Sept 8/Open interest for the upcoming October contract remains extremely high at 44,000 contracts/Despite the whacking of gold and silver yesterday, both OI’s rise at the comex/Bank of Japan/and or the government are planning something big and thus we must be cognizant/Italy’s target 2 balances rise hugely despite its current account surplus/total credit in the uSA rises again: both auto loans and student loans take the bulk of those loans: total number for both; 2.4 billion USA dollars/

Gold:1336.80 down $7.50

Silver 19.59  down 17 cents

In the access market 5:15 pm

Gold: 1337.40

Silver: 19.62



The Shanghai fix is at 10:15 pm est and 2:15 am est

The fix for London is at 3 am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 45 minutes before London’s first fix.

And now the fix recordings:

Shanghai morning fix Sept 8 (10:15 pm est last night): $1348.03


Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$1348.96



London Fix: Sept 8: 3: am est:  $1348.00   (NY: same time:  $1347.42:    3 AM)

London Second fix Sept 8: 10 am est:  $1343.40  (NY same time: $1344.60 ,    10 AM)

It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex

For gold:The front September contract month we had 399 notices filed for 39900 oz

For silver:  the month of September we have a total of 429 notices filed for 2,145,000 oz

Let us have a look at the data for today



In silver, the total open interest rose by 135 contracts up to 199,332. The open interest rose even as the silver price was down 29 cents in yesterday’s trading .In ounces, the OI is still represented by just LESS THAN 1 BILLION oz i.e. .967 BILLION TO BE EXACT or 138% of annual global silver production (ex Russia &ex China). the crooks are doing a great job fleecing unsuspecting longs

In silver we had 304 notices served upon for 1,520,000 oz

In gold, the total comex gold rose by 7810 contracts despite the fact that the price of gold fell BY $5.10 yesterday . The total gold OI stands at 598,466 contracts


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


we had a no changes tonight out of the GLD

Total gold inventory rest tonight at: 951.81 tonnes of gold


we had no changes with respect to inventory at the SLV /SLV inventory

THE SLV Inventory rests at: 362.719million oz


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

1. Today, we had the open interest in silver rose by 28791 contracts up to 199,197 as the  price of silver fell by 29 cents with yesterday’s trading.The gold open interest rose 28,791 contracts up to 590,656 as the price of gold fell $5.10 IN YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg



i)Late  TUESDAY night/WEDNEDAY morning: Shanghai closed UP 18.61 POINTS OR 0.61%/ /Hang Sang closed UP 138.13 points or 0.58%. The Nikkei closed UP 44.35 POINTS OR 0.26% Australia’s all ordinaires  CLOSED DOWN 0.29% Chinese yuan (ONSHORE) closed UP at 6.6785/Oil ROSE to 44.91 dollars per barrel for WTI and 47.42 for Brent. Stocks in Europe: IN THE GREEN EXCEPT LONDON  Offshore yuan trades  6.6894 yuan to the dollar vs 6.6785 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS SLIGHTLY AS  MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES



The following is very important:  The Bank of Japan may be planning something fierce trying to get its economy going.  The latest theory is a reverse operation twist where the central bank buys long term and sells short term.  This will be deemed tightening and so to offset that, they will want to lower its interest rate from -.20% down to -4%. That will unleash nothing but terror and cause a massive outflow from their stock market and may cause the Japanese interest rate to rise above zero.

we must watch carefully on this development.

( zero hedge)


Big problems in China.  Many investors were expecting that China would devalue immediately after the G20 meeting.  However to the surprise of many they raised the Hibor rate and that crushed the yuan shorts.  It also launched a huge buying spree for Bitcoin.  Again we witnessed more dollars leaving China;.  55 billion USA left in July and 49 billion USA left in June. China’s total reserves (which includes gold) fell to 3.185 trillion uSA

( zero hedge)



Another huge story:  Italy’s target 2 balances is a massive liability to other members of the EU despite having positive current account surplus with the rest of the world due to its strong manufacturing base. Do you have money leaving the banking sector due to its massive problems…

stay tuned

( zerohedge)



As expected the ECB keeps rates unchanged and reaffirms that they will keep QE until March 2017 and probably BEYOND

( zero hedge)


iii)And now the conference: wow!!

no discussion on extension of asset purchase plan and also states that no additional stimulus is needed? Euro surges above 1.13! and Euro stocks are slumping!gold is hit a bit.

( zero hedge)

iv)And as zero hedge has speculated, the ECB will probably run out of bonds to buy as early as this November.  Then the fun begins:

( zero hedge)


none today



Earnings for many firms will suffer as chaos on the high seas reigns supreme.  e have 14 billion in uSA cargo stranded at sea.  The crews have only a week left of food and water;
( zerohedge)


i)Both API and EIA report lower inventory levels as huge drawdowns due to hurricane Hermine as oil shoots higher

( zero hedge)

ii)There are 4 scenarios that can happen for oil producers ahead of the next oil summit in Algiers.  You can skip one through 3, only number 4 will be the resultant:

( BLOOMBERG/Angelina Rascouet/zero hedge)



none today


i)We brought this story to you yesterday about the “flash boys” with the support of our own Eric Sprott taking on the bad guys our HFT traders in the gold market. They should neutralize the criminals stopping their spoofing.
( GATA/Chris Powell/Reuters)

ii)More on the Deutsche bank-Xetra gold case:( Reggie Middleton)

iii)The following is a shocker to the highest degree:  The Fed tells congress to restrict banks from buying stocks and COMMODITIES

Something is up!! why now?

(courtesy zero hedge and Bloomberg

iv))The poor data coming from the states will propel gold above the $1350 mark

( Lawrence Williams/Sharp’s Pixley/Lawrieongold)


i)How can the dept of Labour explain poor PMI and ISM numbers on both manufacturing and service with lower jobless claims?

( zero hedge)

ii)Michael Snyder on how the big one trillion uSA auto loan bubble will burst:

( Michael Snyder/EconomicCollapse blog)

iii) Charles Ortel is a Wall Street analyst who is well respected.  He is the one who noted huge financial discrepancies with General Electric whose stock crashed in 2008 after his report.

He now states that the Clinton Foundation is one big charity fraud

(courtesy zero hedge/Charles Ortel)

iv)Total credit jumps by 18 billion in july and the winning sector: student and auto loans. With weak car sales we wonder what the loans given were spent on:

The total loans now are $1.4 trillion USA. Total auto loans now eclipse $1 trillion USA.

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE to an OI level of 598,466 for a GAIN of 7810 contracts even though the price of gold FELL by $5.10 with yesterday’s trading. We are now in the NON active month of SEPTEMBER/

The contract month of Sept saw it’s OI fall by 393 contracts down to 119. We had 399 notices filed yesterday so we GAINED 6 contracts or 600 additional oz will stand for delivery.  The next delivery month is October and here the OI rose by 47 contracts up to 44,280. This level is extremely high and no doubt many of these will wait it out and take delivery at the end of the month. The next contract month of December showed an increase  of  6664 contracts up to 450,549.The estimated volume today at the comex: 183,637 fair  Confirmed volume yesterday: 165,383, which is also fair.

Today we had  1 notice filed for  100 oz of gold.
And now for the wild silver comex results.  Total silver OI ROSE by 135 contracts from 199,197 UP TO 199,332  despite the FALL in price of silver to the tune of 29 cents yesterday.  We are moving away from the all time record high for silver open interest set on Wednesday August 3:  (224,540).  We are now into the next active month of September and here the OI fell by 331 contracts down to 1468. We had 429 notices filed on yesterday so we gained 33 contracts or 165,000 additional oz will stand for delivery in this active month of September.  The next non active delivery movement of October hardly moved falling by 11 contract down to 270 contracts.  The next big delivery month will be December and here it fell , down 62 contracts  to 173,334. The volume on the comex today (just comex) came in at 43,993 which is very good  The confirmed volume yesterday (comex and globex) was escellent  at 57,676 . Silver is not in backwardation.  London is in backwardation for several months.

today we had 304 notices filed for silver: 1,520,000 oz

 SEPT 8.
Withdrawals from Dealers Inventory in oz  


Withdrawals from Customer Inventory in oz  nil
8,398.25 OZ
Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
1 notice 
100 oz
No of oz to be served (notices)
118 contracts
(11,800 oz)
Total monthly oz gold served (contracts) so far this month
2304 contracts
230,400 oz
7.1644 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   192.90 oz
Total accumulative withdrawal of gold from the Customer inventory this month   35,725.9 oz
 Today: tiny activity at the gold comex and 0 kilobar entry
We had 0 dealer deposits:
Total dealer deposits; NIL oz
We had 0 dealer withdrawals:
total dealer withdrawals:  NIL oz
We had 0 customer deposits:
 Total customer deposits:  nil oz
We had 1 customer withdrawals:
i) Out of Brinks: 8,398.25  oz
Total customer withdrawals: 8,398.25 oz
Today we had 0 adjustments:
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 at the comex will be compromised!
I also urge all of you do not place any option trades at the comex as these gangsters will gun you down.
If you are taking delivery of gold/silver please remove it from comex banks and place it in private vaults 
Today, 0 notices were issued from JPMorgan dealer account and 0 notices were issued form their client or customer account. The total of all issuance by all participants equates to 1 contract  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped (received) by jPMorgan customer account.
To calculate the initial total number of gold ounces standing for the SEPT  contract month, we take the total number of notices filed so far for the month (2304) x 100 oz  or 230,400 oz , to which we  add the difference between the open interest for the front month of SEPT  (119 CONTRACTS) minus the number of notices served upon today (1) x 100 oz   x 100 oz per contract equals 242,200  oz, the number of ounces standing in this NON active month. 
Thus the INITIAL standings for gold for the SEPT contract month:
No of notices served so far (2304) x 100 oz  or ounces + {OI for the front month (119) minus the number of  notices served upon today (1) x 100 oz which equals 242,200 oz standing in this non  active delivery month of SEPT  (7.5333 tonnes).
we  GAINED 6 contracts or an additional 600 oz will  stand. We are almost back to our original standings on first day notice. (ON FIRST DAY NOTICE: 7.5561 TONNES STOOD FOR DELIVERY)
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.  This is becoming quite a farce but I will no longer show settlements vs what is owing:
 Total dealer inventor 2,440,410.452 or 75.906 tonnes
Total gold inventory (dealer and customer) =10,920.897.369 or 339.68 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 339.68 tonnes for a  gain of 37  tonnes over that period. 
Ladies and Gentlemen:  the comex is beginning to lose some of its gold.


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

And now for silver
SEPT INITIAL standings
 SEPT 8.2016
Inventory movements not available today from the CME/
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
20,794.79 oz
Deposits to the Dealer Inventory
 641,778.75 OZ
Deposits to the Customer Inventoryxxx
 595,775.000 oz
No of oz served today (contracts)
(1,520,000 OZ)
No of oz to be served (notices)
1164 contracts
(5,820,000 oz)
Total monthly oz silver served (contracts) 1520 contracts (8,555,000 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  3,122,399.5 oz
today, we had 1 deposit into the dealer account:
i) Into CNT:  641,778.75 oz
total dealer deposit:   641,778.75 oz
we had 0 dealer withdrawals:
 total dealer withdrawals: NIL oz
 we had 2 customer withdrawals:
 i) Out of BRINKS  5038.32 OZ
ii) Out of Scotia: 15,756.47 oz
Total customer withdrawals: 20,794.79  oz
We had 3 customer deposit:
i) Into CNT 1972.500 OZ
ii) Into HSBC: 578,046.000 oz  ????
iii) into JPMorgan 15,756.500 oz
total customer deposits:  595,775.000   oz
 we had 1 adjustment
i) from the vaults of CNT:
2,953.11 oz was adjusted out of the customer at CNT into the dealer account of CNT
The total number of notices filed today for the SEPT contract month is represented by 304 contracts for 1,520,000 oz. To calculate the number of silver ounces that will stand for delivery in SEPT., we take the total number of notices filed for the month so far at (1711) x 5,000 oz  = 8,555,000 oz to which we add the difference between the open interest for the front month of SEPT (1468) and the number of notices served upon today (304) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the SEPT contract month:  1711(notices served so far)x 5000 oz +(1468 OI for front month of SEPT ) -number of notices served upon today (304)x 5000 oz  equals  14,375,000 oz  of silver standing for the SEPT contract month.
we gained 98 contracts or an additional 490,000 will stand FOR DELIVERY IN THIS  ACTIVE MONTH OF SEPTEMBER. SOMEBODY TONIGHT WAS IN GREAT NEED OF SILVER.
Total dealer silver:  29.449 million (close to record low inventory  
Total number of dealer and customer silver:   164.078 million oz (close to a record low)
The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
And now the Gold inventory at the GLD
Sept 8./no changes in gold inventory at the GLD/Inventory rests tonight at 951.81 tonnes
SEPT 7.2016/we had a small withdrawal of .333 tones from the GLD/Inventory rests tonight at 951.81 tonnes
Sept 6/a monstrous addition of 14.25 tonnes into the GLD/with London in backwardation in gold I wonder how these guys found so much “gold”/Inventory rests tonight at 952.14 tonnes/
Sept 2/no change in inventory at the GLD/Inventory rests at 937.89 tonnes
SEPT 1/another montrous withdrawal of 5.34 tonnes/Inventory rests at 937.89 tonnes
August 31/ a monstrous 13.36 tonnes of gold leaves the GLD/inventory rests at 943.23 tonnes
august 30/no change at the GLD/Inventory rests at 956.59 tonnes
August 29/no changes at the GLD/Inventory rests at 956.59 tonnes
August 26./no changes at the GLD/inventory rests at 956.59 tonnes
August 25/a withdrawal of 1.78 tonnes at the GLD/Inventory rests at 956.59 tones
August 24/NO CHANGE  in gold inventory at the GLD/inventory restsw at 958.37 tonnes
August 23/no change in gold inventory at the GLD/Inventory rests at 958.37 tonnes
August 22/ a deposit of 2.38 tonnes of gold into the GLD/Inventory rests at 958.37 tonnes
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
SEPT 8/ Inventory rests tonight at 951.81 tonnes


Now the SLV Inventory
Sept 8/ no changes in silver inventory at the SLV/Inventory rests at 362.719 million oz/
SEPT 7/We had a huge addition of 3.134 million oz into the SLV/Inventory rests a t 362.719 million oz. In less than a month we had added 11 million oz of silver into SLV vaults.
Sept 6/Strange: no addition of silver at the SLV. You mean they cannot find any paper silver?/Inventory rests at 359.585 million oz
Sept 2/a small withdrawal of 158,000 oz at the SLV probably to pay for fees/Inventor  rests at 359.585 million oz.
SEPT 1/no change in inventory at the SLV/Inventory rests at 359.743 million oz/
August 31/we had a monstrous addition of 1.899 million oz into the SLV/this would be a paper addition/inventory rests at 359.743 million oz//why the difference in gold and silver: one reduces dramatically and the other increases dramatically
August 30/no change in silver inventory/inventory rests at 357.844 million oz/
August 29/we had a good sized deposit of 950,000 oz at the SLV/Inventory rests at 357.844 million oz/
August 26/no change in silver inventory at the SLV/Inventory rests at 356.894 million oz
August 25/a withdrawal of 1.899 million oz from the SLV/Inventory rests at 356.894 million oz
August 24/no change in silver inventory at the SLV/Inventory rests at 358.793 million oz
August 23/no change in silver inventory at the SLV/Inventory rests at 358.793 million oz.
August 22/a huge addition of 3.324 million oz into the SLV/Inventory rests at 358.793 million oz
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
SEPT 8.2016: Inventory 362.719 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 5.3 percent to NAV usa funds and Negative 5.0% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.2%
Percentage of fund in silver:39.7%
cash .+1.1%( SEPT 8/2016).
2. Sprott silver fund (PSLV): Premium rises to +0.94%!!!! NAV (SEPT 8/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.42% to NAV  ( SEPT 8/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.94% /Sprott physical gold trust is back into positive territory at 0.42%/Central fund of Canada’s is still in jail.


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

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

Jan Skoyles Appointed Research Executive At GoldCore

(Media Release – September 8, 2016 – Immediate Release) – Jan Skoyles – has been appointed Research Executive  at international gold specialist@GoldCore .

As a recognized thought leader in the gold and fintech space, Jan will augment GoldCore’s research capabilities and will focus on the UK economy and gold’s role as an important diversification, payment and savings vehicle.


As one of the world’s largest and fastest growing gold bullion delivery and storage providers, GoldCore continues to focus on educating its large client and subscriber base, social media following and the wider public of the importance of owning physical gold for diversification and financial insurance purposes.

Jan Skoyles became interested in precious metals and financial technology when she wrote her dissertation on the use of gold and silver in modern monetary systems. Following graduation in 2011, she joined UK gold investment platform, The Real Asset Co, as a co-founder and Head of Research. Her work and views on both gold and fintech have been featured on a range of media including the BBC, Reuters, RT, Wall Street Journal, Al Arabiya, Forbes and The Telegraph, as well as her own online investment show, Get Real.

Jan was made CEO of The Real Asset Company in June 2014 before stepping down to work with London’s fintech start-ups including the first London listed blockchain company, Coinsilium Group in 2015. She is frequently asked to speak at events on the future uses of blockchain technology in the investment, savings and payments space. In 2016, Jan moved to the UAE where she is a partner at Barlings Consulting, an investment and financial technology consultancy.

“Jan’s knowledge of the precious metal market and her understanding of money, past and present, will help GoldCore in furthering our mission to become one of the largest gold delivery and storage providers in the world,” said Mark O’Byrne, Research Director.

According to O’Byrne, “gold continues to be an important diversification and wealth preservation tool. It is a hedging instrument and safe haven asset and will protect and grow wealth in the coming years.”

“I have known Mark and the GoldCore team pretty much since I first started out in 2011 and I have always admired their research and approach to offering precious metals investment,”Jan Skoyles said.

Jan continued “with gold and silver having an excellent year and GoldCore’s fantastic plans and reputation I can’t think of a better time to be re-entering the precious metal space and am delighted that I am able to do so with Mark and the team. I am looking forward to building upon the high-level research and commentary that GoldCore clients and communities currently enjoy, as well as bringing fresh insights into this period of technological and financial change.”

About GoldCore

GoldCore are one of the leading gold brokers and storage providers in the world. Founded in 2003, the company specialises in allocated and segregated coin and bar ownership. It has over 5,000 clients in over 50 countries, with over $145 million in gold and silver bullion assets under management & storage. GoldCore offer retail, HNW, and institutional investors including family offices, gold, silver, platinum and palladium bullion for storage in the safest vaults in the world – in London, Zurich, Dubai, Singapore and Hong Kong.

GoldCore Secure Storage is setting the benchmark in terms of ultra-secure gold and silver storage with allocated and importantly segregated storage for clients who have outright legal ownership of individual coins and bars.

For more information on GoldCore, please visit or contact
Mark O’Byrne, Research  Director of Goldcore Limited

For more information about Jan – follow her on Twitter and Linkedin

Telephone: 01 632 5010 (IRL)       0044 0203 086 9200 (UK)      1 302 635 1160 (US)

Gold and Silver Bullion – News and Commentary

Gold steady as dollar slips; ECB in focus (Reuters)

Gold Holds Near Three-Week High as Odds Drop for Fed Rate Rise (Bloomberg)

Gold prices higher in Asia as China surprises with import gains (Investing)

Investors Pile Into Gold ETFs on Dimming Outlook for Rate Hike (Bloomberg)

Volatile gold demand tarnishes U.S. commodity fund sales (Reuters)


Gold price to reach new heights on increased global stimulus, negative rates (FinancialPost)

When they say ‘hoarding’ instead of ‘saving’ you know you’re in trouble (SovereignMan)

The Swiss Begin To Hoard Cash (ZeroHedge)

Financial “Matrix Exposed” (FirstRebuttal)

Current Situation is bad – Don’t Make It Worse (RTE)

Gold Prices (LBMA AM)

08 Sep: USD 1,348.00, GBP 1,009.11 & EUR 1,195.81 per ounce
07 Sep: USD 1,348.75, GBP 1,008.60 & EUR 1,199.85 per ounce
06 Sep: USD 1,330.05, GBP 1,997.94 & EUR 1,191.46 per ounce
05 Sep: USD 1,328.30, GBP 1,996.23 & EUR 1,189.49 per ounce
02 Sep: USD 1,311.50, GBP 1,987.95 & EUR 1,172.74 per ounce
01 Sep: USD 1,305.70, GBP 1,985.80 & EUR 1,172.13 per ounce
31 Aug: USD 1,314.45, GBP 1,000.30 & EUR 1,179.19 per ounce

Silver Prices (LBMA)

08 Sep: USD 19.93, GBP 14.90 & EUR 17.65 per ounce
07 Sep: USD 19.92, GBP 14.89 & EUR 17.71 per ounce
06 Sep: USD 19.60, GBP 14.70 & EUR 17.55 per ounce
05 Sep: USD 19.46, GBP 14.60 & EUR 17.43 per ounce
02 Sep: USD 18.75, GBP 14.15 & EUR 16.76 per ounce
01 Sep: USD 18.65, GBP 14.08 & EUR 16.73 per ounce
31 Aug: USD 18.74, GBP 14.27 & EUR 16.82 per ounce

Recent Market Updates

– Silver Bullion Surges 3.5% To Over $20/oz
– Ireland “Especially Exposed” To “International Shocks” Warns Central Bank
– Deutsche Bank Tries To Explain Failure To Deliver Physical Gold
– Physical Gold Delivery Failure By German Banks
– Avoid Paper Gold – “Gold Delivery” Refused By Gold Exchange Traded Commodity
– Debt Bubble in Ireland and Globally Sees Wealthy Diversify Into Gold
– “Why Case Against Gold Is Wrong” – James Rickards
– Obama To Leave $20 Trillion Debt Crisis For Clinton Or Trump
– Gold Bullion Averages Biggest Seasonal Gains in September Over Past 20 Years
– Gold Futures See Massive $1.5 Billion “Non Profit” Liquidation In “One Minute”
– Jim Grant Is “Very Bullish On Gold”
– Germans Warned To ‘Stockpile’ Cash In Case Of ‘War’
– Ireland’s Biggest Bank Charging Depositors – Negative Interest Rate Madness

Mark O’Byrne
Executive Director
We brought this story to you yesterday about the “flash boys” with the support of our own Eric Sprott taking on the bad guys our HFT traders in the gold market. They should neutralize the criminals stopping their spoofing.
(courtesy GATA/Chris Powell/Reuters)

Backed by Sprott, ‘Flash Boys’ protagonists aim a new exchange at gold


By John McCrank
Wednesday, September 7, 2016

NEW YORK — IEX Group, which rose to prominence with its bid to shake up stock trading in the United States, now aims to do the same in the more than $5 trillion-a-year gold market with a new exchange being created by its spinoff TradeWind Markets, a board member of the new venture said on Tuesday.

The protagonists of Michael Lewis’s book, “Flash Boys: A Wall Street Revolt,” are planning a gold exchange that would use elements of blockchain technology to improve transparency and the clearing and settling of trades, said Matt Harris, a managing director at Bain Capital Ventures. Bain has an investment in IEX.

Blockchain is a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms.

TradeWind Markets began as an internal project of IEX and was spun off as a separate firm earlier this year. In June, the startup raised $9 million, according to a regulatory filing with the U.S. Securities and Exchange Commission. A person familiar with the operation who asked not to be identified because the plans are not public, said the funding came from IEX and Sprott Inc., a Canada-based investment firm that manages physical bullion funds.

A lack of transparency is one of the problems that makes the gold market ripe for change, said Harris, who is on TradeWind’s board. …

… For the remainder of the report:





More on the Deutsche bank-Xetra gold case:

(courtesy Reggie Middleton)

Deustche Bank’s Xetra-Gold: Is It Fraud, Trading Against Clients (Goldman Style), or Just Misleading Advertising?

This is the 4th installment of our public service announcements on Deutsche Bank subsidiary, Xetra-Gold’s gold note offerings. Since a lot has been covered already, it’s advisable that you read the first 3 articles to catch up:

  1. Veritaseum Knowledge Exposes Frightening Counterparty Risk At Deutsche Bank for “Gold Investors”
  2. Is Deutsche Bank Prepping for Fraud Charges Against It’s Gold Derivative Products?
  3. The Debate on the Potential of Fraudulent Actions At Deutsche Bank Subsidiary, Xetra-Gold

Now, that we have determined that Deutsche Bank subsidiary Xetra-Gold “may” not have been fraudulent, mainly because they stated in their prospectus things that contradict and befuddle the misleading things they stated in their marketing material, we are left to ponder, “Well, we know the offering was unethical, but was it illegal?” Unfortunately, I’m not a lawyer thus cannot accurately opine on such. Alas, I can speculate as a laymen. The Xetra-Gold derivatives were offered in the UK, as well as several other jurisdictions. Let’s peruse the UK perspective via the FCA in the difference between clear and misleading financial advertising:

“Financial adverts and promotions can be misleading for many reasons, but there are some questions you can consider to help you spot and avoid misleading financial adverts, such as: … Are there important points that are only shown in the small print?”

Hmm… Let’s take a look at the Xetra-Gold advertisement, and cross reference it to it’s prospectus:

DB Xetra-Gold false advertising test

You guys tell me, is this a blatant case of false advertising, or is it not? Let me know in the comment section below. It’s not as if DB is totally innocent in these matters, for they just signed a consent order admitting the manipulation of gold prices. This goes deeper than many may care to admit. Deutsche bank seems to be dumping its gold exposure, and what better way to dump it than to sell it unsuspecting gold derivative note buyers. This is how it could be going down…

Deutsche Bank, through it’s Xetra-Gold subsidiary, has a guaranteed, zero premium call option.

  1. DB/Xetra-Gold accepts money from investors who are told they are buying gold, from “an economic perspective”.
  2. DB/Xetra-Gold takes money that was supposed to buy gold (at least in the eyes of many investors) and does whatever they want with it (which could include buying gold) because gold delivery on demand is not guaranteed and the investors have been disclaimed against ownership of, and rights to, the gold underlying as well as price correlation, and failure to deliver.
  3. If the price of gold goes up, DB/Xetra-Gold can fail to deliver (as disclaimed) and keep the capital gains profits. They don’t even have to match the price of the gold underlying. or return the initial investment.
  4. If the price of gold goes down, DB can deliver gold on demand and keep the spread from gold spot and the price originally charged for the gold notes.

This is good work, if you can get it, no?

This is how a company like DB can have over 90% in profitable trading days, because they never had a chance of losing in the first place. The losses belong to their clients! This is speculation, of course (wink, wink). Now, legal eagles say that we can’t scream fraud, because Deutsche clearly says they have the motivation to, and the ability to, rip you off in their prospectus (but not in their marketing materials).


Which leads us to the end of “The Debate on the Potential of Fraudulent Actions At Deutsche Bank Subsidiary, Xetra-Gold“, where John Titus (see his videos at the end of this article at the bottom) explained to me after I queried about misleading and contradictory marketing materials:

I asked, “If marketing materials are negatively contradicted by the prospectus then the marketing materials are fraudulent and misrepresentative, no?” He replied…

Misrepresentative, yes (accepting your definition of economic), and the marketing materials probably do in fact flout any number of laws against false advertising.
But fraudulent, no. The essence of fraud is to falsely induce someone by words or acts into doing something against his interests that he wouldn’t have done but for the dishonesty. Courts consider the totality of the circumstances. So while you would undoubtedly tear the economic investment statement to shreds, you’d still be left with the many other statements from the prospectus that are true, and herein lies the problem.
The UK Fraud Act of 2006 is a criminal statute. So each element of the crime has to be proved beyond a reasonable doubt (or whatever the English equivalent burden of proof is). The first element of fraud by false representation under the Act is “dishonestly makes a false representation.” The problem posed by the prospectus is that it would preclude a finding that DB acted dishonestly beyond a reasonable doubt. I mean, you’ve got one false (but arguably vague) statement vs. several clear-cut disclaimers that are accurate. The totality of the statements are perhaps half false and half true, but dishonest beyond a reasonable doubt? Fuhgetaboutit. DB played the game with all of its cards face up. Yeah, they contradicted each other, but they were damn sure visible to investors, who can claim they were misled only in a subjective (personal) sense, not in an objective way (which is how a judge would look at it).
Now, if–in addition to the mktg mat’s and the prospectus–you’ve got some Goldman-like behavior where DB took out massive insurance policies on the investments it sold and concealed them from the buyer, it’s a totally different story.

Hmmm… On that note, let’s take a look at whether DB has been a net buyer or net seller of gold exposure. Remember, Goldman, sold MBS structures to clients and then took big short positions betting against their own clients, reference “Goldman ‘bet against securities it sold to clients‘.

The subcommittee also released four internal Goldman Sachs emails. In one, says a subcommittee statement: “Goldman employees discussed the ups and downs of securities that were underwritten and sold by Goldman and tied to mortgages issued by Washington Mutual Bank’s sub-prime lender, Long Beach Mortgage Company. Reporting the ‘wipe-out’ of one Long Beach security and the ‘imminent’ collapse of another as ‘bad news’ that would cost the firm $2.5m, a Goldman Sachs employee then reported the ‘good news’ – that the failure would bring the firm $5m from a bet it had placed against the very securities it had assembled and sold.”

Goldman is fighting to clear its name after the $1bn fraud charges brought by the US Securities and Exchange Commission last week, and wants the case settled in court.

The movie, “The Big Short” dramatized this rather well.

Well, guess what it looks like Deustche has been doing…

DB gold exposure expressed as VaRDeustche has been a net seller of foreign exchange risk, which includes (wait for it now, and guess….) gold! They probably were not cash sellers, but purchased swaps to reduce exposure, possibly along the parameters I mentioned above with the guaranteed, zero premium call option.

If you enjoy this free analysis, there’s much more where this came from as we pick apart many other banks in our paid research and knowledge modules. WE just finished a true forensic valuation (very extensive, and detailed analysis) of a very large European bank that led to a huge short recommendation. Subscribe here and pass the word. Our bank analyses have performed very well in 2016, with Banco Popular and Banco Popular Milano doing roughly 40% to 80% in theoretical returns (contingent on how the positions were taken). We have done an excellent job historically as well, calling the fall of Bear Stearns, Lehman, Countrywide, GGP, etc. If you think the free stuff is intense, you should see the stuff that we sell!



And the final word on this subject is Dave Kranzler who reviewed the prospectus.  In his conclusions it is not Deutsche bank who is obligated but Unicore.  The only thing Deutsche bank is guilty of is a moral breach of duty.

There Is No Default Or Fraud Committed On The Xetra-Gold Securities

Anyone who purchases paper gold with the belief that it is an investment in gold is an imbecile.

Last week Zerohedge broke a story about an investor who tried to redeem shares in Xetra-Gold “notes” in exchange for the designated amount of gold represented by those notes. The story gained legs on the internet as a “refused delivery” and a “delivery default.”  I received several inquiries about this and my only response was that someone needs to go through the prospectus in order to determine what type of event has occurred.

I went through the prospectus and so far, everything published on the internet, including any claims made by Zerohedge, are reckless, useless and incorrect.   Here’s a link to the prospectus:  Xetra-Gold Notes.   Ultimately, there has not been a legal default. Furthermore, here has not been any fraud committed because there has not been any breach of contract.

Let’s start with some facts directly from the prospectus.   1)  The Issuer is Deutsche Borse Commodities GmbH;  2) The Custodian is Clearstream Banking AG;  3)  The Debtor of the Gold Delivery Claims is Umicore AG.   That latter aspect is interesting.  Umicore is a Swiss metals refiner and trader.   Any claims of failure to deliver  should be directed at Umicore. The securities in question are unsecured Notes of the Issuer and the only “asset” of the Issuer is a “claim for delivery of one gram of Gold in accordance with the Terms and Conditions.”  That’s it, there are not any other assets in Deutsche Borse Commodities GmbH.

Deutsche  Bank is one of the redemption agents.  But Zerohedge labelled Deutsche Bank as a “Designated Sponsor” as if it meant that DB had obligations beyond what was defined by the prospectus.  In fact, DB is a “designated sponsor in the electronic trading system” of the notes.  In other words, DB is the primary market maker in the trading of the securities.  Nowhere in the prospectus does it specify that DB is obligated to fulfill delivery of gold in exchange for redeemed Xetra-Gold Notes.  Note:  This is not a defense of DB – I regard DB as one of the most vile and corrupt banks on earth;  but legal facts are facts that need to understood and regarded.

Here’s the other relevant facts:   1)   The purchasers of the Notes will only acquire the rights securitised by the Notes. The purchasers of the Notes will not acquire any title to, or security interests or beneficial ownership in, the physical Gold held in custody on behalf of the Issuer. An investment in the Notes does not constitute a purchase or other acquisition of Gold.   This means that the notes are unsecured and the only right is to submit a claim against Unicore, the Debtor of the Gold Delivery Claims.  Good luck with that.

2) The gold price is determined based on demand for and supply of gold. The value of the Notes is a function of the demand for and supply of the Notes as such. This distinguishes an investment in the Notes from a direct investment in gold. The purchasers of the Notes will only acquire the rights  securitised by the Notes. The purchasers of the Notes will not acquire any title to, or security interests or beneficial ownership in, the physical Gold held in custody on behalf of the Issuer. An investment in the Notes does not constitute a purchase or other acquisition of Gold. This means that you are investing in paper plus the right to make a delivery claim.

3)  Deutsche Bank AG is not, in any way, obliged to protect the interests of the investors.  That’s self-explanatory and it is legal refutation of all of the accusations made against DB by reckless blog posts.

4) Unicore AG & Co. KG as the responsible agent for all physical delivery processes in connection with the Notes and in its capacity as the Debtor of the Gold Delivery Claims will be actively trading in gold. This activity may also lead to various potential and actual conflicts of interests. Unicore AG & Co. KG is not obliged to decide any such conflict of interests in favour of the investors, but will in connection with the trading in gold take such decisions and measures at its sole discretion as it may deem
necessary or expedient to protect its own interests and will act in this context as if the Notes did not exist.   That basically says that if you expect to be guaranteed delivery of gold when you send your notes to Deutsche Bank, who is a redemption agent, then pay your lawyer to file a claim in German and Swiss courts.

The prospectus makes it very clear that the purpose of the notes is to make profits for the entities who are the shareholders in Deutsche  Borse.   In that regard, the prospectus states that:  The only business activity of Deutsche Börse Commodities GmbH is the ongoing issuance of the Notes which are the subject matter of this Prospectus and transactions associated with such issuance. All activities resulting from the issue of the Notes, e.g., the safekeeping of Gold and the fulfilment of claims for delivery of holders, have been outsourced by the Issuer to third parties.  Those third  parties are generally the shareholders of Deutsche Borse.

The bottom line on the failed delivery incident reported by Zerohedge and strangulated by several other blogs is that Deutsche Bank has no obligation with respect to delivering gold to any note-holder who submits the paperwork required to redeem notes for gold other than to pass on the request to Unicore, which is specified as “the responsible agent for all physical delivery processes in connection with the Notes.”  In fact, the prospectus reiterates that “Deutsche Bank AG is not, in any way, obligated to protect the interests of investors.”

It goes on to state that Unicore, in its capacity as Debtor of the Gold Delivery Claims, will be actively trading in gold and that “this activity may also lead to various potential and actual conflicts of interests. Unicore AG & Co. KG is not obliged to decide any such conflict of interests in favour of the investors, but will in connection with the trading in gold take such decisions and measures at its sole discretion as it may deem necessary or expedient to protect its own interests and will act in this context as if the Notes did not exist.”

With the above as legal context, I’m not surprised that Deutsche Bank did not offer any remedy when it was asked to respond to the allegations of a failed delivery of gold.  In fact, the prospectus does not contain any specific remedies in this case.   The only possible conclusion is that there has been a “breach of morals and ethics.”   Boo hoo.

Ironically, the Xetra-Gold notes have more loopholes and lack of investor protections than GLD.  Anyone who buys GLD thinking they are investing in gold is an idiot.  What does that make anyone investing in Xetra-Gold with the belief that it’s an investment in gold?

The easy conclusion in this situation is that the entities that are involved in Xetra-Gold do not have the gold that is supposed to be delivered.  That’s probably the most likely explanation but unfortunately the prospectus does not specify any legal remedies.  I guess a gold-delivery-note-holder could file a lawsuit against the Issuer and Unicore.  Until someone with deep pockets who is interested in truth discovery takes that initiative, we are left with no definitive explanations.




The following is a shocker to the highest degree:  The Fed tells congress to restrict banks from buying stocks and COMMODITIES

Something is up!! why now?

(courtesy zero hedge)


Fed Tells Congress To Restrict Banks From Buying Stocks, Commodities

What is The Fed suddenly worried about?

In a somewhat shocking report from The Federal Reserve, Janet Yellen and her motley crew of private bankers are urging Congress to make some significant changes to banking regulation. As Bloomberg highlights:

  • Fed urges Congress to repeal section of the Bank Holding Act that allows Wall Street firms to make investments in non-financial companies, report says
  • Prohibiting merchant banking would prevent Wall Street from “becoming exposed to the risk of legal liability for the operations of a portfolio company,” Fed says
  • Merchant-banking ban would also “help address potential safety and soundness concerns and maintain the basic tenet of separation of banking and commerce,” Fed says
  • Fed also advises Congress to restrict bank ownership of physical commodities
  • Fed separately advises Congress to force industrial loan companies to operate within the “regulatory and supervisory framework applicable to other corporate owners of insured depository institutions”
  • Fed, FDIC and OCC report to Congress on bank practices required under Dodd-Frank Act

The two that caught our eyes most were:

1) the ban on ‘investing in non-financial companies’, which is highly ironic given that other central banks are directly buying massive stakes in the world’s corporate entities; and


2) restrictions on physical ownership of commodities, which raises eyebrows on both oil manipulation and the hoarding of precious metals ahead of The Fed losing control.

Of course, the chances of any of these recommendations actually being signed into law is nil – especially if Clinton is elected – since Wall Street donors will not take kindly to this ‘restriction



Bloomberg’s Jessie Hamilton comments on the above zero hedge story:

(courtesy Bloomberg/GATA)


Fed urges ban on Wall Street buying stakes in companies and commodities


By Jesse Hamilton
Bloomberg News
Thursday, September 8, 2016

Goldman Sachs Group Inc. would be among banks most affected by recommendations issued today by U.S. banking agencies that seek an end to merchant banking and a limit on Wall Street’s ownership of physical commodities.

The report — based on a multi-agency study of banks’ investment activities required by the Dodd-Frank Act — highlighted ways to fix potential risks that the agencies didn’t think were handled by the law’s Volcker Rule ban on certain trading and investments. Among the Federal Reserve’s suggestions was a call that Congress repeal merchant banking powers and the ability of certain banks to engage in physical commodities businesses — both hallmarks of Goldman Sachs’ business.

The Office of the Comptroller of the Currency also said it planned to curtail a bank’s ability to hold copper and to restrict lenders’ holdings of hard-to-value securities. Additional Fed recommendations include repealing exemptions for industrial loan companies, which are lenders generally owned by non-financial firms, that allow them to operate outside of rules that affect banks. …

… For the remainder of the report:…





The poor data coming from the states will propel gold above the $1350 mark

(courtesy Lawrence Williams/Sharp’s Pixley/Lawrieongold)


Disappointing U.S. data propelling gold towards $1,350

We have recently speculated as to how the gold price might perform now U.S. execs are back at their desks after holidaying in the summer sunshine.  Precious metals investors will no doubt recall the time in 2011 when the end of the summer holidays precipitated the beginnings of a prolonged period of precious metals price weakness and will have been worried that this year might see something of the same effect given gold and silver’s strong run over the first half of the year, but this year’s price performance has been very different from that of 2011.  Back then the gold price had soared throughout the normally weak July and August months – unsustainably so as it proved.  This year the gold price has been pretty flat to weak in July and August following a Brexit boost in late June.  Many analysts have seen this as consolidation, perhaps ahead of an upturn in the final four months of the year.  Early signs for this look good with the gold price today heading into the mid-$1,340s.  Indeed it has hit $1,350 on the spot market on a couple of occasions before slipping back.

Thus, on the first days of trading after the Labor Day holiday, initial portents for precious metals price performance will have been encouraging for investors, helped by weaker than expected PMI Services data and by a weaker dollar.  Interestingly, like Friday’s nonfarm payroll figures, the latest Services PMI is not actually weak per se – remaining above the all-important 50 level – but was sharply weaker than analysts’ expectations.  The U.S. economy may thus well be growing, but perhaps at a far slower rate than entities like the U.S. Fed would like us to believe.

The net result of the weaker than anticipated US data is for analysts and investors to assume the Fed is unlikely to restart interest rate tightening at the September FOMC meeting in two weeks’ time, for fear of nipping any tentative economic upturn in the bud.  If this assumption is correct – and it may be dangerous to assume that it is, given Fed credibility could be at stake in that it had foreshadowed up to four interest rate hikes in 2016 back in December last – then that effectively rules out any interest rate hike announcement until the December FOMC meeting which takes place December 13-14.  And if US data follows its current weaker than anticipated course then even a December rate hike may be in doubt.  (November is effectively ruled out as a rate increase announcement then would only come about a week before the Presidential Election date scheduled for November 8th.)

Of course the Presidential Election itself could provide yet another huge degree of uncertainty in U.S. markets.  According to the latest CNN poll, Donald Trump and Hillary Clinton are running neck and neck – and the Donald is actually in the lead taking into account those who are most likely to turn out and vote, although the majority still anticipates a Clinton victory.  Voter turnout could be key with neither candidate being popular with the electorate and, if anything, the latest polls show that Clinton is even less popular, or trusted, among registered Democrats than Trump is among Republicans.  As with Brexit, voter turnout may be key and with the two contenders being so unpopular even among their own party supporters, this could be hugely unpredictable.

With the election only two months away we will be seeing probably the most vitriolic, and personally antagonistic, campaign ever which will do nothing for any positive global perceptions on the US political system and could rebound on the economy and markets dependent on who is seen as gaining the upper hand. As someone who awoke on June 24th to hear that UK voters had gone for Brexit, contrary to nearly all the polls, one cannot but help wondering if U.S. voters will be similarly shocked at the Presidential outcome on November 8th.  Whoever is elected, economic uncertainty will undoubtedly come to the fore and that could give a big boost to gold in the final two months of the year – and could see the dollar and the general equities markets take a substantial knock further hamstringing any Fed move to raise interest rates.

As we advised UK investors to invest in gold ahead of the Brexit vote – and those who did were rewarded well with the double whammy of a dive in the value of the pound against the dollar coupled with a rise in the gold price – US investors might also be well advised to buy gold ahead of the Presidential election as financial insurance against an unlikely result causing the dollar to fall and gold to rise (which many will see as effectively the same thing!)

For the  moment, gold still seems to be holding up in the $1,340s and silver at or around just below $20.  After rising to above 71, the Gold:Silver ratio (GSR) has come back down to a little below 68 showing that, as usual silver has been performing better than gold when the latter is looking even just a little stronger.  Should gold breach $1,350, expect the GSR to come down even more and silver could easily hit the mid $20s or higher – still an awful long way off where it rose to up until the big take-down in 2011, but in terms of performance this year has already done well for those invested in it at the beginning of 2016.

This is an updated and edited version of one posted by me on the Sharps Pixley website earlier in the week 




At least, these sovereigns are smart: they cannot get their hands on physical gold so they do the next best thing: buy gold mining companies:

(courtesy Nathan McDonald/SprottMoney)


Switzerland and Norway Begin to Massively Accumulate Precious Metals Mining Shares

Sprott Money's picture







Events are moving behind the scenes. For decades, Western Central bankers have told the masses that gold is a barbarous relic. They have encouraged us to shed its protection and move into the sanctity of their highly corrupt and highly manipulated fiat assets.


During this time period, our Western Central bankers have offloaded our countries’ hard earned wealth, shipping massive quantities of precious metals to far off lands in the East, never to be seen again – despite what they may think. Our wealth is being sold out from under our feet.


Yet, as I have reported on recently, a shift is occurring. Call it what you will – I call it panic. Many Western Central bankers are trying to accumulate metals in stealthy ways, behind the scenes and unbeknownst to the masses, whom they wish to keep trapped in fiat money.


The two most recent examples of Western Central Banks moving into precious metals in a serious way are the Swiss and Norwegian Central Banks.


Both banks are being reported to have printed close to $1 billion dollars of fiat money as of recently. This should come as no shock to anyone, as this is all Central Banks know how to do – print money.


What is more stunning, however, is where they immediately moved these funds. You guessed it right – into precious metals.


They know that the physical precious metals market is limited, tight, and scarce. They also know that if they simply printed $1 billion worth of fiat money out of thin air and moved it into physical, then they would risk blowing the market apart, sending prices potentially catapulting higher.


Since they are not yet willing to face the wrath of the other Central Bankers around the world, they did the next best thing. They bought shares in the gold mines themselves.


Below, you will find two lists compiled by Smaulgold, which showcases the current gold mining stock holdings of both the Swiss and Norwegian Central Banks:

(Harvey:  note the huge amount of ownership by both sovereigns of Agnico Eagle and Silver Wheaton)



These movements of funds are likely the cause of many of these stocks being up drastically this year and confirm the suspicions of many – that major entities were moving into the mining shares for protection.

Yet, you must ask yourself: why? Why now? What do they fear? Do they know the folly that they and other Central Bankers have committed around the world? Do they know that this entire system is destined to fail and come crashing down on our heads?

I believe they do. These people may be manipulative and they may be corrupt, but they are not stupid. They are getting prepared, just as you should be getting prepared, before it is too late and there is no escape.


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




2 Nikkei closed DOWN 53.67 OR 0.32% /USA: YEN FALLS TO 101.62

3. Europe stocks opened MIXED  (     /USA dollar index DOWN to 94.58/Euro UP to 1.1296

3b Japan 10 year bond yield: RISES TO  -.034%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 101.62/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY.

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  46.19  and Brent: 48.59

3f Gold UP /Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.090%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 8.02%/: 

3j Greek 10 year bond yield FALL to  : 8.20%   (YIELD CURVE NOW BECOMING INVERTED)

3k Gold at $1344.25/silver $19.83(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 30/100 in  roubles/dollar) 63.90-

3m oil into the 46 dollar handle for WTI and 48 handle for Brent/

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9663 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0916 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -0.09%

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


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

4. USA 10 year treasury bond at 1.551% early this morning. Thirty year rate  at 2.249% /POLICY ERROR)

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

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


With All Eyes On The ECB, Catatonic Global Markets Remain In State Of Near Paralysis

As the market’s comatose trading range continues with no notable moves for nearly 40 consecutive days, there is some hope volatility may return after today’s main event, the ECB’s announcement due in just two hours, when Mario Draghi may surprise the market in either direction. As of today, the S&P500 has held in a band of 1.5% for 39 days, the narrowest ever for that length of time. A 50-day volatility measure for the MSCI All Country World Index of shares has more than halved since the start of this month.

Ahead of the ECB, European stocks advanced and Spanish 10-year bond yields fell to a record low, of 0.909% while Italy’s yield dropped one basis point to 1.07%, on speculation Draghi will extend the European Central Bank’s stimulus measures beyond its March 2007 deadline, as well as increase the universe of monetizable bonds while potentially cutting the deposit rate floor. A full preview of the ECB’s decisioncan be found here.

Banks led European shares toward the highest since January on hopes Draghi will purchase more securities in a dovish move, or that bond curves may steepen if the ECB moves modestly hawkish. AsBloomberg reports, the ECB may help revive markets following a slump in volatility as traders focus on potential tweaks to quantitative easing and economists predict Draghi will prolong bond buying even if policy makers don’t cut rates. In the U.S., investors will be looking at data on jobless claims after prospects for an interest-rate increase in September faded amid data showing slowdowns in hiring and business activity. The EUR jumped in advance of Draghi’s announcement, with the EURUSD fast approaching 1.13 as the US Dollar fell to a three week low.

“Rather than waiting for concrete measures from Draghi, this time we’re all looking for any signals regarding what more could be done if needed,” said Alan Higgins, chief investment officer at Coutts & Co. in London. “That means whether the ECB could extend the period of QE, any word about buying more government bonds in the periphery and whether they can include bank bonds in the program. It’s all about clues today.”

To some, however, it is time for more than merely clues: “The market is losing momentum,” Bernard Aw, a strategist at IG Asia Pte in Singapore, told Bloomberg. “Investors are probably looking for fresh catalysts that may come in the form of additional stimulus from the European Central Bank or Bank of Japan”

Ahead of the ECB, the Stoxx Europe 600 Index gained 0.1% while futures on S&P 500 added 0.1% after the U.S. measure barely moved in the last session.

Italian banks gained, with Banca Monte dei Paschi di Siena SpA rising 2.9 percent after Il Messaggero reported that its planned capital increase could be postponed until next year. (Harvey:  the stock rises on this news???) Micro Focus International Plc soared 20 percent after Hewlett Packard Enterprise Co. said it’s spinning off and merging some non-core software assets in a deal with the U.K. company valued at about $8.8 billion.  Rocket Internet SE declined 5 percent after the German startup incubator slashed the value of one of its key portfolio companies by more than 50 percent in a new financing round. ASML Holding NV lost 2 percent as terms of a transaction obtained by Bloomberg News showed that Samsung Electronics Co. is selling about half of its stake in the chip-equipment supplier.

Ireland auctioned 10-year bonds at a record-low yield, as investors brushed off the controversy over Apple Inc.’s tax arrangements in the country. The nation’s debt office sold 1 billion euros ($1.1 billion) of 2026 bonds at a yield of 0.33 percent on Thursday in Dublin, as the European Central Bank’s quantitative-easing program continued to drive down financing costs

U.S. 10Y Treasuries were steady at 1.53%. The probability of the Fed boosting benchmark interest rates at its meeting this month has dropped 10 percentage points this week to 22 percent, futures prices indicate.

Asian stocks were little changed; Japanese shares slid as investors assessed the chances of government stimulus after revised data showed the economy grew more than estimated. The Shanghai composite (+0.1%) and Hang Seng (+0.8%) recovered from early commodity-related weakness, as the latest Chinese trade figures continued to point to a rebound in growth, with exports and imports beating expectations, although trade balance slightly missed.  China’s August Trade Balance printed at 52.10BN vs. Exp. 58.35BN , and down modestly from July’s 52.31BN.

  • Exports (USD)(Aug) Y/Y -2.8% vs. Exp. -4.0% (Prey. -4.4%); 5th consecutive decline, but narrowest drop in 4 months.
  • Imports (USD)(Aug) Y/Y 1.5% vs. Exp. -4.9% (Prey. -12.5%); 1st increase since October 2014.

China also reported that August auto retail sales soared 24.5% Y/Y, driven by a surge in car loan issuance.

Meanwhile, the western cataonia has spread to china, where daily moves in the Shanghai gauge have been less than 1 percent for 17 days in a row, a phenomenon that last occurred in 2001.

Yuan borrowing costs surged to the highest since February amid speculation China is taking steps to deter bets on depreciation (more on this shortly).

10yr JGBs saw subdued trade as better GDP figures and its likely implications on BoJ policy dampened demand, while today’s 5yr bond auction also failed to spur a bid-tone with the the b/c declining from last month.  Japanese revised Q2 GDP grew annualised 0.7% vs. Exp. 0.2%, and up from the last print of 0.2%.

West Texas Intermediate crude climbed 2 percent to $46.38 a barrel, spurring gains in currencies of commodity-producing countries. Crude has risen more than 7% in the past week amid optimism OPEC producers will agree measures to support prices. U.S. crude inventories fell by 12.1 million barrels last week, according to the industry-funded American Petroleum Institute. A similar drop in official data due Thursday, which is forecast to show an expansion, would be the largest since 1999.

The Bloomberg Dollar Spot Index fell 0.3 percent, nearing a two-week low. Australia’s dollar led gains among 16 major currencies with a 0.7 percent advance and the Taiwan dollar was the worst performer with a 0.3 percent loss. The euro rose 0.3 percent to $1.1274.

Market Snapshot

  • S&P 500 futures up 0.1% to 2188
  • Stoxx 600 up 0.1% to 351
  • FTSE 100 up 0.5% to 6882
  • DAX down 0.1% to 10739
  • German 10Yr yield up less than 1bp to -0.11%
  • Italian 10Yr yield down less than 1bp to 1.08%
  • Spanish 10Yr yield down less than 1bp to 0.92%
  • S&P GSCI Index up 1.3% to 356.6
  • MSCI Asia Pacific up less than 0.1% to 142
  • Nikkei 225 down 0.3% to 16959
  • Hang Seng up 0.7% to 23919
  • Shanghai Composite up 0.1% to 3096
  • S&P/ASX 200 down 0.7% to 5386
  • US 10-yr yield down less than 1bp to 1.53%
  • Dollar Index down 0.23% to 94.74
  • WTI Crude futures up 1.9% to $46.36
  • Brent Futures up 1.7% to $48.80
  • Gold spot up 0.2% to $1,349
  • Silver spot up 0.6% to $19.92

Top Global Headlines

  • HPE to Merge Software With Micro Focus in $8.8b Deal: HPE shareholders will own 50.1% stake in combined co.; Hewlett Packard Enterprise gets $2.5b cash in deal
  • Liberty Media Agrees to Acquire Formula One for $4.4 Billion: former Fox executive Chase Carey to be racing group’s chairman; U.K. private-equity firm CVC seen getting windfall from sale
  • ECB expected to keep interest rates unchanged, may extend end-date of asset purchases; Draghi to hold press conference; Draghi Has Decision on QE Program Coming, If Not Now Then Soon
  • TPG to Buy Intel’s McAfee Security Unit in $4.2b Deal: Intel selling business as it focuses on data centers
  • Fiat Chrysler’s Rising Star in U.S. Swept Up in Criminal Probe: alleged gaming of car sales draws attention to Reid Bigland
  • Nintendo Soars With Super Mario Game Debut for the IPhone: Pokemon Go’s popularity probably fueled Super Mario efforts
  • Amazon Cuts Delivery Times in Threat to Alibaba, EBay, small items commonly shipped from China now Prime eligible
  • Lloyd’s Wins Right to Fight in N.Y. Over Oklahoma Quake Coverage: judge refuses driller’s effort to resolve dispute in Oklahoma
  • Medivation Stockholder Objects to Pfizer Merger in Lawsuit: investor says $81.50/share price isn’t fair value in class- action complaint
  • Wells Fargo Faces Enforcement Action on Sales Tactics, WSJ Says: co. facing regulatory enforcement action relating to cross-selling of products and aggressive sales tactics
  • Blue-Chip U.S. Company Bond Sales Top $1 Trillion at Record Pace: global ‘influx of capital’ is going to corporate bonds; investors are looking to ‘get a little bit of yield’

* * *

Looking at regional markets, we begin in Asia where stock markets traded mixed following a lacklustre lead from the US while the region digested key tier-1 data. ASX 200 (-0.7%) underperformed after iron ore prices declined for the third consecutive day to its lowest level in six weeks. Nikkei 225 (-0.3%) traded in the red, despite better than expected upward revisions to Q2 GDP, as the improvement in the data dampened urgency for the BoJ to act this month. Shanghai Comp (+0.1%) and Hang Seng (+0.8%) recovered from early commodity-related weakness, as the latest Chinese trade figures were mostly encouraging with exports and imports beating expectations, although trade balance slightly missed. 10yr JGBs saw subdued trade as better GDP figures and its likely implications on BoJ policy dampened demand, while today’s 5yr bond auction also failed to spur a bid-tone with the the b/c declining from last month.

Japanese GDP (Q2 F) Q/Q 0.2% vs. Exp. 0.0% (Prey. 0.0%); GDP Annualised (Q2 F) Y/Y 0.7% vs. Exp. 0.2% (Prey. 0.2%)  (Harvey: very tiny growth)

Chinese Trade Balance (CNY)(Aug) M/M 346b1n vs. Exp. 371.7bIn (Prey. 342.8bIn). (Newswires) (Harvey:  poor growth in China trade)

  • Exports (CNY)(Aug) Y/Y 5.9% vs. Exp. 2.7% (Prey. 2.9%)
  • Imports (CNY)(Aug) Y/Y 10.8% vs. Exp. 1.0% (Prey. -5.7%)

Chinese Trade Balance (USD)(Aug) M/M 52.10bIn vs. Exp. 58.35b1n (Prey. 52.31 bin) (Newswires)

  • Exports (USD)(Aug) Y/Y -2.8% vs. Exp. -4.0% (Prey. -4.4%); 5th consecutive decline, but narrowest drop in 4 months.
  • Imports (USD)(Aug) Y/Y 1.5% vs. Exp. -4.9% (Prey. -12.5%); 1st increase since October 2014.

Top Asian News

  • Yuan Intervention Signs Intensify as Offshore Loan Rates Surge: PBOC may be trying to crack down on bearish wagers, Mizuho says
  • Yuan Overnight Hibor Surges to 5.45%, Highest Since February: Yuan borrowing costs in Hong Kong’s offshore interbank market
  • Hedge Fund Makes 2,100% From the World’s Most Extreme Mania: Chinese manager rides booms and busts in commodities futures
  • Dealers at Ground Zero of Japan’s Bond Rout Say It’s Time to Buy: Primary dealers see 10-year yield at -0.15% by year-end
  • Hong Kong Land Prices Baffle Tycoon With 50 Years Experience: Lui’s development arm outbid in 16 land tenders this year
  • Doosan Bobcat IPO to Raise Up to 2.45t Won in S. Korea Listing: total ~49m shares will be offered at price range of 41,000-50,000 won apiece

In Europe, the ECB rate decision remains at the forefront of everybody’s minds so far this morning, with newsflow extremely light elsewhere. European equities reside in modest positive territory, following on from the strength seen yesterday. On a sector breakdown, IT names are among the worst performers, with ASML lower after a stake sale by Samsung, while Dialog are suffering the fallout from Apple’s latest product announcement. Also of note, the FTSE outperforms this morning, with mainland European indices striking a more tentative tone ahead of the ECB. Finally, fixed income markets have been particularly quiet today, with many commentators suggesting that if the ECB do act today it will impact fixed income markets to a greater extent than FX or equities and could largely be a technical adjustment to the bond buying program.

Top European News

  • Rocket Internet Falls in Frankfurt After Slashing Home24 Value: furniture retailer’s worth declines 57% to EU420m
  • Eni’s Troubles Off Norway Risk Fueling Fight Against Arctic Oil: Barents Sea’s Goliat field idle again after series of mishaps
  • Mediaset Said to File Complaint Against Vivendi Over TV Deal: urges French regulator to demand Vivendi correct statements; cos. at odds after Vivendi pulls out of deal to buy unit
  • U.K. Housing Market ‘Settling Down’ After Brexit-Vote Shock: RICS says August house-price index rises from 3 1/4-year low; London home values continue to fall and stagnation predicted

In FX, the Bloomberg Dollar Spot Index fell 0.3 percent, nearing a two-week low. Australia’s dollar led gains among 16 major currencies with a 0.7 percent advance and the Taiwan dollar was the worst performer with a 0.3 percent loss. The euro rose 0.3 percent to $1.1274. The Philippine peso sank to a four-week low after foreigners pulled $153 million from the nation’s stocks since the end of August, on track for the heaviest monthly net sales since November. China’s yuan weakened less than 0.1 percent in the onshore market, declining for the first time this week, and was little changed in offshore trading.

In commodities, West Texas Intermediate crude climbed 2 percent to $46.38 a barrel. It’s risen more than 7 percent in the past week amid optimism major producers will agree measures to support prices. U.S. crude inventories fell by 12.1 million barrels last week, the industry-funded American Petroleum Institute was said to have reported. A similar drop in official data due Thursday, which is forecast to show an expansion, would be the largest since 1999. “The size of inventories around the world are a headwind for oil prices,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “If government data backs up the API figures, and we saw a decline in inventories instead of a build, then that would be a positive development.” Gold rose 0.2 percent, approaching a three-week high, and tin retreated in London from its best close since January 2015.

* * *

Bulletin Headline Summary From RanSquawk and Bloomberg

  • FX markets have seen some pre-emptive buying seen in EUR/USD, EUR/GBP and EUR/CHF ahead of ECB
  • European equities reside in modest positive territory, following on from the strength seen yesterday with newsflow otherwise light
  • Looking ahead, highlights include ECB rate decision, DoE crude oil inventory report and ECB President Draghi press conference
  • Treasuries little changed in overnight trading, global equities mixed and oil, precious metals rally; euro rises against the USD before ECB announcement at 7:45am ET as traders wait to see whether the central bank will expand its quantitative-easing program.
  • ECB president Mario Draghi will hold a press conference after his Governing Council sets monetary policy; if no definitive action is taken immediately, he is likely to be quizzed on what he’ll do — and when — to keep growth on track
  • “Rates are driving everything,” Mark Connors, Credit Suisse global head of risk advisory, said. “At a minimum you have to be aware of the influence of central banks. Fundamental analysis doesn’t explain the movement higher from here”
  • The largest oil traders are anticipating little relief to what has become the worst market slump in a generation. All but one of 15 senior oil traders and executives interviewed expect crude to remain between $40-$60/barrel over the next 12 months
  • Family offices, which manage the money of wealthy clans, are growing wary of hedge funds and have reduced their exposure to them by 10% in the 12 months ending in May as hedge funds have mostly underperformed stock markets since the financial crisis
  • China’s sprawling and inefficient state-owned enterprises are dragging down growth, with their return on assets in 2015 estimated to be at 2.8% versus 10.6% for private sector-firms
  • The cost of borrowing yuan in Hong Kong surged to a seven- month high amid speculation China’s central bank is intervening to discourage bearish bets on the currency
  • As the latest season of the Greek drama premiers this week, investors are steering clear of the country’s bonds and stocks. Greek government bonds have delivered the worst returns of all European sovereigns over the past three months
  • The bond market is getting so hot that it’s fueling a surge in so-called payment-in-kind toggle notes that let companies pay coupons with more debt

* * *

Economic Event Calendar

  • 7:45am: ECB decision
  • 8:30am: Draghi speaks
  • 8:30am: Initial Jobless Claims, Sept. 3, est. 265k (prior 263k)
  • 9:45am: Bloomberg Consumer Comfort: Sept. 4, (prior 43.4)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change

DB’s Jim Reid concludes the overnight wrap

Today’s main event is the ECB policy meeting outcome this afternoon at 12.45pm BST. As a reminder, DB’s Mark Wall and his team had previously thought that the ECB would err on the side of caution and ease policy again at today’s meeting, specifically by extending QE by 9-12 months. While they still think that it’s a close call, recent events have caused them to change this view and they now believe the ECB will wait until December before announcing the QE extension. In justifying this they highlight that Brexit has not been much of a shock yet. Fed hawkishness could be just what the ECB wanted (although that perhaps is now put into question post recent data). Moreover, the credit impulse is holding up and the latest Bank Lending Survey showed no deterioration. At the same time they highlight that the ECB is increasingly aware of the vulnerability of market perceptions of bank profitability and how this might impair the transmission mechanism.

Our colleagues’ view appears to be broadly in line with the wider market. The consensus is for no change to any policy rates today although a Bloomberg survey of economists (conducted between August 30th and September 1st) showed that 41 of 50 participants expect a QE extension announcement at some stage, with around 50% of the respondents expecting this to be announced today.

Staying with the ECB theme, yesterday we published a Credit Bites piece attempting to answer a question which has gained more focus in recent weeks, that being the possibility of the ECB buying senior unsecured bank bonds by year-end as a further extension of its QE scope. Our conclusion is that this is highly unlikely for several reasons including; the inconsistency between the ECB requiring collateral from banks in its liquidity operations and buying the same credit risk outright, regulatory fragmentation issues, potential conflicts of interest and the availability of TRLTRO II.

In terms of what’s going on in markets at the moment, there’s one consistent theme which has emanated through the week so far. Credit primary issuance is booming with yesterday in the US being another record high for the year in terms of issuers (19) according to Bloomberg, and the fifth highest day by volume (at $24.9bn). Three corporates also came to market in Europe while we also saw the second bumper PIK deal launched this week, this one suggested to be the largest deal of its kind in Europe.

So while primary markets were in gung-ho mode again yesterday, markets elsewhere were a little bit more subdued and instead generally consolidated the post ISM Fed re-pricing that we got the day prior. Indeed the S&P 500 (-0.01%) finished virtually unchanged yesterday with a +0.61% gain for Apple following that latest new product launch. US 10y Treasury yields (+0.5bps) were also little moved and continue to hover in this extraordinarily tight 1.50-1.60% range that they’ve generally been in since the start of August, while the USD (+0.14%) did nudge a little bit higher, albeit modestly so.
Once again we heard some upbeat Fedspeak yesterday although markets again largely shrugged it off as the implied September Fed hike odds dipped to 22% from 24%). Following on from Williams’ comments, the non-voting and hawkish Lacker said that employment and GDP ‘still seem to be on track’ and that ‘at this point it looks like the case for a rate increase is going to be strong in September’. The Fed’s George also added – in what is a fairly commonly shared view amongst board members – that the labour market is ‘at or near full employment’.

Switching attention to the overnight session now where much of the focus has been on some important data released this morning. In Japan real Q2 GDP growth was revised up to a seasonally adjusted +0.2% qoq from the first preliminary estimate of 0.0%. That was above the consensus and roughly in line with the view of our Japan economists. The annualized rate was revised up from +0.2% to +0.7% as a result. The Yen was initially weaker following the release but is back to unchanged now around 101.70, while the Nikkei (-0.24%) and Topix (-0.23%) are both slightly weaker. Meanwhile, the latest trade data in China was supportive. In USD terms exports increased to -2.8% yoy (vs. -4.0% expected) from -4.4%. It was a similar story in RMB terms with exports rising to +5.9% yoy from +2.9%. Imports were also boosted. In USD terms they rose +1.5% yoy (vs. -5.4% expected) having been down double digits previously. It was in fact the first increase since 2014 while the increase in RMB terms was even greater (+10.8% yoy vs. +0.7% expected; -5.7% previously). Despite that there’s not been much of a reaction in markets with the Shanghai Comp (-0.10%) and CSI 300 (-0.17%) a shade lower. Elsewhere markets are mixed. The Hang Seng (+0.36%) has gained while the Kospi (-0.26%) and ASX (-0.93%) are in the red.

With regards to the data yesterday, in the US the BLS reported a decent jump in job openings in July to 5.87m (vs. 5.63m expected) from 5.64m previously, which in the process marked a new cyclical high. The quits rate did hold steady at 2.1% and there wasn’t much of a reaction in markets. Meanwhile in Europe we saw an eye watering and unexpected drop in Germany industrial production in July (-1.5% mom vs. +0.1% expected) which puts the Q3 starting base for IP on the back foot. In the UK the data was a bit more mixed. Industrial production (+0.1% mom vs. -0.2% expected) was a bit better than expected in July, however manufacturing production (-0.9% mom vs. -0.3% expected) saw a sharper decline than the market had expected.

The other big focus here in the UK was BoE Governor Carney’s comments during a parliamentary hearing. Carney presented a confident view of the Bank’s post-Brexit actions and attributed this to the strong August business and consumer surveys. Carney also said that although recent data suggested that the UK is a bit stronger than the Bank had forecasted in August, growth was likely to be ‘about half as much as it was prior to the referendum’. UK PM Theresa May also made comments to UK lawmakers and adamantly pushed back on making any hasty decisions, saying that ‘we will not take decisions until we are ready’ and ‘we will not show our hand prematurely’.

Before we look at the day ahead, a quick mention that this morning our European equity strategy team have published a new report. They note that global macro surprises have turned negative this week, after hitting a two-year high in mid-August. The rebound in global growth momentum has led cyclicals to outperform defensives by 13%, the sharpest rally in cyclicals since 2010. With growth momentum now rolling over again, they think cyclicals are vulnerable and our colleagues re-iterate their underweight, with a particular focus on autos and capital goods. Email for the report.

Looking at today’s calendar, first thing this morning we’ve got data out in France in the form of the latest payrolls numbers and business sentiment reading. That’s before we turn over to today’s main event at 12.45pm BST where we have the aforementioned ECB policy meeting outcome. At 1.30pm BST Draghi will then hold his post-meeting press conference. There’s not too much of note in the US this afternoon. The latest weekly initial jobless claims numbers are expected to show little change while later on we get the July consumer credit reading.


i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 4.04 POINTS OR 0.13%/ /Hang Sang closed UP 177.53 points or 0.75%. The Nikkei closed DOWN 53.67 POINTS OR 0.32% Australia’s all ordinaires  CLOSED DOWN 0.71% Chinese yuan (ONSHORE) closed UP at 6.6621/Oil ROSE to 46.24 dollars per barrel for WTI and 48.59 for Brent. Stocks in Europe: MIXED   Offshore yuan trades  6.6719 yuan to the dollar vs 6.6621 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES


The following is very important:  The Bank of Japan may be planning something fierce trying to get its economy going.  The latest theory is a reverse operation twist where the central bank buys long term and sells short term.  This will be deemed tightening and so to offset that, they will want to lower its interest rate from -.20% down to -4%. That will unleash nothing but terror and cause a massive outflow from their stock market and may cause the Japanese interest rate to rise above zero.

we must watch carefully on this development.

(courtesy zero hedge)

Brace For “VaR Shock” – How The Bank Of Japan May Be About To Unleash A Global Selloff

As we pointed out recently, Japan has been quietly undergoing a mini bond tantrum as over the past two months, its sovereign debt suffered the worst rout in 13 years, handing investors bigger losses over the past two months than any other government bonds, amid speculation the Bank of Japan plans to change its asset-purchase strategy.

The selloff started in late July, around the time the time the BOJ disappointed with its latest announcement, and accelerated on fears that as part of its “comprehensive assessment” of its policies, the central bank would set back the BOJ’s monetary easing stance. 

It then resumed in late August, after central bankers made another coordinated push for fiscal stimulus at Jackson Hole, which would mean more sovereign debt supply, and thus lower prices, all else equal. Then earlier this week, Kuroda said that a review of the current stimulus efforts due by the Sept. 20-21 policy meeting in which some analysts and investors read between the lines that the BOJ may be seeking to force a shift toward a steeper yield curve after the gap between two- and 30-year securities compressed to a record 30 basis points.

Kuroda on Monday also pointedly flagged concerns about negative potential effects from the slide in long-maturity bond yields. Earlier this year, rates as long as 20 years touched zero percent. The BOJ chief noted that the drop hurt returns on pension programs, and could affect confidence levels and the economy more broadly.

As Kuroda said, clearly highlighting the dangers of a flatter yield curve, “some business firms have revised down their profit forecasts due in part to the increase in the net present value of retirement benefit obligations. We should take account of the possibility that such developments can affect people’s confidence by causing concerns over the sustainability of the financial function in a broad sense, thereby negatively affecting economic activity.”

These hints prompted Evercore ISI analysts to suggest that Japan’s central bank in coming weeks will modify its stimulus program to alleviate risks from ultra-low long-term yields, by pursuing a reverse “Operation Twist”, where the central bank sell long-end bonds while buying the short-end.

The change would help to make the Bank of Japan’s easing more sustainable over the longer haul, given diminishing chances of hitting the 2 percent inflation target soon, according to the analysis by Evercore ISI’s Krishna Guha and Ernie Tedeschi. “The BOJ’s policy review will point to a rebalancing of its monetary policy aimed at maintaining or increasing downward pressure on short-to-medium term real interest rates (and in turn put downward pressure on the yen) while engineering a steepening of the yield curve,” Guha and Tedeschi wrote in a note.

To avoid market fears that the central bank is seeking an outright tightening of monetary conditions, which a “reverse Twist” would suggest, the BOJ may cut short rates further from the current -0.20%. A cut in the already-negative benchmark rate, levied on a portion of banks’ reserves parked at the BOJ, which would also steepen the yield curve, could show the BOJ is still implementing unvarnished stimulus. The Evercore ISI analysts, cited by Bloomberg, said a rate cut could come either this month or later in the year.

It may not stop there: the BOJ could additionally add local-government or nonfinancial corporate bonds to its asset purchases. Another option could be to pledge an “overshoot” of the 2 percent inflation target, which would suggest avoiding any shrinkage of the balance sheet for an extended period. As the Evercore analysts added: “A core part of the operation would be shifting government debt purchases to shorter maturities, allowing ultra-long term yields beyond 10 years in particular to rise,” Guha and Tedeschi wrote. “The combination of credible aggression today with a commitment to maintain that and the associated balance sheet/rate settings longer into the future would in our view make the policy additionally effective.”

* * *

On the surface, pushing for a steeper yield curve may seem like a good idea, and something which Japan’s bank and pension funds will applaud. However, there is a problem: with trillions in long-dated JGBs carrying negative yields, a sudden withdrawal of support for the long-end could roil the market in a repeat of what happened to the 2013 US Taper Tantrum and the 2015 Bund Tantrum, when in a very short period of time, benchmark bonds were liquidated en masse, resulting in tens of billions in mark to market losses for investors.

As a result, the reversal is spurring concern the second-largest debt market is the vanguard for a broader selloff.

Cited by Bloomberg, Chotaro Morita, the chief rates strategist at Tokyo-based SMBC Nikko Securities Inc., one of the 21 primary dealers that trade directly with the central bank, said that “The impact of the BOJ’s stimulus is that the bond markets worldwide are becoming one market. If there’s a reversal of policy, you can’t rule out that it would roil global debt.

Indeed, as we have shown repeatedly out over the past few weeks, and as JPM’s head quant, Marko Kolanovic, noted yesterday, with cross asset correlation soaring, not to mention with risk-party and CTA funds approaching record leverage, the risk is that investors frontrunning a perceived change in the BOJ’s policy in two weeks time could lead to a dramatic selloff in JGBs, which then spreads across to global fixed income markets, all of which trade like connected vessels.

Another risk factor is that just hours before the BOJ announces what may be a seachange in policy, the Fed itself will announce its latest monetary policy decision, which – in the case Yellen raises rates by another 25 bps – will further add to market dislocation.

* * *

But why so much attention on Japan? Well, Japan’s sway over global debt has increased in 2016. The correlation between securities in Tokyo and a gauge of worldwide bonds has risen to 0.86 this year, from 0.58 in 2015, according to Bank of America Corp. indexes. A correlation of 1 would mean they moved in lockstep.

Goldman Sachs warned in May that Japan could be the catalyst for the next international selloff in bonds. While there’s no immediate danger of a global spike in long-term yields amid tepid inflation worldwide, any shift in the BOJ’s unprecedented asset-purchase plan would have a ripple effect, according to Goldman’s Francesco Garzarelli.

“A change in tack by the BOJ would be felt on global bonds,” he said in e-mailed responses to questions on Wednesday.

Furthermore, in a note in early June, he also also warned that a sharp 1% spike in rates across the curve in the US alone, would result in MTM losses of $2.4 trillion.

That excludes the crossover impact into stocks, as a selloff in bonds leads to a correlated liquidation across equities, as a result of record leverage for Risk-Parity and other quant funds

… for whom coordinated selling in both asset classes could lead to dramatic deleveraging, and a positive feedback loop of even more selling.

Risk Parity

As BofA calculated one month ago, “even a relatively benign 2% selloff of the S&P coupled with just a 1% selloff of the 10Y could result in up to 50% deleveraging, which in turn would accelerate further liquidations by other comparable funds, and lead to a self-fulfilling crash across asset classes.”

A central bank-prompted market fiasco won’t be new: in 2015, it was euro-area government debt that was in the driving seat for fixed-income markets around the world. Traders were caught off guard as nascent signs of inflation and euro-zone economic growth fueled a bond rout that began in Europe and quickly spread. The 10-year German yield surged by more than one percentage point in less than two months, and the Bloomberg Global Developed Sovereign Bond Index lost more than $750 billion in market value between April 29 and June 5 last year.

Meanwhile, the selloff in Japanese bonds, as shown in the top chart, has already begun: Japan’s government debt has tumbled 2.1% this quarter, heading for its steepest such loss since 2003.

Making matters worse, the rush among Japanese investors to seek income in bonds abroad after Japan’s launch of Negative rates in January, have now started to dry up.  Japanese investors sold a net 1.33 trillion yen ($13.1 billion) of overseas debt in the week ended Sept. 2, unloading securities for the first time since June, according to Ministry of Finance data. That was after buying 4.72 trillion yen of U.S. sovereign bonds in July, the biggest amount in ministry data to 2005 after the record 4.95 trillion yen they purchased in March.

“Japanese purchases of Treasuries have stopped temporarily,” said Hideo Shimomura, the chief fund investor at Mitsubishi UFJ Kokusai in Tokyo. “Long-term yields in Japan have risen. Money will be coming back.” Incidentally, three months ago the world was shocked to learn that Mitsubishi UFJ had appealed the BOJ to quit as a primary dealer for the rapidly shrinking JGB market.

Which brings up another point: with virtually no sources of liquidity on either side of the market, the BOJ holding a third of all Japanese treasuries, and banks no longer actively involved in market making of JGBs, the market has never been more illiquid.

Which means that any coordinated selloff of longer-dated yields would certainly result in the infamous “VaR shock” which sent shockwaves across Japan in 2003. Recall that in early June, BOJ board member Takehiro Sato already knew which way the wind was blowing. As we wrote at the time, this is what he said:

Financial institutions are facing the risk of a negative spread for marginal assets due to the extreme flattening of the yield curve and the drop in the yield on government bonds in short- to long-term zones into negative territory. When there is a negative spread, shrinking the balance sheet, rather than expanding it, would be a reasonable business decision. In the future, this may prompt an increasing number of financial institutions to take such actions as restraining loans to borrowers with potentially high credit costs and raising interest rates on loans to firms with poor access to finance.


…a weakening of the financial intermediary functioning could affect the financial system’s resilience against shocks in times of stress. In addition, an excessive drop in bond yields in the super-long-term zone could also make the financial system vulnerable by increasing the risk of a buildup of financial imbalances in the system.

He concluded by saying that from financial institutions’ recent move to purchase super-long-term bonds in pursuit of tiny positive yield, “I detect a vulnerability similar to that seen before the so-called VaR (Value at Risk) shock in 2003.

* * *

So will the BOJ shock markets and unleash this year’s “bond tantrum”, one which would come at a time when there is an unprecedented $13 trillion in negative yielding bonds? According to Old Mutual Global Investors which oversees the equivalent of about $436 billion, a policy change aimed at steepening the yield curve wouldn’t be surprising, even though it would come at the expense of bondholders.

“It would definitely see some pain,” said Mark Nash, head of global bonds at the London-based fund manager. “Money flows across borders. It’s all linked.

How much pain?

If Sato, and Goldman, are right, and the BOJ is about to unwittingly launch a repeat of the 2003 VaR shock, this much:

What that selloff – in a time of soaring cross-asset correlations, record quant leverage and virtually non-existent market liquidity – would mean for equities, we don’t know, – but thanks to Haruhiko “Peter Pan” Kuroda, we will soon find out.


Big problems in China.  Many investors were expecting that China would devalue immediately after the G20 meeting.  However to the surprise of many they raised the Hibor rate and that crushed the yuan shorts.  It also launched a huge buying spree for Bitcoin.  Again we witnessed more dollars leaving China;.  55 billion USA left in July and 49 billion USA left in June. China’s total reserves (which includes gold) fell to 3.185 trillion uSA

(courtesy zero hedge)

Chinese Central Bank Crushes Yuan Shorts, Launching Bitcoin Buying Spree

With the Yuan having traded within fractions of what many consider a key psychological level for the USDCNY at 6.70, many traders expected that following the just concluded G-20 meeting in China, the PBOC would finally relent in its devaluation defense, and let the currency slide on through to the other side. Not only did that not happen, but overnight the Chinese Central bank unleashed one of the most furious attacks on currency Yuan shorts since the January devaluation scare when the cost of borrowing yuan in Hong Kong soared to a seven-month high amid.

The overnight HIBOR, or Hong Kong Interbank Offered Rate, jumped – seemingly without reason – by 3.88% points to 5.45%, the most expensive since February, according to Treasury Markets Association data. Other tenors joined with the one-week rate rose 2.09% points to 4.06%.

As Bloomberg confirms, the PBOC “may have tightened liquidity in the offshore yuan market to control declines following speculation that it would allow depreciation now that a Group of 20 summit is over, according to Mizuho Bank Ltd. The monetary authority drove offshore yuan borrowing costs to unprecedented levels in January in an effort to punish bears.

Ken Cheung, an FX strategist at Mizuho Bank, said that “everyone was talking about depreciation after the G20 meeting, and China could be reacting to that.” To be sure, the monetary authority was aware of the coming short attack as well, and simply preempted it by making costs of borrowing prohibitively expensive. As Ken adds, “the authorities may be repeating January’s trick – tighten liquidity and crack down on bearish speculation on the yuan.”

The mechanics of the move, used often in January and February when the Yuan was seemingly sliding every day, are as follows (courtesy of Bloomberg): China’s central bank influences funding costs in Hong Kong by encouraging state-owned banks to hold back from loaning their excess yuan. A surge in yuan Hibor hurts bears in two ways: by increasing the cost to borrow the currency and sell it, and also by prompting lenders that want to avoid paying the higher rates to buy the yuan they need in the spot market instead, bolstering the exchange rate.

It is unclear if the PBOC’s move, which to some smells of desperation, will have a long-lasting effect: the offshore yuan has dropped 0.6% versus the dollar since the start of August as Chinese data failed to quell concerns over the nation’s economic health and the Federal Reserve indicated it could raise borrowing costs this year. Furthermore, some banks such as JPM have voiced a certainly that China will cut rates by at least 25 bps in the coming months – a move which would further weaken the currency. As a result, depreciation bets have resurfaced in the derivatives market, with a three-month measure of expected yuan price swings surging the most since January last month. The offsetting good news, as reported this morning, is that the weaker yuan helped Chinese exports drop less than expected in August.

Meanwhile, the bogeyman for China, capital outflows, continue, and as China reported on Wednesday, the latest foreign reserve total dipped by $16 billion to $3.185 trillion.

While capital outflows have eased from record levels last year, firms and individuals still appear uncomfortable with exposure to China’s currency. A Bloomberg gauge of local companies’ willingness to convert foreign currencies into yuan is near a record low, while an unprecedented overseas acquisition binge suggests strong demand for exposure to foreign assets. A net $55 billion flowed out of China in July, compared with $49 billion in the previous month, according to calculations by Goldman Sachs.

Yet as outflows have persisted, the Yuan has done very little in recent months, which has spurred speculation that China’s central bank was propping up the exchange rate to deflect criticism of its policies during the G20 meeting,and that it would allow depreciation before the yuan’s entry into the International Monetary Fund’s reserves on Oct. 1. It appears that the PBOC was eager to not only reject such speculation, but to crush any news Yuan shorts.

Confirming that there was a directed intervention aimed at punishing shorts, Bloomberg adds, that the gap between overnight forwards and the spot rate in Hong Kong, so-called forward points, jumped to 20, the highest since February. The increase suggests the yuan’s supply was squeezed, according to Zhou Hao, an economist at Commerzbank AG in Singapore. The offshore currency rose to as high as 6.6637 per dollar before weakening 0.02 percent to 6.6725.

“The authorities could be trying to dry up liquidity in the offshore market in order to reduce bearish bets, as the exchange rate approached the sensitive level of 6.7 a dollar earlier,” said Banny Lam, head of research at CEB International Investment Ltd. in Hong Kong. “There’s still very strong expectation for the yuan to depreciate.”

For now the PBOC has won the battle, however it will likely lose the war: as Frances Cheung, head of rates for Asia ex-Japan at SocGen told Bloomberg, “front-end forward points coming off earlier highs suggests the squeeze could be temporary. The less flush offshore yuan liquidity conditions – as various flows subside – could amplify the movement in front-end rates should there be a sudden need for liquidity.”

* * *

Meanwhile, just as the PBOC intervened in the FX market, a new leak sprung in a totall different place: just as the central bank was squeezing Yuan shorts in Hong Kong, Bitcoin soared higher by another 3%, driven by a surge in buying on the Chinese Huobi exchange, sending the price for the digital currency back to a 1 month high.

As we first reported over a year ago, when it was trading at $230, bitcoin has become the “capital outflow alternative” of choice for numerous Chinese, and based on historical patterns, any time Chinese capital outflows spike, or the PBOC engages aggressively in preventing these, the price of bitcoin jumps, just as it did overnight.

Going forward the PBOC may be forced to intervene not only in the spot FX markets but also to short BTC as the local population gets increasingly creative in finding ways to bypass China’s great monetary firewall.



Another huge story:  Italy’s target 2 balances is a massive liability to other members of the EU despite having positive current account surplus with the rest of the world due to its strong manufacturing base. Do you have money leaving the banking sector due to its massive problems…

stay tuned

(courtesy zerohedge)

Italy Funding Panic? Target2 Liabilities Unexpectedly Soar To Record High

During the peak days of the European credit crisis in 2011 and 2012, one of the unfalsifiable indicators used by market watchers to observe the state of Italy’s banking system and regional fund flows (mostly outflows from the periphery, inflows into Germany and northern states), was the monthly Target2 balance. Positions within the Target2 system, which settles cross-border payments in the euro zone, are monitored because in a world where all other market signals are corrupt and distorted by central banks (Spanish 10Y bonds yield less than US bonds), they remain a reliable, concurrent indicator of financial stress, for example when banks in a country lose foreign funding.

Which is why we were surprised to learn that in the latest monthly update, Bank of Italy’s liabilities toward other eurozone nation soared by €35 billion in August, just shy of the biggest monthly increase on record, and reached an all time high of €327 billion, surpassing the previous records set in 2012, just prior to Draghi’s infamous “whatever it takes” speech.

What makes the surge in liabilties particularly notable is that Italy continues to sport a healthy current account surplus, suggesting the source of the outflows is likely found inside Italy’s banking sector. In July, the Bank of Italy said that the recent increase in its Target 2 position was driven by foreigners selling Italian assets, especially bonds, and Italians buying foreign assets, movements which were only partially offset by Italian banks raising more funds on international markets.

In August this trend accelerated dramatically, prompting questions just how dire is the true state of Italy’s banks, behind the shiny and cheerful facade presented on a daily day by Matteo Renzi, and whether this has anything to do with the recent decision by Milan prosecutors to end the probe for market manipulation, false accounting and corruption by insolvent Monte Paschi’s CEO and former chairman which “risked undermining investor sentiment.


As expected the ECB keeps rates unchanged and reaffirms that they will keep QE until March 2017 and probably BEYOND

(courtesy zero hedge)

ECB Keeps Rates Unchanged, Reaffirms Will Keep QE “Until March 2017 Or Beyond”

As largely expected, the actual ECB press announcement did not contain major surprises, which saw the ECB keep all three key rates unchanged, adding that “the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary” and that it expects “interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.”

There was some modest kneejerk market disappointment, expressed in German 10Y Bunds whose yields rose 3 bps to -0.09%, after the ECB did not lower the -0.40% deposit facility rate, as some had whispered may happen.

Perhaps more importantly, there was no formal extension to the QE program, which kept its old deadline, and which means that the ECB will extend the duration at its December meeting as much of the sellside community had expected.

From the press release:

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

Regarding non-standard monetary policy measures, the Governing Council confirms that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

Now all attention turns to Draghi’s press conference in 45 minutes.


And now the conference: wow!!

no discussion on extension of asset purchase plan and also states that no additional stimulus is needed?

Euro surges above 1.13! and Euro stocks are slumping!

gold is hit a bit.

(courtesy zero hedge)

DAX Dumps, EUR Surges After Draghi Dashes “Moar QE” Hopes, Warns Of “Major Market Dislocations”

And just like that, hope was dashed…


EURUSD is surging back above 1.13, and EU stocks are slumping.

“We discussed the growth projections. We did not discuss anything else,” European Central Bank President Mario Draghi says at a press conference in Frankfurt on Thursday.

“We tasked the relevant committees to work on the smooth implementation and the changes needed for the smooth implementation of our program

  • QE program is effective
  •  Lack of upward inflation pressure is a concern
  • No additional stimulus needed for the time being, Draghi says

And then went so far as to admit the following…


EURUSD shorts unhappy…

DAX Shorts happy…

And Bund yields are spiking...

We are going to need another press conference tomorrow to talk this back.



And as zero hedge has speculated, the ECB will probably run out of bonds to buy as early as this November.  Then the fun begins:

(courtesy zero hedge)


The ECB’s QEnundrum: Draghi May Run Out Of Bonds To Buy As Soon As November

Yesterday we pointed out the many “Conundrums Of A Policy Maker” which focused on the waning ability of central banks and sovereign governments to continue to control asset prices as their traditional forms of stimulus are reaching the end of their useful life.  As proof of just how ineffective the marginal stimulus from Central Banks has become, the Financial Times points out this morning that the ECB will likely have bought every dollar of eligible debt available by the end of this year under its $1.6 trillion QE program.

As the FT points out, there is about $7.5 trillion of government and agency paper outstanding in the EU.  That said, the ECB is restricted to purchasing bonds with maturities ranging from 2-30 years and with a yield above the eurozone’s deposit rate of -0.4%.  According to FT calculations, those restrictions eliminate roughly $1.5 trillion of eligible paper.  Moreover, the ECB is also restricted from purchasing more than 33% of any given issuance or of a single country’s outstanding debt which reduces total supply of eligible paper further to just $2.0 trillion which is only slightly more than the $1.6 trillion approved for the QE program.

That said, other rules require the ECB to make purchases on a pro-rata basis in-line with the size of the economies of its member states. Therefore, the ECB will likely run out of paper to buy in larger countries like Germany earlier than others.  Per the FT, many analysts are starting to speculate that the ECB will have bought every single available bond by the end of 2016.

The mechanics of the ECB’s quantitative easing project means banks and investors believe the central bank cannot keep on buying €80bn of bonds a month as planned — or extend quantitative easing — unless it relaxes rules about what it can buy.


With the eurozone’s recovery proving relatively lacklustre, the ECB has vowed to continue QE at least until March and many economists expect it will be forced to prolong the programme beyond that date.


But credit analysts at banks including Citi, HSBC, Bank of America Merrill Lynch, BNP Paribas and JPMorgan and investors such as Pimco all say the €1.6tn programme is fast approaching a wall, perhaps as early as this year. The trouble is that no one outside the ECB knows how close the wall is.


Citi believes the squeeze is so severe that the ECB will run out of German paper to buy in November, although BofA thinks the programme can run unaltered until the end of the year.

And, as we concluded yesterday, there’s only one thing left to do when you’ve lowered interest rates to below 0% and purchased every piece of sovereign paper possible.



none today



Earnings for many firms will suffer as chaos on the high seas reigns supreme.  e have 14 billion in uSA cargo stranded at sea.  The crews have only a week left of food and water;
(courtesy zerohedge)

“It’s Bordering Chaos”: $14 Billion In Cargo Stranded At Sea, Crews “Go Crazy” On Hanjin Ghost Ships


Both API and EIA report lower inventory levels as huge drawdowns due to hurricane Hermine:

(courtesy zero hedge)

Crude Soars Above $47 After Biggest Inventory Draw Since 1999

Following last night’s API-reported 12mm barrel drawdown (the most since 1999) – attributed to last week’s Gulf shut-ins due to tropical storm Hermine – EIA reported an even bigger 14.5 million barrel draw. Production fell for the 3rd week and Distillates saw a big inventory build but the headline crude build dominated algos which spiked WTI above $47.


  • Crude -12.08mm (exp +905k)
  • Cushing -0.7mm (exp -900k)
  • Gasoline -2.388mm (exp -750k)
  • Distillates +944k


  • Crude -14.5mm (exp +905k)
  • Cushing -434k (exp -900k)
  • Gasoline -4.2mm (exp -750k)
  • Distillates +3.38mm

The breakdown of crude imports, which dipped 21% to 7069k b/d from 8917k last week, and the lowest since November, by region was as follows:

  • PADD1: 581k vs 1239k, -53.1%
  • PADD2: 2468k vs 2566k
  • PADD3: 2478k vs 3237k, -23.5%
  • PADD4: 333k vs 236k
  • PADD5: 1209k vs 1639k

The EIA added that Gulf Coast (PADD3) crude imports fell to 2.48m b/d, the lowest since at least 1990.

Distillates saw a big build.

API’s reported 12mm draw (which made sense in the context of major draws during 2008 and 2013 storm seasons in the Gulf) and DOE confirmed it with the biggest draw since Jan 1999…

Unexpectedly large drop in U.S. crude imports, which led to falling inventories and price surge, was due to Tropical Storm Hermine, and thus could be temporary phenomenon that may reverse, according to Commerzbank and other analysts.

Following Crude production’s sudden dramatic rise 3 weeks ago, US production has fallen back for the 3rd week.

Gasoline stocks declined further, dropping by 4.2mmbbls to 228 million in the week ended September 2.

East coast gasoline stocks likewise fell notably, declining by 2.3mmbbls to 64.9 million in the past week.

Following last night’s post-API gains, Iran comments combined with Draghi’s letdown were weighing on prices before the EIA data hit, which then exploded above $47.

As Bloomberg noted,

“It’s the numbers from last night that are pushing up oil prices,” says Gerrit Zambo, trader at BayernLB in Munich.

“Even if we see a bullish number this afternoon I wouldn’t bet on rising prices for too long”

The question is with the temporary storm shutdown over, and rigs back to work, just how big the rebound next week will be.

The Algos may have run out of steam…

Charts: Bloomberg, Reuters



There are 4 scenarios that can happen for oil producers ahead of the next oil summit in Algiers.  You can skip one through 3, only number 4 will be the resultant:

(COURTESY BLOOMBERG/Angelina Rascouet/zero hedge)


Four Scenarios For Oil Producers Ahead Of Algiers

With oil prices surging on the ‘one-off’ crash in US inventories (as algos run riot once again), overnight remarks from Iran, largely dashing hopes of any freeze agreement in Algiers at the end of September appear to have been forgotten. However, after two years of a Saudi-led strategy of all-out pumping, adopted to protect market share against the surge in U.S. shale oil, OPEC and Russia are putting cooperation back on the table. Their last attempt to do this – a proposal to freeze output in April – collapsed inacrimony because of rivalry between Saudi Arabia and Iran.

As Bloomberg’s Angelina Rascouet details,there may be four potential outcomes from the Algiers talks

1. Production Freeze

A freeze in production by OPEC and Russia would be the most effective way of stabilizing the market, Alexander Novak, the Russian energy minister, said in a joint press conference at the G-20 summit in China with his Saudi counterpart on Sept. 5. Novak said his country is ready to cap output at the level of any month in the second half of this year, a period that so far has delivered record volumes from both Russia and OPEC.

A freeze at July levels, the most recent month for which data is available, would mean OPEC keeping production at 33.4 million barrels a day, roughly in line with demand for the group’s crude in the fourth quarter, according to data from the International Energy Agency. The Paris-based adviser already expects Russia to hold output steady for the rest of this year and into 2017.

The major hurdle to freezing at current levels would be getting Nigeria, Libya and Iran on board,according to London-based consultant Capital Economics Ltd. Those countries’ output has been severely constrained in recent years and they all hope to resume lost production. Political divisions have halted Libyan fields, Iran is still restoring exports halted by sanctions over its nuclear program and armed groups have attacked Nigeria’s oil infrastructure.

2. Freeze Exemptions

“If they say a freeze at current levels, but making allowances for Iran, Nigeria and Libya, then you’re effectively freezing at a couple of million barrels above where you are today,” Thomas Pugh, commodities economist at Capital Economics, said by phone.

Several countries could potentially add barrels to the market:

  • Iran is determined to raise production to 4 million barrels a day this year, from about 3.8 million currently, as it recovers market share after years of sanctions.
  • Nigeria, which produced 1.44 million barrels a day last month according to data compiled by Bloomberg, is seeking to end the militant attacks and get back to the 2 million barrels a day it pumped in January.
  • Libya is working to reopen its main export terminals, which could boost output to 1.2 million barrels a day by the end of the year, from about 300,000 a day currently.
  • Iraq and Venezuela are also pumping less crude now than in January, so could seek a higher cap on their output.

Under this scenario, OPEC could in theory get to pump as much as 36.2 million barrels a day by next year, about 2.7 million barrels a day more than the IEA’s estimate of demand for the group’s crude in 2017. That’s a bigger surplus than in 2015, a year in which oil prices dropped more than a third.

3. Production Cut

OPEC has on occasion overcome internal divisions and agreed to radical measures, most notably to slash production during the 2008 financial crisis.

Previous cuts worked because Saudi Arabia carried most of the burden, said Spencer Welch, director for oil markets and downstream at IHS Markit in London. Now the kingdom “has been quite clear that they are no longer willing to support prices on their own,” he said.

Since the oil slump began in 2014, Saudi Arabia and its Gulf allies have repeatedly resisted pressure from other members to cut production. Russia has pledged in the past to coordinate cuts with OPEC, but that’s typically come to nothing.

Cuts are the most unlikely scenario, said Capital Economics’s Pugh. If they were to happen, it would have by far the biggest impact on the markets and “you would see prices surge,” he said.

4. Do Nothing

The most likely scenario is that the talks don’t yield any curbs on output, said Pugh.

When that happened at the April freeze talks in Doha, prices slid right after the collapsed deal, but the impact was offset by an oil workers strike in Kuwait. The market continued to recover in the following months as wild fires shut down output in Canada and attacks in Nigeria cut production.

There may be some downside for OPEC if it fails again to reach an agreement, said David Fyfe, head of market research and analysis at oil trader Gunvor Group Ltd. “At some stage it’s the law of diminishing returns, when you keep talking about a production agreement and not actually reach one,” he said.

*  *  *

For now it appears the extreme positioning in crude futures has abated and headline-driven squeezes are off the cards but as we draw closer to Algiers, we suspect the headline-hockey will once again erupt.


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



GBP/USA 1.3353 UP .0016 

USA/CAN 1.2877 DOWN .0010

Early THIS THURSDAY morning in Europe, the Euro ROSE by 58 basis points, trading now well above the important 1.08 level FALLING to 1.1296; 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 4.02 POINTS OR 0.13%    / Hang Sang CLOSED UP 177.53 POINTS OR 0.75%     /AUSTRALIA IS LOWER BY .71% / EUROPEAN BOURSES ALL  MIXED 

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

2, the Nikkei average vs gold carry trade ( NIKKEI blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this WEDNESDAY morning CLOSED DOWN 53.67 POINTS OR 0.32%  

Trading from Europe and Asia:
1. Europe stocks ALL MIXED

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 177.53 POINTS OR 0.75%  ,Shanghai CLOSED UP 4.02  POINTS OR 0.23%    / Australia BOURSE IN THE RED: /Nikkei (Japan)CLOSED IN THE RED   INDIA’S SENSEX IN THE GREEN 

Gold very early morning trading: $1347.50


Early THURSDAY morning USA 10 year bond yield: 1.551% !!! UP 1  in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield  2.249, UP 1 IN BASIS POINTS  from YESTERDAY night. 

USA dollar index early THURSDAY morning: 94.58 DOWN 38 CENTS from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING



And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.07%  UP 9 in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.034% UP 1 in   basis point yield from WEDNESDAY

SPANISH 10 YR BOND YIELD:0.987% UP 5 IN basis point yield from WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.15 UP 7 in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 17 points HIGHER than Spain.





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

Euro/USA 1.1253 UP .0015 (Euro UP  15 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 102.47 UP .638(Yen DOWN 64 basis points/


USA/Canada 1.2916 UP 0.0033 (Canadian dollar DOWN 33 basis points AS OIL ROSE (WTI AT $45.44). Canada keeps rate at 0.5% and does not cut!


This afternoon, the Euro was UP by 15 basis points to trade at 1.1253

The Yen FELL to 102.47 for a LOSS of 64 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE 

The POUND was DOWN 40 basis points, trading at 1.3297/

The Canadian dollar FELL by 33 basis points to 1.2916, DESPITE WTI OIL AT:  $47.61


The USA/Yuan closed at 6.6640

the 10 yr Japanese bond yield closed at -.034% DOWN 3 IN BASIS POINTS / yield/ AND THIS IS BECOMING BOTHERSOME TO THE BANK OF JAPAN

Your closing 10 yr USA bond yield: UP 8 IN basis points from WEDNESDAY at 1.618% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.326  UP 9 in basis points on the day / NOT GOOD WITH THE DOW TANKING TODAY


Your closing USA dollar index, 95.07 UP 11 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED UP 12.12 POINTS OR 0.18%
German Dax :CLOSED DOWN 77.69 OR  0.72%
Paris Cac  CLOSED DOWN 15.46 OR 0.34%
Spain IBEX CLOSED UP 85.80 OR 0.96%
Italian MIB: CLOSED UP 82.89 POINTS OR 0.48%

The Dow was DOWN 46.23 points or 0.25% 

NASDAQ down  24.44 points or 0.46%
WTI Oil price; 47.61 at 4:30 pm;

Brent Oil: 49.98




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

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


BRENT: 49.67

USA 10 YR BOND YIELD: 1.601% 

USA DOLLAR INDEX: 95.03 UP 6 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.32927 DOWN .0042 or 42 basis pts.

German 10 yr bond yield at 5 pm: -0.065%


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


Oilgasm Unable To Save Stocks As Draghi ‘Dud’ Sparks Bond Bloodbath

Are they losing control?


China/Hong Kong Money Markets “broke” overnight – amid tightening liquidity from PBOC – and that seemed to stir problems around the world…


Draghi’s disappointing lack of MOAR sparked selling


Something was different about today… The dip was bought BUT it didn’t hold...


Trannies were green again today…and Nasdaq lost ground


But The Dow was unable to get green on the week… (thanks to AAPL)


Despite the “great news” that bond yields are rising, US financials disappointed (but Energy stocks soared)…


But it is Retail/Consumer-focused stocks (h/t Doug Kass) that are notably rolling over as Nasdaq makes record highs…


And AAPL was monkey-hammered… worst day in 3 months…


The USD Index rose today as early EUR weakness on Draghi disappointment was turned around into panic selling for no good reason but oil’s strength…


Bond markets were a bloodbath today after what appears like proxy panic selling out of Japan combined with Draghi disappointment…


The 9bps spike in 30Y Treasury yields was the biggest spike since Dec 2015…as 30Y yield tests the top of its 2 month range again…This was 30Y Yield’s highest close since June 24th – when Brexit hit

Bonds and Stocks recoupled (buit bonds overshot)


Silver and gold lagged modestly on the day as Crude soared…


Today’s almost 5% spike in crude is the biggest in 5 months…


But oil’s spike failed to help stocks…


Charts: Bloomberg

Bonus Chart: Time to dust off the Gold vs Japanese VaR shock chart…




How can the dept of Labour explain poor PMI and ISM numbers on both manufacturing and service with lower jobless claims?


(courtesy zero hedge)

Dear Department Of Labor, Please Explain This

The last week has seen both PMI and ISM surveys for both manufacturing and services economies in America collapse. The hope-strewn bounce in Q2 is officially dead and leading this demise is a crash in employment components. So that leaves us, after today’s near 40-year lows initial jobless claims print at 259k, asking The Department of Labor… please explain this…

And then there’s this…

“probably nothing”




Michael Snyder on how the big one trillion uSA auto loan bubble will burst:

(courtesy Michael Snyder/EconomicCollapse blog)

The One Trillion Dollar Consumer Auto Loan Bubble Is Beginning To Burst

Submitted by Michael Snyder via The Economic Collapse blog,

Do you remember the subprime mortgage meltdown from the last financial crisis?  Well, this time around we are facing a subprime auto loan meltdown.  In recent years, auto lenders have become more and more aggressive, and they have been increasingly willing to lend money to people that should not be borrowing money to buy a new vehicle under any circumstances.  Just like with subprime mortgages, this strategy seemed to pay off at first, but now economic reality is beginning to be felt in a major way.  Delinquency rates are up by double digit percentages, and major auto lenders are bracing for hundreds of millions of dollars of losses.  We are a nation that is absolutely drowning in debt, and we are most definitely going to reap what we have sown.

The size of this market is larger than you may imagine.  Earlier this year, the auto loan bubble surpassed the one trillion dollar mark for the first time ever

Americans are borrowing more than ever for new and used vehicles, and 30- and 60-day delinquency rates rose in the second quarter, according to the automotive arm of one of the nation’s largest credit bureaus.

The total balance of all outstanding auto loans reached $1.027 trillion between April 1 and June 30, the second consecutive quarter that it surpassed the $1-trillion mark, reports Experian Automotive.

The average size of an auto loan is also at a record high.  At $29,880, it is now just a shade under $30,000.

In order to try to help people afford the payments, auto lenders are now stretching loans out for six or even seven years.  At this point it is almost like getting a mortgage.

But even with those stretched out loans, the average monthly auto loan payment is now up to a record499 dollars.

That is the average loan size.  To me, this is absolutely infuriating, because only a very small percentage of wealthy Americans are able to afford a $499 monthly payment on a single vehicle.

Many middle class American families are only bringing in three or four thousand dollars a month (before taxes).  How in the world do they think that they can afford a five hundred dollar monthly auto loan payment on just one vehicle?

Just like with subprime mortgages, people are being taken advantage of severely, and the end result is going to be catastrophic for the U.S. financial system.

Already, auto loan delinquencies are rising to very frightening levels.  In July, 60 day subprime loan delinquencies were up 13 percent on a month-over-month basis and were up 17 percentcompared to the same month last year.

Prime delinquencies were up 12 percent on a month-over-month basis and were up 21 percentcompared to the same month last year.

We have a huge crisis on our hands, and major auto lenders are setting aside massive amounts of cash in order to try to cover these losses.  The following comes from USA Today

In a quarterly filing with the Securities and Exchange Commission, Ford reported in the first half of this year it allowed $449 million for credit losses, a 34% increase from the first half of 2015.

General Motors reported in a similar filing that it set aside $864 million for credit losses in that same period of 2016, up 14% from a year earlier.

Meanwhile, other big corporations are also alarmed about the economic health of average U.S. consumers.  Just check out what Dollar General CEO Todd Vasos had to say about this just the other day

I know that when we look at globally the overall U.S. population, it seems like things are getting better. But when you really start breaking it down and you look at that core consumer that we serve on the lower economic scale that’s out there, that demographic,things have not gotten any better for her, and arguably, they’re worse. And they’re worse, because rents are accelerating, healthcare is accelerating on her at a very, very rapid clip.

The stock market may seem to be saying that everything is fine (for the moment), but the hard economic numbers are telling a completely different story.  What we are experiencing right now looks so similar to 2008, and this includes big institutions just dropping dead seemingly out of the blue.  On Tuesday, we learned that ITT Technical Institute is immediately shutting down and permanently closing all locations.  This is from a Los Angeles Times report

The company that operates the for-profit chain, one of the country’s largest, announced that it was permanently closing all its campuses nationwide. It blamed the shutdown on the recent move by the U.S. Education Department to ban ITT from enrolling new students who use federal financial aid.

“Two quarters ago there were rumors about the school having problems, but they told us that anyone who was already a student would be allowed to finish,” said Wiggins, who works as the assistant manager for a family-run auto parts business and went to ITT to open new opportunities.

“Am I angry?” he said. “I’m like angry times 10 million.”

As a result of this shutdown, 35,000 students are suddenly left out in the cold and approximately 8,000 employees have lost their jobs.

This is what happens during a major economic downturn.  Large institutions that may have been struggling under the surface for quite a while suddenly give up and drop a bomb on those that were depending on them.  In the months ahead, there will be a lot more examples of this.

Already, some of the biggest corporate names in America have been laying off thousands of workers in 2016.  Mass layoffs are usually an early warning sign that big trouble is ahead, so keep a close eye on those companies.

The pace of the economic decline has been a bit slower than many (including myself) originally anticipated, but without a doubt it has continued.

And it is undeniable that the stage is set for a crisis that will absolutely dwarf 2008.  Our national debt has nearly doubled since the beginning of the last crisis, corporate debt has doubled, student loan debt has crossed the trillion dollar mark, auto loan debt has crossed the trillion dollar mark, and total household debt has crossed the 12 trillion dollar mark.

We are living in the greatest debt bubble in world history, and there are signs that this giant bubble is now starting to burst.  And when it does, the pain is going to be greater than most people would dare to imagine.


Charles Ortel is a Wall Street analyst who is well respected.  He is the one who noted huge financial discrepancies with General Electric whose stock crashed in 2008 after his report.

He now states that the Clinton Foundation is one big charity fraud

(courtesy zero hedge/Charles Ortel)

“Clinton Foundation Is Charity Fraud Of Epic Proportions”, Analyst Charges In Stunning Takedown



Total credit jumps by 18 billion in july and the winning sector: student and auto loans. With weak car sales we wonder what the loans given were spent on:

The total loans now are $1.4 trillion USA. Total auto loans now eclipse $1 trillion USA.

(courtesy zero hedge)



Consumer Credit Jumps By $18 Billion In July; Student, Auto Loans Hit $2.4 Trillion

After last month the Fed reported that in June revolving, i.e. credit card, credit unexpectedly soared by $7.7 billion, the second highest monthly increase since the financial crisis, many were popping the champagne, ready to celebrate the return of the consumer’s “animal spirits” who were out and about, and most importantly, charging it.  One month later, we find that the June revolving credit spike was even higher, rising by $9.2 billion following today’s revision.  However, as a result, the July consumer credit grew by just $2.8 billion to start the third quarter, the smallest amount since February, suggesting that the prior month’s spike may have been a one-time fluke.

Perhaps more troubling is that while non-revolving credit rose just by only a revised $5 billion in June, this credit item, which is almost entirely in the form of student and car loans, once again spiked, rebounding to $14.9 billion in July.

In any case, as a result of these two series, in July total consumer credit rose by $17.7 billion in
July, up from last month’s upward revised $14.53 billion, and above the
$16 billion expected, as US consumers continued to get increasingly more

However, while the credit spigot appears to be fully functional once again, it does not explain the disappointing car sales numbers in recent months, which prompted Ford earlier this week to warn that US car sales have now hit a “plateau.” If so, one wonders just what these car loans, which total $1.1 trillion, are being spent on.


As for the student loans, which now amount to $1.4 trillion, the endgame there is clear, and was provided by this week’s dramatic collapse of ITT Tech: sooner or later, all such loans will be forgiven at the expense of the US taxpayer.



Well that is all for today

I will see you tomorrow night



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