Sept 20/Another huge “paper” withdrawal of gold from the GLD/Huge spread in gold at the Shanghai gold fix/Loan demand falls dramatically in China: the only game in town is the rising house prices with the accompanying shadow banking loans/Deutsche bank falls to all time lows. Italy’s Renzi in a sparing match with Germany’s Central banker Weidmann/

Gold $1313.70 up $0.20

Silver 19.20  down 1 cent

In the access market 5:15 pm

Gold: 1314.80

Silver: 19.25

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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 20 (10:15 pm est last night): $  1320.03

NY ACCESS PRICE: $1315.70 (AT THE EXACT SAME TIME)

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1320.03

NY ACCESS PRICE: 1315.90 (AT THE EXACT SAME TIME)

HUGE SPREAD TODAY!!

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Sept 20: 5:30 am est:  $1315.40   (NY: same time:  $1315.37:    5:30AM)

London Second fix Sept 16: 10 am est:  $1313.80  (NY same time: $1313.80 ,    10 AM)

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

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 0 notices filed for nil oz

For silver:  the front month of September we have a total of 105 notices filed for 525,000 oz

Let us have a look at the data for today

.

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In silver, the total open interest ROSE by 2109 contracts UP to 193,605. The open interest ROSE as the silver price was up 43 cents in yesterday’s trading .In ounces, the OI is still represented by just LESS THAN 1 BILLION oz i.e. .968 BILLION TO BE EXACT or 138% of annual global silver production (ex Russia &ex China). the crooks are doing a great job fleecing unsuspecting longs

In silver we had 105 notices served upon for 525,000 oz

In gold, the total comex gold fell by 468 contracts even though the price of gold rose BY $7.70 yesterday . The total gold OI stands at 565,071 contracts.  The level of OI now is good for us as it will support a rise in gold price and it will be hardly for the boys to raid.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

LAST NIGHT WE HAD A HUGE CHANGE  out of the GLD/ A WITHDRAWAL OF 3.86 TONNES FROM THE gld

Total gold inventory rest tonight at: 938.75 tonnes of gold

SLV

we had NO change with respect to inventory at the SLV

THE SLV Inventory rests at: 363.479 million oz

.

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

1. Today, we had the open interest in silver rose by 2109 contracts up to 193,605 as the price of silver rose by 43 cents with yesterday’s trading.The gold open interest fell 468 contracts down to 565,071 as the price of gold rose $7.70 IN YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

end

3. ASIAN AFFAIRS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 3.05 POINTS OR .10%/ /Hang Sang closed DOWN 19.59 PONTS OR .08%. The Nikkei closed DOWN 27.14 POINTS OR .16%/ Australia’s all ordinaires  CLOSED UP 0.17% /Chinese yuan (ONSHORE) closed  UP at 6.6712/Oil rose to 43.05 dollars per barrel for WTI and 45.55 for Brent. Stocks in Europe: ALL MIXED   Offshore yuan trades  6.6818 yuan to the dollar vs 6.6712 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AGAIN AS MORE USA DOLLARS  LEAVE CHINA’S SHORES

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)Korea:

none

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

The following is a very important commentary.  Although the demand for loans for housing continues to rise (as indicated by the increase in shadow bank financing) , China is witnessing an overall loan demand drop.  This is due to low demand for loans on the corporate sector as global demand for goods dissipates

( zerohedge)

4 EUROPEAN AFFAIRS

i)The gloves just came off as Italy’s Renzi attacks Deutsche bank’s unfixable derivative problem.  Renzi has his own problems on non performing loans equal to about 360 billion euros or 18% of all total loans.  But he states that his problems are small compared to the supposed 42 trillion Euros (47 trillion USA) in derivatives held by DB.

( zero hedge)

ii)It sure looks like Deutsche bank is hiding its losses through derivatives a la Greece in 2010. The market believes the same

( zero hedge)

iii)And today, Deutsche bank hits record lows

( Dave Kranzler/IRD)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

none today

7.OIL ISSUES

i)Oil continues with its descent as no production freeze is on the horizon

( zero hedge)

ii)The east coast gas pipeline is now fixed and that causes gasoline prices to plunge;

( zero hedge)

 

iii)Late in the day, oil jumps after a huge inventory draw

( zero hedge)

8.EMERGING MARKETS

none today

9.PHYSICAL STORIES

i)Sibanye mines Neal Froneman is not afraid to say that President Zuma must go:

( GATA/Bloomberg)

ii)Turk asks: “what will be the Fed’s excuse for not raising rates this time?”Same B.S. as before.

( James Turk/Kingworldnews)

iii)Bill Murphy talks about the gold and silver suppression scheme

( GATA)

iv)Bitcoin is deemed money by a USA judge:

(courtesy Chris Powell/GATA/Reuters)

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

i)It sure looks like intent here as Combetta sought a reddit advice on how to strip VIP emails 5 months before Hillary delivered emails to the state dept.

( zero hedge)

ii)Now the House Committee is reviewing Combetta’s Reddit threat and they may rescind the immunity order because he misled the house.

( zero hedge)

iib)That did not take long!. The house committee demands an interview with Mr Combetta. That should be interesting!

( zero hedge)

iii)This month we received an interesting boost in homebuilder confidence.  Today housing starts tumbled and thus the higher confidence seems a little misplaced

( zero hedge)

iv)the mouthpiece of the Fed, Jon Hilsenrath hath spoken: no rate hike until December

( zero hedge)

v)the Atlanta Fed’s first Q3 GDP print comes in at only 2.9% and you can bet the farm that it will be adjusted lower

( Atlanta Fed/zero hedge)

Let us head over to the comex:

The total gold comex open interest fell to an OI level of 565,071 for a loss of 468 contracts as the price of gold ROSE by $7.70 with YESTERDAY’S trading. We are now in the NON active month of SEPTEMBER/

The contract month of Sept saw it’s OI ROSE by 20 contracts UP to 157. We had 0 notices filed yesterday so we gained 20 gold contracts or an additional 2000 gold ounces  will stand for delivery. The next delivery month is October and here the OI lost just 2 contracts DOWN to 37,539. 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 96 contracts down to 419,415 .The estimated volume today at the comex: 95,652 which is horrendous.  Confirmed volume on yesterday: 141,481 which is fair.

 

Today we had  0 notices filed for  nil oz of gold.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI rose by 2,109 contracts from  191,496 up to 193,605 with the rise in price of silver to the tune of 43 cents on 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 19 contracts down to 692. We had 27 notices filed upon yesterday so we GAINED BACK ANOTHER 8 contracts or 40,000 additional oz will stand for delivery in this active month of September. The next non active delivery movement of October LOST 1 CONTRACT TO 290 contracts.  The next big delivery month is December and here it FELL by 1997 contracts DOWN to 168,266. The volume on the comex today (just comex) came in at 34,116 which is fair.  The confirmed volume yesterday (comex and globex) was very good at 50,609 . Silver is not in backwardation.  London is in backwardation for several months.

today we had 105 notices filed for silver: 525,000 oz

INITIAL standings for SEPTEMBER
 SEPT 20.
Gold
Ounces
Withdrawals from Dealers Inventory in oz  

NIL

Withdrawals from Customer Inventory in oz  nil
32.15 oz
1 kilobar
Manfra
Deposits to the Dealer Inventory in oz NIL oz
Deposits to the Customer Inventory, in oz 
nil
No of oz served (contracts) today
0 notices 
nil oz
No of oz to be served (notices)
157 contracts
(15,700 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   170,150.1 oz
 Today; some activity at the gold comex and 1 kilobar entry 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 0 customer deposits:
Total customer deposits: nil oz.
 We had 1 customer withdrawals:
ii) Out of Manfra; 32.15 oz
(1 kilobar)
total customer withdrawals: 32.15 oz
Today we had 0 adjustment:
 
Note:
If anybody is holding any gold at the comex, you must be out of your mind!!!
since comex gold storage is unallocated , rest assured any gold stored 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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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 0 contract  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped (received) by jPMorgan customer account.

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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 (157 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 263,400 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 (157) minus the number of  notices served upon today (0) x 100 oz which equals 263,400 oz standing in this non  active delivery month of SEPT  (8.1928 tonnes).
We gained an additional 2,000 oz that 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) =10,851,159.760 or 337.51 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 337.51 tonnes for a  gain of 35  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 of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine.
 
IN THE LAST MONTH 15 NET TONNES HAS LEFT THE COMEX.

end
And now for silver
 
SEPT INITIAL standings
 SEPT20.2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
637,575.89 oz
HSBC
Scotia
Brinks
Deposits to the Dealer Inventory
 511,849.400  OZ
Brinks
Deposits to the Customer Inventory 
 403,684.05 oz
CNT
No of oz served today (contracts)
105 CONTRACTS
(525,000 OZ)
No of oz to be served (notices)
587 contracts
(2,935,000 oz)
Total monthly oz silver served (contracts) 2591 contracts (12,955,000 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  5,983,6199.9 oz
today, we had 1 deposit into the dealer account:
 i) Into Brinks: 511,849.400 oz
total dealer deposit: 511,849.400 oz
we had 0 dealer withdrawals:
 total dealer withdrawals: NIL oz
 we had 3 customer withdrawals:
i) Out of HSBC:  20,162.89 oz
ii) Out of Scotia; 600,388.000  oz ??? exactly xx.000 oz???
iii) Out of Brinks: 17,025.000 oz ???? exactly xx.000???
Total customer withdrawals: 637,575.89  oz
We had 1 customer deposit:
i) Into CNT:  403,684.05 oz
total customer deposits:  403,684.05  oz
 
 
 
 we had 0 adjustment
The total number of notices filed today for the SEPT contract month is represented by 105 contracts for 525,000 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 (2591) x 5,000 oz  = 12,955,000 oz to which we add the difference between the open interest for the front month of SEPT (692) and the number of notices served upon today (105) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the SEPT contract month:  2591(notices served so far)x 5000 oz +(691 OI for front month of SEPT ) -number of notices served upon today (105)x 5000 oz  equals  15,890,000 oz  of silver standing for the SEPT contract month.
we GAINED 8  contracts or an additional 40,000 will stand FOR DELIVERY IN THIS  ACTIVE MONTH OF SEPTEMBER. 
 
Total dealer silver:  31.677 million (close to record low inventory  
Total number of dealer and customer silver:   170,722 million oz (close to a record low)
The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
end
And now the Gold inventory at the GLD
SEPT 20/A HUGE CHANGES IN INVENTORY AT THE GLD/: A WITHDRAWAL OF 3.86 TONNES/INVENTORY RESTS AT 938.75 TONNES
SEPT 19/2016: 10.39 TONNES WERE ADDED INTO THE GLD/THIS WOULD BE A “PAPER DEPOSIT”/INVENTORY RESTS AT 942.61 TONNES
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SEPT 19/ Inventory rests tonight at 938.75 tonnes

end

Now the SLV Inventory
SEPT 20/NO CHANGES IN INVENTORY AT THE SLV/INVENTORY RESTS AT 363.479 MILLION OZ
SEPT 19/A HUGE ADDITION OF 1.045 MILLION OZ WAS ADDED INTO THE SLV/INVENTORY RESTS AT 363.479 MILLION OZ/
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 20.2016: Inventory 363.479 million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 5.1 percent to NAV usa funds and Negative 5.2% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.5%
Percentage of fund in silver:39.3%
cash .+1.2%( SEPT 20/2016).
2. Sprott silver fund (PSLV): Premium falls to +0.65%!!!! NAV (SEPT 20/2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES TO  0.87% to NAV  ( SEPT 20/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.65% /Sprott physical gold trust is back into positive territory at 0.87%/Central fund of Canada’s is still in jail.
 
 
 

end

 

Gold Bugs Rejoice – Central Banks Think You’re On To Something

Gold Bugs Rejoice – Central Banks Think You’re On To Something

by John Stepek, Editor of Money Week

Central banks have got the economy and markets covered.

They know what they’re doing. Their theories are backed up by decades of academic research and expert advice.

gold-bugs--gold-vaultsQueen Elizabeth inspecting gold bars in Bank of England. Source: Money Week

Expert advice, as we all know, is completely apolitical, changes rarely, and never, ever does a complete U-turn, like – I don’t know – telling us all to start eating butter after years of telling us not to, or something crazy like that.

So why worry? I mean, what kind of deluded neurotic doom-monger would keep hanging onto gold (as insurance, of all things!) in their portfolio with people of this calibre in charge?

Well, I hate to break this to you, but…

Guess who’s buying lots of gold?

Central banks are piling into gold. They have been ever since the financial crisis blew up in 2008.

In fact, says a new report from the OMFIF (Official Monetary and Financial Institutions Forum) research group, central banks have been buying gold at a rate of 350 tonnes a year for the last eight years. That takes us back to the sorts of levels we saw in the pre-1970 era.

OMFIF has looked at central bank behaviour and gold buying going back over more than a century (back to 1871, in fact). It’s broken it down into seven “ages of gold’. There’s some interesting stuff in there, but I’ll only go back as far as post-World War II this morning, as that’s the most relevant to today’s topic.

So the fourth age of gold – 1945 to 1973 – covers the Bretton Woods era, during which gold reserves were rising, notes David Marsh of OMFIF, “with European countries and Japan amassing sizeable new post-war holdings as central banks exchanged surplus dollars for gold from the US Treasury”.

Indeed, between 1950 and 1965, central banks and treasuries bought up more than 7,000 tonnes of gold.

But this all came to a screeching halt in 1971 when US President Richard Nixon severed the dollar’s link to gold. Gold was no longer backing the world’s reserve currency. Instead, it was backed by the faith in the US government – “fiat” money.

“The fifth age” (from 1973 to 1998) wasn’t what you’d call a smooth transition. The 1970s were stagflationary, replete with energy shocks, and marked by geopolitical conflict and domestic political tumult across developed nations.

But things started to settle down in the 1980s and gold lost its lustre, helped by US Federal Reserve boss Paul Volcker’s determination to crush inflation and make the dollar worth holding.

Peak paper – gold in the gutter

We then come to what OMFIF calls the “sales” period – the sixth age of gold. From 1998 to 2008, “central banks, particularly in developed countries including the UK, the Netherlands and Switzerland, were unloading bullion holdings.”

I’d argue that this period – the launch and early years of the euro experiment – was the “peak” fiat currency moment. That was also when chancellor Gordon Brown sold off a big chunk of the Bank of England’s gold at its lowest price for 20-odd years. Gold’s lowest point corresponded to paper’s peak.

The two phenomena were related, of course. The gold was sold to buy euros. And it was all purely political – the gold wasn’t sold in order to get a good price, and the euros were bought to prop up the new currency in its early days.

It’s also notable – I think – that European countries who didn’t join the euro were prominent among those selling their gold to prop up the single currency. It’s almost as though they were paying a loyalty penalty for their lack of commitment to le grand projet.

Trouble is, since then, the era of purely credit-backed currency has been found wanting. That great big blow-up in 2008, itself a direct result of efforts to reflate markets following the dotcom crash, unsurprisingly rattled faith in the global monetary system.

Not least, it seems, among central banks themselves. Since 2008, they’ve added more than 2,800 tonnes to reserves – nearly 10% of the global total. China and Russia are the main buyers, but developed world central banks have been adding too, or at least keeping reserves static.

This is the longest period of sustained purchases since that 1950 to 1965 era mentioned earlier. As Marsh puts it, “this has restored the yellow metal as a central element of money management after four decades of attempted demonetisation”.

Not unlike the Bank of England’s decision to whack most of its pension fund money into index-linked gilts, it shows a remarkable lack of faith in its own ability to run the economy successfully.

And I’m not surprised. It’s hard to see a route out of today’s debt burdens. But I suspect that it will involve some major shift in the monetary regime. I’m talking along the lines of a wholesale shift that will in the future be labelled as an “era”, in the same way as we label the Bretton Woods era now.

What will it look like? I don’t know. An intense suspicion of cash and an increasing reliance on digital currency seems likely to be part of it, judging by the mood music.

But whatever happens, regime change is a chaotic period during which few things can be relied upon.

So having a bit of gold in your portfolio – just like our central bankers – seems like a sensible precaution.

John Stepek, is the editor of the best selling financial publication in the UK, MoneyWeek, and the full article can be rea

Gold and Silver Bullion – News and Commentary

Gold retains strength ahead of Fed meeting (Reuters)

Gold Climbs as U.S. Rates Seen Steady Even as Fed ‘Talks Tough’ (Bloomberg)

Gold Advances as Traders Pare Bearish Bets Before Fed Meeting (Bloomberg)

Gold Prices Bounce From Two-Week Low (WSJ)

Gold retains strength ahead of Fed meeting (Reuters)

Unnatural calm in today’s markets should have you worried (Moneyweek)

Bond yields are surging despite deflation, and that is dangerous (Telegraph)

7 Ages of Gold – “Central banks are turning back to gold” – OMFIF (OMFIF)

Central banks have been buying gold with a vengeance (Marketwatch)

Bitcoin is money, U.S. judge says in case tied to JPMorgan hack (Reuters)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

20 Sep: USD 1,315.40, GBP 1,011.02 & EUR 1,175.84 per ounce
19 Sep: USD 1,315.05, GBP 1,007.99 & EUR 1,177.36 per ounce
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

Silver Prices (LBMA)

20 Sep: USD 19.17, GBP 14.78 & EUR 17.15 per ounce
19 Sep: USD 19.12, GBP 14.65 & EUR 17.13 per ounce
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


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– 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

Mark O’Byrne
Executive Director

 

Turk asks: What will be the Fed’s excuse this time for not raising rates?

Section:

7p ET Monday, September 19, 2016

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk tells King World News today that this week’s meeting of the Federal Open Market Committee will be interesting not for any increase in interest rates but for the committee’s explanation for again declining to raise rates. An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/james-turk-the-world-is-headed-for-a-crisis-far…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

END

 

Bill Murphy talks about the gold and silver suppression scheme

(courtesy GATA)

GATA Chairman Murphy discusses silver’s threat to gold price suppression

Section:

7:54p ET Monday, September 19, 2016

Dear Friend of GATA and Gold:

Ken Ameduri of Crush The Street today interviews GATA Chairman Bill Murphy about silver’s threat to the central bank gold price suppression scheme. The interview is 15 minutes long and can be heard at Crush the Street here:

https://www.crushthestreet.com/videos/live-interviews/inevitable-physica…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

end

 

Bitcoin is deemed money by a USA judge:

(courtesy Chris Powell/GATA/Reuters)

Bitcoin is money, U.S. judge says in case tied to JPMorgan hack

Section:

Sounds like this logic would recognize gold as money too.

* * *

By Jonathan Stempel
Reuters
Monday, September 18, 2016

NEW YORK — Bitcoin qualifies as money, a federal judge ruled on today in a decision linked to a criminal case over hacking attacks against JPMorgan Chase & Co. and other companies.

U.S. District Judge Alison Nathan in Manhattan rejected a bid by Anthony Murgio to dismiss two charges related to his alleged operation of Coin.mx, which prosecutors have called an unlicensed bitcoin exchange.

Murgio had argued that bitcoin did not qualify as “funds” under the federal law prohibiting the operation of unlicensed money transmitting businesses.

But the judge, like her colleague Jed Rakoff in an unrelated 2014 case, said the virtual currency met that definition.

“Bitcoins are funds within the plain meaning of that term,” Nathan wrote. “Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment.” …

… For the remainder of the report:

http://www.reuters.com/article/us-jpmorgan-cyber-bitcoin-idUSKCN11P2DE

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

 
 

:

1 Chinese yuan vs USA dollar/yuan  UP to 6.6712( REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6818 / Shanghai bourse CLOSED DOWN 3.05 POINTS OR .10%   / HANG SANG CLOSED DOWN 19.59 POINTS OR 0.08%

2 Nikkei closed  /USA: YEN FALLS TO 101.91

3. Europe stocks opened ALL MIXED (     /USA dollar index DOWN to 95.92/Euro UP to 1.1179

3b Japan 10 year bond yield: FALLS TO    -.063%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 101.91/ 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::  43.05  and Brent: 45.55

3f Gold UP /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.007%   

3j Greek 10 year bond yield FALLS to  : 8.54%   

3k Gold at $1314.50/silver $19.17(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 WILL BE DEFENDED 

3l USA vs Russian rouble; (Russian rouble DOWN 35/100 in  roubles/dollar) 64.95-

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  REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 101.91 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9786 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0939 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -.007%

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

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

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

4. USA 10 year treasury bond at 1.686% early this morning. Thirty year rate  at 2.422% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS

US Futures, Bonds Rise, Dollar Dips As Fed, BOJ Meetings Begin

If yesterday one could “explain” the overnight stock levitation due to the move higher in crude oil, today there is no such catalyst with WTI down modestly, and yet the broader push higher across European stocks and US equities has reappeared following yesterday’s muted close on Wall Street ahead of key central bank data on deck. Some have attributed the 0.4% rise in futures to the latest dip in the dollar, while a modest bond rally as the countdown to crucial policy decisions by the Bank of Japan and the Federal Reserve entered its final stretch, put taper tantrum concerns on hold if only for the time being.

Indeed, it is all about the two key central bank meetings over the next 24 hours, with both the BOJ and Fed set to make highly anticipated policy decisions. As DB’s Jim Reid puts it, “tomorrow is going to be a bit of a Hollywood day in markets with the FOMC conclusion and the BoJ meeting. In 24 hours we’ll know the Japanese decision and we’ll be awaiting the press conference from Kuroda at 7.30am BST.” DB thinks the BOJ they’ll refrain from adding more stimulus this month. While the bank’s Japan economists acknowledge all the noise from the various media outlets reporting that the BoJ is considering a change in its JGB purchasing scheme to spur a steepening in the curve, a deepening of NIRP and a new forward guidance strategy, they think that the BoJ will do little more than indicate its intent to base its policy implementation on the yield curve, especially since the Fed announcement shortly after can undo anything the BOJ may “surprise” with. Still, the wider market forecasts suggest a reasonable split between economists however so it should be an interesting meeting and reaction.

To be sure, traders are skeptical to put on big trades with not one but two key risk events ahead: “no one is prepared to take on too much risk ahead of the Bank of Japan and the Fed Open Market Committee meetings,” Chris Weston, chief market analyst at IG told Bloomberg. “The key this week for me is how the Japanese and U.S. fixed-income markets react to either central bank decision. If real bond yields start moving up it will cause a tightening of financial conditions that will not be taken well by the credit or equity markets.”

He wasn’t the only one: “the market in general is in a wait and see mode ahead of the Fed meeting tomorrow,” said Allan von Mehren, chief analyst at Danske Bank A/S in Copenhagen. “There’s some anxiety still over the risk of a Fed hike. The euro strengthening a bit might affect European stocks negatively and a small decline in oil as well is weighing on oil companies.”

There was some movement in the USD, which declined versus most of its major counterparts, while the yen advanced, with a large majority of economists surveyed by Bloomberg predicting the Fed will keep policy unchanged. European bonds gained with their U.S. counterparts, pushing Spain’s 10-year yield below 1%, as fixed-income traders assessed the potential results of a BOJ policy review.

Oil declined amid projections of rising supply from Nigeria and expanding crude stockpiles in the U.S. New Zealand’s dollar climbed with milk prices. European stocks were little changed at a one-week high.

Shifting expectations regarding the outcomes of the BOJ and Fed meetings spurred volatility in financial markets over the past two weeks. A slew of weak American economic data has pushed the probability of a U.S. rate hike to 20 percent in the futures market, down from more than 40 percent in late August. The BOJ has been studying the effectiveness of its stimulus programs and economists are split over the likelihood of further easing on Wednesday. To be sure, if the last BOJ announcement is any indication, when the central bank broadly disappointed and only boosted its ETF purchases…

tomorrow may see another general aversion from risk assets, especially if the JGB curve resumes its steepening.

Stock trading has been generally muted, with Asian stocks declining broadly across the board – the Nikkei 225 (-0.2%) traded choppy on return from its long weekend with sentiment driven by an indecisive JPY. ASX 200 (+0.2%) was initially pressured by losses in telecoms and energy, while Shanghai Comp (-0.1%) and Hang Seng (-0.1%) both declined. The Stoxx Europe 600 Index rose 0.1%. Italian banks dragged a gauge of lenders to the worst performance of the 19 industry groups on the equity benchmark. Total SA and BP Plc weighed on oil-related companies as crude gave up Monday’s gains on speculation a global glut will persist amid rising Nigerian output. Bayer AG climbed 1 percent after raising the peak sales forecast for its new-drug portfolio. GVC Holdings Plc added 2.6 percent after saying that its 2016 results will be at the upper end of market expectations.

S&P 500 Index futures advanced 0.4%, after U.S. equities ended Monday little changed.

Japan’s Topix climbed 0.4 percent as trading resumed following a holiday on Monday, while the Nikkei 225 fell 0.2 percent. Nicholas Smith of CLSA Ltd. said he’s “absolutely certain” the BOJ will stop buying exchange-traded funds tracking the Nikkei 225 amid criticism its use of the measure is distorting the market, and buy more Topix and JPX-Nikkei Index 400 ETFs instead.

The yield on 10Y Treasuries declining 2bps to 1.70%, and offsetting Monday’s 2bps increase. Two of the Fed’s 23 primary dealers — Barclays Plc and BNP Paribas SA — are going against the grain and betting on a surprise rate hike from the Fed on Wednesday. It’s the first time more than one dealer has gone against the consensus during the week of a policy meeting since last September, data compiled by Bloomberg show. Germany’s benchmark 10-year bond yields slipped two basis points to minus 0.002 percent. In Europe, Spanish 10-year bond yields fell to less than 1 percent for the first time since Sept. 9. Italy led advances among the region’s longer-maturity bonds, with the nation’s 30-year yield sliding seven basis points to 2.36 percent. Japan’s 10-year bond yield slipped 1-1/2 basis points to minus 0.06 percent.

Market Wrap:

S&P 500 futures up 0.4% to 2142
Stoxx 600 up 0.1% to 342
FTSE 100 up 0.4% to 6837
DAX up 0.5% to 10422
German 10Yr yield down 1bp to 0.01%
Italian 10Yr yield down 2bps to 1.29%
Spanish 10Yr yield down 1bp to 1.02%
S&P GSCI Index down 0.1% to 348.5
MSCI Asia Pacific up 0.2% to 139
Nikkei 225 down 0.2% to 16492
Hang Seng down less than 0.1% to 23531
Shanghai Composite down 0.1% to 3023
S&P/ASX 200 up 0.2% to 5304
US 10-yr yield down 2bps to 1.69%
Dollar Index down 0.04% to 95.8
WTI Crude futures down 0.3% to $43.16
Brent Futures down 0.3% to $45.83
Gold spot up 0.2% to $1,315
Silver spot down 0.2% to $19.21
Global Headline News:

Two of Fed’s Own Primary Dealers Warn Shock Hike Awaits Markets: Barclays, BNP see September hike even as futures show 20% odds
Dollar Weakens Before BOJ, Fed as Energy Stocks Decline With Oil: Crude slips toward $43 a barrel before U.S. stockpiles data
Online Grocer Backed by Facebook Billionaire Said to Seek Buyer: Singapore-based RedMart working with bank to explore options
Grab’s Record $750m Funding Turns Up the Heat on Uber: SoftBank led round that’s said to hand Grab a $3b value
Looking at regional markets, we start in Asia where stocks traded subdued following a similar lead from the US close, with participants tentative ahead of this week’s BoJ and FOMC meetings. Nikkei 225 (-0.2%) traded choppy on return from its long weekend with sentiment driven by an indecisive JPY. ASX 200 (+0.2%) was initially pressured by losses in telecoms and energy, while Shanghai Comp (-0.1%) and Hang Seng (-0.1%) were also negative on cautiousness ahead of the key risk events, with the latter also dampened following recent increases in money market rates. 10yr JGBs were marginally lower amid increased risk appetite in Japan, while today’s BoJ bond buying operations were for a relatively reserved amount. BoJ will likely adjust the policy framework this week and could be forced to abandon 2-year inflation target for a longer outlook, according to Nikkei.

Top Asian News

China Said to Plan $150b in New Public-Private Projects: Focus will be on fiscal policy and infrastructure investment
Yuan Funding Crunch Shows Risks in Reserve Currency Ranking: Yuan will join IMF’s Special Drawing Rights next month
Japan Funds Reluctant to Buy Local Debt After Selling Abroad: Japanese investors sold foreign bonds for two straight weeks
Brevan Howard, Caxton Expand in Asia Amid Hedge Fund Woes: Asia funds have beaten global rivals for past four years
With 18 Soldiers Dead, Modi Faces Pressure to Hit Pakistan: After Kashmir attack, analysts say Modi’s credibility at risk
In Europe, stocks are broadly in the green, despite a relatively flat open. Much of the focus has been on Financials given reports that Deutsche Bank (-1.8%) are planning to securitize USD 5.5bIn of loans in order to bolster capital. Further bad news came from Handelsblatt, claiming outflows from DB’s asset management unit hit EUR 20bIn in the first half of 2016. In spite of this the DAX (+0.4%) outperforms its major peers this morning, through a lack of energy names — which are amongst the worst performers – and the upside seen in Bayer’s (+1.3%) shares. The German pharmaceutical heavyweight, which is a large component of the DAX, increased its 2017 Y/Y pharma revenue forecast by 6%. Elsewhere, Monte Paschi (-5.3%) continues its roller coaster ride, having been halted from trading several times in today’s session and drags the FTSE MIB (-0.4%) lower. This morning has seen marginal upside in fixed income with Dec’16 Bund futures higher by 15 ticks. Of note Fl trade is relatively thin with some position squaring before the Fed.

Top European News

Glaxo Names Emma Walmsley as New CEO to Succeed Andrew Witty: Walmsley to join board on Jan. 1, take helm on March 31
Lufthansa, Air China Sign Pact to Operate China-Europe Routes: Carriers plan to start joint operations in 2017: statement
Bayer Mulls Dropping Monsanto Name as Brand Headache Cure: Executives aiming to build on consumer trust in Europe
UBS Raises $637 Million for European Infrastructure Debt Fund: money was raised from 17 investors, including pension funds and insurers in Europe and Japan
Swiss Watch Exports Fall for 14th Straight Month: Shipments dropped 8.8% in August, following 14% slide in July
Tesco Outpaces Rivals as Britons Splurge on Summer Booze Deals: Tesco had its smallest sales decline in 2.5 years
Sports Direct Seeks to Appease Investors With New Review Leader: Mike Ashley bows to shareholder pressure in latest concession
Arrow Global to Co-Invest in EU1.7b Real Estate Loan Portfolio: co. commented in statement
Banco Popular CEO Halts Private Bank Sale: Expansion: Larena wants to keep business to gain profitability, newspaper reports
Greencore Group Names Eoin Tonge CFO Effective Oct. 3: Eoin replaces Alan Williams, who is to become Travis Perkins CFO
In FX, the dollar fell against 13 of its 16 major peers, weakening 0.2 percent to 101.75 yen in early trading. It weakened 0.1 percent to $1.1187 per euro, having dropped 0.2 percent the previous day. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was little changed, after touching its strongest level since July 29 last week. The BOJ should continue with both asset purchases and its negative interest rates policy, partly to prevent currency appreciation, Koichi Hamada, adviser to Prime Minister Shinzo Abe, was cited as saying in a Tokyo Shimbun report over the weekend. Any debate to cut back on the central bank’s easing program now will bring back a pre-Abenomics, deflationary age, he said. South Africa’s rand gained 0.5 percent to a one-month high, bringing its advance in September to 5.5 percent, the biggest appreciation among 31 major currencies tracked by Bloomberg. The rand is rebounding from a 6.1 percent selloff in August sparked by concern that Finance Minister Pravin Gordhan’s job is on the line after reports that he faces arrest over allegations of irregularities at the tax authority, which he headed from 1999 to 2014.

In commodities, West Texas Intermediate fell 0.4 percent to $43.15 a barrel and Brent slipped 0.5 percent to $45.74. Nigeria’s output reached 1.75 million barrels a day and will keep rising after government outreach and a cease-fire with militants allowed some production to restart, Minister of State for Petroleum Emmanuel Kachikwu said. U.S. crude stockpiles probably increased by 3.13 million barrels last week, according to a Bloomberg survey before government data Wednesday. Gold rose 0.2 percent to $1,315.28 an ounce, advancing for a second day. U.S. natural gas climbed for the third day out of four. Futures rose 0.7 percent to $2.955 per million British thermal units as above-normal temperatures were forecast for most of southern and eastern part of the country next week.
Bulletin Headline Summary from RanSquawk and Bloomberg

European equities trade mostly higher with the exception of the FTSE MIB as the nation’s banking sector continues to concern investors
A busy morning in FX with markets back to full strength, but not for the specific currencies in the line of fire ahead of the BoJ and FOMC rate announcements
Looking ahead, highlights include the NZ GDT Auction and API crude oil inventories
Treasuries slightly higher in overnight trading as global equities mixed, oil lower and gold rallies; investors see just 20% chance of rate hike tomorrow by Fed; BOJ rate announcement overnight.
Two of the Fed’s 23 preferred bond-trading partners — Barclays Plc and BNP Paribas SA — are betting against their peers and the bond market by forecasting officials will raise rates Wednesday
China’s shadow banking could lead to losses of $375 billion, according to CLSA Ltd. estimates of likely levels of bad debt. The brokerage estimated the potential bad debt ratio for “bank-related shadow financing” at 16.4%, or 4.2 trillion yuan
China’s attempts to slow runaway home-price growth in major cities are showing little sign of success, stoking the threat of a housing bubble that could destabilize the economy
Deutsche Bank AG, which is trying to bolster its capital, is working to securitize billions of dollars of corporate loans to offload risk, according to a person with knowledge of the matter
Trade is likely to remain weak in the coming years, according to a report by the ECB. While global trade grew on average roughly twice as fast as global output prior to the financial crisis, the ratio of imports to world GDP has largely stagnated over the last five years and will probably remain at current levels
This year is poised to be one of the biggest on record for corporate bonds in Europe after getting off to a slow start. Companies have sold the equivalent of about 250 billion euros ($280 billion) of notes in the single currency and sterling
Wells Fargo’s John Stumpf, struggling to quell a scandal and demands for management accountability, plans to tell lawmakers Tuesday the bank failed customers and the public by reacting too slowly to signs employees were opening millions of unauthorized accounts
The mandate to negotiate Britain’s departure from the European Union must be unanimously approved by the bloc’s remaining 27 governments, leaving “zero chance” the U.K. can clinch a deal with both immigration curbs and free- market access, the Czech envoy said
* * *

DB’s Jim Reid concludes the overnight wrap

Tomorrow is going to be a bit of a Hollywood day in markets with the FOMC conclusion and the BoJ meeting. In 24 hours we’ll know the Japanese decision and we’ll be awaiting the press conference from Kuroda at 7.30am BST. As a reminder DB thinks that they’ll refrain from adding more stimulus this month. While our Japan economists acknowledge all the noise from the various media outlets reporting that the BoJ is considering a change in its JGB purchasing scheme to spur a steepening in the curve, a deepening of NIRP and a new forward guidance strategy, they think that the BoJ will do little more than indicate its intent to base its policy implementation on the yield curve. The wider market forecasts suggest a reasonable split between economists however so it should be an interesting meeting and reaction.

In terms of markets in the early going this week, following a decent rebound in Europe and then a positive start to trading in the US, equity markets were left treading water by the end of play yesterday as the rally faded into the evening. Indeed a boost from the commodity complex had initially helped the Stoxx 600 close up +1.02% for just the second daily gain in the last eight sessions, while the S&P 500 opened up as much as +0.67% but that marked the high point for the day with the index eventually fading into the close to end around flat. Gains for utility and real estate names – the latter following a bumper NAHB housing market index print (more on that below) – ended up being offset by losses for telecom names and also the tech sector with Apple (-1.17%) down for the second day in a row following four strong days to start last week.

While not quite making up for the steep decline on Friday, WTI did finish +0.63% yesterday as exports out of Libya continued to be halted, while OPEC’s secretary general suggested that there could be an extraordinary meeting between Oil ministers if a consensus is reached at the informal meeting next week. Precious metals were also stronger, with Gold (+0.22%) and especially Silver (+2.02%) rebounding. Base metals excluding Copper were also broadly higher (Nickel in particular rallying +4.37% on supply concerns).

There wasn’t a huge amount to report in the rates space with Treasury yields inching slightly higher (10y +1.9bps to close back above 1.700%), while the Greenback was weaker despite the latest NAHB housing market index reading The index rose a bumper 6pts to 65, well exceeding the consensus estimate of 60 and it means that the current reading is the joint highest (with October 2015) since 2005. The details pointed to widespread strength with both reported present sales (+6pts to 71) and future sales expectations (+5pts to 71) both rising.

Refreshing our screens and looking at the latest in Asia, there doesn’t appear to be much in the way of a direction in markets this morning with the bourses fairly mixed. Japan has reopened following the public holiday yesterday and the Topix and Nikkei have climbed +0.63% and +0.11% respectively. The Kospi (+0.03%) is little changed, while the Hang Seng (-0.30%), Shanghai Comp (-0.29%) and ASX (-0.21%) have dipped modestly lower. There’s little to report from currency markets while Oil (-0.40%) has faded. Meanwhile there continues to be some focus on the BIS report from the weekend which showed that the credit gap in China (also known as the credit-to-gross domestic product gap, or the difference between the credit-to-GDP ratio and its long term trend) has risen to 30.1% and well above the 10% level that signals financial stress. A year ago the ratio was 25.4% and the increase in the gap has raised fresh concerns about China’s banking sector.

Moving on. We discovered yesterday that the past week has seen the highest amount of the ECB CSPP to date. Net settled purchases were €2.657bn last week which equates to a daily average of €531mn. This compares to a daily average of €365mn since the program started and a monthly average of €7.666bn. The step-up in buying has coincided with healthy primary issuance and hints that the ECB are being very active in new issues. Remember that when they last disclosed buying composition (on September 5th) for data at the end of August, the split was around 93% secondary and only 7% primary. When they next detail the split in early October, which will factor in all the September purchases, we’d expect primary to have increased.

Flipping to equities, a quick mention this morning that our European equity strategists have published their latest report looking at the risks of a US recession. They note that four signals are in place that have been associated with US recessions in the past: corporate margins have been declining for the past two years, the Fed’s Labour Market Conditions Index has turned negative last month, capex growth is negative and the US speculative default rate is above 5%. There has only been one occasion over the past 30 years on which these factors have come together without this leading to a recession – namely, 1986. The reason the economy did not go into recession but back then was that the Fed cut rates by 550bps and the US dollar dropped by 40% after the Plaza Accord, boosting export growth. None of these support factors are unlikely to materialize this time round. As a consequence, the team agree with our economists that there is a 30% probability of a US recession over the coming 12 months. This is one reason for their cautious stance on European equities – and cyclical sectors in particular.

end

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 3.05 POINTS OR .10%/ /Hang Sang closed DOWN 19.59 PONTS OR .08%. The Nikkei closed DOWN 27.14 POINTS OR .16%/ Australia’s all ordinaires  CLOSED UP 0.17% /Chinese yuan (ONSHORE) closed  UP at 6.6712/Oil rose to 43.05 dollars per barrel for WTI and 45.55 for Brent. Stocks in Europe: ALL MIXED   Offshore yuan trades  6.6818 yuan to the dollar vs 6.6712 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AGAIN AS MORE USA DOLLARS  LEAVE CHINA’S SHORES

3a)NORTH KOREA:

none today

b) REPORT ON JAPAN

c) Report on CHINA

The following is a very important commentary.  Although the demand for loans for housing continues to rise (as indicated by the increase in shadow bank financing) , China is witnessing an overall loan demand drop.  This is due to low demand for loans on the corporate sector as global demand for goods dissipates

(courtesy zerohedge)

Chinese Loan Demand Drops To All Time Low

With China’s latest housing bubble once again in full swing, when as reported overnight the average new-home price in China’s 70 cities rose 1.2% in August, the biggest monthly increase in six years…

… the euphoria for home purchases can be easily explained: an epic burst of mortgage loan issuance, serving as the false foundation for China’s latest home buying spree.

However, step away from the residential housing market, and things turn decidedly sour. As Caixin reported overnight, loan demand in China, as opposed to record supply, 

… has plunged to all time lows. Specifically, the willingness of Chinese companies to borrow reached dropped to the lowest print in the series’ 12 year history, according to a survey published by the country’s central bank on Sunday.

Amid China’s accelerating economic slowdown, the country’s overall index of loan demand was at 55.7 in the third quarter, the lowest since the People’s Bank of China started to compile the data in 2004. The index of loan demand from medium-sized enterprises fell to 52 and for small business to 55.8, both historic lows. However, the figure for large corporations slightly rebounded at 51.4, up 0.1 points from a quarter earlier.

Faced with a slower economy, small and medium-sized enterprises (SMEs) now find it difficult to expand their businesses, said an SME loan manager at one of China’s midtier commercial banks who did not want to be named, citing bank policy against speaking to the media. He said his bank has been losing borrowers since the first half of 2015.

Additionally, banks have imposed tougher rules on approving loans to SMEs amid rising non-performing loans. Tighter restrictions, in turn, have cooled companies’ enthusiasm to seek new funds from banks, the SME loan manager said.

And here is a stunning statistic you will likely not hear anywhere else as it may shake the very foundations of China’s house of cards: “20% to 30% of his business customers haven’t repaid their debt, he said.”

As we have reported for years, in the latest period, 12 out of China’s 16 publicly listed banks saw a rising level of non-performing loans in the first half of 2016 compared with the same period a year before.

At the same time, and explaining the rise in NPLs, the demand by manufacturers for loans declined in the third quarter, falling to 46.8 from the second quarter’s 48.

Chinese manufacturers’ growth stagnated in August, with the Caixin China Purchasing Managers’ Index coming in at 50, down from 50.6 the previous month. The PBOC’s index of loan demand from the non-manufacturing sector remained unchanged at 55.1.

Some more Chinese fiction peddling: more than half of the bankers from the 3,100 institutions surveyed by the central bank said the national economy in the third quarter was “cooling down,” while 44.6 percent of them thought the overall trend looked “normal.” That’s more than half who said China’s economy was set for more economic deterioration.

Finally, of the 20,000 residents surveyed, 53.7% said the housing prices are “high and unacceptable,” 0.3 percentage points more than in the second quarter. Only 3.4 percent described prices as “satisfactory,” and the remaining 42.9% considered them “acceptable.” Then again, if loan demands continues to collapse at this record pace, the clearest indication yet that China is indeed headed for a hard landing despite the trillions in new loans created (which go who knows where if they are not actually demanded), all those house prices will soon become far more affordable.

4 EUROPEAN AFFAIRS

 

The gloves just came off as Italy’s Renzi attacks Deutsche bank’s unfixable derivative problem.  Renzi has his own problems on non performing loans equal to about 360 billion euros or 18% of all total loans.  But he states that his problems are small compared to the supposed 42 trillion Euros (47 trillion USA) in derivatives held by DB.

(courtesy zero hedge

Italy’s PM Unloads On Deutsche Bank’s Unfixable Problem: “Hundreds And Hundreds Of Billions Of Derivatives”

After a tumultuous week for Deutsche Bank which saw the DOJ demand a $14 billion settlement for the bank’s past RMBS transgressions, it was another bad day for the giant German lender, whose stock and contingent converts tumbled after the investing community realized that even a modest $5.5 billion final settlementwould leave it perilously undercapitalized and likely scrambling to raise more cash.

As SocGen’s Andrew Lim calculated, Germany’s biggest bank would be “significantly undercapitalized” even if an eventual settlement with the DoJ can be covered by the bank’s reserves. Any settlement above €5.4 billion would imply a capital increase is needed just to pay the fine, he wrote.

Taking prompt remedial action, news leaked over the afternoon that Deutsche Bank was hoping to bolster its balance sheet and boost its capitalization, when The Street first reported that it was trying to securitize at least some $5.5 billions of corporate loans to offload risk. The problem for Deutsche Bank, already ranked among the worst-capitalized lenders in European stress tests before the DOJ’s $14 billion demand, is that by admitting it is in balance sheet “recovery” mode it would make shareholders even more nervous: what if the bank failed to securitize those loans? Or what happens if yet another legal settlement arrives? Or, worst of all, what if Mario Draghi cuts rates again and pressures the bank’s inceome statement even more? There is little the bank can cut as is: CEO John Cryan already suspended the bank’s dividend to preserve capital and has repeatedly ruled out tapping investors for more; but if he has to, he surely will.

But not even that is the biggest problem facing Deutsche Bank.

Recall that several years ago, we were the first to point out the true “elephant in the room”, namely Deutsche Bank’s $75 trillion at the time in gross notional derivatives which as we said then was about 20 times bigger than Germany’s GDP, and 5 times bigger than the entire economic output of the Eurozone.” Much to the chagrin of those who did (and still do) accuse of being conspiratorial something or another, since then Deutsche Bank stocks has plunged, reaching all time lows as recently as a few months ago.

Still, Deutsche Bank’s “derivative problem” was largely ignored by the “experts” because why bring attention to something which is fundamentally a devastating break in the narrative that “Europe is fine” and the financial crisis is contained.

Fast forward to today when Europe is once again not fine, only this time one can’t blame Europe’s problems on Greece or Brexit, when in a surprising admission of reality, none other than Italy’s prime minister Matteo Renzi, “went there” and slammed Deutsche Bank as the true “derivative problem” facing Europe.

To be sure, Renzi has his own problems, chief among which is how to conclude the latest and greatest bail out of Italy’s third largest and most insolvent bank, Monte Paschi, a process which we hear is not going well at all, without resorting to a government-funded rescue – a plan which the Germans have repeatedly frowned upon.

So it is not surprising that when faced with stiff resistance from the Germans, Renzi decided to call a spade a spade when, as Reuters reports, he said that the difficulties facing Italian banks over their bad loans are miniscule by comparison with the problems some European banks face over their derivatives.

As Reuters reports, Renzi once again broke with the fine European tradition of ignoring the massively overlevered elephant in the roon, and said on Monday that Germany’s central bank chief Jens Weidmann should concentrate on fixing the problems of his own country’s banks, after Weidmann had urged Italy to cut its huge public debt.

Specifically, Renzi told reporters in New York that Weidmann needed to solve the problem of German banks which had hundreds and hundreds and hundreds of billions of euros of derivatives” on their books.

He was, of course, referring to Deutsche Bank.

Renzi, who has staked his career on a referendum on constitutional reform this autumn, has repeatedly criticized other European leaders in the last few days over what he sees as an inadequate European Union response to the problems of his country’s economy and Europe’s immigration crisis, which in 2016 has slammed Italy most acutely, largely bypassing Germany for the time being. In this particular case, Renzi was responding to an interview Jens Weidmann gave to daily La Stampa on Monday, in which the German said Italy needed to consolidate its budget to avoid doubts emerging about the sustainability of its public debt.

Renzi’s angry response was predictable: stop worrying about Italy’s debt problem, after all that’s what the ECB is for, to monetize it and keep rates artificially low indefinitely. Instead worry about your own mega bank, which judging by its stock price, is something the market has been doing for quite a few months now.

And while Renzi may be wrong about almost everything else, he is right about Deutsche Bank’s hundreds and hundreds and hundreds of billions of euros of derivatives.

€42 trillion to be precise.

Then again, it’s more than just Deutsche Bank’s problem; more than just Germany’s problem. If something bad happens to DB, it is Europe’s problem.

So while DB may or may not find a few billion under the rug to plug its latest leaking hole, the real question is what happens when, not if, another crisis flares up and one or more counterparties to the bank’s trillions in various derivatives suddenly is unable to post margin, as its obligation becomes a pre-petition claim, sticking DB with the entire gross notional derivative amount and forcing the German giant to foot the gross, not net. Something tells us that like in 2013, nobody will acknowledge the biggest elephant in the room: after all, at this point financial liabilities are now a political issue (especially when one can blame Putin). The only difference with 2013 is that as Europe continues to splinter, more disenchanted political leaders (because the “enemy of my enemy is my friend”) will join Renzi in admitting that Europe’ emperor – Germany – and its mega bank, is not only naked but one needs scientific notation to express just how big its financial problems truly are.

 

end

 

It sure looks like Deutsche bank is hiding its losses through derivatives a la Greece in 2010. The market believes the same

(courtesy zero hedge)

Is This Why Deutsche Bank Is Crashing (Again)?

 

Deutsche’s dead-bank-bounce is over. The last few days have seen shares of the ‘most systemically dangerous bank in the world’ plunge almost 20%, back to record lows as the DoJ fine demands reawoken reality that the €42 trillion-dollar-derivative-book bank is severely under-capitalized no matter how you spin asset values.

Deutsche Bank closes at an all-time record low close…

More questions about DB are appearing, however, as MishTalk.com’s Michael Shedlock asks

Is Deutsche Bank cooking its derivatives book to hide huge losses... (Harvey: I wondered about that as well/ it book goes from 72 trillion USA/2013 down to 47 trilllion?)

Deutsche Bank’s notional derivatives book had huge swings in notional value between its year-end 2014 report and its “passion to perform” year-end 2015 report.

Deutsche Bank did not list the notional value of its derivatives book in its 2016 Quarterly Report.

The bank would like us to take it on faith, that the positive value of its derivatives book is €615 billion while the net positive value of its book is around around €18 billion.

There’s just one little problem: the market believes something is wrong. What is it? Derivatives or something else?

Reader Lars writes

Hello Mish,

I’m investigating changes in Deutsche Bank’s derivatives book.

At 2014 year end, DB had derivatives which notional value was €52 trillion. The positive value was around €630 billion.

At 2015 year end, DB had derivatives which notional value was €42 trillion. The positive value was around €515 billion on total assets of €1.629 trillion.

So during 2015 derivatives exposure (notional) was reduced by €10 trillion or 19%.

As of June 30th 2016, DB does not give a number for notional value but the positive value has again increased to €615 billion. Total assets are €1.8 trillion.

Meanwhile the the net positive value of DBs derivatives portfolio is stable around €18 billion.

What’s Happening?

It is possible that DBs derivatives portfolio has increased in value by €100 billion, roughly 19% in 6 months without the notional amount going up correspondingly?

Did DB offload €10 trillion worth of notional derivatives before year end 2015 only to pad it back later?

Book equity is €67 billion but it’s trading at a 75% discount. The market values DB at €16.5 billion.

Tier 1 bond holders say pretty much the same thing. Bonds sell at a 22% discount to par.

Lars

Comments from Matterhorn Asset Management

I was involved in a three-way email conversation on Deutsche Bank with Lars and Egon von Greyerz at Matterhorn Asset Management AG.

Von Greyerz chimed in with …

Thank for this Lars.

I would not be surprised if they are moving balance sheet risk to derivatives. This is a very common trick to reduce official exposure. Greece did this with the help of Goldman Sachs.

Share price confirms something is seriously wrong.

I saw the “Big Short” for the second time on Saturday. It’s a great film. I told my wife that what happened in 2007-2009 is a walk in the park compared to what we will see next. It’s only a question of when.

Still only 0.5% of world financial assets are insured in the form of physical gold. Investors think that trees will continue to grow to heaven. What a shock they will get.

Kind regards

Egon von Greyerz
Founder & Managing Partner
Matterhorn Asset Management AG
GoldSwitzerland

Accounting Methodology Change

I dove into Deutsche Bank’s 4Q/FY2015 Presentation which contained these statements on various pages.

  • Continued strong de-leveraging in the quarter of EUR 44 billion on an FX neutral basis, principally in derivatives.
  • Full year 2015 de-leveraging of EUR ~130 billion on an FX neutral basis.
  • Equity Derivatives significantly lower y-o-y driven by lower client activity exacerbated by challenging risk management in certain areas.
  • Lower loan loss provisions reflecting portfolio quality and the benign economic environment.
  • Despite adverse FX impact, non-interest expenses decreased mainly due to lower litigation and performance-related expenses.
  • De-risking activity was the main driver of Balance Sheet reductions in 4Q2015.

Consolidation & Adjustments

db-fy2015

Income before income taxes (IBIT) does not look pretty, to say the least. And what’s with these accounting methodology changes?

Lower loan loss provisions? In this environment?

Price-to-Book Value

db-book-value

Chart from Y-Charts.

Competitor Price-to-Book Values

db-book-value2

Price-to-Book Values US Banks

us-bank-book-values

I do not know if the problem is derivatives, the eurozone mess, negative interest rates, counter-party risk, or some combination of the above, but the above images collectively say something is seriously wrong, not only with Deutsche Bank, but the European banking system in general.

and as an example, Italy’s Monte Paschi has just crashed to new record lows…

Get back to work Mr. Draghi…

 

end

 

And today, Deutsche bank hits record lows

(courtesy Dave Kranzler/IRD)

Bye Bye Deutsche Bank

It smells like death.

No way to know for sure when the Bundesbank, Fed and ECB lose control of Deutsche Bank’s balance sheet.  But its stock price just hit an all-time low since its NYSE-listing in October 2001.

Anyone who owns the Deutsche Bank “Tier 1” bonds should sell them now. They are currently yielding about 8%, which puts on the same “tier” as U.S. triple-C (CCC/Caa) rated credits.

I’ve been wondering for quite some time if DB’s demise would be the 2016 “Lehman” event, but I don’t think it will be.  Why?  Because Germany has a fabled history in which it has demonstrated a willingness to print trillions to keep its system from collapsing.

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6. GLOBAL ISSUES

7. OIL ISSUES

Oil continues with its descent as no production freeze is on the horizon

(courtesy zero hedge)

Oil Slide Extends As OPEC SecGen Sees No Production Freeze This Month

With just a few days before the highly anticipated OPEC meeting in Algeria, WTI Crude prices are tumbling once again as OilPrice.com reports a top official from the group threw cold water on the possibility of a production freeze.

Expectations for a deal have gone up and down since they were first floated in August, taking oil prices on a volatile ride. But, as OilPrice’s Charles Kennedy notes, rumors of a possible deal were enough to spark a 20 percent rally in oil prices in August, ending what had become a bear market. Since then, a cavalcade of comments, opinions, and seemingly off the cuff remarks from OPEC officials and oil ministers have fueled market speculation about the possibility of a production freeze.

But the latest comment from OPEC’s Secretary-General is arguably the most definitive to date, and it doesn’t bode well for a production freeze in Algiers. Secretary-General Mohammed Barkindo said over the weekend that the group wouldn’t be making a decision on any limits. “It is an informal meeting, it is not a decision-making meeting,” Barkindo said to Algerian state media.

On the other hand, Venezuelan President Nicolas Maduro said that they were closing in on a deal, which could be announced before the end of the month. “We had a long bilateral meeting with Rouhani. We’re close to a deal between OPEC producer countries and non-OPEC,” Maduro said at a news conference, referring to a meeting with Iranian President Hassan Rouhani on the sidelines of a summit in Venezuela for the Non-Aligned Movement.

Venezuela is one of the countries that is most desperate for a deal, so those comments should be taken with a large dose of skepticism.

At the same time, the comments from OPEC’s Secretary-General should also not be taken at face value. Damping down speculation could be a calculated move, lowering expectations for whatever might come from the Algeria meeting.

Nevertheless, if an agreement is to be reached, the most likely scenario is that OPEC and non-OPEC participants agree to some sort of consensus about capping output, but a formal agreement would only come from some future meeting, not from the upcoming gathering in Algeria.

 

The east coast gas pipeline is now fixed and that causes gasoline prices to plunge;

(courtesy zero hedge)

 

East Coast Gasoline Prices Plunge After Leaking Pipeline Bypass Completed

In what was clearly not ‘government work’ Colonial has completed the bypass of its leaking pipeline early and has told shippers it will restart supplies tomorrow. This has sent near-term gas prices to the east coast tumbling. Great news amid claims from Alabama’s governor of price-gouging by retail gas suppliers.

As Bloomberg reports, Colonial Pipeline has finished construction, fabrication and positioning of bypass connector pipeline segment around leak site west of Pelham, Ala., co. says in e-mailed statement.

  • Colonial in process of carrying out hydrostatic test of new segment
  • Segment is approx. 500ft in length
  • Co. says it will take “several days” for fuel delivery supply chain to return to normal when Line 1 restarts
  • Some markets should expect intermittent service interruptions

But the market is pricing out disruptions…

This is great news as OilPrice reports several US Governors warned against price-gouging as shortages loomed…

Georgia Governor Nathan Deal signed an executive order against unjust price hikes after gasoline prices spiked 20-40 cents across the state following a pipeline leak in Helena, Alabama.

 

The order emphasizes the terms of an existing law that forbids gouging during “a state of emergency” by permitting price changes only as a reaction to the higher cost of fuel or fuel transportation.

 

An increased demand for gasoline—as is the status quo in Alabama, Georgia, Tennessee and the Carolinas after a 252,000-barrel leak in Colonial Pipeline Company’s line last week—is not considered a valid reason to raise prices under the law.

 

Last week, GasBuddy reported that the average price of a regular gallon of gas in Georgia stood at $2.17. The same site said the state’s average gallon price today is$2.35.

 

Citizens in affected states have been encouraged to report unusually high prices to the relevant authorities, which, coupled with the Governor’s announcement, has likely prompted prices to self-correct under the weight of the law.

 

The Governor of North Carolina approved a similar executive order in the wake of theSeptember 9th detected leak and the supply shortages it has caused since.

 

“Based on our ongoing updates from Colonial, the construction of a bypass pipeline is moving forward which will soon allow fuel supply operations to return to normal,” saidGovernor Pat McCrory.

 

“In the meantime, my executive orders remain in effect to protect motorists from excessive gas prices and minimize any interruptions in the supply of fuel.”

 

Colonial now says the new bypass line will be in operation by the end of next week, after itreceived the necessary approvals from federal regulators to begin construction. Initially, the Georgia-based firm did not provide a timeline for the process.

 

Washington D.C. and eleven states located on the leaked pipeline’s route have received waivers from the Environmental Protection Agency to sell gasoline formulations banned under the Clean Air Act in order to alleviate the affects of the ongoing shortage.

And even better, National RBOB prices have also tumbled back to recouple with WTI…

 

 

END

Late in the day, oil jumps after a huge inventory draw

(courtesy zero hedge)

 

WTI Crude Jumps After Surprise Massive Inventory Draw

Following last week’s unexpected draw (following the huge storm-driven draw from the week before),traders expected a 3.25mm build this week but API reported another surprise draw (massive 7.497mm draw!) . The Colonial pipeline leak/shutdown likely had some exogenous effect as Cushing saw a large build but Gasoline drewdown as Distillates inventories rose. WTI prices are surging back to yesterday’s highs on the surprise.

 

API

  • Crude -7.497mm (+3.25mm exp)
  • Cushing +407k (+100k exp)
  • Gasoline -2.5mm (-1.4mm exp)
  • Distillates +1.4mm

For the 3rd week running (including the epic draw from the storms), Crude inventories declined… butDistillates inventories rose for the 6th week in a row…

 

While prices are expectd to remain somewhat rangebound ahead of Algiers, the surprise draw sent the mahcines ramping WTI above $44.50 (to yesterday’s highs)…

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

 

Euro/USA   1.1179 UP .0002 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 101.91  up .008(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.2958 down .0082 

USA/CAN 1.3224 up .0022

Early THIS TUESDAY morning in Europe, the Euro ROSE by 2 basis points, trading now well above the important 1.08 level RISING to 1.1179; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED DOWN 3.05 OR   0.10%   / Hang Sang  CLOSED DOWN 19.59 POINTS OR .08%     /AUSTRALIA IS HIGHER BY 0.17% / EUROPEAN BOURSES ALL MIXED

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED DOWN 27.14 OR .16%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 19.59 OR .08%  ,Shanghai CLOSED  DOWN 3.05 POINTS OR .10%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE RED   INDIA’S SENSEX IN THE RED 

Gold very early morning trading: $1314.60

silver:$19.18

Early TUESDAY morning USA 10 year bond yield: 1.686% !!! DOWN 1/5 in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield  2.422, DOWN 1 IN BASIS POINTS  from YESTERDAY night.

USA dollar index early TUESDAY morning: 95.92 UP 5 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

END

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And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.31% DOWN 6   in basis point yield from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: -.063% DOWN 3 in   basis point yield from MONDAY

SPANISH 10 YR BOND YIELD:0.984% DOWN 3 IN basis point yield from MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.25 DOWN 6   in basis point yield from MONDAY 

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

GERMAN 10 YR BOND YIELD: -0.018% DOWN 2  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/2:00 PM

Euro/USA 1.1165 DOWN .0010 (Euro DOWN 10 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 101.74 DOWN: 0.153 (Yen UP 15 basis points/

Great Britain/USA 1 .2974 DOWN 0.0064 ( PoOUND DOWN 64 basis points

USA/Canada 1.3223 UP 0.0022 (Canadian dollar DOWN 22 basis points AS OIL ROSE (WTI AT $43.56). Canada keeps rate at 0.5% and does not cut!

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This afternoon, the Euro was DOWN by 10 basis points to trade at 1.1165

The Yen ROSE to 101.74 for a GAIN of 15 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 64 basis points, trading at 1.3223/

The Canadian dollar FELL by 22 basis points to 1.3223, WITH WTI OIL AT:  $43.56

The USA/Yuan closed at 6.6700

the 10 yr Japanese bond yield closed at -.063%  DOWN 3  IN BASIS POINTS / yield/ AND THIS IS BECOMING BOTHERSOME TO THE BANK OF JAPAN

Your closing 10 yr USA bond yield: UP 1/4 IN basis points from MONDAY at 1.689% //trading well below the resistance level of 2.27-2.32%) very problematic

USA 30 yr bond yield: 2.432  DOWN 1/10 in basis points on the day /*very problematic as all bonds globally rose in yield (lowered in price)

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

Your closing USA dollar index, 96.01 UP 14 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 TUESDAY: 2:30 PM EST

London:  CLOSED UP 17.24 POINTS OR 0.25%
German Dax :CLOSED UP 19.99 OR  0.19%
Paris Cac  CLOSED DOWN 5.59 OR 0.13%
Spain IBEX CLOSED DOWN 29.40 OR 0.34%
Italian MIB: CLOSED DOWN  192.16 POINTS OR 1.17%

The Dow was UP 9.79 points or 0.02%  4 PM EST

NASDAQ  UP 6.33 points or 0.12%  4 PM EST
WTI Oil price; 43.56 at 2:00 pm; 2:30 EST

Brent Oil: 45.7-   2:00 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.84(ROUBLE DOWN  20/100 ROUBLES PER DOLLAR FROM FRIDAY)  2:30 EST

TODAY THE GERMAN YIELD FALLS TO -0.018%  FOR THE 10 YR BOND  2:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$43.85

BRENT: $46.13

USA 10 YR BOND YIELD: 1.693%

USA DOLLAR INDEX: 95.99 UP 16 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.2982 DOWN 0.0058 or 58 basis pts.

German 10 yr bond yield at 5 pm: -0.018%

 

END

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

Traders Buy Everything As Yellenado & Kurodageddon Loom

Today…

 

Market-implied rate hike odds for tomorrow are low… (but Dec has picked up)

 

It’s probably nothing…

 

They bought everything… Bonds up, Stocks up, Gold up, Oil up, and Dollar up.

 

Standard pre-Fed buying spree in stocks – but it wasn’t convincing… (Small Caps pulled back from yesterday’s squeeze) – with a big dump into the close…

 

On the week, today was a repeat of yesterday with Nasdaq dropping into the red…

 

Once again 16 was the cap for VIX but despite best efforts, VIX increased into the close…

 

Treasury yields fell on the day – though notably bonds were sold in the afternoon back into yesterday’s tight range after running stops either way…

 

FX markets were also oddly quiet with the USD Index drifting higher – but JPY flat…

 

Let’s hope BoJ doesn’t disappoint…

 

Oil followed a similar pattern to yesterday with a surge into othe NYMEX close (and contract roll), PMs remain green on the week…

 

 

Charts: Bloomberg

Bonus Chart: Tobira or Tobira Not…

Bonus Bonus Chart: We do note that asset markets are decoupling from blobal central bank balance sheet growth…

end

 

This month we received an interesting boost in homebuilder confidence.  Today housing starts tumbled and thus the higher confidence seems a little misplaced

(courtesy zero hedge)

Housing Starts Tumble Despite Surging Homebuilder Confidence

While homebuilder confidence spiked this month to near cycle highs, Housing Starts plunged 5.8% MoM – the biggest drop in 5 months; and building permits slipped 0.4% MoM – the second monthly drop in a row. Below the surface, things are more troubling as Rental unit permits (forward-looking) dropped to April lows (perhaps the surging rent-flation is finally crushing demand). Worse still Single-family housing starts are the worst since Octoberand down YoY.

Confidence seems a little misplaced…

Both single-family and rental units saw Starts drop – but Single-Family is weakest since October and down Year-over-year…

Permits tumbled for rental units – worst since April…

However it appears a lot of the drop might be due to the weather as Starts in the south slumped 14.8% and Permits -3.4%.

 

end

It sure looks like intent here as Combetta sought a reddit advice on how to strip VIP emails 5 months before Hillary delivered emails to the state dept.

(courtesy zero hedge)

Dear FBI, This Is Intent: Hillary’s “Oh Shit” Guy Sought Reddit Advice On How To “Strip VIP’s Emails”

At this point, our readers should be intimately familiar with the timeline leading up to the “Oh Shit” moment when the Platte River Networks employee, Paul Combetta, deleted Hillary’s emails despite later admitting to the FBI that he “was aware of the existence of the preservation request and the fact that it meant he should not disturb Clinton’s e-mail data on the PRN server” (if not, see “The “Oh Shit” Moment: Hillary Wiped Her Server With BleachBit Despite Subpoena“).  Once Combetta was summoned to testify in front of Congress, we also learned that the FBI had granted Combetta an immunity deal (see “The “Oh Shit” Guy That Wiped Hillary’s Server With BleachBit Was Just Granted Immunity“).

Well, the plot just continues to thicken around the “Oh Shit” guy as a political researcher just posted the following tweet that exposes a Reddit thread from July 2014 in which Combetta sought tech advice on how to “strip out a VIP’s (VERY VIP) email address from a bunch of archived emails.”

View image on TwitterView image on TwitterView image on TwitterView image on Twitter

SMOKING GUN: “BleachBit” Paul Combetta ASKED TO STRIP OR REPLACE VIP’s EMAIL ADDRESS! https://redd.it/2bmm4l 

The full thread initiated by Combetta can be viewed here, but below are a couple of the key exchanges.

Combetta started the thread on July 24, 2014 with the following question seeking technical advice on how to “strip out a VIP’s (VERY VIP) email address from a bunch of archived email[s].” 

Combetta

Combetta was quickly admonished by a user named “borismkv” that “you can’t change them” because it was illegal and “could result in major legal issues.”  That, however, didn’t seem to deter the ambitious Combetta who continued to press “borismkv” for ways around the legal issues.

Combetta

The whole exchange may have been overlooked but for the following discovery from “Katica” linking Paul Combetta to the “stonetear” user name.  In the post below, this administrator notes that he’s“extremely grateful to Paul Combetta” who can be reached at “stonetear@gmail.com.”

Combetta

Combetta

So, now we have evidence of the Hillary campaign and Platte River Networks conspiring in July 2014, a full 5 months before Hillary delivered emails to the State Department, to “strip out emails” in an obvious attempt to thwart efforts to collect federal records.  

Could someone within the FBI please explain how this does not constitute “intent”?

END

 

Now the House Committee is reviewing Combetta’s Reddit threat and they may rescind the immunity order because he misled the house.

(courtesy zero hedge)

House Committee Reviewing “Oh Shit” Guy’s “Troubling” Reddit Thread

Earlier today we wrote about a Reddit thread that was allegedly created by Paul Combetta, the “Oh Shit” guy of Platte River Networks, seeking tech advice on how to “strip out a VIP’s (VERY VIP) email address from a bunch of archived emails” (see details here: “Dear FBI, This Is Intent: Hillary’s “Oh Shit” Guy Sought Reddit Advice On How To ‘Strip VIP’s Emails’“).

“Ironically,” the day before the Reddit thread appeared, the Benghazi Committee reached an agreement with the State Department on the production of email and other records related to their investigation.  How weird, right?

Well, it seems as though the Reddit thread is getting some attention on Capitol Hill as well.  Earlier, Mark Meadows (R-NC), Chair of the Government Operations subcommittee of the House Oversight Committee, told The Hill that committee staff are reviewing the Reddit thread and find the “date of the Reddit post in relationship to the establishment of the Select Committee on Benghazi [to be] troubling.”

“The Reddit post issue and its connection to Paul Combetta is currently being reviewed by OGR staff and evaluations are being made as to the authenticity of the post.”

“If it is determined that the request to change email addresses was made by someone so closely aligned with the Secretary’s IT operation as Mr. Combetta, then it will certainly prompt additional inquiry.  The date of the Reddit post in relationship to the establishment of the Select Committee on Benghazi is also troubling.”

Of course, as we mentioned a couple of weeks ago, the “Oh Shit” guy was granted immunity by the DOJ for cooperating with the FBI’s investigation into Hillary’s email scandal (see “The “Oh Shit” Guy That Wiped Hillary’s Server With BleachBit Was Just Granted Immunity“).

So, now we have evidence of the Hillary campaign and Platte River Networks conspiring in July 2014 (the  day after the Benghazi Committee reached an agreement with the State Department on the production of email records and a full 5 months before Hillary finally delivered all of her emails) to “strip out emails” in an obvious attempt to thwart efforts to collect federal records.  

Could someone within the FBI please explain how this does not constitute “intent”?

Therefore, the only question left to answer is what recourse, if any, Congress and/or the FBI has to nullify Combetta’s immunity agreement with the DOJ if he is found to have withheld information and/or committed perjury while being questioned by federal agents?

end

 

That did not take long!. The house committee demands an interview with Mr Combetta. That should be interesting!

(courtesy zero hedge)

 

 

House Committee Demands Interview With “Oh Shit” Guy By Friday At Noon Over Reddit Thread

Yesterday, we pointed out how the now infamous Reddit thread from Hillary’s “Oh Shit” guy was getting some attention on Capitol Hill.  In fact, Mark Meadows (R-NC), Chair of the Government Operations subcommittee of the House Oversight Committee, announced that his committee was reviewing the thread and found the “date of the Reddit post in relationship to the establishment of the Select Committee on Benghazi [to be] troubling.”  If you’re not up to speed on the whole issue then all the details are posted here: “Dear FBI, This Is Intent: Hillary’s “Oh Shit” Guy Sought Reddit Advice On How To ‘Strip VIP’s Emails’.

Now, according to The Hill, the House Science Committee, led by Lamar Smith (R-TN), is also demanding interviews with Paul Combetta and Bill Thornton, of Platte River Networks, by this Friday at noon.  Among other things, Smith noted his concern over Combetta’s attempt to delete his relevant Reddit threads shortly after they were discovered yesterday and whether or not the FBI was aware of Combetta’s Reddit posts at the time of their investigation. 

“If true, these details raise new questions as to whether Platte River Networks purposefully defied legal document retention requirements. Further, it is unclear if the Federal Bureau of Investigation was aware of these facts at the time of their investigation,” Smith wrote in a letter sent Wednesday.

“Additionally, I am concerned that Mr. Combetta may have made an attempt to delete relevant posts, including the post mentioned above, from his Reddit.com username just hours after reports initially surfaced on September 19, 2016, about his request for assistance on deleting email addresses from archived emails,” Smith wrote.

“This raises significant concerns that materials directly related to the Committee’s investigation and responsive to its outstanding requests are being actively destroyed in an attempt to conceal relevant information from coming to light,” Smith writes.

Combetta

Smith threatened to issue a subpoena if interviews with Combetta and Thornton were not scheduled by noon on Friday.

Clearly, this is a potentially extremely embarrassing issue for the FBI if a random analyst was able to uncover relevant facts regarding Hillary’s email scandal that were seemingly hiding in plain sight while somehow evading the FBI’s “thorough” investigationThe only question now is how FBI Director Comey chooses to handle the embarrassment.  We see two potential paths, including: 1)pursue Combetta for potentially excluding relevant disclosures during his FBI interview process or 2)bury the story as quickly as possible in an effort to save face.

We have our guess on Comey’s most likely path…what say you?

 

end

 

And now your humour story of the day:

Only in California:

 

Only In California – Governor Jerry Brown Signs Bill To Regulate Cow Flatulence

end

 

the mouthpiece of the Fed, Jon Hilsenrath hath spoken: no rate hike until December

(courtesy zero hedge)

Hilsenrath Calls It: No Rate Hike Until December

end

 

the Atlanta Fed’s first Q3 GDP print comes in at only 2.9% and you can bet the farm that it will be adjusted lower

(courtesy Atlanta Fed/zero hedge)

 

Atlanta Fed’s Exuberant Q3 GDP Estimate Tumbles Back To Reality

Just over a month ago, The Atlanta Fed surprised economic watchers when in early August it unveiled that its Q3 GDP tracker was predicting that the US economy would grow at an annualized pace of 3.6% (and as high as 3.80%) a substantial rebound from the “deplorable” 0.8% and 1.1% growth rates in Q1 and Q2, respectively. To be sure, many expressed surprise at the underlying assumptions that would send US economic growth soaring in the second half: after all, it was a near record surge in consumer spending that boosted first half GDP –  and kept it positive – as all other components, most notably Capex, tumbled into a non-consumer recession. Alas, the spending surge that boosted first half growth has now fizzled, as monthly personal spending data confirmed, so it stood to reason that these overoptimistic estimates for GDP growth would ultimately be revised substantially lower.

Sure enough, moments ago in the latest revision to the Atlanta Fed forecast, the model has now unveiled its first sub-3% GDP growth estimate, printing at 2.9%, and the lowest in this particular series’ lifetime. This is what the Atlanta Fed said:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2016 is 2.9 percent on September 20, down from 3.0 percent on September 15. The forecast of third-quarter real consumer spending growth ticked down from 3.1 percent to 3.0 percent after last Friday’s Consumer Price Index release from the U.S. Bureau of Labor Statistics. The forecast of third-quarter real residential investment growth remained at -6.3 percent after this morning’s housing starts release from the U.S. Census Bureau.

But what was most notably about the Atlanta Fed’s Q3 GDP estimate is how much higher they were compared to Wall Street’s own forecasts. Well, no more.

Finally, one thing to note is that the Atlanta Fed assumes a substantial inventory build in the current quarter, one which would boost GDP by over 0.5%. Since the various ISM, PMI and regional Fed diffusion indices have failed to confirm such an inventory build. Absent this boost, Q3 GDP drops to 2.3%, and is then set to decline even more in Q4.  Whether that will impact the Fed’s decision-making remains to be seen.

 

end

 

Well that about does it for tonight

I will see you tomorrow night

Harvey.

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