Oct 13/Gold rises $3.00 but silver falls 5 cents/China devalues hugely last night to over 6.723 YUAN/DOLLAR/Chinese exports sink/Well over 25 tonnes of gold standing in October (comex)/Another 2.7 tonnes of gold added to GLD/Savings rate in Europe RISES DESPITE NIRP /Copper crashes today/

Gold $1255.00 up  $3.10

Silver 17.41 DOWN 5 cent

In the access market 5:15 pm

 

Gold: 1258.00

Silver: 17.50

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 OCT 13 (10:15 pm est last night): $  1263.42

NY ACCESS PRICE: $1259.90 (AT THE EXACT SAME TIME)

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1264.98

NY ACCESS PRICE: 1260.64 (AT THE EXACT SAME TIME)

HUGE SPREAD TODAY!!

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: OCT 13: 5:30 am est:  $1258.00   (NY: same time:  $1258.40:    5:30AM)

London Second fix OCT 13: 10 am est:  $1261.60  (NY same time: $1261.10 ,    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

For comex gold: 

41  NOTICES FILED FOR 4100 OZ

For silver:

for the Oct contract month:  0 notices for NIL oz.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by 1509 contracts DOWN to 185,960. 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. .929 BILLION TO BE EXACT or 133% of annual global silver production (ex Russia &ex China).

In silver for October we had 0 notices served upon for nil oz

In gold, the total comex gold fell by 4,871 contracts with the FALL in price of gold( $3.90 yesterday) . The total gold OI stands at 495,457 contracts. The bankers have done a great job fleecing longs

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

TODAY WE HAD ANOTHER HUGE ADDITION TO THE GLD: A DEPOSIT OF 2.67 TONNES OF GOLD

Total gold inventory rests tonight at: 961.57 tonnes of gold

SLV

we had NO CHANGES at the SLV

THE SLV Inventory rests at: 361.147 million oz

.

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

1. Today, we had the open interest in silver FELL by 1,509 contracts DOWN to 185,960 as the price of silver FELL by 1 cent with yesterday’s trading.The gold open interest FELL by 4871 contracts DOWN to 495,457 as the price of gold FELL $3.90 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

2c) Federal Reserve Bank of New York/earmarked gold removal

(Harvey)

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 2.84 POINTS OR 0.09%/ /Hang Sang closed DOWN 375.75 POINTS OR 1.61%. The Nikkei closed DOWN  65.76 POINTS OR 0.39% Australia’s all ordinaires  CLOSED DOWN 0.71% /Chinese yuan (ONSHORE) closed DOWN at 6.7275/Oil ROSE to 50.30 dollars per barrel for WTI and 51.99 for Brent. Stocks in Europe: ALL IN THE RED   Offshore yuan trades  6.7362 yuan to the dollar vs 6.7275 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS QUITE BIT  AS MORE USA DOLLARS   LEAVE CHINA’S SHORES

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

The much beloved King of Thailand has died.  Prior to his death the Thai bhat currency and their stock market were plummeting.  The king was the stable force behind Thailand. It sure looks like their central bank intervened today trying to cool things:

( zero hedge)

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

i)Chinese exports sink which causes the USA/Jpy cross to plunge! The yuan also plunged to 6.73 to the dollar.

( zero hedge)

ii)We have a new bubble in China: car sales !

( zero hedge)

4 EUROPEAN AFFAIRS

i)DEUTSCHE BANK/GERMANY

As I have mentioned to you in the past, Deutsche bank has an income problem coupled with a solvency issue and not a liquidity problem.  To prove this, they have implemented a hiring freeze:  the stock slides again.

( zero hedge)

ii)ENGLAND/EU

Just look at what the EU is seeking for a BREXIT divorce: 20 billion euros. England needs access to the EU but the EU needs England more with respect to their financial hub

( Mike Shedlock/Mishtalk)

iii)EU/

What a complete failure.  One would have thought that savings rate would decline as consumers would spend more.  Wrong! they are saving more because they are fearful of a global catastrophe.

(courtesy zero hedge)

 

iv DEUTSCHE BANK

Deutsche bank’s stock continues to slide accompanied by higher credit default swaps and yet BB states that there is nothing to see here..sure thing!@

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)The USA is joining Saudi Arabia directly with cruise missile strikes inside Yemen. This is not going to end well!

( zero hedge)

ii)This is also not going to end well:  British pilots have been ordered to shoot down hostile (Russian jets) over Syria:

( zero hedge)

iii)Having already intervened in Yemen, this Friday, Obama will decide on what military action he will do in Syria:

( zero hedge)

6.GLOBAL ISSUES

How the Philippines has just snubbed the USA as they face eastward towards China for alliances.  One by one, nations are abandoning the uSA.

( James Holbrooks/antiMedia.org)

7.OIL ISSUES

WTI plunges below $50 on another huge inventory build

( zero hedge)

8.EMERGING MARKETS

none today

9.PHYSICAL STORIES

i)Even mainstream is getting the idea that we have gold intervention by governments and bankers

( John Embry/Kingworldnews)

ii)All indicators suggest that inflation will rise. Gold will be the ultimate winner here

( Phoenix Research Capital/Graham Summers)

iii)A good indicator defining global growth (copper crashing): non existent

( zero hedge)

 

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

i)USA layoffs in Sept jump by 38%

( CNBC)

ii)Wells Fargo CEO retires immediately as the heat of the situation got to him

( zero hedge)

iii)This should give you an idea of how pension shortfalls can destroy towns or cities:

( zero hedge)

iv)The very popular hedge fund, Bridgewater, was evacuated yesterday after receiving a bomb threat

( zero hedge)

v)Import prices have now dropped for 26 straight months as both the uK and China are supplying the deflation.

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY 4871 CONTRACTS to an OI level of 495,457 as the price of gold FELL by  $3.90 with YESTERDAY’S trading.

We are in the delivery month is October and here the OI GAINED 40 contracts UP to 192. We had 3 notices filed yesterday so we gained another 43 contracts or 4300 additional oz will stand.

The next delivery month is November and here the OI FELL by 74 contracts DOWN to 2952 contracts. This level is extremely elevated as generally November is a very poor delivery month.The next contract month and the biggest of the year is December and here this month showed an decrease of 7,295 contracts down to 372,654.

Today we had  41 notices filed for 4100 oz of gold.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI FELL BY 1,509 contracts from  187,469 down to 185,960 as the  price of silver rose  to the tune of 1 cent yesterday.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3:  (224,540).  The next non active delivery month is October and here the OI rose by 2 contracts up to 116. We had 0 notices filed yesterday so we gained 2 contracts or 10,000 additional oz will stand for delivery.The November contract month saw its OI remain constant at 341.   The next major delivery month is December and here it FELL BY 2491 contracts DOWN to 150,857

VOLUMES:

Today the estimated volume was 152,214 contracts which is fair.

Yesterday, the confirmed volume was 155,069 which is also fair.

 

today we had 41 notices filed for GOLD:

INITIAL standings for OCTOBER
 Oct 13.
Gold
Ounces
Withdrawals from Dealers Inventory in oz  NIL
Withdrawals from Customer Inventory in oz  nil
2m089.75
Scotia
Manfra
65 kilobars
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 32,921.620 oz
incl 1000 kilobars
Brinks
Scotia
No of oz served (contracts) today
41 notices 
4100 oz
No of oz to be served (notices)
151 contracts
 15,100
oz
Total monthly oz gold served (contracts) so far this month
7989 contracts
798,900 oz
24.849 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month    oz
Total accumulative withdrawal of gold from the Customer inventory this month    131,768.6 oz
Today we had 3 kilobar transactions 
Today we had 0 deposit into the dealer:
total dealer deposits:  nil oz
We had zero dealer withdrawals:
total dealer withdrawals:  nil oz
.
We had 2 customer deposits;
i) into  Brinks:  771.62 oz  (real)
ii) into+Scotia: 32,150.0000 oz  (1000 kilobars)  suspect!
total customer deposits; 32,921.620 oz
We had 2 customer withdrawals (also suspect)
Out of Scotia:  1,929.000 oz (60 kilobars)
out of Manfr: 160.75  5 kilobars
total customer withdrawal:  2089.75  oz
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventor 2,447,936.0 or 76.14 tonnes
Total gold inventory (dealer and customer) =10,648,362.400. or 331.249 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 331.229 tonnes for a  gain of 28  tonnes over that period.  Since August 8 we have lost 23 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best.
For October:

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 41 contract  of which 0 notices were stopped (received) by jPMorgan dealer and  31 notice(s) was (were) stopped received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the Oct contract month, we take the total number of notices filed so far for the month (7989) x 100 oz or 798,900 oz, to which we add the difference between the open interest for the front month of OCT (192 contracts) minus the number of notices served upon today (41) x 100 oz per contract equals 814,000 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 (7989) x 100 oz  or ounces + {OI for the front month (192) minus the number of  notices served upon today (41) x 100 oz which equals 814,000 oz standing in this non active delivery month of Oct  (25.318 tonnes).
we gained 4300 additional oz standing in this active delivery month of October.
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.ALSO TODAY THE LIQUIDATION OF 96 CONTRACTS HAVING STOOD FOR THE ENTIRE MONTH AND THEN ROLLING MAKES ABSOLUTELY NO SENSE
 
IN THE LAST MONTH and one half , 23 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
 
OCT INITIAL standings
 Oct 13. 2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
1,113,591.69 oz
Brinks
Scotia
Deposits to the Dealer Inventory
nil OZ
Deposits to the Customer Inventory 
2,009,412.700  oz
JPM
No of oz served today (contracts)
0 CONTRACTS
(20,000 OZ)
No of oz to be served (notices)
116 contracts
(580,000 oz)
Total monthly oz silver served (contracts) 353 contracts (1,765,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  3,100,010.5 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;; 513,021.890 oz
ii) Out Scotia: 600,569.800 oz
Total customer withdrawals: 1,113,591.69  oz
We had 1 customer deposits:
i) Into JPMorgan;  2,009,412.700 oz
total customer deposits: 2,009,412.700 oz
 
 
 
 we had 0 adjustments 
Volumes:
Today the estimated volume was 53,243 which is very good.
Yesterday the confirmed volume was 50,765 which is very good
The total number of notices filed today for the Oct contract month is represented by 0 contracts for NIL oz. To calculate the number of silver ounces that will stand for delivery in OCT., we take the total number of notices filed for the month so far at  353 x 5,000 oz  = 1,765,000 oz to which we add the difference between the open interest for the front month of OCT (114) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the OCT contract month:  353(notices served so far)x 5000 oz +(116 OI for front month of SEPT ) -number of notices served upon today (0)x 5000 oz  equals  2,345,000 oz  of silver standing for the OCT contract month. THIS IS STILL A HUGE SHOWING FOR SILVER AS OCTOBER IS GENERALLY A VERY WEAK DELIVERY MONTH.
We gained 10,000 additional silver ounces THAT WILL  STAND.
 
Total dealer silver:  29.286 million (close to record low inventory  
Total number of dealer and customer silver:   172.745 million oz
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
OCT 13/a deposit of 2.67 tonnes of gold into the GLD/inventory rests  at 961.57 tonnes
Oct 12/No changes in inventory/inventory rests at 958.90 tonnes
Oct 11/ what!!! we had a gigantic 9.76 tonnes of inventory increase today/inventory rests at 958.90 tonnes.  (this was done with gold down?)
Oct 7:  949.14 tonnes
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Oct 13/ Inventory rests tonight at 961.57 tonnes

end

Now the SLV Inventory
OCT 13/ NO CHANGES  in inventory at the SLV/Inventory rests at 161.147 million oz
Oct 12:NO CHANGES  in inventory at the SLV/Inventory rests at 161.147 million oz
Oct 11/ a withdrawal of 1.762 million oz of inventory from the SLV/Inventory rests at 361.147 million oz/
.
Oct 13.2016: Inventory 361.570 million oz
 end

NPV for Sprott and Central Fund of Canada

will not provide today.

1. Central Fund of Canada: traded at Negative 3.9 percent to NAV usa funds and Negative 4.0% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.6%
Percentage of fund in silver:38.2%
cash .+1.2%( Oct 13/2016).
2. Sprott silver fund (PSLV): Premium FALLS to +1.11%!!!! NAV (OCT 13/2016) 
3. Sprott gold fund (PHYS): premium to NAV  rises TO  0.86% to NAV  ( OCT 13/2016)
Note: Sprott silver trust back  into POSITIVE territory at 1.11% /Sprott physical gold trust is back into positive territory at 0.86%/Central fund of Canada’s is still in jail.
 
 
 

end

 

 

FEDERAL RESERVE BANK OF NEW YORK/GOLD INVENTORY MOVEMENT:

Last month we had a reading of 7883 million dollars worth of gold at the FRBNY at $42.22 dollars per oz. This month we had a reading of 7849 million dollars

Thus we had 34 million dollars worth of gold valued at $42.22 shipped out.

In oz:

34,000,000 divided by $42.22 =   805,305 oz

in tonnage:25.048 tonnes

Since Germany is the only official nation seeking its gold, no doubt that this gold was repatriated towards Frankfurt.

 

end

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

Trading in gold and silver overnight in Asia and Europe

Sell Gold Now – Time To Liquidate Gold ETF, Pooled and Digital Gold

Sell Gold Now – A Note from GoldCore CEO Stephen Flood

It has never been more important to own gold as part of a diversified portfolio. The form your gold investment takes is just as important as owning it in the first place. ETFs and pooled gold may not be functional in extreme markets and may themselves be subject to systemic risk events.

Fifty gram gold bars sit across a one kilo gold bar at bullion dealers Goldcore, in London, U.K., on Thursday, March 11, 2010. Gold priced in euros reached a record on March 5 as investors, concerned that a Greek debt default may devalue the currency, purchased the metal as an alternative asset. Photographer: Chris Ratcliffe/Bloomberg

We are living in extraordinary times and key to any investment plan that can weather the coming global financial storm is access to all important – liquidity.

Traditional market liquidity is drying up. Increasingly dark pools are hoovering up equity and FX volumes. Markets are becoming disjointed and prone to large wild swings. Central banks are entering the market on political mandates as opposed to a search for yield, algorithmic investors are untested in bear markets and likely unprepared. The table is set for significant disruption and systemic damage. Your gold investment may not be accessible nor liquid in times extremis.

When you buy gold as a systemic hedge you do so hoping that it will never be needed. You may even hope it falls in value, because if it is falling all your other productive assets are hopefully appreciating. This is the key, gold is valuable as a systemic hedge, if the system is working then gold should fall in value. If gold is rising then the system is not healthy and you need to take stock, literally.

At GoldCore we have long advocated a 5 – 10% allocation of gold into your portfolio. Today given the increasing risks, we believe there is a justification for allocating as much as 20% to 25% of a portfolio to physical gold. Your gold should be held in allocated, segregated and most importantly physical form, with serial numbers, in a non bank vault, in a safe jurisdiction.

Gold owners should be able to take physical delivery of their gold whenever they wish, without entering into a transaction to sell. We believe that gold should have as little legal separation from our clients as possible and that is how we have designedGoldCore Secure Storage – with clients having maximum and outright legal ownership of actual, individual bullion coins and bars.

Beware of e-gold masquerading as allocated gold

Buying gold through an electronic platform can be very convenient and very fast. You can buy significant sums and pay low spreads and low fees, your storage costs for such investments can be extremely cheap too.

These electronic platforms spend a lot of money advertising, and some even claim to give you allocated gold. We do not consider a part ownership of a large 400 oz bar of gold as being allocated. You are in fact a pooled gold investor and one who has no idea of what particular part of a gold bar you own. You can not, unlike GoldCore Secure Storage, drive to a vault in Zurich, Singapore, Hong Kong, Dubai or London and take delivery of your gold, without entering into a sale transaction.

In addition many such platforms force you to only buy and sell through their market board and their online platform and website. Digital gold platforms are “closed loop systems” where liquidity and pricing are dependent on a single platform, website and company. A buyer can only buy and sell through that one online platform. An investor is in effect “captive”. This is very different to owning individual Canadian Maple Leaf gold bullion coins or gold kilo bars and the huge level of liquidity and pricing one has when one owns coins and bars in a segregated and allocated manner.

Yes you may be able to sell your gold in the future but at what cost? Yes you may be able to take delivery in the future, but at what cost? The fact is that if you can’t hold it you may not truly own it.

Caveat Emptor

Stephen Flood, CEO of GoldCore Limited
Email: stephen.flood@goldcore.com
US +1 (302)635 1160
UK +44 (0)203 086 9200
IRL  +353 1 632 5010

Open an account with GoldCore today

Gold and Silver Bullion – News and Commentary

Increasingly shambolic U.S. election could support gold said GoldCore (MarketWatch)

Greenspan: Worried about 1970s Style ‘Stagflation’ (CNBC)

Gold prices up in early Asia despite rising chances of Fed hike (Investing)

Wells Fargo CEO Stumpf Quits in Fallout From Fake Accounts (Bloomberg)

Fed Says Several FOMC Members Saw Rate Rise ‘Relatively Soon’ (Bloomberg)

The Demise Of The EU (ZeroHedge)

Doug Casey on “Quitaly” and the Collapse of the EU (CaseyResearch)

Major Silver Bottom Reached; Dramatically Higher Levels Ahead (Investing)

WikiLeaks Bombshell: Emails Show Citigroup Had Major Role in Shaping and Staffing Obama’s First Term (WallStreetOnParade)

If Europe insists on a hard Brexit, so be it (Telegraph)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

13 Oct: USD 1,258.00, GBP 1,029.93 & EUR 1,141.76 per ounce
12 Oct: USD 1,255.70, GBP 1,024.53 & EUR 1,139.05 per ounce
11 Oct: USD 1,256.40, GBP 1,021.58 & EUR 1,130.76 per ounce
10 Oct: USD 1,262.10, GBP 1,016.62 & EUR 1,129.71 per ounce
07 Oct: USD 1,255.00, GBP 1,012.91 & EUR 1,127.62 per ounce
06 Oct: USD 1,265.50, GBP 994.30 & EUR 1,131.23 per ounce
05 Oct: USD 1,274.00, GBP 1,001.11 & EUR 1,134.37 per ounce

Silver Prices (LBMA)

13 Oct: USD 17.59, GBP 14.40 & EUR 15.95 per ounce
12 Oct: USD 17.44, GBP 14.23 & EUR 15.83 per ounce
11 Oct: USD 17.48, GBP 14.26 & EUR 15.78 per ounce
10 Oct: USD 17.78, GBP 14.31 & EUR 15.92 per ounce
07 Oct: USD 17.33, GBP 14.01 & EUR 15.55 per ounce
06 Oct: USD 17.76, GBP 13.98 & EUR 15.88 per ounce
05 Oct: USD 17.80, GBP 13.99 & EUR 15.86 per ounce


Recent Market Updates

– Gold In GBP Up 43% YTD – “Massive Twin Deficits” To Impact UK Assets
– Ron Paul Says “Gold Going Up” Whether Trump Or Clinton Elected
– Gold Trading COT Report “Means Lower – Then Much Higher – Prices Coming”
– Currency Shock Sees Sterling Gold Surges 5% In One Minute “Flash Crash”
– Top Gold Forecaster: “As Quickly As Gold Fell” May “Rally Back” on Global Risks
– Gold Buying ‘Opportunity’ After Surprise 3.4% Drop
– Deutsche Bank “Is Probably Insolvent”
– GBP Gold Rises 1.3% as Sterling Slumps On ‘Hard Brexit’ Concerns, Up 36% YTD
– Why Krugman, Roubini, Rogoff And Buffett Hate Gold
– ECB Refused “To Answer Questions” – Deutsche Bank “Systemic Threat” Is “Not ECB Fault”
– Euro “Might Start To Unravel” If Collapse Of Deutsche Bank
– Do You Really Own Your Gold?
– “Gold Will Likely Soar To A Record Within Five Years”

Stephen Flood
Chief Executive Officer

I am the CEO of GoldCore. We help investors buy and store gold and silver easily and cost effectively. We work with clients of every variety from wealth family offices to everyday people. We provide the very best market data and client service and we care deeply for our clients interests.

 

 

END

 

Even mainstream is getting the idea that we have gold intervention by governments and bankers

(courtesy John Embry/Kingworldnews)

It’s getting harder to deny intervention against gold, Embry tells KWN

Section:

5:03p ET Wednesday, October 12, 2016

Dear Friend of GATA and Gold:

It’s becoming difficult if not impossible for a rational observer to deny government intervention against gold and silver in the monetary metals markets, Sprott Asset Management’s John Embry tells King World News today. An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/john-embry-the-imfs-warning-desperate-bullion-b…

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

 

 

END

 

All indicators suggest that inflation will rise. Gold will be the ultimate winner here

(courtesy Phoenix Research Capital/Graham Summers)

What Happens to Gold When the Markets Figure Out the Fed Screwed Up?

The Fed is now in very serious trouble.

All but one of the inflation metrics the Fed tracks are above its target rate of 2%.

The one exception is Core Personal Consumption Expenditures (red line below). And it’s turning sharply upwards as well.

H/T VP Research

I keep emphasizing this but no one is paying attention…

THE FED HAS LET THE INFLATION GENIE OUT OF THE BOTTLE.

Look at the recent spike in inflation expectations. We’ve broken the downtrend of the last three years.

BIG inflation is coming. The US Dollar will be dropping hard in the near future.

And Gold will be going through the roof.

On that note, we just published a Special Investment Report concerning a secret back-door play on Gold that gives you access to 25 million ounces of Gold that the market is currently valuing at just $273 per ounce.

The report is titled The Gold Mountain: How to Buy Gold at $273 Per Ounce

We are giving away just 100 copies for FREE to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/goldmountain.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

END

 

A good indicator defining global growth (copper crashing): non existent

(courtesy zero hedge)

Copper Crashes To 1 Month Lows

Selling pressure began during Asian trading following disappointing China trade data but as US markets started trading so Copper futures plunged on extremely heavy volume to one-month lows…

China cut imports for a 6th month…

But it seems the US markets prompted a flush…

As the metal broke crucial technical support..

 

.

end

 

Gold prices are now trading at a premium in India.  This is in spite of the huge 10% tax and massive smuggling going on over there

(courtesy Dave Forest/OilPrice.com)

Gold Prices Just Did Something They Haven’t Done All YearBy Dave Forest – Oct 13, 2016, 9:49 AM CDT

Finally the global gold market is getting some good news from its top consuming nation — India.

Reports earlier this week suggest that something very unusual has just happened with India’s local gold prices: they’ve jumped to a premium above worldwide bullion prices.

That’s big news because — so far this year — India’s prices have been lagging the rest of the world. With gold here selling at discounts of $50 or more per ounce below average global prices.

But that situation has now apparently reversed itself. With local media reporting that gold sellers in Mumbai’s Zaveri Bazar were quoting gold at $1 to $2 above benchmark pricing. Marking the first time this year that India’s prices have pulled back to parity.

And that’s a critical observation for all participants in the global gold sector.

Here’s why.

http://oilprice.com/er/video? utm_campaign=solar&utm_placement=opban&banner_id=1

As I’ve discussed in the past, India’s buyers tend to act as a floor for the gold market. When gold prices rise (usually driven by speculative trading in places like New York and London), India’s buyers tend to stay away from the market — waiting for a correction to offer a better buying opportunity.

That’s exactly what we’ve seen so far this year. With gold prices rising from near $1,000 to as high as $1,350 per ounce, India’s buying all but dried up. In fact, stats released this week show that India’s gold imports for January to September likely fell 59% to just 270 tonnes — down from 658 tonnes in the same period in 2015.

That lack of buying caused gold prices across India to sag into discount, as buyers waited for better rates to prevail.

And this week’s news shows that Indians now feel that buying opportunity is at hand. With reports suggesting that bullion’s recent plunge to $1,250/oz has lured buyers back into the market.

Such a return of Indian buying is typically a sign that the market has reached bottom — with an influx of new purchases helping to set a floor under prices. Watch for gold to stabilize over the coming weeks, perhaps setting the stage for a renewed rally.

Here’s to getting back in the market

By Dave Forest

http://oilprice.com/Metals/Gold/Gold-Prices-Just-Did- Something-They-Haven-Done-All-Year.html

 

END

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

 
 

:

1 Chinese yuan vs USA dollar/yuan UP to 6.7275( DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.7362 / Shanghai bourse CLOSED UP 2.84 POINTS OR 0.09%   / HANG SANG CLOSED DOWN 375.75 POINTS OR 1.61%

2 Nikkei closed DOWN 65.76 OR 0.39%   /USA: YEN FALLS TO 103.73

3. Europe stocks opened ALL IN THE RED (     /USA dollar index UP to 97.75/Euro UP to 1.1037

3b Japan 10 year bond yield: REMAINS AT     -.056%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 103.72/ 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::  50.30  and Brent:51.99

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” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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 QUITE A BIT to +049%   

3j Greek 10 year bond yield RISES to  : 8.37%   

3k Gold at $1258.80/silver $17.56(8:45 am est)   SILVER FINAL RESISTANCE AT $18.50 WILL BE DEFENDED 

3l USA vs Russian rouble; (Russian rouble DOWN 5/100 in  roubles/dollar) 63.19-

3m oil into the 50 dollar handle for WTI and 51 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 103.73 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 .9872 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0896 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  +.049%

/German 9+ 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 1.752% early this morning. Thirty year rate  at 2.480% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS

Global Stocks Tumble To Three Month Lows As China Fears Return

Remember when two weeks ago the China Beige Book warned that “It’s A Lot More Negative Than People Think” in the world’s second biggest economy? Well after months of complacency about the Chinese economy and financial risks emanating from its $35 trillion financial sector, overnight the world got a rude awakening when China export figures tumbled, signalling a deeper slowdown than many anticipated just as the Fed prepares to raise interest rates.

As reported last night, the market was caught by surprise after China exports dropped the most in seven months as imports dropped suggesting the latest Chinese credit impulse has again faded; here is the breakdown of the latest disappointing trade data out of the world’s former, and now massively levered, growth dynamo:

  • China Yuan Exports -5.6% YoY (exp. +2.5%)
  • China Yuan Imports +2.2% YoY (exp. +5.5%)
  • China Trade Balance 278.35bn (exp. 364.5bn)
  • China USD Exports -10.0% (exp. -3.3%)
  • China USD Imports -1.9% (exp. +0.6%)
  • China USD Trade balance 41.99bn (exp. 53.00bn) 

In Dollar terms that is the biggest drop in exports since February. Imports also slid to +2.2% yoy from +10.8%. As DB notes, “while the trade data has a tendency to be quite volatile, the data will pose downside risks to the Q3 GDP print next week and will also likely put the focus back on the currency.”

The market reaction was swift and unpleasant, as stocks fell around the world, while government bonds climbed. The key carry currency USDJPY plunged on the China news…

… as China’s currency continues to weaken substantially, posing a renewed threat to the Chinese elephant in the room: an acceleration in capital outflows.

The MSCI All-Country World Index headed for an almost three-month low, while 10-year yields on Treasuries dropped three basis points and the yen gained. The Bloomberg Dollar Spot Index advanced to its highest level since March. The pound weakened to $1.2151, although it has since rebounded modestly, while Turkey’s lira slid to a record as renewed dollar strength risks send another shockwave among emerging markets.

PIMCO said it’s time to reduce risk, with the overseer of the world’s biggest actively managed bond fund expecting the Fed to raise interest rates two or three times by the end of 2017. “Shares are falling on a combination of the prospect of the U.S. raising interest rates and a slowdown in global demand hurting China exports,” said Andrew Sullivan, managing director of sales trading at Haitong International Securities Group Ltd. in Hong Kong.

The Stoxx Europe 600 dropped 0.9 percent in early London trading, led by declines in raw material and financial shares. BHP Billiton Plc and Rio Tinto Plc plunged more than 4 percent. Futures on the S&P 500 Index declined 0.8 percent to 2,115. Shares of Wells Fargo & Co. climbed in extended New York trading after the bank’s chief executive officer, John Stumpf, stepped down amid a public outcry over fake accounts. The Hang Seng Index slumped 1.6 percent in Hong Kong. Cathay Pacific Airways Ltd. sank to its lowest level since 2009 after scrapping its profit outlook. Thailand’s benchmark SET Index tumbled 3.2 percent, however in a surprise move it soared from overnight lows and at last check was in the green . The index had fallen every day this week after the royal palace said on Sunday that the king’s condition was unstable.

Benchmark U.S. 10-year yields slid to 1.74 percent, after climbing to the highest level since June on Wednesday. Australia’s 10-year yield dropped six basis points. China’s exports fell 10 percent in September from a year earlier, while imports declined 1.9 percent. Lackluster trade data may increase pressure on the yuan at the same time as new property curbs threaten the nation’s growth rate.

“The Chinese economy is going to be weaker,” said Kazuaki Oh’E, the head of fixed income at CIBC World Markets Japan Inc. in Tokyo. “There’s a flight to quality.”

Bulletin Headline Summary from RanSquawk:

  • European equities enter the North American crossover in negative territory as disappointing Chinese trade data hampers sentiment
  • The Chinese trade figures took their toll on the risk currencies, while the USD remains firm against its major counterparts
  • Looking ahead, highlights include German CPI, US Weekly Jobless Claims, DoE Crude Oil Inventory Report and comments from Fed’s Harker

Market Snapshot

  • S&P 500 futures down 0.6% to 2119
  • Stoxx 600 down 0.7% to 336
  • FTSE 100 down 0.4% to 6999
  • DAX down 1.1% to 10407
  • German 10Yr yield down 2bps to 0.05%
  • Italian 10Yr yield down 3bps to 1.39%
  • Spanish 10Yr yield up 5bps to 1.11%
  • S&P GSCI Index down less than 0.1% to 372.4
  • MSCI Asia Pacific down 0.9% to 137
  • Nikkei 225 down 0.4% to 16774
  • Hang Seng down 1.6% to 23031
  • Shanghai Composite up less than 0.1% to 3061
  • S&P/ASX 200 down 0.7% to 5436
  • US 10-yr yield down 3bps to 1.74%
  • Dollar Index up 0.11% to 98.08
  • WTI Crude futures down 0.4% to $49.96
  • Brent Futures down 0.3% to $51.68
  • Gold spot up 0.2% to $1,257
  • Silver spot up 0.1% to $17.55

Top Global News

  • Wells Fargo CEO Stumpf Quits in Fallout From Fake Accounts: Leaving CEO, chairman posts effective immediately; COO Tom Sloan to replace Stumpf; Stumpf Departure Doesn’t Quell Congress’ Fury: Legislators
  • Fed Minutes Suggest Yellen Made the Difference in ‘Close Call’; investors will get a chance to hear directly from Yellen on Friday when she speaks at a Boston Fed conference.
  • EBay to Raise More Than $1b Selling Stake in MercadoLibre: Parent offering up to 5.5m, underwriters Morgan Stanley, JPMorgan have option 825k extra MercadoLibre shares.
  • Trump to Intensify Attacks on Clinton Over Bill’s Accusers: Advisers think tactic will make Hillary Clinton appear toxic, depress turnout among young women.
  • U.S. to Double Shale Gas Exports on Cheniere’s Train 2: Co. cleared by U.S. regulators to start loading tankers with LNG from second plant at Sabine Pass, La.
  • Janus-Henderson Sees U.S. Fund Growth Outstripping Others: Cos. expect largest growth in their combined funds management business to come from U.S. after 2 firms join together to oversee >$300b.
  • Tesla Dominates U.S. Luxury Sedan Sales: U.S. sales of Model S jumped 59% y/y in 3Q, according to internal numbers.
  • Sprint “Hail Mary” Financing Buys More Time for Turnaround: Softbanks CEO Son, his team have won raves from Wall Street by mortgaging Sprint’s most valuable assets to buy time to pay off creditors.
  • SunEdison Receives Subpoena as Part of SEC Investigation: bankrupt clean-energy co. received notice Oct. 5 of “non- public, fact-finding investigation.”
  • Apple CEO Tim Cook Visits Nintendo Headquarters in Kyoto: Cook spent about an hour meeting with Nintendo President Tatsumi Kimishima, Super Mario co-creator Shigeru Miyamoto.
  • Hurricane Nicole Extremely Dangerous, Heads for Bermuda: NHC: Maximum winds at 130mph.

Looking at regional markets, we start as traditional in Asia where stocks traded mostly lower following a subdued after weak Chinese trade data dampened sentiment, while relatively uneventful FOMC minutes provided little insight into the Fed’s thinking. ASX 200 (-0.7%) was dragged by commodity names after oil prices retreated below USD 50.00/bbl following a lack of developments at producer talks in Istanbul and a build in API crude inventories. Nikkei 225 (-0.4%) failed to hold on to early gains alongside swings in USD/JPY, while discouraging Chinese data in which trade balance fell to a 6-month low and exports unexpectedly contracted pressured the Hang Seng (-1.6%) and Shanghai Comp (+0.1%), although the latter narrowly remained afloat following recent announcements to support investment growth in the mainland. The poor trade figures also weighed on US equity futures which saw E-mini S&P retreat below a key 2120.00 support level while Dow futures dropped over 100 points.

Top Asian News

  • China Cooling Property Market Is New Economic Growth Threat: High-profile tightening reverses two years of easing cycle.
  • TSMC Profit Rises to Record on Orders for Apple Processors: 3Q net income NT$96.8b beats est. of NT$95.3b.
  • Cathay Pacific Falls to 7-Year Low After Profit Outlook Scrapped: Jefferies expects Cathay to report losses in 2H and 2017.
  • Samsung Stock Meltdown Attracts Investors on Survival Bets: Shares of Samsung trading near cheapest level since Feb.
  • Showa Shell, Idemitsu to Delay Merger, Nikkei Says: Both parties still agree that early merger is necessary.
  • Fast Retailing Forecasts FY Net Income Up 108.1%, Missing Est.: Sees net income of 100b yen for current fiscal year vs 104.7b yen analyst est.

In Europe, the re-emergence of Chinese concerns took the limelight from last night’s uninspiring FOMC minutes as soft Chinese data dictated price action this morning with weak imports and exports painting the picture that global demand remains sluggish. In reaction to this, US equity futures extended on losses with European equities following suit as Chinese exposed sectors, mainly material names dampened sentiment. As such, FTSE 100 has continued to pull away from its recent intra-day record highs seen earlier this week, while Tesco shares have also been weighing on the index after pulling Unilever products in a dispute over pricing. Government bond yields slipped amid the aforementioned Chinese trade figures with bonds paring the large declines seen from yesterday’s session. Additionally, ECB sources resurfaced with reports indicating that the central bank could potentially make technical changes to QE including a temporary deviation from the capital key.

Top European News

  • Pound’s Plunge Squeezes U.K. Companies as Brexit Hedges End: Dilemma for merchants: pass on higher cost or hold line on prices that erode profits; London Home Presales Slump 14% as Brexit Compounds Tax Woes
  • U.K. Housing Market Strengthens in Sept. as Brexit Hit Fades
  • Unilever Price Increases Weigh on Demand in 3Q: Volume of 3Q goods sold declined 0.4%, surprising analysts who expected an increase.
  • Brexit May Affect French Race With Juppe Demanding Hard Line: Alain Juppe, consistently ahead in polls, wants EU negotiators to take a harder line with U.K., according to an adviser.
  • Sturgeon to Set Out Scottish Nationalists’ Response to Brexit: Scotland voted in June to stay in EU by 62% to 38%.
  • ING Said to Add London Jobs, Cut Stock Derivatives in Revamp: Bank to move as many as 60 trading jobs to London from Amsterdam, Brussels; also to shut equity derivatives business for financial institutions in NYC, Singapore, Brussels.
  • TomTom Falls After Forecast Cut; Auto Case Intact: Analysts: Personals navigation device (PND) result “is close to irrelevant” for investment case: ABN Amro.
  • Nets Shares Fall; Nordea Teams Up With Danske on MobilePay: Banks to cooperate on developing payment system, which is rival to Nets.

In FX, the Bloomberg Dollar Spot index rose 0.2 percent. Odds on an increase in U.S. borrowing costs by the end of the year are around 68 percent, according to Fed funds futures, up about six percentage points from a week ago.The yen climbed 0.3 percent to 103.95 per dollar. South Korea’s won fell 1.1 percent after the country’s central bank held its key interest rate unchanged. Turkey’s lira depreciated 0.6 percent. Data released on Wednesday showed the nation’s current-account deficit in August was wider than expected, adding to a list of economic and political risks that are weighing on investor sentiment.

In commodities, oil dropped, sliding below $50 a barrel in early trading after U.S. industry data showed stockpiles grew and as differences emerge within OPEC over how members will share output cuts, although it has since managed to rebound back over the psychological level. West Texas Intermediate crude fell 0.5 percent to $49.93 a barrel. Base metals slumped amid concerns over China’s economy. Nickel sank as much as 1.9 percent on the London Metal Exchange, reversing earlier gains. While metals have advanced into a bull market this year as China’s economy stabilized, signs of an export slowdown are now clouding the outlook for global demand.  Gold rose for a second day, and platinum rebounded after entering a bear market on Wednesday.

Looking at the day ahead, we’ll get the September import price index reading along with the latest weekly initial jobless claims number. Away from the data we’re due to hear from the Fed’s Harker at 12;15pm when he speaks on the economic outlook in Philadelphia. Earnings wise we’ve got 3 S&P 500 companies reporting with Delta Airlines the notable name, while Sky is due to report in Europe.

* * *

US Event Calendar

  • 8:30am: Sept. Import price index
  • 8:30am: Initial jobless claims
  • 8:45am: Bloomberg Oct. United States Economic Survey
  • 9am: DOE crude, diesel, natgas short term outlook
  • 10:30am: EIA natural-gas storage change
  • 11am: DOE inventories
  • 12:15pm: Fed’s Harker Speaks on Economic Outlook in Philadelphia
  • 9pm: Fed’s Kashkari Speaks at Town Hall in Missoula, Mont.

* * *

DB’s Jim Reid concludes the overnight wrap

Perhaps yesterday was the day that Brexit finally hit home to the British public. Migration debates, a sinking pound, rising gilt yields are a side show to the real distressing story. Yes the biggest food retailer in the U.K. have seemingly removed Marmite from our shelves in response to a dispute with suppliers over who pays for the higher post Brexit costs. Many other brands have been affected with Ben and Jerry’s, Magnums and PG Tips some of those that caught my eye. It feels apt that Marmite is one of those impacted as like Brexit it can split opinions. At least the UK’s first post-Brexit trade deal could be with Australia who can provide us with some Vegemite to soften the blow.

Last night the blow of a hawkish set of FOMC minutes was offset by the fact that a) we knew they were going this way and b) a lot of water can still flow under the bridge before mid-December (assuming we’re ruling out a November hike given its proximity to the election). Indeed the minutes showed that the decision to stay on hold in September was a ‘close call’ while some participants believed that it would be appropriate to hike ‘relatively soon’ should the labour market continue to improve and economic activity strengthened. On the other hand ‘some others preferred to wait for more convincing evidence that inflation was moving toward the committee’s 2% objective’. It was also noted that ‘several participants expressed concern that continuing to delay an increase in the target range implied a further divergence from policy benchmarks based on the committee’s past behaviour or risked eroding its credibility’.

There were some other interesting elements to the minutes however with the text revealing disparate views on the state of the labour market. The text showed that ‘participants generally expected the unemployment rate to run somewhat below their estimates of its longer-run normal rate over the next couple of years, but they offered differing views about the extent of slack that currently remained in the labour market’.

As the dust settled the market reaction was pretty muted. There was no change in the implied pricing of a Fed rate hike in December at 68%. The Greenback (Dollar index +0.28%) rose for a third consecutive day but closed a smidgen off the pre-minute highs. Treasuries took a similar course with the 10y yield edging a few basis points down from the early afternoon highs to close at 1.770% and little changed on the day. This morning we’ve seen yields fall a further 3bps with risk assets in Asia taking a bit of a hit following the China trade data. Yesterday was however a much weaker day for European bond markets though where yields were broadly 4-7bps higher. The Gilt market appeared to be at the forefront again with the 10y yield up nearly 7bps to 1.042% while Sterling (+0.67%) pared back a big part of the early advance following the Parliamentary session. More on that shortly.

In terms of equities meanwhile, the S&P 500 closed +0.11% after being up as much as +0.40%. Volumes have been a bit lower than usual this week but earnings season will start to kick into gear tomorrow when JP Morgan, Wells Fargo and Citigroup all report so activity should pick up again. Meanwhile, along with a fall for Oil (WTI -1.20%) – with questions continuing to be asked about the commitment of an OPEC production cut – earnings also dictated a much weaker European session yesterday. The Stoxx 600 closed -0.47% with the tech sector (-2.57%) driving that after Ericsson plummeted more than 20% (and the most in 9 years) after the company issued a statement reporting a huge slide in Q3 sales and profits.

Before we go any further, as we noted earlier the latest trade data is out in China this morning. It makes for slightly disappointing reading with exports unexpectedly plummeting to -10.0% yoy in September (vs. -3.3% expected) in USD terms from -2.8% in August. In CNY terms exports slid to -5.6% from +5.9% (vs. +2.5% expected). In Dollar terms that is the biggest drop in exports since February. Imports also slid to +2.2% yoy from +10.8%. While the trade data has a tendency to be quite volatile, the data will pose downside risks to the Q3 GDP print next week and will also likely put the focus back on the currency,
The biggest impact to markets this morning is actually on bourses outside of China. The Nikkei (-0.39%), Hang Seng (-1.46%), Kospi (-1.18%) and ASX (-0.85%) have all declined while the losses for the CSI 300 (-0.11%) and Shanghai Comp (-0.06%) have been a lot more modest, although markets there have chopped around all morning. The Yen has rallied close to half a percent, while the Aussie Dollar (-0.36%), Korean Won (-0.53%) and Malaysian Ringgit (-0.42%) have seen the biggest impact in the FX market.

Moving on. There wasn’t much data released yesterday with the lone print in the US being a slightly underwhelming JOLTS report. The data showed that job openings declined to 5.44m in August from 5.83m in July. Market expectations were for a 5.80m print. The job opening rate declined to 3.6% from 3.9% and while the level of job openings was actually the lowest this year, there wasn’t a great deal of reaction in markets given we have since had that September employment report.

In Europe the main highlight datawise was a slightly better than expected industrial production report for the Euro area (+1.6% mom vs. +1.5% expected). Staying with Europe, there was a bit of focus on a Reuters report yesterday suggesting that the ECB may consider technical changes to its asset-buying scheme next week. The article suggested that the ECB could consider proposals on small, temporary deviations from the capital key and buying of bonds with yields below the depo rate. That clearly fits with the mantra of the ECB allowing itself the flexibility to ensure it can continue buying €80bn worth of bonds each month even if it decides to extend the program length.

Coming back to the latest Brexit news. Yesterday following the PM’s Questions, UK lawmakers approved the motion from the opposition Labour Party which will give Parliament the right to examine the Government’s exit strategy prior to formal talks. However, PM Theresa May stopped short of allowing for a vote on the strategy which dented hopes that some in the market had of a slight softening in stance. Brexit Secretary David Davis also confirmed that he would allow Parliament to scrutinize details as long as it did not ‘thwart the process of exit’. A reminder that today the High Court will deem whether or not an Act of Parliament is needed for Article 50 to be triggered, with a loss for the government potentially leading to delays or forcing the issue in the House of Commons and House of Lords.

As we look at the day ahead now, the calendar is reasonably light over the next 24 hours. This morning in Europe the only data due out is the final September CPI report in Germany. Over in the US this afternoon we’ll get the September import price index reading along with the latest weekly initial jobless claims number. Away from the data we’re due to hear from the Fed’s Harker this evening (5.15pm BST) when he speaks on the economic outlook in Philadelphia. Earnings wise we’ve got 3 S&P 500 companies reporting with Delta Airlines the notable name, while Sky is due to report in Europe.

 

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 2.84 POINTS OR 0.09%/ /Hang Sang closed DOWN 375.75 POINTS OR 1.61%. The Nikkei closed DOWN  65.76 POINTS OR 0.39% Australia’s all ordinaires  CLOSED DOWN 0.71% /Chinese yuan (ONSHORE) closed DOWN at 6.7275/Oil ROSE to 50.30 dollars per barrel for WTI and 51.99 for Brent. Stocks in Europe: ALL IN THE RED   Offshore yuan trades  6.7362 yuan to the dollar vs 6.7275 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS QUITE BIT  AS MORE USA DOLLARS   LEAVE CHINA’S SHORES

3a)THAILAND:

The much beloved King of Thailand has died.  Prior to his death the Thai bhat currency and their stock market were plummeting.  The king was the stable force behind Thailand. It sure looks like their central bank intervened today trying to cool things:

 

(courtesy zero hedge)

Thai Stocks, Currency Rally As ‘Investors’ Buy The Dead King Dip

The last few days have seen carnage in Thailand’s currency and stock markets following reports that the King’s condition was unstable on Sunday. But the news that the world’s longest reigning monarch has died this morning has prompted a buying panic in stocks and the Baht.

Thai King Bhumibol Adulyadej, the world’s longest reigning monarch, has died, according to an announcement from the palace. He was 88.

Bhumibol has been a symbol of unity in Thailand, which had 10 coups during his seven-decade reign. He had been ill for years, making limited public appearances and spending most of his time in the hospital.

Thailand’s stock market and the baht have fallen this week after the royal palace said Sunday the king’s condition was unstable. Prime Minister Prayuth Chan-Ocha’s government had earlier urged citizens not to panic over rumors circulating on social media.

But it appears the “relief” rally now that he has died is well underway…

One has to wonder whether the Thai central bank stepped in here to manage the hysteria?

END

b) REPORT ON JAPAN

none today

end

c) Report on CHINA

Chinese exports sink which causes the USA/Jpy cross to plunge! The yuan also plunged to 6.73 to the dollar.

(courtesy zero hedge)

Stocks, USDJPY Plunge After Dismal China Trade Data

Following an unexpected plunge in China’s trade balance (to 6 month lows), US equity futures and USDJPY are tumbling as Yuan turmoil ripples through markets once again.

Misses across the board in China trade data…

  • China Yuan Exports -5.6% YoY (exp. +2.5%)
  • China Yuan Imports +2.2% YoY (exp. +5.5%)
  • China Trade Balance 278.35bn (exp. 364.5bn)
  • China USD Exports -10.0% (exp. -3.3%)
  • China USD Imports -1.9% (exp. +0.6%)
  • China USD Trade balance 41.99bn (exp. 53.00bn)

*CHINA TRADE STILL FACES GREAT UNCERTAINTIES: CUSTOMS’ HUANG

Sparked chaotic trading in Yuan as offshore selling pressure accelerated post Golden Week…

And spread to USDJPY and implicity US equity futures…

USDJPY dropped a whole big figure erasing the gains of the day…

 

END

 

We have a new bubble in China: car sales !

(courtesy zero hedge)

As China Pops Its Housing Bubble, Car Sales Soar 29%

Late in September, we showed a viral surveillance video from inside new construction in east Hangzhou, which captured the sheer buying frenzy and panic, prompted by the new purchasing restrictions set to be unveiled just days later which would prevent people born outside Hangzhou from buying more than one property.

The crackdown on China’s latest housing bubble takes place as local home prices rose 9.2% in August from a year earlier, while in places like Shenzhen, prices soared almost 37%, in Beijing more than 23% and in Shanghai topped 30%. Such hefty price rises have been common all year in these so-called Tier 1 cities.

Now that the widely telegraphed restrictions have kicked, as expected China’s housing market now appears set for a sharp pullback after several months of record pricing gains. As Reuters reports, a wave of restrictions imposed on housing markets in major Chinese cities last week have cut the area of new homes sold in places such as Beijing and Shenzhen by more than half. More than 20 cities have imposed measures, including higher mortgage downpayments, to cool hot property markets that have raised official alarm in Beijing and fresh concerns about China’s ballooning debt.

Last week was a public holiday to mark National Day, traditionally a high season for property sales. Property agents said prices of new homes sold in the southern city of Shenzhen and in Beijing dropped 20 percent last week to entice buyers, compared with the previous week.

Beijing and Wuxi, a city near Shanghai, had no new launches last week, a survey of 10 major cities by property researcher CREIS showed. But the area of residential space sold, based on developments launched previously, plunged 86 percent and 72 percent, respectively, compared to the previous week. CREIS said cities including Shanghai, Hangzhou and Wuhan, launched new developments but the area put on the market declined more than 50 percent and the area sold dropped 35 percent to 60 percent.

“The new tightening measures are quite stringent,” said Alan Cheng, general manager of realtor Centaline Shenzhen. “It’s a blow to confidence and people are worried that prices will drop, so they are observing from the sidelines now.” The latest restrictions varied from city to city, but included higher mortgage downpayments for second and third-time home buyers, in a bid to stem the flow of cash into the red-hot property market.

* * *

However, since this is China, where one zombie asset bubble dies (briefly) only for another bubble to be (re)born, at the same time as the housing bubble is set to pop, the local population has turned its attention to cars.

According to Bloomberg, Chinese passenger-vehicle sales surged a gargantuan 29% last month, led by small-car makers Geely Automobile Holdings Ltd. and Mazda Motor Corp., as consumers seeking to beat an expiring tax cut helped clear inventory on dealer lots. Deliveries of sedans, minivans, sport utility and multipurpose vehicles to dealerships rose to 2.27 million units in September, the state-backed China Association of Automobile Manufacturers said Wednesday.

Just like with the rush to buy housing ahead of purchasing restrictions, in the case of autos, consumers rushed to buy to take advantage of potentially expiring preferential tax terms. The government has so far stayed silent on whether it will extend a tax cut on purchases of vehicles with smaller engines beyond Dec. 31. As a result, sales could plunge next year if levies are allowed to double to 10 percent, said Cui Dongshu, secretary general of the China Passenger Car Association, a separate industry group. A slump in demand would worsen a capacity glut and dent profit margins, according to Steve Man, an analyst with Bloomberg Intelligence.

“The expiration of the current purchase tax cut is encouraging consumers to catch the last bus and bring forward their car purchases,” said Huang Xiaowei, an analyst with Shenzhen-based WAYS Consulting Co. “Dealers are preparing stocks for the surging demand at the year-end.”

The scramble to buy cars has left many carmakers with little to no inventory. A gauge of vehicle inventory fell for a third straight month in September to the lowest level in two years, according to the China Automobile Dealer Association. Dealers of Japanese brands in August saw profits increase by 27% from a month earlier to 1,851 yuan per vehicle after scaling back discounts due to strong demand, according to WAYS Consulting.

Mazda said its sales in China jumped 49 percent in September from a year earlier, led by models including the Axela compact, which qualifies for the tax cut. Geely raised its full-year sales target after September deliveries surged 82 percent from a year earlier.

Even General Motors’ car sales, which had recently slowed in China, surged 16% to 343,773 units, with deliveries of Cadillac sedans increasing 63%. Great Wall Motor Co.’s sales rose 49 percent to 97,685 units, with SUV deliveries reaching 87,627 units.

What happens should both the housing and car bubbles pop? Well, buy stocks (again) or (even more) bitcoin, because in China, where the total amount of bank deposit is in the mid-$20 trillion range, the bubbles never actually die, they just get recycled.

 

END

4 EUROPEAN AFFAIRS

As I have mentioned to you in the past, Deutsche bank has an income problem coupled with a solvency issue and not a liquidity problem.  To prove this, they have implemented a hiring freeze:  the stock slides again.

(courtesy zero hedge)

Deutsche Bank Implements Hiring Freeze, Stock Slides

While much attention in recent weeks has fallen on Deutsche Bank’s balance sheet, with concerns over both the bank’s capitalization as well as its liquidity forcing its stock price to all time lows as recently as two weeks ago, today we got a timely reminder that the bank also has substantial income statement problems when Bloomberg reported that the biggest German lender is implementing a companywide hiring freeze as CEO John Cryan “seeks to lower costs and shore up investor confidence.”

However, the confirmation that the bank continues to hemorrhage cash and is in expense-slashing mode, and which hits just a day after Deutsche Bank completed a tack-on bond offering in which it sold a total of $4.5 billion in 5 year bonds in two tranches, paying junk bond spreads for the privilege of obtaining funds, will hardly “shore up investor confidence.” If anything it will short it, or perhaps short DBK stock, which was down 2.5% to €12.04 in German trading as of this writing.

As Bloomberg adds, in a message to divisional chief operating officers on Wednesday, the Frankfurt-based lender said “hiring will be put on hold with immediate effect.” The hiring freeze affects all divisions excluding some control functions such as compliance. Arguably this means that i) the bank was hiring as concerns mounted that it was on the precipice and ii) that it actually had applicants who wanted to join the bank even as its stock plummeted to all time lows.

“It would be desirable if Deutsche Bank was restrictive in terms of new hires as they need to cut costs,” said Philipp Haessler, an analyst at Equinet Bank AG in Frankfurt, with a neutral recommendation on the shares. “Another way to cut costs is reducing the bonus pool.”

When reached by Bloomberg, a DB spokesman declined to comment on the hiring freeze, referring to an announcement on Oct. 6, when the bank said it reached an agreement with labor representatives to cut 1,000 positions in Germany as part of the wider restructuring plan. The lender employed more than 101,000 people in June, up from 98,138 at the end of 2014. Analysts at JPMorgan Chase & Co. have estimated that Deutsche Bank could save as much as 1.9 billion euros ($2.1 billion) this year largely through a hiring freeze.

Among other initiatives launched by Cryan, who tried to reassure investors that the bank is stable, was his assurance that the bank doesn’t plan to raise capital; instead it has approached the bond market on two separate occasions paying surprisingly high yields for the privilege of obtaining much needed dunds. And then there is the ongoing feud with the DOJ over the $14 billion RMBS settlement: Deutsche Bank’s negotiations with the Justice Department to resolve a years-long investigation into residential mortgage-backed securities are continuing, Bloomberg reports.

Deutsche Bank is holding informal talks with securities firms to explore options including raising capital should mounting legal bills require it, Bloomberg also reports, adding that the lender could also revisit selling its Deutsche Postbank unit or parts or all of its asset-management division, according to the people. Cryan has already said Deutsche Bank may fail to be profitable this year after posting the first annual loss since 2008 last year. He also signaled that the lender may have to deepen cost cuts.

 

END

 

ENGLAND/EU

Just look at what the EU is seeking for a BREXIT divorce: 20 billion euros.

England needs access to the EU but the EU needs England more with respect to their financial hub

(courtesy Mike Shedlock/Mishtalk)

EU Seeks €20 Billion Brexit Divorce Settlement

Submitted by Michael Shedlock via MishTalk.com,

The price of Brexit is high and rising.

On top of previous demands such as a “fair but inferior deal” for the UK,  the EU now wants a €20 billion divorce settlement as the UK’s “fair share” of inane projects the UK agreed to as part of the EU.

EU officials insist the UK is on the hook for past spending commitments.

more-eu-demands

Here is the question of the day: Why Should Britain Pay for a Brexit Divorce?

Money has long been the subject of the most ferocious political fights in Brussels and the Brexit divorce — and Britain’s legacy bill of as much as €20bn — is shaping up to be one of the most epic of them all.

At the heart of the debate is a question about the nature of the bloc. Is it a club where a member’s liabilities expire on withdrawal or one where a member honours its promises even after it leaves?

For the EU-27 the answer is clear. One official compared it to Britain signing a five-year gym membership then asking for its money back after three. Another senior diplomat said it was like Britain “sitting at the restaurant, picking from the menu, then leaving before the bill arrives”.

Over time this has built up into a roster of outstanding payment promises — known in Brussels by the French term reste à liquider — running to more than €200bn. It could increase to €241bn by 2019. With Britain’s planned departure, it forces a financial reckoning that politicians had imagined would never be needed.

These are not the only liabilities. The EU accounts detail more than €300bn in shared payment liabilities, from fisheries agreements to pensions to promised funding for satellites building.

On top of that are about €56bn of shared contingent liabilities — where the EU raised funds to lend to countries such as Ireland, Portugal and Ukraine — and €21.4bn of loan guarantees that may generate costs in years to come.

Britain may argue it is no longer legally liable. It could be right. But the settlement will come in a political negotiation to leave the EU, not in a court.

The crucial point is that the EU is preparing to make payment of Britain’s legacy bill a basic condition of securing single market access or a transition agreement, which would provide a soft landing for British business operating in Europe.

Another Reason for Brexit

Inane EU projects provide yet another reason the UK was wise to kiss the EU goodbye.

Meanwhile the EU demands on the UK keep mounting.

Growing List of Demands

  1. The free movement of persons and citizenship, including free movement of workers which is of course one of the reasons the UK left in the first place.
  2. Ongoing payment for access to the common market.
  3. A “fair” but inferior deal for the UK, a contradiction in terms.
  4. A €20 billion divorce settlement as the UK’s “fair share” of EU projects approved during the time the UK was part of the EU

Basic Math

It is mathematically impossible for something to become more impossible.

As noted previously, the Gang of 27 Hits UK with Impossible Demands: EU Seeks “Inferior” Deal for UK, Spain Wants Gibraltar

That makes the EU’s demand for a €20 billion divorce settlement on top of other impossible demands all the more laughable.

Piling On

Curiously, this absurd piling on is to the benefit of the UK.

The UK has the option of saying, OK we will pay your €20 billion bribe if you drop your free movement of persons demand and give us access to the alleged “single market”.

The UK is prepared to walk away already, so now it can walk away from another €20 billion demand.

Meanwhile, the costs on the EU continue to pile up.

What price is the EU willing to pay for a hard ? A full blown global trade war is not all that unlikely.

end

EU/

 

What a complete failure.  One would have thought that savings rate would decline as consumers would spend more.  Wrong! they are saving more because they are fearful of a global catastrophe.

(courtesy zero hedge)

 

 

NIRP Has Failed: European Savings Rate Hits 5 Year High

 

One year ago, when it was still widely accepted conventional wisdom that NIRP would “work” to draw out money from savers who are loathe to collect nothing (or in some cases negative interest) from keeping their deposits at the bank, and would proceed to spend their savings, either boosting the stock market or the economy, we showed research from Bank of America demonstrating that far from promoting dis-saving, those European nations which had implemented NIRP were, “paradoxically”, also observing a jump in their rate of savings.

In what arguably was the first shot across the bow of conventional economic wisdom, BofA first admitted something which at least to its own conventional sensibilities, was quite amazing: NIRP is achieving the opposite of what it was meant to achieve.

The problem of low inflation remains evident. Swiss inflation has collapsed into very negative territory, albeit precipitated by the SNB abandoning their currency peg earlier in the year. While Danish inflation has moved away from zero post big rate cuts in 2015, it is still hovering at just 0.5%. And Swedish inflation has been stuck around zero since early 2013.

In other words, NIRP was pushing inflation lower, not higher, as the following stunner admitted:

Yet, household savings rates have also risen. For Switzerland and Sweden this appears to have happened at the tail end of 2013 (before the oil price decline). As the BIS have highlighted, ultra-low rates may perversely be driving a greater propensity for consumers to save as retirement income becomes more uncertain.

And the evidence as of October 2015:

One year later, everything has changed: not only has NIRP become “non grata” even among the caste of perpetually wrong career economists, but as a result of a scarcity in monetizable assets, something we first warned about in 2012, QE is no longer the preferred mode of monetary policy intervention, instead as the BOJ revealed last month, the current central banker intervention mechanism of “choice” is yield and curve targeting, something which has never been tried before, and which many – including Goldman Sachs – believe will fail.

But until it does, we present the latest testament to Europe’s 2+ years of failed Negative Interest Rate Policy. This week Eurostat published the latest quarterly savings rate data for the Euro area. What it found is that not only has NIRP not pushed savings lower, but at 12.8%, the gross household savings rate in Q2 2016 had risen to the highest level observed since the 13% in Q3 2011.

The good news: Europe’s savings rate still has a ways to go before it hits the crisis high 14.7% during the final quarter of 2008. But give it time, thought: with central bankers now openly improvising and in the process making the economic situation worse day by day, it is only a matter of time before savings not only hit new all time highs, but what until recently has been a trickle of disgruntled depositors pulling their cash from the bank and putting it in gold, as observed recently in both Switzerland andGermany, becomes a flood, presaging the end of the fractional-reserve banking model.

Until then, we can at least conclude that NIRP, yet another contraption created by economists to part savers with their money, has failed.

 

end

 

DEUTSCHE BANK

Deutsche bank’s stock continues to slide accompanied by higher credit default swaps and yet BB states that there is nothing to see here..sure thing!@

(courtesy zero hedge)

 

Bundesbank Says ‘Nothing To See Here’ As Deutsche Bank Stock Slumps

hile Deutsche Bank credit instruments hover near their worst ever, the stock price had been jawboned and squeezed higher enabling the issuance of more junk-priced debt… until today. The first close back below €12 in over a week has some worried, confirmed by Buba’s Dombret denial – “European bank sector concerns are overstated.”

  • *DOMBRET SAYS CONCERNS ABOUT EUROPE BANK SECTOR OVERSTATED
  • *DOMBRET SAYS SOLVENCY OF EUROPE BANK SECTOR NOT IN DOUBT

Record wide credit spreads, surging interbank rates, yuuge USD liquidity demand…

 

Yeah no ‘doubt’ at all.

 

END

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

The USA is joining Saudi Arabia directly with cruise missile strikes inside Yemen. This is not going to end well!

(courtesy zero hedge)

US Joins Yemen Conflict With Cruise Missile Strikes On Anti-Saudi Targets

We can now put away any speculation whether the US will limit its support and arming of Saudi Arabia in its ongoing campaign over Yemen over “war crime” concerns.

Overnight, the U.S. military not only did not rebuke the Saudis for a military campaign that has claimed nearly 10,000 innocent civilian lives, but became the latest entrant in the Yemen offensive, when it launched cruise missile strikes on Thursday to knock out three coastal radar sites in areas of Yemen controlled by Iran-aligned Houthi forces, in what was supposedly a retaliation after failed missile attacks this week on a U.S. Navy destroyer, U.S. officials said.

Cited by Reuters, U.S. officials speaking on condition of anonymity, said U.S. Navy destroyer USS Nitze launched the Tomahawk cruise missiles around 4 a.m. (0100 GMT). The strikes, authorized by President Barack Obama, represent Washington’s first direct military action against suspected Houthi-controlled targets in Yemen’s conflict.

The US Navy released the following video of the airstrikes:

As we reported previously, U.S. officials said there growing indications – if no official proof – that Houthi fighters, or forces aligned with them, were responsible for Sunday’s attempted strikes, in which two coastal cruise missiles designed to target ships failed to reach the destroyer.

And like on all previous occasions when the US got involved in a nation’s sovereign affairs, the Pentagon stressed the limited nature of the strikes, aimed at radar that enabled the launch of at least three missiles against the U.S. Navy ship USS Mason on Sunday and Wednesday. What it did, however, was make Saudi incursions into Yemen even easier, providing the Saudi airforce a corridor deep into the country which making sure Yemen was unable to retaliate against its invaders.

Of course, the official line is different:

“These limited self-defense strikes were conducted to protect our personnel, our ships and our freedom of navigation,” Pentagon spokesman Peter Cook adding that “these radars were active during previous attacks and attempted attacks on ships in the Red Sea,” including the USS Mason, one of the officials said, adding the targeted radar sites were in remote areas where the risk of civilian casualties was low.

In retrospect one now wonders if the “cruise missiles” that fell close to the US ships were merely the latest false flag providing the US cover to launch another foreign intervention.To be sure, the Houthis, who are battling the internationally-recognized government of Yemen President Abd Rabbu Mansour al-Hadi, denied any involvement in Sunday’s attempt to strike the USS Mason.

On Thursday, the Houthis reiterated a denial that they carried out the strikes and said they did not come from areas under their control, a news agency controlled by the group reported a military source as saying.  The allegations were false pretexts to “escalate aggression and cover up crimes committed against the Yemeni people”, the source said.

it wouldn’t be the first time that the US has done just that to launch an offensive war (without Congressional approval). Sure enough, the US from immediately launching a strategic attack.

According to Reuters, the US military official identified the areas in Yemen where the US strikes took place as near Ras Isa, north of Mukha and near Khoka.

There may have been another reason for the strikes: shipping sources told Reuters sites were hit in the Dhubab district of Taiz province. As the map shows, the area impacted by US air strikes overlooks the Bab al-Mandab Straight known for fishing and smuggling; also known for being one of the world’s busiest transit spots.

The missile incidents, along with an Oct. 1 strike on a vessel from the United Arab Emirates, add to questions about safety of passage for military ships around the Bab al-Mandab Strait, one of the world’s busiest shipping routes.

This latest US attack appears to be just the beginning: Pentagon spokesman Peter Cook warned against any future attacks, adding that “The United States will respond to any further threat to our ships and commercial traffic, as appropriate.”

Others chimed in:

The United Arab Emirates (UAE), a leading member of a Saudi-led Arab coalition fighting to end Houthi control, denounced the attacks on the Mason as an attempt to target the freedom of navigation and to inflame the regional situation.

Although Thursday’s strikes against the radar aim to undercut the ability to track and target U.S. ships, the Houthis are still believed to possess missiles that could pose a threat.

Reuters has reported that the coastal defense cruise missiles used against the USS Mason had considerable range, fuelling concern about the kind of weaponry the Houthis appear willing to employ and some of which, U.S. officials believe, is supplied by Iran.  One of the missiles fired on Sunday traveled more than two dozen nautical miles before splashing into the Red Sea off Yemen’s southern coast, one U.S. official said.

And suggesting that Yemen is about to become the next major geopolitical hotzone, earlier today Iran’s semi-official Tasnim news agency reported that Iran sent two warships to the Gulf of Aden on Thursday, establishing a military presence in waters off Yemen where the U.S. military launched cruise missile strikes on areas controlled by Iran-backed Houthi forces.

“Iran’s Alvand and Bushehr warships have been dispatched to the Gulf of Aden to protect trade vessels,” Tasnim reported.

As a result, we expect many more “false flag” events in the coming days.

 

 

 

END

 

This is not going to end well:  British pilots have been ordered to shoot down hostile (Russian jets) over Syria:

(courtesy zero hedge)

Royal Air Force Pilots Ordered To Shoot Down “Hostile” Russian Jets Over Syria

(courtesy zero hedge)

Obama To Decide Friday On Military Action In Syria

Two weeks ago when the US broke off bilateral relations with Russia over the ongoing Syrian proxy war,we reported that as part of America’s “next steps” would be a discussion on military options. As Reuters reported then, the “discussions were being held at “staff level,” and have yet to produce any recommendations to President Barack Obama, who has resisted ordering military action against Syrian President Bashar al-Assad in the country’s multi-sided civil war. “The president has asked all of the agencies to put forward options, some familiar, some new, that we are very actively reviewing,” Blinken said. “When we are able to work through these in the days ahead we’ll have an opportunity to come back and talk about them in detail.”

Fast forward to today, when as Reuters once again reports, the time has come for the US to make a decision: on Friday President Barack Obama and his top foreign policy advisers are expected to meet to consider their military and other options in Syria as Syrian and Russian aircraft continue to pummel Aleppo and other targets.

The tensions here are well known: some of the more hawkish “top officials” told Reuters that the United States must act more forcefully in Syria or “risk losing what influence it still has over moderate rebels and its Arab, Kurdish and Turkish allies in the fight against Islamic State.” Naturally, this means that one set of options includes direct U.S. military action such as air strikes on Syrian military bases, munitions depots or radar and anti-aircraft bases.

That is also the scenario which General Joseph Dunford warned may lead to war with Russia. Indeed, the quoted said one danger of such action is that Russian and Syrian forces are often co-mingled, “raising the possibility of a direct confrontation with Russia that Obama has been at pains to avoid.” This is also known as the “world war” scenario.

Luckily, there are options.

One alternative, U.S. officials said, is allowing allies to provide U.S.-vetted rebels with more sophisticated weapons, although not shoulder-fired anti-aircraft missiles, “which Washington fears could be used against Western airliners.” Like, for example, what happened above the Donestk region during the peak of the Ukraine proxy war in 2014.

As Reuters adds, Friday’s planned meeting is the latest in a long series of internal debates – which have so far achieved nothing but escalate the situation which fast approaches a point of no return – about what, if anything, to do to end a 5-1/2 year civil war that has killed at least 300,000 people and displaced half the country’s population. According to insiders, the ultimate aim of any new action could be to “bolster the battered moderate rebels so they can weather what is now widely seen as the inevitable fall of rebel-held eastern Aleppo to the forces of Russian- and Iranian-backed Syrian President Bashar al-Assad.” The question is whether it was also “bolster” al-Qaeda linked jihadists whom the US has been supporting for the past several months as a result of the perverse merger of “moderate” rebel forces in Syria.

Apparently, there is also an element of pride:

It also might temper a sense of betrayal among moderate rebels who feel Obama encouraged their uprising by calling for Assad to go but then abandoned them, failing even to enforce his own “red line” against Syria’s use of chemical weapons.

This, in turn, might deter them from migrating to Islamist groups such as the Nusra Front, which the United States regards as Syria’s al Qaeda branch. The group in July said it had cut ties to al Qaeda and changed its name to Jabhat Fatah al-Sham.

In other words, having started the proxy war in Syria, with every passing day that Obama fails to resolve it – while ideally avoid a world war with Russia – is a day that more and more “moderate rebels” are likely to openly “migrate” to jihadist extremists, with all of the latest US military equipment so generously provided to them by the administration.

There is also hope that just like in 2013, Kerry and Lavrov will somehow cobble together another last minute peace agreement. The U.S. and Russian foreign ministers will meet in Lausanne, Switzerland on Saturday to resume their failed effort to find a diplomatic solution, possibly joined by their counterparts from Turkey, Qatar, Saudi Arabia and Iran, but U.S. officials were said to have voiced little hope for success.

Complicating matters, however, is that as we reported this morning, the US is now officially engaged in another regional conflict, after US warships fired ballistic missiles targeting Yemen radar stations in proximity to the critical Bab al-Mandab Straight.

Earlier Thursday the United States launched cruise missiles at three coastal radar sites in areas of Yemen controlled by Iran-aligned Houthi forces, retaliating after failed missile attacks this week on a U.S. Navy destroyer, U.S. officials said.

There is also the question of what to do in Iraq, where officials are debating whether government forces will need more U.S. support both during and after their campaign to retake Mosul, Islamic State’s de facto capital in the country. Some officials argue the Iraqis now cannot retake the city without significant help from Kurdish peshmerga forces, as well as Sunni and Shi’ite militias, and that their participation could trigger religious and ethnic conflict in the city.

* * *

For now, the best news is that according to Reuters, US officials said they consider it unlikely that Obama will order U.S. air strikes on Syrian government targets, and they stressed that he may not make any decisions at the planned meeting of his National Security Council. However, that will only be the case should the US not be further humiliated in Syria, and – of course – all bets are off if and when Obama is replaced, especially if his successor is a well-known warmonger, directly and indirectly responsible for much of the unstable geopolitical situation across most of the region.

 

 

END

6. GLOBAL ISSUES

How the Philippines has just snubbed the USA as they face eastward towards China for alliances.  One by one, nations are abandoning the uSA.

(courtesy James Holbrooks/antiMedia.org)

How The President Of The Philippines Just Snubbed The US While Embracing China

ubmitted by James Holbrooks via TheAntiMedia.org,

As Filipino President Rodrigo Duterte continues to distance himself from the West, moving instead toward regional powerhouse China, an official from China’s Foreign Ministry said Wednesday that the controversial leader of the Philippines will meet with the Chinese president next week in Beijing.

As Reuters reports:

“China confirmed on Wednesday that Philippine President Rodrigo Duterte will visit China next week, as the Southeast Asian leader’s relationship with traditional ally the United States frays.

“Under Duterte, Manila’s relations with Washington have come under strain and the recently elected president has opted to put aside years of hostility with China, especially over the disputed South China Sea, to form a new partnership.”

The Foreign Ministry spokesman, Geng Shuang, said Duterte would meet with Chinese President Xi Jinping, as well as Premier Li Keqiang, on a visit set to begin on October 18.

“China looks forward to increasing mutual trust between the two countries,” Geng said,“deepening practical cooperation and continuing the tradition of friendship via the visit of President Duterte.”

But Duterte won’t be alone. Joining him will be 250 Philippine business executives, all “eager to talk with Chinese business leaders and government officials about deals in a range of sectors, from rail, and construction to tourism, agribusiness, power and manufacturing,” according to Reuters.

This falls perfectly in line with statements made by Duterte in September, when the president toldreporters the Philippines had reached a “point of no return” with the U.S. and expressed a desire to“open alliances with China.”

“I will open up the Philippines for them to do business, alliances of trade and commerce,” he said.

Since then, however, Duterte’s animosity toward the U.S. has grown considerably, with Anti-Mediareporting last week that the Filipino president actually dared the CIA to attempt to oust him from power.

“Be my guest. I don’t give a shit,” he told the press while speaking in his hometown of Davao.

The whole situation — the U.S. possibly losing an ally to a nation it’s currently on the brink of naval warfare with — is complicated further when considering events taking place just north of the Philippines, off the eastern coast of China.

There, longtime U.S. ally Japan is squaring off against China over territorial rights to the East China Sea. Japan, which has already implemented plans to construct a missile defense system to protect what it purports to be its national interests, has also begun sending out coast guard patrols to hunt Chinese fishing vessels it says are operating illegally.

At the same time, the U.S., Japan, and South Korea recently conducted their first ever joint naval drills in a show of cooperation amid concerns over the much-hyped North Korean nuclear threat.This week, in fact, the navies of the U.S. and South Korea are conducting a series of exercises that simulate strikes on North Korean nuclear facilities.

China, however, has never bought the North Korea excuse. It’s stipulated all along the U.S. is using these drills as a pretext to prepare for a preemptive strike against Chinese interests, as China’s state-run People’s Dailywrote in early October:

“Like any other country, China can neither be vague nor indifferent on security matters that affect its core interests. If the United States and South Korea harm the strategic security interests of countries in the region including China, then they are destined to pay the price for this and receive a proper counter attack.”

END

7. OIL ISSUES

WTI plunges below $50 on another huge inventory build

(courtesy zero hedge)

WTI Plunges Below $50 On Biggest Inventory Build In 6 Months

Following last night’s bigger than expected build from API, DOE reports an even bigger (4.85 mm barrel) build – the biggest since April (and first build in six weeks). Cushing, Gasoline, and Distillates saw bigger than expected draws (likely presured by Hurricane effects). While Production dropped very modestly on the week, WTI plunged off early high back below $50.

API

  • Crude +2.7mm (+2mm exp)
  • Cushing -1.352mm (+100k exp)
  • Gasoline +688k (-900k exp)
  • Distillates -4.517mm

DOE

  • Crude +4.85mm (+2mm exp)
  • Cushing -1.318mm (+100k exp)
  • Gasoline -1.907mm (-900k exp)
  • Distillates -3.746mm

US Crude inventories rose for the first time in six weeks with the biggest build in 6 months…

US Production remains stuck around the 8.5mm bbl/d level

Gasoline stocks drew down 1.9MMbbl to 225MM, approaching the historical level for this time of year:

Likewise, distillates – perhaps on the back of last week’s hurricane – also declined by 3.7MMbbl and are now just 9MMbbl higher than 2015’s level:

Oil prices rallied back up to pre-API levels before the DOE datas hit

 

 

 

END

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

 

Euro/USA   1.1037 UP .0026/REACTING TO NO DECISION IN JAPAN AND USA + huge Deutsche bank problems 

USA/JAPAN YEN 103.73  DOWN 0.572(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 AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2206 UP .0020 (Brexit by March 201/pound clobbered)

USA/CAN 1.3238 DOWN .0038

Early THIS THURSDAY morning in Europe, the Euro ROSE by 26 basis points, trading now well above the important 1.08 level FALLING to 1.1037; 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,  THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK / Last night the Shanghai composite CLOSED UP 2.84 OR   0.09%   / Hang Sang  CLOSED DOWN 375.75 POINTS OR 1.61%     /AUSTRALIA IS LOWER BY 0.71% / EUROPEAN BOURSES ALL IN THE RED

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 65.76 POINTS OR 0.39%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 375.75  OR 1.61%  ,Shanghai CLOSED DOWN 2.84 POINTS OR .09%   / Australia BOURSE IN THE RED: /Nikkei (Japan)CLOSED IN THE RED  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1259.40

silver:$17.58

Early THURSDAY morning USA 10 year bond yield: 1.752% !!! DOWN 4 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.480, DOWN 3 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early WEDNESDAY morning: 97.75 DOWN 23 CENTS from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

END

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.37% DOWN  4 in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -.056% PAR in   basis point yield from WEDNESDAY

SPANISH 10 YR BOND YIELD:1.12%  UP 6 IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.38 DOWN 4  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 26 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +038% UP 3  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

Euro/USA 1.1048 UP .0038 (Euro UP 38 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 103.58 DOWN: 0.725(Yen UP 73 basis points/POLICY ERROR ON BANK OF JAPAN

Great Britain/USA 1.2247 UP 0.0062( POUND UP 62 basis points

USA/Canada 1.3194 DOWN 0.0084 (Canadian dollar UP 84 basis points AS OIL ROSE TO 50.36

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This afternoon, the Euro was UP by 38 basis points to trade at 1.1048

The Yen ROSE to 103.58 for a GAIN of 73 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  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 59 basis points, trading at 1.2247/ AND REACTING BADLY TO UPCOMING BREXIT FROM EU 

The Canadian dollar ROSE by 84 basis points to 1.3194, WITH WTI OIL AT:  $50.36

The USA/Yuan closed at 6.7269 (SENDING DEFLATION AROUND THE WORLD)

the 10 yr Japanese bond yield closed at -.056%  PAR  IN BASIS POINTS / yield/ AND THIS IS BECOMING BOTHERSOME TO THE BANK OF JAPAN

Your closing 10 yr USA bond yield:DOWN 4  IN basis points from WEDNESDAY at 1.736% //trading well below the resistance level of 2.27-2.32%) very problematic

USA 30 yr bond yield: 2.476 DOWN 2  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, 97.54 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 THURSDAY: 2:30 PM EST

London:  CLOSED DOWN 46.27 POINTS OR 0.66%
German Dax :CLOSED DOWN 109.09 OR  1.04%
Paris Cac  CLOSED DOWN 47.07 OR 1.06%
Spain IBEX CLOSED DOWN 77.80 OR 0.90%
Italian MIB: CLOSED DOWN 201.02 POINTS OR 1.22%

The Dow was DOWN 45.26 points or 0.25%  4 PM EST

NASDAQ  DOWN 25.69 points or 0.49%  4 PM EST
WTI Oil price;  50.36 at 2:30 pm; 

Brent Oil: 52.04   2:30 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  62.92(ROUBLE UP 22/100 ROUBLES PER DOLLAR FROM FRIDAY)  2:30 EST

TODAY THE GERMAN YIELD RISES TO +.038%  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:$50.42

BRENT: $51.95

USA 10 YR BOND YIELD: 1.746%

USA DOLLAR INDEX: 97.55 DOWN 43 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.2245 UP 0.0060 or 60 basis pts.

German 10 yr bond yield at 5 pm: +038%

 

END

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

TRADING IN GRAPH FORM

VIX-Slam Saves Stocks From China Turmoil As Copper Crashes

 

An oldie but a goodie… Didn’t work today…

 

China’s return from Golden Week combined with a dismal dump in ist trade data overnight has seenYuan volatility back on the rise…

 

Stocks are the biggest losers post-Fed Minutes…

 

Crude inventories rose, jamming oil lower, and then the narrative changed on the build (it was an imaginary build that was actually a yuuge draw) and oil ripped back above $50 and supported stocks…

 

Dow dipped below 18,000 but as Europe closed VIX was smashed lower and 18,000 was rescued…

 

Total desperation was unleashed to get stocks back into the green on the day.. but it failed…

 

Notably, the S&P 500 closed below its 100DMA for the 3rd day in a row – not happened since Feb…

 

Treasury yields fell on the day with the shorter-end back to unchanged on the week (2s30s slightly steeper)…

 

The USD Index fell for the first time in 6 days..

 

Copper was clubbed as Crude bounced and gold gained…

 

Copper was the biggest deal today but the dump’n’pump in crude was just farcical…

 

Leaving Copper at one-month lows…

 

Charts: Bloomberg

Bonus Chart: It appears the market is growing increasingly concerned at Hillary’s lead…

 

END

USA layoffs in Sept jump by 38%

(courtesy CNBC)

US LAYOFFS JUMP IN SEPTEMBER BY 38%

The number of announced layoffs by U.S.-based companies rose in September to the highest level in two months, global outplacement consultancy Challenger, Gray & Christmas reported Thursday.

Employers announced plans to cut 44,324 jobs last month, a 38 percent increase from August, when total job cuts of 32,2188 fell to lowest total since May.

September’s was the highest monthly total since July, when 45,346 layoffs were announced, Challenger said. Despite the monthly rise, September’s total was 25 percent below the announced job cuts a year ago.

The biggest job cutter last month was the education sector, rising by 363 percent to 8,671. Fueling the cuts was the collapse of for-profit college ITT Technical Institute, which sustained 8,000 job losses.

Cuts in the computer industry in September totaled 4,152 jobs. The sector’s year-to-date layoffs were second only to the energy sector, which announced 98,733 cuts for the nine-month period. CONTINUE @ CNBC

 

 

 

END

 

Wells Fargo CEO retires immediately as the heat of the situation got to him

(courtesy zero hedge)

Wells Fargo CEO John Stumpf To Retire Effective Immediately

The most anticlimatic and predictable outcome to the biggest banking scandal to rock Wall Street in recent years, Wells Fargo;s fraudulent creation of 2 million (or more) fake customer accounts, has just concluded in the only possible way: with CEO and Chairman John Stumpf retiring.  

The stock has jumped on the news, up 2% in the after hours.

There are two outstanding questions here: i) the size of his retirement package, and ii) whether by exiting stage left, he leaves criminal and civil liability behind, or whether this time, the DOJ and/or SEC will actually prosecute the disgraced form chief executive.

The Full press release is below:

Wells Fargo & Company (NYSE:WFC) announced today that Chairman and Chief Executive Officer John Stumpf has informed the Company’s Board of Directors that he is retiring from the Company and the Board, effective immediately. The Board has elected Tim Sloan, the Company’s President and Chief Operating Officer, to succeed him as CEO, and Stephen Sanger, its Lead Director, to serve as the Board’s non-executive Chairman, and independent director Elizabeth Duke to serve as Vice Chair. Sloan also was elected to the Board.

Sloan’s appointment to CEO and election to the Board are effective immediately. He will retain the title of President.

Sanger said, “John Stumpf has dedicated his professional life to banking, successfully leading Wells Fargo through the financial crisis and the largest merger in banking history, and helping to create one of the strongest and most well-known financial services companies in the world. However, he believes new leadership at this time is appropriate to guide Wells Fargo through its current challenges and take the Company forward. The Board of Directors has great confidence in Tim Sloan. He is a proven leader who knows Wells Fargo’s operations deeply, holds the respect of its stakeholders, and is ready to lead the Company into the future.”

Stumpf, a 34-year veteran of the Company, joined Wells Fargo in 1982 as part of the former Norwest Bank, becoming Wells Fargo’s CEO in June 2007 and its chairman in January 2010.

“I am grateful for the opportunity to have led Wells Fargo,” Stumpf said. “I am also very optimistic about its future, because of our talented and caring team members and the goodwill the stagecoach continues to enjoy with tens of millions of customers. While I have been deeply committed and focused on managing the Company through this period, I have decided it is best for the Company that I step aside. I know no better individual to lead this company forward than Tim Sloan.”

Sloan said, “It’s a great privilege to have the opportunity to lead one of America’s most storied companies at a critical juncture in its history. My immediate and highest priority is to restore trust in Wells Fargo. It’s a tremendous responsibility, one which I look forward to taking on, because of the incredible caliber of our people, and the opportunity we have to impact the lives of our millions of customers around the world. We will work tirelessly to build a stronger and better Wells Fargo for generations to come.”

Sloan joined Wells Fargo 29 years ago, launching a career that would include numerous leadership roles across the Company’s wholesale and commercial banking operations, including as head of Commercial Banking, Real Estate and Specialized Financial Services. He became president and COO in November 2015, when he assumed leadership over the Company’s four main business groups: Community Banking, Consumer Lending, Wealth and Investment Management and Wholesale Banking. Previously, he headed the Wholesale Banking group after serving as the Company’s Chief Financial Officer and, prior to that, as the Company’s Chief Administrative Officer.

Sanger has been a member of the Wells Fargo Board since 2003, serving as its Lead Director since 2012. Sanger also chairs the Governance and Nominating Committee and is a member of Human Resources Committee and Risk Committee. He was CEO of General Mills, Inc., a leading packaged food producer and distributor, from 1995 until 2007. He served as chairman of General Mills from 1995 to 2008. He also serves on the board of Pfizer Inc.

Duke has been a member of the Wells Fargo Board since 2015. She served as a member of the Board of Governors of the Federal Reserve System from 2008 to 2013, where she served as Chair of the Federal Reserve’s Committee on Consumer and Community Affairs and as a member of its Committee on Bank Supervision and Regulation, the Committee on Bank Affairs, and the Committee on Board Affairs. She also previously held senior management positions at banks including Wachovia and SouthTrust.

So, Elizabeth Warren ‘Wins’ by knockout.

 

END

 

This should give you an idea of how pension shortfalls can destroy towns or cities:

(courtesy zero hedge)

Pension Benefits In Tiny California Town To Be Slashed As “Ponzi Scheme” Is Exposed

For the tiny little town of Loyalton, California, with a population of only 700, a failure of city council members to understand the difference between the calculation a regular everyday pension liability and a “termination liability” has left 4 residents at risk of losing their pensions from Calpers.  According to the New York Times, the town of Loyalton decided to drop out of Calpers back in 2012 in order to save some money but what they got instead was a $1.6mm bill which was more than their annual budget.

For those who aren’t familiar with pension accounting, we can shed some light on the issue faced by Loyalton.  There are two different ways to calculate the present value of pension liabilities.  One methodology applies to “solvent”, fully-functioning pension funds (we call this the “Ponzi Methodology”) and the other applies to pensions that are being terminated (we call this one “Reality”).

Under the “Ponzi Methodology,” pension funds, like Calpers, discount their future liabilities at 7.5% in order to keep the present value of their liabilities artificially low.  That way, pension funds can maintain the illusion that they’re solvent and the Ponzi scheme can continue on so long as there are enough assets to cover annual benefit payments.

Now, the managers of the pension funds aren’t actually dumb enough to believe that the “Ponzi Methodology” accurately reflects the true present value of future liabilities because they know that, particularly in light of current Central Banking policies around the world, their actual long-term returns will be much lower than 7.5%.  Therefore, they have a completely separate, special calculation that applies when towns, like Loyalton, want to exit their plan.  This “termination liability”, or what we refer to as “Reality”, uses a discount rate closer to or even below risk-free rates which means the present value of the future liabilities is much higher.

As a quick example, lets just assume that Loyalton’s 4 pensioners draw $225,000 per year, in aggregate pension benefits, and enjoy a 2% annual inflation adjustment.  Assuming a 7.5% discount rate, the present value of that liability stream is about $2.9mm.  However, if the discount rate drops to 2%, the present value of those liabilities surges to $4.5mm…hence the $1.6mm bill sent to the Loyalton City Council.

Loyalton

Of course the 4 residents of Loyalton currently drawing a pension were outraged by the discovery that their monthly benefits may be slashed.

“I worked all those years, and they did this to me,” said Patsy Jardin, 71, who kept the town’s books for 29 years, then retired in 2004 on an annual pension of about $48,000. Now, because of Loyalton’s troubles, Calpers could cut it to about $19,000.

In Loyalton, Mr. Cussins, the retiree and City Council member, said he was so frustrated about being barred from the council’s pension discussions that he and another former town worker drove to Sacramento to attend Calpers’s last board meeting.

The trustees were cordial, he said, but they held out little hope.

“We had a bunch of them come and shake our hands,” he said. “I said, ‘We need some guidance.’ They told us the city could apply to get back into Calpers next spring. But they made it very clear that they will not allow the city to get back into Calpers until that $1.6 million is paid.”

As Calpers’s chief of public affairs points out “the State of California is not responsible for a public agency’s unfunded liabilities.”  And since Calpers knows that the “Ponzi Methodology” is not an accurate reflection of their true liabilities, towns like Loyalton must pay the difference between the “Ponzi Methodology” and “Reality” when they choose to withdraw.

Public pensions are supposed to be bulletproof, because cities — unlike companies — seldom go bankrupt, and states never do. Of all the states, experts say, California has the most protective pension laws and legal precedents. Once public workers join Calpers, state courts have ruled, their employers must fund their pensions for the rest of their careers, even if the cost was severely underestimated at the outset — something that has happened in California and elsewhere.

Across the country, many benefits were granted at the height of the 1990s bull market on the faulty assumption that investments would keep climbing and cover most of the cost. And that flawed premise is now hitting home in places like Loyalton.

“The State of California is not responsible for a public agency’s unfunded liabilities,” said Wayne Davis, Calpers’s chief of public affairs. Nor is Calpers willing to play Robin Hood, taking a little more from wealthy communities like Palo Alto or Malibu to help luckless Loyalton. And if it gave a break to one, other struggling communities would surely ask for the same thing, setting up a domino effect.

Loyalton

Mr. Davis, the Calpers spokesman, said that since 2011, Calpers had been giving its member municipalities a “hypothetical termination liability” in their annual actuarial reports, so there was little excuse for not knowing that a payment would be due upon exit.  But the former Mayor of Loyalton said the paperwork was simply too confusing.

Ms. Whitley disagreed. “It’s just too confusing,” she said. “I looked at what’s been happening with all the other entities, and I saw that eventually it’s got to collapse. It’s almost like a Ponzi scheme.”

While Whitley was right that her town was trapped in a “Ponzi Scheme,” she failed to recognize the critical fact that only willing participants get to participate in the Ponzi…for everyone else, we have to continue living in “Reality.”

 

 

 

END

 

The very popular hedge fund, Bridgewater, was evacuated yesterday after receiving a bomb threat

(courtesy zero hedge)

World’s Biggest Hedge Fund Evacuated After Receiving Wednesday Afternoon Bomb Threat

While bomb threats to schools and government institutions are a standard feature in this day and age, there was a twist on a familiar theme yesterday afternoon when employees of Bridgewater Associates, the biggest hedge fund in the world, evacuated from the company’s Westport headquarters Wednesday after a ” nonspecific bomb threat,” according to an alert sent out by the company to employees. The evacuation was first reported by the WSJ.

The alert, sent out at about 3:30 p.m., instructed staff to “immediately evacuate the building” and wait for instructions from police or Bridgewater security, the alert said. No bomb was found.

Bridgewater manages about $150 billion for global pension funds and institutional investors. It has about 1,500 employees as of earlier this year, but is undergoing layoffs, according to a letter sent to investors last month.

“We had a routine bomb threat and handled it accordance with our well-established protocols,” a Bridgewater spokeswoman said.

Considering that the trading floor was entirely evacuated and yet there was no impact to the company’s P&L, or the market for that matter – recall that Bridgewater’s “risk parity” strategy is one of the most important, marginal price setters for the entire S&P, one marvels at the level of automation within the world’s biggest hedge fund. Alternatively, now that the genie is out of the bottle, one wonders if other more “hands on” hedge funds won’t suffer the same threats in the coming weeks as disgruntled former or current employees seek to punish their employers in a market in which being present and observing every gyration in this volatile, illiquid market can mean the difference between profit and a career-ending loss.

 

END

Import prices have now dropped for 26 straight months as both the uK and China are supplying the deflation.

(courtesy zero hedge)

US Import Prices Drop For 26th Straight Month As UK Exports Most Deflation

US import prices have now fallen year-over-year for 26 straight months – the longest non-recessionary streak in US history. The 1.1% decline is slightly worse than expected as China’s exported deflation was flat at 6 year lows but UK ‘exported’ the most deflationary pressure.

26 months in a row… probably nothing.

And while China was flat at 6 year lows, UK is now exporting deflation rapidly…

Time to hike rates?

Charts: Bloomberg

 end

See you tomorrow night

Harvey

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3 comments

  1. Thank you Harvey. Is there information you have access to which would track PM activity in the China exchange for direct comparison to that of the Comex possibly to see if in fact the china premium is drawing activity away, or if not yet, at least growing in volume? elements listed in orange and yellow tables above.

    Like

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