Sept 16/With China on a two day holiday, yesterday and today, the crooks orchestrated another raid knowing the Chinese will not purchase any physical while on holiday/European and Japanese bankers are threatening mutiny with new Basel III as they cannot come up with required collateral/Deutsche bank clobbered today with new 16 billion fine from the USA for the fraudulent mortgaged backed securities/DB stock plummets as well as its bonds/Mexico peso crashes to almost 20:1/

Gold $1307.80 down $7.20

Silver 18.80  down 16 cents

In the access market 5:15 pm

Gold: 1310.50

Silver: 18.79



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

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

Shanghai morning fix Sept 16 (10:15 pm est last night): $  not available/holiday


Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   not available/holiday



London Fix: Sept 16: 5:30 am est:  $1314.25   (NY: same time:  $1314.50:    5:30AM)

London Second fix Sept 16: 10 am est:  $1309.00*  (NY same time: $1309.00 ,    10 AM)*after another beautifully orchestrated criminal raid today.

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.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

For comex gold:The front September contract month we had 11 notices filed for 1100 oz

For silver:  the front month of September we have a total of 149 notices filed for 745,000 oz


Last night, in my commentary to you I wrote:

“Yesterday, you could have bet the farm that there is going to be a raid on gold and silver today due to the Chinese festival.  They will be on holiday until Monday.  With no physical to draw on, it was relatively easy for our crooks to supply 70 tonnes of gold in seconds to cause gold to falter down to 1308.00 before recovering.”


With the raid today, I guess I was correct.

Let us have a look at the data for today



In silver, the total open interest FELL by 992 contracts down to 192,474. The open interest fell as   the silver price was down 2 cents in yesterday’s trading .In ounces, the OI is still represented by just LESS THAN 1 BILLION oz i.e. .962 BILLION TO BE EXACT or 137% of annual global silver production (ex Russia &ex China). the crooks are doing a great job fleecing unsuspecting longs

In silver we had 149 notices served upon for 745,000 oz

In gold, the total comex gold fell by 3,204 contracts as the price of gold fell BY $8.00 yesterday . The total gold OI stands at 570,619 contracts.  The level of OI now is good for us as it will support a rise in gold price.


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



Total gold inventory rest tonight at: 932.22 tonnes of gold


we had no changes with respect to inventory at the SLV

THE SLV Inventory rests at: 362.434 million oz


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

1. Today, we had the open interest in silver fell by 992 contracts down to 192,474 as the price of silver fell by 2 cents with yesterday’s trading.The gold open interest fell 3,204 contracts down to 570,619 as the price of gold fell $8.00 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

2c) COT report




i)Late  THURSDAY night/FRIDAY morning: Shanghai closed FOR HOLIDAY/ /Hang Sang closed for holiday. The Nikkei closed UP 114.28 POINTS OR 0.70% Australia’s all ordinaires  CLOSED UP 0.70% Chinese yuan (ONSHORE) closed HUGELY DOWN at 6.6744/Oil FELL to 43.20 dollars per barrel for WTI and 45.70 for Brent. Stocks in Europe: ALL IN THE RED   Offshore yuan trades  6.6448 yuan to the dollar vs 6.6744 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS HUGELY TO BLOCK  MORE USA DOLLARS AS IT ATTEMPTS TO LEAVE CHINA’S SHORES





This is interesting.  The European and Japanese bankers are threatening to mutiny the new Basel III capital rules that was suppose to start on Sept 1 but these guys got a temporary reprieve.  Obviously they will have considerable trouble raising the necessary capital requirement

( zero hedge)


none today



i)The Dept of Justice is now paying back Europe for their tax grabbing of Apple’s income in that part of the world.  They just hit the extremely vulnerable Deutsche bank with a monstrous 14 billion dollar fine over those mortgaged back securities back in 2008 era.

The shares of DB tanked immediately!

( zero hedge)


ii)The CEO rejects the Dept of Justice settlement:

( zero hedge)

iii)Deutsche bank’s bonds are dropping like a stone as systemic risk increases dramatically.

Remember that this bank has the highest derivatives on the planet at 72 trillion USA
(courtesy zero hedge)
i)This is interesting.  The Greek prosecutors have raided the office of the central bank of Greece as well as offices of his wife. Something going on here!
( zero hedge)


none today


i)An extremely important commentary and video.  Spitznagel is one smart cookie and he warns that if the Fed ever hikes, the markets will go down very hard and probably 50%

a must view..

( zero hedge/Spitznagel)


ii)The Mexican Peso crashes to 20:1 today and the currency is now at record lows.  it is interesting that it is also crashing as the popularity of Donald Trump increases.  The threat of higher USA interest rates is having a devastating effect on emerging nations like Mexico as commodities are being killed.  The low oil price is certainly not helping Mexico

( zero hedge)


Oil tumbles again to one month lows as new supplies are coming onstream from Libya and Nigeria:

( zero hedge)


none today


i)Bill Murphy and Chris Powell interviewed by Lars Schall

ii)I brought this to your attention yesterday but it is worth repeating, showing what criminals we are dealing with(courtesy Dave Kranzler/IRD)

iii)This is a terrific informational graph depicting the India and their love for gold.Indian citizens have accumulated over time 23,000 tonnes of gold out of 165,000 tonnes mined or 14% of total world production from time zero

( Ronan Manly/Bullionstar/GATA)


i)Oh OH! Goldman Sachs not only downgrades the S & p 500 but also the big European Stoxx 600 as the state the valuations are just too high and there is extreme risk of shocks.

( Goldman Sachs/zero hedge)


ii)Today we had the release of the core CPI and it is now higher than the Fed’s ceiling level of 2% coming in at 2.3%.  The big costs were rent and healthcare costs

( zero hedge)

Let us head over to the comex:

The total gold comex open interest fell to an OI level of 570,619 for a loss of 3204 contracts as the price of gold FELL by $8.00 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 61 contracts DOWN to 148. We had 94 notices filed yesterday so we GAINED 33 contracts or 3300 additional oz will stand for delivery. The next delivery month is October and here the OI FELL by 257 contracts down to 39,533. 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 decrease of 3,461 contracts down to 423,897 .The estimated volume today at the comex: 171,811 fair  Confirmed volume yesterday: 210,555 which is good.


Today we had  11 notices filed for  1100 oz of gold.

And now for the wild silver comex results.  Total silver OI fell by 992 contracts from 193,466 down to 192,474 with the FALL in price of silver to the tune of 2 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 28 contracts down to 802. We had 94 notices filed upon YESTERDAY so we GAINED BACK ANOTHER 66 contracts or 330,000 additional oz will stand for delivery in this active month of September. The next non active delivery movement of October hardly moved FELL by 6 contracts DOWN to 276 contracts.  The next big delivery month is December and here it FELL by 920 contracts DOWN to 167,367. The volume on the comex today (just comex) came in at 59,956 which is excellent  The confirmed volume yesterday (comex and globex) was huge  at 84,733 . Silver is not in backwardation.  London is in backwardation for several months.

today we had 149 notices filed for silver: 745,000 oz

 SEPT 16.
Withdrawals from Dealers Inventory in oz  


Withdrawals from Customer Inventory in oz  nil
93,979.719 oz
incl 950 kilobars
Deposits to the Dealer Inventory in oz NIL oz
Deposits to the Customer Inventory, in oz 
546.55 oz
17 kilobars
No of oz served (contracts) today
11 notices 
1,100 oz
No of oz to be served (notices)
137 contracts
(13,700 oz)
Total monthly oz gold served (contracts) so far this month
2427 contracts
242,700 oz
7.5489 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   170,009.7 oz
 Today; huge activity at the gold comex and 2 kilobar entries and another massive amount of gold leaving the comex
We had 0 dealer deposit:
Total dealer deposits; NIL oz
We had 0 dealer withdrawals:
total dealer withdrawals; NIL oz
we had 1 customer deposits:
i) Into Manfra; 546.55 oz (17 kilobars)
Total customer deposits: 546.55 oz.
 We had 2 huge customer withdrawals:
i) Out of JPMorgan:  63,437.219 oz
ii) Out of Scotia; 03,542.500 oz (950 kilobars)
total customer withdrawals: 93,979.719 oz
Today we had 1 adjustment:
i) Out of Delaware:  578.700 oz was adjusted out of the customer and this landed into the dealer account of JPM
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 11 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 (2427) x 100 oz or 242,700 oz, to which we add the difference between the open interest for the front month of SEPT (148 contracts) minus the number of notices served upon today (11) x 100 oz per contract equals 261,400 oz, the number of ounces standing in this  NON active month of September.
Thus the INITIAL standings for gold for the SEPT contract month:
No of notices served so far (2427) x 100 oz  or ounces + {OI for the front month (148) minus the number of  notices served upon today (11) x 100 oz which equals 261,400 oz standing in this non  active delivery month of SEPT  (8.1306 tonnes).
we GAINED 33 contracts or an additional 3300 oz will  stand.  We have surpassed  our original standings on first day notice. (ON FIRST DAY NOTICE 7.5561 TONNES STOOD FOR DELIVERY) as well as surpassing the 8 tonne mark.  This is without a doubt a record level of gold ounces standing for September.
 Total dealer inventor 2,329,260.475 or 72.449 tonnes
Total gold inventory (dealer and customer) =10,787,852.910 or 335.84 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 338.45 tonnes for a  gain of 33  tonnes over that period. However since August 8 we have lost 15 tonnes leaving the comex.
Ladies and Gentlemen:  the comex is beginning to lose some of its gold as no doubt the Shanghai fix is having its effect.
The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent!

To me, the only thing that makes sense is the fact that “kilobars” are entries or hypothecated gold sent to other jurisdictions so that they will not be short in their derivatives like they are in England.  This would be similar to the rehypothecated 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
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
251,443.480 oz
Deposits to the Dealer Inventory
 583,351.600  OZ
Deposits to the Customer Inventory 
 1,156,123.700 oz
No of oz served today (contracts)
(745,000 OZ)
No of oz to be served (notices)
653 contracts
(3,265,000 oz)
Total monthly oz silver served (contracts) 2459 contracts (12,245,000 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  4,021,672.1 oz
today, we had 1 deposit into the dealer account:
i) Into CNT; 583,351.600 oz
total dealer deposit:  583,351.600 oz
we had 0 dealer withdrawals:
 total dealer withdrawals: NIL oz
 we had 2 customer withdrawals:
i) Out of Brinks:  150,689.650 oz
ii) Out of Scotia; 100,753.830 oz
Total customer withdrawals: 251,443.480  oz
We had 2 customer deposit:
i) Into CNT:  11,805.700 oz
ii) Into  HSBC: 1,15,123.700
total customer deposits:  1,167,929.400  oz
 we had 1 adjustment
Out of CNT:  605,441.54 oz was adjusted out of the customer and this landed into the dealer account of CNT
The total number of notices filed today for the SEPT contract month is represented by 149 contracts for 745,000 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 (2427) x 5,000 oz  = 12,245,000 oz to which we add the difference between the open interest for the front month of SEPT (802) and the number of notices served upon today (149) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the SEPT contract month:  2427(notices served so far)x 5000 oz +(802 OI for front month of SEPT ) -number of notices served upon today (149)x 5000 oz  equals  15,510,000 oz  of silver standing for the SEPT contract month.
we GAINED 66 contracts or an additional 330,000 will stand FOR DELIVERY IN THIS  ACTIVE MONTH OF SEPTEMBER. 
Total dealer silver:  31.155 million (close to record low inventory  
Total number of dealer and customer silver:   169.290 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.
At 3:30 pm we receive the COT report and my goodness did the bankers fleece the speculators again.  I wonder when they will learn not to play with these crooks:
First your gold COT:
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
351,776 66,363 52,492 116,841 428,212 521,109 547,067
Change from Prior Reporting Period
-18,599 3,848 -3,380 6,371 -12,231 -15,608 -11,763
197 95 86 51 61 292 207
  Small Speculators      
  Long Short Open Interest    
  53,893 27,935 575,002    
  -46 -3,891 -15,654    
  non reportable positions Change from the previous reporting period
Our large specs:
Those large specs that have been long in gold were fleeced to the tune of 18,599 contracts.]
Those large specs that have been short in gold covered 3380 contracts from their short side
Our criminal commercials;
those commercials that have been long in gold added 6371 contracts to their long side
those commercials that have been short in gold covered a whopping 12,231 contracts from their short side.
Our small specs;
those small specs that have been long in gold added 46 contracts to their long side
those small specs that have been short in gold covered 3891 contracts from their short side.
Conclusions: more bullish today as the bankers go net long by 18,602 contracts
and now for our silver COT
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
113,792 32,224 8,174 45,479 142,154
-4,267 2,193 -640 -491 -3,398
115 47 32 33 37
Small Speculators Open Interest Total
Long Short 193,953 Long Short
26,508 11,401 167,445 182,552
154 -3,399 -5,244 -5,398 -1,845
non reportable positions Positions as of: 161 106
  Tuesday, September 13, 2016   © Sil
Our large speculators:
Those large specs that have been long in silver pitched a huge 4267 contracts from their long side and again they have been fleeced by our criminal bankers
Our commercials:
Those commercials that have been long in silver pitched 491 contracts from their long side
those commercials that have been short in silver covered 3398 contracts from their short side
Our small specs;
Those small specs that have been long in silver added 154 contracts to their long side
those small specs that have been short in silver added 3399 contracts to their short side??
Conclusion:  the commercials go net long by 2907 contracts and that is bullish but it seems that the bankers are having a tougher time covering their massive silver shorts.
And now the Gold inventory at the GLD
Sept 16./no change in gold inventory at the GLD/Inventory rests at 932.22 tonnes
SEPT 15/another paper withdrawal of 3.27 tonnes of “gold” inentory leaves the GLD/Inventory rests at 932.22 tonnes
SEPT 14./A  withdrawal of 4.45 tonnes of gold inventory from the GLD/Inventory rests at 935.49 tonnes
SEPT 13/no changes in gold inventory at the GLD/Inventory rests at 939.94 tonnes
Sept 12/no changes in gold inventory at the GLD/inventory rests at 939.94 tonnes

SEPT 9/ we had a big changes tonight out of the GLD/ there were two major withdrawals

i) first early morning: 1.19 tonnes

ii) second:  10.68 tonnes of gold

total: 11.87 tonnes

Total gold inventory rest tonight at: 939.94 tonnes of gold

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
SEPT 16/ Inventory rests tonight at 933.22 tonnes


Now the SLV Inventory
Sept 16/no changes in silver inventory/inventory rests at 362.434 million oz/
SEPT 15/no change in silver inventory/inventory rests at 362.434 million oz.
SEPT 14/no change in silver inventory at the SLV/Inventory rests at 362.434 million oz
sept 13/2016: a huge deposit of 1.329 million oz into the SLV/Inventory rests at 362.434 million oz/
Sept 12/a huge withdrawal of 1.614 million oz from the SLV/Inventory rests at 361.105 million oz
SEPT 9/no change in silver inventory at the SLV/Inventory rests at 362.719 million oz/
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
SEPT 16.2016: Inventory 362.434 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 5.4 percent to NAV usa funds and Negative 5.3% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.8%
Percentage of fund in silver:39.0%
cash .+1.2%( SEPT 16/2016).
2. Sprott silver fund (PSLV): Premium rises to +0.63%!!!! NAV (SEPT 16/2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.80% to NAV  ( SEPT 16/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.63% /Sprott physical gold trust is back into positive territory at 0.80%/Central fund of Canada’s is still in jail.


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

Trading in gold and silver overnight in Asia and Europe
A must read George Friedman paper on the systemic risk to the banking sector in Italy and for that matter all of Europe:
(courtesy Mark O’Byrne/Goldcore)

Mother Of All Systemic Threats Is Italy, EU Bail-Ins and World War? Happy Friday !

GoldCore's picture
EU Bail In Rules Ignored By Italy  – Mother Of All Systemic Threats and World War?

by George Friedman for Mauldin Economics via Forbes

Italy has been in a crisis for at least eight months, though mainstream media did not recognize it until July. This crisis has nothing to do with Brexit, although opponents of Brexit will claim it does. Even if Britain had voted to stay in the EU, the Italian crisis would still have been gathering speed.

Bail In EU

The high level of non-performing loans (NPLs) has been a problem since before Brexit. It is clear that there is nothing in the Italian economy that can reduce them. Only a dramatic improvement in the economy would make it possible to repay these loans. And Europe’s economy cannot improve drastically enough to help. We have been in crisis for quite a while.

Banks were simply carrying loans as non-performing that were actually in default and discounting the NPLs rather than writing them off. But that only hid the obvious. As much as 17 percent of Italy’s loans will not be repaid. This will crush Italian banks’ balance sheets. And this will not only be in Italy.

Italian loans are packaged and resold, and Italian banks take loans from other European banks. These banks in turn have borrowed against Italian debt. Since Italy is the fourth largest economy in Europe, this is the mother of all systemic threats.

Bail-Ins, Not Bail Outs

The only way to help is a government bailout. The problem is that Italy is not only part of the EU, but part of the eurozone. As such, its ability to print its way out of the crisis is limited. In addition, EU regulations make it difficult for governments to bail out banks.

The EU has a concept called a bail-in, which means the depositors and creditors to the bank will lose their money. This is what the EU imposed on Cyprus. In Cyprus, deposits greater than 100,000 euros ($111,000) were seized to cover Cypriot bank debts. While some was returned, most was not.

The bail-in is a formula for bank runs. The money seized in Cyprus came from retirement funds and payrolls. Rome wants to make sure depositors don’t lose their deposits. A run on the banks would guarantee a meltdown. A meltdown would topple the government and allow the Five Star Movement, a Euroskeptic party, a good shot at governing.

The bail-in rule exists because Berlin doesn’t want to bail out banking systems using German money. Anti-European sentiment in Germany is already growing, with the rising popularity of the nationalist Alternative for Germany party. The Germans feel that they are fiscally responsible, and they resent paying for others’ irresponsibility.

Therefore, the German government’s hands are tied. It cannot accept a Europe-wide deposit insurance system, as it would put German money at risk. Nor can it permit overprinting of the euro. That would come out of the German hide as well.

The Italians can only try to manage the problem by ignoring EU rules, which is what they are doing.


Crisis Spreading

And another European economic crisis is brewing. Germany derives nearly half of its GDP from exports. All the discipline and frugality of the Germans can’t hide the fact that their prosperity depends on their ability to export. The ability to export depends on the demand of their customers.

Germany exports heavily to the EU, and the Italian crisis could cause an EU-wide banking crisis. That would cut deeply into German exports, slashing GDP and driving up unemployment. Logically, the Germans should be desperately trying to head off an Italian default. But Chancellor Angela Merkel is not eager to announce to the German people that their economy depends on Italy’s well-being.

Clearly, German businesses are aware of the danger. German production of capital goods fell nearly 4 percent from last month. German production of consumer goods rose only 0.5 percent.

German consumption can’t possibly make up for half of Germany’s GDP. In addition, the IMF recently said Deutsche Bank is the single largest contributor to systemic risk in the world. A rippling default through Europe will hit Deutsche Bank.

The US Piece of the Puzzle

However, the real threat to Germany is a U.S. recession. Recessions are normal, cyclical events that are necessary to maintain economic efficiency by culling inefficient businesses. The U.S. has one on average once every six to seven years. Substantial irrationality has crept into the economy. The yield curve on interest rates is beginning to flatten. Normally, a major market decline precedes a recession by three to six months. That would indicate that it likely won’t happen in 2016, but it could in 2017.

Given the stagnation in Europe, Germany has been shifting its exports to other countries, particularly the U.S. If the U.S. goes into recession, demand for German goods, among others, will drop. But in the case of Germany, a 1 percent drop in exports is nearly a half percent drop in GDP. With Germany’s minimal growth rate, drops of a few points could drive it into recession and high unemployment.

A U.S. recession would not only hit Germany, but the rest of Europe. Many countries export to the U.S., either directly or through producing components for German and British products. The U.S. is somewhat exposed to foreign debt defaults, but not enough to bring down the American system. The United States, with relatively low export percentages and low exposure, can withstand its cycle. It is not clear that Europe can.

The Big Picture

The EU must address Italy’s and Germany’s problems, but its regulations make finding solutions very difficult. This all was put in motion in 2008, but it is not a 2008 crisis. This is most of all a political and administrative crisis. The European system was created to administer peace and prosperity, not to manage the complex gyrations of an economy.

The argument from those who are against internationalism is simple. Sometimes the major international systems fail. The less entangled you are with these systems, the less damage you suffer. And since such systemic failures historically leads to political conflict and crisis, the case for nationalism increases – assuming you aren’t already trapped in the systemic crisis. In any event, increasing nationalism follows systemic failure like night follows day.

Italy’s contagious crisis is part of a storm of instability engulfing a region that’s home to 5 billion of the planet’s 7 billion people.

In this provocative documentary from Mauldin Economics and Geopolitical Futures, George Friedman uncovers the crises convulsing Europe, the Middle East and Asia … and reveals the geopolitical chess moves that could trigger global conflict.

Watch George Friedman’s Ground-breaking Documentary ‘Crisis & Chaos: Are We Moving Toward World War III?’ and access the Forbes article here

Editors Note: The U.S. will not be unscathed from the collapse of the EU banking and political system, from a new global financial crisis or indeed a new world war. Indeed, we believe the U.S., being the largest debtor nation the world has ever seen, would have plenty of its own financial, economic and geo-political challenges. Financial and economic contagion is the likely outcome. We agree with the substantive point made in the article and believe that an important way to protect investments and savings in the coming years is to be diversified and have a healthy allocation to physical gold – both in one’s possession and in secure storage, in the safest vaults in the world.

Protecting-Your-Savings-In-The-Coming-Bail-In-EraDownload Bail-In Guide

Gold and Silver Bullion – News and Commentary

Gold firm after U.S. data adjusts Fed rate hike views (Reuters)

Dollar Rally Fades as Odds of Fed Move This Year Drop Below 50% (Bloomberg)

Gold set for first weekly loss in three as investors turn to risky assets (Reuters)

Deutsche Bank falls another 7% – U.S. seeks $14 billion as settlement in mortgage case (Reuters)

Wells Fargo fallout: More pressure to break up the banks? (CNBC)

Bond Bull Market Will Ends – “Going To Get Ugly” (MoneyWeek)

Unusual dangers that are unique in the ‘5,000 years-ish’ history of finance (CNBC)

Gold: The Best Performing Asset of the 21st Century (GoldSeek)

Gold Will Skyrocket When Anchor To New Monetary System (KingWorldNews)

Stuff getting cheaper but stuff we really need getting more expensive (WashingtonPost)


Gold Prices (LBMA AM)

16 Sep: USD 1,314.25, GBP 999.56 & EUR 1,170.08 per ounce
15 Sep: USD 1,320.10, GBP 998.26 & EUR 1,174.23 per ounce
14 Sep: USD 1,323.20, GBP 1,001.40 & EUR 1,177.91 per ounce
13 Sep: USD 1,328.50, GBP 1,000.36 & EUR 1,183.69 per ounce
12 Sep: USD 1,327.50, GBP 1,000.80 & EUR 1,182.54 per ounce
09 Sep: USD 1,335.65, GBP 1,004.68 & EUR 1,184.86 per ounce
08 Sep: USD 1,348.00, GBP 1,009.11 & EUR 1,195.81 per ounce

Silver Prices (LBMA)

16 Sep: USD 18.91, GBP 14.36 & EUR 16.85 per ounce
15 Sep: USD 18.96, GBP 14.32 & EUR 16.87 per ounce
14 Sep: USD 19.04, GBP 14.42 & EUR 16.96 per ounce
13 Sep: USD 19.16, GBP 14.44 & EUR 17.06 per ounce
12 Sep: USD 18.72, GBP 14.11 & EUR 16.68 per ounce
09 Sep: USD 19.41, GBP 14.58 & EUR 17.23 per ounce
08 Sep: USD 19.93, GBP 14.90 & EUR 17.65 per ounce

Recent Market Updates

– Buy Gold – Bonds Are ‘Biggest Bubble In World’ – Billionaire Singer Warns
– Silver Bullion Market – “Most Bullish Story Ever Told?”
– “Sorry, You Can’t Have Your Gold Bullion”
– Global Stocks, Bonds Fall Sharply – Gold Consolidates After Two Weeks Of Gains
– Gold, Silver, Blockchain and Fintech – Solutions To Negative Rates, Bail-ins, Cash Confiscations and Cashless Society
– Jan Skoyles Appointed Research Executive At GoldCore
– 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

Bill Murphy and Chris Powell interviewed by Lars Schall
(courtesy GATA)

GATA’s Murphy and Powell interviewed by Lars Schall for Gold Switzerland


11:19p ET Wednesday, September 14, 2016

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy and your secretary/treasurer recently were interviewed about the prospects for gold and silver by Lars Schall for Matterhorn Asset Management’s Gold Switzerland Internet site. The interview covers the risks of the world monetary system, changes in the procedures of the daily gold price fixing in London, the use of the derivative market to control monetary metals prices, and the refusal of mainstream financial news organizations to report central bank intervention in the markets. Audio and a transcript of the interview can be found at Gold Switzerland here:…

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





I brought this to your attention yesterday but it is worth repeating, showing what criminals we are dealing with

(courtesy Dave Kranzler/IRD)


Dave Kranzler: Someone dumped 70 tonnes of paper gold at 8:30 a.m.


By Dave Kranzler
Investment Research Dynamics, Denver
Thursday, September 15, 2016

At 8:30 this morning, 10 minutes after the Comex gold pit opened, more than 70 tons of gold was dropped into the entire Comex trading system If this happened on the New York Stock Exchange, one of the electoral communications networks (usually BATS) would have mysteriously “broke” and trading would have been halted before the damaging effects of the systemic paper overload hit the market. …

… For the remainder of the report:…





This is a terrific informational graph depicting the India and their love for god.

Indian citizens have accumulated over time 23,000 tonnes of gold out of 165,000 tonnes mined or 14% of total world production from time zero

(courtesy Ronan Manly/Bullionstar/GATA)


Bullion Star’s informational graphic about the Indian gold market


10:05a ET Friday, September 16, 2016

Dear Friend of GATA and Gold:

Bullion Star proprietor Torgny Persson today presents an informational graphic about the gold market in India, where government long has waged war against gold and where the people can’t get enough of it anyway. The graphic is posted at Bullion Star here:…

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

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




2 Nikkei closed UP 114.28 OR 0.70% /USA: YEN FALLS TO 101.87

3. Europe stocks opened ALL IN THE RED (     /USA dollar index UP to 95.49/Euro DOWN to 1.1218

3b Japan 10 year bond yield: FALLS TO  -.039%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 101.87/ 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::  43.20  and Brent: 45.79

3f Gold DOWN /Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.015%   

3j Greek 10 year bond yield RISE to  : 8.60%   

3k Gold at $1313.00/silver $18.91(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 WILL BE DEFENDED 

3l USA vs Russian rouble; (Russian rouble DOWN 31/100 in  roubles/dollar) 65.04-

3m oil into the 43 dollar handle for WTI and 45 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT a  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 .9750 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0940 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 POSITIVE territory with the 10 year FALLS to  -.015%

/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 1.663% early this morning. Thirty year rate  at 2.435% /POLICY ERROR)

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

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


US Futures; Euro Stocks Slide On Deutsche Bank Liquidity Fears; Bonds Bid

Following yesterday’s paradoxical S&P surge catalyzed by a bevy of dreadful economic news, the overnight session has seen some good old “risk off” mood which first hit European shares as a result of the previously reported $14 billion DOJ claim against Deutsche Bank, which sent Europe’s biggest bank tumbling, dragging the banking sector lower, while a continued drop in the price of oil pushed energy companies lower, and then spilling over to US equity futures which were down 10 points at last check.

In early trading, DB was trading down around 8%, while Deutsche Bank’s €1.75 billion of 6% additional Tier 1 bonds, the first notes to take losses in a crisis, fell 4 cents to 79 cents. The bank’s 650 million pounds of 7.125% notes dropped 5 pence to 81 pence on the pound on concerns the bank may be forced to shore up billions more in liquidity.

“The Deutsche Bank news kind of rattled markets,” said Jasper Lawler, an analyst at CMC Markets in London. “It just goes to show that we’re still dealing with the same old headwinds: this low-interest rate environment, which will go on for a while, and the regulatory scrutiny.”

“None of the European banks has settled with the DOJ on RMBS yet so Deutsche Bank is the first to enter negotiations with Barclays, UBS, Credit Suisse and RBS also facing this issue,” RBC analyst Fiona Swaffield said in note. “We would expect Deutsche Bank’s final settlement to be significantly below the starting negotiation amount as seen at other banks although it remains uncertain where the final settlement will end up and the final impact on the capital ratios. Resolving this issue remains key for Deutsche Bank as it will give more clarity on capital, although there are a number of other moving parts – namely the Russian equities investigation and also the IPO of Postbank.”

The markets’ attention was so focused on DB in particular, and European banks in general (Italy’s perpetually insolvent Monte Paschi was halted after falling as much as 7.8%, after a report the bank’s recapitalization could be done through a private placement to institutional investors and a voluntary subordinated bonds conversion with minimum threshold, along the lines of Greek banks’ recapitalizations, Il Sole 24 Ore reports, as the previously planned bailout appears to have failed to attract attention), that risk off flows finally prompted some buying of the German long end, which saw the 30Y Bund yield slide from 0.7% nearly 10 bps lower. Additionally. Germany’s 10-year bund yield fell four basis points, dropping below zero for the first time in a week, and wiping out a weekly increase that had been driven by the European Central Bank failure to flag an immediate expansion of bond-buying program.

Europe’s Stoxx 600 Index was lower for the sixth time in seven sessions, while S&P 500 Index futures also fell. Russia’s ruble slipped before a forecast cut in interest rates and as U.S. crude traded below $44 a barrel amid concern rising exports from Nigeria and Libya will add to a glut. German bonds rallied while Portuguese government securities sank. Earlier, the MSCI Asia Pacific Index rose for the first time in seven days, albeit with markets in half of the region’s 10 biggest economies shut for holidays.

Lenders fell the most of the equity gauge’s 19 industry groups, with Deutsche Bank tumbling 6.8 percent. The German lender said it’s not willing to pay the claim from the DOJ to settle an investigation into its sale of residential mortgage-backed securities. Credit Suisse Group AG and Royal Bank of Scotland Group Plc slid at least 3 percent.  Energy companies were the second-worst performers after banks, while Fiat Chrysler Automobiles NV retreated 1.9 percent after saying it’s recalling about 1.4 million cars and trucks in the U.S. Health-care companies, deemed safe in times of economic turmoil, posted the best performances. British private-equity firm SVG Capital Plc gained 4.6 percent after saying an unsolicited bid by HarbourVest Partners LLC undervalues the firm and that it has other offers.

Deutsche Bank’s woes are adding to the worst week in a month for European stocks, after global markets were shaken by concern central banks in the euro area and Japan are becoming hesitant to boost stimulus. The cost of insuring corporate debt has increased this week by the most in three months, commodities prices have tumbled and yield curves have steepened. The Bank of Japan will conclude a policy meeting on Wednesday, the same day as a Federal Reserve decision.

The MSCI Asia Pacific Index was up 0.6 percent, trimming this week’s drop to about 2.2 percent. Philippine stocks dropped by the most in three months. Markets in mainland China, Taiwan, Malaysia, South Korea and Hong Kong were closed for holidays.

S&P 500 Index futures slipped 0.2 percent, after a rebound in
consumer and health-care companies pushed equities up 1 percent on

Elsewhere in bond land, Portuguese bonds extended their slide, pushing the 10-year yield to the highest since June 24, when the U.K.’s Brexit vote sparked selloff of higher-yielding assets. S&P Global Ratings set to review the nation’s debt Friday. Other peripheral bonds also trailed behind German securities as Bundesbank President Jens Weidmann said the ECB should continue following its capital key rule when acquiring bonds under its quantitative-easing program.

Long-term bonds in the U.S. took a knock this week, lifting the 30-year yield to levels last seen in June, amid speculation monetary loosening around the world has about run its course. Japan’s 30-year yield climbed to a six-month high during the week and rates on short-term securities fell on bets the BOJ will adjust policy to steepen the yield curve. The rate on notes due in September 2046 increased by four basis points to 0.56 percent.

In other key overnight news, Japan’s central bank remains completely confused what it should do next
week, while Japan’s finance ministry said it will probably closely
examine what’s going on with Chinese purchases of Japanese securities
and act appropriately; ECB’s Villeroy says ECB’s policy effective, to
continue in this direction; ECB’s Jazbek adds ECB policy working, no
need to change it for now; Merkel says EU survival at stake as chiefs
plot post-Brexit path; while

Market Snapshot

  • S&P 500 futures down 0.5% to 2127
  • Stoxx 600 down 0.3% to 339
  • FTSE 100 down 0.2% to 6715
  • DAX down 0.5% to 10384
  • German 10Yr yield down 4bps to -0.01%
  • Italian 10Yr yield down 3bps to 1.31%
  • Spanish 10Yr yield down 1bp to 1.06%
  • S&P GSCI Index down 0.7% to 347.1
  • MSCI Asia Pacific up 0.6% to 137
  • Nikkei 225 up 0.7% to 16519
  • S&P/ASX 200 up 1.1% to 5297
  • US 10-yr yield down 2bps to 1.67%
  • Dollar Index up 0.09% to 95.38
  • WTI Crude futures down 1.1% to $43.41
  • Brent Futures down 1.2% to $46.01
  • Gold spot up less than 0.1% to $1,315
  • Silver spot down 0.2% to $18.96

Global Headline News

  • Deutsche Bank Drops on $14 Billion DOJ Claim Lender Rebuffs: Negotiations are ‘just beginning,’ lender says in statement
  • Europe Said to Threaten Revolt Over Bank Capital-Rule Overhaul: 2-day meeting of Basel Committee concluded on Thursday
  • Oracle Sales Miss Estimates on Slow Transition to Cloud: Demand sluggish for traditional data, business software
  • IPhone Buyers Poised for Letdown, Apple Supply Trails Demand: Pre-orders required to buy an iPhone 7 Plus on first sales day
  • Spotify Is Said to Seek Reset in Negotiations With Record Labels: New music releases could be limited to subscription tier
  • Tesla Says Mobileye Tried to Block Its Auto Vision Capability: Says Mobileye knew about its Autopilot for 3 years
  • Fiat Chrysler Recalls 1.4 Million U.S. Vehicles Over Seat Belts: 3 fatalities, 5 injuries possibly related to situation
  • Chevron Said to Narrow Bids for $3 Billion Asian Geothermal Sale: China General Nuclear Power invited for second-round bid
  • Dollar Rally Fades as Odds of Fed Move This Year Drop Below 50%: Fed’s Brainard urged ‘prudence,’ while US data disappointed
  • Oil Set for Weekly Drop as Resilient Supply Seen Sustaining Glut: Oil falls on speculation a global crude glut will persist
  • Vale Said to Sign $1 Billion Bank Funding Backed by Glencore: Glencore said to help organize bank syndicate for loan

Looking at regional markets, we start in Asia where stocks traded higher following the positive lead from the US where tech outperformed after continued strength in Apple shares, while poor Industrial Production and Retail Sales figures further dampened the likelihood of a Fed hike next week. ASX (+1.1%) and Nikkei (+0.7%) took the impetus from the firm US close with energy outperforming in Australia following a rebound in the complex, while gains in Japan were capped by a firm JPY. The remainder of the region was quiet with China, Hong Kong, Taiwan, Malaysia and South Korean markets all shut for public holidays. 10yr JGBs saw a lack of demand amid flow’s into riskier assets, while the BoJ was relatively restrained in regards to the amount of today’s buying operations. As the WSJ again confirmed what we reported earlier in the week, the BoJ is said to be split over monetary easing program, with some of the board thinking there should be more flexibility in bond purchases.

Top Asian News

  • BOJ ‘Absolutely Certain’ to Stop Buying Nikkei ETFs, CLSA Says: CLSA says it’s “absolutely certain” BOJ will stop buying ETFs tracking Nikkei 225 amid criticism
  • Japan Looks to Bring in More Foreign Workers as Population Falls: Nation planning to bring more overseas workers to bolster shrinking labor force
  • Mitsubishi to Pay $1.4 Billion to Raise Lawson Stake to 50%: Plans to turn Lawson into unit
  • Japan to Step Up Engagement in South China Sea Against Xi’s Will: Japan’s new defense minister said her nation would step up activity in the South China Sea
  • Samsung Recalls 1 Million Galaxy Note 7 Phones on Risk of Fire: U.S. safety regulators start official recall of Samsung’s Galaxy Note 7 smartphone
  • Solar Industries Cuts FY17 Rev. View on Forex, Lower Prices: CFO: Company hurt by weaker Nigerian, Turkish currencies and lower product prices in India

European stocks have tradeD lower across the board in the final trading session of the week with the Dax lower by 0.5% and financial names underperforming amid reports that Deutsche Bank (-8.0%) could face a USD 14bIn lawsuit. This has subsequently squeezed financial names across the continent with UBS, Credit Suisse and RBS all lower. Furthermore, Banca Monte de Paschi trade at record lows after falling 7.3% as the troubled Italian lender’s outlook continues to be questioned. Additionally, energy names are doing little to inspire confidence across Europe with WTI and Brent crude futures failing to recover from yesterday’s declines. As a side note, today also sees quadruple witching for US and European equities. Fixed income markets have benefitted from the softness in equities with the German 10yr yield subsequently climbing back in to negative territory with no notable supply for the session. Of note, there has been a notable widening of the GE/PO spread with some attributing this to comments from ECB’s Weidmann and his reluctance to abandon the capital key.

Top European News

  • StanChart Said to Mull Private-Equity Unit Spin-Out to Managers: StanChart Private Equity said to manage $5 billion
  • Telenor Said to Consider Options for Stake in Malaysia’s Digi: Carrier may explore a JV or sale of Digi holding
  • SVG Says Harbourvest Offer Undervalues Co, Has Other Approaches: Got approaches from a number of credible parties
  • SOBI CEO Sees Potential in Biogen Spin-Off, Long-Acting Products: Co. has up to $700m for M&A in next 12-18 months
  • Knorr-Bremse Increases Haldex Offer in ZF Takeover Tussle: Haldex suitor offers 125 kronor a share, outbidding ZF
  • EU Targets October Ratification of Paris Climate Accord: Fast-track approval could occur by Oct. 7, EU’s Delbeke says
  • Investec Forecasts Decline in First-Half Operating Profit: Rand depreciation, rising impairments in South African business
  • Novo’s Diabetes Medicine Shows 26% Reduction in Heart Risks: Semaglutide may launch in first quarter of 2018, Novo says

In FX, the Bloomberg Dollar Spot Index was little changed following two days of declines. Futures prices put the probability of a Fed rate hike next week at 18 percent following Thursday reports that showed U.S. retail sales declined 0.3 percent in August from the previous month and industrial output dropped 0.4 percent. The chance of a rate increase this year has slipped below 50 percent for the first time in a month.  The South African rand gained 0.9 percent, heading for the biggest weekly increase since July after the disappointing U.S. economic data and dovish Fed comments. The currency was heading for a weekly gain of 2 percent, the most among 31 major currencies tracked by Bloomberg. “Near term, the dollar is likely to come under pressure as the Fed stands pat next week,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “However, as we look towards the end of the year, we still see a resurgence in dollar strength as the Fed prepares the market for a December hike.” The yen was little changed at 102.03 per dollar. Just over half of economists surveyed by Bloomberg anticipate the BOJ will ease monetary policy further on Sept. 21, with an interest-rate cut seen as the most likely option.  The U.K. pound dropped 0.3 percent to $1.3202, on speculation that potentially painful Brexit negotiations will prompt the Bank of England to ease monetary policy further. Officials maintained their monetary policy stance Thursday and indicated there’s a chance of another interest-rate cut this year.

In commodities, crude fell 1.2 percent to $43.38 a barrel in New York, extending its weekly slide to more than 5 percent. OPEC members Libya and Nigeria, whose supplies have been reduced by domestic conflicts, are preparing to boost exports within weeks. The oil surplus will last longer than previously thought as demand growth slumps and output proves resilient, the International Energy Agency said Tuesday. Nickel fell by about 6 percent this week in London, its biggest loss of the year. Copper prices gained more than 3 percent, having got a boost in recent days from better-than-expected economic data in China, the biggest user of industrial metals. Soybeans in Chicago were down more than 3 percent for the week amid speculation that a record U.S. harvest will cap prices. Corn and wheat also lost ground on expectations for ample supply.

In the US all eyes will be on the August CPI report. Market expectations are for a +0.1% mom headline print and +0.2% mom core reading. Those numbers also match the views of our US economists and if true, it would have the effect of lifting the headline YoY rate to +1.0% from +0.8%, but keep the core at +2.2% yoy. The other data scheduled for release is the first take of the September University of Michigan consumer sentiment reading. The market consensus for this is for a modest increase in the headline sentiment reading to 90.6 from 89.8. Away from the data, the 27 leaders of the EU are holding a summit in Bratislava today to discuss Brexit so that might be worth keeping an eye on.

* * *

* * *

DB’s Jim Reid concludes the overnight wrap

We’ve stabilised over the last 48 hours. Last night the S&P 500 (+1.01%) saw its 4th more than 1% move in either direction in 5 days after the 43 days we’ve talked about at length without one. A strong 4-day 12% rally for Apple has helped and yesterday commodities were firm as gasoline (+5.05%) had its second best day since May, WTI Oil bounced back +0.76% after a -6% 2-day slump and copper futures hit their highest in four weeks after the stronger Chinese data earlier this week.

The welcome moves came despite a backdrop of some softer US data yesterday, led in particular by the latest retail sales numbers. Headlines sales were down -0.3% mom last month which was weaker than the market had pegged (-0.1% expected). Ex auto (-0.1% mom vs. +0.2% expected) and ex auto and gas (-0.1% mom vs. +0.3%) also missed heavily and it was difficult to find any pockets of strength at all amid the soft report. The control group component – which as a reminder goes into the GDP accounts – was also disappointing (-0.1% mom vs. +0.4% expected) while July data was also revised down one-tenth from an already disappointing monthly reading.

That data had the Atlanta Fed scampering to slash its Q3 GDP forecast to 3.0% from 3.3% last week. 10y Treasury yields initially dipped lower and struck an intraday low of 1.660%, while the USD also sold off however both quickly reversed. In fact the 10y yield got back as high as 1.734% and so swinging 7.5bps, before eventually closing unchanged around 1.691%. The Treasury curve did however steepen once again. The 5y30y spread was another 4bps wider yesterday, the 11th day in a row that the spread has widened and at 128bps that spread is now the widest it’s been since June 30th.

This morning in Asia it’s been relatively quiet with JGB’s little changed. The Nikkei (+0.39%) and Topix (+0.43%) are firmer however, following that lead from Wall Street last night. Staying with Japan, late last night the WSJ ran an article suggesting that BoJ members are split on the direction the Bank should next take. The article suggests that of the seven members on the nine member board, at least three are still in favour of the current policy of bond purchases and negative rates, however the others, while still in favour of easing, are less confident now that bond purchases are effective. There’s some suggestion amongst these members of bringing in flexibility to purchases, through perhaps targeting a range (¥70-90tn) rather than an outright commitment to ¥80tn of purchases. This faction are also concerned about the availability of bonds to buy, suggesting that the BoJ may be approaching the practical limit sometime next year and the BoJ should look for policy alternatives.

In one last mention of Japan for today, yesterday our Global Economic Perspectives team published their latest note, titled ‘The Bank of Japan Reassesses Policy’. They expect the BoJ to conclude next week that asset purchases has been successful in driving down funding costs and pushing growth and inflation higher. They also expect that the BoJ will conclude that the introduction of negative interest rates in January this year had a powerful complementary effect, but that exogenous shocks (declining oil, slower Chinese growth and weak US and European activity), a larger than expected decline in demand following the consumption tax increase, and strongly backward-looking inflation expectations are responsible for the failure to meet the 2% inflation target. As a result they believe that the most likely course of action for the BoJ is to leave policies unchanged. They do however also mention that it’s possible that we see the BoJ (even as soon as next week) reconfigure policy to gain more flexibility in terms of the pace and types of asset purchases. Such a measure would likely be accompanied by a rate cut.

Looking at the rest of Asia this morning with China and Hong Kong both closed unsurprisingly there’s not a huge amount to highlight but along with the gains in Japan, the ASX (+1.08%) is also having a reasonably strong morning. US equity index futures are little changed, while Oil has given up some of yesterday’s move higher.

In terms of the rest of markets yesterday, a late surge into the close helped European equities also generally finish with gains. The Stoxx 600 closed +0.57% which meant it finally brought to an end five days of consecutive losses (in which time it had lost -3%). The FTSE 100 (+0.85%) outperformed, boosted by losses for Sterling following the BoE decision to hold policy steady as expected, but clearly keeping the door open for a cut soon. The positive read-through from the BoE was clearly the upbeat commentary from the MPC about the post-Brexit data which has come in ‘slightly to the upside’ of their forecasts. While we’re on the UK, yesterday’s retail sales ex fuel data for August (-0.3% mom vs. -0.7% expected) was not quite as weak as expected, helping to support that view from the BoE.

Just recapping the remainder of that US data, also disappointing was the industrial production reading in August which missed to the downside (-0.4% mom vs. -0.2% expected) with capacity utilization dropping to 75.5% from 75.9%. The manufacturing data was a mixed bag. Empire manufacturing for this month did improve just over 2pts but not as much as hoped (-2 vs. -1 expected). Manufacturing production in August was softer than expected (-0.4% mom vs. -0.3% expected) however the Philly Fed manufacturing survey bounced an impressive 10.8pts to 12.8 (vs. 1.0 expected). On the inflation front headline PPI (0.0% mom vs. +0.1% expected) was unchanged last month, while the ex food and energy print (+0.1% mom) met expectations. Finally initial jobless claims (+1k to 260k) and business inventories (0.0% mom vs. +0.1% expected) were non events. The end result of all that was another leg lower for US economic surprise indices that we follow.

Looking at the day ahead, it’s a quiet session for data in Europe with just the final Q2 wages numbers in France due out. This afternoon in the US however all eyes will be on the August CPI report. Market expectations are for a +0.1% mom headline print and +0.2% mom core reading. Those numbers also match the views of our US economists and if true, it would have the effect of lifting the headline YoY rate to +1.0% from +0.8%, but keep the core at +2.2% yoy. The other data scheduled for release in the US this afternoon is the first take of the September University of Michigan consumer sentiment reading. The market consensus for this is for a modest increase in the headline sentiment reading to 90.6 from 89.8. Away from the data, the 27 leaders of the EU are holding a summit in Bratislava today to discuss Brexit so that might be worth keeping an eye on.


i)Late  THURSDAY night/FRIDAY morning: Shanghai closed FOR HOLIDAY/ /Hang Sang closed for holiday. The Nikkei closed UP 114.28 POINTS OR 0.70% Australia’s all ordinaires  CLOSED UP 0.70% Chinese yuan (ONSHORE) closed HUGELY DOWN at 6.6744/Oil FELL to 43.20 dollars per barrel for WTI and 45.70 for Brent. Stocks in Europe: ALL IN THE RED   Offshore yuan trades  6.6448 yuan to the dollar vs 6.6744 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS HUGELY TO BLOCK  MORE USA DOLLARS AS IT ATTEMPTS TO LEAVE CHINA’S SHORES


none today


This is interesting.  The European and Japanese bankers are threatening to mutiny the new Basel III capital rules that was suppose to start on Sept 1 but these guys got a temporary reprieve.  Obviously they will have considerable trouble raising the necessary capital requirement

(courtesy zero hedge)

European, Japanese Bankers Threaten Mutiny Over Basel Committee’s Capital Rules

European and Japanese banking officials are reportedly enraged that the (US-backed) world’s top banking regulator would dare to demand banks hold higher levels of capital to meet credit, market and operational risks. These rules are not new, of course, but the bankers, used to getting their own way reportedly demanded in two heated meetings this week that The Basel Committee ‘scale back; the rules to ensure the rules have no “particularly negative consequences for specific regions,” such as Europe.

As Bloomberg reports,

Some European officials went so far as to say they wouldn’t adopt the proposals on the table, according to the people, who asked not to be identified because the deliberations were private. If the European Union — home to nearly half of the world’s most systemically important banks — balks at implementing the Basel Committee’s rules, it could undermine the global regulator’s authority and contribute to fragmentation of the industry.

The Basel Committee is racing to finish work on the post-crisis capital framework known as Basel III by the end of the year, and it’s under instructions not to increase capital requirements significantly in the process.

The debate in Basel pits bank regulators from Tokyo to Frankfurt against a U.S.-backed push for stiffer standards, which take effect when they’re implemented by national governments.

The industry is not happy. Despite the mainstream media’s proclamations of the fortress-like balance sheets of banks, the banks themselves, and their revolving-door regulators, are unable to meet new capitakl regulation without unintended consequences…

The industry says the proposed revisions to risk-assessment rules and limits on banks’ use of their own models to make these calculations would send capital requirements spiraling. Key policy makers have heeded their message. German Finance Minister Wolfgang Schaeuble last week insisted that the Basel Committee not only keep any overall increase in capital requirements to a minimum, but also ensure the rules have no “particularly negative consequences for specific regions,” such as Europe.

European regulators told the Basel Committee that its sweeping new proposals, dubbed Basel IV by the industry, were impeding banks’ ability to finance the economy and even to pursue mergers and acquisitions, one of the people said.

Shunsuke Shirakawa, vice commissioner for international affairs at Japan’s Financial Services Agency, has said the regulator needs to “make adjustments” to bring the new rules in on target. The Basel Committee’s members include Japan’s FSA, Germany’s Bundesbank and the U.S. Federal Reserve.

William Coen, secretary general of the Basel Committee, told reporters on Sept. 13 that the regulator’s goal is not to drive capital requirements higher as it finishes up Basel III.

“If we wanted to increase capital, that would be far easier than what we’re doing at present,” Coen said.

“We’re doing this work to reduce risk-weighted asset variability. And why are we doing that? To restore confidence in the risk-weighted capital ratios and to fully restore credibility to the capital adequacy framework.”

A good point – nothing like threatening mutiny to show just how ‘un-confident’ the world’s investors should be?

So to summarize: German, Italian, and Japanese banking regulators just admitted that it they are forced to meet The Basel Committee’s (long-warned) capital regulations there will be chaos… and therefore Basel should back off or they will all revolt and leave (signaling to investors that they are – for intent and purpose – under-capitalized as far as the world’s top regulator is concerned). Now we have just one question – will you leave your cash on deposit at any of the banks that ‘mutiny’ from global risk regulations? ….. Thought not.

c) Report on CHINA



The Dept of Justice is now paying back Europe for their tax grabbing of Apple’s income in that part of the world.  They just hit the extremely vulnerable Deutsche bank with a monstrous 14 billion dollar fine over those mortgaged back securities back in 2008 era.

The shares of DB tanked immediately!

(courtesy zero hedge)

Deutsche Bank Slapped With $14 Billion Fine By DOJ Over Mortgage Probe

Blowback? Just a few weeks after the EU slapped Apple with a $14 billion bill for “back taxes,” the U.S. has apparently responded with a $14 billion fine of their own to Deutsche Bank to settle an outstanding probe into the company’s trading of mortgage-backed securities during the financial crisis

Shareholders are not happy…

According to the Wall Street Journal, the proposed settlement would be largest fine paid by any of the banks related to similar charges.  Unfortunately for DB, the fine is roughly equal to it’s entire market cap and the stock is plunging nearly 8% in after hours trading.

The U.S. Justice Department proposed that Deutsche Bank AG pay $14 billion to settle a set of high-profile mortgage-securities probes stemming from the financial crisis, according to people familiar with the matter, a number that would rank among the largest of what other banks have paid to resolve similar claims and is well above what investors have been expecting.

The figure is described by people close to the negotiations between Deutsche Bank and the government as preliminary, and they said it came up in discussions between the bank and government lawyers in recent days. It hasn’t been previously disclosed. Deutsche Bank is expected to push back strongly against it, the people said, and it is far from clear what the final outcome will be.

It is also unclear how much of that amount is proposed to be paid in cash, and how much could be in consumer relief, as past deals have been structured.

A DB spokesman confirmed back in July that negotiations had been initiated with the DOJ though no estimates had been provided on the size of any potential settlement before today.  That said, the Wall Street Journal notes that DB’s attorneys had privately suggested that a $2 – $3 billion settlement with the DOJ was probably in the ballpark.  Meanwhile, wall street analysts had estimated settlements in the $2-$5 billion range.  Any fines paid pursuant to current negotiations would be in addition to the $1.9 billion already paid in 2013 to settle other U.S. claims related to mortgage-backed securities.

Per the table below, as of June 30, DB had reserved a total of €5.5 billion for civil litigation and regulatory penalties on it’s balance sheet.


The size of the proposed settlement is also bad news for other European banks that remain under investigation by the DOJ including Barclays, Credit Suisse, UBS and RBS.  Lawyers working with other banks have indicated that DB’s settlement would likely set the precedent for what other Euro banks might be expected to pay.

Just when you thought DB was safe…



The CEO rejects the Dept of Justice settlement:

(courtesy zero hedge)

Deutsche Bank Shares Tank After CEO Rejects $14 Billion DOJ Settlement

As reported last night, things for Germany’s largest, and most troubled lender, Deutsche Bank went from bad to worse when just a few weeks after the EU slapped Apple with a $14 billion bill for “back taxes,” the U.S. Department of Justice responded in kind with a $14 billion fine of its own to Deutsche Bank to settle an outstanding probe into the company’s trading of mortgage-backed securities during the financial crisis. Making matters hostile, in a statement on Friday morning, the German bank’s CEO rejected the opening settlement claim and said that he “has no intent to settle these potential civil claims anywhere near the number cited”, adding that “the negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”

Maybe, but the market is not so sure, and after opening for trading minutes ago, Deutsche Bank stock tanked a whopping 8% on news of the DOJ’s $14 billion proposed settlement, once again approaching its all time lows.

Putting the settlement in context, BofA paid $17 billion to reach a settlement in a similar case in 2014, while Goldman agreed to a $5.1 billion settlement with the U.S. earlier this year, including a $2.4 billion civil penalty and $875 million in cash payments, to resolve U.S. allegations that it failed to properly vet mortgage-backed securities before selling them to investors as high-quality debt. The settlement included an admission of wrongdoing.

As Bloomberg reports, the bank confirmed that it had started negotiations with the Justice Department to settle civil claims. The $14 billion is considered an “opening bid” that could go “much lower,” according to the Wall Street Journal. On the other hand, in light of the recent European hostility involving AAPL shares, the DOJ may be unwilling to budge. Which is why the final settlement amount is now so critical: according to a JPM calculation, a settlement of about $2.4 billion “would be taken very positively,” and that an agreement exceeding $4 billion would pose questions about the bank’s capital positions and force it to “build additional litigation reserves.”

Others on the sellside are less sanguine: “Overall it’s very
negative for the share price if you look at the Justice Department
figure but you don’t know where it will end up,” said Andreas Plaesier,
an analyst at Warburg Research told Bloomberg. “If you come down to the Goldman amount they may not need to do much in terms of reserves.”

Goldman concluded, laconically, that the settlement news was “negative”, noting the following:

  1. On September 9, Manager Magazin reported DBK was close to a settlement with the DoJ and that the amount could exceed US$2.4bn
  2. It is unclear if the amount referenced includes consumer relief in addition to monetary payments. The highest RMBS-related monetary payment to the DoJ thus far was US$5bn (by BofA).
  3. DBK’s total on balance sheet litigation reserves stood at €5.5bn as of 2Q16; this includes provisions for all outstanding litigation, most notably RMBS and the Russian equities matter;
  4. Management stated with 2Q results that it aims to settle major outstanding litigation items (including RMBS and Russia) by year end.
  5. Deutsche Bank stated in its 2Q16 report that it has “received subpoenas and requests for information from certain regulators and government entities, including members of the Residential Mortgage-Backed Securities Working Group”. The DoJ is not the only member of the RMBS Working Group (see Ex. 1); DBK has already settled with the FHFA for US$1.9bn.

The implications, according to Goldman are that while DB shares reacted positively to the Manager Magazin report of September 9, ending the day +4%, Goldman there expects “a negative reaction to these
latest developments. That said, we stress that the end settlement figure remains unclear and we do not take a view on the final outcome. From a read-across perspective we expect the shares of European IBs which are yet to settle the RMBS issues (CS, UBS, BARC and RBS) to be impacted today.”

Deutsche Bank Chief Executive Officer John Cryan, 55, has struggled to boost profitability as unresolved legal probes and claims compound concerns that the lender will be forced to raise capital or sell assets. Reaching a mortgage deal would clear a major hurdle for the bank, which has paid more than $9 billion in fines and settlements since the start of 2008.

“In defense of protecting its shareholders’ money, Cryan is well within his rights in negotiating a more equitable and just settlement with the U.S. government, and calling this one a punishment that’s several orders of magnitude greater than the crime,” said Tony Plath, a finance professor at the University of North Carolina. Plath expects a final settlement of about $4 billion to $5 billion.

It remains to be seen if the US is willing to entertain such a lowball counteroffer, especially now that US corporations are used as taxable piggybanks by Europe.


Deutsche bank’s bonds are dropping like a stone as systemic risk increases dramatically.
Remember that this bank has the highest derivatives on the planet at 72 trillion USA
(courtesy zero hedge)

Deutsche Bonds “Dropping Like A Stone” As ‘Most Dangerous Bank In The World’ Plummets

“They are dropping like a stone,” warns one European credit strategist as signals from the bottom of Deutsche Bank’s capital structure signal a “huge increase in the potential for a coupon skip.”


With DB stock tumbling towards record lows again…


Back to an EUR11 handle…biggest drop since Brexit


Bloomberg reports, the bank’s 1.75 billion euros ($2 billion) of 6% additional Tier 1 bonds, the first notes to take losses in a crisis, are crashing… as the world’s most systemically dangerous bank faces existential problems once again.

Deutsche Bank AG’s riskiest bonds plummeted after the German lender received a $14 billion claim from the U.S. Justice Department to settle an investigation into the firm’s sale of residential mortgage-backed securities.


“They are dropping like a stone,” said Tomas Kinmonth, a credit strategist at ABN Amro Bank NV in Amsterdam. “The fine, even if reduced, could surpass all provisions held by the bank.”


Interest payments on additional Tier 1 bonds can be switched off if a lender runs into trouble and Germany’s biggest bank has the least available distributable funds among banks in Europe, according to CreditSights Ltd. The bank said in March it had 1.1 billion euros available to pay AT1s for the year.


“Anything above $10 billion will make things very difficult for them,” he said. “This is unequivocally bad for their AT1s. It hugely increases the potential for a coupon skip.”

Then who’s next?


As we previously conclude, considering two of the three most “globally systemically important”, i.e., riskiest, banks just saw their stock price scrape all time lows earlier this week, we wonder just how nervous behind their calm facades are the executives at the ECB, the IMF, and the rest of the handful of people who realize just close to the edge of collapse this world’s most riskiest bank (whose market cap is less than the valuation of AirBnB) finds itself right now.

This is interesting.  The Greek prosecutors have raided the office of the central bank of Greece as well as offices of his wife. Something going on here!
(courtesy zero hedge)

Greece Raids Home Of Central Bank Head

While the US the media lashes out at Trump every time he dares to tell the truth that the central bank is a biased, engaged, political member of the decision-making landscape, other “developed” countries are happily willing to demonstrate just how apolitical the central bank truly is. Take Greece, for example, where today the chief prosecutor ordered a raid of the home of the governor of the Greek central bank, Yannis Stournaras and the company office of his wife, Lina.

Yannis Stournaras

The searches were part of a probe conducted by the Financial Police in connection to the alleged mismanagement of more than 1 million euros in state funding by the Hellenic Center for Disease Control and Prevention, KEELPNO. The investigation related to funds that KEELPNO allegedly received through a company owned by Nikolopoulou as well as complaints regarding the disappearance of documents tied to the case.

According to the WSJ, the raid was part of a continuing investigation into business Stournaras’ wife has done with a state entity, officials said, in a probe that may heighten tension between the top bank official and the left-wing government. Lina Nikolopoulou-Stournaras, the wife of central bank Governor Yannis Stournaras and owner of an communications company specializing in the medical sector, is under investigation from Greek authorities for business she has done with the Hellenic Center for Disease Control and Prevention, or Keelpno.

In yet another case of alleged embezzlement, last year Greek authorities charged board members of Keelpno, with misappropriation of funds over contracts they had awarded between 2011 and 2013. Ms. Nikolopoulou-Stournaras has denied any wrong doing in the case. Mr. Stournaras isn’t involved in the business.

Meanwhile, the Greek central bank governor called Greek Prime Minister Alexis Tsipras to inform him of the raid and the two men agreed that it won’t affect their work on the country’s banking system, Greek government officials said. In a statement, the company owned by Ms. Nikolopoulo-Stournaras, Mindwork Business Solutions, said it handed over the information authorities asked for and that it operates within the law.

The central banker’s wife did not pull her punches, and in her statement made it clear that the object of the raid was not her, but her husband: “We all understand that the real target is my husband as a means of serving a certain purpose.”  Syriza officials refused to comment on the statement.

And confirming without a doubt just how political central bankers truly are, Stournaras, who has was appointed as the country’s central bank governor in June 2014 under the previous conservative government, has sparred with the ruling left-wing Syriza party since it came into power in January last year. Senior members of the party have accused the Greek central bank governor of unfairly using his position to swing public opinion against their economic policies and in favor of the country’s lenders, eurozone nations and the International Monetary Fund.

Last summer the country’s previous parliamentary speaker, Zoe Konstantopoulou, demanded Mr. Stournaras testify at a committee investigating bribery allegations against Siemens AG, the German engineering giant, in a public stand off between the two. Mr. Stournaras initially refused to attend, citing his workload, but testified several months later.

Ironcially, a similar blowback against central bankers is taking place in the US and across the western world right now, however any time someone dares to state the truth, they are branded as a tinfoil wearing conspiracy theorist, and desperately ignored. This is better known as the denial phase.




An extremely important commentary and video.  Spitznagel is one smart cookie and he warns that if the Fed ever hikes, the markets will go down very hard and probably 50%

a must view..

(courtesy zero hedge)


Beware Central Banks’ “Illusion Of Control”; Spitznagel Warns “If The Fed Hikes, Markets Will Go Down Very, Very Hard”

Central banks have created a bubble in the stock market, which will come down “very, very hard” when it finally prices in a series of Fed rate hikes, said Universa’s Mark Spitznagel, warning that “the markets are absolutely not positioned for this.”

CNBC anchors were stunned into relative silence as Spitznagel unleashed truth-bomb after truth-bomb. Those ‘facts’ are just hard to argue with…

Key Excerpts…

CNBC: Well what’s the precipitating factor?

Spitznagel: Well, the ultimate cause of that would be the fact that the central banks got us here in the first place. Ultimately, my view is that central banks are the cause of bubbles.

CNBC: So you’re betting essentially that the central banks, whether it be the Fed or the ECB, they can’t unwind the trade that they put on years ago. It’s going to be a messy unwind for their trade.

Spitznagel: There’s no doubt about that.

CNBC: But is that really a black swan? Because you’ve got all these people at Delivering Alpha talking about it, isn’t a black swan supposed to be something that nobody is talking about? Godzilla attack on Tokyo, out of the blue, or something like that?

Spitznagel: So it’s great that everyone’s talking about this now. I had a little less company a few years ago when this was sort of building and now it’s so obvious, you know, the casual user has become an addict, and now we’re concerned about this. And that’s great. But you’re right it’s not a black swan. The reason I’m going to still call it a black swan is because the markets still price it as a black swan.


Spitznagel: The markets are absolutely not positioned for this. There is this sort of collective psychology that says that the Fed can keep this going, that the Fed is in control. But, in fact, central banks are not in control. In many ways central banks are the tail wagging the dog. We think that central banks are so big relative to the market, but, in fact, central banks are tiny relative to the market. Central bank balance sheets are twenty-trillion, the whole global securities and derivatives market is a half-a-quadrillion. So, in fact, central banks are miniscule compared to that. The only thing they have going for them is this collective psychology. It’s an illusion of control.

CNBC: The asymmetric bet that you’re putting on to reflect this, does this focus on the treasury market, or does it focus on equities? Do you think all asset classes go down in this scenario?

Spitznagel: I focus very much on the systemic left tail of equities. But, to answer your question, yes, I think all assets are very much correlated. I think there’s just one big bet out there, so diversification really isn’t going to work. Timing this is not going to work. Remember, the equity has extreme duration now. These low rates and this high valuation means that they’re extraordinarily sensitive to changes in rates, extraordinarily sensitive to changes in risk premiums and growth.

Spitznagel: If the Fed proceeds with rate hikes the markets will go down very very hard, just by duration alone.

CNBC: A series of hikes?

Spitznagel: If the market is going to price in a series of hikes, the stock market has to go down very hard. And this is high dividends, this is all equities have got to go down very very hard. So I don’t think it’s really possible.

CNBC: What’s the percentage? What’s the percentage that it would go down? Some think that the Fed pumped in all this liquidity into the system, that it drove up asset prices, let’s just say stocks, drove up stock prices by x amount, that that has to be unwound when the Fed starts to take that away.

Spitznagel: Ok so the Fed’s gonna, what are they gonna do, raise rates two-hundred basis points? Is that what you mean, if we find ourselves there in a year? The markets will be much much lower. I would argue that central banks cannot allow rates to free float. Which is a little bit of a crazy statement. We cannot allow this most important market that there is, interest rates.

CNBC: The most liquid market that there is.

Spitznagel: Right, but it’s also an important price signal, it’s the most important price signal. And we can’t let it free-float, we can’t let the discovery process work. If we did that, the markets would be cut in half, the stock market would be cut in half.


the video:


h/t Jim S



The Mexican Peso crashes to 20:1 today and the currency is now at record lows.  it is interesting that it is also crashing as the popularity of Donald Trump increases.  The threat of higher USA interest rates is having a devastating effect on emerging nations like Mexico as commodities are being killed.  The low oil price is certainly not helping Mexico

(courtesy zero hedge)


Mexican Peso Crashes To Record Lows As Trump Odds Surge

While correlation is not causation, it is certainly a wink and a nudge in this case. As Donald Trump’s poll numbers soar so the Mexican Peso has been collapsing against the US dollar, and just broke to fresh record lows…


After last year’s annus horribilis that saw the currency shed more than 14 per cent of its value against the dollar, the peso is down an additional 10.5 per cent so far this year – making it the world’s second worst performing major emerging market currency after the Argentine peso, report The FT’s Pan Kwan Yuk and Jude Webber.

Low oil prices have hobbled Mexican president Enrique Peña Nieto’s efforts to open up the country’s energy sector to private investments and forced the government to cut spending and growth forecasts. In addition Mr Peña Nieto has seen his approval ratings sunk to record lows amid anger over his handling of corruption scandals and perceived inability to maintain law and order in Latin America’s second most important economy.


Meanwhile, uncertainty over the timing of the next US interest rate rise and Mr Trump’s recent recovery in the opinion polls against Hillary Clinton have further sapped enthusiasm for Mexican assets.

Combined together, analysts say this mean it’s no longer a question of when the peso will breach the once unheard-of level of 20 to the dollar. It’s when.




Oil tumbles again to one month lows as new supplies are coming onstream from Libya and Nigeria:

(courtesy zero hedge)

WTI Crude Tumbles To One-Month Lows As Libya, Nigeria Supply Looms

Concerns over Libya, Nigeria compounding the already record high global crude surplus (glut) has sentWTI Crude futures to $43.50 – one-month lows…

Stocks are ignoring crude’s collapse for now…

As Bloomberg notes, OPEC members Libya and Nigeria, whose supplies have been reduced by domestic conflicts, are preparing to boost exports within weeks. The oil surplus will last longer than previously thought as demand growth slumps and output proves resilient, the International Energy Agency said Tuesday.

“Oil prices keep trading in a narrow range,” said Michael Poulsen, an analyst at Global Risk Management Ltd. “A short spike yesterday is erased this morning as supply glut worries rule.”

World oil stockpiles will continue to accumulate through 2017, a fourth consecutive year of oversupply, according to the IEA. Just last month the agency predicted the market would return to equilibrium this year.


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




GBP/USA 1.3173 DOWN .0071 

USA/CAN 1.3207 UP .0049

Early THIS FRIDAY morning in Europe, the Euro FELL by 28 basis points, trading now well above the important 1.08 level FALLING to 1.1242; 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 FOR HOLIDAY    / Hang Sang  CLOSED FOR HOLIDAY     /AUSTRALIA IS HIGHER BY 1.08% / EUROPEAN BOURSES ALL IN THE RED

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

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

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

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

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

The NIKKEI: this FRIDAY morning CLOSED UP 114.28 POINTS OR 0.70%  

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


Gold very early morning trading: $1312.35


Early FRIDAY morning USA 10 year bond yield: 1.663% !!! DOWN 9 in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield  2.435, DOWN 5 IN BASIS POINTS  from YESTERDAY night.

USA dollar index early FRIDAY morning: 95.49 UP 22 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING



And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 3.42% DOWN 1   in basis point yield from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: -.039% DOWN 1/10 in   basis point yield from THURSDAY

SPANISH 10 YR BOND YIELD:1.078% UP 1 IN basis point yield from THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.342 UP  1 in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 27 points HIGHER than Spain.





Closing currency crosses for FRIDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/4:30 PM


Euro/USA 1.1155 DOWN .0091 (Euro DOWN 91 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 102.28 UP: 0.296 (Yen DOWN 30 basis points/

Great Britain/USA 1 .2998 DOWN 0.0296 ( Pound DOWN A HUGE 296 basis points

USA/Canada 1.3215 UP 0.0058 (Canadian dollar DOWN 58 basis points AS OIL FELL (WTI AT $43.25). Canada keeps rate at 0.5% and does not cut!


This afternoon, the Euro was DOWN by 91 basis points to trade at 1.1155

The Yen FELL to 102.28 for a LOSS of 30 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 FELL 296 basis points, trading at 1.2998/

The Canadian dollar FELL by 58 basis points to 1.3215, WITH WTI OIL AT:  $43.25

The USA/Yuan closed at 6.6705

the 10 yr Japanese bond yield closed at -.039%  UP 1/10  IN BASIS POINTS / yield/ AND THIS IS BECOMING BOTHERSOME TO THE BANK OF JAPAN

Your closing 10 yr USA bond yield: DOWN 1 IN basis points from THURSDAY at 1.6926% //trading well below the resistance level of 2.27-2.32%) very problematic

USA 30 yr bond yield: 2.446  DOWN 4 in basis points on the day /*very problematic as all bonds globally rose in yield (lowered in price)


Your closing USA dollar index, 99.05 UP 76 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED DOWN 20.02 POINTS OR 0.30%
German Dax :CLOSED DOWN 155.03 OR  1.49%
Paris Cac  CLOSED DOWN 40.77 OR 0.93%
Spain IBEX CLOSED DOWN 87.10 OR 1.00%
Italian MIB: CLOSED DOWN 403.27 POINTS OR 2.43%

The Dow was DOWN 88.68 points or 0.49% 

NASDAQ  DOWN 5.12 points or 0.10%
WTI Oil price; 43.25 at 4:30 pm;

Brent Oil: 45.99




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: $45.99

USA 10 YR BOND YIELD: 1.6926%

USA DOLLAR INDEX: 96.05 UP 76 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.2996 DOWN 0.0249 or 249 basis pts.

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


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

VIXtermination Trumps Deutsche Damage, Dismal Data; But Stocks End Week Weak

After that week, this seemed appropriate…



Macro data has fallen 5 of the last 6 weeks…


Despite desperate efforts to ramp stocks intro the quad witching close, major indices ended the day red…


VIX crush is losing its mojo…


On the week, stocks closed green (despite weakness today)…


Dow futures swung around 200 points on the week to end practically unch…


Post-Rosengren, everything is lower (USD higher) with the least worst being the long-bond…


Of course it was AAPL that saved the world this week….massively outperforming after dropping following the iPhone 7 farce…


The only thing that mattered this week…


The biggest headlines this week were in bond land but today’s moves erased much of the record-breaking panic-mongering (with 30Y outperforming 2Y today)…


2s30s steepened on the week but flattened dramaticlaly today after tagging Brexit highs…


On the week Yen strengthened (against the USD) most but the USD Index gained notbaly led by weakness in EUR and GBP…


Cable -1.9% this week – worst week since Brexit (and -1.6% today – worst day since Brexit) – thanks to comments on Article 50 being triggered in Jan/Feb


Commodities were very mixed on the week – PMs drifted lower as USD strengthened, but Copper soared as Crude got clubbed…

Big moves…

  • WTI -6.5% this week – worst week since January
  • Copper +3.2% this week – best week in 2 months

Charts: Bloomberg




Oh OH! Goldman Sachs not only downgrades the S & p 500 but also the big European Stoxx 600 as the state the valuations are just too high and there is extreme risk of shocks.

(courtesy Goldman Sachs/zero hedge)

Goldman Downgrades S&P 500, Stoxx 600 To Sell, Cites “Elevated Valuations And The Risk Of Shocks”


The gloves finally come off.

After tactfully warning clients for months that staying invested in US stocks and bonds is an unacceptable risk, overnight Goldman’s Peter Oppenheimer finally changed Goldman’s official “tactical” bias, and as of this moment recommends selling not only bonds, as well as the S&P500 and Europe’s Stoxx 600 “due to elevated valuations across assets and the risk of shocks.

Here is the full list of Goldman’s latest recos:

  • We are Underweight S&P 500 as we see strong positioning, headwinds from the resumption of the Fed rate hike cycle and a strong Dollar, and increasing political uncertainty into the US elections.
  • We are also Underweight Europe into year-end due to elevated political uncertainty (from Brexit and the Italian referendum) and uncertainty on ECB policies. A ‘no’ vote in the Italian referendum (a 40% probability, in our view) could put pressure on Italian risky assets, in particular banks, and increase political uncertainty in Italy and the Euro area.
  • Negative macro surprises and the global bond sell-off since last week have driven a reversal of the ‘Goldilocks’ summer rally. Risk parity and balanced funds suffered in particular, with a sharp increase in equity/bond correlations. We think bond yields will increase more until year-end, and downgrade bonds to  Underweight on a 3-month horizon (in line with 12-month). However, while rate volatility could pick up in the near term, we expect the most pressure in the back end and continued anchoring of the front end by central banks next week.
  • We remain defensive in our asset allocation and Overweight cash (3m) due to elevated valuations across assets and the risk of shocks. However, we upgrade equities back to Neutral on a 3m basis due to support from still low rates and optimism on fiscal easing stabilising LT growth expectations. We continue to expect ‘fat and flat’ returns but our equity strategists now forecast less negative returns. Risks are still skewed to the downside in the near term, in our view, owing to more bullish positioning and the fading ‘Goldilocks’ backdrop. However, we see a lack of catalysts for a material drawdown.
  • With central banks anchoring rates and a pick-up in macro data, we would expect equities to stabilise. The sensitivity to US 10-year yields across assets is close to the highest level since the 1990s. And risky assets tend to benefit from higher rates as long as they come alongside better growth; the correlation of risky assets with US breakeven inflation is more positive than with real yields. But, elevated rate volatility often results in a negative correlation of equities with higher yields initially.
  • We stay Neutral commodities, on both a 3- and 12-month horizon. In the near term, fading supply disruptions in Nigeria, Iraq and Libya could drive more volatility in oil prices (see More worried about a thaw than a freeze, August 22, 2016). We continue to like Gold as a diversifier, as correlations with equities are negative; however, near-term Gold is also at risk from higher yields.





Today we had the release of the core CPI and it is now higher than the Fed’s ceiling level of 2% coming in at 2.3%.  The big costs were rent and healthcare costs

(courtesy zero hedge)

“Stagflation”: Core CPI Highest Since Lehman As Rent, Healthcare Costs Soar






Jason Chaffetz is my favourite USA politician on a par with Nigel Farage of Great Britain.

You have got to see the following: he totally stunned an FBI official as he serves him with a subpoena to provide Congress with all FBI documents on Hillary that has been withheld

(courtesy zero hedge)


Chaffetz Obliterates Stunned FBI Official; Serves Him With A Subpoena During Testimony

For those of our readers who haven’t yet had the pleasure of hearing Jason Chaffetz (R – Utah) absolutely obliterate Jason Herring, the FBI’s acting assistant director for congressional affairs, during a recent emergency hearing of the House Committee on Oversight and Government, might we suggest that you do so post haste.  While there are several epic exchanges in the short 4 minute video, the best is the very end where Chaffetz literally serves Herring with a subpoena while he’s still on the stand.

Chaffetz“You don’t get to decide what I get to see. I get to see it all. I was elected by some 800,000 people to come to Congress and see classified information. I was elected by my colleagues here to be the chairman of this committee. That’s the way our Constitution works. Will the FBI provide to Congress the full file with no redactions of personal identifiable information?”


Herring:  “I cannot make that commitment sitting here today.”


Chaffetz:  “Then I’m going to issue a subpoena and I’m going to do it right now. So let’s go. I’ve signed this subpoena.  We want all the 302s and we would like the full file. You can accept service on behalf of the FBI?”


Herring:  “Certainly.”


Chaffetz:  “You are hereby served.  We have a duty and a responsibility.  You can sight no precedent, nothing in the constitution, no legal precedent, you know this is important to us.  You now have your subpoena.  We would all like to see this information.”


Let us conclude this week’s commentary with one of my favourite authors:  David Stockman talking with Greg Hunter of USAWatchdog
(courtesy Greg hunter/USAWatchdog)

Stock & Bond Bubbles Much Worse Than 1929-David Stockman

By Greg Hunter’s 

Economic expert and best-selling author David Stockman offers a dire view of the deep financial trouble America faces in his new book titled “Trumped!”   Stockman warns, “I think we are on the very edge, but what is different this time and makes it scarier . . . is I believe the central banks that ruled the roost have gone from one extreme to the next and done unfathomable things like negative interest rates on $13 trillion of bonds around the world, monetization of the debt, and bond purchases that are staggering such as $90 billion a month in Europe. . . . So, this time, as the phrase goes, they went all in.  They have violated every principle of sound money and sustainable finance that mankind has ever learned about over many centuries.  They have taken us to the edge, but they are out of dry powder.  I think it’s pretty obvious that they can’t go any deeper with subzero interest rates, or negative interest rates. . . . If they tried this in the United States, I think there would be a huge political uprising. . . . They are out of dry powder and out of tools, and therefore, the financial markets of the world are more vulnerable, maybe even more so than in 1929.  You are talking about a bond bubble like never before imagined or conceived, and the stock market is the same way as well as derivatives.”

All this financial malfeasance and engineering was fantastic for the one percent, but everybody else got the shaft. For example, Stockman points out in “Trumped!” the last 30 years “The top 1%’s wealth has grown by 300%, and the top “Forbes 400” wealthiest people in the world had their wealth grow by a staggering 1,000%.”  Meanwhile, the “bottom 90% of Americans have seen their wealth steadily deteriorate.”  Stockman goes on to say, “This has benefited a very narrow slice of the population.  You can call it the 1% or the bicoastal elites who own most of the financial assets.”

Stockman, who was the White House Budget Director in the Reagan Administration, says this is the single biggest reason that created a groundswell of support for Donald Trump, which may catapult him into the White House. Stockman explains, “This is the point of my book . . . . I wanted to address why this phenomenon is happening.  He wasn’t given a snowball’s chance of making it through the first Republican debate, let alone the Iowa Primary, let alone the nominee for the GOP Convention, let alone ahead in the polls this week as we speak. . . . So, none of this was remotely expected by the mainstream media (MSM) who obviously drink the Kool-Aid and think everything is all fixed, and the Fed are great heroes and Obama has saved the economy.  I don’t believe that at all.  So, why I wrote this book is to try to explain why there is so much economic pain in fly-over America, and link that to the wrongheaded policies of the Fed and explain what I call the revolt of the rubes.  I don’t use that in a condescending way.  I use that to explain the so-called sophisticated press, and they think they are enlightened ones and think the rest of the country is kind of dimwitted and don’t get it.  So, they call them rubes.  The rubes are revolting, and they are revolting because they can see the system is rigged.  These people are fed up, and they have had enough, and I think this is where Trump is coming from. . . . I do think we are at an inflection point where someone is finally challenging the Wall Street/Washington elites.  Trump is kind of a wild man in some ways, but he hasn’t spent the last 30 years in Washington drinking the Kool-Aid.”

Stockman’s view of the wealthy buying gold is most sobering and illuminating. Stockman contends, “I think some people are realizing the central bank era of bubble finance and massive money printing is leading to a dead end and some kind of crackup phase in the world monetary system and a breakdown of confidence in the central banks.  I think what this means is when the market loses confidence in the current regime, when they no longer believe the Fed has your back, that there is a put under the market or that they know what they are doing, when that confidence finally evaporates, the monetary system will be in crisis.  Gold prices, in my view, will soar because it will be seen as the last refuge of monetary assets that are outside the purview of the control of a failing central bank system.  I don’t think we have seen anything yet.  It’s only a matter of time when we see the gold price revisit the $1,950 per ounce price that was achieved a few years ago and probably goes well beyond that.”

Join Greg Hunter as he goes One-on-One with David Stockman, the best-selling author of the new book titled “Trumped!” 

(There is much more in the video interview.)

After the Interview: 

Join Greg Hunter as he goes One-on-One with David Stockman, the best-selling author of the new book titled “Trumped!” 

(There is much more in the video interview.)

After the Interview: 


I wish you all a grand weekend

See you on Monday night


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