OCT 27/Comex gold deliveries in October surpass 30 tonnes: (30.24 tonnes standing)/huge withdrawal of 5.987 million oz from the SLV/Another fall in the Chinese yuan/Huge fall in Deutsche banks deposits as depositors are very fearful/Egypt entering hyperinflation/Venezuela in the thick of hyperinflation as Maduro orders a 200 fold increase in largest denomination bill/

Gold $1267.90 UP  $3.10

Silver 17.60 UP 1 cents

 

In the access market 5:15 pm

Gold: 1269.00

Silver: 17.63

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 26 (10:15 pm est last night): $  1272.76

NY ACCESS PRICE: $1267.40 (AT THE EXACT SAME TIME)

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1273.38

NY ACCESS PRICE: 1268.80 (AT THE EXACT SAME TIME)

HUGE SPREAD TODAY!!  5 dollars

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: OCT 27: 5:30 am est:  $1269.30   (NY: same time:  $1269.30:    5:30AM)

London Second fix OCT 27: 10 am est:  $1267.70  (NY same time: $1267.70 ,    10 AM)

Shanghai premium in silver over NY:  80 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

 

Tomorrow is Friday and they generally raid especially once London is put to bed.  So please be careful when you play with crooks.

For comex gold: 

20  NOTICE(S) FILED FOR 2,000 OZ

For silver:

for the Oct contract month:  3 notices for 15,000 oz.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 63 contracts UP to 196,374. The open interest ROSE despite the fact that the silver price was DOWN 15 cents in yesterday’s trading .In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .981 BILLION TO BE EXACT or 140% of annual global silver production (ex Russia &ex China).

In silver for October we had 3 notices served upon for 15,000 oz

In gold, the total comex gold ROSE by 2546 contracts despite the FALL in price of gold ($7.10 YESTERDAY) . The total gold OI stands at 510,163 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

TODAY WE HAD NO CHANGES AT THE GLD OUT OF THE GLD

Total gold inventory rests tonight at: 942.59 tonnes of gold

 

SLV

we had A HUGE CHANGE at the SLV/ A MONSTROUS WITHDRAWAL OF 5.987 MILLION OZ

THE SLV Inventory rests at: 360.673 million oz

.

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

1. Today, we had the open interest in silver ROSE by 63 contracts UP to 196,374 as the price of silver FELL by 11 cents with yesterday’s trading.The gold open interest ROSE by 2,546 contracts UP to 510,163 despite the fact that  the price of gold FELL $7.10 IN YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 3.96 POINTS OR 0.13%/ /Hang Sang closed DOWN 193.08  OR 0.83%. The Nikkei closed DOWN 55.42 POINTS OR 0.32% Australia’s all ordinaires  CLOSED DOWN 1.17% /Chinese yuan (ONSHORE) closed DOWN at 6.7816/Oil ROSE to 49.39 dollars per barrel for WTI and 50.26 for Brent. Stocks in Europe: ALL IN THE RED   Offshore yuan trades  6.7936 yuan to the dollar vs 6.7816  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS QUITE A BIT AS MORE USA DOLLARS  LEAVE CHINA’S SHORES / 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

4 EUROPEAN AFFAIRS

i)italy

The two earthquakes that hit central Italy yesterday wiped out two towns and has caused huge infrastructure damage

( zero hedge)

ii)DEUTSCHE BANK
Deutsche bank reports an unexpected 3rd quarter profit but fails to provide information on the USA settlement issue.  So instead of the stock rising, it fell badly.
( zero hedge)

iib)Oh oH this is troublesome:  Deutsche bank’s demand deposits tumble by over 13% and their entire liquidity has dropped by 10% down to 200 billion euros.  If the depositors flee then all bets are off and DB implodes due to its massive derivative bets

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

 

 

I)EGYPT

 

Hyperinflation looms large in Africa’s largest country Egypt today as the pound in the black market reaches 16.11 to the dollar from its official 8.8 level.

( zero hedge)

 

ii)RUSSIA

Seems that Russia is getting ready for a nuclear war

(courtesy zero hedge)

6.GLOBAL ISSUES

Canada and Belgium overcame their differences and we now have an EU-Canada trade deal.(CETA)

(/zero hedge)

7.OIL ISSUES

Oil spikes on an suspicious OPEC cut headline but totally misses the Russian refusal to participate in those cuts:

( zero hedge)

8.EMERGING MARKETS

VENEZUELA
Hyperinflation is now ripping through this country. Maduro has now decided to print a much higher denominating bill;  a 20,000 bolivar note from his previous highest note at 100 bolivars.  The new note is worth 15 dollars.
( zero hedge)

9.PHYSICAL STORIES

Chris Powell’s remarks at the New Orleans gold conference today:

( Chris Powell/Gata)

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

i)Initial claims fall but all other indicators point to problems:

( zero hedge/BLS):

ii)RNC chair Priebus filed two lawsuits in federal court allegingthat he State Dept is “stonewalling: in refusing to respond to requests for email records of staffers involved in the Clinton email scandal

( zero hedge)

iii)For 21 straight months, core durable goods orders have contracted year over year as well as business spending.

(courtesy zero hedge)

iv)Pending home sales growth disappoints the market as the slump continues;( zerohedge)

v)Now that the the probability of a fed rate hike rises to over 75%, USA rela estate stocks plunge to 7 month lows:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 2,546 CONTRACTS to an OI level of 510,163 as the price of gold FELL $7.10 with YESTERDAY’S trading.

We are in the delivery month is October and here the OI GAINED 202 contracts UP to 309. We had 1 notice filed YESTERDAY so we GAINED 203 contracts or 20,300 additional oz will stand  for delivery.

The next delivery month is November and here the OI FELL by 376 contract(s) DOWN to 1,884 contracts. This level is extremely elevated as generally November is a very poor delivery month.To give you an idea of size, on Oct 26 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 530 contracts down to 371,691.

Today we had  20 notices filed for 2,000 oz of gold.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI rose by 63 contracts from  196,311  UP TO 196,374 even though the  price of silver FELL to the tune of 15 cents yesterday.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3:  (224,540).  The next non active delivery month is October and here the OI rose by 5 contracts up to 41. We had 0 notices filed yesterday so we gained 5 contracts or an additional 25,000 oz will stand for delivery. The November contract month saw its OI gain 11 contracts up to 340.   The next major delivery month is December and here it fell BY 1194 contracts down to 147,782.

we had 3 notices filed for 15,000 oz

VOLUMES: for the gold comex

Today the estimated volume was 125,702  contracts which is POOR.

Yesterday’s confirmed volume was 160,713  which is  fair.

 

today we had 20 notices filed for 2000 oz of gold:

INITIAL standings for OCTOBER
 Oct 27.
Gold Ounces
Withdrawals from Dealers Inventory in oz  NIL
Withdrawals from Customer Inventory in oz  nil
NIL oz
Deposits to the Dealer Inventory in oz 2,000.02 oz

BRINKS

Deposits to the Customer Inventory, in oz 
 9894.700 oz
SCOTIA
No of oz served (contracts) today
20 notices 
2,000 oz
No of oz to be served (notices)
289 contracts
 28,900
oz
Total monthly oz gold served (contracts) so far this month
9434 contracts
943,400 oz
29.343 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month    oz
Total accumulative withdrawal of gold from the Customer inventory this month    388,783.5 oz
Today we had 0 kilobar transactions
Today we had 1 deposit into the dealer:
i) Into Brinks: 2,000.02 oz ?? strange deposit
total dealer deposits:  2,000.02 oz
We had zero dealer withdrawals:
total dealer withdrawals:  nil oz
.
We had 1 customer deposit;
 i) Into Scotia:  9894.700 oz
total customer deposits; 9894.700 oz
We had 0 customer withdrawal(s)
total customer withdrawal:nil   oz
We had 0 adjustment(s)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventor 2,238,377.849 or 69.622 tonnes
Total gold inventory (dealer and customer) =10,564,658.582. or 328.607 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 328.607 tonnes for a  gain of 26  tonnes over that period.  Since August 8 we have lost 25 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 from their client or customer account. The total of all issuance by all participants equates to 20 contract  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the Oct contract month, we take the total number of notices filed so far for the month (9434) x 100 oz or 943,400 oz, to which we add the difference between the open interest for the front month of OCT (309 contracts) minus the number of notices served upon today (20) x 100 oz per contract equals 972,300 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 (9434) x 100 oz  or ounces + {OI for the front month (309) minus the number of  notices served upon today (20) x 100 oz which equals 972,300 oz standing in this non active delivery month of Oct  (30.24 tonnes).
we GAINED ANOTHER 203 NOTICES OR AN ADDITIONAL 20,300 oz will stand for gold 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!
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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; 29.611 tonnes so far.
total for the 10 months;  183.222 tonnes
average 18.32 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: 159.993 tonnes per the 6 months or 26.665 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.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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  25 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
 
OCT INITIAL standings
 Oct 27. 2016
Silver Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
1,224,531.656 oz
Deposits to the Dealer Inventory
NIL  OZ
Deposits to the Customer Inventory 
 nil oz
No of oz served today (contracts)
3 CONTRACT(S)
(15,000 OZ)
No of oz to be served (notices)
38 contracts
(190,000 oz)
Total monthly oz silver served (contracts) 503 contracts (2,515,000 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  7,732,804.0 oz
today, we had 0 deposits into the dealer account:
total dealer deposit: NIL oz
we had 0 dealer withdrawals:
 total dealer withdrawals: nil oz
we had 2 customer withdrawals:
i) Out of Delaware: 623,751.646 oz
ii) Out of Scotia: 600,780.01 oz
Total customer withdrawals: 1,224,531.656  oz
We had 0 customer deposits:
total customer deposits;  nil oz
 
 
 we had 0 adjustment(s) 
.
Volumes: for silver comex
Today the estimated volume was 50,683 which is VERY GOOD.
YESTERDAY’S  confirmed volume was 56,612 which is EXCELLENT
The total number of notices filed today for the Oct contract month is represented by 3 contracts for 15,000 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  503 x 5,000 oz  = 2,515,000 oz to which we add the difference between the open interest for the front month of OCT (41) and the number of notices served upon today (3) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the OCT contract month:  503(notices served so far)x 5000 oz +(41) OI for front month of SEPT ) -number of notices served upon today (3)x 5000 oz  equals  2,705,000 oz  of silver standing for the OCT contract month. THIS IS STILL A HUGE SHOWING FOR SILVER AS OCTOBER IS GENERALLY A VERY WEAK DELIVERY MONTH.
We GAINED 5 SILVER CONTRACT OR AN ADDITIONAL 25,000 OUNCES WILL  STAND FOR DELIVERY TODAY.
 
Total dealer silver:  29.987 million (close to record low inventory  
Total number of dealer and customer silver:   173.206 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 27/NO CHANGES AT THE GLD/INVENTORY REMAINS AT 942.59 TONNES
Oct 26/a massive 14.24 tonnes of gold leave the GLD and I am sure this is a paper transaction/this “paper gold” was used in the whacking of gold today/Inventory rests at 942.59 tonnes
OCT 25/A HUGE ADDITION OF 3.27 TONNES INTO THE GLD/INVENTORY RESTS AT 956.83 TONNES
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Oct 27/ Inventory rests tonight at 942.59 tonnes
*IN LAST 19 DAYS: 7.6 TONNES REMOVED FROM THE GLD

end

Now the SLV Inventory
OCT 27/A MONSTROUS WITHDRAWAL OF 5.987 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 360.673 MILLION OZ  (AND YET NO CHANGE IN THE SILVER PRICE???)
Oct 26/NO CHANGES AT THE SLV/INVENTORY RESTS AT 366.366 MILLION OZ/
OCT 25/NO CHANGES AT THE SLV INVENTORY/INVENTORY RESTS AT 366.366 MILLION OZ
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 27.2016: Inventory 360.673 million oz
 end

NPV for Sprott and Central Fund of Canada

 

1. Central Fund of Canada: traded at Negative 3.2 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 27/2016).
2. Sprott silver fund (PSLV): Premium FALLS to +0.30%!!!! NAV (OCT 27/2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES TO  0.92% to NAV  ( OCT 27/2016)
Note: Sprott silver trust back  into POSITIVE territory at 0.30% /Sprott physical gold trust is back into positive territory at 0.92%/Central fund of Canada’s is still in jail.
 
 
 

end

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

Trading in gold and silver overnight in Asia and Europe

World Is Out of Weapons

Satyajit Das has written an excellent article in Bloomberg which clearly details the risks facing the global financial and monetary system and how central bankers are out of monetary ammunition and weapons.


NOT A BAD PLACE FOR IT. PHOTOGRAPHER: ERWIN WODICKA/ULLSTEIN BILD/GETTY IMAGES VIA BLOOMBERG

Excerpt:

“No one likes to admit defeat. But global policymakers, who continue to insist that there’s more they can do to revive growth and inflation, are starting to sound like Monty Python’s Black Knight (click link to see video), the limbless and mortally wounded warrior who threatens to bleed on his victorious opponent. The truth is that governments and central banks have very few weapons left — and have probably lost any chance they once had of averting a prolonged stagnation.

Secular Stagnation

Clearly, the real economy hasn’t responded as hoped to zero and now negative interest rates. A whole host of factors continue to depress personal spending — high debt, stagnant incomes, unemployment and under-employment, and economic uncertainty. Even the rich, who have benefited immensely from the runup in asset prices, can’t really spend much more than they already are.”

Satyajit Das is an Australian former banker and corporate treasurer, turned consultant, author and academic. His latest book is “A Banquet of Consequences” and he is also the author of “Extreme Money” and “Traders, Guns & Money.”

Important article can be read on Bloomberg here

Gold and Silver Bullion – News and Commentary

Gold prices score highest settlement in 3 weeks (MarketWatch)

Gold prices mostly steady in Asia as investors eye U.S. vote, Fed (Investing)

Gold edges down on firmer dollar (Reuters)

Trump’s Family Fortune Originated in a Canadian Gold-Rush Restaurant and Bar (Bloomberg)

Turn your voice into solid gold with this 3D-printed ring (CNET)

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

3 Reasons Why Having Gold Exposure Is Now Essential (Fool.ca)

Indian, Chinese love affairs with gold turn financial (Gata)

The Next Financial Collapse: An Update (DailyReckoning)

I Dislike Gold, BUT Couldn’t Get Any Cash (SRSRoccoReport)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

27 Oct: USD 1,269.30, GBP 1,038.29 & EUR 1,162.93 per ounce
26 Oct: USD 1,273.90, GBP 1,043.45 & EUR 1,166.13 per ounce
25 Oct: USD 1,269.30, GBP 1,037.53 & EUR 1,165.85 per ounce
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

Silver Prices (LBMA)

27 Oct: USD 17.66, GBP 14.41 & EUR 16.16 per ounce
26 Oct: USD 17.66, GBP 14.46 & EUR 16.17 per ounce
25 Oct: USD 17.73, GBP 14.49 & EUR 16.30 per ounce
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


Recent Market Updates

– Gold Is The “Kardashian of Commodities” – Herbert & Keiser Interview Skoyles
– Value of Gold – Unlike Paper Currency Gold Maintained Value Throughout Ages
– Fed Risks Lehman Crisis As US Recession Storm Gathers
– 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”

Mark O’Byrne
Executive Director

end

Chris Powell’s remarks at the New Orleans gold conference today:

(courtesy Chris Powell/Gata)

Central banks fear exposure of their interventions, so we GATA press on

Section:

Gold Market Manipulation Update

Remarks by Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
New Orleans Investment Conference
Hilton New Orleans Riverside Hotel
Wednesday, October 26, 2016

Since 1999 the Gold Anti-Trust Action Committee has been trying to get the financial industry, the mining industry, and mainstream financial news organizations to acknowledge that the gold market is aggressively manipulated by governments and central banks to protect their currencies and bonds against competition from a potentially superior currency and store of value. This year seems to have been the one when respectable people in the financial industry gave up disputing us.

Not that GATA still isn’t disparaged. Rather, respectable people in the financial industry have gone from denying that the gold market is manipulated to dismissing complaints of gold market manipulation because, they say, “All markets are manipulated.”

Of course this response is an evasion. It fails to address the specifics and purposes of the manipulation of the gold market. That is, are all markets manipulated nearly every day by the surreptitious sale by governments and central banks of massive amounts of imaginary product? Are all markets manipulated every day so the developed world can expropriate the resources of the developing world?

Respectable people in the financial industry still find such issues politically incorrect, very bad for their business. To avoid these issues, some of these respectable people even assert that central banks don’t matter — even though central banks are authorized to create infinite money and deploy it in secret on a patronage basis, making them the most powerful institutions in the world.

But the evidence of market rigging that has been exposed this year makes it easy to understand the transition from “gold isn’t manipulated” to “everything is manipulated.”

For example:

— In the class-action anti-trust lawsuits brought in federal court in New York against the investment banks that operated the daily gold and silver price fixings in London, Deutsche Bank effectively confessed to manipulating the gold and silver markets, agreeing to pay $38 million in damages and to provide evidence against the other defendant banks. The judge authorized the lawsuits to proceed to the discovery and deposition stage, where production of evidence is mandatory. So now the case may get very interesting. The production of evidence may reveal more government involvement with the banks that run the gold market.

See:

http://www.gata.org/node/16380

http://www.gata.org/node/16847

— A study published in July by a finance professor at the University of Western Australia, Dirk Baur, concluded that, as GATA long has maintained, central banks rig the gold market primarily through their leasing of gold, their creation of imaginary gold. This leasing vastly inflates what the world mistakenly understands to be its gold supply and thus suppresses the price. While gold’s advocates like to say, “You can’t print gold,” in effect central banks print massive amounts of it, and while it is imaginary gold, people still accept it. Professor Baur’s study is posted at GATA’s Internet site:

http://www.gata.org/node/16611

— In August JPMorganChase’s chief of quantitative and derivatives strategy, Marko Kolanovic, issued a report asserting that the rise in stock markets after the United Kingdom’s vote to withdraw from the European Union was caused by central bank intervention:

http://www.gata.org/node/16641

— In January a review of former Secretary of State Hillary Clinton’s e-mail correspondence, released by the State Department, disclosed an e-mail from her political adviser, Sidney Blumenthal, asserting that France decided to overthrow Libyan dictator Muammar Gaddafi to thwart his plan to use gold and silver to underwrite a new pan-African currency:

http://www.gata.org/node/16074

— In March GATA consultant Robert Lambourne disclosed that the annual report of the Bank for International Settlements showed that the BIS, which had gotten out of the gold swap business, had returned to gold swapping in a big way. This signified that central banks lately have been moving gold around desperately to apply it where they believe its price most needs suppressing:

http://www.gata.org/node/16704

— In August the Netherlands central bank refused the request of gold researcher Koos Jansen to publish its gold bar list:

http://www.gata.org/node/16705

This month Austria’s central bank, which had publicized its plan to audit its gold reserve, refused Jansen’s request to publish its gold bar list and the audit:

http://gata.org/node/16866

In recent years the International Monetary Fund has boasted of increasing the transparency of its gold operations, but in September gold researcher Ronan Manly reported that the IMF had refused to give him access to the records of those supposedly transparent transactions:

http://gata.org/node/16722

These refusals by the Netherlands and Austrian central banks and the IMF suggest, as the annual report of the BIS does, that central bank gold has been moved all around for price suppression purposes and is badly oversubscribed — that the same gold bars reside on the books of many financial entities, that many people and institutions think they own the same gold.

— Speaking on March 31 to a financial conference at the Virginia Military Institute in Lexington, the president of the Federal Reserve Bank of New York, William Dudley, refused to answer a question from a GATA supporter in the audience, W. Ware Smith Jr., about whether the Federal Reserve is involved with gold swaps. Smith’s question about gold swaps followed his question about Germany’s repatriation of some of its gold from the New York Fed. I’d like to show you a one-minute excerpt from the exchange between Dudley and Smith:

https://drive.google.com/file/d/0B7bb1NsDZTmjMkIyM1VsQndneXc/view

You can’t hear Smith’s follow-up question, but that’s when he asked Dudley if the Fed was involved with gold swaps.

Note Dudley’s reply to Smith: “I can’t comment on individual customer kind of transactions.”

But Smith had not asked Dudley to comment on any “individual customer kind of transactions.” Smith had asked only if the Fed is involved in gold swapping. And of course in his previous reply to Smith, Dudley had discussed transactions with an individual customer of the Fed, Germany’s Bundesbank.

When Smith told me about his exchange with Dudley, I wrote to the publicist for the New York Fed, Eric Pajonk, seeking confirmation and posing Smith’s question for myself. I asked Pajonk: Is the Fed involved with gold swaps?

The New York Fed’s publicist acknowledged my e-mail and directed me to a transcript of Dudley’s speech at VMI and to a YouTube video of Dudley’s appearance there, from which the video excerpt I showed you was drawn. But like his boss, the New York Fed’s publicist would not answer my question about gold swaps. Remarkably, the New York Fed’s publicist repeatedly refused even to acknowledge my gold swaps question:

http://www.gata.org/node/16341

Now we already knew from a letter sent in 2009 to GATA’s lawyer by a member of the Fed’s Board of Governors, Kevin M. Warsh, that the Fed is indeed engaged in gold swaps with foreign banks and refuses to disclose the records of these swaps:

http://www.gata.org/node/7819

So why can’t Dudley acknowledge the Fed’s gold swap business today? Because gold swaps are for surreptitious market rigging, making the issue too sensitive. Any honesty from the Fed would lead to many more questions about the sensitive matter of market manipulation.

From the vast documentation GATA has collected of surreptitious intervention in the gold market by central banks — documentation drawn mainly from government archives and statements by central bankers themselves, many of these documents quite current — and from Dudley’s clumsy evasion of the gold swap question, you can see how easy it has become to catch central bankers. All you have to do is corner them with specific questions about a document. Though central banking, operating largely in secret, is conspiracy, GATA’s work isn’t mere “conspiracy theory.” GATA’s work is just traditional journalism.

That’s why the most urgent issue for investors in the monetary metals may not be the surreptitious intervention in the markets by governments and central banks — intervention that constitutes the destruction of the market economy and even the destruction of democracy itself. Rather the most urgent issue for monetary metals investors may be the cowardice and even the corruption of mainstream financial news organizations, which won’t report critically on central banking and expose its interventions.

Nearly every major mainstream financial news organization in the world has received from GATA a detailed summary of the documentation we have compiled — a summary containing internet links to the original documents. This summary is posted in “The Basics” section at our Internet site, GATA.org:

http://www.gata.org/node/14839

But not one major mainstream financial news organization has pursued the issue.

My recent experiences with The Wall Street Journal and Financial Times may illustrate the nature of mainstream financial news organizations today.

In April, when GATA was publicizing New York Fed President Dudley’s evasion of the gold swap question, I wrote something in GATA’s daily newsletter, the GATA Dispatch, denouncing the cowardice of the mainstream financial press. I sent this commentary to many financial journalists.

I received an indignant response from a reporter for The Wall Street Journal, Katy Burne, who identified herself as the Journal’s reporter covering the New York Fed. I invited her to telephone me. When we spoke Burne insisted that she often puts critical questions to officials of the New York Fed, including Dudley himself. She said she was ready to put to them questions about gold. She asked me to send her GATA’s documentation.

I agreed to do so but I cautioned her that I already had provided the documentation to two other reporters for the Journal at their request — Kate Kelly in 2010 and Greg Zuckerman in 2011 — and that the newspaper had done nothing with it. As I sent Burne the documentation, I told her I’d be delighted to provide more information, and since April I have updated her many times by e-mail.

But as usual the Journal has done nothing with the information. Mainstream financial news organizations continue to prohibit critical questions to central bankers, especially about gold, the control of gold being the secret knowledge of the financial universe.

Of course Burne may have tried briefly to pursue the gold issue with New York Fed President Dudley, only to be instructed against it by her superiors, or even by Dudley himself. Either way, I suspect that she is no longer so indignant about my criticism of her newspaper.

Two weeks ago an editor for the Financial Times, Dan McCrum, wrote a column asserting that there is no explanation for movements in the gold price except what he called “fashion”:

http://www.gata.org/node/16826

McCrum’s column was so outrageously mistaken and lazy that I wrote to him that there is indeed another explanation for movements in the gold price: surreptitious intervention by central banks. I sent him the summary of GATA’s documentation and urged him to review it.

McCrum cordially replied: “Many thanks for your e-mail. Unfortunately, I feel it would be counter to the spirit of the column were I to write more on the subject of gold.”

But what if the “spirit of the column” was wrong? What if the column failed to acknowledge and examine the evidence? What if the column misinformed readers? McCrum’s column wasn’t journalism; it was just propaganda and disinformation.

Ironically, we know from the State Department cables obtained by Wikileaks in 2011 that the government-controlled press in China has been full of reports about gold price suppression by Western governments. Those Chinese press reports were translated by the U.S. embassy in Beijing and cabled back to Washington. That is, China knows all about gold price suppression and the U.S. government knows that China knows:

http://www.gata.org/node/10380

http://www.gata.org/node/10416

This failure of Western journalism especially bothers me because I am one year short of 50 years in the newspaper business. I know that governments too often operate in secret and sometimes, facilitated by secrecy, will deceive and even do awful things. I know that, as it also is a human enterprise, journalism is imperfect too. But if journalism won’t even try to hold government to account, what will?

As much as it disappoints me as an investor in the monetary metals, I can understand the mining industry’s cowardice. As it is a natural resource business and the most capital-intensive business, the mining industry is almost entirely dependent on government and the biggest investment banks, which in turn are essentially government agencies themselves.

In contrast, journalism’s calling is higher, and in the West its rights are far greater.

As for GATA’s calling, we increasingly are regarded as bad for the monetary metals business. Ross Norman, CEO of the venerable London bullion brokerage firm Sharps Pixley, made this point about GATA in a cordial exchange with me the other day. GATA’s complaints about manipulation of the monetary metals markets, Norman wrote, are discouraging investment.

Yes, as GATA Chairman Bill Murphy has noted, the more GATA has established that governments and central banks are rigging the monetary metals markets, the less popular GATA has become with people selling monetary metals products. While some people still dismiss GATA as a mere touter of the monetary metals, the organization warns investors of what they are up against even as we explain the potential consequences of the enormous naked short position in gold represented by the “paper gold” and gold derivatives that are underwritten by central banks. The logic of GATA’s work isthat the monetary metals are grossly undervalued, undervalued by hundreds of percent.

But if, as GATA has concluded, surreptitious intervention by governments and central banks, and not mere “fashion,” is the primary determinant of the gold price, and if the objective of that intervention is generally suppressive, would we help gold and free markets more by remaining silent about the intervention? Given their surreptitiousness and unaccountability in the gold market, central banks themselves plainly have concluded that exposure would demolish their policy, maybe even demolish central banking itself, and help gold.

In this respect GATA agrees with central banks.

So GATA persists, figuring that if we can’t easily make friends in the monetary metals industry, then we can aim for something else, fulfillment of the old maxim of the English common law, which, ennobled into Latin, goes: Fiat justitia et ruant coeli.

“Let justice be done though the heavens fall.”

 

 

END

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

 
 

:

1 Chinese yuan vs USA dollar/yuan UP to 6.7816( dEVALUATION SOUHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.7936 / Shanghai bourse CLOSED DOWN 3.96 POINTS OR 0.13%   / HANG SANG CLOSED DOWN 193.08 OR 0.83%

2 Nikkei closed DOWN 55.42 OR 0.32%   /USA: YEN RISES TO 104.70

3. Europe stocks opened ALL IN THE RED ( /USA dollar index DOWN to 98.54/Euro UP to 1.0925

3b Japan 10 year bond yield: RISES TO    -.052%/     !!!!(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::  49.39  and Brent:50.26

3f Gold UP  /Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES  A BIT to +.149%   

3j Greek 10 year bond yield FALLS to  : 8.30%   

3k Gold at $1269.25/silver $17.69(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 WILL BE DEFENDED 

3l USA vs Russian rouble; (Russian rouble DOWN 2/100 in  roubles/dollar) 62.84-

3m oil into the 49 dollar handle for WTI and 50 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 104.70 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 .9915 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0834 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 RISES to  +.149%

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

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

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

4. USA 10 year treasury bond at 1.83% early this morning. Thirty year rate  at 2.580% /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

US Futures Rebound, Global Stocks Dip As Bond Yields Rise, Dollar Hits 9 Month High

Top overnight news included the surprising profit by Deutsche Bank as well as the 35% jump in Barclays earnings on rising bond trading revenue; in macro the biggest overnight event was the UK Q3 GDP report which rose 0.5% handily beating expectations of 0.3% rise in the first quarter of Brexit. Yields on Britain’s gilts jumped to the highest since the Brexit vote. 2Y gilts rose four basis points  to 0.31% in early trading and touched 0.33 percent, the highest since June 23. Germany’s 10-year bund yield climbed seven basis points to 0.15 percent, a fifth-straight increase, and Treasury 10-year note yields added three basis points to 1.82% as a December rate hike looking increasingly likely.

Norway’s krone surged after the central bank kept its benchmark interest rate unchanged for a fourth meeting. Crude oil traded below $50 a barrel amid doubts that OPEC will implement its first output cuts in eight years, further pressured by rising oil. The Bloomberg Dollar Spot Index was 0.1 percent higher. Europe’s Stoxx 600 fell 0.3 percent after rising as much as 0.5 percent.

Markets are now pricing in a 74-percent chance that the U.S. Federal Reserve will raise interest rates at its December meeting following a series of hawkish comments from Fed policymakers. Bets that the Fed will hike rates have driven the dollar to nine-month highs against a basket of currencies this week and have supported U.S. 10-year Treasury yields.

The “steepening of the US yield curve works as a magnet for capital coming at this point in particular out of low yielding environments such as Japan and Switzerland,” said analysts at Morgan Stanley, adding that these flows will continue to support the dollar.

An overnight slide in oil prices and underwhelming results from Apple soured the mood in Asian stocks where technology sectors led losses in Japan. Europe’s STOXX 600 was up 0.3 percent, however, though defensive sectors such as healthcare and utilities provided the biggest boost to the index, reflecting investor caution. Banks among the worst performing sectors in Europe this year, rose 0.5 percent helped by a surprise third-quarter profit at Deutsche Bank and forecast-beating numbers from Barclays which, like its U.S. rivals, enjoyed a significant pick-up in bond trading revenue.

Data from the European Central Bank showing lending growth to euro zone companies and households grew at a steady pace last month was also seen helping the sector.

On the earnings front it’s another busy day with 62 S&P 500 companies scheduled to release their latest quartiles including Ford Motor, ConocoPhillips and UPS either prior or at the open, and Alphabet after the close.

Bulletin Headline Summary from RanSquawk

  • European equities have traded in a relatively choppy manner all morning before turning lower ahead of the US open with earnings continuing to dictate sentiment.
  • A busy morning in FX, heightened by the usual month end flow — which is said to favour the USD — with the Riksbank and Norges bank rate decisions preceding the key Q3 UK GDP number which exceeded expectations
  • Looking ahead, highlights US Durable Goods Orders, Weekly Jobs and Pending Home Sales

Market Snapshot

  • S&P 500 futures down 0.2% to 2130
  • Stoxx 600 down 0.3% to 341
  • FTSE 100 down 0.2% to 6942
  • DAX down 0.3% to 10674
  • German 10Yr yield up 5bps to 0.14%
  • Italian 10Yr yield up 5bps to 1.5%
  • Spanish 10Yr yield up 5bps to 1.18%
  • S&P GSCI Index up 0.4% to 372
  • MSCI Asia Pacific down 0.6% to 139
  • Nikkei 225 down 0.3% to 17336
  • Hang Seng down 0.8% to 23132
  • Shanghai Composite down 0.1% to 3112
  • S&P/ASX 200 down 1.2% to 5296
  • US 10-yr yield up 3bps to 1.82%
  • Dollar Index down 0.03% to 98.6
  • WTI Crude futures up 0.3% to $49.34
  • Brent Futures up 0.6% to $50.27
  • Gold spot up 0.2% to $1,269
  • Silver spot up 0.1% to $17.65

Global Headline News

  • Deutsche Bank Posts Surprise Profit on Trading Jump, Costs: Litigation, restructuring costs lower than analysts forecast
  • Barclays Posts 35% Jump in Profit on Bond Trading Revenue: Fixed-income unit reports highest revenue in more than 2 years
  • VW Struggles to Emerge From Crisis as Audi Takes Profit Hit: Audi return on sales will be ‘considerably below’ target range
  • Treasury Selloff Is About to End If Consensus Forecast Is Right: Rate hike has been priced in, says Mitsubishi UFJ Kokusai
  • Verizon, Danone Pushing Company Bond Sales to Six-Week High: Borrowers rush in as borrowing premiums close to 18 month low
  • Tesla Posts Rare Quarterly Profit as Musk Readies for SolarCity: Earnings surprise aided by cost-cutting, zero- emission credits
  • Viacom Said Close to Naming International Chief Bakish CEO: Choice fills leadership void as company weighs deal with CBS
  • Apple Delays AirPods Wireless Headphones Announced With IPhone 7: Didn’t provide a technical reason for the delay or indication as to when the product will be shipped

Looking at regional markets, we start in Asia where it has been a subdued session as equities fell albeit mildly so with earnings continuing to dictate much of the price action. In light of the negative sentiment, safe-haven flows into the JPY hindered Japanese exporters and the Nikkei 225 (-0.3%). The 1st of the large banks in Australia provided their financial results with NAB (+1.8%) announcing that cash earnings rose 4%, while they maintained their dividend. However, this failed to lift the ASX 200 (-1.2%), as the index was dragged lower by energy names. The Shanghai Comp (-0.1%) and the Hang Seng (-0.8%) were also softer in the wake of industrial profits rising at a slower pace than the prior month. In credit markets, focus in JGB’s has been in the short end, with the 2-yr outperforming post the strong 2-yr auction, resulting in an unwind of the recent curve flattening. BoJ Governor Kuroda said the BoJ may not need to purchase JPY 80trl to keep zero goal in the future, although it doesn’t plan to lower JGB holdings at this stage. Kuroda further commented that the yield curve is moving inline with what was desired at prior policy meeting. Chinese Industrial Profits in September rose Y/Y 7.7% declining from a multi-year high of 19.5%.

Top Asian News

  • China Steps Up Yuan Rhetoric as Currency Tumbles to Six-Year Low: Volatility gauge most muted in year as officials show support
  • Nomura’s Second-Quarter Profit Climbs 31% on Trading Income: 2Q net income 61.2b yen vs est. 45b yen
  • OCBC Quarterly Profit Beats Estimates on Wealth, Insurance: Non-interest income climbs 25%, interest income falls 6%
  • Samsung Scion’s Reign Begins Amid Note 7 Smartphone Crisis: Lee gains corporate power with Samsung Electronics board seat
  • Ousted Tata Chief Warns Group Faces $18 Billion in Writedowns: Cyrus Mistry defends his record in letter to Tata’s board

European equities have traded in a relatively choppy manner all morning before turning lower ahead of the US open with earnings continuing to dictate sentiment. Stocks were initially led higher by pre-market earnings, with the likes of Deutsche Bank (flat) and Barclays (+1.8%) initially impressing investors to trade in the green before investor sentiment turned less receptive to Deutsche Bank with many concerns seemingly persisting around the company and a broader move lower in stocks also hampering sentiment. Finally, the likes of T-Notes and Bunds followed the lead from Gilts, which took out last week’s lows in the wake of UK GDP. As such the German benchmark has fallen over 50 ticks, slipping back below 162.50 and taking out 163 in the process. T-Notes also printed fresh lows in the wake of the report, consolidating below the psychological 130 level with the 10yr yield hitting its highest level since Brexit.

Top European News

  • Brexit Likely to Cost Banks Easy Access to EU, Trade Chief Says: Inflation is ‘inevitable’ side effect of depreciation, Mark Garnier says
  • Telefonica to Cut Dividend After Failing to Sell 02 in U.K.: Carrier continues to battle with high debt load, deal flops
  • ABB Tumbles After Quarterly Orders Decline More Than Forecast: Swiss company names ex-Nokia executive Ihamuotila as new CFO
  • Swedish Central Bank Prepares for More Easing to Spark Inflation: stands prepared to extend bond purchases into next year and will keep interest rates lower for longer
  • BBVA Third-Quarter Profit Beats Estimates on Asset Sale, Trading: makes 94 million-euro provision for restructuring costs
  • U.K. Power Reserve No Cure for Biggest Price Surges Since 2008: French nuclear outages to influence market volatility

In FX, it has been a busy morning with the Riksbank and Norges bank rate decisions preceding the key Q3 UK GDP number which exceeded expectations coming in at +0.5% vs +0.3 consensus. The YoY rate was 2.3% vs 2.1% expected, but so much negativity over the expectations in the EU negotiations ahead, GBP is struggling for traction on the upside. In the Scandies, the SEK saw a minor bid after the Riksbank held rates unchanged, but maintaining the prospect of prolonged QE at the Dec meeting while keeping further rate cuts on the table, we saw a marked turnaround. This was exacerbated by the neutral stance at the Norges bank, keeping their outlook unchanged. NOK/SEK was the major move, pushing up into the upper 1.0800’s to erase some of the modest clawback seen in the SEK in recent sessions. Elsewhere, USD/JPY continues to probe higher levels, unrelenting in the push for 105.00. EUR/USD is struggling for upside traction also, but despite dovish comments from ECB sources late yesterday regarding QE extension, the lead spot rate is finding firm bids below 1.0900. AUD and CAD remain under the cosh in the meantime, with .7700+ sellers in the high(er) yielder looking past the headline rise in inflation yesterday and sending the pair down close to a cent so far. USD/CAD is still grappling with sellers ahead of 1.3400, but refuses to give up on a break higher as Oil prices have also slipped in recent sessions.

In Commodities, WTI and Brent futures both found support during European hours to move higher towards USD 49.50 and USD 50.50 respectively, albeit below yesterday’s post-DOE highs with the report overshadowed by persisting concerns over the likelihood of OPEC and non-OPEC producers being able to strike a meaningful production cut. Elsewhere, price action across the metals complex has been relatively continued with just a modest bid for gold alongside the recent downtick seen in equities

Looking at the day ahead, the big data in the US this afternoon is the preliminary durable and capital goods orders data for September, which could still have an impact on Q3 GDP forecasts this Friday. The market is expecting no change in headline durable goods order, while core capex orders are expected to decline very modestly. Other data this afternoon includes initial jobless claims, the Kansas City Fed’s manufacturing survey and pending home sales. Away from the data comments from the ECB’s Mersch are expected this evening. There’s also some central bank focus with policy decisions due from Norway and Sweden (no changes expected). On the earnings front it’s another busy day with 62 S&P 500 companies scheduled to release their latest quartiles including Ford Motor, ConocoPhillips and UPS either prior or at the open, and Alphabet after the close.

* * *

DB’s Jim Reid concludes the overnight wrap

Bond yields continue to rise like an oven baked Victoria sponge at the moment. Yesterday’s selloff started in Europe where yields were up anywhere from 5bps to 7bps with 10y BTP’s in particular finishing up 7.5bps at 1.457% and the highest yield since June 27th. The finger of blame was pointed at the busy day for new issuance with auctions for Gilts, Bunds and BTP’s in particular contributing, while a busy day for corporate issuance including the announcement of a near €4bn deal for Verizon also played a part. That weakness spread to Treasuries where 10y yields ended the day up 3.7bps and near the top end of the recent range at 1.794%. It’s continued this morning in Asia too where yields in the antipodeans are up 4-5bps, while 10y JGB’s have crept up a basis point too.

While those moves for bonds helped financials yesterday (European Banks +0.23% and S&P 500 Banks +0.88%), broader equity markets succumbed to another fairly mixed day for earnings and also another leg lower for Oil. The S&P 500 finished -0.17% and the Stoxx 600 ended -0.38%. While Apple (-2.25%) pared losses of over -4% at the open, the move still weighed on the wider tech sector while there were also some disappointing results in the healthcare sector from Edwards Lifesciences which resulted in shares tumbling over 17% and the most in three years. On the flip side Boeing surprised to the upside with its latest quarterly, while Coca-Cola largely met expectations. During the European session Lloyds Bank, Vinci and Bayer disappointed.

In terms of Oil, WTI finished last night down -1.56% and a shade above $49/bbl for its lowest closing level since September 30th. It was actually quite a volatile day for the complex. Prices jumped back above $50/bbl midway through the afternoon after the latest EIA data showed that stockpiles unexpectedly declined last week in the US. However once the details were digested it was revealed that the decline mainly came about due to a big drawdown in stockpiles along the West Coast which is seen as a bit isolated from the rest of the country. WTI is hovering around that closing level this morning.

Elsewhere this morning, bourses in Asia are generally trading with a softer tone too with results also starting to ramp up in the region. The Nikkei (-0.29%), Hang Seng (-1.01%), Shanghai Comp (-0.22%) and ASX (-0.60%) are all in the red, with the Kospi (+0.26%) the only market currently up. US equity index futures are also tracking lower, while EM currencies are generally weaker. There’s also been some data released in China this morning. Industrial profits were reported as increasing +7.7% yoy in September, down from that bumper +19.5% reading in August. The latest print means that for the nine months through September, profits are up +8.4% yoy.

Moving on. There were a few other interesting stories which attracted a bit of attention yesterday. Late last night after the US close Bloomberg ran a story suggesting that global lenders and insurance companies would probably lose their passporting rights to provide services in the EU following Brexit. The story was based on the outline of a plan from UK trade minister Mark Garnier. Interestingly the article went on to suggest that an alternative system, known as ‘equivalence’, was being floated however with the drawback that the UK may have to accept all future EU regulations as handed down from Brussels. One to keep an eye on.

Meanwhile, another story which attracted some brief attention was a Reuters report suggesting that the ECB is ‘all but certain’ to extend QE beyond March and at the same time ease the rules around purchases. The details were a little less impressive though. The article quoted ‘central bank officials’ rather than governing council members and so in our view raises credibility questions again much like the tapering story. The story also went on to say that ‘whether the current monthly volume of purchases will be maintained or reduced after March has not been decided and will depend on incoming economic data’. The Euro chopped around a bit with the story but there wasn’t ultimately much of a reaction in markets to it.

Staying with the ECB, board member Praet was fairly downbeat in his comments yesterday. He said that ‘although the euro-area recovery is showing signs of resilience, material downside risks remain, mainly stemming from the external environment and significant uncertainties following the outcome of the UK referendum’. Praet also said that underlying inflation has ‘yet to show clear signs of a more dynamic upward movement’ and that it’s ‘imperative that decisive action is taken now in order to propel the on-going cyclical recovery into a structural recovery’. He did however also add to this that ‘such reforms are outside of the scope of monetary policy and fall under the remit of other national and European policy makers’,

Away from this, yesterday evening hopes seemed to have been on the rise for a last minute reprieve of the trade deal between Canada and the EU, known as CETA. The President of the European Commission, Juncker, said that he expected Belgium’s French-speaking southern region of Wallonia to sign up imminently and so allow Belgium to endorse the pact. All other 27 EU members states are ready to sign the agreement according to the FT. While talks are due to resume this morning, overnight the press secretary to the Canadian International Trade Minister has said that the Canada delegation won’t be travelling to Europe today, so it remains to be seen what the outcome will be.

Before we look at today’s calendar, the largely second tier data in the US yesterday was generally a little better than expected. The flash services PMI for this month printed at 54.8 which was up 2.5pts from September and also well above market expectations of 52.5. It is also the highest reading since November last year and, combined with the manufacturing print, puts the composite reading at 54.9. Elsewhere, the usually volatile new home sales were up an unexpected +3.1% mom in September (vs. -1.5% expected) and wholesale inventories rose +0.2% mom in September. The other data yesterday was the advance goods trade balance for September which revealed a shrinking of the deficit to $56.1bn from $59.2bn after expectations were for a slight widening. We’ve yet to see any changes to Q3 GDP trackers following that. There wasn’t much to report from the data in Europe other than a modest decline in Germany consumer confidence (9.7 from 10.0).

Looking at the day ahead now, this morning in Europe the main highlight is the advance Q3 GDP report in the UK. The market consensus is for a +0.3% qoq print which follows the +0.7% qoq reading in Q2. Our Economists are also pegging a +0.3% qoq growth forecast. While the Brexit vote should show up more clearly in the Q3 GDP data there may be some upside risks given the resilience of short term data post the referendum. Elsewhere in Europe this morning the M3 money supply reading will also be released for the Euro area. The big data in the US this afternoon is the preliminary durable and capital goods orders data for September, which could still have an impact on Q3 GDP forecasts this Friday. The market is expecting no change in headline durable goods order, while core capex orders are expected to decline very modestly. Other data this afternoon includes initial jobless claims, the Kansas City Fed’s manufacturing survey and pending home sales. Away from the data comments from the ECB’s Mersch are expected this evening. There’s also some central bank focus with policy decisions due from Norway and Sweden (no changes expected). On the earnings front it’s another busy day with 62 S&P 500 companies scheduled to release their latest quartiles including Ford Motor, ConocoPhillips and UPS either prior or at the open, and Alphabet after the close. VW is also due to report in Europe.

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 3.96 POINTS OR 0.13%/ /Hang Sang closed DOWN 193.08  OR 0.83%. The Nikkei closed DOWN 55.42 POINTS OR 0.32% Australia’s all ordinaires  CLOSED DOWN 1.17% /Chinese yuan (ONSHORE) closed DOWN at 6.7816/Oil ROSE to 49.39 dollars per barrel for WTI and 50.26 for Brent. Stocks in Europe: ALL IN THE RED   Offshore yuan trades  6.7936 yuan to the dollar vs 6.7816  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS QUITE A BIT AS MORE USA DOLLARS  LEAVE CHINA’S SHORES / 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

4 EUROPEAN AFFAIRS

italy

The two earthquakes that hit central Italy yesterday wiped out two towns and has caused huge infrastructure damage

(courtesy zero hedge)

‘It’s Apocalyptic, Our Town Is Finished” – Two Quakes Strikes Italy, Collapsing Buildings And Causing Panic

As reported earlier, at 7:10pm on Wednesday central Italy was shaken by a strong, shallow 5.4 magnitude quake which was felt as far away as Rome.

However it was an aftershock which struck two hours later at 9:18 pm, and which was 8 times stronger and measured M6.1 according to the USGS, likewise striking at a shallow, 10-km depth, which brought up vivid memories of the August 24 earthquake which destroyed the hilltop village of Amatrice and other nearby towns, leading to 300 casualties. It was the second quake which according to AP resulted in crumbling churches and buildings, knocking out power and sending panicked residents into the rain-drenched streets.


The epicenter of the first earthquake today was Castel Santangelo Sul Nera, near Perugia,
but the more powerful aftershock hit the area centerd on Visso.

One person was injured in the epicenter of Visso, where the rubble of collapsed buildings tumbled into the streets. But the Civil Protection agency, which initially reported two injured, had no other immediate reports of injuries or deaths. Because many residents had already left their homes after the first one struck just after 7pm., with plans to spend the night in their cars or elsewhere, they weren’t home when the second one hit two hours later, possibly saving lives, news reports said.


“It was a very strong, apocalyptic earthquake – people were screaming in the street, and now the lights are cut off,”
said Marco Rinaldi, the mayor of Ussita, a community of 400 that was also affected by the earthquake. “Many houses have collapsed. Our town is finished.”

Speaking to Sky TG24, Rinaldi said that “the facade of the church collapsed. By now I have felt many earthquakes. This is the strongest of my life. It was something terrible. The second quake was a long, terrible one.’

The mayor said two elderly people were rescued from their home, where they were trapped. He said they appeared to be in good condition. Some 200 people in Ussita will sleep in the streets, given the impossibility of putting up tents in the night.


Rubble covers a car in Castel Santangelo Sul Nera but the full extent of the
damage will not be clear until daybreak

A church crumbled in the ancient Perugian town of Norcia, famed for its Benedictine monastery and its cured meats. A bell-tower damaged on Aug. 24 fell and crushed a building in Camerino, the ANSA news agency said. Elsewhere, buildings were damaged, though many were in zones that were declared off-limits after the Aug. 24 quake that flattened parts of three towns.

 END
DEUTSCHE BANK
Deutsche bank reports an unexpected 3rd quarter profit but fails to provide information on the USA settlement issue.  So instead of the stock rising, it fell badly.
(courtesy zero hedge)

Deutsche Bank Reports Unexpected Q3 Profit, But Wall Street Yawns Asking For More

After serving much drama to its shareholders – and global markets – over the past couple of months, when its stock tumbled to all time lows following the news of the bank’s $14 billion DOJ settlement ask, Deutsche Bank provided some relief when earlier this morning it reported a modest, unexpected profit of €256 million for the third quarter on lower litigation and restructuring costs, beating consensus estimates of a €394 million loss, and a far better number than the €6 billion loss reported one year ago. Revenues were also a modest improvement to consensus expectations of €7.19BN, coming in at €7.49BN as a result of a 14% jump in fixed income trading revenues.

The bank’s closely watched core tier one capital ratio rose from 10.8% at the end of June to 11.1% at the end of September, as Deutsche cut its risk-weighted assets by €18bn to €385bn. CFO Marcus Schenck said that the ratio would get a further boost of 40 to 50 basis points once the sale of its stake in Chinese lender Hua Xia was completed.

CEO John Cryan repeated that Deutsche was making “good progress” on its restructuring, but admitted that results had been “overshadowed” by its negotiations with the DOJ. “This had an unsettling effect. The bank is working hard on achieving a resolution of this issue as soon as possible.”

The failure to provide some additional guidance on the bank’s settlement process as well as on its recapitalization status is why the shares have undone the entire 3% gap higher, and were trading fractionally in the red. Raising a red flag, Deutsche Bank also said that it saw €9BN in outflows from its new business for private, wealth and commercial clients in the third quarter.

In its Q3 interime report the bank revealed that it had suffered reduction in business volumes as result of “negative perceptions” concerning business and prospects amid talks tied to RMBS settlement with the DoJ, and added that it saw business reductions and asset outflows particularly in parts of global markets, wealth management business.

In a letter to employees, CEO Cryan said that Deutsche Bank’s end-3Q liquidity reserve was ~€200b, down €23 billion from a quarter earlier, and said that the bank’s situation will remain tough for some time. He also said that while talks with DOJ advancing, and it was working to resolve matter as soon as possible, the environment worsened in some important areas.

On the conference call Cryan said that the bank needs to “restructure and modernize the bank faster and with higher intensity,” and added the following remarks:

  • “We are taking steps now particularly to achieve additional cost savings and RWA reductions”
  • “We are also addressing the more challenging outlook in our planning to ensure we achieve our financial goals”
  • “We aim to be more ambitious in headcount reduction” and “give preference to internal candidates”

Finally, when looking at the results, Wall Street analysts said that that while the positive surprise is a relief, it’s was also mostly irrelevant because of potential impact from DOJ settlement.

Below, courtesy of Bloomberg, is a summary of sellside opinions on the earnings:

CITI (neutral/high risk) says adj. pretax of EU1.1b that excludes revamp, litigation and other charges exceeds market expectation almost by 3x

  • Statutory pretax profit of EU0.6b also beat consensus est for a loss of EU0.6b
  • Beat driven by revenue, lower costs
  • Most of beat is from Global Markets; CIB and AM also beat
  • Capital ratios are in line
  • Litigation provisions rise to EU5.9b vs EU5.5b
  • Lack of update on litigation, plan to improve capital may weigh on stock today
  • Adj. costs for 2016 now expected to be lower vs 2015

UBS (neutral) says Deutsche’s 3Q is a relief, was beat on every line

  • Revenue, costs, pretax, net all significantly above consensus and UBS ests
  • FICC and CIB were strong
  • Beat mostly due to FICC in GM and NCOU in CIB
  • Capital and leverage ratios in line
  • Focus remains on litigation, HuaXia stake sale

KEEFE, BRUYETTE & WOODS (underperform) says 3Q results are irrelevant even if they are better than expected

  • Results do not indicate a turnaround even as they seem to signal healthy balance sheet, better profit metrics
  • NII revenue may halve if interest rates remain low for long period, could result in losses by 2020
  • Deutsche’s challenge is to generate sustainable Free Cash Flow in current rate environment

GOLDMAN SACHS (neutral) says market should see this as a “constructive” set of results, view it with relief

  • P&L highlight is net income vs GS est for loss of EU269m; consensus est for loss of EU610m
  • Costs were also lower, adj. beat to consensus is EU560m
  • CET1 gained 30bp to 11.1% on drop in RWAs
  • Liquidity reserve remains generous at EU200b
  • Deposits were broadly stable with exception of other customers, unsecured wholesale deposits

COMMERZBANK (hold) says 3Q profit was boosted by lower than expected litigation expenses, better than expected sales & trading revenue

  • Net income EU256m compares to Commerzbank est. loss EU765m
  • Litigation expenses were EU501m vs est. EU1b
  • Debt sales & trading revenue EU2.07b vs est. EU1.56b

MORGAN STANLEY (equal-weight) says 3Q beat is strong, shows progress on revamp

  • Revenue is stronger, costs down for 4th consecutive quarter
  • Performance was especially good at Global Markets, CIB which both beat consensus
  • Retail banking looks a bit challenged in Germany
  • NCOU managed to reduce RWAs by EU10b with only a EU538m loss
end
Oh oH this is troublesome:  Deutsche bank’s demand deposits tumble by over 13% and their entire liquidity has dropped by 10% down to 200 billion euros.  If the depositors flee then all bets are off and DB implodes due to its massive derivative bets
(courtesy zero hedge)

Bank Jog: Deutsche Bank’s Demand Deposits Tumble By 13% In Q3

One month ago when we showed that while Deutsche Bank is seriously undercapitalized it still has access to copious amounts of liquidity, which at June 30 stood at €223 billion but according to today’s Q3 report has since dropped by some 10% to €200 billion, we pointed out one way that DB’s currently safe liquidity position could turn precarious: it has deposits, and thus there is an all too real threat depositors may get nervous and start pulling them out. To wit:

This is where Deutsche Bank is very different from Lehman, and far riskier, because if the institutional panic spreads to the depositor base, which as the table below shows amounts to some €566 billion in total, and €307 billion in retail deposits…

… then all bets are off.

Which is why it is so critical for Angela Merkel to halt the plunging stock price, an indicator DB’s retail clients, simplistically (and not erroneously) now equate with the bank’s viability, and the lower the price drops, the faster they will pull their deposits, the quicker DB’s liquidity hits zero, the faster the self-fulfilling prophecy of Deutsche Bank’s death is confirmed.

Which is why it is so critical for Angela Merkel to halt the plunging stock price, an indicator DB’s retail clients, simplistically (and not erroneously) now equate with the bank’s viability, and the lower the price drops, the faster they will pull their deposits, the quicker DB’s liquidity hits zero, the faster the self-fulfilling prophecy of Deutsche Bank’s death is confirmed.

Which is why we mostly ignored today’s better than expected headline financial data reported by the German lender, (as did most of Wall Street it appears judging by the stock’s tepid reaction), especially after the recent disclosure that DB is currently probing its derivative book for potential missmarking, something which would drastically change the bank’s reported P&L and balance sheet, and instead focused on something far simpler: its deposits.

What we found was troubling: in the just concluded quarter, Deutsche reported that its total deposit base had shrunk by a very substantial 5%, sliding from €565.645 to €540.609. But even more concering was the most liquid “sight deposit” category, which DB tracks as “interest-bearing demand deposits on its books. It was this that plunged by a whopping 13% from Q2 to Q3, sliding from €156.2 billion to €135.9 billion as of Sept. 30.

This was the biggest drop recorded since the bank reorganized its various divisions and started breaking out demand deposits as a standalone category in its quarterly presentations. It was also the lowest amount of demand deposits on DB’s books going back to Q4 2014 and perhaps further.

On its face, this data means that in the third quarter, DB’s depositors pulled a substantial amount of savings held at the bank, precisely the outcome that the bank was eager to avoid, and hints of the start of a very unpleasant bank “jog” by the bank’s depositors. And since deposits declined, assets had to be impacted as well, and sure enough, total cash and central bank balances declined from $123 billion to $108 billion.

As of this moment there was no update from DB management, whether the documented deposit flight continued into the month of October when DB’s woes became particularly acute, and whether the jog had become a run.

Source: DB

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

EGYPT

Hyperinflation looms large in Africa’s largest country Egypt today as the pound in the black market reaches 16.11 to the dollar from its official 8.8 level.

(courtesy zero hedge)

Hyperinflation Looms As ‘Black Market’ Egyptian Pound Crashes To Record Low

With all eyes on the drop in the British Pound, it is another ‘pound’ that is utterly collapsing. Despite its official exchange rate is 8.88 per dollar, Egypt’s pound dropped to 16.11 per dollar in the black market, another record that extends declines over the past month to 19% and down over 40% since it devalued in March.

The Sovereign CDS market (which prices for both default and devaluation) is pricing in a further dramatic devaluation of the official rate…

Bloomberg reports that Africa’s third-biggest economy will close a $12 billion lifeline from the International Monetary Fund within two months, according to Prime Minister Sherif Ismail, as pressure grows on the country to weaken its currency to lure foreign investment and stimulate growth.

Ever since General Sisi ousted the Muslim Brotherhood, the Egyptian economy has remained in shambles. Businessmen are fed up.  They are ignoring government gag orders, and are making their voices heard. And why not?  They are losing sales, missing deadlines, and scrapping expansion plans because of limited access to U.S. dollars.

Where are the greenbacks that Egyptians demand? Well, even though General Sisi has passed the begging bowl, the cupboard is pretty bare (as the accompanying chart shows).  This, in part, is due to the Muslim Brotherhood.  The Brotherhood did one thing well: they blew through foreign exchange reserves like wildfire.   Not surprisingly, the Sisi administration is squeaky tight about holding on to its limited reserves.

As we noted in March,the only sure-fire way to save the pound and eliminate Egypt’s USD shortage is to install a currency board.  This would allow the quantity of pounds in circulation to be determined by a free-market mechanism.

So, just what is a currency board? Operating under currency board rules, a monetary authority issues notes and coins convertible on demand into a foreign anchor currency at a fixed exchange rate. As reserves, a currency board holds low-risk, interest-bearing bonds denominated in the anchor currency.  The reserve levels are set by law and are equal to 100 percent, or slightly more, of its monetary liabilities. A currency board generates profits
(seigniorage) from the difference between the interest it earns on its reserve assets and the expense of maintaining its liabilities. By design, a currency board has no discretionary monetary powers and cannot engage in the fiduciary issue of money. Its operations are passive, and automatic. The sole function of a currency board is to exchange the domestic currency it issues for an anchor currency at a fixed rate.  Consequently, the quantity of domestic currency in circulation is determined solely by market forces, namely the demand for domestic currency.

There have been many currency boards, and none have failed.  By design, they can’t be broken. Even the currency board designed by John Maynard Keynes, which was installed in North Russia, during the civil war, worked like a charm.

But, you may ask, what about Argentina’s Convertibility System (1991 2001). That system was not a currency board.  It might have had the appearance of a currency board, but appearances can be deceiving, particularly in Argentina.  Even though it linked the peso to the USD at a one-to-one rate, the Convertibility System was a system that operated with monetary discretion – unlike a currency board.  And over long periods of time,
the discretion was wild.

A currency board would give Egypt stability, and while stability might not be everything, everything is nothing without stability.

END

RUSSIA

Seems that Russia is getting ready for a nuclear war

(courtesy zero hedge)

Caught On Tape: Russian Soldiers Prepare For Nuclear War

The first images of the Russia’s recent nuclear attack drill have been released, confirming the massive scale of the preparations

An unprecedented 40 million Russian citizens, as well as 200,000 specialists from “emergency rescue divisions” and 50,000 units of equipment took part in a four day-long civil defense, emergency evacuation and disaster preparedness drill last week, the Russian Ministry for Civil Defense reported on its website.

As The Sun reports, radiation-ready Russian soldiers prepare for nuclear war in the first footage to emerge of a terrifying practice drill involving up to 40 million people.

Emergency services wore hazchem suits and gas masks during the four-day trial run in Moscow.

Soldiers dressed in hazchem gear carry victims of an attack away from the scene.

Up to 40 million people were involved in the terrifying drill, organised following deteriorating relations between Russia and the West. Soldiers were seen carrying away ‘victims’ of a nuclear attack while civilians scampered into protective tents.

More than 200,000 emergency service staff are believed to have taken part in the drill.

 

Moscow’s entire population of 12 million would be able to fit into refurbished underground shelters, Russian authorities confirmed.

6. GLOBAL ISSUES

Canada and Belgium overcame their differences and we now have an EU-Canada trade deal.(CETA)

(courtesy/zero hedge)

Stalled EU-Canada Trade Deal Gets Greenlight Following Belgium Approval

The tentative deal took place just hours after Canadian PM Trudeau cancelled a trip to sign the so-called Ceta pact at a ceremony in Brussels. In question now is when the regional Belgian parliaments that have objected to the trade deal will vote to allow the country’s government to support it.  The accord needs the full backing of all 28 member states. But while the Belgian federal government supports the trade pact, it still needed the green light from its five regional authorities before it could give its official approval.

As the FT adds, Belgian leaders had come close to a deal on Wednesday but their talks broke up without definitive agreement shortly before midnight, leading to the cancellation of an EU-Canada summit that had been scheduled for months. So, following weeks of intense talks with the leadership of Wallonia and its other regions, Belgium finally got the green light to back CETA on Thursday.

A spokesman for the Belgian prime minister said the Belgian government had reached a deal with its regions to back CETA and that the text of the deal was sent to the EU so it could be approved by the rest of the bloc.

The news will be well-received by the EU, whose officials have been agonizing about what implications the inability to sign CETA would have on the bloc’s trade agenda. Europe has in recent months been stuck in trade limbo, with the TTIP deal with the US looking increasingly unlikely following significant internal protests in France, while the ongoing post-Brexit fiasco will take years to be resolved.

end

7. OIL ISSUES

Oil spikes on an suspicious OPEC cut headline but totally misses the Russian refusal to participate in those cuts:

(courtesy zero hedge)

Oil Spikes On OPEC Cut Headline (Misses Russian Refusal Headline)

Oil prices are spiking after headlines hit stating that “SAUDI, GULF OPEC ALLIES MAY CUT OIL OUTPUT 4% FROM PEAK:REUTERS.” However, it appears the machines missed the rest of the stories, beginning with “RUSSIA TOLD GULF/OPEC MEMBERS THAT IT WILL NOT CUT OUTPUT.”

So we rally on “may cut” and ignore “will not cut”…

8. EMERGING MARKETS

VENEZUELA
Hyperinflation is now ripping through this country. Maduro has now decided to print a much higher denominating bill;  a 20,000 bolivar note from his previous highest note at 100 bolivars.  The new note is worth 15 dollars.
(courtesy zero hedge)

Venezuela Throws In The Towel On Hyperinflation: Will Print 200x Higher-Denominated Bills

While several years ago it was perhaps debatable in polite society that Venezuela’s socialist economy would collapse ultimately unleashing hyperinflation, any doubt was put to rest early this year when the IMF’s own inflationary forecast confirmed as much.

However, while the international community had long accepted the inevitable fate of Maduro’s socialist paradise, the local government sternly refused to admit reality and to avoid confirming what the local population already knew, it insisted on keeping the highest denomination bill in circulation at 100 bolivars, whose worth is approximately 8 cents on the black market, turning the most basic transactions into logistical nightmares and saddling banks with crippling money-handling costs. Economists and central bank employees say Mr. Maduro didn’t want to acknowledge the country’s inflation problem by printing bigger notes.

This has finally changed, and as the WSJ reports, Venezuela’s government, slammed by hyperinflation has finally thrown in the towel, and is planning to issue new bills in December with larger denominations—up to 200 times higher than the current biggest bill, according to people familiar with the plans. The move marks an implicit acknowledgment by the government that skyrocketing prices have slashed the value of the currency

The new coins and notes will go up to 20,000 bolivars, according to people close to the central bank, the finance ministry, the country’s banks and bill suppliers. This would make the biggest note worth $15 on the black market.

And since by doing so the government will tacitly admit that it has lost control over prices, It will also create a self-fulfilling prophecy of even higher prices, sending the country’s hyperinflation into overdrive.

As the WSJ adds, earlier this year, the government began informally allowing shops in the outer provinces to sell food at free market prices, reducing shortages at the cost of higher inflation, which the International Monetary Fund expects to rise above 1,600% next year. Further liberalization followed after the state oil company gradually rolled out higher-priced gasoline at gas stations in the border regions to reduce the cost of subsidizing the cheapest car fuel in the world, according to the company’s executives.

Venezuela’s loss, however, is a big gain for the companies contracted to print the money:

In recent weeks, several companies, including U.K.-based De La Rue, the world’s largest commercial printer, won contracts to print the new set of notes, which the government wants in time for the annual December spending spree, according to a person familiar with contract negotiations.

“It’s a very big deal. It’s a big package,” the person said.

Meanwhile, the central bank remains stuck in denial and hasn’t published price statistics for almost two years. Instead, Mr. Maduro has blamed the skyrocketing prices on the “economic war” waged against his government by shopkeepers and financiers. This has forced people to brave one of the world’s highest crime rates by shopping with backpacks full of cash and spend hours lining up outside ATMs, which give out less than $10 per withdrawal. Many provincial banks have reduced daily withdrawals to 30,000 bolivars, which would buy a Venezuelan couple a lunch at a mid-scale restaurant.

Amusingly, as we reported last year, the high demand for nearly worthless currency notes has also presented a financial burden for the cash-strapped government, which also lacks raw materials to print its own money. Since last year, Venezuela has had to pay hundreds of millions of dollars to printing companies to feed its economy with bolivar currency. The shipments arrived to Venezuela from private printing presses around the world on several dozen windowless Boeing 747 jets. Given the crime risks, the air shipments arrive at the Caracas airport at night before the notes are loaded onto armored trucks and transported to the central bank vaults in Caracas, protected on the 18-mile route by soldiers.

Indicatively, a fully stocked ATM is emptied in just three and a half hours on average now, according to the Venezuelan Banking Association.

The good news for the insolvent nation is that all local denominated debts are now just as worthless as the currency, which incidentally is what the BOJ’s Kuroda would call: mission accomplished.

Sadly, Venezuela is the canary in the coalmine for what will happen to all currencies in a world where there is now simply too much debt.

end

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

 

Euro/USA   1.0925 UP .0016/REACTING TO NO DECISION IN JAPAN AND USA + huge Deutsche bank problems 

USA/JAPAN YEN 104.70  UP .140(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 1.2263 UP.0028 (Brexit by March 201/pound clobbered)

USA/CAN 1.3362 DOWN .0012

Early THIS THURSDAY morning in Europe, the Euro ROSE by 16 basis points, trading now JUST above the important 1.08 level RISING to 1.0925; 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 DOWN 3.96 OR   0.13%   / Hang Sang  CLOSED D0WN 193.08 OR 0.83%   /AUSTRALIA IS LOWER BY 1.17% / EUROPEAN BOURSES ALL IN THE RED

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 55.42 POINTS OR 0.32%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 193.08 OR 0.83%   ,Shanghai CLOSED DOWN 3.96 POINTS OR 0.13%   / Australia BOURSE IN THE RED /Nikkei (Japan)CLOSED IN THE RED/  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1269.50

silver:$17.68

Early THURSDAY morning USA 10 year bond yield: 1.830% !!! UP 6 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.58, UP 5 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 98.54 DOWN 8 CENTS from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

END

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.28% UP 7 in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -.052% up  2 in   basis point yield from  WEDNESDAY

SPANISH 10 YR BOND YIELD:1.20%  UP 7 IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.53 UP 7  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 33 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.178% UP 9  IN  BASIS POINTS ON THE DAY

END

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

IMPORTANT CURRENCY CLOSES FOR THURSDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3.00 PM

Euro/USA 1.0908 UP .0022 (Euro UP 22 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 104.50 UP: 0.338(Yen UP 34 basis points/POLICY ERROR ON BANK OF JAPAN

Great Britain/USA 1.2228 UP 0.0054( POUND UPP 54 basis points

USA/Canada 1.3367 UP 0.0014(Canadian dollar UP 14 basis points AS OIL FELL TO $49.14

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 13 basis points to trade at 1.0890

The Yen FELL to 105.20 for a LOSS of 65 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 70 basis points, trading at 1.2165/

The Canadian dollar FELL by 10 basis points to 1.3384, AS WTI OIL ROSE TO :  $49.62

The USA/Yuan closed at 6.7819 (SENDING DEFLATION AROUND THE WORLD)

the 10 yr Japanese bond yield closed at -.052%  UP 2 POINTS  IN BASIS POINTS / yield/ AND THIS IS BECOMING BOTHERSOME TO THE BANK OF JAPAN

Your closing 10 yr USA bond yield UP 7   IN basis points from WEDNESDAY at 1.85% //trading well below the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.609 UP 8  in basis points on the day /

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

Your closing USA dollar index, 98.90 UP 29 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 THURSDAY: 2:30 PM EST

London:  CLOSED UP 28.48 POINTS OR 0.41%
German Dax :CLOSED UP 7.40 OR  0.07%
Paris Cac  CLOSED DOWN 1.02 OR 0.02%
Spain IBEX CLOSED UP 23.90 OR 0.26%
Italian MIB: CLOSED UP 145.72 POINTS OR 0.84%

The Dow was DOWN 29.65 points or 0.16%  4 PM EST

NASDAQ  DOWN 34.30 points or 0.65%  4 PM EST
WTI Oil price;  49.62 at 3:00 pm; 

Brent Oil: 50.35   3:00 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  62.79(ROUBLE UP 3/100 ROUBLES PER DOLLAR FROM THURSDAY)  2:30 EST

TODAY THE GERMAN YIELD RISES  TO +0.179%  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:$49.63

BRENT: $50.37

USA 10 YR BOND YIELD: 1.860%

USA DOLLAR INDEX: 98.94 UP 34  cents

The British pound at 5 pm: Great Britain Pound/USA: 1.2157 DOWN .0072 or 72 basis pts.

German 10 yr bond yield at 5 pm: +.179%

END

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

TRADING IN GRAPH FORM

Bond Bloodbath Sinks Stocks As Dollar Spikes To 9-Month Highs

Another day, another pump-n-dump…

 

For a few brief shining moments this morning, everything was awesome, but then – once again – the selling started…

Bonds & Stocks were slammed…

 

As Risk parity funds dumped…

 

As Bond-Stock correlation leaked back to ‘normal’…

 

Futures show the week has been very technial with stops being run up and down around the 50- and 100-DMA…

 

Trannies outperformed but Small Caps were hit hard…

 

The Dow is clinging to green on the week…

 

And it’s turning into an ugly month for Small Caps…

 

VIX pushed up against 15 a number of times today… S&P was rampoed above its 100DMA for the open…

 

As we tweeted…

Ever since the SEC started looking into Goldman’s EOD ETF rebal, the ramp is gone. Strange

Yet again no ramp (the game has changed)…

 

Real Estate stocks were slammed hard…

 

TSLA tanked off overnight run stop highs…

 

Treasuery yields jumped dramatically early on today and steepened considerably…

 

Yields rose across the entire developed sovereign complex with UST yields (at the long-end) to 5-month highs…

 

SEK is the weakest of the majors this week but JPY weakness along with pound’s plunge pushed USD Index up again…

 

The USD Index broke back above 99.00 once again to 9 month highs…

 

Gold & Silver were flat today but crude and copper managed gains despite USD gains…

 

Crude algos ramped oil prices again to run $50 stops… twice…

 

 

Charts: Bloomberg

end

 

Early trading today:  bond yields rise, stocks falling:

US Stocks & Bonds Are Tumbling

US treasury yields are extending their earlier spike (from UK GDP) with 30Y up 5bps on the day (and the curve steepening). While historical correlation between stocks and bonds has come in a little, it appears risk-parity unwinds are also hitting as US equity markets have dumped at the open also...

Deleveraging across US complex in stocks and bonds…

As the long-end yields push to fresh 5 month highs…

And sure enough – just as we said – oil erased its spike after humans read the Russian headlines…

 

end

 

Graham Summers is also picking up on the plummeting bond prices (rising yields)

(courtesy Graham Summers/Phoenix Capital Research)

Bonds Are Signaling BIG Trouble is Ahead

Phoenix Capital Research's picture

 

 

end

 

Initial claims fall but all other indicators point to problems:

(courtesy zero hedge/BLS):

Thursday Humor: Jobless ‘Claims’

Presented with no comment but a deeply furrowed brow…

Less Business Spending… more jobs?

Dismal Services economy… more jobs?

More jobs… more misery?

More fictional ‘claims’.

 

 

end

 

RNC chair Priebus filed two lawsuits in federal court allegingthat he State Dept is “stonewalling: in refusing to respond to requests for email records of staffers involved in the Clinton email scandal

(courtesy zero hedge)

RNC Chair Priebus Slams State’s Failure As “Obama Cover-Up To Protect Hillary”

For 21 straight months, core durable goods orders have contracted year over year as well as business spending.
(courtesy zero hedge)

Core Durable Goods Orders Extend Longest Non-Recessionary Streak In US History As Business Spending Plunges

 

 

 

end

 

Pending home sales growth disappoints the market as the slump continues;

(courtesy zerohedge)

Pending Home Sales Growth Disappoints As Post-Summer Slump Accelerates

Pending Home Sales are following the usual seasonal pattern, fading quickly after the summer jump. Year-over-year, pending home sales are up just 2% (NSA), less than the expected 4% rise and considerably slower than the same time last year.

As NAR’s Larry Yun notes,

“The one major predicament in the housing market is without a doubt the painfully low levels of housing inventory in much of the country,

“It’s leading to home prices outpacing wages, properties selling a lot quicker than a year ago and the home search for many prospective buyers being highly competitive and drawn out because of a shortage of listings at affordable prices.

end

 

Now that the the probability of a fed rate hike rises to over 75%, USA rela estate stocks plunge to 7 month lows:

(courtesy zero hedge)

US Real Estate Stocks Plunge To 7 Month Lows As Rate Hike Odds Soar

END

 

One of the top 4 horseman plunges:  Amazon after missing earnings and guiding everybody to below expectations:

(courtesy zero hedge)

 

Amazon Plunges After Missing Earnings, Guides Below Expectations

It seems the Jeff Bezos magic may have run out (if only for the time being).

After several quarters of smashing expectations, moments ago Amazon tumbled as much as 9% after reporting EPS of $0.52, far below the $0.85 expected, on revenue of $32.7 billion, in line with estimates, and up 29% from a year earlier.  Operating income also missed, printing at $575 million, below the $690.5 million expected.

The guidance was also troubling, with the company now expecting Q4 operating income between $0 and $1.25 billion, below the street’s expectation of $1.7 billion, on revenue of $42 to $45.5 billion, roughly in line with consensus of $44.6 billion.

The full guidance:

  • Net sales are expected to be between $42.0 billion and $45.5 billion, or to grow between 17% and 27% compared with fourth quarter 2015. This guidance anticipates approximately 60 basis points of favorable impact from foreign exchange rates.
  • Operating income is expected to be between $0 and $1.25 billion, compared with $1.1 billion in fourth quarter 2015.
  • This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded.

Digging into the number we find that while the all important AWS generated net sales of $3.23 billion, above the $3.13 billion expected, growth slowed modestly from 58% to 55% Y/Y. In the quarter, AWS generate $1 bilion in profit, suggesting a 31.6% margin, well above the 25% from a year ago. AWS’ profit of $1 billion was more than the rest of the entire business combined generated.

Another curious highlight is that Amazon expects to create 120,000 seasonal jobs in customer fulfillment and customer service this holiday season. We hope the BLS keeps track of this and adjusts accordingly for the surge in temp-workers.

Still, none of this dented Bezos’ optimism who had this to say, which curiously was only focused on Alexa:

“Alexa may be Amazon’s most loved invention yet — literally — with over 250,000 marriage proposals from customers and counting,” said Jeff Bezos, founder and CEO of Amazon. “And she’s just getting better. Because Alexa’s brain is in the cloud, we can easily and continuously add to her capabilities and make her more useful — wait until you see some of the surprises the team is working on now.”

Despite the disappointing earnings number, cash flow hit a record $8.6 billion in Q3.

 

Additionally, free cash flow less finance lease principal repayments and assets
acquired under capital leases increased to $3.4 billion for the trailing
twelve months, compared with $637 million for the trailing twelve
months ended September 30, 2015.

Also, the company’s LTM operating margin remained flat at 3.2%:

However, in Q3, the picture was different, as the margin slid from 4.2%, the highest this decade to 1.8%, the lowest in the past year.

Also notable, as of Sept 30, Amazon employed some 306,800 workers.

For now the stock is not happy, plunging as much as 9% after hours, as much as 3 month lows, although it has since erased roughly half the miss.

 

END

Well that is all for today

I will see you tomorrow night

h

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: