Oct 24/FOR OCTOBER, ALMOST 30 TONNES OF GOLD STANDING FOR DELIVERY/ANOTHER HUGE DEVALUATION IN THE CHINESE YUAN AS GLOBAL FEARS OF A HUGE DEFLATION CIRCLING THE GLOBE/HUGE CLASHES IN CALAIS, FRANCE WITH THE MIGRANTS AS THEY ARE MOVED FROM THE “jUNGLE”/bANK OF CANADA PUNTS AS TO WHETHER ENGAGE IN MORE QE/VENEZUELA ON VERGE OF REVOLUTION AS MADURO CANCELS RECALL/ HILLARY CAUGHT CAUGHT IN ELECTION VIOLATIONS/

Gold $1262.00 DOWN  $3.90

Silver 17.56 UP 11 cents

In the access market 5:15 pm

Gold: 1264.50

Silver: 17.60

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

Shanghai morning fix OCT 24 (10:15 pm est last night): $  1265.91

NY ACCESS PRICE: $1263.00 (AT THE EXACT SAME TIME)

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1270.27

NY ACCESS PRICE: 1265.10 (AT THE EXACT SAME TIME)

HUGE SPREAD TODAY!!  5 dollars

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: OCT 24: 5:30 am est:  $1267.00   (NY: same time:  $1266.10:    5:30AM)

London Second fix OCT 24: 10 am est:  $1267.60  (NY same time: $1267.60 ,    10 AM)

Shanghai premium in silver over NY:  70 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.

end

For comex gold: 

0  NOTICES FILED FOR nil OZ

For silver:

for the Oct contract month:  48 notices for 240,000 oz.

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Let us have a look at the data for today

.

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In silver, the total open interest FELL by 1764 contracts DOWN to 192,329. The open interest FELL as the silver price was DOWN  5 cents in Friday’s trading .In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .961 BILLION TO BE EXACT or 137% of annual global silver production (ex Russia &ex China).

In silver for October we had 7 notices served upon for 35,000 oz

In gold, the total comex gold FELL by 3,444 contracts with  the FALL  in price of gold ($0.30 ON FRIDAY) . The total gold OI stands at 500,583 contracts.

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

GLD

TODAY WE HAD NO CHANGES AT THE GLD:

Total gold inventory rests tonight at: 953.56 tonnes of gold

SLV

we had NO CHANGES at the SLV/

THE SLV Inventory rests at: 366.366 million oz

.

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

1. Today, we had the open interest in silver FELL by 1764 contracts DOWN to 192,329 as the price of silver FELL by 5 cents with yesterday’s trading.The gold open interest FELL by 3,444 contracts DOWN to 500,583 as the price of gold FELL $0.30 IN FRIDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 37.30 POINTS OR 1.21%/ /Hang Sang closed FOR UP 229.68 9R .98%. The Nikkei closed UP 49.83 POINTS OR 0.29% Australia’s all ordinaires  CLOSED DOWN 0.40% /Chinese yuan (ONSHORE) closed DOWN at 6.7735/Oil ROSE to 50.28 dollars per barrel for WTI and 51.41 for Brent. Stocks in Europe: ALL IN THE GREEN   Offshore yuan trades  6.7826 yuan to the dollar vs 6.7635  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY  AS MORE USA DOLLARS LEAVE CHINA’S SHORES AND CHINA SENDS A MESSAGE TO THE USA TO NOT RAISE RATES IN DECEMBER.

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

i)Home prices continue to surge in most major cities inside China and the citizens ignore the cooling measures instituted by government;

(courtesy zero hedge)

ii)Graham Summers comments that the Chinese yuan is being devalued because of the risks seen with the USA raising rates.  A rising yuan with the huge garbage of Chinese debt is now a good recipe. Gold has picked up on this and is rising against all currencies with the exception of the uSA dollar. Summers suggests that something big is afoot.

( Graham Summers/Phoenix Research Capital)

iii)As soon as we got the phony Markit, national mfg PMI, the Chinese yuan fell again to its lowest level in offshore trading:  6.7875 from 6.7829 this morning.  So far no panic yet, but a few more days of yuan selling will probably show a repeat of the Asian contagion  with the threat of huge deflation ripping apart the world’s finances:

( zero hedge)

4 EUROPEAN AFFAIRS

ITALY

Renzi’s gamble is that he will win the referundum ahead of the election.  If Italy votes against Renzi then the euroskeptic party wins and Italy leaves the Euro

( Mish Shedlock)

FRANCE

Violent clashes erupt in the Calais Jungle as migrants are removed

(courtesy zero hedge)

GERMANY

We warned you about this, and now the Bundesbank confirms:  the HFT’s contribute to flash crashes, they reduce liquidity and they withdraw at times of “market stress” instead of providing liquidity.
( zero hedge)

Reuters)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

i)A great Bellwether stock as an indicator of global growth and general economic activity: Caterpillar retail sales fall for the 46th consecutive month

( zerohedge)

 

ii)The Canadian dollar soars in the value after the Bank of Canada’s governor punts as to whether we will provide more stimulus

( zero hedge)

7.OIL ISSUES

i)China continues to add gold its the Strategic reserve. When they finally stop buying, then oil will plummet;

( zero hedge)

ii)Iraq has split from the agreement in September and this sends oil down below 50 dollars:

( zerohedge)

8.EMERGING MARKETS

Venezuela now braces for a revolution after Maduro blocks a recall referendum:

( zero hedge)

9.PHYSICAL STORIES

i)Craig Hemke talks about the huge increase in gold deliveries in 2016

( Craig Hemke)

ii)Bullionstar attends the important LBMA conference in Singapore last week. Please note the Chinese speakers and also note that Koos Jansen is perfectly correct in his analysis of gold demand from China:

China imports a little over 1600 tonnes of gold.  Together with over 400 tonnes of gold mined from Chinese mining production, total gold coming into China is over 2000  tonnes.

( Bullion star)

iii)Craig Hemke interviews Bill Murphy of GATA.  Among the discussion is the huge class action case and how it is progressing.

( Craig Hemke/Bill Murphy/TFMetals)

iv)Swiss gold exports up 4% on the year but down 9% in September

( Cassell/London’s Platt.GATA))

v)Austria is closing out its gold leases with the Bank of England.  However it will not reveal its audit and bar lists.  Did you expect anything different?

( Koos Jansen/Bullionstar)

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

i)Steve Wynn slams Obamacare as he states that his costs per employee is escalating.  He states that the living standards of every person in the USA is degrading due to the high health costs:

( Steve Wynn/zero hedge)

ii)Paul Volcker and Peter Peterson both posted an Op-ed in the New York Times explaining the huge problems facing the USA with their high debt.  These guys ought to know: the USA cannot raise rates as this will burst all of the bubbles created.

( Paul Volcker/Peter Peterson/NYTimes/zero hedge)

iii)Goldman Sachs realizes that the S and P earnings cannot grow.  They have now cut forecasts for the next 3 years:

( Goldman Sachs/zero hedge)

iv)Wow!  The Liberal Washington Post and it editor Bob Woodward has now stated that the Clinton Foundation is Corrupt, It’s a Scandal”

( Bob Woodward/Washington post/zerohedge)

v)My goodness what a conflict:  the Governor of the state of Virginia donates 675,000 to the campaign of Dr Jill McCabe wife of the deputy director of the FBI.

( zero hedge)

vi)If you believe the data, USA manufacturing (wth the higher USA dollar) rises to its highest level in one year;

( Markit/USAmfg PMI/zero hedge)

vii)Hillary Clinton linked to violation of election laws in the latest Project Veritas videos and so is Donna Brazile

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY 3,444 CONTRACTS to an OI level of 500,583 as the price of gold FELL $0.30 with YESTERDAY’S trading.

We are in the delivery month is October and here the OI LOST 395 contracts DOWN to 298. We had 618 notices filed on Friday so we GAINED 223 contracts or 22,300 additional oz will stand  for delivery.

The next delivery month is November and here the OI FELL by 51 contract(s) DOWN to 2694 contracts. This level is extremely elevated as generally November is a very poor delivery month.To give you an idea of size, on Oct 24 2015, we had an OI of only 253 contracts standing. Eventually by the end of Nov 2015, 214 notices stood for delivery for 21,400 oz  (.6656  tonnes).The next contract month and the biggest of the year is December and here this month showed an decrease of 2150 contracts down to 370,088.

Today we had  0 notices filed for NIL oz of gold.
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And now for the wild silver comex results.  Total silver OI FELL BY 1764 contracts from  194,093 DOWN TO 192,329 as the  price of silver FELL to the tune of 5 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 fell by 7 contracts down to 89. We had 7 notices filed ON FRIDAY so we NEITHER GAINED NOR LOST ANY SILVER contracts that will stand for delivery.The November contract month saw its OI LOSE 3 contracts DOWN to 324.   The next major delivery month is December and here it FELL BY 1906 contracts DOWN to 148,912.

we had 48 notices filed for 240,000 oz

VOLUMES:

Today the estimated volume was 113,419 contracts which is poor.

FRIDAY’S confirmed volume was 119,509  which is also fair.

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

INITIAL standings for OCTOBER
 Oct 24.
Gold
Ounces
Withdrawals from Dealers Inventory in oz  NIL
Withdrawals from Customer Inventory in oz  nil
53,783.278 oz
HSBC
SCOTIA
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 82,182.410 oz
BRINKS
JPM’
SCOTIA
INCL 500 KILOBARS
No of oz served (contracts) today
0 notices 
NIL oz
No of oz to be served (notices)
298 contracts
 29,800
oz
Total monthly oz gold served (contracts) so far this month
9163 contracts
916,300 oz
28.500 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month    oz
Total accumulative withdrawal of gold from the Customer inventory this month    372,228.8 oz
Today we had 1 kilobar transactions,  
Today we had 0 deposit into the dealer:
total dealer deposits:  nil oz
We had zero dealer withdrawals:
total dealer withdrawals:  nil oz
.
We had 3 customer deposit;
i) Into Brinks:  65,610.16 oz
ii) Into JPM; 497.25 oz
iii) into Scoita:  16,075.000 oz  (500 kilobars)
total customer deposits;82,182.410 oz
We had 2 customer withdrawal(s)
i) Out of HSBC; 7,058.394
ii) Out of Scotia:  46,724.884 oz
total customer withdrawal: 53,783.278  oz
We had 0 adjustment(s)
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Total dealer inventor 2,236,180.879 or 69.559 tonnes
Total gold inventory (dealer and customer) =10,558,384.585. or 328.410 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 328.410 tonnes for a  gain of 25  tonnes over that period.  Since August 8 we have lost 26 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 0 contracts  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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To calculate the initial total number of gold ounces standing for the Oct contract month, we take the total number of notices filed so far for the month (9163) x 100 oz or 916,300 oz, to which we add the difference between the open interest for the front month of OCT (298 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 946,100 oz, the number of ounces standing in this  active month of October.
 
Thus the INITIAL standings for gold for the Oct contract month:
No of notices served so far (9163) x 100 oz  or ounces + {OI for the front month (298) minus the number of  notices served upon today (0) x 100 oz which equals 946,100 oz standing in this non active delivery month of Oct  (29.42 tonnes).
we GAINED ANOTHER additional 223 NOTICES OR 22,300 oz standing in this active delivery month of October and that is a record standing for any October from the beginning of time. 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!
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I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 12 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for 2016:
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 29.42 tonnes so far.
total for the 10 months;  182.3129 tonnes
average 18.23 tonnes per month vs last yr 51 tonnes total for 12 months or 4.25 tonnes average per month. From May 2016 until Oct 2016 we have had: 159.02 tonnes per the 6 months or 26.5033 tonnes per month (which includes the non delivery months of May, June and Sept).  In essence the demand for gold is skyrocketing.
Something big is going on inside the gold comex.
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The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine
 
IN THE LAST TWO MONTHS  26 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
 
OCT INITIAL standings
 Oct 24. 2016
Silver
Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
686,693.317 oz
CNT
Delaware
Deposits to the Dealer Inventory
244,574.400  OZ
CNT
Deposits to the Customer Inventory 
 367,215.100 oz
CNT
No of oz served today (contracts)
48 CONTRACT(S)
(240,000 OZ)
No of oz to be served (notices)
41 contracts
(205,000 oz)
Total monthly oz silver served (contracts) 496contracts (2,480,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  5,878,497.9 oz
today, we had 1 deposit into the dealer account:
i) Into CNT: 244,575.400 oz
total dealer deposit: 244,574.400 oz
we had 0 dealer withdrawals:
 total dealer withdrawals: nil oz
we had 2 customer withdrawals:
i) Out of CNT: 60,014.910 oz
ii) Out of Delaware: 626,678.407 oz
Total customer withdrawals: 686,693.317  oz
We had 1 customer deposits:
 i) Into CNT: 367,215.100 oz
total customer deposits;  367,215.100 oz
 
 
 we had 0 adjustment(s) 
Volumes:
Today the estimated volume was 33,431 which is fair.
FRIDAY’S  confirmed volume was 37,828 which is GOOD
The total number of notices filed today for the Oct contract month is represented by 48 contracts for 240,000 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  496 x 5,000 oz  = 2,480,000 oz to which we add the difference between the open interest for the front month of OCT (96) and the number of notices served upon today (48) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the OCT contract month:  496(notices served so far)x 5000 oz +(89) OI for front month of SEPT ) -number of notices served upon today (48)x 5000 oz  equals  2,685,000 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 NEITHER GAINED NOR LOST ANY SILVER OUNCES STANDING TODAY.
 
Total dealer silver:  29.952 million (close to record low inventory  
Total number of dealer and customer silver:   174.563 million oz
The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
end
And now the Gold inventory at the GLD
OCT 24/NO CHANGES AT THE GLD/INVENTORY RESTS AT 953.56 TONNES
OCT 21/A MONSTROUS CHANGE IN GOLD INVENTORY AT THE GLD: A WITHDRAWAL OF 16.61 TONNES FROM THE GLD/INVENTORY RESTS AT 953.56 TONNES
OCT 20/A HUGE CHANGE IN GOLD INVENTORY AT THE GLD OF 2.94 TONNES/INVENTORY RESTS AT 970.17 TONNES
OCT 19/no change in gold inventory at the GLD inventory/inventory rests at 967.21 tonnes
OCT 18/A DEPOSIT OF 1.78 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT967.21 TONNES
OCT 17/ A DEPOSIT OF 3.86 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 965.43 TONNES/IN 10 DAYS 16.29 TONNES DEPOSITED
Oct 14./NO CHANGE IN 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
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Oct 24/ Inventory rests tonight at 953.56 tonnes
*IN LAST 16 DAYS: 3.37 TONNES ADDED INTO THE GLD

end

Now the SLV Inventory
OCT 24/NO CHANGES AT THE SLV INVENTORY/INVENTORY RESTS AT 366.366 MILLION OZ
OCT 21/A HUGE CHANGES IN SILVER INVENTORY AT THE SLV/: A DEPOSIT OF 3.226 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 366.366 MILLION OZ
oCT 20/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 363.140 MILLION OZ
oCT 19/a good sized change at the SLV inventory: a deposit of 855,000 oz/rests at 363.140 million oz/
OCT 18/NO CHANGES AT THE SLV INVENTORY RESTS AT 362.285 MILLION OZ
OCT 17/NO CHANGES AT THE SLV/INVENTOR RESTS AT 362.285 MILLION OZ/
oCT 14: A HUGE ADDITION (DEPOSIT) OF 1.138 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 362.285 MILLION OZ
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 24.2016: Inventory 366.366 million oz
 end

NPV for Sprott and Central Fund of Canada

Central fund data not available today.

1. Central Fund of Canada: traded at Negative 3.0 percent to NAV usa funds and Negative 3.2% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.7%
Percentage of fund in silver:38.3%
cash .+1.0%( Oct 24/2016).
2. Sprott silver fund (PSLV): Premium FALLS to +0.47%!!!! NAV (OCT 24/2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES TO  1.04% to NAV  ( OCT 24/2016)
Note: Sprott silver trust back  into POSITIVE territory at 0.47% /Sprott physical gold trust is back into positive territory at 1.04%/Central fund of Canada’s is still in jail.
 
 
 

end

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

Trading in gold and silver overnight in Asia and Europe

Fed Risks Lehman Crisis As US Recession Storm Gathers

The Telegraph’s Ambrose Evans Pritchard reports that “the risk of a US recession next year is rising fast” and that “the Federal Reserve has no margin for error”.

AEP is quite well connected and very well informed on such matters and hence the need to consider what he is saying and more importantly prepare:

“Liquidity is suddenly drying up. Early warning indicators from US ‘flow of funds’ data point to an incipent squeeze, the long-feared capitulation after five successive quarters of declining corporate profits.

Yet the Fed is methodically draining money through ‘reverse repos’ regardless. It has set the course for a rise in interest rates in December and seems to be on automatic pilot.”

“We are seeing a serious deterioration on a monthly basis,” said Michael Howell from CrossBorder Capital, specialists in global liquidity. The signals lead the economic cycle by six to nine months.

“We think the US is heading for recession by the Spring of 2017. It is absolutely bonkers for the Fed to even think about raising rates right now,” he said.

The article can be read in the Telegraph here

Gold and Silver Bullion – News and Commentary

Gold steady as markets await Fed rate hike clues (Reuters)

Mobius Says Gold to Gain in 2017 as Fed Goes Slow on Rate Hikes (Bloomberg)

Gold trades in narrow range in Asia with India domestic demand eyed (Investing)

Sixth tranche sovereign gold bond issue opens (EconomicTimes)

Palladium Slumps to Lowest in Three Months Amid Demand Concerns (Bloomberg)

It’s time to invest in gold: Haywood (Mining)

Gold offtake at Comex explodes (TFMetalsReport)

The Boredom Before The Storm (DollarCollapse)

Politicians must grasp the difference between free market and corporate stitch-up – or face popular rage (Telegraph)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

24 Oct: USD 1,267.00, GBP 1,034.89 & EUR 1,163.61 per ounce
21 Oct: USD 1,263.95, GBP 1,033.79 & EUR 1,160.69 per ounce
20 Oct: USD 1,269.20, GBP 1,034.65 & EUR 1,156.75 per ounce
19 Oct: USD 1,269.75, GBP 1,031.29 & EUR 1,154.97 per ounce
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

Silver Prices (LBMA)

24 Oct: USD 17.64, GBP 14.41 & EUR 16.19 per ounce
21 Oct: USD 17.51, GBP 14.34 & EUR 16.08 per ounce
20 Oct: USD 17.60, GBP 14.35 & EUR 16.03 per ounce
19 Oct: USD 17.69, GBP 14.38 & EUR 16.11 per ounce
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


Recent Market Updates

– Silver Eagle Demand ‘Returned with a Vengeance’
– Cashless Society – War On Cash to Benefit Gold?
– “Higher Gold Prices” On Global Trade Slowdown – HSBC
– Euro “Will Collapse” As Is “House of Cards” Warns Architect of Euro
– 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

Mark O’Byrne
Executive Director

END

Craig Hemke talks about the huge increase in gold deliveries in 2016

(courtesy Craig Hemke)

October Comex Gold “Deliveries” – Craig Hemke

October Comex Gold "Deliveries" - Craig Hemke
By Craig Hemke Yesterday 647 Views No comments

October 21, 2016

As we’ve been monitoring all year, the total amount of gold allegedly “delivered” through the Comex has soared in 2016. This is simply another anecdotal datapoint of gold demand but the trend is certainly noteworthy, particularly when you see the numbers thus far in October.

We’ve already written about this trend several times this year. Our most recent article is linked below and I strongly encourage you to read this post as a refresher before you continue.

As noted in the post above, 2016 has seen a very unusual “delivery” pattern for gold on the Comex. Consistent with surging open interest and surging demand for gold in all its forms around the world, “deliveries” of gold through the Comex have increased as well. However, when you compare “deliveries” for 2016 versus 2015, you’ll notice that the divergence and increase didn’t really begin in earnest until June if this year. See below:

As you can see, for the first six months of 2015, the amount of Comex gold “deliveries” totaled 4,149 for 414,900 ounces or about 13 metric tonnes. Through May of 2016, total Comex gold “deliveries” were 9,683 for 968,300 or about 30 metric tonnes. As you can quickly do the math, this is over a 2X increase and certainly noteworthy on its own merit.

However, beginning with the “delivery month” of June, Comex gold “deliveries” began to explode at a startling pace. Check the charts above again and note the totals over the past four months. For the period June-September 2015, total Comex gold “deliveries” were 8,832 for 883,200 ounces or about 27.5 metric tonnes. For the same period this year, total Comex gold “deliveries” totaled 39,646 for 3,964,600 ounces or about 123.5 mts. This is about 4.5X times the 2015 amount.

And now look at what has happened during the October…a month which is historically the lightest “delivery month” on the Comex calendar. Again, referring to the charts above you can see that the total number of Oct15 “deliveries” was 950 for 95,000 ounces or slightly less than 3 metric tonnes. Through yesterday, October 21, the Oct16 “delivery” total is a whopping 9,163 for 916,300 ounces or about 28.5 metric tonnes.This is over a 9X increase versus the same month last year!

And this gets even more interesting when you drill down into the day-by-day “deliveries” and open interest…

The Oct16 Comex gold contract went “off the board” back on September 29. That evening, there will still 7,393 Oct16 contracts still open and, with First Notice Day pending the next day, all of these remaining contracts had to be fully funded with 100% margin, indicating a willingness and financial ability to take or make delivery. The October deliveries began on September 30 and total Oct16 open interest fell to 4,458 as 2,470 contracts were “delivered” and 465 contracts were liquidated by speculators unwilling or unable to make the 100% margin requirement.

A normal “delivery” pattern would then show a declining amount of open interest in the active “delivery” month as gold is “delivered” and contracts are closed. However, as you can see below, it has been a very busy month. You should also be sure to note the current total:

So, contributing to the total “delivery” number that exceeds last October by a factor of 9.5, there has been a surge of new open interest that has entered the Oct16 contract with the intention of either making or taking immediate “delivery” of gold…electing not to wait for November or the huge “delivery month” of December. The additions of open interest so far total 1,523 contracts for 152,300 ounces or nearly 5 metric tonnes.

Of course, the Comex and CME Group deliberately make it nearly impossible to discern if this is a rush to buy or sell “gold” in October. This new open interest could be a party looking to immediately unload $200,000,000 worth of gold. However, it could also be someone or something looking to buy and take immediate “delivery” of $200,000,000 worth of gold. It could also be some combination of the two…no one can say with certainty. And much of this is the usual Comex Bullion Bank Circle Jerk where one Bank issues out the warehouse receipts while another Bank stops and takes “delivery”.

Total Stops: Goldman 2,936, JPM 2,095 and Scotia 819

Total Issuance: Scotia 3,100, Goldman 1,409 and HSBC 532

You can see the entire report here:http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf

And this is also interesting. Note the sudden involvement of two firms which had, heretofore, had very little if any activity:

More information on those two firms here:

For example, just yesterday, 608 “deliveries” were issued out of the House Account of Macquarie with 533 being stopped into the House Account at Scotia:

But I don’t want to get bogged down in the minutiae as this post is not about attempting to unravel the riddle wrapped in mystery inside of an enigma that is The Comex. Instead, we simply wanted to draw your attention to the astonishing increase in the pace of Comex “deliveries”. Again, this DOES NOT signal that some sort of Comex delivery failure is imminent or eventual. However, in an anecdotal indicator similar to surging ETF inventories, this massive expansion in the amount of gold allegedly “delivered” through Comex is clearly a signof a significant increase in demand for gold and synthetic, gold-related investments in 2016.If this trend continues, you can be certain that the new bull market for price, which began early this year, will continue into 2017 and beyond.


Our Ask The Expert interviewer Craig Hemke began his career in financial services in 1990 but retired in 2008 to focus on family and entrepreneurial opportunities. Since 2010, he has been the editor and publisher of the TF Metals Report found at TFMetalsReport.com, an online community for precious metal investors.

end

Bullionstar attends the important LBMA conference in Singapore last week. Please note the Chinese speakers and also note that Koos Jansen is perfectly correct in his analysis of gold demand from China:

China imports a little over 1600 tonnes of gold.  Together with over 400 tonnes of gold mined from Chinese mining production, total gold coming into China is over 2000  tonnes.

(courtesy Bullion star)

BullionStar attends LBMA Conference in Singapore, October 2016

BullionStar's picture

Introduction

This year, the well-known annual conference of the London Bullion Market Association (LBMA) was held in Singapore between Sunday 16 October and Tuesday 18 October at the impressive Shangri-La Hotel. The conference attracts delegates and speakers from across the world of bullion, with representatives from precious metals refiners, mints, bullion banks, brokers, trading and technology providers, bullion dealers and bullion wholesalers. This year over 700 delegates attended.

The main speaker sessions, presentation and panel sessions of industry representatives ran over two days, between Monday 17 October and Tuesday 18 October. Topics covered in the speaker sessions were numerous and varied and included the bullion market in China, developments in the Indian gold market, responsible gold guidance, LBMA updates and developments, a dedicated session on platinum group metals, and a session on the financing of refineries.

As interesting as the speaker sessions and presentations are, many of the conference attendees use at least some of their time at the LBMA conference to engage in meetings with each other on the sidelines. This explains the constant stream of small breakout meetings that took place in the hotel lobby’s seating areas, as well as in dedicated meeting rooms around the hotel. BullionStar also used the occasion to meet with existing suppliers from the refining, minting and wholesaling world, as well as to discuss potential business opportunities with new suppliers.

There were also approximately 20 exhibitor stands at the conference, including stands hosted by CME Group, Brinks, the World Gold Council, IE Singapore (Singapore’s trade development authority), Istanbul Gold Refinery (IGR), Metals Focus consultancy, Cinnober, and Nadir Refinery.

Singapore – Central Business District, Skyline

Hong Kong – Shenzhen Gold Connect

On the Sunday prior to the conference, the Chinese Gold and Silver Exchange (CGSE) and the Singapore Bullion Market Association (SBMA) co-hosted a pre-conference presentation titled “Building a physical gold corridor in Asia: Shanghai – Hong Kong / Qianhai – Singapore”, at the hotel, which featured a series of discussions about the CGSE’s new gold trading and vaulting project located in the Shenzhen free trade zone at Qianhai, just across the border from Hong Kong.

Haywood Cheung, Permanent President of CGSE, gave an introductory overview of the Qianhai project, showcasing it as part of China’s “One Belt, One Road” plan, after which Dong Feng, Ping An Commodities Trading in Shenzhen presented a detailed explanation of how the linkages between the CGSE’s trading platform in Hong Kong and Qianhai’s clearing and settlement will for the first time enable the trading of both onshore and offshore Renminbi and the trading of onshore and offshore gold. The Qianhai project integrates trading, clearing, settlement and vaulting, with a 1500 tonne capacity vault, and a trading hall. ICBC will provide settlement of both onshore (Shenzhen) and offshore (Macau) Renminbi as well as providing use of its Shenzhen gold vault (onshore gold settlement) until the CGSE Qianhai vault is completed.

This onshore and offshore trading and settlement of Yuan and physical gold will facilitate arbitrage trading, and is another step in China’s liberalisation of its currency and its gold market as it links the Chinese currency to physical settlement of gold inside and outside of China. This initiative is one to watch and will demonstrate the Chinese government’s gradual easing of cross-border restrictions on currency and gold flow. Next phase gold trading in Qianhai by CGSE member companies will commence on 7 December.

With the CGSE having already established a gold trading link with the Shanghai Gold Exchange (SGE) though its Shanghai-Hong Kong Connect, and with the Shenzhen (Qianhai) – Hong Kong Connect now coming on stream, the CGSE is also planning a Singapore – Hong Kong Connect, and a Dubai – Hong Kong Connect, which, if they materialise, will extend physical gold corridor (trading and vaulting connections) across the Asian region and beyond.

Albert Cheng, CEO of the SBMA, wrapped up the afternoon with an overview presentation of SBMA’s aspirations to evolve Singapore into a bullion market hub for the entire ASEAN region, including countries such as Indonesia, Vietnam and Myanmar. However, details of how this plan will be implemented were not addressed. Cheng also showcased the SGX gold contract which is backed by the SBMA, but which has yet to take off despite being launched over 2 years ago.

LMEprecious gold Futures

The first event we attended on Monday was an early morning presentation by the London Metal Exchange (LME) about LMEprecious, its new suite of spot, daily, and monthly gold and silver futures contracts to be launched in the first half of 2017, that will trade on LME’s trading platform, with market-making offered by 5 investment banks such as Goldman Sachs and ICBC Standard Bank. These futures are for delivery of unallocated metal in the London market and the contracts will still clear through the London bullion market’s LPMCL unallocated bullion clearing system. In time, the LME plans to launch platinum and palladium futures contracts on LMEprecious, as well as options contracts on all 4 metals. The LMEprecious platform will also link into LBMA’s planned trade reporting system.

ICE gold Futures

On Monday morning, ICE Benchmark Administration (IBA), a direct competitor to LME in the precious metals trading and clearing space, used the LBMA conference to make a very well-timed announcement that it too will be launching a new gold futures contract for delivery of unallocated gold in London (loco London). The ICE contract will trade on the ICE US futures platform and will begin trading in February 2017, in advance of the LME contracts. This contract is being designed to be compatible for settlement within the LBMA Gold Price auction which IBA administers in London, and it will, according to IBA, allow the introduction of central clearing into the auctions, and thus facilitate wider auction participation. Currently,the direct auction is exclusively open  to a handful of large banks that have large bi-lateral credit lines with each other. At this stage it’s unclear how the connections between the futures contract and the LBMA Gold Price auction will work, but BullionStar plans to examine this development in future coverage.

Shangri-La Hotel, Singapore

Unallocated Gold, Gold Lending and Central Banks

Given that the LBMA Conference is attended by dozens and dozens of precious metals refineries and mints, it was notable that the subject of “unallocated gold” cropped up in the discussion of LMEprecious and ICE futures contracts, but that there was no discussion in the actual LBMA conference programme schedule of ‘unallocated gold’ as the term is used by the LBMA. An unallocated gold position in an account in the London gold market is merely a contractual claim for gold against the bank that the account is held with. As such, it is a synthetic gold position.

It was also odd in our view that there was no seminar or discussion about the London gold lending market within the conference programme. As gold lending is an important and influential area of the London gold market, it affects marginal gold supply, and it has an impact on gold price formation.  Notably, the topic of central bank activities in the gold market was completely ommitted from the conference schedule this year, which was odd given that in previous years there was usually such a session. Have the central bankers involved in the gold market become shy all of a sudden?

Gold price benchmark for Singapore revisited

In another announcement on Monday morning at the conference, the Singapore minister for trade and industry announced that the SBMA in conjunction with the LBMA and ICE Benchmark Administration (IBA), there begin a feasibility study on launching a “pre-AM gold price” auction, which would serve as a benchmark for the Asian region and which would be held at 2pm Singapore time, in advance of the European trading day. This Singapore benchmark was already discussed and announced over 3 years ago, but has put on hold in 2014 due to European regulatory investigations at that time into manipulation of the London Gold Fix.

LBMA Trade Reporting

The conference speaker programme opened on Monday morning with introductory remarks from Lim Hng Kiang, Singapore Minister for Trade and Industry, outgoing LBMA chairman Grant Angwin, incoming newly appointed ChairmanPaul Fisher who recently arrived from the Bank of England, Tim Pearce, the chairman of the London Platinum and Palladium Market (LPPM), and LBMA CEO Ruth Crowell.

The LBMA CEO’s introductory speech touch on the planned launch of trade reporting services for the London Gold Market. This trade reporting contract has been awarded to financial technology providers Cinnober – BOAT Services – Autilla, after those partners won the LBMA’s recent RfP tender which had been launched in October 2015. Ruth Crowell referred to trade reporting as ‘Phase 1’ of a new suite of technology services. Trade reporting  will be launched in Q1 2017, and will, according to the LBMA “demonstrate of the size and liquidity of the market for clients, investors and regulators”. Phase 2 of this project refers to services such as central clearing in the London bullion market.

Further background to the chosen trade reporting solution was provided by Jamie Khurshid, the CEO of BOAT Services. Surprisingly, even though this RfP took the LBMA over 1 year to complete, it will still now require a ‘design phase’ where BOAT/Cinnober needs to meet with LBMA member firms to discuss the scope of reporting, followed by a period of customisation and configuration of the implementation. Details on what exactly will be reported (the scope) remain sketchy, and since full London gold and silver trade reporting by all participants (including central banks) is not mandatory in a regulatory sense, it remains to be seen to what extent transparency will be improved.  Because if you don’t have full mandatory reporting, you don’t have transparency. In another related presentation, Sakhila Mirza, LBMA General Counsel stated that trade reporting will apply to loco London spot trades, forwards and options, but that “LBMA and its members retain control over the scope of reporting“, which highlights the self-regulatory nature of the reporting, and again may suggest that the trade reporting may not be as granular or have as much informational value as some may think, especially given that central banks will be exempt from trade reporting.

The Shanghai Gold Exchange and Chinese Gold Market

Monday’s schedule also included an  informative series of presentations titled “The Bullion Market in China” from an impressive list of experts. Jiao Jinpu, chairman of the Shanghai Gold Exchange (SGE), provided an overview of the latest developments from the SGE, which has a network of 61 vaults across 35 cities in China, and where physical trading volume reached 34,100 tonnes of gold in 2015. Jinpu revealed that the International Board of the SGE (known as SGEI) has, since launch in September 2014, traded 7,838 tonnes of gold, while the daily Shanghai Gold Price auction, only launched in April 2016, has already traded 384 tonnes, worth RMB 105.5 billion, giving it an average daily trading volume of 3.4 tonnes. Jinpu also vindicated BullionStar’s estimates of 2015 SGE gold withdrawals, because, in the words of Jinpu, he sits on the SGE tap, and knows exactly how much gold has been withdrawn from the Exchange vaults.

In his speech, Jinpu announced that in the near future, the SGE and other exchanges will begin using the SGE Gold Price benchmark to develop gold price derivative products.

Shanghai Gold Exchange (SGE) Chairman JiaoJinpu

In another notable confirmation, Yang Qing, from the Bank of China, one of China’s largest commercial banks involved in the global gold market, responding to a question posed by BullionStar, said that he thinks that in future, the Chinese currency, the Renminbi, should have an element of gold backing.

In what was probably one of the most interesting and revealing presentations from BullionStar’s perspective, and which vindicates the extensive research and analysis that BullionStar’s precious metals analyst Koos Jansen has done on the Chinese gold market, Matthew Turner from Macquarie Commodities Research in London gave a presentation about how to accurately capture and estimate the total trade flows of gold into China given that China does not publish this data itself.

One of Turner’s approaches is to use the trade data of all other countries which do report gold exports to China. This approach reveals that China imported 1626 tonnes of gold in 2015 from a number of countries, primarily Hong Kong, Switzerland, the UK and Australia. Another more elegant Turner approach is to take China’s total import figure which it does publish, as well as the summated figures of  all of China’s other import categories of data, which China also does publish, and then derive the gold import quantities as the delta.

This approach yields a net gold import figure of 1693 tonnes in 2015. Both of these figures are very close to BullionStar’s previously published Chinese gold import data estimates, as calculated by Koos Jansen. Adding 2015 Chinese gold mining production to imports gives total new supply coming into the Chinese market in 2015 in excess of 2000 tonnes, which is over 1000 tonnes higher than consumer gold demand as estimated by consultancies such as GFMS and the World Gold Council.

LBMA and SGE familiar with BullionStar’s research

On the Monday evening we attended a dinner hosted by Australia and New Zealand Bank (ANZ) at Singapore’s famous Raffles Hotel. Just after arriving we had the privilege of chatting for a few minutes to Jiao Jinpu, chairman of the Shanghai Gold Exchange (SGE) via his colleague and interpreter Jess Yang, and we highlighted to him BullionStar’s extensive research from Koos Jansen on the China gold market and the SGE, which we were impressed that he was already familiar with. Dinner conservation was interesting and varied as we were seated at a table with representatives of the London Metal Exchange, ICE Benchmark Administration (IBA), the CME Group, GFMS, Metalor Singapore, and the Royal Canadian Mint.

During the conference, we also learned that the LBMA is familiar with BullionStar’s research into the London gold market, another confirmation that the analysis that we publish is read widely within the bullion industry.

As the conference wrapped up on the Tuesday afternoon, delegates were asked to forecast what the US Dollar gold price will be this time next year. Audience members submitted their forecasts via a special handheld device in the auditorium, which resulted in an average forecast of US$ 1347.

BullionStar Seminar during LBMA Week

To coincide with the fact that the LBMA conference was located in Singapore this year, BullionStar hosted a number of events at its shop and showroom premises on New Bridge Road, Singapore. On the Saturday prior to the conference, 15 October, BullionStar held a ‘meet and greet’ morning, where customers and anyone in town for the conference could pop in and chat with BullionStar staff. On Wednesday 19 October, BullionStar held a precious metals seminar in its showroom premises at which BullionStar CEO Torgny Persson and Precious Metals Analyst Ronan Manly presented to an audience on the topics of Bullion Banking, and Transparency vs Secrecy in the gold market. The presentations and transcripts of these speeches will be published on the BullionStar website in the near future.

end

Craig Hemke interviews Bill Murphy of GATA.  Among the discussion is the huge class action case and how it is progressing.

(courtesy Craig Hemke/Bill Murphy/TFMetals)

GATA Chairman Murphy interviewed by TF Metals Report

Section:

3:53p Friday, October 21, 2016

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy was interviewed Thursday by the TF Metals Report, discussing progress in the gold and silver market manipulation lawsuits, the failure of monetary metals mining executives to challenge market manipulation, the circumstances that might break the manipulation, and other subjects. The interview is 38 minutes long and can be heard at the TF Metals Report here:

http://www.tfmetalsreport.com/podcast/7934/a2a-bill-murphy

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

END

Swiss gold exports up 4% on the year but down 9% in September

(courtesy Cassell/London’s Platt.GATA))

Swiss gold exports down 9% on month to 149 metric tonnes in September. …

Section:

… but up 4 percent for the year to date.

* * *

By George King Cassell
Platts, London
Friday, October 21, 2016

Gold exports from Switzerland totaled 149 mt in September, down 9 percent from 163 metric tonnes in August, Swiss federal customs data showed Tuesday.

The figure is 5 percent higher than 141 metric tonnes reported a year earlier but is the weakest monthly outflow since March.

Switzerland is the world’s largest refiner and exporter of gold and total exports from the country now stand at 1,349 metric tonnes for the year to date, up 4 percent from 1,302 metric tonnes in the same period of 2015.

… For the remainder of the report:

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

END

Austria is closing out its gold leases with the Bank of England.  However it will not reveal its audit and bar lists.  Did you expect anything different?

(courtesy Koos Jansen/Bullionstar)

Koos Jansen: Austrian central bank conceals gold audit and bar list

Section:

7:05p ET Saturday, October 22, 2016

Dear Friend of GATA and Gold:

Gold researcher Koos Jansen reports tonight that while Austria’s central bank has been closing out its gold leases through the Bank of England and auditing its gold reserves, it will release neither the audit nor a list of its gold bars. Jansen’s report is headlined “Central Bank of Austria Claims to Have Audited Gold at Bank of England, Refuses to Release Audit Reports and Gold Bar List” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/koos-jansen/central-bank-austria-claim…

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

END

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

 
 

:

1 Chinese yuan vs USA dollar/yuan UP to 6.7735( DEVALUATION SOUTHBOUND HUGELY /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.7826 / Shanghai bourse CLOSED UP  37.30 POINTS OR 1.21%   / HANG SANG CLOSED UP 229.68 OR .98%

2 Nikkei closed UP 49.83 OR 0.29%   /USA: YEN RISES TO 104.00

3. Europe stocks opened ALL IN THE GREEN ( /USA dollar index DOWN to 98.62/Euro UP to 1.0891

3b Japan 10 year bond yield: FALLS TO    -.051%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 104.00/ 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::  50.28  and Brent:51.44

3f Gold DOWN /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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS  A BIT to +004%   

3j Greek 10 year bond yield FALLS to  : 8.434%   

3k Gold at $1265.10/silver $17.64(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 WILL BE DEFENDED 

3l USA vs Russian rouble; (Russian rouble UP 10/100 in  roubles/dollar) 62.27-

3m oil into the 51 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 HUGE DEVALUATION DOWNWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 104.00 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9932 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0818 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.004%

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

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

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

4. USA 10 year treasury bond at 1.733% early this morning. Thirty year rate  at 2.482% /POLICY ERROR)

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

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

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

Futures Drop As ECB Confusion Persists, Dollar

Global stocks jumped around the globe, with Europe’s Stoxx 600 and US equity futures rising more than 0.5% on a surge in merger announcements over the weekend including the $85 billion mega takeout of Time Warner by AT&T, the $6.4 billion acquisition of B/E Aerospace by Rockwell Collins, the $2.7 billion deal targeting Genworth by China Oceanwide and the just announced $4 billion purchase of Scottrade by Ameritrade.

In other risk-positive news, Spain stocks surged after the local socialist party shifted its strategy and cleared the way for a Rajoy re-election, ending a nearly year-long impasse that left Spain without a government, while a series of Eurozone flash PMIs for October printed stronger than expected, driven by strength in Germany:

  • Eurozone Oct. Flash Services PMI 53.5; Est. 52.4; Eurozone Oct. Flash Services PMI 53.5; Est. 52.4
  • Eurozone Oct. Flash Manufacturing PMI 53.3; Est. 52.7
  • Germany Oct. Flash Composite PMI 55.1; Est 53.3

There was even good manufacturing data out of Japan, where the Nikkei Japan Oct. Flash Manufacturing PMI rose to 51.7 vs 50.4 in Sept.

Additionally, European government bonds advanced after Portugal was retained at investment grade by DBRS Ltd, removing a key risk overhang for the peripheral country that threatened making it ineligible for ECB QE purchases. Portugal’s 10-year bond yield declined 10 basis points to 3.10 percent, touching the lowest level in more than a month. The nation’s credit rating was retained at investment grade by DBRS, securing eligibility of the country’s debt for the European Central Bank’s bond purchase program. Spain’s 10-year yield fell four basis points to 1.07 percent.

As a result, European markets started the week in a buoyant mood, as equities rose on earnings, bonds jumped on a brightening credit outlook and economic data exceeded analyst estimates. Shares climbed around the world, with 17 of the 19 industry groups in the Stoxx Europe 600 Index rising as Royal Philips NV surged on improved profits. Emerging-market currencies strengthened, led by the rand, while in Asia, the Shanghai Composite Index reached its highest level since January and the yuan sank toward an all-time low in the offshore market. Base metals jumped.

As Bloomberg adds, with more than 100 companies in the Stoxx 600 scheduled to report results this week, Europe’s markets received an additional boost after a Purchasing Managers’ Index for manufacturing and services showed euro-area economic momentum accelerated to the fastest pace this year. Earnings will play a key role for stocks this week, with three of the world’s four biggest companies by market value, including Apple Inc., due to announce results in America, while China has all four of its largest listed banks reporting.

Europe started off the week strong, thanks first of all to an upgrade of Eurozone stocks by JPM to “overweight” which said that equity valuations have improved, P/E, P/Book relative now attractive, region has seen biggest outflows out of the main developed equity markets YTD. That set the mood for the Stoxx Europe 600 Index which climbed 0.5% in early trading. Royal Philips NV jumped by the most since January after the Dutch company announced a 14 percent increase in third-quarter profit.

Spain’s benchmark IBEX 35 Index advanced the most among western-European markets after the Socialist Party leadership opted to stand aside and let acting Prime Minister Mariano Rajoy take office for a second term, signaling the end of the nation’s 10-month political stalemate. Elsewhere, Syngenta AG tumbled 6.2 percent, the most in 14 months, after the European Union said China National Chemical Corp. didn’t submit concessions to EU regulators by an Oct. 21 deadline for a review of the $43 billion takeover of the Swiss seed and pesticide maker.

The MSCI Asia Pacific Index rose 0.4 percent, reversing an earlier loss. The Shanghai Composite Index rallied to a nine-month high amid speculation China will boost fiscal spending and follow through with pledges to overhaul the ownership structure of state-owned firms. Hong Kong’s Hang Seng Index gained 1 percent from Thursday’s close as trading resumed following a typhoon on Friday.

“Stabilization in third-quarter economic data has provided support to the broader market,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co. “Some big state-owned enterprises are doing well as there is speculation that the government will accelerate their consolidation to improve efficiency and boost infrastructure spending to further bolster economic growth.”

S&P 500 Index futures rallied 0.5% before American companies including Visa Inc. and T-Mobile US Inc. announce quarterly earnings on Monday. Over the weekend more polls showed Hillary Clinton pulling ahead of Trump which has traditionally been perceived as positive for risk. About 80% of the 118 members of the S&P 500 that have reported so far beat estimates, though analysts still forecast a contraction in profits. AT&T Inc. said over the weekend it agreed to buy Time Warner Inc. for $85.4 billion.

“Earnings is the key metric for investors,” Matthew Sherwood, head of investment strategy in Sydney at Perpetual Ltd., told Bloomberg. “Meanwhile, there are a number of important macro events which are holding the market back, including the U.S. election early next month.”

10Y Treasuries were little changed and yielded 1.73%, after the rate sank six basis points last week. U.S. government debt handed investors a 0.6 percent loss in the month through Sunday, still the best performance in dollar terms among 26 major markets. U.K. notes ranked last with an 8.7 percent loss.

Bulletin Headline Summary from RanSquawk

  • European equities enter the North American crossover in positive territory with gains relatively broad-based from a sector specific standpoint
  • A very quiet start to the week, with the plenty of event risk around, but much of which looks to be priced in to the major FX pairs as tight ranges suggest
  • Looking ahead, highlights include Eurozone Services and Manufacturing PMIs, US Manufacturing PMI and Fed’s Bullard

Market Snapshot

  • S&P 500 futures up 0.5% to 2145
  • Stoxx 600 up 0.5% to 346
  • FTSE 100 up 0.2% to 7034
  • DAX up 0.8% to 10794
  • German 10Yr yield down 2bps to -0.01%
  • Italian 10Yr yield down 3bps to 1.35%
  • Spanish 10Yr yield down 4bps to 1.07%
  • S&P GSCI Index up 0.3% to 376.8
  • MSCI Asia Pacific up 0.4% to 140
  • Nikkei 225 up 0.3% to 17234
  • Hang Seng up 1% to 23604
  • Shanghai Composite up 1.2% to 3128
  • S&P/ASX 200 down 0.4% to 5408
  • US 10-yr yield down less than 1bp to 1.73%
  • Dollar Index down 0.12% to 98.58
  • WTI Crude futures up less than 0.1% to $50.87
  • Brent Futures up 0.2% to $51.87
  • Gold spot up less than 0.1% to $1,266
  • Silver spot up 0.5% to $17.64

Global Headline News

  • AT&T $40 Billion Loan Pledge From Wall Street Brings Fees, Risks: Dose of concern that the $40 billion loan pledge may get caught up in a regulatory impasse
  • Rockwell Collins Buying B/E Aerospace for $6.4 Billion: Largest acquistion in avionics company’s 83-year history
  • Axa in Talks to Sell Insurance Broker Bluefin to Marsh: In “advanced discussions” with U.S. insurance broker Marsh & McLennan over ~GBP300m sale of British unit, Sky News reports, citing sources
  • ChemChina and Syngenta Made No Concessions by EU Deal Deadline: EU has Oct. 28 deadline to decide on approval or longer probe
  • Ford, Nissan Seek Africa Car Industry Fixes With State Talks: African manufacturers group will seek to work with lawmakers
  • Russian Suspect Charged Over 2012 Hack of LinkedIn, Dropbox: Hacker known as Chinabig01, itBlackHat was arrested in Prague

Looking at regional markets, we start in Asia where stocks kicked off the week strongly with the exception of the ASX 200 (+0.4%), in which the index was pressured by health care names following another session of heavy declines in Healthscope (-6%) shares after Friday’s profit warning. While concerns have been mounting for Australia’s big 4 banks over potential dividend cuts ahead of their earning updates. Nikkei 225 (+0.3%) traded with marginal gains amid encouraging trade figures, whereby the contraction in exports was less severe than expected. Chinese markets outperformed with the Hang Seng (+1.0%) and the Shanghai Comp (+0.9%) buoyed by a firm liquidity injection by the PBoC, allied with a near record low in CNH. In credit markets, Japanese bond yields were a touch firmer overnight, with the curve notable flattening amid the outperformance in the long end.

Top Asian News

  • China Oceanwide Joins Deal Spree With $2.7 Billion Genworth Bid: China firms have announced $207b overseas deals in 2016
  • Chinese Money Flowing to Hong Kong Stocks Has Suddenly Dried Up: Financial shares fall out of favor with link investors
  • Japan’s Exports Drop for 12th Month in Dismal Year for Trade: Japan Sept. exports fall 6.9% y/y vs est. -10.8%
  • Yen Yields in BOJ Vise Give Investors Easier Path to Profit: Bond market volatility has plunged to lowest since January
  • Singapore Strains Mount as ASL Marine Seeks to Issue Shares: Swissco and Rickmers are struggling to repay bond investors
  • Mobius Doubles Down on India as Fund Exodus Seen Fleeting: India in a “sweet spot” and top emerging market pick, Mobius says

European equity markets have kicked off the week firmly in the green, with major indices trading higher by around 1%. Notable outperformance has been in the IBEX (+1.2%), with the index benefitting from news that Spain will finally form a government after almost a year without a permanent one, albeit a minority government. On a stock specific basis, Syngenta (-8.5%) are among the worst performers this morning, with fresh doubts over their potential merger with ChemChina after reportedly failing to make any concessions ahead of the EU deal deadline last Friday, while elsewhere Philips (+4.4%) outperform in the wake of their earnings release. Fixed income markets have remained relatively quiet today, with Bunds hovering just below the 164.50 level having failed to make a firm break above the level, while Portuguese debt reversed early outperformance, with some suggesting a buy rumour sell the fact strategy in the wake of Friday saw DBRS affirm the country’s sovereign rating, meaning they can continue to take part in the ECB’s bond buying.

Top European News

  • German Economy Regains Momentum as Manufacturing Powers Growth: Factory activity expanded at the fastest pace in almost three years
  • Philips Sees Lumileds Sale in 2016 as Health Boosts Profit: Aiming to sell division before year-end to better focus on health care, which helped drive a 14% increase in 3Q profit
  • Germany Reopens Aixtron Review in China Investment Curb Push: Follows calls by economy minister Gabriel, who is also Merkel’s deputy, for EU measures to give national governments powers to block or impose conditions on shareholdings of non-EU companies
  • Cobham Tumbles After Third Profit Warning in Less Than a Year: Satcoms, wireless units underperforming as Boeing cash delayed

In FX, the yuan fell 0.1 percent to a six-year low in Shanghai and was 0.1 percent shy of its all-time low in the offshore market, which started in 2010. A net $44.7 billion worth of yuan payments left China in September, the most in data going back to 2010, the currency regulator reported Friday. Goldman Sachs Group Inc. estimated on Friday that China’s outflows totaled about $500 billion in the first nine months of this year. “Market sentiment will be relatively negative in the near term as the offshore yuan tests record lows,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “In the long term, China will still see net funds exit.” The Bloomberg Dollar Spot Index fluctuated ahead of Monday speeches by Federal Reserve Governor Jerome Powell and regional Fed presidents for New York, St. Louis and Chicago. The chance of a rate hike this year increased by two percentage points last week to 68 percent in the futures market. The euro halted a four-day run of losses.

In commodities, crude oil was little changed at $50.89 a barrel in New York, after advancing 0.8 percent on Friday. Iraq’s oil minister said Sunday that the nation should be exempted from production cuts proposed by the Organization of Petroleum Exporting Countries because it’s embroiled in a war with Islamic militants. The country is the group’s second-largest producer.Industrial metals advanced across the board following a seven-day slide in the London Metal Exchange’s LMEX Index. Zinc led gains with a 1.3 percent increase. Gold was little changed after advancing 1.2 percent last week. The net-long position in bullion futures and options fell to the lowest in more than seven months during the week ended Oct. 18, according to Commodity Futures Trading Commission data released Friday. “Market participants will be watching for any data that could drive the FOMC to raise rates,” Jason Schenker, president of Prestige Economics LLC, said in a note received on Monday, referring to the policy-setting Federal Open Market Committee by its initials. “Near-term Fed-hawkish, dollar-bullish factors threaten to send gold prices lower.”

It’s a busy start to the week today with the release of the flash October PMI’s this morning in Europe including the services, manufacturing and composite prints. In the UK we’ll also get the October CBI selling prices data. In the US we’ll also get the flash manufacturing PMI, along with the Chicago Fed national activity index.

* * *

US Event Calendar

  • 8:30am: Chicago Fed National Activity Index, Sept., est. -0.13 (prior -0.55)
  • 9:00am: Fed’s Dudley speaks in New York
  • 9:05am: Fed’s Bullard speaks in Fayetteville, Ark.
  • 9:45am: Markit US Manufacturing PMI, Oct. P, est. 51.5 (prior 51.5)
  • 1:30pm: Fed’s Evans speaks in Chicago
  •     2pm: Fed’s Powell speaks in New York
  • 3:30pm: BOC’s Poloz at House of Commons committee hearing

* * *

DB’s Jim Reid concludes the overnight wrap

It’s tempting to start this morning pondering over how, following the weekend results, the Premier League is shapely up nicely for one of the more closely fought contests in some time. Just 1 point separates the top 5 with Arsenal and Liverpool 2nd and 3rd respectively and separated only by goal difference leaving us with a rare sense of optimism on a Monday morning. That said, it also means that at least one of us will be left bitterly disappointed by the end of the season and the short history of the Premier League has also taught us that this optimism usually fades at a rapid rate by the turn of the New Year for our teams. We’ve also got far more important matters to highlight in markets for this week.

Indeed we’ve got various data, earnings and political snippets this week to keep us busy. In terms of the former, we’ve got the October flash PMI’s to look forward to today and also Wednesday along with the advance Q3 GDP reports for the UK on Thursday and US on Friday. The durable goods report in the US is always worth keeping an eye on too on Thursday. On the earnings front we’ve got 181 S&P 500 companies reporting and 115 Stoxx 600 companies on the cards for this week. As is so often the case now, Apple’s results after the close tomorrow have become something of a spectacle while a number of the energy names also report this week. Another potentially important event this week is the decision from the UK High Court on the judicial review brought against the government’s Brexit policy concerning the ability of the government to trigger Article 50 without a parliamentary vote. An appeals process to the Supreme Court aside, the implications of the High Court ruling against the government are still a bit of an unknown but it is highly likely that it would significantly increase Parliament’s leverage over the timing and nature of the Brexit process. It’s expected that the timing of the High Court decision will be made public via the Royal Courts of Justice Cause List at some stage.

So with politics likely to be one of the important themes this week, the news that Spain’s unprecedented ten-month long political impasse looks set to end is the main headline from the weekend. Indeed the big news yesterday is the announcement that the federal committee of the centre-left PSOE has voted in favour of facilitating the formation of a centre-right minority government led by their historical opponent PP by abstaining. As DB’s Marco Stringa highlighted in a note published last night, the decision of the PSOE aims to avoid the third election in 12 months and means that incumbent PM and PP leader Mariano Rajoy is set to serve a second term. His party is expected to form a coalition with the liberal Citizens party to reach 170 seats, six votes short from an absolute majority. Significantly, the PSOE federal committee remained divided. Indeed Marco notes that 139 versus 96 voted in favour of abstaining. As Marco highlights, the risk for the PSOE is to see more of its voters move to left-wing, anti-establishment Podemos as happened in Greece. A situation that warrants close attention. In terms of the market reaction, Marco notes that breaking the political deadlock was important but he expects only a subdued positive reaction from markets given that the dilemma of whether a third election could be avoided had already become a less and less pressing concern for markets.

Switching our focus now to the latest in Asia where, after a bit of a directionless start, most bourses are currently trading with a positive tone. The Nikkei (+0.31%), Hang Seng (+0.31%), Shanghai Comp (+1.29%) and Kospi (+0.40%) are all up despite a muted start, with just the ASX (-0.63%) languishing. Commodity markets are weaker with WTI Oil (-0.59%) in particular lower, while Gold (-0.26%) isn’t faring too much better. There has also been some data this morning and it was generally a little better than expected in Japan. The September trade data showed that exports (-6.9% yoy vs. -10.8% expected) declined less than expected and also improved from a -9.6% yoy decline in August. Imports (-16.3% yoy vs. -17.0% expected) contracted less than expected too, while the trade surplus swung back into surplus in unadjusted terms.

The moves this morning come following a pretty quiet end to the week on Friday in markets. A batch of mixed earnings reports on both sides of the pond largely dictated the amazingly muted closing levels for equity markets. Indeed in Europe the Stoxx 600 closed flat after mixed reports from SAP, Ericsson and Daimler. Over in the US the S&P 500 was initially weighed down by a decent rally for the US Dollar with the index tumbling as much as -0.50% at the open, before paring losses into the close to finish -0.01% by the closing bell. Earnings from both Microsoft and McDonalds were taken positively however that was offset by disappointing reports from General Electric and Advanced Micro Devices. That lack of any material moves on Friday also meant that the S&P 500 (+0.38%) and Stoxx 600 (+1.28%) finished the week up.

While we’re on earnings, it’s worth taking stock of where we are currently in reporting season. As it stands, 35% of the S&P 500 companies have reported and overall it’s been a decent start with Banks and the Tech sector in particular surprising to the upside. Using our US equity strategy team’s data, 73% have beaten at the earnings line versus 17% that have missed with a weighted average beat of 6.8%. EPS is also up over 4% year-on-year. Interestingly the EPS analyst cuts during the calendar quarter amount to -3% versus the five-year average of just over -4%. At the sales line the beat miss ratio is less of a standout at 41% versus 26% in favour of beating, while the average weighted beat is just 0.7%. Still, sales are still up 1.7% year on year. Our colleagues note that the bottom-up consensus EPS for Q3 is $30.41 now, which is +0.9% yoy. In their view they think Q3 EPS is likely to be in the range of $30.25-30.50 however it’s the energy sector, of which some report this week, which is the uncertainty factor. It’s worth noting however, that after four consecutive quarters of negative yoy EPS growth, the consensus is that this trend will be bucked, albeit just, with this current reporting season.

Away from earnings, the other big theme on Friday was M&A. The headliner was the news that AT&T has agreed to acquire Time Warner for about $85bn in cash and stock in a deal which would create the world’s largest vertically integrated content and distribution company according to the FT. The deal is still to face the scrutiny of US regulators however with a number of wires reporting this morning that it’s unlikely to be a smooth process. Meanwhile, the other big announcement was that of British American Tobacco’s offer for Reynolds American in a deal worth $47bn.

Elsewhere in markets on Friday the Euro (-0.41%) extended its post-ECB slide and in the process closed at the lowest level since March. The other side of that trade saw the US Dollar index (+0.39%) close up for the eighth time in the last ten sessions and the highest level since February. Meanwhile, 10y Treasury yields did dip 2.1bps to 1.736% but still remain some 14bps above where they were at the start of the month. In Europe 10y Bund yields continue to hover just north of 0% while 10y Portugal yields strengthened a couple of basis points with the news that DBRS had retained the sovereign’s BBB rating and so still making the country’s debt eligible for ECB QE purchases.

Away from that and with little in the way of data on Friday, the only other highlight was comments from the San Francisco Fed President Williams. He said that he expects the Fed to maintain its balance sheet reinvestment strategy and only expects the Fed to start to shrink its balance sheet once the Fed Funds rate is ‘well away’ from zero.

Turning now to the week ahead. It’s a busy start to the week today with the release of the flash October PMI’s this morning in Europe including the services, manufacturing and composite prints. In the UK we’ll also get the October CBI selling prices data. Over in the US this afternoon we’ll also get the flash manufacturing PMI, along with the Chicago Fed national activity index. Kicking off Tuesday will be France where the latest confidence indicators will be released. Over in Germany we’ll also get the October IFO index readings. Across the pond in the US on Tuesday the highlight is the October consumer confidence reading, while the Richmond Fed manufacturing survey, IBD/TIPP economic optimism print, FHFA house prince index and S&P/Case-Shiller house price index will also be released. Wednesday starts in Asia where we’ll get the latest consumer sentiment reading in China. In Europe consumer confidence readings are expected in Germany and France while it’s a busy session scheduled in the US on Wednesday with the remaining flash PMI’s (services and composite), wholesale inventories, advance goods trade balance and new home sales. We’re in Asia again on Thursday with the latest industrial profits data in China. In Europe we’ll get M3 money supply data for the Euro area, along with the advance Q3 GDP report for the UK. The important data in the US on Thursday is the September durable and capital goods orders data. Also due out will be initial jobless claims, pending home sales and the Kansas City Fed manufacturing survey. We end the week on Friday in Japan with the September CPI report and also the latest household spending and jobless rate data. During the European session we’ll get CPI reports for both France and Germany, along with the advanced Q3 GDP reading for the former. Euro area confidence indicators will also be released. In the US it’ll be all about the advance Q3 GDP report, while the final University of Michigan consumer sentiment reading for October is also due.

Away from the data, the Fedspeak this week is reserved for the first half with Dudley, Bullard, Evans and Powell on the cards today, with Lockhart scheduled to speak tomorrow. In Europe Draghi is scheduled to speak tomorrow at a lecture in Berlin on stability, equity and monetary policy while the ECB’s Mersch and Coeure speak on Thursday and Friday respectively. Over at the BoE Carney is due to be questioned by the House of Lords Economic Affairs Committee tomorrow on the economic consequences of the Brexit vote. As always, the other big focus this week is earnings. We’ve got 181 S&P 500 companies and 115 Stoxx 600 companies scheduled to release their latest results. The list includes Visa and T-Mobile today, Apple, AT&T and Fiat-Chrysler on Tuesday, Coca-Cola and Glaxo on Wednesday, Alphabet, Twitter, Amazon, ConocoPhillips and VW on Thursday and Exxon Mobil, Chevron and UBS on Friday.

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 37.30 POINTS OR 1.21%/ /Hang Sang closed FOR UP 229.68 9R .98%. The Nikkei closed UP 49.83 POINTS OR 0.29% Australia’s all ordinaires  CLOSED DOWN 0.40% /Chinese yuan (ONSHORE) closed DOWN at 6.7735/Oil ROSE to 50.28 dollars per barrel for WTI and 51.41 for Brent. Stocks in Europe: ALL IN THE GREEN   Offshore yuan trades  6.7826 yuan to the dollar vs 6.7635  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY  AS MORE USA DOLLARS LEAVE CHINA’S SHORES AND CHINA SENDS A MESSAGE TO THE USA TO NOT RAISE RATES IN DECEMBER.

3a)THAILAND/SOUTH KOREA/SOUTHEAST ASIA:

none today

b) REPORT ON JAPAN

none today

c) Report on CHINA

Home prices continue to surge in most major cities inside China and the citizens ignore the cooling measures instituted by government;

(courtesy zero hedge)

Chinese Home Prices Surge Most On Record, Ignore “Cooling” Measures

Over the past month, one of the key Chinese economic themes has been Beijing’s tepid, if growing, desire to gradually deflate the country’s unprecedented housing bubble. Alas, according to the latest, September data, the government has so far failed to tame the epic home buying frenzy it unleashed just over a year ago courtesy of a record debt and fiscal stimulus flood, when it in turn scrambled to offset the popping of the 2013 housing bubble (as a reminder, China’s economy is best described as a serial or parallel shift from one asset bubble to another).

According to China’s National Bureau of Statistics, average new-home prices in the 70 cities tracked surged by 1.8% in September from the month prior. On an annual basis, housing prices soared 11.2% year over year, after a 9.2% jump in August. This was the biggest annual jump on record, and the 12th consecutive month in year-over-year gains.


Still, despite the obvious failure to cool the market, the NBS noted in its statement that the market “apparently cooled” in response to targeted measures rolled out in some cities. If a record jump in prices is considered “cooling”, we’d be curious to know what China considers a “overheating.”

The latest home price increase record takes place even as local governments in at least 21 cities introduced property curbs as reported previously, such as requiring larger down-payments and limiting purchases of multiple dwellings, in a bid to arrest runaway prices. Even with some main markets cooling though, policy makers have a long way to go before they can claim victory in averting a bubble without killing one of the economy’s main pillars of growth.

Some more details from Goldman, which reports that using its own population-weighing seasonal adjustments, the primary market increased 2.1% month-over-month in September, higher than the growth rate in August. Out of 70 cities monitored by China’s National Bureau of Statistics (NBS), 66 saw housing prices increase in September from the previous month (68 in August, on a seasonally adjusted basis).

On a year-over-year, population-weighted basis, housing prices in the 70 cities were up 11.7% (vs. 9.7% yoy in August).

House price inflation decelerated in tier-1 cities (Shanghai) but accelerated in the others in September: In tier-1 cities, September price growth was 3.3% month-over-month after seasonal adjustment, coming off the peak of 3.5% in August. (Total property sales in tier-1 cities accounted for around 5% of nationwide property sales in volume terms.) In tier-2, 3 and 4 cities, house price inflation accelerated 0.8pp, 0.5pp and 0.3pp respectively in September, compared with August.

Still, as Bloomberg noted, it was the first time the statistics bureau had released figures for the current month, which suggests that moves to clamp down on the property frenzy may have had the unintended effect of stoking an already red-hot market by prompting a rush of buying before further restrictions were imposed. Prices in Beijing jumped a record 4.9 percent in September, Friday’s data showed. The local government Sept. 30 increased down payments for first-time buyers to 35 percent, the highest among the nation’s biggest cities. In Shanghai, prices rose 3.2 percent in September.

That said, the NBS unexpectedly pointed out that new-home prices in Beijing fell 3.7 percent in the first weeks of October from September and dropped 2.5 percent in Shanghai. It is unclear if this marks a shift in the long-term trend or just a brief hiccup.

“These curbs only aim to rein in the home-buying panic and to stem the bubble, instead of being an all-round shackling on the property market,” Wang Tao, chief China economist at UBS Group AG in Hong Kong, said before the data was released. “The possibility of a home-price plunge is low.”

And as one can see by looking at the above charts, the curbs introduced so far are likely to have only a mild impact, she said. “The purchase restrictions currently imposed can still be bypassed.”

It wasn’t just soaring prices: the pace of home sales is also rising sharply. The value of new homes sold rose 61% in September from a year earlier, almost double the previous month’s gain. A buoyant property industry helped the world’s second-biggest economy grow 6.7% in the third quarter from a year earlier, exactly as consensus had “expected.”

For now, it is safe to say that the recent “curbs” have failed: an Oct. 1 report by SouFun Holdings Ltd., the owner of China’s biggest property website, showed prices in September gained in 81 of 100 cities tracked, up from 68 in August. Average new-home prices climbed 2.8 percent, accelerating from a 2.2 percent gain the previous month, the private data provider said.

To be sure, if China did want to really burst the property bubble, it could: as UBS’ Wang Tao said, “the most powerful property control is credit tightening, which we haven’t seen.” Why? Because if we did see it, China would have to worry not so much about its housing bubble, as its credit growth and debt bubble, which as we showed last week, is the last pillar holding up not just the Chinese, but the global economy too.

end

Graham Summers comments that the Chinese yuan is being devalued because of the risks seen with the USA raising rates.  A rising yuan with the huge garbage of Chinese debt is now a good recipe. Gold has picked up on this and is rising against all currencies with the exception of the uSA dollar. Summers suggests that something big is afoot.

(courtesy Graham Summers/Phoenix Research Capital)

Is China About to Go “Scorched Earth” on the US Dollar?

end

As soon as we got the phony Markit, national mfg PMI, the Chinese yuan fell again to its lowest level in offshore trading:  6.7875 from 6.7829 this morning.  So far no panic yet, but a few more days of yuan selling will probably show a repeat of the Asian contagion  with the threat of huge deflation ripping apart the world’s finances:

(courtesy zero hedge)

end

4 EUROPEAN AFFAIRS

ITALY

Renzi’s gamble is that he will win the referundum ahead of the election.  If Italy votes against Renzi then the euroskeptic party wins and Italy leaves the Euro

(courtesy Mish Shedlock)

Renzi’s Gamble Is Even Bigger Than Most Think

Submitted by Michael Shedlock via MishTalk.com,

Italian Prime Minister Matteo Renzi threatened to step down if a December government-reform measure he seeks does not pass.

The reform will dramatically reduce the power of the Senate. It will also give a parliamentary majority to the party that gets the most votes. Renzi wants that authority.

Ironically, if the referendum does pass, Italy is more likely to leave the Euro than if it doesn’t. A graph of Italian Voter Polls shows why.

Opinion Polling for the Next Italian General Election

italian-polls-2

italys-polotical-parties

Beppe Grillo’s Five Star Movement party (M5S) is now neck and neck with Renzi’s PD party. M5S is decidedly eurosceptic.

Should the referendum pass, but Renzi lose the next election, a eurosceptic party will have control over Italy.

Renzi’s gamble is that he will win the referendum, consolidate power ahead of the next election, and stave off election of M5S. That’s quite the gamble given how support for Renzi has collapsed.

end

FRANCE

Violent clashes erupt in the Calais Jungle as migrants are removed

(courtesy zero hedge)

Violent Clashes Erupt As French Police Begin To Clear Calais Migrant “Jungle” – Live Feed

Violent clashes erupted overnight in the Calais jungle as 1,200 French police began the process of relocating the camp’s 8,000 migrant residents to 450 separate facilities across France.  The plan calls for a mass evacuation to be conducted on Monday and Tuesday with heavy machinery expected to be sent in Tuesday afternoon to clear any remaining debris and officially demolish the camp.  That said, many of the migrants chose not to leave peacefully launching rocks at French police and setting fires to property adjacent to the camp.

French authorities have arranged for migrants to be transported to over 450 facilities across the country where housing will be provided and they will be given the opportunity to claim asylum.  According to BBC, 2,500 people are expected to leave the camp on Monday with the remainder expected to depart on Tuesday.

The Jungle migrants are being placed into separate queues to determine who are in families, travelling alone or whether they are in vulnerable categories.

After processing they will leave for various parts of France and be given the opportunity to claim asylum. If they do not, they could face deportation.

There are 7,500 beds being made available in 450 centres across France.

By mid-morning there were long lines at the entrance to the registration centre. French officials said the operation was proceeding well, although Calais’ police commissioner said some migrants would have to return to the Jungle and try again on Tuesday.

Parts of the camp were emptying quickly, the BBC’s Gavin Lee reported. By 13:30 local time, 23 buses had left carrying 900 people. Officials have predicted that some 2,500 people will leave the camp on Monday.

Heavy machinery is expected to be sent in on Tuesday to clear any remnants of the camp left behind by migrants while those who choose not to leave voluntarily will be forcibly removed.

From Tuesday, heavy machinery will be sent to clear the tents and shelters that have been left behind.The whole operation is expected to take three days.

The French interior ministry said it “does not want to use force but if there are migrants who refuse to leave, or NGOs who cause trouble, the police might be forced to intervene”.

Below is a live feed of the current evacuation efforts.

For those not as familiar with the situation, the “Jungle” camp, near the port of Calais in Northern France, has become home to ~8,000 migrants as Europe has struggled to deal with the flow of refugees from Northern Africa and the Middle East.  The camp has drawn a lot of criticism from nearby French citizens as a haven for violence and crime.  Tensions climaxed last month when French farmers, truckers and police all united to block the Calais portwhile calling on President Hollande to announce specific plans for the demolition of the “Jungle” camp.

Calais

Of course, camps like these have grown as Europe has struggled to accommodate several hundred thousand migrants flowing in from Northern Africa and the Middle East.

END
GERMANY
We warned you about this, and now the Bundesbank confirms:  the HFT’s contribute to flash crashes, they reduce liquidity and they withdraw at times of “market stress” instead of providing liquidity.
(courtesy zero hedge)

(courtesy Reuters)

 

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6. GLOBAL ISSUES

A great Bellwether stock as an indicator of global growth and general economic activity: Caterpillar retail sales fall for the 46th consecutive month

(courtesy zerohedge)

Caterpillar Retail Sales Decline For 46 Consecutive Months; Worst Month For North America Since 2010

While Caterpillar’s CEO may have resigned recently, the woes at the heavy industrial manufacturer continue, with yet another month of declining global sales, the company’s 46th in a row.

According to the latest monthly release of global retail sales which traditionally presages the company’s earnings release due out tomorrow, the company reported that North American sales dipped by 23%, the steepest monthly decline since February 2010, confirming recent speculation that demand for original equipment is simply not there. The rest of the world did not fare much better, with EAME down 17%, Latin America sliding 23% and only Asia posting a rare rebound in sales, up 3%, the best print in the series since October 2012.

But it is on a blended global basis, that the ongoing problems facing CAT emerge where we can see that the company has now not reported a single monthly uptick in sales for 46 consecutive months, a period which is now 2.5x longer than the far more acute 19 month drop observed during the post-financial crisis period.

Below is a quick thought on CAT’s latest performance from Axiom’s Gordon Johnson:

QUICK THOUGHT: Sentiment aside (which is at/near an all-time high for CAT on the idea that earnings are bottoming), things are getting worse. And, with mining CAPEX across all CAT’s key segments above the 5-10yr trend line, we feel, as we have published previously (see attached note), things are still bottoming vs. the popular view that they have already bottomed. We think this becomes clearer as we move through 2017.

END

 

The Canadian dollar soars in the value after the Bank of Canada’s governor punts as to whether we will provide more stimulus

(courtesy zero hedge)

 

Loonie Soars After BOC’s Poloz Says Fiscal Stimulus Has Eased Pressure For Lower Rates

The reason why the loonie is surging and USDCAD tumbling is because moments ago, in his testimony before the House of Commons committee in Ottawa, BOC head Poloz said that the Bank of Canada is taking a wait-and-see approach to dealing with Canada’s two-track economy, adding that fiscal stimulus has eased pressure for lower rates.

He said that “we have to weigh the risks of waiting longer against what are the costs associated with doing something more immediate” adding that “if we were to be easing further, we’d be very close to using unconventional tools. And so that’s of course not a decision we take lightly.” As a reminder, many have speculated that the BOC may be the next central bank to pursue NIRP, although for the time being at least it appears that the Canadian central bank is trying to push back.

“And when we have the Canadian economy operating on two tracks – one track doing reasonably well and in certain regions doing quite well, and others adjusting through something quite difficult, it’s not as easy as it sounds to speed up the fast-growing parts to offset the slow growing parts. If everything was the same, it would be in many ways an easier decision to do that kind of thing.”

“So this is what I mean by the uncertainties, they’re multidimensional. So we just have to take — we do a fresh judgment every time and again we can’t plan it out that way, but our best plan right now, we think, is to wait for the next 18 months or so.”

And so with the BOC becoming the latest central banks to punt on more monetary easing into the realm of fiscal stimulus and policy, CAD traders were caught offguard, and the result was a nearly 100 pip surge in the Canadian currency.

 

end

7. OIL ISSUES

China continues to add gold its the Strategic reserve. When they finally stop buying, then oil will plummet;

(courtesy zero hedge)

Angola Becomes China’s Largest Oil Supplier As Beijing Stockpiles Record Amounts Of Crude

Overnight China’s customs data revealed that with imports from both Russia and Saudi Arabia posting modest declines in the past month, Angola once again became China’s largest crude supplier for the second time in September, taking the top position from Russia. China imported 4.19 million tonnes of oil from the southern African nation last month, up 45.8% from a year ago. That meant Angolan shipments stood at 1.02 million barrels per day, below 1.11 million bpd seen in August, the last time the country was the top exporter to China. according to Reuters

China imported record volumes of crude oil last month, eclipsing the United States as the world’s top buyer of foreign oil as Beijing’s state reserves shipped in cheap crude to fill new storage tanks. China’s Pivate “teapot” refiners boosted runs to a record 55.98% as of Sept. 29.

The amount of crude oil heading east from ports on Africa’s west coast is expected to reach a five-month high in September, partly driven by trading houses such as Trafigura and Gunvor, according to a Reuters survey.

Furthermore, it seems that as Saudi Arabia and Russia continue to posture for market share, the west African nation will be the winner for the foreseeable future: Chinese demand for Angolan oil, which is cheaper and deemed to offer stable supply, is set to accelerate in October as the refinery maintenance season comes to an end.

In the first nine months of 2016, Angola was also China’s third-largest supplier. Imports jumped 17.7 percent on-year to 34.39 million tonnes (916,229 bpd) in the period, data showed.

Imports from Iraq jumped 58.4 percent in September from a year earlier to 4.07 million tonnes, or 989,400 bpd. In the January to September period, imports grew 10.3 percent from a year ago to 706,155 bpd. Imports from Russia were down 2.14 percent year-on-year in September at 962,620 bpd. Saudi Arabia supplied 949,500 bpd, down 1.29 percent.

While Saudi Arabia still holds the position of top suppler year-to-date, with shipments at 1.03 million bpd, the latest customs data will likely mean that both Saudi Arabia and Russia will accelerate their head to head fight for Chinese market share to regain the top position, by either boosting output or by further cutting prices to compete with the African oil-exporting nation.

What is also notable about the latest data Chinese oil import data  is that despite an apparent drop in oil demand of 0.36% y/y to 10.12m b/d, China stockpiled crude oil at a record daily rate of 1.17m b/d in Sept. vs 1.14m b/d in Aug., according to Bloomberg calculations based on General Administration of Customs data.  China bought ~873k b/d surplus crude in Jan.-Sept., highest for the period since 2004 when Bloomberg started tracking customs data.

Where is the excess oil going? Most likely toward China’s strategic petroleum reserve. Bloomberg agrees, and notes that the stockpiling rate will persist throughout year-end as nation prepares for filling new SPR tanks in Zhoushan, Huizhou and Jinzhou, according to ICIS-China.

 

END

 

Iraq has split from the agreement in September and this sends oil down below 50 dollars:

(courtesy zerohedge)

Oil Slides Below $50; Hits Two Week Lows As Concerns Over Iraq Break From OPEC Agreement Mount

Having flirted with the key psychological level of $50/bbl ever since the first week of October as a result of an ongoing short squeeze due to concerns that OPEC just may pull of the production cut it agreed on in Algiers in late September, moments ago the active WTI contract dipped below $50 without any notable news.

Furthermore, as Reuters’ Amanda Cooper points out, the 1M/2M contango has now blown out to the wide level in almost a year.

As there was no immediate catalyst, traders attributed to slide to the delayed reaction from this weekend’s news that Iraq has effectively split from the Algiers agreement, and now demands to be granted the same exemption from oil production cut rights as were granted to Iran, Libya and Nigeria.  As a reminder, and as we reported yesterday, Iraq’s Oil Minister Jabber Al-Luaibi said Sunday at a news conference in Baghdad that his country should be exempted from output restrictions as it was fighting a war with Islamic State. “We are fighting a vicious war against IS,” Luaibi said in e briefing for reporters, adding that Iraq should get the same exemption as Nigeria and Libya.

“We are with OPEC policy and OPEC unity,” Al-Luaibi said. “But this should not be at our expense.” Instead, it is looking like a cut, if any, will be entirely at the expense of Saudi production, which may be forced to cut 1mmbpd or more, should OPEC continue to see rising record monthly production.

Cited by Reuters, Falah al-Amiri, head of Iraq state oil marketer SOMO, said Iraq’s market share was compromised by the various wars it fought since the eighties.

Even more fascinating was Iraq’s stated expectations of what its true output should be: a whopping 9 million barrels per day, roughly double from where it is now! “We should be producing 9 million if it wasn’t for the wars.” He added that Iraq has “passed 4.7 million barrels a day” and made it quite clear that Iraq would certainly not cut production: “We are not going back. It’s a question of sovereignty.”

* * *

Earlier today, Bloomberg confirmed the mounting skepticism that an OPEC deal would be problematic at best, when it cited Michael Lynch of SEER who siad that “we’ve had a big run-up in anticipation of OPEC cuts, but nothing has happened yet. There are a lot of negotiations ahead.”

But it all goes back to Iraq, which we warned readers would be a major hurdle from the start: “Iraq’s request to be exempted from a deal to cut output has further clouded the prospect of OPEC strategy to stabilize the oil market succeeding,” said Jens Naervig Pedersen, a Copenhagen-based analyst at Danske Bank A/S. “At the same time, the oil-rig count indicates that U.S. shale producers are slowly returning, making OPEC’s life even more difficult.”

Meanwhile, Russia is still in talks with OPEC about production and “many scenarios” are being discussed, Energy Minister Alexander Novak said after meeting his Gulf Arab counterparts in Riyadh. However, attention is shifting to the Op-ed posted by Rosneft CEO Igor Sechin which implied that Russia would most likely not comply with a production freeze, and would certainly avoid a production cut.

Finally, courtesy of Bloomberg, here is a roundup of the main oil-related news from this morning:

  • Iran hopes Russia will cooperate with OPEC, Iranian Oil Minister Bijan Namdar Zanganeh said in Tehran.
  • Iran will “go along” with OPEC’s goal of balancing the market, state news agency IRNA reported, citing Deputy Oil Minister Amir Hossein Zamaninia, who expects a “fair” oil price of $55 to $60 by 2017.
  • Libyan oil output will rise to 600,000 barrels a day “soon” and may reach 900,000 barrels if the El Sharara and El Feel fields reopen, Prime Minister Fayez al-Sarraj said on state television.
  • China’s imports of crude from Russia fell to 3.96 million tons in September, 2.1 percent lower than a year earlier, according to data from the General Administration of Customs.

But while crude may have reached its interim peak for the current cycle, Saudi Arabia is content, having achieved its goal: it issued a record for an EM $17.5 billion bond issue, and is far less concerned what happens with the price of oil in the near term.

 

end

 

Five factors that will cause crude oil prices to be under pressure

(courtesy Ghouri/OilPrice.com)

 

5 Negative Factors For Oil Prices

Submitted by Salman Ghouri & Andreas de Vries via OilPrice.com,

It has been a rough 2 years for forecasters of crude oil prices. Essentially no one saw the 2014 crash coming, and everyone looked on in surprise as a barrel of crude oil tanked, from over $100 to less than $30. After the crash, many forecasters expected a speedy recovery driven by bankruptcies in U.S. Shale, only to be left surprised again by the slow pace of the structural adjustment of supply to demand, causing the crude oil price to remain in the $30 to $50 per barrel range much longer than anticipated. And now, just as everyone has begun forecasting “lower for longer”, crude oil seems to be breaking through the $50 per barrel range in response to the announcement that OPEC and Russia intend to cut production.

All these surprises did not happen because crude oil price forecasters are “quacks” and “charlatans” who don’t really know what they are doing. Rather, the issue is the large number of real world factors that impact the crude oil price – economic growth; interest and exchange rates;demographics; global, regional and local politics; weather conditions; et cetera – and the general unpredictability of these factors. On top of this, the global economy’s financial markets have made it possible for the crude oil price to move disconnected from these factors. Speculator sentiment can make the crude oil price move in anticipation of an event, that is before something has actually happened, and by more than is justified by the event (“overshoot”).

Clearly, this makes crude oil price forecasting exceptionally difficult. That does not mean, however, there is no value in doing it.

If it hadn’t been for crude oil price forecasts the world wouldn’t have known about many of the factors impacting the crude oil price. The reconciliation of the forecast and the actual price of crude oil often results in learning about new things with implications for the crude oil price, new factors which had not been considered before. U.S. shale’s ability to innovate is a recent example. In other words, while crude oil price forecasts might not always be accurate, if done well they do always support development of critical insights into the crude oil market.

That this enhanced understanding of how the world of crude oil works has not resulted in increased accuracy of crude oil price forecasting, is because the world continues to increase incomplexity. New factors continue to be added to the pool of factors of affecting the crude oil price, often times upsetting the effect of established factors. In a business with a long term horizon such as the crude oil industry, where exploration, development and production can all take years, added complexity substantially adds to uncertainty. The oil industry has developed management techniques to deal with this uncertainty, such as scenario planning and strategic risk management. Crude oil price forecasts are a critical input for these tools to function, which means that crude oil price forecasting is an impactful value creation and preservation tool.

With the value of crude oil price forecasting firmly established, we will continue to monitor the global crude oil market to assess how events and trends will be impacting the crude oil price. At present we are bearish for crude oil, as we believe the following factors will be driving the oil prices in the short to medium term.

(Click to enlarge)

Downside Risks

OPEC

The countries united in OPEC at present account for approximately one third of global crude oil production, giving the OPEC cartel significant ability to influence crude oil supply and market sentiment. The recent announcement of an agreement to cut production sometime in November 2016 effectively signaled a change in course. Since 2014 OPEC’s strategy had been to “protect market share”. Now it seems to be returning to a price management strategy.

OPEC’s ability to deliver on this strategy remains doubtful. The allocation of the announced production cut amongst the OPEC members still needs to be agreed, for example. Since essentially all are struggling under the low oil price, this will not be easy to achieve. The reported disagreement amongst OPEC members on production statistics signals a behind-the-scenes disagreement about next steps.

If an agreement is established, the cartel’s history of members cheating on formal agreements, leading to actual production coming in higher than formally agreed, will need to be managed. Amongst the tools historically used by OPEC member states to avoid being impacted by an agreed cut is increasing production before the cut becomes effective. As OPEC reported record production of 33.6 million barrels per day during the month of September 2016, at least some of the OPEC countries appear to have resorted to this tactic this time round as well.

There is also the question of how much exactly an agreed production cut will impact the number of barrels supplied to the international markets. For example, during summer Saudi Arabia uses over 1.0 million barrels of crude oil for power generation, in order to deal with peak power demand associated with air-conditioning. Now that summer is over it can easily afford to lower production by 0.5 to 0.75 million barrels per day since that would not affect the number of barrels of crude oil it offers for sale to international buyers.

The crude oil price seems to have already factored in an effective implementation of OPEC’s stated intent to reduce supplies. Consequently, we don’t expect “OPEC success” in November to raise the crude oil price much higher. On the other hand, if OPEC fails to deliver a real reduction in the number of barrels it supplies to the global markets, this could push the price back down to the $45 level.

Global Economic Growth

The two-way relationship between economic growth and energy demand, and by extension crude oil demand, is well established. As economies grow they tend use more energy. Conversely, the availability of (cheap) energy enables economies to grow. For this reason global economic growth forecasts feature prominently in crude oil demand forecasts.

The fact that global economic growth has consistently been overestimated the last few years thereforesubstantially contributed to current supply glut. In essence, the crude oil industry invested billions in anticipation of demand that never materialized.

A consensus seems building amongst economists that in the short to medium term, global economic growth will be less than what the world got used to in the post WWII period. The IMF, for example, has warned for a coming period of mediocre growth, under the influence of factors that according to some are not easily resolved and according to others can not be resolved at all.

But even mediocre growth is under threat, and thus also even the least optimistic of crude oil demand growth forecasts.

Many of the globe’s key economies are struggling. In Japan Abenomics are by now considered a failure. In Europe, where the euro debt crisis remains lingering, Brexit has raised additional concerns about the future of an economic growth that already was “sluggish” at best. Regarding China concerns remain that the real growth slowdown is much worse than the official statistics indicate.

Hanging over all of this like a thick dark cloud is a global debt which has reached record levels. As long as interest rates globally remain at their current record low levels, this will not cause any issues for economic growth. But in today’s a low growth environment an increase in rates obviously would, which would have a knock-on effect on global crude oil demand. In China the debt issue seems to be aparticular concern at the moment.

As energy efficiency is becoming more and more a focus area of governments around the world, reducing the impact of economic growth on crude oil demand growth, there is a high probability that crude oil demand growth will continue to disappoint, which would keep the price locked at around $50 per barrel, the price of the marginal barrel at the moment.

Chinese Oil Demand

China was instrumental in the crude oil supercycle that lasted from 1999 to 2014, as during that periodChina’s crude oil demand grew by an amount equivalent to the total oil consumption of Japan and the United Kingdom. The country is now the world’s largest crude oil importer.

Although growth of the Chinese economy has slowed down over recent years, Chinese crude oil demand has continued to grow at the previous pace. This is because China has been using the low oil price environment to fill up strategic and commercial storage. According to some, China has been buying 0.5 million barrels per day on average in 2015 and 0.9 million barrels per day on average in 2016.

Obviously, this demand can not last forever as at some point China’s storage capacity will be full. It is not known exactly how large this capacity is, or how full it is at present, but as the buying associated with strategic storage is slowly phased out, China’s crude oil imports will stop growing or even decrease, taking the crude oil price down with it.

Technological Innovation & Process Optimization

At the beginning of 2015, most crude oil price forecasts assumed US shale to respond quickly and lower production, since the typical shale production cost at that time was substantially higher than the crude oil price. This expectation never materialized, however. Total US crude production dropped by just 0.8 million barrels per day between April 2015 and May 2016, because the US shale players were able todrastically lower their cost of operation. In part through renegotiating contracts with suppliers and service providers, but also through innovating and optimizing their processes.

While some of the savings from contract renegotiations will be undone during the upcoming period,shale innovation should be expected to continue to lower the production cost. In more conventional areas a similar trend to drive operating costs down through innovation and process optimization can be witnessed, with some success stories already. Effectively, this will result in increased crude oil supply at every possible price range (ceteris paribus), and thus put downward pressure on the crude oil price.

Automotive Revolution

Crude oil has been a remarkably stable industry for most of its existence. While the technologies applied to finding, developing and processing crude oil have indeed changed substantially, the products itself was never seriously challenged by outsiders, i.e. by new solutions for humanity’s energy need. Until recently, that is.

Under the influence of factors such as emission control regulation, changes in consumer preferences, digitalization and urbanization, the auto industry is presently going through transformation change. One of the changes is a move away from the internal combustion engine towards electric and fuel cell vehicles.

As some two thirds of crude oil demand is linked to transportation, this could have far reaching consequences for the crude oil industry, deflating global crude oil demand by millions of barrels per day as soon as early as 2030.

Upside Potential

Opposite these substantial downside risks for the crude oil price we see just two factors that bring an upside potential, namely Upstream underspending and geopolitical risks.

Upstream Underspending

Major cutbacks in exploration spending following the 2014 crude oil price collapse have resulted in new crude oil discoveries dropping to a 60 year low in 2015. On top of this, spending on productionmaintenance for mature fields has also been greatly reduced, the first effects of which are beginning to show in the production numbers.

The global average for natural decline rate for mature fields has been assessed at around 6 percent annually. Therefore, unless spending on exploration and mature field production maintenance recovers during 2016 and 2017, there is a substantial chance that 2 to 3 years from now the crude oil market will return to a state of shortage, which for an intermediate period at least could push the crude oil price up to $80 per barrel, the price needed to spur on investment in long-cycle projects such as deepwater, or possibly even higher.

Geopolitics

The war in Yemen is a geopolitical conflict with the potential to impact the crude oil price in the short to medium term, for two reasons.

Firstly, Yemen itself borders a key transport route for crude oil. Some 5 million barrels of crude oil pass through its Bab Al Mandab every day. Recently, the area has been drawn into the conflict. A worst case scenario for the conflict is a further escalation which closes the Bab Al Mandab for commercial shipping entirely, forcing crude oil transports from the Middle East to Europe and the Americas to take the much longer route around the Cape of Good Hope instead of through the Suez Canal.

Secondly, behind the war in Yemen is a conflict between Saudi Arabia and Iran. It is not impossible for the war in Yemen to spill over into other areas of the Middle East, which, at 31 million barrels per day, is home to around 35 percent of global crude oil production.

Other geopolitical events with a more remote likelihood of impacting the global oil markets are Iraq, in particular the battle for Mosul which is of course a key oil producing area, and the battle against ISIS, in particular in Libya where the group has been threatening the major oilfields in the eastern desert of the country.

end

8. EMERGING MARKETS

Venezuela now braces for a revolution after Maduro blocks a recall referendum:

(courtesy zero hedge)

Venezuela Braces For Revolution After Maduro Blocks Recall Referendum

Once a “flagship socialist nation,” Venezuela has suffered over the past couple of years from a dramatic economic crisis that has resulted in severe shortages of food, clean water, electricity, medicines and hospital supplies all of which have resulted in a desperate population which has resorted to the black market and violence for survival.  That said, Venezuela likely inched one step closer to revolution on Friday when Maduro’s leftist government took steps to block a recall referendum that could have resulted in his ouster.  According to the US News and World Report, Venezuelan opposition leaders are calling the efforts of Maduro “a coup” in light of the broad based public support of the recall effort.

Venezuela is bracing for turbulence after the socialist government blocked a presidential recall referendum in a move opposition leaders are calling a coup.

The opposition is urging supporters to take to the streets, beginning with a march on a major highway Saturday led by the wives of jailed activists, while a leading government figure is calling for the arrest of high-profile government critics.

Polls suggest socialist President Nicolas Maduro would lose a recall vote. But that became a moot issue on Thursday when elections officials issued an order suspending a recall signature drive a week before it was to start.

“What we saw yesterday was a coup,” said former presidential candidate Henrique Capriles, who had been the leading champion of the recall effort. “We’ll remain peaceful, but we will not be taken for fools. We must defend our country.”

International condemnation was swift. Twelve western hemisphere nations, including the U.S. and even leftist-run governments such as Chile and Uruguay, said in a statement Friday that the suspension of the referendum and travel restrictions on the opposition leadership affects the prospect for dialogue and finding a peaceful solution to the nation’s crisis.

The Maduro government has claimed that the recall was halted due to “irregularities in a first-round of signature gathering” though the public, 80% of whom polls suggest supported the recall efforts, aren’t buying it.  Meanwhile, Maduro loyalists are calling for opposition leaders to be imprisoned for attempts to commit election fraud.

Critical television stations have been closed and several leading opposition activists have been imprisoned. The country’s supreme court, packed with government supporters, has endorsed decree powers for Maduro and said he can ignore Congress following a landslide victory for the opposition in legislative elections.

The election commission, which has issued a string of pro-government rulings, halted the recall process on grounds of alleged irregularities in a first-round of signature gathering.

Polls suggest 80 percent of voters wanted Maduro gone this year, and the electoral council on Tuesday also ordered a delay of about six months in gubernatorial elections that were slated for year-end which the opposition was heavily favored to win. It gave no reason for the delay.

Meanwhile, one of his most powerful allies, Diosdado Cabello, said top opposition leaders should be jailed for attempting election fraud. And opposition leaders said a local court blocked eight of their leaders from leaving the country.

Of course, the integrity of “elections” in Venezuela have long been questioned particularly afterWikiLeaks posted the following cable linking Hugo Chavez to a mysterious company that came out of nowhere in 2000 and suddenly snatched up major contracts to supply voting machines around the world.  The company, Smartmatic, included a Hugo Chavez campaign adviser on it’s board.  Curiously, according to Gateway Pundit, the company’s board also included Lord Mark Malloch-Brown, a man who served on the board of George Soros’s Open Society Foundations and who was formerly the vice-chairman of Soros’s Investment Funds. 

“Ironically,” shortly after winning a “multi-million” dollar contract to supply these voting machines in Venezuela, Chavez won a landslide victory in the 2004 elections that all but destroyed his political opposition.

Venezuela

But, what is perhaps even more disturbing is that Smartmatic has also secured major contracts to supply voting machines for 16 states in the U.S., including key battleground states like Arizona, Colorado, Florida, Michigan, Nevada, Pennsylvania and Virginia. 

Which leaves us with only one thing left to say:

“Those who cast the votes decide nothing.

Those who count the votes decide everything.”

-Joseph Stalin

end

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

 

Euro/USA   1.0891 UP .0018/REACTING TO NO DECISION IN JAPAN AND USA + huge Deutsche bank problems 

USA/JAPAN YEN 104.00  UP .328(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2236 UP.0020 (Brexit by March 201/pound clobbered)

USA/CAN 1.3347 UP .0021

Early THIS MONDAY morning in Europe, the Euro ROSE by 18 basis points, trading now JUST above the important 1.08 level FALLING to 1.0891; 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 37.30 OR   1.21%   / Hang Sang  CLOSED UP 229.68 OR .98%    /AUSTRALIA IS LOWER BY 0.40% / EUROPEAN BOURSES MIXED

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

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

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

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

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

The NIKKEI: this MONDAY morning CLOSED UP 49.83 POINTS OR 0.29%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 229.68 OR 98%   ,Shanghai CLOSED UP 37.30 POINTS OR 1.21%   / Australia BOURSE IN THE RED: /Nikkei (Japan)CLOSED IN THE GREEN/  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1264.75

silver:$17.63

Early MONDAY morning USA 10 year bond yield: 1.733% !!! DOWN 1 in basis points from FRIDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.482, DOWN 1 IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 98.62 DOWN 5 CENTS from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

END

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And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 3.15% DOWN 4 in basis point yield from FRIDAY  (does not buy the rally)

JAPANESE BOND YIELD: -.051% DOWN 1/10 in   basis point yield from FRIDAY

SPANISH 10 YR BOND YIELD:1.10%  UP 2 IN basis point yield from  FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.39 UP 2  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 29 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.023% UP 2  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.0871 DOWN .0003 (Euro DOWN 3 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 104.27 UP: 0.593(Yen DOWN 59 basis points/POLICY ERROR ON BANK OF JAPAN

Great Britain/USA 1.2209 DOWN 0.0007( POUND DOWN 7 basis points

USA/Canada 1.3383 UP 0.0056(Canadian dollar DOWN 56 basis points AS OIL FELL TO $50.29

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This afternoon, the Euro was DOWN by 3 basis points to trade at 1.0871

The Yen FELL to 104.29 for a LOSS of 59 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 7 basis points, trading at 1.2209/

The Canadian dollar FELL by 56 basis points to 1.3383, AS WTI OIL FELL TO AT:  $50.29

The USA/Yuan closed at 6.7723 (SENDING DEFLATION AROUND THE WORLD)

the 10 yr Japanese bond yield closed at -.051%  DOWN 1/10  IN BASIS POINTS / yield/ AND THIS IS BECOMING BOTHERSOME TO THE BANK OF JAPAN

Your closing 10 yr USA bond yield UP   IN basis points from FRIDAY at 1.77% //trading well below the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.524 UP 3  in basis points on the day /

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

Your closing USA dollar index, 98.81 UP 13 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 MONDAY: 2:30 PM EST

London:  CLOSED DOWN 34.07 POINTS OR 0.49%
German Dax :CLOSED UP 50.44 OR  0.47%
Paris Cac  CLOSED UP 16.31 OR 0.36%
Spain IBEX CLOSED UP 115.80 OR 1.27%
Italian MIB: CLOSED UP 139.01 POINTS OR 0.81%

The Dow was UP 77.18 points or 0.43%  4 PM EST

NASDAQ  UP 52.43 points or 1.00%  4 PM EST
WTI Oil price;  50.29 at 3:00 pm; 

Brent Oil: 51.46   3:00 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  62.21(ROUBLE UP 15/100 ROUBLES PER DOLLAR FROM THURSDAY)  2:30 EST

TODAY THE GERMAN YIELD RISES  TO +.0.023%  FOR THE 10 YR BOND  2:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$50.47

BRENT: $51.45

USA 10 YR BOND YIELD: 1.764%

USA DOLLAR INDEX: 98.65 down 1/2  cent

The British pound at 5 pm: Great Britain Pound/USA: 1.2232 up .0016 or 16 basis pts.

German 10 yr bond yield at 5 pm: +.023%

 

END

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

TRADING IN GRAPH FORM

Manic Merger Monday Saves Stocks As China Currency Crashes To Record Low

Mega-Mergers and Pumping PMIs…

 

Offshore Yuan crashes to a record low…

 

And a huge merger with Time-Warner… (Nasdaq 100 new record high)

 

Futures show the excitement best…

 

Stocks ramped at the open, but went sideways from that point… (Only NASDAQ closed higher than its opening print)

 

Nasdaq was unable to get green on the month despite the ramp…

 

AT&T, Time-Warner  both sold off on the ‘deal’…

 

GOOGL hit a new record high (along with NASDAQ 100)

 

For the first time in 10 days, stocks managed a ramp into the close but once again VIX slid lower (to a 12 handle)…

 

Treasury yields rose on the day – all squeezed at the same time in the pre-open…(the entire move happened between US open and EU close)

 

The USD Index rose again to new 8-month highs led by JPY weakness

 

Oil closed lower on the day – despite a bounce of $50 – copper and silver closed higher…

 

$50 was defended aggressively…

 

Again…

 

Silver spiked – running stops – before plunging back…

 

Charts: bloomberg

 

END

 

Steve Wynn slams Obamacare as he states that his costs per employee is escalating.  He states that the living standards of every person in the USA is degrading due to the high health costs:

(courtesy Steve Wynn/zero hedge)

Steve Wynn Slams Obamacare, Warns Government “Is Degrading The Living Standards Of Every Person In America”

(courtesy zero hedge)

 

Last week, Jame O’keefe and Project Veritas Action potentially altered the course of the U.S. election, or at a minimum raised serious doubts about the practices of the Clinton campaign and the DNC, after releasing two undercover videos that revealed efforts of democrat operatives to incite violence at republican rallies and commit “mass voter fraud.”  While democrats have vehemently denied the authenticity of the videos, two democratic operatives, Robert Creamer and Scott Foval, have both been forced to resign over the allegations.

Many democrats made the rounds on various mainstream media outlets over the weekend in an attempt to debunk the Project Veritas videos.  Unfortunately for them, O’Keefe fired back with warnings that part 3 of his multi-part series was forthcoming and would implicate Hillary Clinton directly.

Anything happens to me, there’s a deadman’s switch on Part III, which will be released Monday. @HillaryClinton and@donnabrazile implicated.

Now, we have the 3rd installment of O’Keefe’s videos which do seemingly reveal direct coordination between Hillary, Robert Creamer and Scott Foval to organize a smear campaign over Trump’s failure to release his tax returns.  PerProject Veritas:

Part III of the undercover Project Veritas Action investigation dives further into the back room dealings of Democratic politics. It exposes prohibited communications between Hillary Clinton’s campaign, the DNC and the non-profit organization Americans United for Change. And, it’s all disguised as a duck. In this video, several Project Veritas Action undercover journalists catch Democracy Partners founder directly implicating Hillary Clinton in FEC violations.In the end, it was the candidate, Hillary Clinton, the future president of the United States, who wanted ducks on the ground,” says Creamer in one of several exchanges. “So, by God, we would get ducks on the ground.” It is made clear that high-level DNC operative Creamer realized that this direct coordination between Democracy Partners and the campaign would be damning when he said: “Don’t repeat that to anybody.” The first video explained the dark secrets and the hidden connections and organizations the Clinton campaign uses to incite violence at Trump rallies. The second video exposed a diabolical step-by-step voter fraud strategy discussed by top Democratic operatives and showed one key operative admitting that the Democrats have been rigging elections for fifty years. This latest video takes this investigation even further.

As Project Veritas points out, direct coordination between Hillary and Americans United For Change is likely a violation of federal election laws:

“The ducks on the ground are likely ‘public communications’ for purposes of the law.  It’s political activity opposing Trump, paid for by Americans United For Change funds but controlled by Clinton/her campaign.”

Donna Brazile is also directly implicated by Creamer who suggests that her conflict of interest with ABC is the only reason that the Donald Duck “hit” had to go through Americans United for Change rather than the DNC.

“The duck has to be an Americans United for Change entity.  This had to do only with some problem between Donna Brazile and ABC, which is owned by Disney, because they were worried about a trademark issue.  That’s why.  It’s really silly.”

Here is the full video just released:

As a reminder, below are parts 1 & 2 of the Project Veritas series in case you missed them.

Video 1 revealed DNC efforts to incite violence at Trump rallies:

Video 2 provided the democrat playbook on how to committ “mass voter fraud”:

(courtesy Markit/USAmfg PMI/zero hedge)

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