:   157.460 million oz (close to a record low)
The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
END
At 3:30 pm we receive the COT report which gives us position levels of our major players:
Let us head over and look at what the Gold COT brings our way:
Gold COT
COT Gold,Report – August 19, 2016
 — Published: Friday, 19 August 2016 | Print  | Disqus

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
351,535 67,684 52,308 116,128 427,121 519,971 547,113
Change from Prior Reporting Period
-4,936 -2,340 2,288 -123 -2,071 -2,771 -2,123
Traders
196 80 80 55 59 290 186
 
Small Speculators  
Long Short Open Interest  
52,525 25,383 572,496  
-132 -780 -2,903  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, August 16, 2016
Our large specs;
Those large specs that have been long in gold pitched 4936 contracts from their long side
Those large specs that have been short in gold covered 2340 contracts from their short side.
Our commercials:
Those commercials that have been long in gold pitched a tiny 123 contracts
Those commercials that have been short in gold covered a tiny 2071 contracts from their short side.
Our small specs:
Those small specs that have been long in gold pitched a tiny 132 contracts from their long side
Those small specs that have been short in gold covered 780 contracts from their short side.
Conclusion: commercials go net long by 1,948 contracts and normally this would be bullish.
And now for our silver COT
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
118,988 33,999 8,836 49,176 149,770
-3,177 2,898 -5,701 2,156 -561
Traders
115 59 50 34 41
Small Speculators Open Interest Total
Long Short 205,905 Long Short
28,905 13,300 177,000 192,605
1,980 -1,378 -4,742 -6,722 -3,364
non reportable positions Positions as of: 173 134
Tuesday, August 16, 2016   © SilverSeek.co
Our large specs:
Those large specs that have been long in silver pitched 3177 contracts from their long side
Those large specs that have been short in silver added 2898 contracts to their short side
Our commercials;
Those commercials that have been long in silver added 2156 contracts to their long side
Those commercials that have been short in silver could only cover 561 contracts from their short side.
Our small specs:
Those small specs that have been long in silver added 1980 contracts to their long side
Those small specs that have been short in silver pitched 1378 contracts from their short side.
Conclusions: very bullish on silver as commercials go net long by 1600 contracts.  It sure looks that they have difficulty in covering their massive shortfall.
end
And now the Gold inventory at the GLD
August 19/no changes at the GLD/inventory resets at 955.99 tonnes
August 18/a withdrawla of 6.24 tonnes of gold from the gLD/Inventory rests at 955.99 tonness
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
August 19/ Inventory rests tonight at 955.99 tonnes

end

Now the SLV Inventory
August 19/no change in silver SLV/Inventory rests at 355.469 million oz/
August 18/ a massive paper deposit of 2.185 million oz into the SLV/Inventory rests at 355.469 million oz
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 19.2016: Inventory 355.469 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 5.0 percent to NAV usa funds and Negative 5.4% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.8%
Percentage of fund in silver:39.0%
cash .+1.2%( August 19/2016).
2. Sprott silver fund (PSLV): Premium falls to +0.59%!!!! NAV (august 19/2016) 
3. Sprott gold fund (PHYS): premium to NAV  rises TO  0.34% to NAV  ( august 19/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.59% /Sprott physical gold trust is back into positive territory at 0.34%/Central fund of Canada’s is still in jail.
 
 
 

end

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

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

Rothchilds Buying Gold On “Greatest Experiment” With Money In “History of the World”

The Rothschilds are buying gold through their investment house RIT Capital Partners and Lord Jacob Rothchild is warning about the results of “the greatest experiment in monetary policy in the history of the world”.

Reception To Mark The Prince of Wales Medal for Philanthropy 2013
British investment banker Lord Jacob Rothschild is buying gold. Pictured with Joanna Lumley. (Source: Getty)

The Rothchild’s investment house has increased its allocation to gold by 8% and aggressively sold quoted equities and sterling to navigate choppy “uncharted waters” post-Brexit. Sale of shares have been used to buy gold and other non-disclosed precious metals, which, at the end of June accounted for 8 per cent of the £2.8 billion portfolio according to the trust’s half-year results, released on Tuesday.

“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 per cent of global government debt at negative yields, combined with quantitative easing on a massive scale.

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.”

Rothschild said to date quantitative easing has successfully driven stock markets higher, but he rightfully fears this will not go on forever. He adds that a number of headwinds could also derail markets – including the very uncertain geopolitical risk.

Geopolitical Risks

“Many of the risks which I underlined in my 2015 statement remain; indeed the geopolitical 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,” said Rothschild.

“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 US in terrorist attacks.”

As we have covered in recent months, the smart and prudent retail, company, family office, HNW, UHNW, pension and institutional money is aware of the real risks of a new global financial crisis and continues to diversify into gold.


Recent Market Updates

– 45th Anniversary Of Nixon Ending The Gold Standard
– Gold In UK Pounds Collapses 38% Versus Gold and 56% Versus Silver Year To Date
– 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 and Silver Bullion – News and Commentary

Buying picks up ahead of festive season in India, China (Reuters)

Texas State Gold Depository Another Step Closer To Reality (TenthAmendmentCenter)

Gold slips on U.S. Fed rate views (Reuters)

Gold Drops as Fed’s Williams Says He’s for Increasing Rates Soon (Bloomberg)

Gold up as Fed minutes cool rate hike prospects, weigh on dollar (Reuters)

7RealRisksBlogBanner

Major gold rush since the Bank of England’s interest rate cut (CityAM)

Why Investors Should Consider a Gold Position (Nasdaq)

Britain faces a nasty shock when the global energy cycle turns  (Telegraph)

What will you do when banking dies? (MoneyWeek)

Market ‘breakdown’ to be ‘sudden, intense, and large’ – Paul Singer (CNBC)

Gold Prices (LBMA AM)

19Aug: USD 1,346.85, GBP 1,026.30 & EUR 1,189.67 per ounce
18Aug: USD 1,347.10, GBP 1,023.93 & EUR 1,190.84 per ounce
17Aug: USD 1,342.75, GBP 1,031.23 & EUR 1,191.96 per ounce
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

Silver Prices (LBMA)

19Aug: USD 19.42, GBP 14.80 & EUR 17.14 per ounce
18Aug: USD 19.78, GBP 15.04 & EUR 17.47 per ounce
17Aug: USD 19.57, GBP 15.04 & EUR 17.37 per ounce
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


Recent Market Updates

– Gold – “Mother of All Bull Markets Has Only Just Begun” – Grandich
– 45th Anniversary Of Nixon Ending The Gold Standard
– Gold In UK Pounds Collapses 38% Versus Gold and 56% Versus Silver Year To Date
– 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

Mark O’Byrne
Executive Director

end

Interesting, the Wall Street Journal shows tremendous interest in the rigging of cattle futures and shows no interest in gold/silver comex?

(courtesy Gee/Wall Street Journal/GATA)

If only the Wall Street Journal showed such interest in gold futures

Section:

Maybe the cattle futures market doesn’t really WANT any ‘signals’ from the physical market. But at least ‘Trader Dan’ Norcini may be getting a good taste of market rigging.

* * *

Welcome to the ‘Meat Casino’ — The Cattle Futures Market Descends Into Chaos

Trading of Physical Cattle Has Become So Scant that the Futures Market Can’t Get the Signals it Needs to Set Prices

By Kelsey Gee
The Wall Street Journal
Wednesday, August 17, 2016

CHICAGO — Wild swings in the cattle futures market have prompted some traders to call it “the meat casino.”

In response, the world’s largest futures exchange has refused to list new contracts, leaving ranchers with fewer tools to hedge the $10.9 billion market. CME Group Inc. said that is because trading of physical cattle has become so scant that the futures market can’t get the signals it needs to set prices.

“It’s madness. The market makes major moves for no reason,” said Blake Albers, a cattle feeder in Wisner, Neb.

The decision to delay new contract listings is the culmination of alarms raised by the exchange and industry groups this year that problems in the physical marketplace have affected futures — a highly unusual meltdown in a market that has attracted more speculators. …

“Guys like me who have been around a long time aren’t putting as many positions on,” said Dan Norcini, an independent livestock-futures trader in Coeur d’Alene, Idaho. “It’s just not worth the risk anymore, when there’s no rhyme or reason to these price swings.” …

… For the remainder of the report:

http://www.wsj.com/articles/welcome-to-the-meat-casino-the-cattle-future…

END

“Money is gold, and nothing else.”

A great history lesson for us

a must read…

(COURTESY  JAMES TURK/GOLDMONEY)

What Did J.P. Morgan Mean?

By James Turk of Goldmoney.com

The following exchange occurred on December 18, 1912 when J.P. Morgan – the most influential American financier and banker of his time – was called to testify before Congress.

Mr Untermyer:

I want to ask you a few questions bearing on the subject that you have touched upon this morning, as to the control of money. The control of credit involves a control of money, does it not?

Mr Morgan:

A control of credit? No.

Mr Untermyer:

But the basis of banking is credit, is it not?

Mr Morgan:

Not always. That [credit] is an evidence of banking, but it [credit] is not the money itself. Money is gold, and nothing else.

Samuel Untermeyer was chief counsel of the Pujo Sub-Committee of the House Committee on Banking and Currency, which was formed to investigate the influence of Wall Street bankers and financiers over the nation’s money and credit. He was attempting to determine whether a “money trust” that controlled American business and finance existed and if Mr Morgan was part of it.

The above exchange is just a small part of more than three hours of testimony by Mr Morgan, but it is the most revealing part of their discussion about money. It hits upon a point not often understood today that, as Mr Morgan put it so precisely and succinctly: “Money is gold, and nothing else”.

It is noteworthy that he is often misquoted to have said ‘gold is money, and nothing else’, which is also true but misses the important point. It is clear that Mr Morgan was defining money in a way that is unfamiliar and therefore baffling to the modern mind, so the quote is frequently altered, whether wittingly or not, to make it understandable today. No doubt further confusing and perhaps somewhat shocking to the modern mind, Mr Morgan – who a century later remains a pre-eminent historical figure in American finance – did not say that ‘money is the dollar’; it is only gold and nothing else.

Nor was Mr Morgan defining gold. His statement simply highlighted how gold is used, not what it is, which can be defined as a natural element ranking number 79 on the periodic table.

Yet there is much more to Mr Morgan’s words, and indeed, both replies to Mr Untermyer’s questions. A deeper analysis will reveal what Mr Morgan and everyone else listening to his testimony obviously understood about money and credit. If they didn’t have this clear understanding, Mr Morgan would have been asked to explain his definition of money. No such questions were asked.

So what did Mr Untermyer and others in that Congressional hearing know then that many do not understand now? What did Mr Morgan mean? And what was it that they intuitively recognised about money and credit that is not widely realised today?

Mr Morgan was defining more than just money. He was revealing the essential nature of the process by which people are paid for their labour, which in turn is the backbone of our capitalist society. Money comes from the market process, not government.

Money comes into existence like every other good and service. They all are a result of labour diligently applied to a task completed over time to produce a useful outcome. A farmer produces food, a builder a house, a manufacturer a car, and so forth. All of these items are useful products. Similarly, useful services are provided by a barber cutting hair, a waiter serving food, etc. And to address Mr Morgan’s point, a gold miner expends labour and time to produce a useful good we call money.

Bankers in stark contrast spawn money-substitutes called dollars, euros, francs, pounds, etc., but just like artificial sweeteners are not sugar, money-substitutes are not money. These currencies are forced into circulation by legal tender laws, which perforce have largely displaced the circulation of gold as currency. The unfortunate result is that gold’s inherent features and attributes have become unfamiliar to many who then fail to recognise gold’s true nature and usefulness.

National currencies like the dollar, euro, franc, pound and all the rest are based on credit, and not expended labour. Consequently, they can be best described as ‘debt-currency’, a befitting term purposefully chosen to express their true nature by revealing their complete and total reliance upon credit.

A talented, hard-working and honest individual will have more ability to borrow on credit than one without these qualities, and credit can be useful. With credit one can obtain goods and services today based on the trust that payment for them will be made in the future by the labour of the individual using credit.

Similarly, banks grant loans on the expectation – and hope – that labour will be expended in the future to repay the loan. So one can borrow a debt-currency from a bank on the trust that it will be repaid. But sometimes that trust is broken. Not all promises are kept, so credit involves the uncertainty of repayment and clearly establishes a fundamental difference in risk between money and debt-currency.

All debt-currencies have counterparty risk, but gold does not. The reason is simple. Debt-currencies are a financial asset. They are not tangible, nor is their value derived from expended labour. More precisely, they are liabilities of banks, and as any accountant knows, it is a bank’s assets – and not its liabilities – that have value.

Debt-currency is backed by credit, specifically the loans on bank balance sheets. If these loans are not repaid, the bank’s ability to honour its liabilities – the bank’s debt-currency – is impeded, adversely impacting that bank’s debt-currency. If the loan defaults are sufficiently large, it can lead to bank runs and ultimately, bank failures.

As Mr Morgan explained to Mr Untermyer, credit is not money. Therefore, dollars are not money, and just circulate as debt-currency in place of money. This reality – that national currencies are liabilities of banks – explains why they have counterparty risk, and more to the point, makes it clear why money is gold.

When you pay for some good or service with a gold coin, a tangible asset that is the product of expended labour – gold – is being exchanged for something else of substance and value that is also the product of expended labour, namely, the good or service being purchased. With gold, the exchange is extinguished the moment the good and gold change hands, but contrast this result with the dollar or any other debt-currency.

When dollars are used to purchase some good or service, the exchange is not extinguished. An item of substance – the good or service – is being exchanged for credit in the form of a money-substitute circulating as debt-currency. The good has not been paid for because the seller receiving the dollars now has counterparty risk. The exchange won’t be extinguished until the seller off-loads those dollars on to someone else in some other exchange to purchase a good or service, which is the hidden meaning of Mr Morgan’s testimony that was widely understood in 1912, but less so today.

Only money can pay for the purchase of a good or service; only a tangible asset extinguishes an exchange. Gold has been money for 5,000 years, though other tangible assets have been used from time to time, generally as a matter of expediency in extraordinary or emergency circumstances, or in the case of silver, to provide coin in small denominations for low-value exchanges.

So what would have been the result if the earth had been formed without any gold? It seems logical to conclude that money would never have emerged from pre-history, meaning the market economy would never have emerged from pre-history either.

So gold is special. It has been central to the development of civilisation. And gold is unique. Other tangible assets deteriorate, tarnish, rot, get used up, depleted or worn out and sooner or later disappear, while gold gets accumulated and does not disappear. Except for the inconsequential amount of gold lost from abrasion of coins or from shipwrecks and buried hoards yet to be located and recovered, all the gold mined throughout history still exists, whether fabricated into bars, coins or other forms.

Throughout history gold has been mined because it is used as money. Even though gold today does not circulate as currency as widely as it did in 1912, it still is money.

Mr Morgan’s testimony occurred just several years after the Panic of 1907 and the collapse of Knickerbocker Trust Company, one of the larger banks in New York City at the time. We’ve seen bank runs in recent decades, but these have happened within a debt-currency world. Historically, bank runs were driven by the need for safety, or in other words, to preserve one’s wealth by avoiding counter-party risk. Safety was achieved by converting the fleeting and impermanent promises of debt-currency into gold, the ultimate safe-haven. A bank owes you your debt currency, whereas gold is money you own.

The last real bank run into gold occurred during the Great Depression, which is out of nearly everyone’s living memory. That explains why so few people are paying attention to the risk of using debt-currency; they have not had the opportunity to learn from experience.

There is an ancient saying that wisdom begins by calling things by their right name. Mr Morgan chose his words in that Congressional hearing accurately and wisely.

“Money is gold, and nothing else.”

 

 

end

 

 

Gold and silver trading early this morning.  Gold is steadier as the bankers seem to have control of the price of paper silver.

(courtesy zero hedge)

Silver Slumps To 6-Week Lows, Gold Ratio Surges

Silver is slumping this morning, back below $19.50 at its lowest level in 6 weeks. Gold is fading also but remains coiled around the $1350 level for now. While both well above pre-Brexit levels, we note that the Gold-to-Silver ratio is recovering after slumping post-Brexit…

Silver is suffering…

Gold is more stable for now…

A triangle-shaped formation has kept prices in check since early July, when the metal traded between $1,310 and $1,370 an ounce. Now, gold is likely to move out of the triangle and start rallying, said Andy Pfaff, chief investment officer for commodities at MitonOptimal Group in Cape Town.

As the gold/Silver ratio jumps back to pre-Brexit ‘norms’

As Bloomberg notes, Gold is poised to continue outperforming silver in the near-term after XAU/XAG broke out bullishly from a one-month triangle pattern this week, Bloomberg technical analyst Sejul Gokal writes, with a ratio of 72/73 as a short-term target (100-day moving average).

 

end

 

Funding complete in 24 hrs

(courtesy Koos Jansen)

The Power Of The Gold Community: Crowdfunding For FOIA Request Fort Knox Audit Documents CompleteWithin 24 Hours

Published: Friday, 19 August 2016

By Koos Jansen

https://www.bullionstar.com/

Since 2014 I’ve been investigating the alleged audits of the US official gold reserves. Of course my goal is to figure out if these audits are credible, or if they’re invented by the US government to silence the people that think gold has any value and forms the very material basis for a well-functioning monetary system.

My first post on this subject, A First Glance At US Official Gold Reserves Audits, published on March 27, 2014, was purely based on publicly available reports. Not surprisingly, all those reports together compounded to a logical story. The US government wouldn’t present anything that’s implausible at the surface. That first post was more or less a summary of the official narrative. After that post I decided to dig a little deeper.

According to the Department of the Treasury’s Office of Inspector General (OIG), which is responsible for the audits, the vast majority of the US monetary stock stored at the US Mint had been audited by 1986, 241,247,820.61 fine troy ounces to be precise, as was said by Inspector General Eric M. Thorsonduring his Statement to the House Financial Services Committee on June 23, 2011:

… the Committee for Continuing Audit of the U.S. Government-owned Gold performed annual audits of Treasury’s gold reserves from 1975 to 1986. … by 1986, 97 percent of the Government-owned gold held by the Mint had been audited and placed under joint seal.

If this is true I would like to see those audit reports, I thought one day. My first Freedom Of Information Act ( FOIA) request submitted in 2015 at the US government asked for delivery of all audit reports drafted by the Committee for Continuing Audit of the U.S. Government-owned Gold from 1975 until 1986. Stunningly, the OIG couldn’t find all the documents – nor did the National Archives, the Government Accountability Office or the Treasury. The OIG only had three of the audit reports in question archived. Something was awfully wrong here.

The essence of auditing the US gold stock is to reassure the global economy that in any extreme scenario all dollars in circulation are supported by gold providing essential confidence and credibility.Once it’s proven the gold is there, why throw away the evidence? I wrote about this in my postUS Government Lost 7 Fort Knox Gold Audit Reports published on June 2, 2015.

In my post from June 2015 I announced I would submit new FOIAs at several US government departments to get to the bottom of this. And I did, I’ve submitted countless of FOIAs at the US Treasury, US Mint and the OIG, next to asking for information through conventional channels like email and phone calls. Sometimes the FOIAs were not honored, sometimes I received very intriguing bits of information. What I found out, inter alia, was that in between 1993 and 2008, 84,671,927 ounces were re-audited. Meaning, several compartments that were sealed in between 1975 and 1986 had been re-opened to access the bars inside. And strangely, the OIG cannot give me a proper explanation for these re-audits. Believe me, I’ve tried to ask numerous times.

Why was this gold re-audited? Why were sealed vault compartments re-opened and re-audited? These are just examples of questions my research is focussed on.

My interest in the subject did not pass unnoticed at the US government. In recent months I could clearly sense a strong defense by all departments in concert. Emails are not being answered, phone calls are not being returned, questions in my FOIAs are dodged, and in my most recent FOIA an unreasonable amount of money was asked for reports the Mint Director’s Representative writes every year for “notifying the CFO of the completion of the verification” of the Deep Storage gold audits.

Through a FOIA submitted at the OIG late 2015 I obtained the Management Letter for the Fiscal Year 2004 Audit of the United States Mint’s Schedule of Custodial Gold and Silver Reserves March 10, 2005. I the management letter we can read:

5. Policy FIN-09, Deep Storage Asset verifications, paragraph 2v, and MD 8H-3 paragraph 6a, both include the requirement that the Director’s Representative submit a written report to the Chief Financial Officer (CFO) notifying the CFO of the completion of the verification.

After reading this paragraph I thought maybe these reports by the Mint Director’s Representative would disclose valuable information. As the US government was barely talking to me anymore, I submitted a new FOIA request at the Mint in 2016 that stated:…

https://www.bullionstar.com/

-END-

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

 
 

:

1 Chinese yuan vs USA dollar/yuan  UP to 6.6547( BIG DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6619) / Shanghai bourse  UP 3.99 OR 0.13%   / HANG SANG CLOSED DOWN 85.94 or 0.37%

2 Nikkei closed /USA: YEN RISES TO 100.21

3. Europe stocks opened  IN THE RED,     /USA dollar index UP to 94.43/Euro DOWN to 1.1325

3b Japan 10 year bond yield: RISES TO  -.078%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 100.21

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  48.10  and Brent: 50.67

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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.081%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 6.89%/: 

3j Greek 10 year bond yield FALL to  : 8.04%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1345.00-/silver $19.45(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 28/100 in  roubles/dollar) 64.04-

3m oil into the 48 dollar handle for WTI and 50 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.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 100.21 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9571 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0844 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -0.081%

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

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

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

4. USA 10 year treasury bond at 1.549% early this morning. Thirty year rate  at 2.269% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS

Global Stocks Drop, US Futures Down As Dollar Rebound Halts Longest Oil Rally In Years

European, Asian stocks and S&P futures all fell in another quiet, low-volume early session. With oil entering a bull market yesterday (after sliding into a bear market just weeks ago), and set for its longest run of gains in 4 years after, overnight crude stumbled, and reversed early gains, falling for the first time in seven days driven by rebound in the dollar which gained versus all G-10 currencies with commodity currencies underperforming.

“I think it’s the case that we’ve run up pretty hard in the past six weeks or so and that slightly caught investors unawares,” James Buckley at Baring Investment told Bloomberg. “That’s probably going to mean that to push on further from here we would need some further affirmative data. I wouldn’t be surprised to see a pause around these levels, I don’t necessarily think it will be up or down, but certainly a pause, perhaps with a downward drift.”

The Bloomberg Dollar Spot Index was +0.5% at 1,167.08, set for the biggest one-day gain since July 19 and trimming this week’s loss to 1 percent. While the U.S. central bank’s minutes showed Wednesday that officials were split in July on the need for an interest-rate hike, New York Fed chief Dudley said the previous day that the market was underestimating the likelihood of an increase. “The Fed’s apparent lack of urgency to raise rates is encouraging expectations of further dollar declines,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Today is probably just a blip in the dollar’s lousy August so far.”

Financial markets were confused this week by more hawkish comments from regional Federal Reserve chiefs including New York’s William Dudley, while minutes of the last policy meeting struck a dovish tone seeing little prospect of a sharp increase in price pressure. The events set the stage for Fed Chair Janet Yellen, who speaks at a meeting of global policy makers in Jackson Hole, Wyoming, next week. December rate hike odds stand at 47%, fed fund futures show. That compares with 36% at the start of the month.

“The Fed, at least in speeches this week, has been trying to get markets more in line with what they expect from monetary tightening this year,” said Richard Falkenhall, a strategist at SEB AB in Stockholm. “But the market is still not convinced.”

Europe’s Stoxx 600 Index is heading for a 1.4% weekly decline, the largest weekly drop since mid-June. Trading volumes were about a third lower than the 30-day average. Italy’s FTSE MIB, the worst performing index in the world this year, tumbled 1.9 percent.

Intesa Sanpaolo SpA weighed heaviest on the index with a 3.1 percent drop. Italy’s shares led declines on Friday and its government bonds yielded the most relative to Spain’s in more than 18 months as concern over the health of the country’s banking industry and political risks weighed on the nation’s assets. Equities in emerging markets erased a sixth week of gains. Gold lost ground for the first time this week as Bloomberg’s dollar index rose from a three-month low. Oil was headed for its biggest weekly jump since March amid speculation major producers will act to freeze output. Insurers were the biggest decliners on Friday, while BMW AG led automakers lower. BHP Billiton Ltd. and Glencore Plc dragged a gauge of miners down as commodity prices slipped. Royal Vopak NV tumbled 6.9 percent after the storage-tank operator reported lower revenue and cashflow.

S&P 500 Index futures were down 0.3% in premarket trading. Applied Materials Inc. advanced 6.5 percent in European trading after the biggest maker of machinery used to manufacture semiconductors predicted revenue and profit that may surpass estimates.

The MSCI Emerging Markets Index slid 0.8 percent, leaving it down 0.1 percent in the week. The measure is up 15 percent this year compared with a 4.4 percent increase in the MSCI World Index of developed-nation stocks.

10Y Treasuries yielded 1.54%, little changed on the day and up three basis points for the week. The two-year note yield, among the maturities most sensitive to the outlook for Fed policy, was little changed this week at 0.71 percent.

Market Snapshot

  • S&P 500 futures down 0.3% to 2177
  • Stoxx 600 down 0.6% to 341
  • FTSE 100 down 0.1% to 6860
  • DAX down 0.8% to 10517
  • German 10Yr yield down less than 1bp to -0.09%
  • Italian 10Yr yield up 3bps to 1.11%
  • Spanish 10Yr yield up 3bps to 0.94%
  • S&P GSCI Index down 0.6% to 368.7
  • MSCI Asia Pacific down 0.3% to 139
  • Nikkei 225 up 0.4% to 16546
  • Hang Seng down 0.4% to 22937
  • Shanghai Composite up 0.1% to 3108
  • S&P/ASX 200 up 0.3% to 5527
  • US 10-yr yield up less than 1bp to 1.54%
  • Dollar Index up 0.4% to 94.53
  • WTI Crude futures down 0.5% to $47.98
  • Brent Futures down 0.8% to $50.46
  • Gold spot down 0.4% to $1,347
  • Silver spot down 0.9% to $19.57

Global Headline News

  • Viacom Board Said to OK Settlement; Dauman Steps Down as CEO: COO Tom Dooley to take over as interim chief executive officer. Settlement marks near-total victory for Sumner, Shari Redstone
  • Exxon, Chevron, Hess Said to Be in Joint Bid for Mexican Oil: Mexico to auction rights to 10 deepwater oil fields on Dec. 5. Companies have until Nov. 18 to report bid groups to regulator
  • China Sovereign Fund Said to Seek $9 Billion Vale Streaming Deal: Miner also talking to other Asian cos. on stake sale
  • Chipotle Is Still in a Funk and Wall Street’s Getting Impatient: Sales haven’t recovered as marketing spending gets a boost; “they’re going to have to find a different way to operate.”
  • Monte Paschi Says It Acted Properly as CEO Viola Investigated: Bank says operations were carried out by previous management. Reuters reported that Viola, Profumo being investigated
  • Katsuyama Shakes Up Industry Even Before His IEX Exchange Opens: Nasdaq, NYSE want new kinds of orders in response to upstart. IEX begins trading as 13th U.S. stock exchange on Friday
  • NBC’s $12b Olympics Bet Stumbles, Thanks to Millennials: Prime-time broadcast viewership has been down ~17% compared to the London games four years ago
  • Singapore Defaults Boost Calls for Aid as Oil Firms Falter: More bonds may default without further bank help, UBS analysts say
  • VW’s German Production at Risk as Supplier Spat Sparks Slowdown:
    Shortened work hours at Emden plant may widen to more sites. Cutbacks
    compound woes as VW seeks to resolve diesel scandal

* * *

Looking at regional markets, we find that Asia failed to sustain the early widespread energy-inspired gains in which oil rallied 3% and officially entered bull market territory, with the regional stock markets mixed. Nikkei 225 (+0.4%) initially outperformed on JPY weakness but then pared some gains as China bourses entered the fray and dragged sentiment lower. ASX 200 (+0.3%) also saw choppy trade amid weakness in financials after Moody’s downgraded its outlook on the big 4 banks and Australia’s banking system to negative. Chinese markets were initially lower with the Hang Seng (-0.4%) and Shanghai Comp (+0.1%) weighed on following reports of possible curbs on the financial and property sectors, while the PBoC also reduced its net weekly liquidity injection. However, the Shanghai Comp managed to pare losses heading in to the close. 10yr JGBs traded flat amid indecisiveness seen across riskier Japanese assets, while the BoJ were present in the market to acquire JPY 1.25tr1 in government debt.

Top Asia News

  • China Sovereign Fund Said to Seek $9 Billion Vale Streaming Deal: Miner also talking to other Asian cos. on stake sale
  • Singapore Defaults Boost Calls for Aid as Oil Firms Falter: More bonds may default without further bank help, UBS analysts say
  • Idle Credit Cards in Asians’ Wallets Prompt Citi, HSBC Overhaul: Banks are eyeing rapid growth of payment transactions in Asia
  • The Gold Medal for Buying Up Brazilian Assets Goes to China Inc.:China surpasses U.S., U.K. as top buyer of Brazilian assets
  • Citic Unit Plans Japan Private Equity Fund as China Buying Jumps: 30b yen fund has invested in Akakura, Mark Styler
  • Bank of East Asia Profit Drops 38% as China Drags on Lending: Weaker China economy causes loan impairments to surge 60%

European equities are softer this morning (Euro Stoma -0.9%) with notable weakness in telecom and health care names, allied with the moves lower in oil prices which have seen a pull-back as Brent crude futures fall below USD 51. Additionally, downside in equities has been somewhat exacerbated by the thin market conditions with newsflow relatively light as has been the case over the past week. In credit markets, Bunds are relatively flat despite the downside in equities, while there has been some notable outperformance in the long end of the curve. In terms of peripheral bonds, Portuguese yields are firmer this morning ahead of Fitch’s sovereign announcement with risks concerning over the potential moves to their outlook.

Top European News

  • Monte Paschi Says It Acted Properly as CEO Viola Investigated: Bank says operations were carried out by previous management. Reuters reported that Viola, Profumo being investigated
  • U.K. Posts Surplus as Bank Surcharge Boosts Corp. Taxes: U.K. posted surplus in July as govt’s tax take was boosted by first payments under a surcharge on banks introduced last year.
  • VW’s German Production at Risk as Supplier Spat Sparks Slowdown: Shortened work hours at Emden plant may widen to more sites. Cutbacks compound woes as VW seeks to resolve diesel scandal
  • Brunel Drops; 2Q Numbers Beat, But FY Guidance Weak, Kepler Says: Brunel International falls as much as 7.6% in early trading, vol. 85% of 3-mo. daily avg. at 9:09am CET; 2Q figures beat ests, but FY Ebit guidance of EU30m-EU35m is “clearly” lower than consensus, Kepler Cheuvreux says in note.
  • Deutsche Bank Whistle-Blower Spurns $8 Million SEC Reward: Eric Ben-Artzi complains that top executives went unpunished. Former Deutsche Bank risk officer writes opinion piece in FT

In FX, the Bloomberg Dollar Spot Index rose 0.4 percent, trimming this week’s loss to 1 percent.While the U.S. central bank’s minutes showed Wednesday that officials were split in July on the need for an interest-rate hike, New York Fed chief Dudley said the previous day that the market was underestimating the likelihood of an increase. “The Fed’s apparent lack of urgency to raise rates is encouraging expectations of further dollar declines,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Today is probably just a blip in the dollar’s lousy August so far.” The yen weakened 0.2 percent to 100.13 per dollar, paring its weekly gain to 1.2 percent. The currency has strengthened 20 percent this year and Japan’s Vice Finance Minister Masatsugu Asakawa said on Thursday that policy makers are prepared to take action if speculative trading is evident. The MSCI Emerging Markets Currency Index declined 0.5%, set for its first weekly loss in four weeks. Mexico’s peso and South Africa’s rand led losses on Friday, both sliding more than 1 percent.

In commodities, oil headed for its strongest weekly increase in four months after entering a bull market amid speculation that major producers may act to freeze output at the same time U.S. crude and fuel stockpiles decline. West Texas Intermediate crude fell 0.4 percent to $48.01 a barrel, paring its weekly gain to 7.9 percent. Brent lost 0.8 percent to $50.48. Prices have risen steadily since Saudi Arabian Energy Minister Khalid Al-Falih said Aug. 11 that informal talks in September may lead to action to stabilize the market. Most metals declined as a rebounding dollar made commodities more expensive to investors in other currencies. Gold dropped 0.4 percent to $1,346.85 an ounce, snapping a four-day advance as the dollar rebounded. Zinc dropped 0.8 percent, paring a weekly gain and retreating from the highest level in 15 months. Copper fell 0.4 percent.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade lower as markets take an opportunity to pare some of the week’s gains
  • This has also been triggered by softness in commodities with analysts cynical about the potential efficacy of an oil production freeze
  • Looking ahead, highlights include Canadian CPI
  • Treasuries mostly steady in overnight trading, global equities higher in Asia, drop in Europe; WTI crude has closed over $45/barrel each day this week, now trading at just over $48.
  • Even if OPEC strikes a deal with Russia next month to freeze oil production, success will mean a lot less than when they tried and failed four months ago. Oil has rallied more than 10% since OPEC said that it will hold an informal meeting
  • Federal Reserve officials have gone out of their way this week to stress the market is underestimating the odds of an interest-rate increase this year — and yet the probability of such a move has fallen back below 50%
  • U.S. regulators looking to avoid bailouts of too-big-to-fail banks have passed so many rules that regional and local lenders are combining to stomach the costs. Mergers and acquisitions by U.S. banks surged last year to about $18 billion, the highest level since 2009
  • Billionaire Paul Tudor Jones, who’s facing his worst performance since the global financial crisis, wants to show investors he hasn’t lost his mojo. He’s also demanding that all his managers take more risk in their bets
  • Will the Socialists dare to steal Christmas? That’s the question that Spaniards are asking after caretaker Prime Minister Mariano Rajoy agreed to face a confidence vote in parliament at the end of this month
  • Ukraine’s president Petro Poroshenko warned of a possible invasion by Russia and said the military may consider imposing a draft if hostilities worsen

DB’s Jim Reid concludes the overnight event wrap

Markets don’t appear to be in much of a race to get anywhere at the moment with the last 24 hours or so consolidating further the post-FOMC minutes price action reversal of NY Fed President Dudley’s more hawkish comments from earlier in the week. We did actually hear from Dudley again yesterday when he spoke to a press briefing. Much of his commentary pointed towards the recent strength in the labour market which has ‘helped allay concerns that arose earlier this year that job growth was beginning to stall and reinforced my view that labour market conditions continue to improve’. Dudley also said that he expects growth in the second half of this year to be ‘quite a bit stronger’ than in the first half but that the labour market data will get greater weight given that the labour market is part of the Fed’s dual mandate and that the Fed is not targeting GDP growth.

The San Francisco Fed President John Williams (seen as relatively centrist) also spoke shortly after although he didn’t offer much in the way of new views. Williams said that ‘I think every one of our meetings should be in play in principle’ including September and that this ‘makes sense given where the economy is’. Williams also said that ‘I don’t think I’m in a hurry to raise rates’ but ‘I don’t think that it would be helpful to allow this economy to overheat’.

Treasuries continued to firm up again yesterday with 2y and 10y yields down 2.4bps and 1.4bps respectively to 0.703% and 1.536%. The latter is now within half a basis point of doing a full circle from the pre-Dudley levels on Tuesday. Meanwhile the US Dollar came under renewed pressure again yesterday, with the Dollar index closing -0.59%. Risk assets eked out modest gains with the S&P 500 and Dow closing +0.22% and +0.13% respectively. The odds of a September rate rise have held steady at 20% (versus 22% on Tuesday) while December odds are down to 47% from 49% on Wednesday and 51% on Tuesday.

Elsewhere European equity markets also finally snapped out of a four-day slump (Stoxx 600 closed +0.72%) with the better tone for risk yesterday also given a boost by another sharp leg higher for Oil. WTI rallied +3.06% yesterday to a close a shade above $48/bbl, while Brent climbed +2.09% to finish above $50/bbl for the first time since July 4th. In fact that’s the sixth successive daily gain for Brent and it has now risen over 22% from the intraday lows on August 2nd and so taking it back into a bull market. Yesterday’s gains came despite there being little new news, instead just seemingly an extension of the positive momentum we’ve seen this month as hopes have risen around a potential OPEC production freeze next month.

Oil is little changed this morning but despite the move yesterday, most major bourses in Asia this morning are trading in the red, albeit modestly. The Hang Seng (-0.50%), Shanghai Comp (-0.36%) and Kospi (-0.22%) are all currently lower although the Nikkei (+0.39%) has bounced back this morning with the Yen (-0.48%) having a rare weaker day after trading back up above 100. In fact it looks set to end five prior consecutive days of gains.

The main economic data of note yesterday was again focused on the UK where the July retail sales data came in much better than expected, adding to the reasonably solid post Brexit data that we’ve seen this week. Excluding fuel, sales rose a bumper +1.5% mom last month (vs. +0.3% expected) which helped to lift the YoY rate to +5.4% from +3.9%. Including fuel, sales were also up an impressive +1.4% mom (vs. +0.1% expected). The YoY rate including fuel is now +5.9% (from +4.3%) which is the highest since September last year. Much of the commentary suggested that the warm weather was a big contributor and it’ll be interesting to see what the August numbers look like. Sterling rallied +0.97% yesterday post the data and is now back above $1.31.

Elsewhere, in the US the main data of note was a pickup in the headline Philadelphia Fed manufacturing index of 4.9pts to +2.0, which was in line with the market. It was some weakness in the details which caught our attention though. The new orders index tumbled to -7.2 from +11.8 in the prior month, while the number of employees weakened further to -20.0 from -1.6. The average workweek was also lower although we did see a pickup in the six-month ahead business conditions reading to the best level since January 2015. Elsewhere, initial jobless claims declined 4k last week to 262k and the Conference Board’s leading index (+0.4% mom vs. +0.3% expected) was up a little more than expected.

The only other data yesterday came in Europe where the July CPI reading for the Euro area came in a smidgen lower than expected (-0.6% mom vs. -0.5% expected) and the unemployment rate in France ticked down three-tenths to 9.9% in Q2.

It looks set to be a fairly quiet day ahead and finish to the week. This morning in Europe we’ll get the latest Germany PPI data (covering July) along with more data out of the UK, this time in the form of public sector net borrowing data for July. There’s nothing due out in the US this afternoon and just 3 corporate earnings reports from the S&P 500 are due out from the retail sector.

end

ASIA MARKETS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 3.99 POINTS OR 0.13%/ /Hang Sang closed DOWN 85.94 points or 0.37%. The Nikkei closed UP 59.81 POINTS OR 0.36% Australia’s all ordinaires  CLOSED UP 0.34% Chinese yuan (ONSHORE) closed DOWN at 6.6547/Oil FELL to 48.10 dollars per barrel for WTI and 50.67 for Brent. Stocks in Europe: in the RED . Offshore yuan trades  6.6619 yuan to the dollar vs 6.6547 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

b) REPORT ON CHINA

none today

EUROPEAN AFFAIRS

England: this is a biggy!

Cable (Great Britain Pound/USA dollar) tumbles as May confirms article 50 trigger by April 2017:

(courtesy zero hedge)

Cable Tumbles After British PM Confirms Article 50 Trigger By April 2017

Just when the world thought Theresa May would let that whole ‘Brexit’ thing slide, hoping everyone would forget about, the new British PM has confirmed that “article 50” – the legal execution of Brexit – will most likely be triggered by April 2017 (wanting to get this done before the crucial French and German elections). Cable is sliding notably on the news…

It’s not over…

  • *U.K. SAID TO SEE BREXIT MOST LIKELY TRIGGERED BY APRIL 2017
  • *MAY SAID TO WANT TO TRIGGER ART. 50 BEFORE FRENCH, GERMAN VOTES

And cable is fading…

As Bloomberg details, Prime Minister Theresa May’s team is still leaning toward the first part of 2017 as the best moment to trigger the start of formal talks over the U.K.’s withdrawal from the European Union, according to two British officials.

While reports in the U.K. media recently suggested May could wait until the end of 2017 before opening two years of negotiations, she is sympathetic to the case for acting by April at the latest as Germany and France prepare for elections and pro-Brexit campaigners at home warn against delay, said the officials, who asked not to be named discussing private conversations.

A March summit of European leaders could provide the right setting for invoking Article 50 of the Lisbon Treaty, which lays out how a country quits the EU, one of the officials said.

May has held off starting the clock on Britain’s exit from the EU to allow her government time to form a team and to prepare positions for what are likely to be marathon negotiations. That’s led her to rule out any move before the end of this year.

The timing is ironic as USD Index has retraced nearly all its safe haven gains post-Brexit…

end

Germany/Deutsche bank

Wow!! we do not see the following quite often.  This Deutsche bank whistleblower turned down 8.25 million reward because he correctly stated that it was not “Deutsche bank’s”  fault but the leaders of the bank who should be punished and it is they who should pay and not the shareholders.  I wish we had more people like  Ben Artzi..

a must read…

(courtesy zero hedge)

Why A Deutsche Bank Whistleblower Turned Down A $8.25 Million Reward: In His Own Words

At the height of the financial crisis, when risk assets were imploding and counterparties were in danger of overnight collapse, Deutsche Bank avoided failure and nationalization by fabricating the value of its $130 billion derivative portfolio of “leveraged super senior” trades.

Some history: back in 2005, these trades were seen as “the next big thing” in the world of credit derivatives, something which DB at the time was building a massive position in. They were designed to behave like the most senior tranche of a typical collateralised debt obligation, where assets such as mortgages or credit default swaps are pooled to give investors varying degrees of risk exposure. Deutsche became the biggest operator in this market, which involved banks buying insurance against the possibility of default by some of the safest companies, the FT writes.

There was just one problem: when it was building up its portfolio, Deutsche never accounted for the possibility of the financial world nearly collapsing. Which is why as the illiquid portfolio was careening, instead marking it to market – an act that would have resulted in the bank’s insolvency – DB’s risk managers misstated the value of the positions by anywhere from $1.5bn to $3.3bn.

Several years later, in 2012, the SEC found out about this, and in 2015 slapped a $55 million fine on Deutsche Bank for this criminal fabrication (nobody went to jail). “At the height of the financial crisis, Deutsche Bank’s financial statements did not reflect the significant risk in these large, complex illiquid positions,” said Andrew Ceresney, director of the SEC’s enforcement division. “Deutsche Bank failed to make reasonable judgments when valuing its positions and lacked robust internal controls over financial reporting.”

The reason why the SEC learned about DB’s massive mismarked derivative exposure, is because two former employee whistleblowers, Matthew Simpson and Eric Ben-Artzi, told it: the duo alleged that if Deutsche had accounted properly for its positions, its capital would have fallen to dangerous levels during the financial crisis and it might have required a government bailout to survive. The highest estimate for the unaccounted loss was $12bn. Which explains why Deutsche Bank was desperate to manipulated the numbers.

End result: DB got its wristslap with a token fine, the SEC came out looking like it knew what it was doing, and – as we learned today – the two whistleblowers got major awards for helping the SEC collected the $55MM fine, amounting to 15% each.

Only, something unexpected happened: as the FT writes, one of the whistleblowers who helped expose the false accounting at Deutsche Bank turned down a multimillion-dollar award from the Securities and Exchange Commission in protest against the agency’s failure to punish executives at the bank.

Eric Ben-Artzi, the former Deutsche risk officer, told the SEC he is declining his share of a $16.5 million payout — the third largest in the whistleblower program’s history — which represents 30% of the $55 million Deutsche Bank fine.

But why turn down enough money that most people, even ex-Wall Streeters, could comfortably retire on?  Ben-Artzi said the fine should be paid by individual executives, not shareholders, and suggested the “revolving door” of senior personnel between the SEC and Germany’s largest bank had played a role in executives going unpunished (understandably he had no comment about the spike in Deutsche Bank suicides in 2013-2014, particularly those emanating from its legal department).

“This goes beyond the typical revolving-door story,” Mr Ben-Artzi wrote in an opinion article for the Financial Times. In this case, top SEC lawyers had held senior posts at the bank, moving in and out of top positions at the SEC even as the investigations into malfeasance at Deutsche Bank were ongoing,”

Which, incidentally, reminds us of a post we wrote back in May 2010, explaining why former Deutsche Bank General Councel, and then-SEC Director of Enforcement, “Robert Khuzami Stands To Lose Up To $250,000 If He Pursues Action Against Deutsche Bank.” We were right: neither Khuzami, nor the SEC, nor anyone else, pursued any charges against Deutsche Bank in the early years after the financial crisis. In retrospect, now that the German bank has been revealed to have manipulated literally everything, such oversight on behalf of the SEC was even more criminal than what DB did over the years.

Six years later, the FT comments on this too:

“Robert Khuzami, director of enforcement at the SEC between 2009 and 2013, was Deutsche’s former general counsel for the Americas. Between 2004 and 2013 Robert Rice was a senior lawyer at Deutsche Bank, where he led an internal investigation into the valuation claims; he then went to the SEC as chief counsel.  Both Mr Khuzami and Mr Rice were recused from the investigation. Dick Walker was enforcement director at the SEC between 1998 and 2001 and then joined Deutsche, later becoming general counsel; he left the bank this year. All three declined to comment. “

Needless to say, there is zero risk to Khuzami’s current job as partner in Kirkland’s Government & Internal Investigations Practice Group, which he joined in 2013. But hopefully, one day there will be, and if so it will be partially thanks to op-eds such as the one – written by Eric Ben-Artzi, who is currently a vice-president of risk analytics at BondIT – published in today’s FT and republished below.

For all those wondering why someone would turn down a $8.25 million whistleblower award, here is the explanation, straight from the source.

* * *

We must protect shareholders from executive wrongdoing 

Eric Ben-Artzi 

I turned down a whistleblower award, writes former Deutsche Bank employee Eric Ben-Artzi

I just got word from the Securities and Exchange Commission that I am to receive half of a $16.5m whistleblower award. But I refuse to take my share. My award, which comes from a fund allocated by Congress, amounts to 15 per cent of the $55m fine the SEC imposed on Deutsche Bank in May 2015 after I informed regulators that my colleagues at the bank had been inflating the value of its massive portfolio of credit derivatives.

I was a risk officer at the bank, and one of the three whistleblowers who in 2010-11 reported the improper accounting internally and to regulators around the globe.

The SEC attorney who oversaw the investigation told the New York Times: “It’s the only enforcement action where we allege that a major financial institution failed to properly value a significant portion of its portfolio of complex securities.”

But Deutsche did not commit this wrongdoing. Deutsche was the victim. To be precise, the bank’s shareholders and its rank­-and­-file employees who are now losing their jobs in droves are the primary victims.

Meanwhile, top executives retired with multimillion­-dollar bonuses based on the misrepresentation of the bank’s balance sheet. It is therefore especially disappointing that in 2015, after a lengthy investigation helped by multiple whistleblowers, the SEC imposed a fine on Deutsche’s shareholders instead of the managers responsible.

Compare this outcome with a contemporaneous SEC enforcement action against the less connected executives of a smaller firm, Trinity Capital, and its subsidiary Los Alamos National Bank. The violations at Trinity seem similar to Deutsche, but orders of magnitude smaller. Five executives at Trinity were charged, the chief executive settled and paid a fine, and litigation continued against two senior officers.

“We will hold senior executives liable when they misstate the company’s performance and fail to come clean with shareholders,” explained Andrew Ceresney, director of the SEC’s Division of Enforcement.

So why did the SEC not go after Deutsche’s executives? The most obvious concern is that Deutsche’s top lawyers “revolved” in and out of the SEC before, during and after the illegal activity at the bank. Robert Rice, the chief lawyer in charge of the internal investigation at Deutsche in 2011, became the SEC’s chief counsel in 2013. Robert Khuzami, Deutsche’s top lawyer in North America, became head of the SEC’s enforcement division after the financial crisis. Their boss, Richard Walker, the bank’s longtime general counsel (he left the bank this year) was once head of enforcement at the SEC.

This goes beyond the typical revolving door story. In this case, top SEC lawyers had held senior posts at the bank, moving in and out of top positions at the regulator even as the investigations into malfeasance at Deutsche were ongoing.

This took place on the watch of Mary Jo White, the current chair of the SEC, whose relationship with Mr Khuzami and Mr Rice dates back 20 years. She bears ultimate responsibility for the Deutsche fine. In 2010 I joined Deutsche from Goldman Sachs as a vice­-president in the market­-risk department. I am a mathematician and had worked in risk­-modelling at other banks. When I joined Deutsche I was not made aware that an internal “investigation” was already under way into the inflated valuation of the bank’s $120bn portfolio of exotic credit derivatives.

Within a few months, though, I realised something was very wrong, and I called the internal hotline. That is when I met Mr Rice. He was then Deutsche’s top lawyer for compliance and regulatory affairs, and asserted that our conversations were subject to “attorney-client” privilege and could not be disclosed. I did not agree and was fired. My Wall Street career was ruined.

When I first helped the SEC investigation, the whistleblower award was a powerful incentive. My lawyers and ex-wife have a claim on a portion of my award, which I am not at liberty to reject.

Although I need the money now more than ever, I will not join the looting of the very people I was hired to protect. I never intended to turn a job in risk management into a crusade, but after suffering at the hands of the Deutsche executives I will not join them simply because I cannot beat them.

I request that my share of the award be given to Deutsche and its stakeholders, and the award money clawed back from the bonuses paid to the Deutsche executives, especially the former top SEC attorneys.

I would then be happy to collect any award for which I am eligible.

 end
France
Another attack by a Muslim radical:
(courtesy zero hedge)

French Rabbi Stabbed By Muslim Assailant, Screaming “Allah Akbar”

In the latest knife attack in Europe, earlier this morning ago a Jewish man, described as a Rabbi, was stabbed by a Muslim attacker in the French city of Strasbourg, according to local media sources. He is has been taken to hospital and is in a stable condition, while the perpetrator has been arrested and is being questioned by police.

View image on TwitterView image on Twitter

FRANCE: Jewish man stabbed & moderately wounded by a Muslim in Strasbourg, attacker arrested.pic.twitter.com/GfZnSVfQMe

The victim, who has been named as Mr. Levy, is reported by a colleague to be a rabbi. He was stabbed by a man who shouted “Allah Akhbar”, according to the 20minutes news platform.

According to RT, the attack took place at around 11:00am local time (09:00 GMT). Mr. Levi, who has been described as an Orthodox Jew, was sitting at a café on the sidewalk, reports Le Parisien.

Je viens de voir M. Levy, victime d’une attaque au couteau. Sa situation est stable. Prions pour son établissement rapide.

“I just spoke to Mr. Levy, who was the victim of a knife attack and is condition is stable,” said Mendel Samama, who is rabbi based in Strasbourg, Le Soir reported. “We pray that he makes a quick recovery.” Reports say he suffered superficial stab wounds to the chest.

> L’attaque a eu lieu en pleine rue. L’agresseur a été stoppé grâce à des passants. (@StanRacineOff)

The perpetrator was detained by police and taken into custody for questioning. Witnesses say that the attacker was between 30 and 40 years old. According to the Journal du Dimanche publication, the attacker had a history of psychiatric problems. So far, the prosecutor has only confirmed that a man has been arrested, without releasing further details regarding the case.

As RT notes, Strasbourg has one of the largest Jewish populations in France, with around 15,000 members of the faith living in the city, which sits on the German border. In total, Jews make up about 5 percent of the city’s population. This attack comes after two men who pledged allegiance to ISIS slit the throat of a Catholic priest in a church near Rouen in July. An elderly parishioner was also injured in the attack. Both assailants were killed by French police as they tried to flee the 17th century church in the town of Saint-Etienne-du-Rouvray.

 

end

 

We now have two more banks in Germany charging clients for holding cash: Bank of Ireland and Ulster bank! Negative rates is having a devastating effect on the financial scene.

(courtesy zero hedge)

 

Two More Banks Start Charging Select Clients For Holding Cash

RUSSIAN AND MIDDLE EASTERN AFFAIRS

This looks ominous: Putin flies into the Crimea as the Ukraine “prepares for an invasion”

Putin Flies Into Crimea As Ukraine “Prepares For An Invasion”

At the same time that Russia is conducting its latest massive military drill on the border with Ukraine, and one day after the latest stark warning by Ukraine’ president Poroshenko that the simmering conflict with Russia may be set to explode again when he said on national TV that “the probability of escalation and conflict remains very significant” adding that we don’t rule out full-scale Russian invasion”, Russian president Putin made a not so subtle point that Crimea will not be relinquished when he flew into contested territory on Friday, one day after staging war games there, and said he hoped Ukraine would see “common sense” when it came to resolving a diplomatic crisis over the peninsula.

Officially, Putin arrived on a working visit in Crimea, where he held a briefing with members of the Russian Security Council and visited the Tavrida international youth forum, a RIA Novosti correspondent reported Friday. The schedule of Putin’s visit to Crimea, at least his fifth in the past two years, also involves meetings with local officials, according to local media reports that broke news of the visit this week.


Putin chairs a meeting with permanent members of the Russian Security Council
at the Belbek airport near the Black sea port of Sevastopol, Crimea.

Crimea, which has been the topic of contention since early 2014, became a part of Russia after almost 97 percent of those who voted in a local referendum on the issue in 2014 supported the move. Ukraine did not recognize the outcomes of the referendum in Crimea and accused Russia of annexation; while many European nations have likewise not recognized the new territory, they have avoided escalating the debate with Russia.

In any case, two years after Russia and Ukraine came close to a state of war over the territory, it is again the focus of international tension, after the Russian president accused Kiev last week of sending saboteurs who clashed with Russian troops. Kiev, which has also fought a two year war against pro-Russian separatists in two eastern provinces, denies the border incident ever took place and calls it a fabrication that could be used as a pretext for a new Russian invasion.

As Reuters reports, the Russian leader has used threatening rhetoric, promising unspecified “counter-measures”, and has built up troops ahead of a big military exercise next month. He addressed the crisis again on Friday, opening a meeting of his Security Council at an air base near the naval port of Sevastopol on his first visit to Crimea since he made the initial accusations.

“It is clear that we have gathered for a well known reason after the infamous incident, after we thwarted attempts by groups of Ukrainian army saboteurs to break into (our) territory,” he said.

Judging by all accounts, our partners in Kiev have decided to escalate the situation. We are all familiar with this method of escalation. It goes back a long way and has sometimes been used successfully but not always.

“I hope that this won’t be a final choice … and that common sense will prevail,” he added.

Just to underscore that point, on Thursday Russian naval and land forces practiced swiftly moving military hardware and troops to Crimea, already one of the world’s most militarised areas, in a logistics exercise that foreshadows larger war games planned for next month. Russia’s Black Sea Fleet, around 2,500 troops and up to 350 armored vehicles were involved in the exercise, which unfolded as tensions have also flared in eastern Ukraine, where a truce that curbed fighting is looking increasingly shaky.

Meanwhile, as noted above, in the latest sharp escalation in rhetoric, Ukrainian President Petro Poroshenko said on Thursday he did not rule out introducing martial law and a new wave of military mobilization if the east Ukraine conflict worsened.

Putin on Friday accused the Ukrainian government of trying to destabilize Crimea to distract attention from its failure to implement a peace deal covering the conflict in eastern Ukraine, a region known as the Donbass.

While fighting that killed thousands of people in the Donbass has ebbed since early 2015, pro-Russian separatists there regularly exchange fire with Ukrainian government forces, and both sides accuse each other of failing to implement terms of the truce, known as the Minsk peace process.

And while Kiev believes Putin is preparing for more fighting, most rational experts believe he is simple interested in gaining diplomatic leverage, seeking to use the latest crisis to prod the West to press Ukraine into doing more to uphold the accords.

That is indeed the case; in fact, over the past week all of Putin’s attention has been focused not on Ukraine, which is seen as the latest attempt by NATO to provoke the Kremlin, but on Turkey which as we reported yesterday, is “considering military cooperation” with Russia, in a pivot that if executed, could be NATO’s biggest strategic loss in history, as Ankara exits the Western sphere of influence and enters The Russian one.

That, however, will not come without a fight, both literally and figuratively, and that is what the current distraction with Ukraine may be all about.

end

GLOBAL AFFAIRS

CANADA/Vancouver

Boy!! that did not take long.  In one month after the Province of British Columbia initiated a property tax on foreigners, the Vancouver housing market implodes.

(courtesy zero hedge)

Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month – “The Market Is Devastated”

Three weeks ago, when we looked at the long-overdue sudden change in the Vancouver housing market, long a receptacle for Chinese hot and laundered money, we found that as a result of the implementation of the 15% property tax implemented by British Columbia (something we recommended over a month earlier), that the Vancouver housing bubble has burst.

We concluded this based on anecdotal evidence by local real estate professionals: “As a new dawn breaks in Metro Vancouver’s real estate market, realty companies and real estate boards are reporting the first anecdotes of deals falling through as foreign buyers forfeited deposits on binding deals rather than pay the new tax. Worse, if only for the unprecedented local housing bubble, and certainly better for potential local homeowners who were locked out from the massively overpriced market, they report evidence of local buyers withdrawing offers in expectation that the market will soften.”

Less than a month later, there is also hard evidence to confirm this assessment. According to Global News, evidence from realtors and MLS data is showing the Vancouver real estate market is in the midst of a major slow down, with prices dropping and sales plummeting. 

While August is typically one of the slowest months for real estate transactions, MLS sales data from the first two weeks of the month shows what many have been hoping for during the last few years of escalating prices. According to realtor Brent Eilers, using MLS listing data, there were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94%.

Global News obtained MLS sales data from several key Metro Vancouver markets and found the number of homes sold during the first two weeks of August in Greater Vancouver dropped by 85% on average. Richmond experienced a 96% drop in the number of sales and Burnaby North fell by 95%. Vancouver’s West Side, West Vancouver, and Coquitlam also took major hits.

It appears that the Vancouver housing market has slammed shut.

Which is hardly a surprise: virtually everyone saw it coming, the only question was when. Eilers says he’s been warning of a real estate slow-down for at least a year due to the region’s unsustainable and unsupportable prices. West Vancouver, where he does a large part of his business, had a benchmark detached home price of almost $3.4 million in July according to the Real Estate Board of Greater Vancouver.

The market in West Van is up 450 per cent since 2001. So is everyone making 600 per cent more income than they were so they can pay their taxes and buy their houses? Of course not. So how is this inflation been financed? By off-shore money and record debt.” Precisely what we said at the start of the year when we first heard horror stories about Chinese buyers paying cash, sight unseen, for any and every local luxury, and not so luxury home.

It appears that it is not just the 15% luxury tax implemented on on July 25 that has burst the bubble: according to Eilers sales were dropping even before the tax. According to the data, July was another slow month in West Vancouver with only 44 sales, down from 80 in 2015. June saw 74 sales, also down from 102 the year before.

The pattern has left the market “devastated”, Eilers adds.

While it may be too early to make a definitive conclusion, after all while earlier this month, the REBGV released its statistics for the month of July, saying the data showed the market had slowed down to “normal levels”, there was still no official August data available, and thus no actual indication of the slowdown. Fortunately for buyers, real-time data proves otherwise.

Zolo, a Canadian real estate brokerage, keeps track of MLS home sales in real-time and reports prices as an average rather than the “benchmark price” used by the REBGV. It currently shows a major correction underway in most Metro Vancouver markets. According to the website, the City of Vancouver currently has an average home price of $1.1 million, down 20.7% over the last 28 days and down 24.5% over the last three months. The average detached home is $2.6 million, down 7% compared to three months ago.

Still, it may be too early to call the time of death of the market. “It’s only slowing down at the top where there is uncertainty,” Zolo CEO Barry Allen said. And that uncertainty is “diabolically dangerous”, according to Eilers, who has sold real estate during four different correction periods in Vancouver. “When the market changes, it typically changes over night or within a couple of weeks, but it often takes two to three months for everybody to figure it out. That’s why it can be so scary,” he said.

According to the realtor, often sellers have their houses appraised months before they put them on the market, meaning in the climate we are currently witnessing, sellers are expecting to list their homes at record-high prices, even though the number of sales and listings indicate prices should be lowering.

“Typically what happens when the market starts to flip is all the buyers go into hibernation and all the listings come on. What are the odds on getting that seller to price his home at a fraction of where the market is now? It’s zero,” Eilers said.

What causes prices to lower is “urgency, anxiety, and fear,” according Eilers. He says a climate of financial overexposure, a treadmill of buying and selling and flipping homes, owning multiple properties, and buying before selling will test how long sellers can hold on without selling in desperation.

If the bubble has indeed burst, things are about to get very ugly. Eilers says that in the 1980 housing crash, prices dropped by 40 to 60% within a year and took six years to recover. “So your $2 million house became $800,000 in five months. There’s a lot of economists and a lot of wise people that believe that our financial structure is much closer to that structure from a corrections’ point of view,” Eilers explained.

One thing, however, appears certain: the foreign money influx has stopped. Zolo’s CEO says the foreign buyer tax has certainly stopped speculative buyers. This has caused many other buyers to take on a “wait and see” approach, which has essentially frozen the market.

News of the foreign buyer tax has spread to China, where Chinese real estate website Juwai now promotes other Canadian cities as foreign capital destinations. The website used to promote Vancouver as one of the best places for wealthy Chinese to invest, but has now switched to publicizing Calgary and Alberta due to the tax.

Which means that while one bubble is bursting, another is about to start, even if it is smack in the middle of Canada’s bleeding oil patch.

That said, this is good news for ordinary Vancouver residents. NDP MLA David Eby says the tax has caused a lot of people to hit the pause button on buying homes, but all those people might come back into the market in September. Despite his reservations on how the tax was implemented – he would have preferred an incrementally-increasing tax – he says a market slow down is good news.  

“A lot of people have said to me quietly that they hope there is a substantial housing crash.”

Well, it appears they got what they wanted. Now the only question is what happens once Vancouver “corrects” by 30%, 40% or more – will the Chinese buyers stay away permanently or, like a good S&P500 algos, simply BTFD. We will have the answer in a few months.

END

APPLE/Global orders plummet by 30%

A good Bellwether on the global economy:  Apple demands cuts form suppliers after their orders are plunging by 30%

(courtesy zero hedge)

Apple Demanding Cost Cuts From Suppliers After 30% Plunge In Orders: Digitimes

Apple stock is sliding very modestly for now as Digitimes reports Tim Cook has asked downstream part and component suppliers in Taiwan to reduce quotes for iPhone 7 devices by as much as 20%…even though order volumes for new phones are reportedly 30% lower than those placed a year earlier.

Via Digitimes.com,

Apple has met resistance from makers in Taiwan’s supply chain to lower their quotes for parts and components for iPhone 7 devices, a move which aims to force Apple to discontinue its established policy of constantly squeezing profits from Taiwan suppliers.

Apple is said to have asked downstream part and component suppliers, excluding Taiwan Semiconductor Manufacturing Company (TSMC) and Largan Precision, to reduce their quotes for iPhone 7 devices by as much as 20% even though order volumes for new phones are reportedly 30% lower than those placed a year earlier.

Major downstream suppliers, notably Advanced Semiconductor Engineering (ASE) and associated companies under the Foxconn Group, have replied Apple that they could not be able to accept orders without reasonable profits at this time.

Apple is leveraging the rising handset supply chain in China to force Taiwan-based companies to reduce their quotes comparable to those offered by China-based suppliers. But it makes no sense for such a requirment since the quality of products rolled out by Taiwan- and China-based suppliers is standing at different levels.

For now, it appears none of this matters…

end

Sweden:

 

Well this did not take long! Sweden is running out of bonds to purchase.  They seek other forms of credit to purchase.

(courtesy Bloomberg)

Riksbanker Signals QE May Reach Other Bond Types Amid Scarcity

The Swedish central bank’s second in command signaled that policy makers may need to expand beyond government bonds should they be forced to continue their quantitative easing program into next year.

The central bank could be nearing the limit on how much of the government bond market it can buy and is monitoring the situation, First Deputy Governor Kerstin af Jochnick said in Stockholm Friday. The bank will by year-end own 40 percent of nominal government bonds and 9 percent of Sweden’s inflation-linked debt, and that’s a large share, she said.

“So far, the view is that it’s functioning well but we are well aware that we are approaching some kind of limit where we probably can’t purchase that much more,” she said. The bank could “technically” buy covered bonds, corporates or municipal bonds if more stimulus is needed, she said .

Swedish municipal bonds gained. The spread between the Kommuninvest 1 percent 2021 note and the benchmark Swedish government note narrowed about 4 basis points to 51 basis points.

Nordea analyst Martin Enlund said the market may be overreacting to the comments as there would be obstacles to any plan to buy other types of debt.

The Riksbank buying Kommuninvest bonds is something that has been discussed on and off for quite some time and policy makers can still implement more government QE to cover the first half of 2017, he said.

Policy makers, recognizing new risks from the Brexit vote, in July delayed a planned rate increase to the second half of next year and predicted rates will remain below zero until mid-2018. The bank, which meets next month, held the repo rate at a record low of minus 0.5 percent and stuck to a prediction that its QE program will end in December.

EMERGING MARKETS

BRAZIL

Brazilian police are recommending charging the swimmers with false testimony.

Is this payback time for the USA’s involvement in the ousting of Roussef?

(courtesy zero hedge)

Brazilian Police Recommends Charging US Swimmers With Vandalism, False Testimony

Earlier today we finally got the answer to precisely what took place with Ryan Lochte and members of the US mens’ swimming team on Sunday morning in Rio, and as it turned out instead of being robbed at gunpoint as the platinum blonde swimmer claimed in a NBC interview, the group was merely vandalizing a local gas station. However, one outstanding question is what would happen next to the three swimmers still stuck in Brazil.

As it turns out, according to Brazil’s GloboNews, the Brazilian police has recommended charging the group of four US swimmers with vandalism and giving false testimony, Rio’s police chief said on Thursday according to brazil’s GloboNews, accusing them of lying about an incident that has marred South America’s first Games.

UPDATE: U.S. Olympic swimmers Bentz, Conger leave Rio police station after giving testimony. http://reut.rs/2b7vHmN 

Three of the four swimmers involved in the incident at a Rio gas station are being prevented from leaving the country pending the outcome of the police investigation. The fourth, gold medalist Ryan Lochte, returned to the United States on Monday.

“In theory, they could be held responsible – by they, I mean one or two or all four of them – with falsely reporting a crime and vandalism,” civil police chief Fernando Veloso told a news conference. He said neither offense was punishable by prison. “There was no robbery as the swimmers described it.”

As we noted over the weekend, the local police began investigating the incident after Lochte told U.S. television they had been robbed by gunmen impersonating police officers who pulled over their taxi in the early hours of Sunday, as they returned to the Athletes’ Village from a party, just after the swimming competition finished on Saturday evening.  Veloso said investigations had revealed that the swimmers’ taxi had pulled into the station where they behaved in a hot-tempered way and damaged the station’s bathroom.

They broke a mirror and a soap-holder, he said, adding that they then handed over a total of 100 reais ($31) and $20 in U.S. currency as compensation. According to Lochte’s account, $400 was stolen from them.

As Reuters reports, at one point a security guard pulled a firearm after one swimmer behaved erratically, Veloso said, adding that the guard had not over-reacted: “From the moment the gun was pulled out, they calmed down. Once they were calm, the gun was lowered.”

Earlier, Brazilian TV aired a video that showed the swimmers did not tell the whole truth in their original accounts.  The security-camera images broadcast on Globo TV appeared to show the swimmers – who also included another gold medalist, Jimmy Feigen, as well as Gunnar Bentz and Jack Conger – in a dispute with staff at the gas station, a fact police say they did not mention in their accounts.

The video does not show them causing any breakage, but only being hustled out of the bathroom by uniformed employees. Security guards then prevented the swimmers from leaving in a taxi and the Americans appear to offer them money from their wallets. Three of the swimmers are made to sit on the ground with their hands in the air. At one point, Lochte stands and appears to argue with the guards but is made to sit down again.

On Sunday, Lochte had told NBC that the taxi he was traveling in with his three team mates was flagged down by robbers posing as police and they held a gun to his head during a robbery. He made no mention of stopping at a gas station. NBC host Matt Lauer said late on Wednesday that Lochte repeated a slightly modified version to NBC in an interview not yet aired, saying the swimmers had stopped at a gas station and that a gun was pointed in his direction during the robbery.

Staff at the Shell gas station where the incident occured, said on Thursday that the U.S. swimmers ripped an advertising plaque off a wall while they urinated on a wall. Security was called and an argument ensued, said one employee who declined to give his name.  A sign on one of the bathrooms read: “Please Do Not Enter”. A spokesperson for the U.S. Olympic Committee (USOC) declined to comment on the video footage.

The USOC said on Thursday that the three swimmers who remain in Brazil would be helping police with their investigation, after authorities had stopped Bentz and Conger from leaving the country the previous day and seized their passports. Bentz and Conger arrived at a police station in downtown Rio on Thursday to speak with investigators.

Rio Games organizers on Thursday defended the four swimmers, saying they were just kids who made a mistake.

“These kids tried to have fun, they tried to represent their country to the best of their abilities,” Rio 2016 spokesman Mario Andrada told reporters, without elaborating. “They competed under gigantic pressure. Let’s give these kids a break. Sometime you take actions that you later regret. They had fun, they made a mistake, life goes on.”

Meanwhile, if charges are indeed filed and the US swimmers are forced to do community service or some other sentence (they can not be put in prison but they will hardly be allowed to leave the country) what would have been a simple incident where just an excuse would be sufficient, may now escalate into a full blown diplomatic scandal.

As for Lochte, who is safe, back in the US, this is what he will have to look forward to tomorrow.

OIL ISSUES

Record levels of oil, record levels of gasoline and distillates. And yet the price of oil is back to 50$ for Brent and 48 dollars for WTI. EconMatters explains that this will not last

(courtesy EconMatters)

Total Commercial Oil and Petroleum Inventories at Record Highs (Video)

EconMatters's picture

Refiners are playing games with refinery runs to make gasoline appear in less of a glut situation year over year. Gasoline inventories are still up 20 Million Barrels versus this time last year. So Oil is much higher than this time last year with 65 Million more Barrels of Oil in storage year over year, 20 million more in gasoline inventories, 5 Million more in Distillate stocks, and overall Petroleum and Oil Inventories not only at record highs but increasing each of the last three weeks.

Furthermore, we have about 10 more days of the Summer Driving Season, and demand for Petroleum products is going to weaken during the soft part of the season as well as refiners going into maintenance mode. Lots of games being played in the refinery space to move gasoline prices up 32 cents in a couple of weeks when inventories are as dismal as ever all over the globe.

Throw in a potential rate hike announcement by Janet Yellen next week and the U.S. Dollar looks like an undervalued currency relative to its peers. I think the market is far too dovish on the Fed, market complacency regarding the lessening chance of rate hikes after the Fed minutes on Wednesday seems highly displaced in my opinion.

END
This is how you know we have a huge glut of gas on the markets:
(courtesy Bloomberg)

Even Warning of Full-Out War in Ukraine Can’t Faze Gas Traders

How can you tell there’s a gas glut in Europe? When even the threat of a full-scale invasion into the continent’s largest gas transit country by its largest outside supplier can’t raise prices.

After Ukrainian President Petro Poroshenko warned on Thursday its conflict with Russia could escalate further amid building violence in Crimea, saying he didn’t rule out a complete war, European natural gas prices continued their weekly decline without interruption. As much as 40 percent of Europe’s supplies flow from Russia via Ukraine.

Gas in storage is less than 5 percent below the five-year average for this time of year, according to data from Gas Infrastructure Europe. Flows from Russia and Norway, Europe’s two biggest gas suppliers, are set to reach record levels. Liquefied natural gas export projects that have started in Australia and the U.S., have added to security of supply.

“It’s rather simple — the storage situation in Europe is extremely comfortable and the amount of gas that is currently landing in Europe is surely at all time high,” said Daniele Corti, a Zurich-based senior gas trader at Axpo Trading AG. “Hence the gas market is not pricing any kind of risk due to Russia.”

Front-month gas in the U.K. is headed for its third straight weekly decline. Prices fell 1.8 percent yesterday to 30.84 pence a therm and moved downward almost all day, including before and after Poroshenko’s comments. Gas for winter delivery declined 0.8 percent yesterday to 42.4 pence a therm, according to broker data. They continued their slide on Friday.

Past Spikes

The conflict between the two countries has caused price spikes in the past. Europe has experienced shortages twice in the last decade during freezing temperatures because of disputes between Ukraine and Russia. The relative calm following the latest warnings of invasions and worsening violence show traders have become accustomed to the tough talk.

“The markets are looking at what’s happening in Ukraine as mostly political posturing, not believing any flows will be affected,” said Pierluigi Frison, a gas trader at Green Network U.K. “Considering that Russia hasn’t started direct confrontation yet, even though the Crimea incident and Donbass escalation has been on the news since early last week, means to me that nothing physical will happen.”

 

end

 

We had another rig count rise (for 8 straight weeks) and yet crude rises again:

(courtesy zero hedge)

 

Crude Shrugs As US Oil Rig Count Rises For 8th Straight Week

Crude prices had slipped back into the red ahead of Baker Hughes rig count data (after topping $48.50 Sept 16 overnight). For the 8th straight week (and 11 of last 12) the US oil rig count rose (up 10 to 406), tracking the lagged recovery of WTI Crude prices and up 28% from cycle lows.

The us oil rig count is now up 90 from the late-May lows at 316 (and based on the lagged oil price, is set to keep rising for another month)

 

The reaction… NOTHING

 

Charts: Bloomberg

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

Euro/USA   1.1325 DOWN .0022 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 100.21  UP .086(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA HELICOPTER MONEY  ON THE TABLE BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.3119 DOWN .0043 

USA/CAN 1.2822 UP .0045

Early THIS FRIDAY morning in Europe, the Euro FELL by 22 basis points, trading now well above the important 1.08 level FALLING to 1.1325; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED UP 3.99 POINTS OR 0.13%    / Hang Sang CLOSED DOWN 85.94 POINTS OR 0.37%     /AUSTRALIA IS HIGHER BY .34% / 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 FRIDAY morning CLOSED UP 59.81 POINTS OR 0.36%  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 85.94 POINTS OR 0.37%  ,Shanghai CLOSED UP 3.99  POINTS OR 0.13%    / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE GREEN   /INDIA’S SENSEX IN THE RED 

Gold very early morning trading: $1345.50

silver:$19.46

Early FRIDAY morning USA 10 year bond yield: 1.549% !!! UP 1  in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES SLIGHTLY to 2.269 UP 1 in basis points from THURSDAY night. 

USA dollar index early FRIDAY morning: 94.43 UP 28 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

END

 

And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  3.00% UP 9 in basis points from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.78% UP 1/4 in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD:0.955% up 4 IN basis points from THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.134 up 5 in basis points from THURSDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 18 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.032% up  5 IN  BASIS POINTS ON THE DAY

END

IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

 

Euro/USA 1.1321 DOWN .0026 (Euro DOWN 26 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.23 UP .103(Yen DOWN 10 basis points/

Great Britain/USA 1 .3075 UP 0.0104 ( Pound UP 104 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.2866 UP 0.0089 (Canadian dollar DOWN 89 basis points AS OIL FELL(WTI AT $48.08). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 26 basis points to trade at 1.1321

The Yen FELL to 100.23 for a LOSS of 10 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was DOWN 87 basis points, trading at 1.3075 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar FELL by 89 basis points to 1.2866, WITH WTI OIL AT:  $48.08

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6515

the 10 yr Japanese bond yield closed at -.078% UP 1/4 IN  points / yield/

Your closing 10 yr USA bond yield:UP 5 IN basis points from THURSDAY at 1.582% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.289 UP 3 in basis points on the day /

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

Your closing USA dollar index, 94.53  UP 37 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED DOWN 10.01 OR 0.15%
German Dax :CLOSED DOWN 58.67 OR  0.55%
Paris Cac  CLOSED DOWN 36.54  OR 0.82%
Spain IBEX CLOSED DOWN 99.50 OR 1.16%
Italian MIB: CLOSED DOWN  363.52 POINTS OR 2.18%

The Dow was DOWN 45.13 points or 0.24%

NASDAQ DOWN  1.77 points or 0.03%
WTI Oil price; 48.08 at 4:30 pm;

Brent Oil: 50.78

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.80 (ROUBLE down  18/100 ROUBLES PER DOLLAR FROM FRIDAY) 

TODAY THE GERMAN YIELD FALLS TO -0.032%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:48.47

BRENT: 50.85

USA 10 YR BOND YIELD: 1.579% 

USA DOLLAR INDEX: 94.50 UP 34 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.30779 DOWN .0086 or 86 basis pts.

German 10 yr bond yield at 5 pm: -0.032%

END

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

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

VIXtermination Saves Nasdaq’s Longest Winning Streak In 6 Years

Don’t celebrate too early… the year’s a long way from over…

The Rick Astley Market Rolls On for the week…

NASDAQ battled with 5233 all day – desperately trying to keep the winning streak alive…

 

Trannies managed to outperform on the day…but everything else ended red – with a big trend change at the EU close…

 

On the week, Trannies also outperformed and The Dow lagged and while the NASDAQ managed to eke out a gain, S&P failed by 0.01%

 

Notably FANG stocks had their worst week since June…

 

All of which happened as US Macro data suffered its worse 4-week streak in 6 months…

 

And earnings expectations for 2015 plumb news lows…

 

And this definitely doesn’t matter…

 

 

Treasury yields rose on the week – thanks mainly to a surge in yields today as the USD gained (though we note they did rally into the close)…

 

But we note that the 10Y yield remains incredibly range-bound…

 

The USD Index fell for the 3rd week of the last 4 (but bounced back today off the week’s lows)…

 

The USD Index bounce seemed to coincide with the Brexit/Jo-Cole-Dead lows…

 

While crude soared ridonculously (best week in a year)

 

Gold managed a small gain and silver losses…

 

In fact this was the biggest Gold outperformance of Silver in 6 months…

 

But of course, oil was all that mattered…

 

Charts: Bloomberg

end

 

After suffering a huge 15% redemption of funds, Jones is imposing minimum risk levels has he now demands that his traders take on more risk in this zero interest rate environment.

(courtesy zero hedge0

Paul Tudor Jones, Facing Redemption Flood, Imposes Minimum Risk Levels, Demands His Traders Take More Risk

Some would call it a classic Martingale laced death spiral.

Just days after it was revealed that as a result of a $2.1 billion surge in redemption requests, would terminate some 15% of his workforce, Bloomberg reports that the legendary macro trader has boosted the amount of money he’s managing, including borrowed capital, to more than 50 percent of his main hedge fund’s net assets, and is also demanding that all his managers take more risk in their bets, according to an August 16 investor letter.

“We have to think outside the box,” Jones, 61, said in the letter. “I firmly believe the changes we have made put us in a position to be successful even in this desultory macro environment.”

Confirming just how difficult it is for conventional strategies to generate profits in this environment, in the letter PTJ also says that his remaining managers will be given more money to run, and that some have been paired with scientists and mathematicians to bring new analytical rigor to their trading as part of a quantitative revamp of the firm.

Jones, who started out as a cotton trader before founding his firm, said his firm must have money managers who can adapt to today’s zero-interest rate environment, which he expects to continue. The firm is imposing minimum levels of risk that its traders must take to remain in its manager lineup. 

Tudor, which Jones founded in 1980, has joined the recent funk that all other comparable macro hedge funds find themselves in, courtesy of central planning and central bank intervention across all asset classes. One of Tudor’s biggest competitors, Brevan Howard, has had an even more difficult time in recent years, with the firm’s assets cut by more than half in the past two years, from around $42 billion to $19.4 billion, as its underperformance has likewise spurred a flood of redemptions.

Tudor’s main, BVI, fund produced an average annual gain of about 26 percent from 1987 through 2007, which dropped to about 5.3% from 2008 through last year. Its main fund lost 2.3% this year through mid-August, according to the letter.

On Tuesday, Tudor dismissed employees ranging from money managers to support staff. Jones said in the letter that the cuts reflected Tudor’s priority to focus on macro and equity-trading.

Jones said the firm implemented a new process, which it described as a chief investment officer tool, to replicate trades of its best managers by using futures contracts and foreign-exchange securities. He expects to scale up the allocation over the next six months. As Bloomberg adds, Tudor also created a role for one of its partner-level money managers in London as head of discretionary trading technology. He and his team will seek to develop a better set of quantitative analytical tools to help money managers.

Will the scramble to boost returns work? Who knows: after all, one can argue that the only reason PMs do not allocate more funds to trades is lack of confidence (whether general, or due to lack of “expert networks” is up to debate). That won’t change, the only thing that will is the amount of capital at risk, which all else equal, virtually assures greater losses. Then again this is the PTJ, the man who inspired countless hedge fund managers to do what they do.

It would be a sad ending to a legendary career if Jones comes out fighting (or not as the case may be) the central banks, and lost.

end

You could certainly guess that something like the following will happen when pension funds try for yield in a zero rate environment:

The Dallas Police and Fireman Pension fund is near insolvent in the wake of shady real estate deals and thus the reason for the FBI raid we commented on back in April.

(courtesy zero hedge)

Advertisements

5 comments

  1. Malcolm Jones · · Reply

    Am I the only one receiving the main body of the report in one LONG paragraph? It has been this way for a week or more for me.

    Like

  2. Now the formatting doesn’t even work in Internet Explorer. I give up.

    Like

  3. main body of the report in one LONG paragraph?
    I give up.
    Bye Harvey O.

    Like

Leave a Reply

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

WordPress.com Logo

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

Twitter picture

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

Facebook photo

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

Google+ photo

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

Connecting to %s

%d bloggers like this: