Gold $1260.80 UP  $6.40

Silver 17.59 UP 16 cents

In the access market 5:15 pm

Gold: 1262.50

Silver: 17.63



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 18 (10:15 pm est last night): $  1265.29


Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1264.67


HUGE SPREAD TODAY!!  5 dollars


London Fix: OCT 18: 5:30 am est:  $1261.65   (NY: same time:  $1261.60:    5:30AM)

London Second fix OCT 14: 10 am est:  $1258.20  (NY same time: $1258.20 ,    10 AM)


Shanghai premium in silver over NY:  87 cents.

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

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


For comex gold: 


For silver:

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


Let us have a look at the data for today



In silver, the total open interest FELL by 2078 contracts DOWN to 186,912. The open interest FELL as the silver price was UP 4 cents in yesterday’s trading .In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .934 BILLION TO BE EXACT or 134% 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 ROSE by 1310 contracts with the RISE  in price of gold( $1.30 YESTERDAY) . The total gold OI stands at 492,937 contracts. The bankers continue with their quest of  fleecing our comex gold longs


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



Total gold inventory rests tonight at: 967.21 tonnes of gold


we had NO CHANGES at the SLV/

THE SLV Inventory rests at: 362.285 million oz


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

1. Today, we had the open interest in silver FELL by 2,078 contracts DOWN to 186,912 as the price of silver ROSE by 4 cents with yesterday’s trading.The gold open interest ROSE by 1310 contracts UP to 492,937 as the price of gold ROSE $1.30 IN YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg



i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 42.71 POINTS OR 1.50%/ /Hang Sang closed UP 356.85 POINTS OR 1.56%. The Nikkei closed UP 63.49 POINTS OR 0.38% Australia’s all ordinaires  CLOSED UP 0.41% /Chinese yuan (ONSHORE) closed UP at 6.7374/Oil ROSE to 50.32 dollars per barrel for WTI and 51.65 for Brent. Stocks in Europe: ALL IN THE GREEN   Offshore yuan trades  6.7427 yuan to the dollar vs 6.7374 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS QUITE A BIT  AS MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES



none today


none today



The Philippines are moving closer and closer to China and further from USA interests. This is not good for the USA

(courtesy Tom Luongo/PlanetFreeWill.com)



A BREXIT needs a vote from both houses.  This causes the pound to rise

( zero hedge)


A terrific commentary from Mish Shedlock as he discusses who would win if these is a hard BREXIT:

In his opinion and I believe he is correct, the biggest loser will be the EU itself

( Mish Shedlock)



Relations between Russia and the west continue to disintegrate as Lavrov accuses the UK government of pressuring RBS to block RT bank accounts:

( zero hedge)


A huge story:  China dumps 34 billion USA dollars worth of bonds while Saudi Arabia sells 94 billion. Custodial holdings of USA paper for both China and Saudi Arabia are at 2012 lows.

The question is who is buying the stuff..answer private individuals.  They are probably unaware of Saudi and Chinese dumping.  What happens if the buyers go on strike? Answer: QE4

( zero hedge)


Nigeria spins out of control as inflation targets 18%and its currency the Naira falls to 460 to one USA dollar

( Steve Hanke)


i)It looks like oil will reach its peak demand in 15 years and not have the steady growth predicted my many:

( Nick Cunningham/Oil Price.com)

ii)big inventory draw causes WTI to surge above 51.00 dollars

(courtesy zero hedge)



i)We now have the amount of settlement that Deutsche bank has to pay:  38 million dollars. The amount is low because  DB will provide the ample evidence of collusion against Scotia and HSBC, and Soc Generale. What is also important is the key findings by the judge

( zero hedge)

ii)Craig Hemke reports on the above story:

( Craig Hemke/TFMetals

iii)Insiders know that the EU and the Euro is doomed

( James Turk/Kingworldnews)


iv)Singapore wants to be another London, in the gold business

( Reuters)

v)China is now trying to bring the Shanghai gold fixing to the rest of Asia including Singapore:

( Reuters)

vi)Ross Norman’s reply to Chris Powell:

( Chris Powell/Ross Norman/Pixley)

vii)Chris Powell responds to Ross Norman of Pixley:

( Chris Powell/GATA)



i)Consumer prices rose from 1.1% year/year to 1.5% year over year.  However core CPI remains well above the Fed’s mandated 2.0% guided level at 2.2% and it has been above 2% for 11 straight months

( zero hedge)


ii)Bellwether for global growth IBM sinks again after recording its 18th straight revenue drop.  It also missed on margins.  The earnings per share beat on an income tax rate fudge:

( zero hedge)

iii)The crooks (Goldman Sachs) did OK due to their proprietary trading dept.

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 1310 CONTRACTS to an OI level of 492,937 as the price of gold ROSE $1.30 with YESTERDAY’S trading.

We are in the delivery month is October and here the OI LOST 534 contracts DOWN to 127. We had 530 notices filed yesterday so we lost 4 contracts or 400 additional oz will not stand.

The next delivery month is November and here the OI ROSE by 1 contract(s) UP to 2987 contracts. This level is extremely elevated as generally November is a very poor delivery month.To give you an idea of size, on Oct 18 2015, we had an OI of only 248 contracts.The next contract month and the biggest of the year is December and here this month showed an increase of 1,056  contracts up to 367,818.

Today we had  5 notices filed for 500 oz of gold.

And now for the wild silver comex results.  Total silver OI fell BY 2078 contracts from 188,990 down to 186,912 as the  price of silver ROSE  to the tune of 4 cents 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 3 contracts up to 150. We had 1 notice filed yesterday so we gained 4 contracts or 20,000 additional oz will stand for delivery.The November contract month saw its OI gain 1 contract up to 330.   The next major delivery month is December and here it FELL BY 1492 contracts DOWN to 150,145.


Today the estimated volume was 153,060 contracts which is fair.

Yesterday, the confirmed volume was 124,529 which is also poor.

today we had 1 notice filed for 5,000 oz of silver:

INITIAL standings for OCTOBER
 Oct 18.
Withdrawals from Dealers Inventory in oz  NIL
Withdrawals from Customer Inventory in oz  nil
225.05 oz
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
5 notices 
500 oz
No of oz to be served (notices)
122 contracts
Total monthly oz gold served (contracts) so far this month
8524 contracts
852,400 oz
26.51 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month    oz
Total accumulative withdrawal of gold from the Customer inventory this month    175,434.0 oz
Today we had 1 kilobar transactions and a tiny amount leaves the comex
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 0 customer deposits;
total customer deposits; nil oz
We had 1 customer withdrawal(s)
i) Out of Manfra; 225.05 oz
(5 kilobars)
total customer withdrawal: 225.05  oz
We had 1 adjustment(s)
i) Out of Malca:  707.322 oz was adjusted out of the customer and this landed into the dealer account of Malca.
Total dealer inventor 2,305.068.210 or 71.697 tonnes
Total gold inventory (dealer and customer) =10,605,500.75. or 329.87 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 329.87 tonnes for a  gain of 27  tonnes over that period.  Since August 8 we have lost 24 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 5 contractS  of which 0 notices were stopped (received) by jPMorgan dealer and  0 notice(s) was (were) stopped received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the Oct contract month, we take the total number of notices filed so far for the month (8524) x 100 oz or 852,400 oz, to which we add the difference between the open interest for the front month of OCT (XXX contracts) minus the number of notices served upon today (5) x 100 oz per contract equals 864,600 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 (8524) x 100 oz  or ounces + {OI for the front month (127) minus the number of  notices served upon today (5) x 100 oz which equals 864,600 oz standing in this non active delivery month of Oct  (26.892 tonnes).
we LOST 400 additional oz standing in this active delivery month of October and I believe that this is a record standing for October. To give you an idea of size from last yr, we had only a little over 2 tonnes standing at the conclusion of Oct 2015!
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
And now for silver
OCT INITIAL standings
 Oct 18. 2016
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
177,893.700 oz
Deposits to the Dealer Inventory
nil OZ
Deposits to the Customer Inventory 
516,081.0000 oz
No of oz served today (contracts)
No of oz to be served (notices)
150 contracts
(750,000 oz)
Total monthly oz silver served (contracts) 356 contracts (1,780,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  4.956,024.2 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 1 customer withdrawals:
i) Out of BRINKS: 177,893.700
Total customer withdrawals: 177,893.700  oz
We had 1 customer deposits:
i) Into JPMorgan: 516,081.000 oz ??? EXACT WEIGHT???
total customer deposits: 516,081.000 oz
 we had 1 adjustment(s) 
I) A 27.000 OZ  was removed from Delaware as an accounting error.
Today the estimated volume was 64,675 which is EXCELLENT.
Yesterday the confirmed volume was 36,578 which is GOOD
The total number of notices filed today for the Oct contract month is represented by 0 contract(s )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  356 x 5,000 oz  = 1,780,000 oz to which we add the difference between the open interest for the front month of OCT (150) 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:  356(notices served so far)x 5000 oz +(150) OI for front month of SEPT ) -number of notices served upon today (0)x 5000 oz  equals  2,530,000 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 20,000 additional silver ounces THAT WILL  STAND.
Total dealer silver:  29.286 million (close to record low inventory  
Total number of dealer and customer silver:   173.725 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.
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
Oct 18/ Inventory rests tonight at 967.21 tonnes


Now the SLV Inventory
OCT 13/ NO CHANGES  in inventory at the SLV/Inventory rests at 361.147 million oz
Oct 12:NO CHANGES  in inventory at the SLV/Inventory rests at 361.147 million oz
Oct 11/ a withdrawal of 1.762 million oz of inventory from the SLV/Inventory rests at 361.147 million oz/
Oct 18.2016: Inventory 362.285 million oz

NPV for Sprott and Central Fund of Canada

Central fund data not available today.

1. Central Fund of Canada: traded at Negative 3.7 percent to NAV usa funds and Negative 3.9% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.8%
Percentage of fund in silver:38.1%
cash .+1.1%( Oct 17/2016).
2. Sprott silver fund (PSLV): Premium RISES to +1.35%!!!! NAV (OCT 18/2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES TO  0.91% to NAV  ( OCT 18/2016)
Note: Sprott silver trust back  into POSITIVE territory at 1.35% /Sprott physical gold trust is back into positive territory at 0.91%/Central fund of Canada’s is still in jail.


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

Trading in gold and silver overnight in Asia and Europe

Euro “Will Collapse” As Is “House of Cards” Warns Architect of Euro

The Euro “will collapse” as it is a”house of cards” warned Otmar Issing, the founder and creator of the euro in an extraordinary interview on Monday.

euro_drachmaPaper currency – Euro paper notes and Greek drachma note

In the explosive interview with the journal Central Banking, Professor Issing, said “one day, the house of cards will collapse”  as the European Central Bank (ECB) is becoming dangerously over-extended and the whole euro project is unworkable in its current form.

The founding architect of the monetary union has warned that Brussels’ dream of a European superstate will finally be buried amongst the rubble of the crumbling single currency he designed.

“Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly,” he told the journal Central Banking in a remarkable deconstruction of the EU project.

The respected economist launched a withering attack on so called eurocrats and German Prime Minister Angela Merkel, accusing them of betraying the principles of the euro and demonstrating scandalous incompetence over its management.

And he savaged the whole idea of a federal “United States of Europe”, saying the attempt to push through federalisation in a stealth manner “by the back door” has turned the very foundations that the currency was built on into a complete mess of patchwork legislation, into which it is sinking fast.

As is frequently the case when there is substantive damaging criticism about the EU and ECB from respected and authoritative sources, the interview was treated in quite an Orwellian manner. It completely ignored and not reported by most state run media in Ireland, the UK and EU.  Most state run media is overwhelmingly pro-EU and continues to ignore the serious problems and growing risks posed by the single currency and the undemocratic EU to the citizens of Europe. Nor was it reported in most corporate media in the EU which also tends to ignore all reasonable criticisms of the EU, ECB and especially the euro.

The explosive interview has been covered extensively in the more “right wing” euro “skeptic” media in the UK in papers such as The Telegraph and The Mail which means that most people in the EU will not even be aware of Otmar Issing’s very real and reasonable concerns and the growing risks posed to the currency they use in their lives every day and their very way of life.

gold in euros_2016Gold in Euros – 5 Years

The coming collapse of the euro is seems inevitable. The question is when rather than if. It gives us no pleasure to say so as the collapse of the euro  will be financially painful for family, friends and people and companies in all EU nations.

The euro has even greater challenges than sterling which has collapsed more than 43% against gold this year. It is only a matter of time before market participants and foreign exchange traders’ focus, moves from sterling to the ‘not so single’ euro. Then the euro will see a similar depreciation and devaluation in the coming months.

Gold will again fulfill its primary role which is as a hedge against currency devaluation. As it has done in the UK and many other nations in recent months and indeed has done throughout history.

Gold and Silver Bullion – News and Commentary

LBMA Singapore: Gold Seen Rebounding Next Year Amid Low Real Interest Rates (Bloomberg)

INTERVIEW-China gold demand to stay firm at 900-1,000 T in 2017 -WGC (CNBC)

SBMA, LBMA and IBA Launch Feasibility Study on “Singapore LBMA Pre-AM Gold Price” (MarketWatch)

Deutsche Bank to Pay $38 Million in U.S. Silver Price-Fixing Case (Reuters)

Gold steady on weaker dollar, firmer stocks cap gains (Reuters)

Money Managers Cut Gold Bets as ETF Holdings Soar to 3-Year High (Bloomberg)

SWOT Analysis: Despite Worst Week for Gold Futures, ETF Inflows Continue (GoldSeek)

Good News For Gold Bugs: The Bottom Is Getting Closer (DollarCollapse)

Inflation could double as oil price pushes up petrol costs (Telegraph)

Euro ‘house of cards’ to collapse, warns ECB prophet (Telegraph)


Gold Prices (LBMA AM)

18 Oct: USD 1,261.65, GBP 1,031.15 & EUR 1,145.33 per ounce
17 Oct: USD 1,252.70, GBP 1,029.59 & EUR 1,139.58 per ounce
14 Oct: USD 1,256.15, GBP 1,028.79 & EUR 1,140.08 per ounce
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

Silver Prices (LBMA)

18 Oct: USD 17.65, GBP 14.37 & EUR 16.03 per ounce
17 Oct: USD 17.40, GBP 14.30 & EUR 15.83 per ounce
14 Oct: USD 17.47, GBP 14.28 & EUR 15.86 per ounce
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

Recent Market Updates

– Property Bubble In Ireland Developing Again
– “Gold Is A Great Hedge Against Politicians” – Goldman
– Sell Gold Now – Time To Liquidate Gold ETF, Pooled and Digital Gold
– 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”

Mark O’Byrne
Executive Director



We now have the amount of settlement that Deutsche bank has to pay:  38 million dollars. The amount is low because  DB will provide the ample evidence of collusion against Scotia and HSBC, and Soc Generale. What is also important is the key findings by the judge

(courtesy zero hedge)

Deutsche Bank Pays $38 Million To Settle Silver Manipulation Lawsuit

2016 is shaping up as the year when countless conspiracy theories will be confirmed to be non-conspiracy fact: from central bank rigging of capital markets, to political rigging of elections, to media rigging of public sentiment, and now, commercial bank rigging of silver.

In short, tinfoil hat-wearing nutjobs living in their parents basement have been right all along.

Two weeks ago we reported that “In A Major Victory For Gold And Silver Traders, Manipulation Lawsuit Against Gold-Fixing Banks Ordered To Proceed,” however one bank was exempt: Deutsche Bank. The reason why was known since April, when we first reported that Deutsche Bank had agreed to settle the class action lawsuit filed in July 2014 accusing a consortium of banks of plotting to manipulate gold and silver. Among the charges that Deutsche Bank effectively refused to contest were the following:

  • employment of a manipulative device claims
  • bid-rigging, and unjust enrichment.
  • price fixing and unlawful restraint
  • price manipulation claims
  • aiding and abetting and principal-agent claims.

Briganti’s affidvait provides some more information on the settlement process:

The negotiations with Deutsche Bank over the material terms of the Settlement took place over several months starting in December 2015 and continuing until the Deutsche Bank Settlement Agreement was executed on September 6, 2016.

Following initial phone calls with Deutsche Bank’s counsel in December 2015, Lowey and Grant & Eisenhofer engaged in lengthy negotiations with Deutsche Bank’s counsel over the material terms of the settlement, including the amount of the settlement consideration, the scope of the cooperation to be provided by the Deutsche Bank Defendants, the scope of the releases, and the circumstances under which the parties would have the right to terminate the settlement.

During the course of the negotiations, Class Counsel presented what we perceived to be the strengths and weaknesses of the claims and defenses, as well as Deutsche Bank’s litigation exposure.

In February 2016, we reached an agreement with Deutsche Bank on the amount of the settlement, subject to the negotiation of other material terms of the deal. For example, given that this is the first settlement in the case, it was our view that the cooperation provisions of the deal were extremely important to our ability to maximize the overall recovery for the class against the Non-Settling Defendants. The negotiations as to the scope of the cooperation provisions continued for several months.

On April 13, 2016, counsel for Deutsche Bank and Class Counsel signed a Binding Settlement Term Sheet (“Term Sheet”). The Term Sheet set forth the terms on which the parties agreed, subject to the negotiation of a full Settlement Agreement, to settle Plaintiffs’ claims against Deutsche Bank. At the time the Term Sheet was executed, Class Counsel was well-informed about the legal risks, factual uncertainties, potential damages, and other aspects of the strengths and weaknesses of the claims and defenses asserted.

By letter dated April 13, 2016, the Parties reported to the Court via ECF that the Term Sheet had been executed, and advised the Court that the Term Sheet would be superseded by a formal settlement agreement. ECF No. 116.

The parties negotiated the Deutsche Bank Settlement Agreement over the course of the next several months. The negotiations over the terms of the Deutsche Bank Settlement Agreement included various material terms over which the parties had substantial disagreement, requiring significant give and take on both sides. To that end, drafts of the Deutsche Bank Settlement Agreement went back and forth between the parties, and numerous contested issues were raised, negotiated and resolved, including without limitation, continuing negotiations over the scope of Deutsche Bank’s cooperation (see ¶ 4(A)-(G)), the scope of the releases (see ¶ 12 (A)-(C)), and the circumstances under which the parties could terminate the Settlement (see ¶ 21).

Thus, the Deutsche Bank Settlement Agreement, which was executed (along with the Supplemental Agreement) on September 6, 2016, was the culmination of arm’s-length settlement negotiations that had extended over many months.

The Deutsche Bank Settlement was not the product of collusion. Before any financial numbers were discussed in the settlement negotiations and before any demand or counter-offer was ever made, we were well informed about the legal risks, factual uncertainties, potential damages, and other aspects of the strengths and weaknesses of the claims against Deutsche Bank.

The Deutsche Bank Settlement involves a structure and terms that are common in class action settlements in this District. The consideration that Deutsche Bank has agreed to pay is within the range of that which may be found to be fair, reasonable, and adequate at final approval.

There was just one thing missing: the settlement amount. This afternoon, that too was revealed when according to court filings, Deutsche Bank had agreed to pay $38 million to settle U.S. litigation over allegations it illegally conspired with other banks to fix silver prices at the expense of investors. The settlement, disclosed in papers filed in Manhattan federal court, concludes one of many recent lawsuits in which investors have accused banks of conspiring to rig the precious metal markets. However, until now there was never any formal closure. Today, that closure cost Deutsche Bank $38 million.

While the amount is tiny for the German bank, now that it is enshrined in case law, it will unleash dozens of similar class action lawsuits, each tweaked a little, and each demanding tens of millions from the gold and silver rigging banks. As Reuters adds, the settlement had been expected since April, though terms had yet to be disclosed. In court papers, lawyers for the investors say the deal will likely be an “ice breaker” that will serve as a catalyst for other banks to settle.

Vincent Briganti, a lawyer for the investors, said the deal provides “substantial monetary compensation plus cooperation from Deutsche Bank in the continued prosecution of this important case against the non-settling defendants.”

As a reminder, in the litigation profiled here most recently, investors claimed Deutsche Bank, HSBC Holdings Plc and Bank of Nova Scotia (ScotiaBank) rigged silver prices through a secret daily meeting called the Silver Fix, and accused UBS AG of exploiting that fix.  The alleged conspiracy started by 1999, suppressed prices on roughly $30 billion of silver and silver financial instruments traded each year, and enabled the banks to pocket returns that could top 100 percent annualized, the investors said.

Earlier this month, U.S. District Judge Valerie Caproni ruled the investors had sufficiently, “albeit barely,” alleged that Deutsche Bank, HSBC and ScotiaBank violated U.S. antitrust law by conspiring to depress the Silver Fix from 2007 to 2013. At the same time, the judge dismissed UBS from the case, saying there was nothing showing it manipulated prices, even if it benefited from distortions.

The Judge added that the investors could amend their complaint, including against UBS, and a lawyer for the investors has said they planned to do so.

So who gets to benefit from the settlement?

We have reason to believe that there are at least hundreds of geographically dispersed persons and entities that fall within the Settlement Class definition. The Settlement Class includes traders of COMEX Silver Futures contracts, anyone who traded in physical silver based on the Silver Fix, and traders in various silver derivatives.

The other beneficiary, of course, is the class of investors, people and “conspiracy theorists” who claimed all along that gold and silver were subject to rigging in various forms throughout the years. Well, you were right. However, we wouldn’t hold much hope for getting any substantial monetary rewards. By the time the settlement is done, there will likely be a few hundred dollars per claimant.

The good news, however, is that this will only unleash many more such lawsuits, now that the seal has been broken.

As for the remaining two banks in the class action, HSBC and Bank of Nova Scotia, the next pretrial conference in that lawsuit which was greenlighted two weeks ago is scheduled for October 28, 2016. Those who wish to be present should appear at 3:00 p.m. in courtroom 443 of the Thurgood Marshall Courthouse, 40 Foley Square, New York, NY 10007.

The Vincent Briganti Declaration is below






Craig Hemke reports on the above story:

(courtesy Craig Hemke/TFMetals

The Importance of The Deutsche Bank Silver Fix Lawsuit Settlement

Craig Hemke


Tuesday, October 18th

This post is intended to remind you that this case is not about the present and it’s not about the $38MM dollars. Instead, the true significance of this lawsuit will be on display over the coming months and years as innumerable new class action lawsuits are filed against The Bullion Banks for their collective role in rigging and manipulating the precious metals markets.

First, some links. Here’s the news item from yesterday released by Reuters and a comprehensive write-up from Zerohedge:

And here are two links from back in April to remind you of the case:

The typical internet reaction I’ve seen thus far is this:

A) This is only $38MM. Where’s my money? I’ve lost a lot of money due to the metals being manipulated but I won’t get any of this settlement and, because the dollar amount is so small, neither will anyone else.

B) This is just another slap on the wrist. A paltry $38MM is a drop in the bucket for Deutschebank and they’ll now skate along with the rest of The Banks.

C) All of the manipulation conspiracy whackos are dead wrong. This case was just a nuisance and Deutschebank only agreed to settle so that the whole thing would just go away. Big corporations do this all the time so move along now. There’s nothing to see here.


The impact and future effects of this case are significant and real. Yes, $38MM is not a lot of money and the settlement will only be disbursed to those few who had participated in the class action. But go back up this page and listen to the interview that I did with The Daily Coin. This is the first time that a settlement has been reached in a precious metals price rigging lawsuit. It’s also the first time that a Bank has agreed to turn state’s evidence against the other Banks that rig the process. The two items ensure that the case against both HSBS and Scotia is being built and that they will soon be forced to settle, too. Already, a NY judge has allowed the case to proceed into legal discovery (subpoenas, depositions, documents, etc) for the first time ever.

But the real story will be what comes next…A virtual avalanche of similar class action lawsuits, each alleging price manipulation and multi-million dollar plaintiff losses. Now that DB is “singing” and legal discovery is proceeding in this single case, the floodgates are truly open.

So think of this from the point of view of a Bullion Bank. Not only are you getting squeezed by tight margins and limited physical supply in London, you’re also deeply underwater on most of the Comex futures positions that you’ve shorted in New York. And now this…An almost endless stream of future lawsuits from investors around the world whom you’ve cheated and defrauded over the past 20 years! What do you think these Banks are going to do in response? Many to most of them will just simply exit the bullion banking business! Can you even comprehend the monumental change this would represent?

Of course this is not going to happen over the next few days or weeks. Instead, a process like this will take months to play out which is WHY we felt the need for this post and reminder. Do not get caught up in the headline of just this one settlement and do not allow some Cartel shill to persuade you that this whole thing is meaningless.

I can assure you that, in the future, when we look back on the rubble of what was “bullion banking”, the date of April 13, 2016 will live in infamy. That was the day that the settlement was first announced and it was the day that The Bullion Banks’ entire house of cards began to crumble under the weight of accumulated fraud, deceit and lies.

Hang in there, my friend. We are winning.




Insiders know that the EU and the Euro is doomed

(courtesy James Turk/Kingworldnews)

Even insiders know that the EU is doomed, Turk tells KWN


2:35p ET Monday, October 17, 2016

Dear Friend of GATA and Gold:

Interviewed today by King World News, GoldMoney founder and GATA consultant James Turk says that even members of the political and financial establishment understand that the European Union project has been botched and is doomed. An excerpt from the interview is posted at KWN here:


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





Singapore wants to be another London, in the gold business

(courtesy Reuters)

Singapore makes another bid for Asia to help set gold price


By Manolo Serapio Jr.
Monday, October 17, 2016

SINGAPORE — Singapore will study the possibility of bringing the gold benchmark pricing in London to users in Asia in a move that would also allow market participants in the world’s top consuming region to help set the price of bullion.

The importance of Asia, home to the world’s biggest buyers China and India, has been on the rise as the key source of demand for gold, but bullion traders in the region are often exposed to intraday price volatility and overnight foreign exchange risks with benchmark prices currently being set out of London.

The Singapore Bullion Market Association, London Bullion Market Association, and Intercontinental Exchange Benchmark Administration will launch a joint feasibility study on the development of “LBMA pre-AM gold price at 2 p.m. Singapore time”, Lim Hng Kiang, minister for trade and industry and deputy chairman of the Monetary Authority of Singapore, told an industry conference today.

The study “is an important first step toward establishing a U.S. dollar price-discovery mechanism for gold during Asian business hours,” Lim said. “When in place, it will facilitate the timely tracking of Asian demand and allow participants in Asia to settle their trades within the same business day.” …

… For the remainder of the report:







China is now trying to bring the Shanghai gold fixing to the rest of Asia including Singapore:

(courtesy Reuters)

China, Singapore boost gold pricing campaign in push for Asia


By Manolo Serapio Jr and Koustav Samanta
Monday, October 17, 2016

SINGAPORE — China is marketing its yuan gold price to foreign exchanges and Singapore is looking at bringing London’s gold benchmark to users in Asia, in moves meant to boost the region’s exposure and influence in the global bullion market. …

Shanghai Gold Exchange, the world’s biggest physical bullion exchange, will collaborate with foreign exchanges and allow them to use its yuan-denominated gold price in developing derivatives products, Chairman Jiao Jinpu told an industry conference

The latest move is an aggressive step by China — the world’s top consumer, producer, and importer of gold — to market its pricing mechanism and aims for a bigger say in an industry long dominated by the London spot price.

“We would collaborate with various exchanges and authorise these external exchanges to start business outside China to use it as a basis for development of derivatives products,” Jiao told an industry conference through an interpreter.

Shanghai’s first deal will be signed with the Dubai Gold & Commodities Exchange next week, Jiao told reporters, adding that he expects more cooperation ahead. …

… For the remainder of the report:







Ross Norman’s reply to Chris Powell:

(courtesy Chris Powell/Ross Norman/Pixley)

Ross Norman: Central bank manipulation of gold wouldn’t surprise me


By Ross Norman, CEO
Sharps Pixley Bullion Brokers, London
Sunday, October 16, 2016

GATA Secretary Chris Powell has invited me to reply to his October 15 commentary —


— in which he replied to my article of the 14th, wherein I rebutted an academic study that concluded that the London gold price fix was manipulated:


If you look at my article (and indeed previous ones) you will see that my aim is to defend the integrity of the London gold fix as a method to derive a fair benchmark price. My aim is not to defend the integrity of the institutions operating the fix.

The reason for this is that I simply do not have the visibility over all fixing members and their every trade that I would need to say that these guys are 100-percent honest. No one does.

That said, I do know that the market traders at the banks are heavily outnumbered by in-house compliance people and it would be close to impossible for them to do anything improper even if they wanted to. The level of forensic investigation into any position taking is actually quite staggering. In the absence of any evidence to the contrary I simply don’t have a view either way.

I might add that I have the same ambivalence toward GATA.

Powell described my assessment as “weak” but it’s a shame that he didn’t go on to say why. I would be interested to hear his views about the fixing process. I would love to hear how he would derive a benchmark.

For bad guys there are many other far easier ways of cheating a client than the fix should they want to — such as front-running. The fix has too many moving parts.

Regarding Deutsche Bank, I understand that the bank’s position is that it has actually paid a fine for all possible sins — whether the bank is guilty or not — simply to allow the bank to move beyond the crippling affect of handling so many lawsuits. In fact the board director in charge of Deutsche Bank’s legal affairs was promptly sacked by the rest of his board for having agreed to the settlement because of the reputational damage he had caused.

You might ask why they would chose to seek a settlement. My understanding is that they simply wanted to move forward and were prepared to take a financial hit to do so. This is not uncommon in legal cases. I don’t doubt that, if there were specific infringements in relation to the fix, these would have been made public by now.

The key issue that Powell raises is whether central banks are active in the precious metals markets — or, to use his words, “manipulating the price.” The short answer is that I don’t know for sure but I would not be surprised.

Central bank intervention in markets is nothing new, nor is their redefining of methodologies around data to suit their purposes — for example, hedonic adjustments.

Gold is often said to be the reciprocal of trust in official planners and as such a weak gold price might seem to reflect well on them and their policies. There are others who would see merit in a weak gold price, including short sellers in the futures markets, physical sellers of gold, and others.

I do worry about the ongoing desire to portray the bullion markets as manipulated and think it is actually counterproductive. Those who are minded GATA’s way are already invested in gold. Those who are not (the remaining 99.5 percent of the population) will conclude that they should not bother with gold because it is said to be a corrupt market. Such accusations are a total passion killer for those who might be minded to invest.

To be clear, I am not a spokesman for the banks, nor for the London Bullion Market Association. Like Powell, I just happen to have an opinion. Our positions are probably not that far apart. I just prefer to deal with known knowns and have less time or regard for conjecture.





Chris Powell responds to Ross Norman of Pixley:

(courtesy Chris Powell/GATA)

Reply to Ross Norman: Is GATA discouraging gold investment?


2:16p ET Monday, October 17, 2016

Dear Friend of GATA and Gold:

Under the circumstances Ross Norman, CEO of London bullion dealer Sharps Pixley, was pretty heroic with his cordial reply today —


— to the questions your secretary/treasurer publicly posed to him Saturday:


That is, virtually alone in the bullion dealing and banking industry, Norman acknowledged the possibility that central banks are surreptitiously intervening in the gold market and manipulating the monetary metal’s price. “I don’t know for sure,” Norman wrote, “but I would not be surprised.” He added that central banks certainly have motives for rigging the gold market.

While Norman declined your secretary/treasurer’s invitation to review and challenge or accept the documents of that intervention summarized by GATA here —


— no one has ever challenged them, presumably because they are genuine and support the conclusions GATA has drawn from them and because if Norman had lent any credibility to them he would be quickly ostracized from his industry.

Having been pressing this issue for 17 years against what seems to be all the money and power in the world, GATA knows very well that this issue is essentially prohibited in polite company. After all, the world financial system now rests on the lies that markets are free and currency values true. If those lies are ever exposed and understood, all power arrangements on the planet will change.

So let us be grateful for Norman’s friendly hint that he knows better.

Norman went on to counter with some questions and issues of his own, and while your secretary/treasurer is little more than a scribe and archivist, hardly a font of knowledge and wisdom, Norman answered and thus deserves answers in return.

1) Emphasizing that his interest is entirely in assuring that the daily London gold price fixing, the benchmark price, has integrity, Norman asks what your secretary/treasurer would recommend for a benchmarking process. The answer is: nothing. For the general sentiment in GATA long has been to wonder why the world needs any special gold benchmarking process in the first place. After all, there are no special benchmark prices for other commodities or currencies, and no benchmark prices for stocks and bonds. Rather, there are closing prices and daily continuous pricing charts, and the world seems to make do with them. The London gold fix is a very odd and inexplicably venerable duck. GATA long has suspected that the fix has endured mainly because it facilitates control of the gold price by governments and central banks. For if governments and central banks are represented at the fixes — through bullion bank intermediaries, of course — they may be less compelled to strive to influence the price by trading surreptitiously around the clock.

2) Norman asks why Deutsche Bank would admit involvement in rigging the gold and silver markets and agree to settle the lawsuits making such accusations. He suggests that such a settlement is only part of the bank’s general inclination to confess to just about anything these days, to pay some big penalties, and to start fresh. Of course GATA doesn’t know Deutsche Bank’s motives and Deutsche Bank is not about to answer GATA’s inconvenient questions any more than the Federal Reserve and Treasury Department are. But note that, unlike some of its other admissions, in the gold and silver rigging cases Deutsche Bank reportedly has agreed to provide evidence against other participants in the London gold fix. We will have to await developments, and we will await them eagerly insofar as the discovery and deposition process in the rigging cases may implicate central bank involvement.

3) Norman fears that GATA’s complaining about market rigging in gold is discouraging investment. He has plenty of company in that fear. For the more GATA has proven that governments and central banks are rigging the monetary metals markets, the less popular GATA has become with people selling gold and gold-related products and investments. While some people still disparage GATA as a touter of gold, the organization now is generally regarded as being bad for business, since we warn investors of what they are up against even as we explain the potential consequences of the enormous naked short position in gold represented by “paper gold” and gold derivatives. The logic of GATA’s case is that the monetary metals are grossly undervalued. But if, as GATA believes, surreptitious intervention by central banks is the primary determinant of the gold price and if the objective of that intervention is generally suppressive, would we help gold and free markets more by remaining silent about the intervention? Given their surreptitiousness and unaccountability in the gold market, central banks themselves plainly have concluded that exposure would demolish their policy, maybe even demolish central banking itself, and help gold. In this respect GATA agrees with central banks, so we persist, figuring that if we can’t easily make friends in the monetary metals industry, then we can aim for something else: Fiat justitia ruat cælum.

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




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




2 Nikkei closed UP 63.49 OR 0.38%   /USA: YEN RISES TO 103.96

3. Europe stocks opened ALL IN THE GREEN ( /USA dollar index DOWN to 97.96/Euro DOWN to 1.10009

3b Japan 10 year bond yield: LOWERS TO    -.050%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 103.96/ 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:52.19

3f Gold UP /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” 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 +054%   

3j Greek 10 year bond yield RISES to  : 8.41%   

3k Gold at $1260.00/silver $17.59(8:45 am est)   SILVER FINAL RESISTANCE AT $18.50 WILL BE DEFENDED 

3l USA vs Russian rouble; (Russian rouble UP 27/100 in  roubles/dollar) 62.85-

3m oil into the 50 dollar handle for WTI and 52 handle for Brent/

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9899 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0882 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.054%

/German 9+ year rate BASICALLY  negative%!!!


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

4. USA 10 year treasury bond at 1.771% early this morning. Thirty year rate  at 2.526% /POLICY ERROR)

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

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


Global Stocks Rebound As Fed Fears Ease, Dollar Falls From 7 Month High

If yesterday’s session was dominated by concerns about Fed tightening and rising long-end rates, today fears about a hawkish Fed have subsided, and as a result European, Asian stocks and S&P futures all rose amid speculation Federal Reserve policy will remain accommodative after yesterday’s dovish comments by Fed vice-Chair Stan Fischer who offet Friday’s hawkishness by Rosengren and Yellen.

This helped the USD-index fall off 7-month highs ahead of US inflation figures, after reports showed New York manufacturing unexpectedly shrank and U.S. factory output barely grew, while corporate earnings also dictate much of the price action in Europe. “The dollar has struggled to gain upside momentum today because of
further evidence that the Fed’s tightening cycle will be very gradual,” Elias Haddad, an FX strategist at Commonwealth Bank of
Australia in Sydney told Bloomberg. The weaker dollar helped lift oil and metals prices which in turn propelled commodity-linked stocks higher.

As Bloomberg further summarizes, stocks rallied around the world, commodities jumped and the dollar sank on speculation that a pick-up in the global inflation outlook won’t tempt the Federal Reserve to quicken the pace of monetary tightening. And speaking of inflation, the UK is already suffering the consequences of the sterling plunge when the Office for National Statistics said the annual inflation rate accelerated to 1% last month, from 0.6% in August, above the 0.9% rate forecast by economists and is the highest since 2014, pushing sterling well higher.

The pan-European STOXX 600 share index rose 1.2 percent, led higher by a 2.6 percent rise in the basic resources sub-index and a 1.4 percent gain in oil and gas firms. Britain’s internationally-focused FTSE 100 index, in which miners are heavily represented, rose 1.1 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.8 percent, led by financials and energy shares. Australia’s benchmark index was up 0.4 percent while Japanese stocks edged higher on a softer yen.

The MSCI All Country World Index of equities headed for its biggest advance in almost four weeks as investors parsed earnings reports. The Bloomberg Dollar Spot Index extended Monday’s retreat from a seven-month high after reports showed New York manufacturing unexpectedly shrank and U.S. factory output barely grew. South Africa’s rand and South Korea’s won led gains in emerging-market currencies. The Bloomberg Commodity Index rose for a fourth day to the highest in a week, with oil and metals climbing.

Speaking of the Fed’s intentions, confusion appears to be the watchword not just about the Fed…

“The market has clearly come to a stronger view that they will raise rates in December but that has very little influence on where rates are perceived to go in the longer term,” said Adam Cole, head of global foreign-exchange strategy at Royal Bank of Canada in London. “In a more normal interest-rate cycle, if the market had moved to discount a December interest rate hike, it would probably have moved to discount three or four hikes next year and that’s simply not the case any more.”

But also about the presidential election:

 “We’re likely to see some choppy trading until we get some of these risk events out of the way, such as the last U.S. presidential debate,” James Woods, an analyst at Rivkin Securities in Sydney, said by phone. “Momentum seems to be building up for a December rate hike by the Fed.”

While Fed fund futures indicate the probability of a rate increase by the December meeting has risen to 66% , from about 55% a month ago, the data continues to come in on the weak side. The Bloomberg U.S. ECO surprise index — which measures whether data have exceeded or fallen short of analysts’ estimates — fell below zero for the first time in two weeks. Officials are still to form a consensus view to support a faster pace of tightening, with Chair Janet Yellen last week pondering whether a “high-pressure economy” could reverse some of the damage done in the recession.

The Stoxx Europe 600 Index rose 1.1 percent at 10:51 a.m. in London. Miners led gains as commodity prices advanced. Italian banks propelled lenders higher, with Banca Monte dei Paschi di Siena SpA jumping 6.5 percent after Il Sole 24 Ore reported that the board of directors will discuss a proposal to bolster the lender’s financial health from Corrado Passera, Italy’s former economic development minister. Among stocks moving on earnings-related news:

  • Remy Cointreau SA added 6.7 percent after its sales growth beat estimates.
  • Burberry Group Plc tumbled 4.9 percent after reporting declines in its Asian business and worsening results from its wholesale unit.
  • Continental AG lost 4 percent after the car-parts maker cut its annual profitability forecast following provisions for antitrust fines.
  • Kuehne & Nagel International AG dropped 4.6 percent after reporting quarterly profit that missed estimates.

S&P 500 Index futures advanced 0.5%, after U.S. equities fell 0.3% on Monday amid a slide in health-care companies. The Hang Seng China Enterprises Index of mainland companies in Hong Kong rose 1.9 percent, its biggest advance since Aug. 1.  The Philippine Stock Exchange Index climbed 2.9 percent, the most in five months. President Rodrigo Duterte starts a four-day trip to China on Tuesday, and there’s optimism it will yield investment deals and boost tourism, said James Lago, head of research at PCCI Securities Brokers Corp. in Manila.

Data on inflation scheduled for release Tuesday. Investors will also look to results from firms including Goldman Sachs Group Inc. and Johnson & Johnson for indications of the health of corporate America. Analysts forecast a 1.4 percent contraction in third-quarter profits for S&P 500 members. Wednesday’s report on China GDP is expected to show that Asia’s largest economy expanded 6.7% in the three months through September, the same as in the
previous two quarters, according to the median estimate of analysts
surveyed by Bloomberg.

Bulletin Snapshot Summary from RanSquawk

  • European equities are on the front foot this morning with energy and financial names among the best performers
  • Early Tuesday price action saw a little more of a pullback in the USD, though as a whole, the greenback is holding its ground, primarily against the JPY and CHF
  • Looking ahead, highlights include US and inflation figures, Fonterra GDT auction and the API oil inventory report

Market Snapshot

  • S&P 500 futures up 0.5% to 2134
  • Stoxx 600 up 1% to 341
  • MSCI Asia Pacific up 0.9% to 139
  • Nikkei 225 up 0.4% to 16964
  • Hang Seng up 1.5% to 23394
  • Shanghai Composite up 1.4% to 3084
  • S&P/ASX 200 up 0.4% to 5411
  • FTSE 100 up 0.9% to 7013
  • DAX up 0.8% to 10587
  • German 10Yr yield down less than 1bp to 0.05%
  • Italian 10Yr yield down 1bp to 1.39%
  • Spanish 10Yr yield down 1bp to 1.1%
  • S&P GSCI Index up 0.6% to 377
  • US 10-yr yield up less than 1bp to 1.77%
  • Dollar Index down 0.19% to 97.71
  • WTI Crude futures up 1% to $50.45
  • Brent Futures up 0.9% to $51.99
  • Gold spot up 0.5% to $1,262
  • Silver spot up 1.1% to $17.65

Top Global News

  • Fed Making Same Errors as Sweden in Trying to Lift Rates: Citi; Market feels there is a recession-type risk based on Fed tightening
  • U.K. Inflation Rate Surges to Highest in Almost Two Years: U.K. inflation accelerated to the fastest in almost two years in September, according to data from the Office for National Statistics published in London on Tuesday
  • IBM Profit Margins Shrink Again in Shift to Cloud Computing; IBM said profit margins shrank for the fourth quarter in a row, underscoring the technology company’s challenge in shifting to more subscription-based software and cloud services
  • Disney Said to Have Dropped Twitter Pursuit Partly Over Image
  • Sprint Said to Change Borrowing Plans by Dropping Longer Bonds
  • William Hill Abandons Amaya Merger Talks on Investor Dissent
  • Visa CEO Scharf Resigns, Replaced by Ex-AmEx President Kelly
  • Netflix Tops Estimates as Hits Like ‘Narcos’ Ease Price Concern
  • China’s New Credit Surges Again to Fuel Economy’s Stabilization
  • IBM Margins Shrink Again Amid Cloud-Computing Shift; Shares Drop
  • Ryanair Finally Bows to Brexit With Cut to Profit Guidance
  • Orbital Rocket Soars to ISS on First Flight Since 2014 Blast
  • United Air Sees Costs Rising as New Labor Contracts Take Effect
  • Wind Farms in U.S. Probed for Potentially Inflating Forecasts
  • VW Seeks Final Approval of Emissions Deal Without Fix in Hand
  • U.K. Inflation Rate Surges to Highest in Almost Two Years
  • Southwest, Virgin America, JetBlue Say Online Bookings Restored
  • Teva May Buy Celltrion to Bolster Biosimilar Portfolio: Investor
  • Staples in Talks With Cerberus on Europe Stores Deal: Telegraph
  • Wanda Nears $1b Deal for Dick Clark Productions: Variety
  • Dick’s Said to Prepare Bid for Golfsmith’s U.S. Stores: Reuters

* * *

Looking at regional, we start in Asia, where stocks again shrugged off the negative US lead and traded mostly higher, although gains were reserved amid quiet news flow and a lack of catalysts to drive price action. ASX 200 (+0.4%) was led higher by mining names after gold rebounded and iron ore surged nearly 2% to above USD 57.00/tonne. Nikkei 225 (+0.2%) recovered from early losses as JPY weakness supported exporters, while index heavyweight Fast Retailing shares gained on China expansion plans. Chinese markets were positive with Shanghai Comp. (+1.4%) and Hang Seng (+1.6%) both higher following further supportive government project announcements and after the PBoC increased its liquidity injections. 10-yr JGBs traded flat amid indecisiveness in Japanese stock markets, while today’s enhanced liquidity auction for 20yr, 30yr and 40yr JGBs also failed to spur demand despite an improvement in the b/c. RBA’s Governor Lowe says Australian interest rates are already very low and says they are watching employment and the stability of the financial system. Japanese Finance Minister Aso says debt panel says it is vital for the market to absorb JGBs, adds Japan is watching FX markets closely and FX volatility would damage the economy.

Top Asia News

  • RBA Sees Reasonable Growth Prospects as Mining Headwinds Ebb: Economic expansion is expected to continue at a moderate pace
  • Pimco Cuts Asia Risk While Being Bullish on India, Indonesia: Dialing down assets that have done well recently, Spajic says
  • China Said to Have Warned Crown, Others in 2015 About Marketing: China probes whether Crown lured Chinese gamblers to Australia
  • Hutchin Hill Hedge Fund to Shut Hong Kong Office After 19 Months: Pan-Asian strategy didn’t meet firm’s performance criteria
  • CEO’s Death Stirs Debate as China’s Techies Face 9-to-9 Workday: Health app founder, Zhang Rui, 44, died of a heart attack
  • Thai Junta Cracks Down on Royal Insults After King’s Death: Justice Ministry says it is setting up new monitoring team

European equities are on the front foot this morning with energy names among the best performers amid the uptick in crude futures as the USD-index falls off 7-month highs ahead of US inflation figures at 1330BST, while corporate earnings also dictate much of the price action in Europe. Additionally, sentiment once again in the financial sector has been lifted with Commerzbank yet again leading the way higher in the DAX amid the recent firm earnings reports from US banking names with focus now turning towards Goldman Sachs who are due to report before the Wall Street open. Furthermore, Deutsche Bank continue to be lifted as markets welcome the company’s restructuring efforts which are also said to be well received by the German government. In credit market, government bonds have been somewhat contained this morning relative to the selloff observed in yesterday’s session with bunds trading near flat for the session. While in the periphery, Portuguese yields saw a slight pull back from 1-month lows ahead of the crucial DBRS rating review at the end of the week.

  • Top European News
  • Ryanair Finally Bows to Brexit With Cut to Profit Guidance: Net income set to gain about 7 percent rather than 12 percent Low-cost specialist says weaker pound is hurting fares
  • William Hill Abandons Amaya Merger Talks on Investor Dissent: Parvus co-founder Gensmann ‘pleased’ deal has fallen apart. Deal would have formed world’s largest online gambling company
  • Carney to Ignore Inflation Jump as November Rate Cut Forecast: Pound drop no barrier to BOE November rate cut, economists say Benchmark will be cut to 0.1% according to 26 of 36 surveyed
  • Tesco Gains U.K. Market Share for the First Time in Five Years: Retailer is only one of U.K.’s largest grocers to grow sales. Food price deflation persists in Britain, weighing on recovery
  • Monte Paschi Board to Discuss Passera Proposal Tuesday: Il Sole: Proposal from Corrado Passera includes a letter of intent from some institutional investors such as Atlas Merchant Capital, Il Sole 24 Ore reports, without citing anyone
  • Teekay LNG Plans 5Y Norwegian Bond Issuance: Planned senior unsecured bonds are expected to be used for refinancing NOK bonds due in May 2017 and general partnership purposes
  • BASF’s Explosions Could Tighten Olefins & Derivatives: Nomura; Nomura says that prolonged outage of steam crackers could tighten the European ethylene markets in 2017, benefitting DOW/LYB, according to note.
  • Munich Prosecutors Limit Appeals of Deutsche Bank Acquittals: Prosecutors drop cases against Boersig and von Heydebreck Cases against Ackermann, Fitschen and Breuer will continue

In FX, the Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, declined 0.3 percent. “The dollar has struggled to gain upside momentum today because of further evidence that the Fed’s tightening cycle will be very gradual,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney. The pound rose 0.6 percent to $1.2253 as the Office for National Statistics said the annual inflation rate accelerated to 1 percent last month, from 0.6 percent in August. That’s above the 0.9 percent rate forecast by economists and is the highest since 2014. The New Zealand dollar climbed 0.9 percent after the country’s consumer prices rose in the last quarter faster than economists predicted, a reading some analysts said may weaken the case for interest-rate reductions beyond November.  The Australian dollar strengthened 0.7 percent and touched a two-week high. Reserve Bank of Australia Governor Philip Lowe said Tuesday that trying to revive inflation too quickly could threaten financial stability by inciting a new round of borrowing by heavily indebted consumers. He spoke before the release of minutes from the RBA’s last policy meeting, which showed economic expansion was forecast to continue at a moderate pace. The MSCI Emerging Markets Currency Index rose 0.4 percent as the South African rand climbed to a one-week high. The won and Mexican peso both strengthened 0.8 percent, followed by gains of at least 0.5 percent in Russia’s ruble, Thailand’s baht and the Philippine peso.

In commodities, crude was up 0.9 percent at $50.40 a barrel in New York, after slipping 0.8 percent in the last session. The price has fluctuated near $50 for most of this month amid skepticism that the Organization of Petroleum Exporting Countries will implement a Sept. 28 agreement to reduce supply. An OPEC committee will meet later this month to try to resolve differences over how much individual members should pump. Gold rose 0.5 percent in London trading to $1,262.29 an ounce while silver, platinum and palladium all added more than 0.7 percent. Copper gained 0.6 percent to $4,705 a metric ton, with all six main industrial metals traded on the London Metal Exchange advancing. U.K. day-ahead natural gas rose an 11th day, buoyed by forecasts for cooler-than-normal temperatures. The contract is in the longest rising streak in at least nine years, according to broker data compiled by Bloomberg going back to 2007.   On the Chicago Board of Trade, soybeans gained 0.4 percent to $9.825 a bushel, touching the highest since Sept. 21.

Looking at today’s calendar, the highlight in the US is also the latest inflation data where market expectations are currently sitting at +0.3% mom for the headline and +0.2% for the core. The NAHB housing market index for October rounds out the data this afternoon. Away from the data the other big focus today will be earnings with 16 S&P 500 companies due to report. The highlights include Goldman Sachs and Johnson & Johnson prior to the open and Yahoo and Intel after the closing bell.

* * *

US Event Calendar:

  • 8:30am: CPI m/m, Sept., est. 0.3% (prior 0.2%)
  • 8:55am: Redbook weekly sales
  • 10am: NAHB Housing Market Index, Oct., est. 63 (prior 65)
  • 4pm: Total Net TIC Flows, Aug. (prior $140.6b)
  • 4:30pm: API weekly oil inventories

DB’s Jim Reid concludes the overnight Wrap

The focus in equity markets is starting to turn now to earnings season. Yesterday Bank of America followed Citi, JPM and Wells Fargo last week in posting results which exceeded both analyst earnings and revenue estimates, driven also by a much better performance in fixed income trading. In fact the YoY improvement in FICC trading revenue for BofA was +39% which is a similar level of improvement to Citi (+35%) and slightly behind JPM (+48%). The consensus estimates based on Bloomberg numbers for those three banks was just +11%, +15% and +8% respectively. It’s worth noting however that these beats are being driven off significantly downgraded earnings estimates from analysts which has been a big theme in recent quarters. Yesterday BofA’s Q3 EPS of 42c was 27% ahead of the consensus 33c forecast. However, go back 12 months and the consensus forecast for the quarter just reported was 41c. It was a similar story for both Citi and JPM last week. JPM’s Q3 EPS would have been  pretty much in line versus the consensus from 12 months ago, while Citi would have missed by 14%.

Despite those BofA numbers beating, US equity markets generally faded into the close. The S&P 500 closed -0.30% and has now alternated on a daily basis between gains and losses for 8 consecutive sessions. Energy stocks weighed in particular with WTI closing back below $50/bbl (-0.81% on the day) with reports of increased supply out of Libya. Prior to this the European session had also been generally weak. The Stoxx 600 (-0.74%), DAX (-0.73%) and FTSE 100 (-0.94%) were all under pressure. Italian equities (+0.23%) were the exception after the banking sector got a boost from that merger news on the weekend.

This morning in Asia it’s been a broadly positive start for equity markets. The Nikkei (+0.14%), Hang Seng (+1.14%), Shanghai Comp (+0.39%), Kospi (+0.27%) and ASX (+0.48%) are all higher helped by a bit of a rebound in Oil this morning (WTI currently +0.50%) following that decline yesterday. US equity index futures are also tracking higher, boosted by better than expected results from Netflix last night which sent shares up over 20% in aftermarket trading. Elsewhere there’s not a lot of direction in sovereign bond markets with moves a lot more mixed. In FX the Aussie Dollar is up half a percent or so with our Australia economists highlighting that comments from Governor Lowe and the latest RBA meeting minutes this morning suggest that rates are likely to remain unchanged in November.

Moving on. Yesterday we got the latest ECB CSPP holdings data as of the week ending 14th October. It showed that total holdings amounted to €33.797bn which implies net purchases settled last week of €1.835bn. That implies a daily run rate in that week of €367m which is more or less in line with the average of €376m since the program started. So after a big month of September which also coincided with more primary market buying, last week was a more solid but unspectacular week of purchases.

Over at the Fed meanwhile, yesterday we heard from Vice-Chair Fischer although his comments were again a bit underwhelming. He said that the Fed was ‘very close’ to employment and inflation goals although offered little guidance to near-term expectations for Fed policy. Perhaps more interesting was some of his comments about how much the Fed can resist a high-pressure economy which was what Yellen alluded to on Friday. Fischer said that ‘if you go below the full employment rate, or peoples’ estimates of full employment, by a couple of tenths of percentage points, I don’t think there’s any danger in that’…..’but saying we should keep going until the inflation rate shows us we’re wrong, then you’re going to change too late’.

Before we look at the day ahead, just wrapping up the remainder of the data flow from yesterday where the only other release to highlight was the final Euro area CPI print for September which was unrevised at +0.4% mom. That also left the YoY rate at +0.4% which is the highest since October 2014, while the core was left unrevised at +0.8% yoy which is in line with that of August.

Looking at today’s calendar, first thing this morning we’ll get the latest ECB bank lending survey which will be worth keeping an eye on, before we then turn to the UK where we get that September inflation data which we mentioned at the top (the latest RPI and PPI prints will also be released). This afternoon the highlight in the US is also the latest inflation data where market expectations are currently sitting at +0.3% mom for the headline and +0.2% for the core. The NAHB housing market index for October rounds out the data this afternoon. Away from the data the other big focus today will be earnings with 16 S&P 500 companies due to report. The highlights include Goldman Sachs and Johnson & Johnson prior to the open and Yahoo and Intel after the closing bell.



i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 42.71 POINTS OR 1.50%/ /Hang Sang closed UP 356.85 POINTS OR 1.56%. The Nikkei closed UP 63.49 POINTS OR 0.38% Australia’s all ordinaires  CLOSED UP 0.41% /Chinese yuan (ONSHORE) closed UP at 6.7374/Oil ROSE to 50.32 dollars per barrel for WTI and 51.65 for Brent. Stocks in Europe: ALL IN THE GREEN   Offshore yuan trades  6.7427 yuan to the dollar vs 6.7374 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS QUITE A BIT  AS MORE USA DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES



none today

c) Report on CHINA



The Philippines are moving closer and closer to China and further from USA interests. This is not good for the USA


(courtesy Tom Luongo/PlanetFreeWill.com)

Duterte Visit To China: Hillbama’s Pivot Has Failed

Submitted by Tom Luongo via PlanetFreeWill.com,

Philippine President Rodrigo Duterte arrived in China to meet with Chinese Premier Xi Xinping.Duterte has become a very controversial figure in Asian politics as he has publicly excoriated U.S. President Barack Obama’s treatment of him and his country.

Duterte has pursued a frank and brutal policy to clean up drug trafficking and crime in the Philippines while at the same time backing away from U.S. influence over the former U.S. colony.

His meeting with Xinping comes after multiple public clashes with Obama which has led to ending joint sea patrols with the U.S. Seventh Fleet in the disputed South China Sea.

These increased patrols and diplomatic overtures in Southeast Asia, particularly with Vietnam are all part of the ‘Asian Pivot’ of which Hillary Clinton was the architect during her reign as Secretary of State.

That Duterte is looking to mend fences with China after the ruling by the Permanent Court of Arbitration in The Hague, Netherlands back in June which denied China’s historical claims to much of the South China Sea is telling.

Because the Philippines has been the loudest opponent of China’s territorial claims.

Vietnamese Waffling

Across the way, Vietnam, on the other hand, has been vocal and taken steps to make substantive claims in the Paracels, it has also been willing to negotiate with China on this issue.

Tensions in the region are always high given the historical backdrop of past Chinese invasions.Vietnamese political moves, in particular, are largely built based on fear of future Chinese colonization, either de facto or through economic means.

This is why, in particular, Vietnam is willing to green light the reopening of Cold War Era Russian military bases there and invite Russian investment in industries normally closed to significant foreign investment like oil production, including offshore exploration and refining.

Talks between Gazprom Neft and state-owned PetroVietnam broke down over the sale of 49% of the refinery at Dun Quat in January, but the fact that Russia got that far in negotiations for that big a stake is itself significant. Vietnam has been desperate to get Dun Quat sold to expand its capacity for three years now but has been unsuccessful in getting a deal done.

This is likely due to a mix of pressures behind the scenes as the U.S. continues to put pressure on the country to not make ties between it and the emerging Russia/China alliance too strong. And Prime Minister Dung has played his poor hand well to get Vietnam concessions from everyone while remaining, at least nominally, independent.

Don’t be surprised in the near future if Vietnam’s terms on Dung Quat become acceptable to Gazprom Neft if the Russians go through with reopening those bases mentioned above.

Russia is seen as a calming influence on any imperial ambitions of the Chinese by regional actors. It has little to do with Russian territorial imperialism. Vietnam is an important strategic and commercial hub in the region historically and it will be difficult for the U.S.’s pivot there to do anything but delay the inevitable.

Flipping the Philippines

The Philippines understands this as well and Duterte’s breaking with the U.S. leadership publicly hands China a grand opening to firm up support within ASEAN – the Association of Southeast Asian Nations. Ties with Thailand, Myanmar, Malaysia and Singapore are strong thanks to strong trade relations.

Xinping just made a deal with Cambodia to help modernize its military.

Once Obama leaves office, U.S. support for Indonesia will drop off a cliff. His personal ties there have ensured a flood of money into that country. It will now have to make deals without that crutch in its back pocket.

While for China, with its soft-peg to the strengthening U.S. dollar, they have very smartly deepened the market for clearing trade directly in local currencies, bypassing the U.S. dollar and insulating these countries from the worst of a dollar bull market, which is again underway, as I discussed last week.

It is also why China is devaluing the Yuan slowly in order to protect its ASEAN trading partners by keeping its real effective exchange rate from rising further and gutting two-way trade.

None of this is lost on Duterte. The resistance to China’s influence over ASEAN is crumbling as China, smartly, has pivoted a larger portion of its trade towards its regional neighbors. With the depression in Europe and the weakness of the Euro, trade between the regions no longer makes sense.

The Philippines cannot be a hold out against the tide of waning U.S. influence in the region lest all the work he’s done to clean up the corruption and violence – regardless of what you may think of his methods – will come to naught.

His trip to China this week is very bad news for Clinton and Obama and it is very likely that the Asian Pivot policy will unravel in short order.






A huge story:  China dumps 34 billion USA dollars worth of bonds while Saudi Arabia sells 94 billion. Custodial holdings of USA paper for both China and Saudi Arabia are at 2012 lows.

The question is who is buying the stuff..answer private individuals.  They are probably unaware of Saudi and Chinese dumping.  What happens if the buyers go on strike? Answer: QE4

(courtesy zero hedge)


Saudis, China Dump Treasuries; Foreign Central Banks Liquidate A Record $346 Billion In US Paper

One month ago, when we last looked at the Fed’s update of Treasuries held in custody, we noted something troubling: the number dropped sharply, declining by over $27.5 billion in one week, the biggest weekly drop since January 2015, pushing the total amount of custodial paper to $2.83 trillion, the lowest since 2012. One month later, we refresh this chart and find that in the latest weekly update, foreign central banks continued their relentless liquidation of US paper held in the Fed’s custody account, which tumbled by another $22.3 billion in the past week, pushing the total amount of custodial paper to $2.805 trillion, another fresh post-2012 low.

Then today, in addition to the Fed’s custody data, we also got the latest monthly Treasury International Capital data, which showed that the troubling trend presented last one month ago, has accelerated. Recall that a month ago,  we reported that in the latest 12 months we have observed a not so stealthy, in fact quite massive $343 billion in Treasury selling by foreign central banks in the period July 2015- July 2016, something truly unprecedented in size and scope.

Fast forward to today when in the latest monthly update, that of July, we find that what until a month ago was “merely” a record $343 billion in offshore central bank sales in the LTM period ending July 30, one month later this number has risen to a new all time high $346.4 billion, or well over a third of a trillion in Treasuries sold in the past 12 months. 

Among the biggest sellers – on a market-price basis – not surprisingly was China, which in July “sold” $34 billion in US paper (the actual underlying number while different, as this particular series is adjusted for Mark to Market variations, will be similar), the biggest monthly dump going back to 2012, and bringing its total to $1.185 trillion, the lowest total since 2012.

It wasn’t just China: Saudi Arabia also continued to sell its TSY holdings, and in August its stated holdings (which again have to be adjusted for MTM), dropped from $96.5BN to $93Bn, the lowest since the summer of 2014.

As we pointed out one month ago, what is becoming increasingly obvious is that both foreign central banks, sovereign wealth funds, reserve managers, and virtually every other official institution in possession of US paper, is liquidating their holdings at a very troubling pace. In some cases, like China, this is to offset devaluation pressure; in others such as Saudi Arabia, it is to provide the funds needed to offset the collapse of the petrodollar, and to backstop the country’s soaring budget deficit.

So who are they selling to? The answer, at least for now, is private demand, in other words just like in the stock market the retail investor is the final bagholder, so when it comes to US Treasuries, “private investors” both foreign and domestic are soaking up hundreds of billions in central bank holdings. We wonder if they would do that knowing who is selling to them.

Meanwhile, while just two months ago yields had tumbled to near all time lows, suddenly the picture is inverted, and long-yields are suddenly surging on concerns the BOJ, the Fed, and maybe even the ECB will soon taper their purchases of the long end.

What happens if in addition to the relentless selling from foreign official institutions, private sellers also declare a buyer’s strike. The answer? More Fed monetization of US debt will be the most likely outcome, aka more QE. We bring this up because, amusingly, the Fed is still harboring some naive hope it can/will raise rates in the coming week and/or months.



A BREXIT needs a vote from both houses.  This causes the pound to rise

(courtesy zero hedge)

Pound Jumps After Government Lawyer Says Brexit Treaty Likely Needs Vote From Both Houses

Shortly after sterling fell to a six year low against the euro, sliding below 1.10 or depths not seen since the March 2010 depths of the European debt crisis, the British currency found a modest respite after comments from a UK government lawyer put Theresa May’s “hard Brexit” plans in flux after stating that it is likely that the Brexit treaty will have to be voted on by both houses.

As Bloomberg notes, speaking before a panel of three senior judges, a UK government lawyer said that any final agreement between the European Union and Britain over Brexit would need to be ratified by Parliament. It is “very likely” that both the House of Commons and the House of Lords would get a vote on any new treaty, even though it’s possible that Prime Minister Theresa May could proceed without, government lawyer James Eadie said Tuesday.

However, his comments didn’t address the central question of whether May can trigger Article 50 of the Lisbon Treaty by April next year without calling a vote in Parliament.

Eadie made the comments during the third day of a lawsuit challenging May’s plan to trigger Brexit without permission from Parliament. Parliament will also have a “central role” in amending domestic legislation to replace EU law rights, Eadie said.

The lawsuit brought by claimants Gina Miller, who runs an investment startup, and Deir Dos Santos, a hairdresser, could undermine May’s plans to invoke Article 50 by the end of March. Any delay would cheer investors concerned that the prime minister is prioritizing immigration controls over safeguards for trade and banking.

The comments helped push cable as high as 1.23, over 100 pips higher from overnight lows, although it remains to be seen if this short squeeze will sustain, especially with Goldman piling on the short side and warning the pound could fall by “around 20-40 relative to pre-Brexit” suggesting parity may well be in the cards.



A terrific commentary from Mish Shedlock as he discusses who would win if these is a hard BREXIT:

In his opinion and I believe he is correct, the biggest loser will be the EU itself

(courtesy Mish Shedlock)


Brexit – Winners & Losers

Submitted by Michael Shedlock via MishTalk.com,

UK prime minister Theresa May hopes the EU will come to its senses and negotiate a fair Brexit settlement.

Unfortunately, current rhetoric suggests a “hard brexit” is the most likely scenario.

If so, who are the winners and losers?

In aggregate, no one wins trade wars. In isolation, there are winners and losers.

The average UK citizen is a loser thanks to higher inflation and the falling British pound. Retailers dependent on goods from the EU will get hit hard.

Common wisdom says UK exporters will get crushed because of EU tariffs, but that alleged wisdom is likely wrong.

For certain, EU exporters to the UK will get hit the hardest as noted by Germany’s Trade Position with the UK.

Germany’s Trade Balance with UK

Germany Trade

Bluff or Stupidity?

Germany exports €50,963,643 to the UK than it takes back in imports.

Clearly, Germany would suffer far more damages than the UK were both sides to remain stubborn.

UK prime minister Theresa May has another bargaining chip: corporate taxes. This especially comes into play given that Manual Valls, the French Prime Minister wants EU-wide tax rates, much higher than corporate tax rates in the UK.

EU Tariffs on UK Goods and Vice Versa

In the case of a hard Brexit, conventional wisdom says the EU would be obliged to place tariffs on UK goods.

I believe both entities could look the other way in negotiations, but let’s assume conventional wisdom is indeed correct.

Under this scenario, let’s further assume 15% tariffs by the EU and the UK on each other.

That may sound like a tit-for-tat deal but it is actually much worse on the EU, over and above the above trade figures, because of currency fluctuations.

British Pound vs. Euro


The British Pound is down about 22.5% vs. the Euro since the mid-November 2015 high.

The Pound is down about 16% vs. the Euro since May of 2016.

A 15% tariff by the UK on German cars would effectively mean the price of German cars to UK buyers would rise by a whopping 30% since May, but the price of British goods in the EU would be roughly unchanged.

A hard Brexit would mean the UK would no longer contribute to the EU budget. And a hard Brexit would also mean the the EU would not see the “€20 Billion Divorce Settlement” that it seeks.

Free from the nonsense of having to get 27 nations all to agree in trade talks, the UK can negotiate new trade deals much faster than it can now.

Let’s now look at UK Trade Relationships with the EU and rest of the world.

UK Trade Relationships


The above list shows the United Kingdom’s top import partners, countries that imported the most UK shipments by dollar value during 2015. Also shown is each import country’s percentage of total UK exports.

Thanks to the depreciating Pound, it’s not at all certain that the UK would lose exports to the EU. Moreover, the UK will have an easier time exporting to the US and Asia, assuming a fast trade negotiation.

Other UK Losses

The UK will lose some financial services activity, and that may even start quickly if the talks are as acrimonious as they currently sound.


I will not put any Dollar or Pound values on this as many things can and likely will change such as tariff rates and currency fluctuations. The global economy is also entering a slowdown so trade is likely to sink no matter what.

But as it stands, and contrary to all the Remain fearmongering and punishment talk, it’s the EU, not the UK that will get clobbered the most if there is a hard Brexit.


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

Salt and vinegar for everyone is a foolish idea.

My advice for the EU, not that I think they will take it, is to go over this framework of winners and losers and not attempt to punish the UK, because such a move is guaranteed to backfire.




Relations between Russia and the west continue to disintegrate as Lavrov accuses the UK government of pressuring RBS to block RT bank accounts:

(courtesy zero hedge)


Sergei Lavrov Accuses UK Government Of Pressuring RBS To Block RT Bank Accounts

In one of the bigger stories to hit yesterday, Russian media outlet, RT, which is funded by the government reported that NatWest, a division of the nationalized RBS, had blocked access to RT’s bank account, provoking a confused and in some cases angry response that the UK government was trying to stifle free speech. To be sure, NatWest rejected any suggestion of political pressure, releasing the following statement:  “We have recently undertaken a review of your banking arrangements with us and reached the conclusion that we will no longer provide these facilities.”

Today it appears that Russia did not accept that explanation, and as Russian foreign minister Sergei Lavrov said, the decision by a majority-British government-owned bank to stop servicing RT UK’s accounts could not have been taken by the institution independently.

“It’s as clear as day that this decision was not made by the bank. And not any other bank – banks don’t make such decisions on their own,” he said. “I believe an old saying is appropriate here: don’t treat others the way you don’t wish to be treated yourself.”

However, while some had expected Russia to suggest how it would respond to the crackdown on RT, so far that has not happened, as Lavrov didn’t elaborate on a possible retaliation. The Russian Foreign Ministry earlier described as “squeezing alternative voices out of UK media space” by the UK government and said it was a violation of British commitments to preserve press freedoms under the Helsinki Accord of 1975.

Meanwhile, the UK government denied any involvement in the situation, insisting that NatWest made the decision independently from its state owner. “I noted the decision of the NatWest bank to withdraw support for RT, that was a wholly independently taken decision,” Foreign Secretary Boris Johnson told the House of Commons on Tuesday. According to RT, however, the bank has since backtracked on its ‘non-negotiable’ position, saying in a statement that it was “reviewing the situation” and “contacting the customer to discuss this further.” According to RT’s Editor-in-Chief Margarita Simonyan, no arrangement has been set for such talks yet.

The Times claimed that Russia had threatened to close the accounts of the BBC in Russia and to report the case to the OSCE, an organization that grew from the Helsinki Accord. The British newspaper didn’t cite any sources, but claimed that RBS “withdrew its punitive action” after the threats. RBS is another bank owned by the RBS Group, which apparently the Times meant to name as the decision-maker.

While the news has not made front pages, some RT decided to protest in the only way they could: by pulling their money:

One NatWest customer told RT he had closed his account with the bank after a decade of being its customer in protest at the way it had treated the news channel.

Since relations between the west and Russia continue to deteriorate, we doubt that this is the last time that a media outlet will be caught in the crossfire of superpower diplomatic tensions


Nigeria spins out of control as inflation targets 18%and its currency the Naira falls to 460 to one USA dollar

(courtesy Steve Hanke)

Nigeria Spins Out of Control, and the IMF Remains Unaware

Nigeria’s President, Muhammadu Buhari, and his government have lost control as Nigeria’s economic crisis sends that African nation into a doom-loop. Everyone, including the President’s wife, Aisha, knows that Nigeria is going down the tubes. But not the International Monetary Fund (IMF). As is often the case, the IMF doesn’t have a clue. The IMF’s October 2016 World Economic Outlook projects Nigerian inflation to average 15.4 percent for 2016.  This number is in sharp contrast to my Johns Hopkins-Cato Institute Troubled Currencies Project’s inflation estimate for Nigeria. We estimate that the year-over-year inflation rate is currently 104.8 percent (see the chart below).

Why is the IMF so far off base? Because it is doing what it often does: it is taking the Central Bank of Nigeria’s (CBN) official inflation data at face value. That official rate averaged 14.3 percent from January to August of this year. For the IMF forecast to materialize, official annual inflation in Nigeria would need to average 17.6 percent for the September through December period.  What did the latest inflation report from the Central bank of Nigeria show?  According to the CBN, annual inflation was 17.9 percent in September. The IMF’s blind acceptance of the CBN’s data is a big mistake.

Driving Nigeria’s surging inflation is the collapse of its currency, the naira (NGN). Indeed, many of Nigeria’s recent economic troubles are reflected in the rapid depreciation of the naira.  For over a year, the CBN held the official exchange rate at about 200 NGN/USD, with the aid of exchange controls.  During this period, dollar shortages raised their ugly heads and caused foreign investment in Nigeria to deteriorate. The shortages even forced airlines to stop flights into Lagos. Simultaneously, a black market (read: free market) for foreign currency developed and the actual value of the naira deteriorated rapidly (see the chart below).

In June 2016, the CBN introduced a managed “float” and claimed that the resulting NGN/USD rate was a purely market driven exchange rate. After a massive one-day depreciation of the official NGN/USD rate, the naira has traded at about 315 NGN/USD while the black market rate plunged to over 450. The sharp contrast between official and black market rates is evidence that the CBN is spreading disinformation (read: lying) about its embrace of a free market for foreign exchange.

Reports have emerged claiming that Nigerian businesses cannot access FX from the banks officially tasked with providing it, so they are turning to bureaux de change (BDCs) and black market dealers. On October 16, 2016 the black market rates and the BDC rates were both 460 NGN/USD, and the official rate was 315 NGN/USD.  The CBN brushes off the existence of the black market, claiming these rates don’t reflect the true value of the naira and only account for a small portion of FX transactions.  This is nonsense.  If this were true, stories of businesses struggling simply to access foreign exchange would not be so common.  The CBN’s claim to embrace a purely free market determined Naira is a lie.  Take what the Central Bank of Nigeria says with a grain of salt.


Nigeria is in a doom loop – one that the government and the CBN lie about and the IMF blindly repeats.




It looks like oil will reach its peak demand in 15 years and not have the steady growth predicted my many:

(courtesy Nick Cunningham/Oil Price.com)

Oil’s Biggest Threat: ‘Peak Demand’ Within 15 Years?

Submitted by Nick Cunningham via OilPrice.com,

For more than two years the oil industry has suffered through its worst down cycle since the 1980s, and relief may not come until the middle of 2017 at the earliest. Some argue that oil prices may take even longer before they rebound. But while oil executives are focusing on the next few years, a much bigger threat looms over the long-term: Peak oil demand.

A new report from the World Energy Council predicts that global demand for crude oil could hit a peak in 2030 at 103 million barrels per day. The scenario would require rapid and substantial advancements in electric vehicles, efficiency, renewable energy, and digital technologies – developments that are no longer difficult to imagine. Additionally, the report envisions a scenario in which global primary energy demand – which includes energy demand for everything including transportation and electricity – could also peak before 2030.

These conclusions fly in the face of the prevailing assumptions within the oil and gas industry, which assumes consistent and stable growth in demand for decades to come. The oil market has always gone through cycles, in which demand spikes or flattens out. The cyclical nature has overwhelmingly been due to the changing nature of global or regional economic growth. But while demand has always been a bit volatile in the short-term, oil demand has grown inexorably for more than a century as population and GDP expand. Recessions hit demand, but once economies recover, demand resumes its upward trajectory. This constant, almost a law of nature, makes it difficult for many to picture a structural, rather than just a cyclical, decline in oil demand. But many analysts, including the WEC, say that such a development is underway.

“Historically people have talked about peak oil but now disruptive trends are leading energy experts to consider the implications of peak demand,” Ged Davis, executive chair of scenarios at the World Energy Council, said in a statement.

The findings from the World Energy Council echo those of other oil market and clean energy analysts. Bloomberg New Energy Finance, for example, published a scenario earlier this year that detailed a decline of more than 13 million barrels of oil demand by 2040 due to the advancements of electric vehicles. That would erase roughly 13 percent of oil demand from today’s levels – which would still leave the world consuming a lot of oil 25 years from now, but the demand destruction would be enough to keep oil prices permanently low. BNEF expects the world to hit a peak in oil demand in the mid-2020s, a bit sooner than the World Energy Council report.

“The longer-term outlook, beyond 10 years, is certainly less rosy,” Alex Blein, energy portfolio manager at Amundi, told Bloomberg an interview. “Given the advances in battery technology, by 2030 carbon-powered vehicles will be the exception rather than the norm. This will inevitably impact on oil demand.”

A lot will depend on government policy, of course. The WEC report says that in its low carbon scenario, in which governments impose costs on fossil fuels and incentivize EVs and renewable energy, global oil demand will still hit a peak around 2030, but at a much lower level of about 94 mb/d. Alternatively, the business-as-usual trajectory has the world heading for a peak of about 104 mb/d between 2040 and 2050. Obviously, the market dynamics are fluid, and great uncertainties remain.

The prospect of peak demand has huge implications beyond just the price of oil. The concept of “stranded assets” – oil and gas reserves that might not get produced, either because of carbon limits or because prices never rebound – has quickly moved from a far-flung scenario to a very credible one in the span of just a few years. Stranded assets would lead to massive write-downs for oil companies, with today’s overvalued share prices destined for decline. The misallocation of capital could be unspeakably large.

But the WEC report says the problem could be even worse than that, because much of the world’s oil and gas reserves are under state control. Peak demand could destabilize entire countries. “Demand peaks for coal and oil have the potential to take the world from stranded assets predominantly in the private sector to state-owned stranded resources and could cause significant stress to the current global economic equilibrium with unforeseen consequences on geopolitical agendas. Carefully weighed exit strategies spanning several decades need to come to the top of the political agenda, or the destruction of vast amounts of public and private shareholder value is unavoidable,” the report concluded.




big inventory draw causes WTI to surge above 51.00 dollars

(courtesy zero hedge)


WTI Surges Above $51 After Unexpected Crude Inventory Draw

Seasonally, expectations are for continued builds in inventories (following last week’s biggest build in 6 months) but API reported a massive 3.8mm drawdown (against 2.1mm build expectations) sending WTI prices soaring. Distillates also saw a notable draw as Gasoline built modestly. Cushing saw the biggest draw since Feb 2014.



  • Crude -3.8mm (+2.1mm exp)
  • Cushing -1.96mm (-1.4mm exp)
  • Gasoline +929k
  • Distillates -2.3mm

As Bloomberg added, “We’ll see what happens with the weekly DOE’s. People will look for confirmation tomorrow about how much refining capacity is offline,” Sam Margolin, energy markets analyst at Cowen & Co., says by phon.


Despite Swiss commodity trading shop Gunvor’s CEO comments that he “doubts prices can go much higher” sparking some early weakness, crude bounced to end the day up and hovering around the $50.70 level until API data struck sparking a kneejerk to the overnight highs above $51…


As Bloomberg reported, “People are stepping back and saying, what next? OPEC has to prove it’s really going to do something. They’ve talked the talk, now they’ve got to walk the walk,” Michael Hiley, head of OTC energy trading at New York-based LPS Futures, says by phone, addingI wouldn’t be surprised to see us continue this choppy-type price action and go nowhere.”


Charts: Bloomberg

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


Euro/USA   1.1005 UP .0009/REACTING TO NO DECISION IN JAPAN AND USA + huge Deutsche bank problems 


GBP/USA 1.2272 up.0054 (Brexit by March 201/pound clobbered)

USA/CAN 1.3067 DOWN .0049

Early THIS TUESDAY morning in Europe, the Euro FELL by 9 basis points, trading now well above the important 1.08 level RISING to 1.10009; 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 42.71 OR   1.40%   / Hang Sang  CLOSED UP 356.85 POINTS OR 1.56%     /AUSTRALIA IS HIGHER BY 0.41% / EUROPEAN BOURSES ALL IN THE GREEN

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED UP 63.49 POINTS OR 0.38%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 356.85  OR  1.56%  ,Shanghai CLOSED UP 42.71 POINTS OR 1.50%   / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE GREEN/  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1261.75


Early TUESDAY morning USA 10 year bond yield: 1.771% !!! UP 2 in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.526, UP 1 IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 97.76 DOWN 12 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING



And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.25% PAR in basis point yield from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: -.050% down 1/5 in   basis point yield from MONDAY

SPANISH 10 YR BOND YIELD:1.10%  DOWN 1 IN basis point yield from  MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.38 DOWN 2  in basis point yield from MONDAY 

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






Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/2.00 PM


Euro/USA 1.0993 DOWN .0017 (Euro DOWN 17 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 103.82 DOWN: 0.026(Yen UP 2 basis points/POLICY ERROR ON BANK OF JAPAN

Great Britain/USA 1.23000 UP 0.0082( POUND UP 82 basis points

USA/Canada 1.3109 UP 0.0029(Canadian dollar DOWN 29 basis points AS OIL ROSE TO 50.03


This afternoon, the Euro was DOWN by 17 basis points to trade at 1.0993


The POUND ROSE 82 basis points, trading at 1.23000/

The Canadian dollar FELL by 29 basis points to 1.3109, WITH WTI OIL AT:  $50.03


the 10 yr Japanese bond yield closed at -.050%  DOWN 1/5  IN BASIS POINTS / yield/ AND THIS IS BECOMING BOTHERSOME TO THE BANK OF JAPAN

Your closing 10 yr USA bond yield:DOWN 1  IN basis points from MONDAY at 1.750% //trading well below the resistance level of 2.27-2.32%) very problematic

USA 30 yr bond yield: 2.515 DOWN 1/3  in basis points on the day /*very problematic as all bonds globally rose in yield (lowered in price)


Your closing USA dollar index, 97.79 DOWN 10 CENTS  ON THE DAY/3 PM 

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

London:  CLOSED UP 52.51 POINTS OR 0.76%
German Dax :CLOSED UP 127.98 OR  1.22%
Paris Cac  CLOSED UP 58.98 OR 1.32%
Spain IBEX CLOSED UP 124.60 OR 1.43%
Italian MIB: CLOSED UP 336.27 POINTS OR 2.02%

The Dow was UP 75.54 points or 0.42%  4 PM EST

NASDAQ  UP 44.01 points or 0.85%  4 PM EST
WTI Oil price;  50.37 at 4:30 pm; 

Brent Oil: 51.77   4:30 EST




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

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


BRENT: $52.12

USA 10 YR BOND YIELD: 1.741%

USA DOLLAR INDEX: 97.87 down 2 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.22940 up .0073 or 73 basis pts.

German 10 yr bond yield at 5 pm: +035%


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


Stocks, Bonds, Dollar, & Gold Jump As US Macro Data Dumps To 4-Month Lows

 “It hasn’t learned…”


Before we start… this!

“probably nothing”

It seems terrible economic data is great news for bonds (up), stocks (up), US dollar (up?), and gold (up?)… Just buy everything stupid.


On the day Trannies were worst as Nasdaq ripped on the back of Netlfix…


The S&P remains unable to regain its range…



VIX was jammed back to a 14 handle…



…but failed to get the S&P back above its 100DMA at 2141…


Netlfix saved the world today – according to the mainstream media – as it burns through cash faster than Hillary Clinton’s campaign…the biggest jump in 3 years


Stock-Bond correlation continues to drift very modestly lower BUT remains risk-parity-poundingly positive…


Despite all the chatter of the Saudi bond deal, there was no sign of rotation or rate-locks in the Treasury market…


Cable strength did nothing to stymie USD stremgth today (as China turmoil continues)…


Copper was flat – giving up overnight gains – as gold and silver rallied despite USD strength…


3 days in a row of crude dumps and pumps… ahead of tonight’s inventory data…




Consumer prices rose from 1.1% year/year to 1.5% year over year.  However core CPI remains well above the Fed’s mandated 2.0% guided level at 2.2% and it has been above 2% for 11 straight months

(courtesy zero hedge)

Core CPI Remains Above Fed Mandated 2% For 11th Straight Month As Cost Of Living Surges

(courtesy zero hedge)

IBM Sinks After 18th Consecutive Revenue Drop; Margins Miss; EPS “Beats” On Tax Rate Fudge

After 17 consecutive quarters, or more than 4 years, of declining annual revenue growth, there were some whispers that this could be the quarter IBM finally breaks the trend. Alas, it was not meant to be, and just after the close, IBM reported Q3 revenues of $19.226BN, which will beating consensus of $19.0BN, was still 0.3% lower than a year ago, marking the 18th consecutive quarter of declining revenues.

The breakdown of the company’s revenue by segment in Q3 was as follows:

  • Technology services & cloud platforms rev. $8.75b vs $8.54b y/y
  • Cognitive Solutions rev. $4.24b vs $4.05b y/y
  • Systems rev. $1.56b vs $1.97b y/y
  • Strategic Imperatives revenue $8.0b
  • Global services rev. $4.19b vs $4.21b y/y

But more troubling is that despite the relatively modest drop in revenue, GAAP profit dropped by a materially greater 3.2% to $2.854BN, as the company’s adjusted gross margin of 48.0%, once again missed the consensus estimate of 50.1%.

Also adding to the bleak picture, Q3 fresh cash flow of $2.43 billion dropped by 27% Y/Y from $3.29 billion a year ago.

Still, thanks to Wall Street’s generosity, EPS estimates which had consistently declined into quarter end, IBM beat consensus non-GAAP EPS of $3.23, reporting $3.29 in bottom line.

How did it do it? The same way it has always beaten on the bottom line for the past several years: by constantly dragging its effective tax rate ever lower rate as has been the case for the past decade, shown in the chart below. In Q3 IBM used a 12.5% effective tax rate, tied with the lowest it has used in the 21st century. Had IBM used the already depressed tax rate from Q3 2015 of 18.2%, it would have reported non-GAAP EPS of $3.09, missing consensus by 14 cents.

And while the stock is getting punished for its lack of growth, its disappointing margin, and its tax accounting gimmicks, there was one silver lining: in Q3 IBM’s net debt, which last quarter posted its biggest one quarter jump since 2014, declined from $34.5 billion to $33.4 billion.




The crooks (Goldman Sachs) did OK due to their proprietary trading dept.

(courtesy zero hedge)

Goldman Smashes Expectations As Trading, Prop Revenues Surge, “Average” Employee Makes $322,607






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