Sept 21/FOMC: stands pat/Bank of Japan basically stands pat/operation twist will come into force/Gold and silver take off/Huge amounts of gold enter the GLD/ Russia imports a huge 21.77 tonnes of gold/London England instead of exporting gold, it is importing almost 85 tonnes last month/Handlesblatt, a respected German newspaper states that Deutsche needs a bailout/

Gold $1326.90 up $13.20

Silver 19.69  up 49 cents

 

In the access market 5:15 pm

Gold: 1336.00

Silver: 19.85

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 21 (10:15 pm est last night): $  1319.10

NY ACCESS PRICE: $1315.05 (AT THE EXACT SAME TIME)

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1323.76

NY ACCESS PRICE: 1317.60 (AT THE EXACT SAME TIME)

HUGE SPREAD TODAY!!

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Sept 21: 5:30 am est:  $1319.60   (NY: same time:  $1319.60:    5:30AM)

London Second fix Sept 16: 10 am est:  $1326.10  (NY same time: $1326.00 ,    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.

 

end

 

Julian Philips agrees with me on the difference between Shanghai Gold and USA gold prices:

 

(courtesy Julian Phillips)

*Julian Philipps…

PRICE DRIVERS

There were substantial sales from the SPDR gold ETF yesterday, but Shanghai ignored it then London tried to pull prices back, to sit in the middle between New York and Shanghai.

This is only the second time Shanghai has walked its own road very clearly. Before, exchange rate changes could have explained the moves, but not this time. If this pattern is continued pricing power will be shifting to China from New York.

Why did this move occur now? The announcement from the Bank of Japan’s Kuroda basically did nothing for the Japanese economy. The policy moves we saw tell us that the Bank of Japan looks as though it has run out of ‘effective options’ to stimulate the economy there. With rates being held at current levels, we see the Bank of Japan unwilling to be seen furthering the ‘currency war’ by trying to lower its exchange rate. The moves by the BoJ were therefore at best hormone-free. This switches the attention back to the Fed’s FOMC meeting going on now.

In the light of all factors and Japan’s unwillingness to do anything solid, we cannot see the Fed surprising us by raising rates. Or can we? If they do, we do expect to see the dollar go stronger, albeit temporarily.

We are fully aware that the impact on the dollar exchange rates is a focal point for the FOMC. The U.S. cannot afford a strong dollar now. If the FOMC believe a rate hike of 0.25% will not affect the dollar’s exchange rate we may well see it happen. Otherwise, December will be the time when the Fed is more likely to make such a move.

 

end

 

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 FELL by 104 contracts DOWN to 193,501. The open interest FELL as the silver price was DOWN 1 cent 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).

In silver we had 8 notices served upon for 40,000 oz

In gold, the total comex gold fell by A MONSTROUS 6280 contracts even though the price of gold rose BY $0.20 yesterday . The total gold OI stands at 558,791 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 MONSTROUS DEPOSIT OF 5.64 TONNES FROM THE GLD

Total gold inventory rest tonight at: 944.39 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 fell by 104 contracts down to 193,501 as the price of silver FELL by 1 cent with yesterday’s trading.The gold open interest fell 6,280 contracts down to 558,791 as the price of gold rose $0.20 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  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 2.87 POINTS OR .10%/ /Hang Sang closed UP 139.04 PONTS OR .59%. The Nikkei closed UP 315.47 POINTS OR 1.91%/ Australia’s all ordinaires  CLOSED UP 0.68% /Chinese yuan (ONSHORE) closed  DOWN at 6.6730/Oil rose to 44.95 dollars per barrel for WTI and 46.67 for Brent. Stocks in Europe: ALL IN THE GREEN   Offshore yuan trades  6.6806 yuan to the dollar vs 6.6730 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)Korea:

none

b) REPORT ON JAPAN

Bank of Japan disappoints as they do their operation twist, something I highlighted to you two weeks ago.  They did not go deeper into NIRP but also there will be no more QE except an offer of hope for more QE in the future..the yen rises to 100.63 from 102.00

( zero hedge)

c) REPORT ON CHINA

Nine months ago we brought you the story that Guangxi NonFerrous Metals Group entered bankruptcy protection.  It was bailout by China Development Bank and then one month later it defaulted on another bond.  For the past 6 months the SOE has been in limbo as the Chinese government wanted to keep these guys alive.   Alas, they could not and this company is now going to liquidation and it will be the first SOE to do so. The fun will begin when the workers will find out that there is no job for them.

( zero hedge)

4 EUROPEAN AFFAIRS

i)The very respectable German Newspaper, Handelsblatt has just come out and stated that Deutsche bank may ultimately need a state bailout. In my opinion there is not enough money in the system to bailout this bank due to its derivatives. DB states that they have 47 trillion USA of derivatives. I believe it is closer to 72 trillion as they are hiding huge amounts off their balance sheet.

( Handelsblatt/zero hedge)

ii)I agree with Graham Summers that something big is going on behind the scenes.  The USA dollar has been creeping up despite lousy economic reports.  The rise in the dollar can only be because of a collapse in the European banks, namely Italy’s banks and Deutsche bank

a must read..

(courtesy Graham Summers/Phoenix Capital)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Tensions mount as Russia sends in their flagship aircraft carrier the Admiral Kuznetsov to Syria:

( zero hedge)

6.GLOBAL ISSUES

none today

7.OIL ISSUES

Another unexpected inventory drawdown causes oil to rise:

( zero hedge)

8.EMERGING MARKETS

none today

9.PHYSICAL STORIES

i)Interesting:  Swiss gold exports are down 7% on the year to 160 tonnes.  Is it because of a lack of supply?

( Cassel/Platts/GATA)

ii)John Embry pounds the table as he discusses Japan’s huge economic problems

( John Embry/Kingworldnews)

iii)What a bummer!! Canadian Mint loses 180,000 dollars worth of gold. Guess where the employee hid the gold?

 your humour story of the day….

(courtesy Ottawa Citizen/GATA)

iv)The argument of storage costs for gold falls to the wayside as their is now a cost to hold dollars in a bank and in a vault!

( McEwan/GATA/Bloomberg))

v)Russia picks up a cool 700,000 oz or 21.77 tonnes last month, its largest monthly increase this year.

( Lawrie Williams/Sharp’s Pixley)

vi)My goodness take a look at how much gold Switzerland shipped London: 84.6 tonnes. It sure looks like London is now out of gold and needs replenishment from Switzerland. The game will be over very shortly

(courtesy Lawrie Williams/Sharp’s Pixley)

 

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

FOMC RESULTS

i)And now the USA FOMC decision:  rates kept the same

( Bloomberg)

ib)As zero hedge comments, the Fed chickens out again even though 3 Presidents dissented.

( zerohedge)

 

iiic)The reaction in NY on the news of inaction on the Fed:

ii)Last month, we brought you a story on a raid by FBI officials on the manager of the Dallas Police Pension.  It seems that the manager engaged in fraudulent activity with respect to real estate.  This has left the Dallas Police Pension in peril of going bust as they need at least a 600 million dollar infusion from taxpayers. I guess some of the Dallas Police cannot wait any longer as some have taken early retirement and cashing in their pension.  The pension fund is now on the verge of complete collapse

( zero hedge)

iii)The crooks are starting to fall:  SEC charges Leon Cooperman  (Omega Advisors) with insider trading

( zero hedge)

Let us head over to the comex:

The total gold comex open interest fell to an OI level of 558,791 for a loss of 6280 contracts as the price of gold ROSE by $0.20 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 85 contracts UP to 214. We had 0 notices filed yesterday so we gained 85 gold contracts or an additional 8500 gold ounces  will stand for delivery. SOMEBODY AGAIN WAS IN GREAT NEED OF PHYSICAL GOLD. The next delivery month is October and here the OI lost   a huge 9,216 contracts DOWN to 28,321. The next contract month of December showed an decrease of 1893 contracts down to 417,522 .The estimated volume today at the comex: 386,748 which is huge.  Confirmed volume on yesterday: 121,600 which is poor.

 

Today we had  72 notices filed for  7200 oz of gold.
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And now for the wild silver comex results.  Total silver OI fell by 104 contracts from 193,605 down to 193,501 with the fall in price of silver to the tune of 1 cent  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 100 contracts down to 592. We had 105 notices filed upon yesterday so we GAINED BACK ANOTHER 5 contracts or 25,000 additional oz will stand for delivery in this active month of September. The next non active delivery movement of October gained 62 CONTRACT TO 352 contracts.  The next big delivery month is December and here it FELL by 95 contracts DOWN to 168,171. The volume on the comex today (just comex) came in at 70,820 which is huge.  The confirmed volume yesterday (comex and globex) was fair at 36,510 . Silver is not in backwardation.  London is in backwardation for several months.

today we had 8 notices filed for silver: 40,000 oz

INITIAL standings for SEPTEMBER
 SEPT 21.
Gold
Ounces
Withdrawals from Dealers Inventory in oz  

NIL

Withdrawals from Customer Inventory in oz  nil
6,590.75 oz
205 kilobars
Scotia
Manfra
Deposits to the Dealer Inventory in oz NIL oz
Deposits to the Customer Inventory, in oz 
nil
No of oz served (contracts) today
72 notices 
7200 oz
No of oz to be served (notices)
170 contracts
(17,00 oz)
Total monthly oz gold served (contracts) so far this month
2499 contracts
249,900 oz
7.7729 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   176,740.9 oz
 Today; good activity at the gold comex and 2 kilobar entry and another large 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 2 customer withdrawals:
i) Out of Manfra; 160.75 oz
(5 kilobar)
ii) Out of Scotia: 6430.000 oz   (200 kilobars)
total customer withdrawals: 6590.75 oz  (205 kilobars
Today we had 3 dilly adjustments: and no doubt that these will be settlements and probably leave the comex:
i) Out of Brinks:  38,262.22 oz
ii) Out of Delaware: 96.726 oz
iii) Out of Manfra;  20,350.960 oz
iv) Out of Scotia: 38,206.299 oz
all of the above left the dealer and entered the customer accounts of each bank  vault
total:  96,916.205 oz leaves the dealer and enters the customer account.
 
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 72 contract  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped (received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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 (2499) x 100 oz or 249,900 oz, to which we add the difference between the open interest for the front month of SEPT (242 contracts) minus the number of notices served upon today (72) x 100 oz per contract equals 266,900 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 (2499) x 100 oz  or ounces + {OI for the front month (242) minus the number of  notices served upon today (72) x 100 oz which equals 263,400 oz standing in this non  active delivery month of SEPT  (8.3017 tonnes).
We gained an additional 7200 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 2,232,344.27 or 69.435 tonnes
Total gold inventory (dealer and customer) =10,844,567.010 or 337.31 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 337.31 tonnes for a  gain of 34  tonnes over that period. However since August 8 we have lost 16 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 16 NET TONNES HAS LEFT THE COMEX.

end
And now for silver
 
SEPT INITIAL standings
 SEPT21.2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
29,179.800 oz
Brinks, JPM
Deposits to the Dealer Inventory
 nil  OZ
Deposits to the Customer Inventory 
nil  oz
No of oz served today (contracts)
8 CONTRACTS
(40,000 OZ)
No of oz to be served (notices)
587 contracts
(2,935,000 oz)
Total monthly oz silver served (contracts) 2599 contracts (12,995,000 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  6,012,799.7 oz
today, we had 0 deposit into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawals:
 total dealer withdrawals: NIL oz
 we had 2 customer withdrawals:
i) Out of Brinks: 4082.0000 oz ???? exactly xx.000???
ii) Out of JPMorgan: 25,097.800 oz
Total customer withdrawals: 29,179.800  oz
We had 0 customer deposit:
total customer deposits:  nil  oz
 
 
 
 we had 1 adjustment
from the CNT vault: 620,918.060 oz was adjusted from the dealer account into the customer account.
The total number of notices filed today for the SEPT contract month is represented by 8 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 (2599) x 5,000 oz  = 12,995,000 oz to which we add the difference between the open interest for the front month of SEPT (592) and the number of notices served upon today (8) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the SEPT contract month:  2599(notices served so far)x 5000 oz +(591 OI for front month of SEPT ) -number of notices served upon today (8)x 5000 oz  equals  15,915,000 oz  of silver standing for the SEPT contract month.
we GAINED 5  contracts or an additional 25,000 oz will stand FOR DELIVERY IN THIS  ACTIVE MONTH OF SEPTEMBER. 
 
Total dealer silver:  31.046 million (close to record low inventory  
Total number of dealer and customer silver:   170.693 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 21/ A HUGE DEPOSIT OF 5.69 TONNES INTO THE GLD/INVENTORY RESTS AT 944.39 TONNES
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SEPT 21/ Inventory rests tonight at 944.39 tonnes

end

Now the SLV Inventory
SEPT 21/NO CHANGES IN INVENTORY AT THE SLV/INVENTORY RESTS AT 363.479 MILLION OZ/
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 21.2016: Inventory 363.479 million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 3.6 percent to NAV usa funds and Negative 4.2% to NAV for Cdn funds!!!!  (the discount is starting to disappear)
Percentage of fund in gold 59.4%
Percentage of fund in silver:39.4%
cash .+1.2%( SEPT 20/2016).
2. Sprott silver fund (PSLV): Premium falls to +0.71%!!!! NAV (SEPT 20/2016) 
3. Sprott gold fund (PHYS): premium to NAV  FALLS TO  0.68% to NAV  ( SEPT 20/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.71% /Sprott physical gold trust is back into positive territory at 0.68%/Central fund of Canada’s is still in jail.
 
 
 

end

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

Trading in gold and silver overnight in Asia and Europe

Trump and Clinton Are “Positive For Gold” – $1,900/oz by End of Year

Trump or Clinton are “positive for gold” and prices could rise to between $1,700 and $1,900 per ounce by year end according to Canadian gold mining magnate Rob McEwen.

Gold “is a currency that doesn’t have a liability attached to it,” McEwen said Tuesday in an interview with Bloomberg at a gold conference in Colorado Springs.

trump clinton goldRobert McEwen Photographer: Victor J. Blue/Bloomberg

“A store of value that has gone for millennia. And the big argument against gold used to be it costs you money to store it. Right now, it’s costing you money to store your cash.”

As reported by Bloomberg:

Robert McEwen, one of the gold’s industry’s most unabashed bulls, is predicting prices could surge as much as 44 percent by the end of the year as confidence in the economy buckles.

The metal could trade in a range of $1,700 an ounce to $1,900 by the end of 2016 as uncertainty builds around the stability of global currencies and sovereign debt, said McEwen, who’s so enamored by bullion that he’s founded two producers: McEwen Mining Inc. and Goldcorp Inc. Record-low global interest rates will cause a “huge amount of anxiety” for investors, who will turn to gold as a store of value and an alternative asset, he said.

Bullion’s 2016 rally comes after three straight annual losses. Prices have slumped 31 percent since reaching an all-time high of $1,923.70 in 2011.

McEwen, one of the most respected business men in the gold mining business, is putting his money where his mouth is and investing much of his wealth in gold:

McEwen is betting big on gold. As the chief executive officer of his eponymous company, he’s paid $1 a year and doesn’t receive bonuses, wagering that his share holdings will reap him ample rewards. He’s doing this at a time when many gold executives have expressed caution over the metal’s recent rebound as the wounds still feel fresh from the bear market that started in 2013.

This isn’t the first time McEwen, a 66-year-old former investment banker, has defied his own industry. In 2000, he launched an audacious experiment when he was at Vancouver-based Goldcorp. Offering $575,000 in awards, he threw open to the public more than five decades of proprietary data on the company’s under-performing Red Lake mine in Ontario and challenged geologists to locate the next 6 million ounces of gold.

Red Lake ended up becoming one of Goldcorp’s richest gold mines, producing more than $3 billion worth of the metal, he has said.
Prediction Redux
This also isn’t the first time that McEwen, who expects bullion could reach $5,000 in four years, has made bold predictions for prices. He gave the same outlook in 2009 and 2011 — the latter forecast came less than five months before gold peaked and then plunged as much as 46 percent to a five-year low reached in December 2015.

This time, McEwen expects a number of catalysts — from the U.S. election to instability at banks — could make his prediction come to fruition.

“You have many more people involved in the market than you ever have before — crowd psychology is there,” he said. “Reasons for anxiety are multiple than what we’ve had in the past and there will be a triggering event.”

As for the elections, McEwen said that no matter which candidate wins over the U.S. populace, it will be positive for prices. Voters take to the polls in November, when Donald Trump, the Republican presidential nominee, will go up against Democrat Hillary Clinton.

“Hillary has got a very accommodative platform,” McEwen said. “She’s made promises to every group you can imagine in the United States to give them money.

Trump is less expansionary, but he’s unnerved a lot of people with his statements, so they don’t really look at this policies, they look at his rhetoric.”

Full Bloomberg article can be read here

Gold and Silver Bullion – News and Commentary

Gold Hits Snooze Button Ahead of Fed Rate, BOJ Policy Decisions (See Chart) (Bloomberg)

Gold steadies as investors bet against Fed hike (Reuters)

Swiss gold exports down 7% on year to 160 mt in August, four-month low (Platts)

Gold ekes out a gain as traders await cues from Fed, BOJ (Marketwatch)

U.S. housing starts, building permits fall in August (Reuters)

Deutsche Bank’s Low Capital Makes It No. 1 for Risk in Study (Bloomberg)

Helicopters Circle Over Bank of Japan With Kuroda Running Out of Options (Bloomberg)

Pensions: Beware of Suits and Tempting Promises (DavidMCWilliams)

Big Short’s Eisman Reveals Next Big Short Is “When World Loses Confidence In QE” (Zerohedge)

Dovish Fed to hike interest rates in December, QE might return in the mid-term (FXStreet)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

21 Sep: USD 1,319.60, GBP 1,015.96 & EUR 1,183.81 per ounce
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

Silver Prices (LBMA)

21 Sep: USD 19.43, GBP 14.95 & EUR 17.43 per ounce
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


Recent Market Updates

– Gold Bugs Rejoice – Central Banks Think You’re On To Something
– ‘Hard’ Brexit Looms For Ireland
– EU Bail In Rules Ignored By Italy – Mother Of All Systemic Threats and World 
– War?– Buy Gold – Bonds Are ‘Biggest Bubble In World’ – Billionaire Singer Warns
– Silver Bullion Market – “Most Bullish Story Ever Told?”
– “Sorry, You Can’t Have Your Gold Bullion”
– Global Stocks, Bonds Fall Sharply – Gold Consolidates After Two Weeks Of Gains
– Gold, Silver, Blockchain and Fintech – Solutions To Negative Rates, Bail-ins, Cash Confiscations and Cashless Society
– Jan Skoyles Appointed Research Executive At GoldCore
– Silver Bullion Surges 3.5% To Over $20/oz
– Ireland “Especially Exposed” To “International Shocks” Warns Central Bank
– Deutsche Bank Tries To Explain Failure To Deliver Physical Gold
– Physical Gold Delivery Failure By German Banks

Mark O’Byrne
Executive Director

END

 

Russia picks up a cool 700,000 oz or 21.77 tonnes last month, its largest monthly increase this year.

(courtesy Lawrie Williams/Sharp’s Pixley)

 

LAWRIE WILLIAMS: Russian Central Bank Gold Purchases Pick Up Again

SEP
21

In its latest announcement, the Russian Central Bank has stated that its gold reserves rose from 48.4 million ounces to 49.1 million ounces during August. This increase of 700,000 ounces – 21.77 tonnes – is the largest monthly increase this year and brings Russia’s total gold reserve increase year to end August to 113 tonnes according to this latest announcement and World Gold council figures for the prior seven months.  Over the same period of 2015 the Russian central bank added 109.15 tonnes, so it has been adding to its reserves at a broadly similar rate so far this year.  Last year it should be noted that it upped its gold reserve additions quite substantially in the final four months of the year to an average of 24.2 tonnes a month, compared with an average of 13.64 tonnes a month over the first eight months of the year.

We had been suggesting in previous articles that the pace of central bank gold buying might be coming down, given the low purchase levels by Russia in May and July, and a big reduction in announced Chinese purchases too, given that these two nations are about the only two whose central banks have been adding to their gold reserves in a significant manner.  Relative to its own gold reserves, Kazakhstan has also been increasing its gold holdings at an important rate, but at only around 3 tonnes a month.  But the latest Russian figure suggests we may have been premature in this assessment, at least as far as that country is concerned.  We shall have to wait another week or two to find out whether China too is reverting to earlier gold reserve increase levels, or is continuing at the slower pace seen in recent months.

On the other side of the equation – central bank gold sales – the principal seller has been Venezuela which has seen its gold reserves reduce by around 100 tonnes since the beginning of December last year.  However it does not appear to have sold any gold in July and August this year according to Swiss gold import statistics given the country’s gold sales so far appear to have been routed through the BIS in Basel, although one cannot rule out further sales during the remainder of the year. (Harvey:  Venezuela is out of gold)

Depending on China’s announced official purchases in the final few months of the year, perhaps our estimate of net central bank gold purchases for the full year of around 350 tonnes could prove to be an underestimate, but only if Russia continues to add at the higher rate, Chinese purchases start to pick up again and Venezuela manages to hold on to most of its gold despite its dire economic situation and global debt position.

 

end

 

Interesting:  Swiss gold exports are down 7% on the year to 160 tonnes.  Is it because of a lack of supply?

 

(courtesy Cassel/Platts/GATA)

Swiss gold exports down 7% on year to 160 metric tonnes in August, four-month low

Section:

By George King Cassell
Platt’s, London
Tuesday, September 20, 2016

Gold exports from Switzerland totaled 160 metric tonnes in August, down 7 percent from 172 metric tonnes a year earlier, Swiss federal customs data showed today.

The figure is 17 percent lower than 192 metric tonnes in July, the largest flow out of the country this year. August is also the lowest monthly export total since April.

Switzerland is the world’s largest refiner and exporter of gold and total exports from the country now stand at 1,197 metric tonnes for the year to date, up 3 percent from 1,160 metric tonnes in the same period of 2015.

In a marked change from the traditional flow of physical gold from west to east, the UK continues to be the largest destination for Switzerland’s gold this year at 84.6 metric tonnes in August, up 6 percent from July. …

… For the remainder of the report:

http://www.platts.com/latest-news/metals/london/swiss-gold-exports-down

END

 

John Embry pounds the table as he discusses Japan’s huge economic problems

(courtesy John Embry/Kingworldnews)

Japan’s problems foreshadow the West’s, Embry tells King World News

Section:

4:18p ET Tuesday, September 20, 2016

Dear Friend of GATA and Gold:

In an interview today with King World News, Sprott Asset Management’s John Embry says Japan’s problems foreshadow the West’s: a “staggering government debt burden in conjunction with a moribund economy as well as a shrinking, aging, xenophobic population.” An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/john-embry-the-key-to-surviving-the-destruction…

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

END

What a bummer!! Canadian Mint loses 180,000 dollars worth of gold. Guess where the employee hid the gold?

your humour story of the day….

(courtesy Ottawa Citizen/GATA)

Do you know where those gold maples have been? Canadian Mint doesn’t either

Section:

Canadian Mint Employee Accused of Smuggling $180,000 of Gold in His Rectum

By Kelly Egan
Ottawa Citizen
Tuesday, September 20, 2016

http://ottawacitizen.com/news/local-news/egan-170k-in-mint-gold-allegedl…

An employee of the Royal Canadian Mint allegedly smuggled about $180,000 in gold from the fortress-like facility, possibly evading multiple levels of detection with a time-honored prison trick.

Hiding the precious metal up his bum.

The case against Leston Lawrence, 35, of Barrhaven concluded in an Ottawa courtroom Tuesday. Justice Peter Doody reserved decision until Nov. 9 on a number of smuggling-for-cash charges, including theft, laundering the proceeds of crime, possession of stolen property, and breach of trust.

The “uck!” factor aside, the case was also an illuminating look at security measures inside the Mint, the building on Sussex Drive that produces hundreds of millions of gold coins annually for the federal Crown corporation.

“Appalling,” was the conclusion of defence lawyer Gary Barnes, who described the Crown’s case as an underwhelming collection of circumstantial evidence.

“This is the Royal Canadian Mint, Your Honor, and one would think they should have the highest security measures imaginable,” Barnes said in his closing submission.

“And here the gold is left sitting around in open buckets.”

Indeed, it was not even the Mint that discovered the alleged theft but an alert bank teller.

Court was told that, on multiple occasions, Lawrence took small circular chunks of gold — a cookie-sized nugget called a “puck” — to Ottawa Gold Buyers in the Westgate Shopping Centre on Carling Avenue.

Typically, the pucks weighed about 210 grams, or 7.4 ounces, for which he was given cheques in the $6,800 range, depending on fluctuating gold prices, court heard. He then deposited the cheques at the Royal Bank in the same mall.

One day a teller became suspicious at the size and number of Ottawa Gold Buyers cheques being deposited and Lawrence’s request to wire money out of the country. She then noticed on his account profile that he worked at the Mint. The first red flag was up.

Bank security was alerted, then the RCMP, which began to investigate. Eventually, a search warrant was obtained and four Mint-style pucks were found in Lawrence’s safety deposit box, court heard.

Records revealed 18 pucks had been sold between Nov. 27, 2014 and March 12, 2015. Together with dozens of gold coins that were redeemed, the total value of the suspected theft was conservatively estimated at $179,015.

But the defence countered with a couple of important points. The Crown was not able to prove conclusively that the gold in Lawrence’s possession actually came from inside the Mint. It had no markings nor, apparently, had any gold been reported missing internally.

The Crown was able to show the pucks precisely fit the Mint’s custom “dipping spoon” made in-house — not available commercially — that is used to scoop molten gold during the production process.

Lawrence, who has since been terminated, was an operator in the refinery section. Among his duties was to scoop gold from buckets so it could be tested for purity, as the Mint prides itself on gold coins above the 99 per cent level.

The great mystery that went unanswered at trial, however, was this: how did the gold get out of the Mint?

Court was told Lawrence set off the metal detector at an exit from the “secure area” with more frequency than any other employee — save those with metal medical implants. When that happened, the procedure was to do a manual search with a hand-held wand, a search that he always passed.

(It was not uncommon for employees to set off the detector, court heard.)

Investigators also found a container of vaseline in his locker and the trial was presented with the prospect that a puck could be concealed in an anal cavity and not be detected by the wand. In preparation for these proceedings, in fact, a security employee actually tested the idea, Barnes said.

Lawrence did not take the stand — as is his legal right — and the Crown was not able to definitively establish how the gold pucks made their way out of the facility.

“We do have compelling evidence,” countered Crown attorney David Friesen, of someone “secreting (gold) on his person and taking it out of the Mint.”

Barnes implied there were many ways Lawrence could have legitimately obtained the gold — he could have bought the coins, for instance — and said he made no efforts to be devious with the gold buyers or the bank. Further, Barnes said, the Mint isn’t even sure a theft took place.

“In fact, I would submit the Mint doesn’t even know if anything is missing.”

In an emailed statement Tuesday evening, a Mint spokeswoman said several security measures had been upgraded, including high definition security cameras in all areas, improved ability to track, balance and reconcile precious metal, and the use of “trend analysis technology.”

 

END

 

The argument of storage costs for gold falls to the wayside as their is now a cost to hold dollars in a bank and in a vault!

(courtesy McEwan/GATA/Bloomberg))

Storage cost argument against gold now applies to cash, McEwen notes

Section:

Gold Bull McEwen Sees Prices as High as $1,900 by End of Year

By Danielle Bochove and Millie Munshi
Bloomberg News
Monday, September 20, 2016

Robert McEwen, one of the gold’s industry’s most unabashed bulls, is predicting prices could surge as much as 44 percent by the end of the year as confidence in the economy buckles.

The metal could trade in a range of $1,700 an ounce to $1,900 by the end of 2016 as uncertainty builds around the stability of global currencies and sovereign debt, said McEwen, who is so enamored by bullion that he has founded two producers: McEwen Mining Inc. and Goldcorp Inc. Record-low global interest rates will cause a “huge amount of anxiety” for investors, who will turn to gold as a store of value and an alternative asset, he said.

Gold “is a currency that doesn’t have a liability attached to it,” McEwen said today in an interview at a gold conference in Colorado Springs. “A store of value that has gone for millennia. And the big argument against gold used to be it costs you money to store it. Right now it’s costing you money to store your cash.” …

McEwen is betting big on gold. As the chief executive officer of his eponymous company, he is paid $1 a year and doesn’t receive bonuses, wagering that his share holdings will reap him ample rewards. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2016-09-20/gold-bull-mcewen-sees-..

END

 

My goodness take a look at how much gold Switzerland shipped London:84.6 tonnes. It sure looks like London is now out of gold and needs replenishment from Switzerland. The game will be over very shortly

(courtesy Lawrie Williams/Sharp’s Pixley)


LAWRIE WILLIAMS: The Curious Case of Swiss Gold Flows – Next Episode

SEP
21

We have commented here before on the strange reversal of gold flows in and out of Switzerland so far this year, where the main sources of supply have been countries which would normally be recipients of Swiss exports of re-refined and re-sized gold products (mostly small bars and coins). Conversely some of the normal major suppliers of gold to Switzerland for re-refining and re-distribution have become the major recipients of Swiss gold exports. We had speculated that perhaps one of the reasons had been the huge needs earlier in the year for supplying gold to the big gold-backed ETFs, but the ETF inflows have diminished sharply since the end of the second quarter and these contrary gold flows are continuing – and even getting bigger.

Take the chart below for Swiss gold exports for the month of August from Nick Laird’s excellentwww.goldchartsrus.com service:

While the chart shows the continuation of gold exports to the world’s principal consuming nations – China plus Hong Kong and India as one would expect, more than half was destined for the United Kingdom which has traditionally been itself an exporter of gold to Switzerland of London Good Delivery gold bars for re-refining and re-sizing into the small bar sizes in demand from Asia. Much of the major ETFs’ gold – notably that of the SPDR gold ETF (GLD), the biggest of them all – is vaulted in London, but in August GLD’s gold holdings actually fell by 8.6 tonnes, yet Swiss gold exports to the UK came in at 84.6 tonnes over the month. This was even higher than the 65 tonnes of gold exports to the UK in June (when GLD was riding high) and 78.7 tonnes in July.

We had heard that inventories of unallocated gold in London’s gold vaults had been getting extremely low – indeed one analyst had even come up with research data suggesting they had moved into the negative, largely because of the necessity to supply unallocated gold into the ETFs which had been so strong in the first half of the year. It could be that the latest Swiss gold export figures to the UK are an attempt to rectify this situation – if indeed it exists. But again this is speculation.

But where is Switzerland importing its gold from. That is the other side of the curious equation. The biggest sources of this gold are nations/states which traditionally are importers of Swiss gold – namely the United Aran Emirates and Hong Kong. See the imports chart below from www.goldchartsrus.com :

As expected many of the countries exporting gold to Switzerland that month were gold mining countries, but the UAE and Hong Kong figures stand out. Other nations usually seen as fabricators are also represented in the list – notably Thailand and Italy. Those following central bank data will perhaps be relieved to see that Venezuela apparently did not ship any gold to the BIS in Switzerland during the month, after being a heavy exporter in earlier months.

The USA, the world’s fourth largest producer of gold, also showed strongly in the Swiss import figures for August after appearing as a significant export destination in the two previous months, which had attracted considerable comment as to why that should be from US commentators!

Our comment on these overall gold imports – notably from the UAE and Hong Kong – we have put down to the overall slippage of gold demand outside the West so far this year prompting traders, who may have built up large inventories in anticipating better markets, taking advantage of the higher gold price so far this year and liquidating some of these at a decent profit. Our views on that are unchanged.

http://news.sharpspixley.com/article/lawrie-williams-the- curious-case-of-swiss-gold-flows-next-episode/255924

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

 
 

:

1 Chinese yuan vs USA dollar/yuan  UP to 6.6730( DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6806 / Shanghai bourse CLOSED UP 2.87 POINTS OR .10%   / HANG SANG CLOSED UP 139.04 POINTS OR 0.59%

2 Nikkei closed U P 315.47 POINTS OR 1.91%  /USA: YEN FALLS TO 101.13

3. Europe stocks opened ALL IN THE GREEN (     /USA dollar index DOWN to 95.92/Euro DOWN to 1.1149

3b Japan 10 year bond yield: RISES TO    -.027%     !!!!(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::  44.95  and Brent: 46.67

3f Gold UP /Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.013%   

3j Greek 10 year bond yield FALLS to  : 8.44%   

3k Gold at $1324.25/silver $19.55(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 WILL BE DEFENDED 

3l USA vs Russian rouble; (Russian rouble UP 39/100 in  roubles/dollar) 64.39-

3m oil into the 44 dollar handle for WTI and 46 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 101.13 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 .9762 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0882 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  -.013%

/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 1.691% early this morning. Thirty year rate  at 2.438% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS

Global Stocks Rise After “Disappointing” BOJ Announcement: All Eyes On Janet Yellen

While the BOJ may have disappointed with its latest iteration of monetary policy, now known as “QQE with Curve Control”, Asian and European stocks as well as U.S. equity index futures rallied in early trading perhaps on the back of the bounce in the USDJPY which has now completely faded. That said, the BOJ’s “Reverse Operation Twist” which hopes to steepen the JGB curve, has provided support to global financial institutions, which are broadly higher.

For those who missed the earlier explainer, here is what happened in a nutshell: The BOJ left the -0.10% policy rate unchanged as generally expected, however the breaking news is the introduction of QQE with ‘yield curve control’. The BoJ has scrapped the average maturity targeting for JGB’s and has stated that it will buy JGB’s so ‘10y yields remain around the current level’. The statement also includes the passage that the ‘monetary base may fluctuate to achieve yield-curve control’ and that the BoJ is ‘committed to expanding the monetary base until CPI is stable above 2%’. As DB’s Jim Reid effectively put it, the main takeaway to us is a tweaking of QQE rather than outright further stimulus.

And while both 10Y JGB yields and the USDJPY jumped in the initial kneejerk reaction, they have since recovered much of the earlier move, and worse – the USDJPY was trading at session lows.

Meanwhile, treasuries and the dollar were little changed before the Fed policy decision at 2pm Eastern, while oil rallied before a meeting of producers next week.

Banks and insurers led gains in equities as the BOJ refrained from moving deeper into negative interest-rate territory and shifted the focus of its stimulus to controlling the yield curve, Bloomberg reports.

After sliding in the aftermath of the announcement from Japan’s central bank, the yen and government bonds pared losses. A gauge of the dollar’s strength held near a seven-week high, while oil jumped toward $45 a barrel.  The BOJ’s shift, which includes plans to target 10-year JGB yields at around the current level of 0%, gives it scope to keep loosening policy to revive growth and inflation, while limiting the negative impact on financial companies’ earnings. “Going forward the BOJ said it can still undertake further easing, and given its new framework will allow it to undertake more negative rate cuts while mitigating the downside impact on financial institutions’ profitability,” Mansoor Mohi-uddin, a Singapore-based strategist at Royal Bank of Scotland Group Plc. “The risk is for more easing action in the fourth quarter.”

And now all eyes turn to the Fed which will be hard pressed not to disappoint like the BOJ, which as we noted earlier, generated a largely negative kneejerk response among Wall Street commentators. Yellen will make her announcement in just over 7 hours, where – with all but four of 102 economists surveyed by Bloomberg predicting the Fed will hold off from raising interest rates – she is expected to do nothing, while lowering rate hike expectations further. As a reminder, this is where the Fed’s infamous “dots” were one year ago: we show this just in case anyone still had any faith in the Fed’s “forward guidance.”

It won’t stop with Yellen however: central bank authorities will continue to hog the limelight on Thursday with speeches due from the new governor of the Reserve Bank of Australia as well as the heads of the European Central Bank and the Bank of England. In addition, central banks in countries including New Zealand, Norway and South Africa have policy decisions due that day.

Meanwhile, in global markets, the MSCI All-Country World Index rose 0.4% as, with the Stoxx Europe 600 Index gaining 0.8 percent and the MSCI Asia Pacific Index up 1.4%. Japan’s Topix index jumped 2.7%, with gauges of banks and insurers soaring more than 5 percent on optimism higher long-term bond yields will alleviate a squeeze on their profits. Japanese markets will be shut Thursday for a holiday.

The Topix rose by more than the Nikkei 225 Stock Average as Japan’s central bank said its on-going purchases of exchange-trade funds will be concentrated more heavily on the broader benchmark.

Futures on the S&P 500 Index added 0.4 percent, having extended gains after the BOJ’s announcement.

More important than stocks, Japan’s 10-year bond yield increased by as much as seven basis points to 0.005 percent after the BOJ said it would adjust purchases of sovereign debt to keep the rate around zero. It subsequently declined to minus 0.035 percent. The rate on 10Y USTs rose by one basis point to 1.70 percent and Germany’s yield increased by two basis points to zero.

Market snapshot

  • S&P 500 futures up 0.4% to 2140
  • Stoxx 600 up 0.9% to 344
  • FTSE 100 up 0.4% to 6859
  • DAX up 1% to 10497
  • German 10Yr yield up less than 1bp to -0.02%
  • Italian 10Yr yield down less than 1bp to 1.25%
  • Spanish 10Yr yield down 2bps to 0.96%
  • S&P GSCI Index up 1% to 353.6
  • MSCI Asia Pacific up 1.4% to 141
  • Nikkei 225 up 1.9% to 16808
  • Hang Seng up 0.6% to 23670
  • Shanghai Composite up less than 0.1% to 3026
  • S&P/ASX 200 up 0.7% to 5340
  • US 10-yr yield down less than 1bp to 1.68%
  • Dollar Index down 0.01% to 96.01
  • WTI Crude futures up 2.1% to $44.98
  • Brent Futures up 1.8% to $46.71
  • Gold spot up 0.4% to $1,320
  • Silver spot up 1.2% to $19.44

Global Headline News

  • Fed Focus Turns to Dots as Hike Odds Fade: Decision-Day Guide: FOMC meeting may be ‘contentious’ even if hawks outnumbered
  • BOJ Shifts Policy Framework to Targeting Japan’s Yield Curve: Board keeps benchmark interest rate unchanged at minus 0.1%
  • Yen Pares Drop Versus Dollar After BOJ Shifts Policy Framework: Currency bounces back from weakest level since Sept. 14
  • Stocks Rise as BOJ Policy Boosts Banks Before Fed; Oil Climbs: Stocks rallied around the world as tweaks to BOJ’s monetary stimulus offered support to financial institutions
  • BOE to Cut Rates Again as Economists See Sharp Slowdown in 2017: Growth will slow to 0.7%, worst outcome since last recession; BOE’s Saunders Says U.K. May Be Stronger Than Economists Predict: Says rise in jobless rate would be an argument for lower rates
  • Oil Advances Near $45 as OPEC May Hold Formal Meeting in Algiers: Algeria says 1m barrel-a-day cut needed for rebalancing
  • VW Investors Sue for 8.2 Billion Euros in Germany Over Diesel: investors seeking damages for losses stemming from the company’s emissions-cheating scandal
  • America Movil CEO Says Co. Interested in Buying Oi: co. is monitoring Oi’s judicial recovery process, Valor Economico reports, citing interview

* * *

Looking at regional markets, Asian stocks shrugged off early caution and traded mostly higher following the BoJ policy overhaul announcement. Nikkei 225 (+1.9%) initially underperformed with sentiment weighed on by poor trade figures after exports fell for an 11th consecutive month, however the index shrugged off losses after the BoJ policy decision in which they kept rates unchanged at -0.1% and monetary base unchanged but left the door open for future rate cuts and expansion in monetary base, while it maintained its commitment to hitting the 2% inflation target and introduced QQE with yield curve control. Elsewhere, ASX 200 (+0.7%) was lifted by commodity names as WTI crude futures advanced to test USD 45/bbl after a 7.5mln bbl drawdown in API crude inventories, while Shanghai Comp (+0.1%) and Hang Seng (+0.6%) were indecisive as all focus turned to the BoJ. 10yr JGBs weakened significantly with pressure seen after the BoJ announced to adopt QQE with yield curve control and to targets 10yr yields to hover around 0%.

Top Asian News

  • BOJ Shifts Policy Framework to Targeting Japan’s Yield Curve: Stocks surge while yen weakens
  • Japan’s 10-Year Bonds Tumble After BOJ Targets Yield Near Zero: 10-year govt bond yields went positive for first time since March
  • China Paves Way for Major Government Influx Into Venture Capital: Country’s cabinet urges state sector to play bigger role
  • China’s Postal Bank Said Poised to Raise $7.4 Billion in IPO: Lender plans to price its sale of 12.1b shares at HK$4.76 apiece, below midpoint of marketed range
  • RBA’s New Boss Greeted by Trader Bets That Cuts Almost Done: Swaps show 73% chance RBA rate won’t go any lower in 2016
  • AC Milan’s Chinese Buyer Said to Show False Bank Letter in Talks: Chinese group said to give letter showing funding capability

In Europe, Christmas came early for central bank fans today, with the BoJ dictating newsflow and price action this morning, ahead of the Fed and RBNZ rate decisions later on in the day. The BoJ inspired gains in the Nikkei filtered through to European bourses, with all major indices in the green and the DAX hovering around the 10500 level. On a sector breakdown, financials are among the best performers this morning, again following on from their Japanese counterparts in the wake of the BoJ’s bank-friendly yield curve targeting, with analysts at RBC suggesting they cannot rule out the ECB taking similar measures in the future. European fixed income markets have seen less of an impact from the BoJ, largely shaking off the latest developments and trading modestly lower this morning, albeit closing the opening gap to see the German benchmark hovering around the 164.00 level. In terms of supply from the session, the German 2021 Bobl auction was relatively well-received with a b/c of 1.7 but failed to cause much traction in the Bobl future.

Top European News

  • U.K. Business Activity Has Slowed, Remains Positive: BOE says in quarterly agents’ summary of business conditions
  • Arrow Global Said to Attract Interest From Buyout Firms: Firms including Apax said to have weighed potential takeover
  • ABB to Sell Cable Business to NKT Cables for $934 Million: ABB to announce progress on review at investor day Oct. 4
  • Ubisoft to Sell $445 Million of Bonds to Finance Game Projects: Bonds are convertible into shares to after five years
  • Inditex Earnings Beat Estimates as Zara Owner Expands Online: Sales increased 13% during first weeks of 3Q
  • Luxury London Home Values to Fall Most Since 2008 on Brexit: Savills says buyers will wait to see outcome of negotiations
  • Majestic Wine Plunges as Naked U.S. Setback Leads to Profit Blow: Shares fall most since market debut almost 20 years ago
  • Aviva Is Looking at M&A Opportunities in Poland: CEO Tells Puls: Co. seeks to boost its presence in Polish property insurance, CEO tells newspaper
  • Diageo Says Set Up to Deliver Stronger Results in FY17: co. comments in statement

In FX, the Bloomberg Dollar Spot Index held near its highest level since July. The yen slipped 0.1 percent to 101.82 per dollar, paring a drop of as much as 1.1 percent. The BOJ said that the monetary base target, which previously had been set at annual increases of 80 trillion yen ($780 billion), may now fluctuate in the short term as policy makers seek to control the yield curve. It also pledged to expand the monetary base until inflation is stable above the 2 percent target. “BOJ’s talk about increasing the amount of base money until inflation gets to 2 percent has seen the yen weaken off,” said Roger Bridges, the chief global strategist for interest rates and currencies in Sydney at Nikko Asset Management Co.’s Australian unit. “We need to wait a couple of days to see the wash-out to determine if the yen weakness will continue.”

In commodities, crude oil climbed as much as 2.5 percent to $45.14 a barrel ahead of a government update on U.S. stockpile levels. Inventories fell by 7.5 million barrels last week, the American Petroleum Institute was said to have reported late on Tuesday ahead of the official figures. Algeria’s energy minister said OPEC may turn its informal talks next week into a formal session, a hint that major producers may agree measures to limit output and support prices. “History suggests that OPEC action is unlikely, but there will be talk and that will move the market,” said Evan Lucas, a market strategist at IG Ltd. in Melbourne. “The API data gave the market a boost, but prices are coming from a low base.” Nickel fell 0.4 percent in London, after jumping 6 percent in the last two sessions, ahead of the results of a mining audit by the Philippines. It has climbed about 16 percent in 2016 as the Philippines — the biggest supplier of the mined metal — shutters sites for failing to meet environmental standards. The government could tell more mines to stop operating, Environment and Natural Resources Secretary Gina Lopez said on Monday.

* * *

US Event Calendar

  • 7am: MBA Mortgage Applications, Sept. 16 (prior 4.2%)
  • 10:30am: DOE Energy Inventories
  • 2pm: FOMC Rate Decision (Upper Bound), est. 0.5% (prior 0.5%); (Lower Bound), est. 0.25% (prior 0.25%); Fed Summary of Economic Projections
  • 2:30pm: Yellen holds news conference after FOMC meeting

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade higher after BoJ stood pat on rates and pace of bond-buying but opted to tweak other parameters of its monetary policy
  • Despite initial upside in USD/JPY, the pair has trimmed some of its gains ahead of the FOMC with some also cynical about the latest stimulus efforts from the central bank
  • Looking ahead, highlights include DoE inventories and RBNZ and FOMC rate decisions
  • Treasuries rebounded from session lows after BOJ shifted the focus of its monetary stimulus from expanding the money supply to controlling interest rates; FOMC statement at 2pm, presser at 2:30pm, with Fed seen keeping rates unchanged, suggesting one increase by year-end.
  • BOJ will reduce investments in the Nikkei 225 Stock Average and buy more exchange-traded funds tracking the Topix index, following criticism its ETF buying is distorting the stock market
  • The BOJ’s shift of focus to control bond yields is fueling speculation that the nation’s investors will put more money into U.S. dollar assets as they chase higher returns
  • ECB has created a task force of national central bank staff to consider economic reforms, according to people familiar with the matter, who asked not to be identified because the initiative hasn’t been publicly announced
  • The BOE will cut interest rates close to zero later this year as concern persists about the longer-term impact of the Brexit vote, according to a survey
  • The U.K. should maintain EU regulations covering everything from working hours to chemicals until after the government sets out its plans for Brexit, said British manufacturers anxious to avoid a policy vacuum and safeguard access to their biggest export market
  • OPEC probably won’t clinch a deal to limit oil production in Algiers next week as members stay focused on either boosting output or defending their market share, according to a Bloomberg survey
  • Volkswagen AG investors filed lawsuits seeking a total of 8.2 billion euros ($9.2 billion) for losses stemming from the company’s emissions-cheating scandal

DB’s Jim Reid Concludes the overnight wrap

We’re straight to it this morning with the BoJ meeting outcome which annoyingly only came through just as we would normally be going to print. So here are our quick interpretations. The -0.10% policy rate has been left unchanged as generally expected, however the breaking news is the introduction of QQE with ‘yield curve control’. The BoJ has scrapped the average maturity targeting for JGB’s and has stated that it will buy JGB’s so ‘10y yields remain around the current level’. The statement also includes the passage that the ‘monetary base may fluctuate to achieve yield-curve control’ and that the BoJ is ‘committed to expanding the monetary base until CPI is stable above 2%’.

It’s early days and there is a lot of detail to sift through but these are the initial headlines and the main takeaway to us is a tweaking of QQE rather than outright further stimulus. We’ll have to wait and see what the full reaction is from markets in terms of whether or not it’s seen as disappointing but the price action so far has been supportive. The most interesting move so far has come in JGB’s with the 10y yield up 7bps and a shade below 0% at -0.007%, despite the statement talking about targeting 10y yields at the same level. They briefly traded in positive territory for the first time since March. 2y yields are 2bps higher and 30y yields are 4bps higher. The Yen is currently 0.60% weaker at 102.33 but it’s been pretty volatile. The Nikkei and Topix are up between 1% and 2%, led by the banks and insurers which are both up over 5% no doubt relieved that there is no interest rate cut and a steeper curve so far. The rest of Asia is firmer but gains are alot more modest. Gold (-0.30%) is the only notable mover in the commodity complex. All eyes on Kuroda’s press conference at 7.30BST.

So that’s one central bank (nearly) out the way but with one more to go today. The Fed is up next with the outcome due at 7pm BST and the post statement conference from Fed Chair Yellen to follow shortly after. A reminder that we’ll also get the updated dot plots and the latest summary of economic projections. With regards to the outcome, DB doesn’t expect the Fed to move this month, a view also shared by the wider market however the key might be just how hawkish the hold can sound. DB’s Peter Hooper expects the statement of risks to be upgraded to ‘nearly balanced’ from ‘have diminished’ – which would be a strong signal ahead of December – and that Yellen should indicate that there was an active discussion of a rate hike this time, but that they decided to hold for now because of mixed signals in both growth and inflation. Yellen will also have to acknowledge that a rate hike by the end of the year is a reasonable expectation if data comes in consistent with the committee’s expectations, but she will probably also do her best to focus as little as possible on ‘December’ specifically. On that note, it’s likely that a substantial majority of the dots will likely shift down to one 25bp rate hike this year (in June a significant majority were projecting at least two hikes this year). What might be interesting is how many remain above one hike this year and how many expect no hike at all. Peter expects at least two in the former and zero to three in the latter.

All that to look forward to later then. Unsurprisingly markets were treading water a bit again yesterday ahead of the two aforementioned big central bank meetings today. The S&P 500 (+0.03%) and Stoxx 600 (-0.08%) finished little changed after paring earlier gains. An announcement after the close from Microsoft that the board has approved a $40bn stock buyback and also a quarterly dividend increase, combined with better than expected earnings from FedEx has however helped US equity futures to nudge up modestly during the Asia session this morning. In commodity markets WTI Oil closed up +0.43% and is up another +1.82% this morning and so hovering close to $45/bbl again with another round of noisy headlines ahead of next week’s meeting playing its part. The latest twist is a suggestion from Algeria’s Energy Minister that the talks may end up being a formal discussion after all, with the Minister playing up the need for a reduction of 1m barrels a day to re-balance the market. Credit markets meanwhile were relatively unchanged in Europe but slightly wider in the US. CDS indices rolled yesterday to the new series so as you’ll see in the market data of today’s EMR we’ve left the intraday moves blank to avoid any confusion.

The most significant price action yesterday came in sovereign bond markets however where yields fell across the board and curves flattened ahead of the BoJ. More than anything this appeared to just reflect the market paring back recent steepening hopes, and that remains to be seen following the BoJ decision. 10y Bund yields were down 3.4bps on the day and back in negative territory once again at -0.021% having spent a total of 7 days trading north of zero. Led by the long end, Treasury yields were down a couple of basis points while the 5y 30y spread, which had widened for 11 days in succession, has now tightened for each of the last 3 sessions.

There wasn’t a huge amount to report on the data front. In the US housing starts in August were down more than expected (-5.8% mom vs. -1.7% expected) to an annualised rate of 1.14m from 1.21m with weakness seemingly coming from a big decline in the South (which accounts for the biggest region for building). Building permits (-0.4% mom vs. +1.8% expected) were also soft. The Atlanta Fed have chopped their Q3 GDP forecast again, with the 2.9% forecast down from 3.0% although that largely reflects last Friday’s CPI report.

Elsewhere it’s worth also highlighting the latest leg lower for Sterling below $1.30 following a -0.32% decline yesterday. A flurry of Brexit related news, all of which suggesting rising risks of a potential hard Brexit and also a prolonged and difficult negotiating period appears to be to blame. One story which stood out yesterday was the news that roughly 5,500 UK registered companies rely on passports to operate in other countries in the EU according to the Financial Conduct Authority. Another 8,000 businesses authorized in other EU states do business in the UK and so therefore also rely on the passport system. The FT noted that there are growing fears that the UK will lose passporting rights once it leaves the EU, however the numbers suggest that the EU would have much to lose from restricting access to the single market for the UK, so it looks to be an interesting back and forth debate.

Today’s diary is clearly dominated by the FOMC meeting outcome this evening at 7pm BST, followed half an hour later by Fed Chair Yellen’s speech. In terms of data it’s very quiet today with just the August public sector net borrowing data in the UK due to be released along with China’s leading economic index print this afternoon. Between now and the Fed however expect the focus to be on the post-BoJ reaction in markets for now.

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 2.87 POINTS OR .10%/ /Hang Sang closed UP 139.04 PONTS OR .59%. The Nikkei closed UP 315.47 POINTS OR 1.91%/ Australia’s all ordinaires  CLOSED UP 0.68% /Chinese yuan (ONSHORE) closed  DOWN at 6.6730/Oil rose to 44.95 dollars per barrel for WTI and 46.67 for Brent. Stocks in Europe: ALL IN THE GREEN   Offshore yuan trades  6.6806 yuan to the dollar vs 6.6730 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES

3a)NORTH KOREA:

none today

b) REPORT ON JAPAN

Bank of Japan disappoints as they do their operation twist, something I highlighted to you two weeks ago.  They did not go deeper into NIRP but also there will be no more QE except an offer of hope for more QE in the future..the yen rises to 100.63 from 102.00

(courtesy zero hedge)

Bank Of Japan Maintains Bond-Buying Pace With “Yield Curve Control”, Leaves Rates Unchanged, But Offers Hope For Moar

With SocGen and Goldman expecting nothing, but many others desperately hoping for more (2Y pricing in moar negative rates), tonight’s Japanese trade deficit disappointment (11th monthly decline in a row) did nothing to help the chaos… and The BoJ waited the longest since 2014 to release its statement. Markets did their usual turmoiling bit with JPY dropping and Nikkei rallying from 2300ET… (on no news whatsoever) before the big decision was unveiled.

The BoJ waited the longest since 2014…

10/07/2014 12:57
10/31/2014 12:44

11/19/2014 11:24
12/19/2014 11:28
01/21/2015 11:29
02/18/2015 10:49
03/17/2015 11:04
04/08/2015 11:36
04/30/2015 12:04
05/22/2015 10:49
06/19/2015 11:04
07/15/2015 11:18
08/07/2015 11:18
09/15/2015 11:07
10/07/2015 11:00
10/30/2015 11:22
11/19/2015 11:17
12/18/2015 11:50
01/29/2016 11:38
03/15/2016 11:35
04/28/2016 11:01
06/16/2016 10:45
07/29/2016 11:44

Since the last policy action (in Jan)…

Bonds were expecting a lot...

*  *  *

And then the decision hit:

Disappointment on rates (no change)

  • *BOJ MAINTAINS POLICY BALANCE RATE AT -0.100%

But it appears BoJ unleashes its reverse twist idea…

  • *BANK OF JAPAN TAKES ADDITIONAL ACTION
  • *BOJ TO INTRODUCE QQE WITH YIELD CURVE CONTROL
  • *BOJ SCRAPS AVG MATURITY TARGET OF JGB HOLDINGS
  • *BOJ TO BUY JGBS IN LINE WITH CURRENT PACE (disappointing)

And ups it ETF-buying…

  • *BOJ: 2.7T YEN OF ETF BUYS FOR ETFS THAT TRACK TOPIX

Will do more jawboning…

  • *BOJ TO ENHANCE FOWARD GUIDANCE
  • *BOJ TO EXPAND MONETARY BASE UNTIL INFLATION STABLE ABOVE 2%
  • *BOJ BOARD VOTES 7-2 ON GUIDELINES FOR MARKET OPERATIONS

So the bottom line is bigger ETF buying, maintains rates (no easing), maintains bond-buying (no easing), unveils “yield curve control” (steepens curve but crushes bank balance sheets through long bond MTM losses)

But then they dropped the final tape-bomb…

  • *BOJ: MONETARY BASE MAY FLUCTUATE TO ACHIEVE YIELD-CURVE CONTROL

In other words – QQE size may increase… which the market liked…

And the yield curve is steepening notably…

And banks are outperforming on the steepening…

“Whatever it takes” moment…

  • *BOJ: COMMITTED TO EXPANDING MONETARY BASE UNTIL CPI EXCEEDS 2%

But as Enda Curran, Bloomberg’s  Chief Asia Economics Correspondent, notes,

there’s a risk of disappointment here. It’s far from the shock and awe we’ve seen before from the BOJ and the moves to control the yield curve appear modest, at first glance.

And one can see the disappointment in the market’s response… 150 NKY points and one big fugure in JPY?

The BOJ says it will buy JGBs “more or less in line with the current pace” of 80 trillion yen. Most observers would have said such a change in commitment meant the BOJ was tapering, and would have anticipated gains in the yen. That may still be the interpretation and reaction in time.

And as far as the policy review, Bloomberg’s Ken McCallum remarks,

Quick read through BOJ policy review suggests, surprise! It thinks the policy is doing a good job. Says expansion of monetary base has led to a rise in inflation expectations, while negative rates have pushed down the yield curve.

*  *  *

Finally, because it’s been a long night (and tomorrow will just make it longer), here is a littel humor (or not) as to where this leads…

h/t @Colgo

end

 

For those of you who want the official version of the Bank of Japan’s decision:

 

 : Bank of Japan changes policy framework, matching expectations
The BoJ revamped its policy framework, which is now called “QQE with Yield Curve Control.” It consists of two major components: yield curve control, in which the Bank will control short-term and long-term interest rates, and an inflation-overshooting commitment, in which the BoJ commits to expand the monetary base stabilizes above the price stability target of 2%.
Board members voted (7-2) on the yield curve control, which comprised:
Short-term policy interest rate of minus 0.1% to the policy- rate portion of the current account balances held by financial institutions
Long term rates control to guide 10-year JGB yields to around zero percent via JGB purchases, which will remain at ~¥80T annually, though the guideline for average remaining maturity will be abolished.
They also decided (8-1) to introduce fixed-rate JGB purchases, while extending its fixed-rate funds-supplying operations up to 10 years from the current 1 year.
For other asset purchases, board members voted (7-2) to maintain J-REITs at ¥90B, ETFs ¥6T, commercial paper ¥2.2T and corporate bonds at ¥3.2T.
The BoJ also outlines possible options for addition easing through cuts to the short term policy rate, the long-term interest rate, expansion of asset purchases, and an accelerated expansion of the monetary base.

 end

c) Report on CHINA

Nine months ago we brought you the story that Guangxi NonFerrous Metals Group entered bankruptcy protection.  It was bailout by China Development Bank and then one month later it defaulted on another bond.  For the past 6 months the SOE has been in limbo as the Chinese government wanted to keep these guys alive.   Alas, they could not and this company is now going to liquidation and it will be the first SOE to do so. The fun will begin when the workers will find out that there is no job for them.

(courtesy zero hedge)

Metals Producer Is China’s First State-Owned Company To Liquidate In Bankruptcy

After a struggle to repay its debts since 2015, Guangxi Nonferrous Metals Group, a regional Chinese state-owned metal producer, has finally been declared bankrupt by a Chinese court, becoming the country’s first interbank bond issuer to fail. It is also China’s first bankruptcy case in which a state-owned company has liquidated.  As Caixin first reported, nine months after the state-owned Guangxi first filed for bankruptcy, a Nanning court on Sept. 12 granted the company’s application to liquidate.

What makes this bankruptcy unique is that while several state-owned enterprises have already gone bankrupt in the past two years due to a failure to repay bank or corporate debt, until recently an unheard of event in China, Guangxi Nonferrous is the first SOE to fail after defaulting in the highly liquid interbank bond market.

The implications will be substantial in a market in which the central bank “put” when it comes to bond issues, had been pervasive until recently.

According to Caixin, the bankruptcy will likely deter foreign investors from China’s bond markets, which are facing increasing risks of default as the country embarks on supply-side reform to cut industrial overcapacity. More than 30 bonds have defaulted as of June, according to data provider Wind. Dongbei Special Steel, a producer of alloys for automakers and other manufacturers, defaulted on seven bonds with a combined value of 3.1 billion yuan between March 28 and late July.

The Guangxi Nonferrous bankruptcy had been closely followed as a case study of how China will resolve complex bankruptcies that mixed private and public funding.

Based in the southern Guangxi region, the company succumbed after three years of losses and, despite government subsidies, failure to repay its debt. Problems started to surface in June 2015 when the metals company said it was having trouble repaying rmb 1.3 billion of principal and rmb 62.92 million of interest on its private placement note.

Despite a subsequent bailout by its lender, China Development Bank, one of the country’s three policy banks which later stepped in to rescue Guangxi Nonferrous, the metals maker defaulted, again, just a few months later on three other bond payments that were due in November, February and most recently in April, when it missed payment on a rmb 500 million yuan 3 year private placement note with a 5.56% coupon (which was rated BB). The metals producer cited in the notice “consecutive losses and the fact that it has already entered bankruptcy reorganization procedures” as reasons for the missed payment.

Which is a valid point: you can’t go more bankrupt if you are already bankrupt.

Based on company filings, Guangxi Nonferrous owed a total of rmb 14.51 billion to 108 creditors, including China Development Bank, Minmetals International Trust and Shanghai Pudong Development Bank.

Founded less than a decade ago in 2008 by the SOE regulator State-owned Assets Supervision & Administration Commission (SASAC) in Guangxi, the company engaged in mineral exploration and mining development. But its troubles started long ago, when it reported a combined loss of rmb 2.29 billion from 2012 to 2014 as the industry was struggling with declining demand and a supply glut amid an economic slowdown. “The nonferrous metal industry has been in a downturn, and also the company faced limited returns from previous investments,” said a person close to the firm cited by Caixin, adding the two factors eventually led to a negative cash flow.

Despite its second default in early 2016, the company was once again given a 6-month leeway by the government to find a way to continue as a going concern, preferably with a vastly deleveraged balance sheet. In a February statement to the Shanghai Clearing House, a government financial institution for the interbank market, the metals company said it filed an application for bankruptcy in Nanning Intermediate People’s Court in December. However, the court gave the company a grace period of six months and set up a committee made of local government and party officials to restructure the debts.

However, the third time would not be the charm for the insolvent, cash-bleeding SOE: a person inside Guangxi Nonferrous told Caixin that the committee reached out to more than 100 investors to bail out the firm, but only five expressed interest. No deals were reached.

Creditors apparently were dissatisfied with the results of the negotiations and blamed their failure on the local SOE regulator. “As far as we know, Guangxi SASAC did not provide any detailed plans or give any promises to potential investors,” one creditor said. “Inviting investors was just a formality.”

In August, creditors submitted a written complaint to the National Association of Financial Market Institutional Investors, which oversees the interbank bond market, accusing the reorganization committee of ignoring creditors’ interests. “The committee did not follow rules to reveal information regarding the restructuring to the public; neither did it communicate with creditors.”

“The key question now is how much money bondholders can claim,” said Ivan Chung, managing director and head of China credit research at Moody’s Investors Service in Hong Kong. Citic’s Ming expects that the “the claim ratio for creditors will not be high.”

And thus concludes China’s ad hoc attempt to implement Chapter 11 reorgnization in a corporate culture that has rarely if ever dealth with multiple stakeholders seeking to split apart a bankrupt entity. In liquidation disaster.

According to Caixin, it is not clear how Guangxi Nonferrous Metals will be liquidated. According to China’s Company Law, the court will administer a bankruptcy auction to sell the company’s assets. The gains will be used to pay employees first, then taxes and eventually creditors. The restructuring committee estimated that the company will need to raise 16 million yuan from the auction to pay around 110 employees. The payment is calculated based on how long an employee worked at the firm and the average salary for the 12 months before the bankruptcy, the person inside the company said. The decision has upset some employees because the company reduced the average salary by almost 50 percent at the beginning of this year.

Where it will get hairy is once the company’s already unhappy workers realize there is no more job for them. “Employees are still calm, but once the liquidation plan becomes clear, I’m afraid the conflict between the company and the workers increase,” the Caixin source said.

And while one liquidation of a SOE will be manageable, even if it means all workers have to be transplanted elsewhere, what happens next, now that the seal has been broken, and many more state-owned companies follow in Guangxi’s footsteps. Can China keep a lid on all the upcoming “conflicts between company and workers”, which as we have said since 2013, is the main reason why China is so terrified of terminal corporate failure.

4 EUROPEAN AFFAIRS

The very respectable German Newspaper, Handelsblatt has just come out and stated that Deutsche bank may ultimately need a state bailout. In my opinion there is not enough money in the system to bailout this bank due to its derivatives. DB states that they have 47 trillion USA of derivatives. I believe it is closer to 72 trillion as they are hiding huge amounts off their balance sheet.

(courtesy Handelsblatt/zero hedge)

“Deutsche Bank May Ultimately Need A State Bailout” – Handelsblatt

While the most recent set of troubles plaguing Deutsche Bank have been duly documented here, most recently yesterday when the stock price tumbled once again just shy of all time lows over fears the bank’s multi-billion DOJ settlement could severely impact its liquidity and/or solvency, this may be the first time we have heard the “n“-word tossed around in an official German publication: as Germany’s top financial newspaper, Handelsblatt said, “German financial officials reacted with shock and dismay to the leaking of a U.S. government demand for a $14 billion fine against Deutsche Bank, which may ultimately need a state bailout to pay the bill.

Some more details from the article titled “Deutsche Bank in New Existential Crisis“:

Discussion of Deutsche Bank’s shaky capitalization has burst back to life, with renewed speculation on whether Chief Executive John Cryan will be forced to raise new capital, which he had previously ruled out, or make emergency asset sales.

Some have even raised the possibility of a government bailout of Germany’s largest bank, which would be a defining event and a symbolic blow to the image of Europe’s largest economy.

And some more troubling truth:

Many analysts fear the bank may be in a vicious circle, with losses and cancelled dividends pushing down share prices and preventing the rebuilding of a capital buffer.

One thing is clear. With this many unresolved legal issues, any recapitalization is likely to mean selling new shares at knock-down prices. One bright spot for the bank may be ongoing negotiations with finance company Phoenix Group for the sale of Abbey Life, its British insurance subsidiary.

Phoenix recently confirmed talks were at an advanced stage. Any sale would bring €1 billion into Deutsche Bank’s coffers – a welcome sum, but not enough to solve the bank’s problems.

So could a state bailout for Deutsche Bank be needed? With next year’s general election looming, and the populist Alternative for Germany party rising in the polls, this would be the last thing the German government wants. But there is no panic in the federal finance ministry as yet. In the past, American banks have been confronted with similarly breathtakingly initial settlement demands, only to see them radically reduced in the final deal.

Unfortunately, Deutsche Bank may not be so lucky. Even if theories are discounted that the $14-billion charge is payback for European tax demands on Apple, the German bank may face tough treatment in the United States.

And then there was the FDIC’s vice chairman, former Kansas Fed president Thomas Hoenig, piling on some more pain for the troubled German lender:

Deutsche Bank AG’s status as the riskiest among more than two dozen large banks is worsening, according to a measure of its leverage used by Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig, adding to woes for Germany’s biggest lender as it braces for a large settlement over mortgage securities.

In a twice-yearly look at what’s known as the leverage ratio — a lender’s capital measured against its assets — Deutsche Bank drags behind the rest of the major global banks, according to data released Tuesday by Hoenig. A lower ratio means the bank has less of a cushion if a crisis arises. Deutsche Bank’s ratio of 2.68 percent as of June 30 is about half of the average for the eight biggest U.S.-based firms including JPMorgan Chase & Co. and Citigroup Inc. It also trails its ratio of 3.01 percent from last year.

Hoenig — among the loudest advocates for stronger bank-capital requirements — regularly releases a tally of capital levels at the largest banks doing business in the U.S. While it’s not an official scoring by the FDIC, his calculations put more emphasis on derivatives exposure, which Hoenig has said is the best way to figure out the riskiness of each institution. The regulator has said before that Deutsche Bank’s capital ratio is too low. “As markets have recovered and as central banks around the world continue quantitative easing programs, the incentives for increasing financial leverage have intensified,” Hoenig said in a statement.

The market seems to agree: as of this moment DB is trading within fractions of its all time low.

end

 

I agree with Graham Summers that something big is going on behind the scenes.  The USA dollar has been creeping up despite lousy economic reports.  The rise in the dollar can only be because of a collapse in the European banks, namely Italy’s banks and Deutsche bank

a must read..

(courtesy Graham Summers/Phoenix Capital)

Ignore the Fed, Something MASSIVE is Brewing in Europe’s Banks

The Bank of Japan failed to announce any new policy initiatives today. The reasons are financial and political.

From a financial perspective, the Bank of Japan is well aware that its current tools cannot and will not generate sustained GDP growth. Bank of Japan head Haruhiko Kuroda implicitly admitted back in January that regardless of what he does, Japan has “potential growth rate of 0.5% or lower.”

That is a HECK of an admission by a Senior Level Central Banker.

Politically, the BoJ’s other primary tool (interest rates) is also a dead end. Japan’s foray into NIRP has proven to be a disaster from a political perspective with a significant media and political backlash. This combined with the fact that Japan’s first round of NIRP resulted in the Yen exploding higher (exactly the opposite of what the BoJ wanted) left the BoJ with little of note.

So the BoJ did what all Central Bankers do in these circumstances and promised it would do more if needed.

Which brings us to the Fed.

The Fed will announce today at 2PM whether or not it will hike interest rates. In the Big Picture, what the Fed does or doesn’t announce really doesn’t matter. The markets have already adjusted as though the Fed was hiking rates with bonds selling off and the US Dollar rallying sharply.

Indeed, few noticed, but the US Dollar just staged its second BIGGEST single day rally of the year on Friday. The only other day in which the $USD rallied more was on BREXIT when the entire global currency system came unhinged.

This kind of move is a clear signal that something MAJOR is underway “behind the scenes” in the financial system. My belief is that the “something” is a European Banking Crisis. Multiple major EU banks hit new record lows yesterday.

The EU Banking System is three times the size of the US’s and leveraged at 26 to 1 (Lehman was leveraged at 30 to 1 when it imploded). THIS is the big issue for the market today. Focusing on what the Fed does is like focusing on the sink while your home is ablaze.

We believe the global markets are on the verge of another Crisis.

2008 was Round 1. This next round, Round 2, will be even worse.

If you’ve yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis “Round Two” Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.

We made 1,000 copies available for FREE the general public.

As we write this, there are less than 100 left.

To pick up yours, swing by….

http://phoenixcapitalmarketing.com/roundtwo.html

Best Regards

Graham Summers/Chief Market Strategist/Phoenix Capital Research

 

end

 

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Tensions mount as Russia sends in their flagship aircraft carrier the Admiral Kuznetsov to Syria:

(courtesy zero hedge)

Russia Deploys Flagship Aircraft Carrier To Syria Coast

Back in the summer of 2013, just around the peak of the first major escalation involving Syria and the US attempt to remove its president al-Assad, the Mediterranean briefly looked like a parking lot, with US and Russian ships on anchor just off the Syrian coast prepared for any eventuality.

Then, last year, around the time Russia announced it would deploy its air force to Syria for the first time, we predicted that sooner or later, the naval phase of the Syrian conflict would ratner and lead to a repeat of the events from the summer of 2013. So, one year later, precisely this sequence of events now appears to be in place: earlier today, Russia’s defence minister said Wednesday that Moscow was dispatching its flagship aircraft carrier to bolster its forces in the eastern Mediterranean off Syria.

The Admiral Kuznetsov aircraft carrier would be sent to join Russia’s current naval deployment there, minister Sergei Shoigu said during a televised meeting.

“At the moment the Russian task force in the Eastern Mediterranean consists of no fewer than six combat ships and three or four logistic ships from all fleets” the minister said adding that “to build up the group’s combat capabilities we plan to reinforce it with an Admiral Kuznetsov-led group,” Shoigu told a meeting of the Defense Ministry’s board. He added that the Russian Navy has been permanently present in the Eastern Mediterranean since 2013.

While Russia has been flying a bombing campaign in Syria for the past year in support of Bashar al-Assad and has deployed a naval contingent to back up its operation, this is the first time that the Soviet-era Kuznetsov – Russia’s only aircraft carrier that is part of its Northern fleet based in Murmansk – will join the Russian deployment after undergoing a refurbishment.

Russia has a base in government-controlled Syrian territory from which it has flown most of its bombing raids in the country. There is also a naval base in the town of Tartus which Russia has used extensively on past occasions.

It has flown long-range bombing raids from bases in Russia and fired cruise missiles from ships in the Caspian Sea and a submarine in the Mediterranean.

However, those were either not enough, or Russia just felt like it needs to make an even more forceful naval statement, and as a result a Russian aircraft carrier will be found off the Syrian coast within a few week. It also means that US aircraft carriers will promptly match the Russian move, and soon be located within torpedo distance of Russian ships. We doubt any of these developments will lead to a de-escalation of hostilities in the region, and if anything, will only lead to an acceleration of the already deadly tensions in the middle-east.

6. GLOBAL ISSUES

none today

7. OIL ISSUES

Another unexpected inventory drawdown causes oil to rise:

(courtesy zero hedge)

Crude Extends Gains After Bigger Than Expected Inventory Draw (Despite Production Rise)

Following last night’s surprisingly large API-reported crude draw, DOE confirmed the drop with a 6.2mm draw (less than API’s 7.5mm though) with some wondering if the Colonial Pipeline closure affected inventories. Cushing saw a notable build and Distillates inventories rose for the 6th week in a row. While gasoline inventories fell (Pipeline?), production rose for the second week in a row.

API

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

DOE

  • Crude  -6.2mm (+3.25mm exp)
  • Cushing +536k (+100k exp)
  • Gasoline  (-1.4mm exp)
  • Distillates

Crude drewdown for the 3rd week in a row (and a large draw)…

Production rose for the second week – seemingly stabilizing at around 8.5mm bbl/day

And Crude is extending API gains…

Charts: Bloomberg

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

 

Euro/USA   1.1149 DOWN .0004 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 101.13  DOWN 0.473(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 TODAY DISAPPOINTS WITH STIMULUS

GBP/USA 1.2991 UP .0009 

USA/CAN 1.3157 DOWN .0023

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 4 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 UP 2.87 OR   0.10%   / Hang Sang  CLOSED UP 139.04POINTS OR .59%     /AUSTRALIA IS HIGHER BY 0.68% / EUROPEAN BOURSES ALL IN THE GREEN

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED UP 315.47 OR 1.91%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 139.04 OR .59%  ,Shanghai CLOSED  UP 2.87 POINTS OR .10%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE GREEN   INDIA’S SENSEX IN THE GREEN 

Gold very early morning trading: $1322.75

silver:$19.47

Early WEDNESDAY morning USA 10 year bond yield: 1.691% !!! UP 1/5 in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield  2.438, UP 1 IN BASIS POINTS  from YESTERDAY night.

USA dollar index early WEDNESDAY morning: 95.92 DOWN 8 CENTS from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

END

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.41% UP 10   in basis point yield from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -.027% UP 4 in   basis point yield from TUESDAY

SPANISH 10 YR BOND YIELD:1.00% UP 2 IN basis point yield from TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.282 UP 3   in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 28 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +0.002% UP 2  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:30 PM

Euro/USA 1.1159 UP .0006 (Euro UP 6 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.67 DOWN: 0.933 (Yen UP 93 basis points/POLICY ERROR ON BANK OF JAPAN

Great Britain/USA 1 .2981 DOWN 0.0001 ( PoOUND DOWN 1 basis points

USA/Canada 1.3196 DOWN 0.0028 (Canadian dollar UP 28 basis points AS OIL ROSE (WTI AT $45.11). Canada keeps rate at 0.5% and does not cut!

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This afternoon, the Euro was UP by 6 basis points to trade at 1.1165

The Yen ROSE to 100.67 for a GAIN of 93 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 : TODAY’S ANNOUNCEMENT A COMPLETE FAILURE

The POUND was FELL 1 basis points, trading at 1.2981/

The Canadian dollar ROSE by 28 basis points to 1.3196, WITH WTI OIL AT:  $45.11

The USA/Yuan closed at 6.6695

the 10 yr Japanese bond yield closed at -.027%  UP 4  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 TUESDAY 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, 95.56 DOWN 44 CENTS  ON THE DAY/4 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for WEDNESDAY: 2:30 PM EST

London:  CLOSED UP 3.98 POINTS OR 0.06%
German Dax :CLOSED UP 42.63 OR  0.41%
Paris Cac  CLOSED UP 20.95 OR 0.48%
Spain IBEX CLOSED UP 72.40 OR 0.83%
Italian MIB: CLOSED DOWN  142.72 POINTS OR 0.88%

The Dow was UP 163.74 points or 0.90%  4 PM EST

NASDAQ  UP 53.83 points or 1.03%  4 PM EST
WTI Oil price; 45.58 at 4:00 pm; 

Brent Oil: 47.10   4:00 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.20(ROUBLE UP  59/100 ROUBLES PER DOLLAR FROM FRIDAY)  2:30 EST

TODAY THE GERMAN YIELD FALLS TO +0.002%  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:$45.62

BRENT: $47.10

USA 10 YR BOND YIELD: 1.655%

USA DOLLAR INDEX: 95.46 DOWN 54 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3034 UP 0.0053 or 53 basis pts.

German 10 yr bond yield at 5 pm: +0.002%

END

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

TRADING IN GRAPH FORM

Stocks Explode Higher After Fed Cuts US Growth Potential To Lowest On Record

 

end

 

FOMC RESULTS

 

And now the USA decision:  rates kept the same

(courtesy Bloomberg)

 

Fed Leaves Rates Unchanged, Signals 2016 Hike Still Likely

A divided Federal Reserve left its policy rate unchanged for a sixth straight meeting, saying it would wait for more evidence of progress toward its goals, while projecting that an increase is still likely by year-end.

“Near-term risks to the economic outlook appear roughly balanced,” the Federal Open Market Committee said in its statement Wednesday after a two-day meeting in Washington. “The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”

The decision extends U.S. central bankers’ run of getting cold feet amid risks from abroad and inconsistent signs of economic strength. Now the focus may shift to December as the Fed’s likely last chance to raise interest rates in 2016 — a move that depends on how the economy, inflation and markets fare in the months surrounding a contentious presidential election.

Three officials, the most since December 2014, dissented in favor of a quarter-point hike. Esther George, president of the Kansas City Fed, voted against the decision for a second straight meeting. She was joined by Cleveland Fed President Loretta Mester — in her first dissent — and Eric Rosengren, head of the Boston Fed, whose previous dissents called for easier policy.

Dot Plot

The central bank’s so-called “dot plot”, which it uses to signal its outlook for the path of interest rates, showed that officials expected one quarter-point rate increase this year. Three policy makers projected that keeping rates unchanged this year would be most appropriate. Officials scaled back expectations for hikes in 2017 and over the longer run.

Policy makers see two rate hikes next year, down from their June median projection of three.

The Fed said that the labor market will “strengthen somewhat further,” adding the qualifier “somewhat further” to similar language from the July statement.

“Although the unemployment rate is little changed in recent months, job gains have been solid, on average,” the Fed said in its statement. “Household spending has been growing strongly but business fixed investment has remained soft.”

The target range for the benchmark federal funds rate remains at 0.25 percent to 0.5 percent, where it’s been since a quarter-point increase in December 2015 that ended seven years of near-zero rates.

The Fed repeated that it “continues to closely monitor inflation indicators and global economic and financial developments.”

Gradual Pace

The FOMC reiterated that borrowing costs will probably rise at an “only gradual” pace. Policy makers also reiterated that they expect inflation to rise to their 2 percent goal over the medium term.

Because November’s FOMC meeting comes within a week of the U.S. presidential election and isn’t followed by a press conference with Chair Janet Yellen, economists have viewed the Fed’s December meeting as a more likely candidate for an increase.

The latest decision could embolden Republican presidential nominee Donald Trump to unleash additional attacks on Yellen. The billionaire businessman said last week that the Fed “is being totally controlled politically” and might stand pat on rates for the rest of year.

Yellen, a former economics professor at the University of California at Berkeley, was appointed Fed chair by President Barack Obama and served as President Bill Clinton’s top economic adviser.

The decision comes as Fed officials become more convinced that the economy is experiencing a new normal.

Long-Term Rate

Policy makers scaled back their median projection of the long-term interest rate to 2.9 percent from 3 percent in June. The estimate shows how high officials think rates can climb, so its downgrade suggests a shallower hiking cycle.

Fed officials also cut their median growth projection for 2016 to 1.8 percent from 2 percent, mirroring the drop in the longer-run forecast, based on median estimates. Inflation is projected at 1.3 percent in the fourth quarter, down from a forecast of 1.4 percent in June. Policy makers again projected that inflation will reach the 2 percent target in 2018.

Most economists in a Bloomberg survey had expected the committee to stay on hold, assigning just a 15 percent chance of a hike this month. Fed watchers saw a 54 percent probability that the Fed will raise rates at its December 13-14 meeting.

Yellen is scheduled to hold a press conference at 2:30 p.m. in Washington. It will be her first public remarks since a speech last month, when she said that the case for an interest-rate increase “has strengthened in recent months.”

Payroll Gains

Nonfarm payrolls have climbed by 182,000 jobs on average so far this year, although the most recent report showed a cooling to 151,000 job gains along with moderating wage increases. Other figures have shown declines in August retail sales and industrial production, as well as drops in sentiment at service companies and manufacturers.

Inflation is still running below the Fed’s 2 percent goal. After picking up earlier in the year, annual gains in the headline personal consumption expenditures price index slowed to

0.8 percent in July. Core inflation, which excludes food and fuel costs, is firmer though still undershooting at 1.6 percent.

Meanwhile, inflation expectations have stayed relatively low. A gauge of market-based expectations watched by the Fed is projecting a pace of price gains of about 1.5 percent in the period five to 10 years out.

The Fed repeated on Wednesday that “market-based measures of inflation compensation remain low.”

 

 

end

 

 

As zero hedge comments, the Fed chickens out again even though 3 Presidents dissented.

(courtesy zerohedge)

 

Fed Chickens Out: 3 Presidents Dissent As Fed “Decides To Wait For Further Evidence” Of Strengthening Before Hiking

With rate hike odds tumbling post-J-Hole thanks to Brainard (but up to 24% today), macro data deteriorating, European banks tumbling, and China money markets turmoiling, expectations were low for a ‘surprise’ rate hike today. And sure enough, they didn’t…

  • *FED: DECIDED TO WAIT ‘FOR THE TIME BEING’ FOR MORE EVIDENCE
  • *FED SAYS GEORGE, MESTER, ROSENGREN DISSENTED IN FAVOR OF HIKE (most dissents sine Sept 2014)

No addition of “Risks are balanced” language and cuts the long-run growth rate for the US economy below 2% for the first time ever.

Pre-Fed: Dec 59.1%, S&P Futs 2134, 10Y 1.695%, Gold $1327

* * *

Some of the notable highlights in the statement, include the Fed’s deletion of the line that

“economic activity has been expanding at a moderate rate”

and is replace with

“economic acticity picked up from the modest pace seen in the first half of this year.”

Fed also removed:

“on balance, payrolls and other labor market indicators point to some increase in labor utilization “

and replaced it with

“unemployment is little changed in recent months., job gains have been solid, on average”

More importantly, the Fed removed the language that “near term economic risks have diminished” and replaced it with “risks appear roughly balanced.”

* * *

But most notable was the addition of the following line in the third paragraph:

 

“The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”

In other words, the Fed has once again had a staring contest with the market… and looked away.

Finally, it is key to note that three Fed officials, the most since December 2014, dissented, and were in favor of a 25 bps rate hike.

*  *  *

Since the last Fed meeting the long bond is worst, gold and stocks are ‘unch’ and oil is up (today)…

The yield curve has steepened since the last Fed meeting but has flattened notably in the last few days…

And macro data has collapsed…

So what will happen?

Additional headlines:

  • FOMC: KEEPS POLICY RATE UNCH AT 0.25%-0.5%, VOTE 7-3
  • FOMC NOW SEES 2016 UNEMP RATE 4.8% VS 4.7% IN JUNE ESTIMATE
  • FOMC NOW SEES 2016 REAL GDP +1.8% VS +2.0% IN JUNE ESTIMATE
  • FOMC SEP MEAN FFR FORECASTS END 2016: 0.654% V 0.831% JUN
  • FOMC SEP MEDIAN FFR FORECASTS END 2016: 0.6% V 0.9% JUN
  • FOMC: 3 FOMC PARTICIPANTS EXPECT NO MORE RATE HIKES IN 2016
  • FOMC:’FOR TIME BEING,’ WAITING FOR FURTHER EVIDENCE ON GOALS
  • FOMC: CASE FOR INCREASE IN FFR ‘HAS STRENGTHENED’
  • FOMC: ‘NEAR-TERM RISKS TO OUTLOOK APPEAR ROUGHLY BALANCED’
  • FOMC: 3 DISSENTS IN FAVOR OF HIKE: GEORGE, MESTER, ROSENGREN

Full redline statement:

Last month, we brought you a story on a raid by FBI officials on the manager of the Dallas Police Pension.  It seems that the manager engaged in fraudulent activity with respect to real estate.  This has left the Dallas Police Pension in peril of going bust as they need at least a 600 million dollar infusion from taxpayers. I guess some of the Dallas Police cannot wait any longer as some have taken early retirement and cashing in their pension.  The pension fund is now on the verge of complete collapse

(courtesy zero hedge)

Dallas Police Pension On Verge Of Collapse As Record Number Of Cops Seek Full Withdrawals

 

The crooks are starting to fall:  SEC charges Leon Cooperman  (Omega Advisors) with insider trading

(courtesy zero hedge)

When it rains – for hedge fund managers, it pours – If it’s not lack of alpha, it’s insider trading. Moments ago, the SEC charged iconic hedge fund manager, Omega Advisors’ Leon Cooperman with insider trading, accusing him of generating substantial illicit profits by purchasing securities in Atlas Pipeline Partners (APL) in advance of the sale of its natural gas processing facility in Elk City, Oklahoma.

The SEC adds that Cooperman “allegedly used his status as one of APL’s largest shareholders to gain access to the executive and obtain confidential details about the sale of this substantial company asset.  Cooperman and Omega Advisors allegedly accumulated APL securities despite explicitly agreeing not to use the material nonpublic information for trading purposes, and when APL publicly announced the asset sale its stock price jumped more than 31 percent.”

According to the SEC’s complaint, when Omega Advisors received a subpoena nearly a year-and-half later about its trading in APL securities, Cooperman contacted the executive and tried to fabricate a story to tell if questioned about this trading activity.  The executive was shocked and angered when he learned that Cooperman traded in advance of the public announcement.

The SEC’s complaint further charges Cooperman with failing to timely report information about holdings and transactions in securities of publicly-traded companies that he beneficially owned, alleging that he violated federal securities laws more than 40 times in this regard.

Looks like Leon won’t be making an Ira Sohn or CNBC appearance conferences in the near future.

* * *

From the SEC’s press release:

The Securities and Exchange Commission today charged hedge fund manager Leon G. Cooperman and his firm Omega Advisors with insider trading based on material nonpublic information he learned in confidence from a corporate executive.

The SEC alleges that Cooperman generated substantial illicit profits by purchasing securities in Atlas Pipeline Partners (APL) in advance of the sale of its natural gas processing facility in Elk City, Oklahoma.  Cooperman allegedly used his status as one of APL’s largest shareholders to gain access to the executive and obtain confidential details about the sale of this substantial company asset. Cooperman and Omega Advisors allegedly accumulated APL securities despite explicitly agreeing not to use the material nonpublic information for trading purposes, and when APL publicly announced the asset sale its stock price jumped more than 31 percent. 

According to the SEC’s complaint, when Omega Advisors received a subpoena nearly a year-and-half later about its trading in APL securities, Cooperman contacted the executive and tried to fabricate a story to tell if questioned about this trading activity.  The executive was shocked and angered when he learned that Cooperman traded in advance of the public announcement.

“We allege that hedge fund manager Cooperman, who as a large APL shareholder obtained access to confidential corporate information, abused that access by trading on this information,”said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.  “By doing so, he allegedly undermined the public confidence in the securities markets and took advantage of other investors who did not have this information.”

The SEC’s complaint further charges Cooperman with failing to timely report information about holdings and transactions in securities of publicly-traded companies that he beneficially owned, alleging that he violated federal securities laws more than 40 times in this regard.

The SEC’s complaint was filed in federal district court in Philadelphia and seeks disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions against Cooperman and Omega Advisors as well as an officer-and-director bar against Cooperman.

* * *

Here is the chronology of events laid out by the SEC:

APL Negotiated the Sale of its Elk City Operating Facilities

By mid-2010, APL had been experiencing financial difficulties. Though its stated principle objective was to “generate cash for distribution” to its shareholders, APL had not declared a cash dividend for the fiscal quarters ending June 30, 2009 through June 30, 2010.

By May 2010, APL had announced to the market that it intended to improve its balance sheet in order to reinstitute a distribution to APL shareholders.

On May 18, 2010, Enbridge Energy Partners, L.P. (“Enbridge”) made a confidential, nonbinding offer to purchase APL’ s Elk City operating facilities for $720 million. Elk City was a significant APL asset, which included 800 miles ofnatural gas gathering pipeline, a hydrogen sulfide treating plant, and three cryogenic processing plants, with a total capacity of approximately 370 million cubic feet ofnatural gas per day and a combined natural gas liquid production of20,000 barrels per day.

Subsequently, APL retained financial and legal advisors, and the parties conducted due diligence and negotiated the terms ofa possible agreement. From May through July 2010, Enbridge and APL conducted these negotiations pursuant to a confidentiality agreement. Dwing this time period, APL’ s executives evaluated the financial impact ofselling Elk City at various prices from $550 million to $720 million.

APL advised personnel working on the Elk City sale that information regarding the potential sale was material nonpublic information and that trading on the information would violate APL’s insider trading policy. By July 7, 2010, APL had taken additional steps to ensure secrecy ofthe Elk City negotiation, including using code names and entering into confidentiality agreements with potential counterparties.

APL’ s board ofdirectors discussed the potential Elk City transaction during a nonpublic meeting on June 18, 2010. By the morning ofJuly 7, 2010, APL’s board ofdirectors planned to consider the sale ofElk City at the board’s July 27, 2010 meeting.

On July 19, 2010, APL agreed to sell Elk City to Enbridge for approximately $680 million, subject to approval by the companies’ respective boards ofdirectors and the finalization ofdeal documentation. On July 27, 2010, the respective boards ofdirectors ofAPL and Enbridge approved the Elk City sale.

The next morning, on July 28, 2010, APL publicly announced that it had entered into an agreement to sell Elk City for $682 million in cash. APL stated that the asset sale would enable the company to: (a) eliminate virtually all ofits senior secured debt and significantly deleverage its balance sheet; (b) allow APL to reinstate distributions to shareholders; and ( c) allow APL to participate in its Marcellus Shale gathering venture. That day, APL’s share price increased by $3.87 or approximately 31.3%, closing at $16.22 per share. The price ofAPL’s bonds and other APL-related securities also increased significantly as a result ofAPL’ s public announcement ofthe Elk City sale.

Cooperman Was One of APL’s Largest Shareholders and Had Great Influence and Access at APL

By July 2010, Cooperman had been a hedge fund manager for a number of years. One strategy Cooperman employed was to accumulate large positions in publicly-traded companies and develop close relationships with those companies’ senior executives.

Cooperman employed this strategy with APL. According to a statement he filed with the Commission, as ofDecember 31, 2009, Cooperman was the beneficial owner ofover nine percent ofAPL’s common stock, worth approximately $46 million. By mid-2010, Cooperman had developed close relationships with APL’s senior executives.

As a result ofhis APL ownership and status, Cooperman had a level ofaccess to APL’s executives that was not available to APL’s smaller shareholders. Through this access, Cooperman had numerous telephone conversations and meetings with APL executives.

During the first half of 2010, Cooperman reduced his stake in APL, by, among other things, directing accounts he controlled to sell APL stock worth millions ofdollars. Indeed, until July 7, 2010, there was no day in 2010 on which the Cooperman Offshore Account, Hedge Fund Accounts, Managed Accounts and Family Accounts collectively were net buyers of APL common stock, call options or bonds. In an April 30, 2010 email, Cooperman stated that he was “scaling out of APL on strength.” The Cooperman Offshore Account, Hedge Fund Accounts, Managed Accounts and Family Accounts did not t.rade APL stock, options or bonds in the six weeks prior to July 7, 2010.

On July 7, 2010, Cooperman expressed to Omega Consultant that APL was a “shitty business.”

* * *

In July 2010, Cooperman Misappropriated Information about the Elk City Sale from APL Executive 1

Cooperman spoke with APL Executive 1 on the telephone on July 7, 19 and 20, 2010. During these telephone conversations, APL Executive 1 informed Cooperman that APL was negotiating the sale ofElk City and Cooperman asked APL Executive 1 questions about the Elk City sale. In at least one ofthese conversations, APL Executive 1 told Cooperman that APL was selling its Elk City facility for approximately $650 million.

Despite knowing that information about the Elk City sale was material nonpublic information, APL Executive 1 told Cooperman about the Elk City sale because he believed Cooperman had an obligation not to use this information to trade APL securities. Indeed, during one ofthese conversations in which APL Executive 1 told Cooperman confidential information about the Elk City sale, Cooperman explicitly agreed that he could not and would not use the confidential information APL Executive 1 told him to trade APL securities. Cooperman, however, did not abide by his agreement to maintain in confidence, and not trade on the basis of, the Elk City sale information.

On July 7, 2010, Cooperman spoke to APL Executive 1 at approximately 2:06 p.m. EDT for about six minutes.Despite taking a bearish position on APL throughout the first half of 2010 and calling APL a “shitty business” earlier that day, after speaking to APL executive 1, Cooperman began buying APL securities.

On July 7, 2010, at Cooperman’s and Omega’s direction, the Cooperman Offshore Account, Hedge Fund Accounts and Managed Accounts purchased a total of 1,966 APL call options with a strike price of $15.00, expiring August 21, 2010. The call options purchases accounted for over 90% ofthe day’s trading volume in that option series. On July 7, 2010, APL’s stock price closed at $9.66, and the call options the Cooperman Offshore Account, Hedge Fund Accounts and Managed Accounts purchased were significantly out-of-the-money.

At Cooperman’s and Omega’s direction, the Cooperman Offshore Account, Hedge Fund Accounts and Managed Accounts continued to purchase APL securities between July 8, 2010 and July 19, 2010. The chart below reflects these purchases:

On July 19, 2010, at approximately 3:19 p.m. EDT, Cooperman spoke on the telephone with APL Executive 1, while APL Executive 1 was located in the Eastern District of Pennsylvania. By the time ofthis telephone conversation, APL had reached an agreement in principle to sell Elk City. APL senior executives, including APL Executive 1, were preparing for a July 27, 2010 meeting ofAPL’s board ofdirectors to discuss the Elk City sale.

On July 19, 2010, after his call with APL Executive 1, Cooperman created an entry on his electronic calendar for July 27, 2010 at 10:30 a.m. with the subject line “APL Board Meeting.”

On July 20, 2010, at approximately 9:43 a.m. EDT, Cooperman spoke on the telephone with APL Executive 1 for about seven minutes, while APL Executive 1 was located in the Eastern District ofPennsylvania.

Almost as soon as his call with APL Executive 1 concluded, at approximately 9:50 a.m. EDT, Cooperman called Omega Consultant on the telephone. During the telephone conversation, Cooperman told Omega Consultant that Cooperman had learned from someone at APL that APL had reached a deal to sell Elk City for $650 million. Cooperman and Omega Consultant discussed how APL’s stock price would react to public disclosure ofthe Elk City sale. Omega Consultant told Cooperman that the announcement that APL was going to sell Elk City for $650 million would cause APL’s stock price to increase significantly.

On July 20, 2010, Cooperman and Omega directed the purchase ofmore APL securities, as follows:

a. The Cooperman Offshore Account, Hedge Fund Accounts and Managed Accounts purchased a total of3,800 out-of-the-money APL call options with a strike price of$15.00, expiring November 20, 2010. This activity constituted over 95% ofthe daily volume oftrading in that option series;
b. In an account Cooperman managed on behalf ofa minor family member, Cooperman purchased $50,000 ofAPL’s 8.75% bonds due June 15, 2018 at an average price of$92.75 per unit; and
c. The Cooperman Offshore Account purchased 61, 700 APL shares at an average price of $10.3056.

On July 21, 2010, based on the material nonpublic information Cooperman told Omega Consultant, Omega Consultant incorporated a $650 million asset sale into Omega Consultant’s model of APL’s financials, which Omega Consultant saved on Omega’s computer systems. Omega Consultant’s revised model indicated that APL’s Elk City sale would significantly enhance APL’s credit standing and the company’s ability to reinstitute cash distributions on an earlier-than-expected schedule and in larger-than-expected amounts.

At Cooperman’ s and Omega’s direction, the Cooperman Offshore Account, Family Accounts, Hedge Fund Accounts and Managed Accounts continued to purchase APL securities between July 21, 2010 and July 27, 2010. The chart below reflects these purchases:

The July 21, 2010 purchase of3,021 APL call options with a strike price of $17.50, expiring August 21, 2010, made up the entire daily volume of trading in that option series. The July 22, 2010 purchase of 1,250 APL call options with a strike price of$17.50, expiring November 20, 2010, made up the entire daily volume of trading in that option series. The July 27, 2010 purchase of 500 APL call options with a strike price of$17 .50, expiring November 20, 2010, made up the entire daily volume of trading in that option series.

On July 22, 2010, at approximately 9:40 a.m. EDT, Cooperman called APL Executive 2’s Philadelphia, Pennsylvania office telephone line. Cooperman asked APL Executive 2 about the progress ofthe Elk City sale. APL Executive 2 was surprised that Cooperman knew about the Elk City sale given that APL had taken substantial steps to keep the transaction confidential.

On July 27, 2010, at approximately 7:52 p.m. EDT, Cooperman spoke on the telephone with APL Executive 1, who told Cooperman that APL’ s board had approved the Elk City sale.

On July 27, 2010, at approximately 8:36 p.m. EDT, Cooperman sent an email to a family member, who also was a hedge fund manager, stating:

Good news on APL … [t]hey sold their ELK City operation for $682mm which will enable them to pay off bank debt, de-risk company because keep whole contracts largely gone and fund their Laurel Mountain obligations. We think stock worth at least $15 in near term—for what that is worth. Cooperman’s family member forwarded this email to a colleague who replied, in part: “That explains the fishy $17 August calls, etc. I still haven’t come across any press release -want to see how it’s discussed ….” Cooperman’s family member responded: “Somebody should investigate that.”

On July 27, 2010 at approximately 9:20 p.m. EDT, Cooperman emailed two Omega traders, stating: “APL has done a major deal and I’m told there will be a call at 10:30am. Please get me dial in info.”

Then at 9:44 p.m. EDT on July 27, 2010, Cooperman sent an email to an Omega trader, stating: “When you get in please check how much APL we could buy to get to 9.9% … Depending on trading level we might add.” Federal securities laws generally require a person to disclose within ten days that he has become the beneficial owner of greater than ten percent of a class ofequity securities, like APL stock.

On July 28, 2010, at approximately 6:59 a.m. EDT, APL publicly announced for the first time that it was selling Elk City for $682 million. As a result, on that day, APL’ s stock price increased approximately 31 % and other APL-related securities greatly increased in value.

After this announcement, Cooperman emailed a family member stating that: “[minor family member] will be pleased to know that the bond I bought [for minor family member] the other day has risen 7% in price as the company just sold some assets that resulted in an improvement oftheir credit standing.”

The Cooperman Offshore Account, Hedge Fund Accounts, Managed Accounts and Family Accounts generated profits ofapproximately $4.09 million by trading APL securities at Cooperman’s direction between July 7, 2010 and July 27, 2010.

As a result ofCooperman’s and Omega’s unlawful conduct, at Cooperman’s direction, the Cooperman Offshore Account, Hedge Fund Accounts, Managed Accounts and Family Accounts made significant ill-gotten gains by trading on the basis ofmaterial nonpublic information about APL’ s Elk City sale.

Cooperman Concealed and Then Attempted To Cover-Up His Insider Trading

Cooperman carefully guarded the information he misappropriated from APL Executive 1, communicating it to Omega Consultant, but not sharing it with his family member, who was also a hedge fund manager and at times an APL investor. Indeed, on July 28, 2010, after APL announced the Elk City sale, Cooperman’ s hedge fund manager family member emailed APL Executive 3 twice, complaining about APL options activity prior to the public announcement ofthe Elk City sale, stating:

Can you please call me[?] Been trying to get you last few days[.] [T]here had been some fishy options trades in apl [sic] before this that somebody should investigate.

***

I also would like to make sure that the sec [sic] looks into the shady option trades and volume in apl [sic] last 2 weeks or so in front ofthis deal[.] How do I become a whistle blower[?]

APL Executive 1 was shocked and angered when he learned that Cooperman and/or accounts that Cooperman managed traded in APL securities in advance ofthe public announcement ofthe Elk City sale.

In late 2011 or early 2012, Cooperman spoke on the telephone with APL Executive 1. During this call, Cooperman informed APL Executive 1 that the Commission had sent Omega a subpoena relating to trading in APL securities in advance ofthe announcement of the Elk City sale. Cooperman improperly sought APL Executive 1 ‘s assurance that APL Executive 1 had not shared confidential information with him in advance ofthe announcement of the Elk City sale, despite knowing this was not true. APL Executive 1 believed that Cooperman was attempting to fabricate a story in case the two were questioned about their conversations regarding Elk City.

In late 2011, Cooperman also informed APL Executive 3 that the Commission had sent Omega a subpoena relating to APL trading in advance ofthe announcement ofthe Elk City sale. Cooperman told APL Executive 3 to tell APL Executive 1 that Cooperman and APL Executive 1 had not discussed confidential information related to the Elk City sale prior to the time APL publicly announced it.

In connection with an investigation concerning Cooperman’s and Omega’s conduct, including the trading in APL securities referenced above, the Commission issued a subpoena for Cooperman’s testimony.  Cooperman invoked his Fifth Amendment privilege against self-incrimination in response to Commission questions regarding Cooperman’s and Omega’s trading in APL securities.

* * *

For those wondering, here are Omega’s Top 30 stock holdings as of June 30:

Full filing below (pdf):

end

FBI Release Photos Of 2 More “Unknown Individuals” Related To NY Bombing

The FBI is asking for the public’s assistance in locating these two unknown individuals.

Closed circuit television recordings indicate that these individuals allegedly located a piece of luggage on the sidewalk, removed an improvised explosive device from the luggage, and then left the vicinity leaving the device behind but taking the luggage.

The image shown above was taken on West 27th Street between 6th and 7th Avenues in Manhattan between 8 p.m. and 9 p.m., on Saturday, September 17, 2016, in the same hour that an explosive device had detonated on West 23rd Street.

The FBI is interested in speaking to these individuals and recovering the luggage.

 

END

Long day today

Well that is all for today

I will see you tomorrow

H

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