Nov 15/Spread between Shanghai fix and NY price: $9.00/Amount standing for gold rises to over 5 tonnes for November/Offshore yuan crashes again to over 6.855/Saudi Arabia warns Trump not to block Saudi imports of oil/George Soros back into the gold business as he doubles his stake in Barrick gold/

Gold closed at $1224.00 up $2.80

silver closed at $17.03:  up $0.15

Access market prices:

Gold: 1228.00

Silver: 17.08





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 Nov 15 (10:15 pm est last night): $  1235.74



Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1236.97


HUGE SPREAD TODAY!!  9.00 dollars


London Fix: Nov 15: 5:30 am est:  $1228.90   (NY: same time:  $1224.90    5:30AM)???

London Second fix Nov 15: 11 am est:  $1226.95 (NY same time: $1226.95,    10 AM)

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

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


For comex gold: 


For silver:



Let us have a look at the data for today




In silver, the total open interest FELL by 3,142 contracts DOWN to 176,219 with yesterday’s trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .881 BILLION TO BE EXACT or 125% of annual global silver production (ex Russia & ex China).


In November, in silver, 112 notice(s) filings: FOR 520,000 OZ


In gold, the total comex gold FELL by 15,334 contracts WITH THE FALL IN THE PRICE OF GOLD ($2.30 yesterday ).The total gold OI stands at 488,774 contracts.

In gold: we had 51 notices filed for 5100 oz


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



Inventory rests tonight: 927.45 tonnes


Total gold inventory rests tonight at: 928.93 tonnes of gold


we had a small withdrawal at the SLV equal to 474,000 oz.

THE SLV Inventory rests at: 356.253million oz


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

1. Today, we had the open interest in silver FELL by 3,142 contracts DOWN to 176,219 as the price of silver FELL by $0.48 with YESTERDAY’S trading.  The gold open interest FELL by 15,334 contracts DOWN to 488,774 as the price of gold FELL BY  $2.30 in YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg



i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 3.39 POINTS OR 0.11%/ /Hang Sang closed UP 101.69  OR 0.46%. The Nikkei closed DOWN 4.47 points or 0.03%/Australia’s all ordinaires  CLOSED DOWN 0.38% /Chinese yuan (ONSHORE) closed DOWN at 6.8566/Oil ROSE to 44.63 dollars per barrel for WTI and 45.64 for Brent. Stocks in Europe: ALL MIXED      Offshore yuan trades  6.8643 yuan to the dollar vs 6.8566  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS CONSIDERABLY AS MORE USA DOLLARS   LEAVE CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER.



none today


Japan’s ten yr bond yield finally climbs above zero as Trumpmania causes all global bond yields to rise/yield curve goes nowhere!

( zero hedge)


i)This is what happens when the yuan rapidly declines:  China exports the most deflaiton in 6 years:

( import prices/zero hedge)

ii)Two major points:

  1. the offshore CNH crashes to 6.8758
  2. the spiking in yields (lowering of prices) causes cheap USA treasuries to be bid and it flattens the yield curve and thus hurts bank stocks

( zero hedge)


iii)the relations between China and Obama has been quite abysmal.  So it is no wonder that China is ridiculing Obama’s latest foreign tour.  You can now imagine what is going to happen with Trump as he plans a 45% tariff on Chinese goods

( zero hedge)



Another setback for Merkel as her rival Steinmeier chosen for the German Presidency totally against her wishes

( Mish Shedlock/Mistalk)


ib)What took them so long: Germany launches the biggest crackdown on Islamists in 15 years as they raid 190 mosques.  They now are banning radical organizations.

(courtesy zero hedge)


Bail-ins begin:  Junior bondholders will exchange their bonds for shares.  The scary part will be if this extends to other Italian banks which have huge non performing loans on their books

( zero hedge)

What a constitutional crisis: the pound jumps as a judge warns BREXIT could take up to 2 years.  Also the will of the people is not binding on Parliament
(courtesy zero hedge)


i)Russia launches a massive air strike against Syrian terrorist targetss

( zero hedge)

ii)Russia arrests its economy minister for receiving a 2 million bribe.  Amazing Russia is behaving much different to crime that the USA  (e.g. Hillary)

(courtesy zero hedge)



More spurious headlines spike oil this morning

( zero hedge)


none today


i)Avery Goodman correctly states that the removal of the high rupee notes will cause citizens to lose faith in the paper currency.  India has a history of not trusting paper assets and this will further citizen angst!

( Avery Goodman/ GATA)

ii)What a story!  India has severe problems with the fact that 86% of the paper money has been withdrawn.  Goods are just not moving because of this lack of liquidity.

This is what happens when you try and stop the purchase of gold with a gold loving citizenry

( Bloomberg/GATA)

iii)Mnuchin is set for the Treasury job

( GATA/Bloomberg)

iv)Soros must be worried;  after selling most of his stake in Barrick last year, he doubled his stake with the drop in gold price.

( Bloomberg/Javier)

v)A senior advisor to Trump:  Judy Shelton PhD:

(courtesy Robert H to me)


i)The Bloodbath is the bond sector halts as yields tumble overnight

( zero hedge)

ii)Used car prices continue to rise, yet a record 25% of the used car trade ins are totally underwater

( zero hedge)

iii)USA retail sales are still spiking higher yet dept sales continue to collapse.

( zero hedge)

iv)The NY Empire manufacturing index rebounds positively but still employment indicators falter as well as optimism. This was taken before the election

( NY Empire/zerohedge)

v)Ray Dalio of Bridgewater suggests (and hopes) that the Donald has good people surrounding him and they understand how economics works and that they will not do anything stupid(courtesy zero hedge)

vi)This is fascinating:  Chicago and Boston both join California  (Los Angeles) in refusing to assist Trump in the deportation of criminal illegal aliens.  So what will Trump do: simply cancel all federal funding to sanctuary cities:

( zero hedge)

vii)Right now we ware witnessing a tightening bias with the dollar rising accompanied by rising bond yields. The offset to this is Trump’s future fiscal stimulus.  The question is what if the market is wrong?  What if the Fed mistakenly raises rates and furthers the tightening bias with no corresponding fiscal stimulus yet?

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL by 15,334 CONTRACTS to an OI level of 488,774 with the continual pummeling in the price of gold as it EVENTUALLY FELL $2.30 with YESTERDAY’S trading. In the front month of November we had 78 notices standing for a LOSS of 107 contracts.  We had 146 notices served on yesterday so we GAINED 37 contracts or 3700 ADDITIONAL oz will stand for delivery in November. The next contract month and the biggest of the year is December and here this month showed a decrease of 21,792 contracts down to 248,703. The December contract month is still highly elevated compared to a year ago.  On Monday Nov 16/2015 comex reading day, we had a total of 191,543 contracts standing ( a loss of 2,426 contracts from Nov 10/2015) It certainly emphasizes the huge demand for physical gold. THIS SHOULD EXPLAIN TO YOU WHY THE BANKERS ARE CONSTANTLY WHACKING OF GOLD (AND SILVER): THE HIGH OI FOR DECEMBER  AND THE HIGH PROBABILITY THAT MANY WILL TAKE DELIVERY.

Today, we had 51 notice(s) filed for 5100 oz of gold.

And now for the wild silver comex results.  Total silver OI FELL by 3142 contracts from 179,361 DOWN TO 176,219 as the price of silver FELL BY $0.48 with yesterday’s drive by shooting. We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540). The front month of November had an OI of 112 and thus a loss of 1 contract. We had 0 notices filed yesterday so we lost 1 contract or an additional 5,000 oz will not stand for delivery in this non active month of November.  The next major delivery month is December and here it FELL BY 3,767 contracts DOWN to 88,556. The December contract month is also highly elevated compared to a year ago.  On Nov 16/2015 reporting day, we had a level of 70,345 contracts having lost 3272 contracts on the day).


In silver had 112 notices filed for 560,000 oz

Eventually at the end of December 2015: 6.4512 tonnes of gold stood for delivery

Eventually at the end of December 2015: 18.84 million oz of silver stood for delivery.

VOLUMES: for the gold comex

Today the estimated volume was 250,230  contracts which is good.

Friday’s confirmed volume was 390,943 contracts  which is gigantic

INITIAL standings for NOVEMBER
 Nov 15.
Gold Ounces
Withdrawals from Dealers Inventory in oz  NIL
Withdrawals from Customer Inventory in oz  nil
 83,114.47 OZ
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
51 notices 
5100 oz
No of oz to be served (notices)
27 contracts
Total monthly oz gold served (contracts) so far this month
1591 contracts
159,100 oz
4.9486 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz
Total accumulative withdrawal of gold from the Customer inventory this month     229,462.0 oz
Today we had 1 kilobar transactions and gold continues to depart from the comex
Today we had 0 deposit into the dealer:
total dealer deposits:  nil  oz
We had zero dealer withdrawals:
total dealer withdrawals:  nil oz
We had 0 customer deposit;
total customer deposits; nil  oz
We had 2 customer withdrawal(s)
i) Out of Brinks:  78,484.870 oz
ii) out of Scotia; 4629.600 oz
total customer withdrawal: 83,114.47   oz
We had 1  adjustment(s)
 i) Out of Brinks: 4,803.900 oz leaves the customer and this lands into the dealer account of Brinks
Total dealer inventor 2,078,538.174 or 64.65 tonnes (this level is coming down)
Total gold inventory (dealer and customer) =10,428,439.682 or 324.368 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 324.368 tonnes for a  gain of 21  tonnes over that period.  Since August 8 we have lost 30 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best.
For November:

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 51 contracts  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the NOV. contract month, we take the total number of notices filed so far for the month (1591) x 100 oz or 159,100 oz, to which we add the difference between the open interest for the front month of NOV (78 contracts) minus the number of notices served upon today (51) x 100 oz per contract equals 161,800 oz, the number of ounces standing in this non  active month of November.
Thus the INITIAL standings for gold for the Nov contract month:
No of notices served so far (1591) x 100 oz  or ounces + {OI for the front month (185) minus the number of  notices served upon today (51) x 100 oz which equals 161800 oz standing in this non active delivery month of Nov  (5.032 tonnes).
we GAINED 39 contracts or an additional 3900 oz will  stand for delivery.
Last yr at the conclusion of November we had .6656 tonnes of gold eventually stand
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; 30.407 tonnes complete.
Nov.    5.032 tonnes.
total for the 11 months;  188.48 tonnes
average 17.134 tonnes per month vs last yr 51 tonnes total for 12 months or 4.25 tonnes average per month. From May 2016 until Nov 2016 we have had: 165,62 tonnes per the 7 months or 23.660 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.
Just take a look at Nov 2016 deliveries at 5.032 tonnes compared to last yr 0.6656 tonnes
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 at MF Global.
And now for silver
NOV INITIAL standings
 Nov 15. 2016
Silver Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
198,616.060 oz
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
 2,080,673.950  oz
No of oz served today (contracts)
(520,000 OZ)
No of oz to be served (notices)
0 contracts
(nil  oz)
Total monthly oz silver served (contracts) 464 contracts (2,3200,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  5,056,990.2 oz
today, we had 0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawals:
 total dealer withdrawals: nil oz
we had 1 customer withdrawal(s):
 i) out of Brinks:  198,616.060 oz
Total customer withdrawals: 198,616.060  oz
 We had one customer deposit:
i)Into Brinks: 2,080,673.950 oz
total customer deposits; 2080,673.95  oz
 we had 0 adjustment(s)
Volumes: for silver comex
Today the estimated volume was 76,171 which is huge
YESTERDAY’S  confirmed volume was 146,200 contracts  which is gigantic
yesterday’s volume in oz = 731 MILLION oz or 104% of annual global production of silver.
The total number of notices filed today for the Nov. contract month is represented by 112 contracts for 520,000 oz. To calculate the number of silver ounces that will stand for delivery in Nov., we take the total number of notices filed for the month so far at  464 x 5,000 oz  = 2,320,000 oz to which we add the difference between the open interest for the front month of NOV (112) and the number of notices served upon today (112) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the NOV contract month:  464(notices served so far)x 5000 oz +(112) OI for front month of NOV. ) -number of notices served upon today (112)x 5000 oz  equals  2,320,000 oz  of silver standing for the NOV contract month.
we lost 1 contract or 5000 additional ounces  that will not stand for delivery in this non active month of November..
Last yr at the conclusion of November 2015, we had only 405,000 oz of silver stand for delivery.
Total dealer silver:  30.347 million (close to record low inventory  
Total number of dealer and customer silver:   177.169 million oz
The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.


And now the Gold inventory at the GLD
NOV 15/  we had 2 monstrous withdrawal of 5.63 tonnes of gold from the GLD in the morning and another 1.48 tonnes this afternoon/Inventory rests at 927.45 tonnes
Nov 14/another monstrous withdrawal of 7.12 tonnes of gold from the GLD/Inventory rests at 934.56 tonnes
Nov 9/no change in gold inventory at the GLD/Inventory rests tonight at 949.69 tonnes
Nov 8/no change in gold inventory at the GLD/Inventory rests tonight at 949.69 tonnes
Nov 7/no changes in the gold inventory at the GLD/Inventory rests  tonight at 949.69 tonnes.
NOV 3/ a huge deposit of 4.43 tonnes of gold into the GLD/Inventory rests at 949.69 tonnes
Nov 1/no change in gold inventory at the GLD/inventory rests at 942.59 tonnes
Oct 31/no changes at the GLD/Inventory rests at 942.59 tonnes
Oct 28/no changes at the GLD/Inventory remains at 942.59 tonnes
Nov 15/ Inventory rests tonight at 927.45 tonnes


Now the SLV Inventory
NOV 15/a withdrawal of 474,000 oz (.474 million oz) from the SLV inventory/inventory rests at 356.253
Nov 14/a withdrawal of 1.329 million oz from the SLV/Inventory rests at 356.727 million oz
Nov 11/a withdrawal of 1.379 million oz from the SLV/Inventory rests at 358.056 million oz
Nov 10/an addition of 949,000 oz added into the SLV/Inventory rests at 359.435 million oz
Nov 9/no change in silver inventory at the SLV/Inventory rests at 359.435 million oz/
Nov 8/no changes in silver inventory at the SLV/inventory rests at 358.435 million oz
Nov 7/no changes in silver inventory at the SLV/Inventory rests at 358.435 million oz
NOV 3/ a huge withdrawal of 2.807 million oz leaves the SLV: somebody was badly in need of silver/inventory rests at 358.435 million oz
Nov 1/no change in silver inventory at the SLV/inventory rests at 360.673 million oz/
Oct 31/no change in silver inventory at the SLV/Inventory rests at 360.673 million oz/
Nov 15.2016: Inventory 356.253 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 8.1 percent to NAV usa funds and Negative 8.2% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.0%
Percentage of fund in silver:38.2%
cash .+0.7%( Nov 15/2016)
2. Sprott silver fund (PSLV): Premium FALLS to -0.27%!!!! NAV (Nov 15/2016) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.05% to NAV  ( Nov 15/2016)
Note: Sprott silver trust back  into NEGATIVE territory at 0-.27% /Sprott physical gold trust is back into NEGATIVE territory at -0.05%/Central fund of Canada’s is still in jail.


Major gold/silver stories for TUESDAY

Early morning gold/silver trading/Goldcore

Gold Price Should Go Higher On Global Risks and Trump – Capital Economics

The gold price should rise in the medium and long term on global risks and the Trump Presidency, according to leading research consultancy Capital Economics.

The recent sharp gold price fall is again causing jitters among some investors who forget that gold remains more than 14% higher in dollar terms, 16.5% higher in euro terms and 36% higher in sterling terms year to date. Thus, gold is outperforming most stock market indices so far this year.

Capital Economics commodities economist, Simona Gambarini suggests in the World Gold Council’s ‘Gold Investor October 2016’ newsletter there is further upside to the gold price even if US interest rates begin to rise. Hence its continuing importance as a diversification and as a safe haven asset.

“Going forward, lingering global risks should ensure that demand for gold as a safe haven asset remains elevated even in light of Fed tightening.”

Gold is likely to benefit from Trump’s presidency for four reasons:

  1. More aggressive fiscal policy could increase domestic demand and inflation. Many investors argue that gold is a good hedge of inflation, although its inflation-adjusted performance shows otherwise. Still, there could be strong demand for gold. If the Federal Reserve raises interest rates in response to higher inflation, higher inflation should keep real rates low, supporting gold; gold does not bear any interest.
  2. If the protectionist policies that Trump threatened (like tariffs on China) trigger a trade war, US exports would suffer, and an economic slowdown would help lift gold prices.
  3. Similarly, Trump’s geopolitical policies could cause more uncertainty, prompting some investors to buy gold for safety.
  4. Trump has touted a return to a gold-based monetary system. That’s very unlikely, however.

In short, the bullish view on gold under Trump rests on the expectation that his policies would keep the world on edge, and that his fiscal spending plans would accelerate inflation. Gambarini forecasts that gold will rally to $1,450 per ounce by the end of 2017.

Once again it is time to fade the noise and fearful sentiment in the gold market and focus on the long term diversification benefits of gold.

Read full excellent ‘Gold Investor October 2016’ here

Gold and Silver Bullion – News and Commentary

Gold crawls away from lowest in over 5 mths on bargain-hunting (

Asian Currencies Tumble to Seven-Year Low Amid Stock Outflows (

Hedge Fund Gold Buyers Caught Out by Trump Vote as Prices Plunge (

Soros Sells Off Gold ETF, Doubles Stack In Barrick Gold (

Mnuchin Said to Be Top Treasury Pick Among Trump’s Advisers (

What Trump’s Stunning Upset Means for Markets (

Why gold should still be the winner from a Trump presidency (

Greenspan Sees Bond Yields Climbing as High as 5 Percent Again (

Ireland facing into a ‘perfect storm’ of economic unrest following Trump victory and Brexit result (

Will Trump ride to Europe’s rescue? (


Gold Prices (LBMA AM)

15 Nov: USD 1,228.90, GBP 998.86 & EUR 1,138.70 per ounce
14 Nov: USD 1,222.60, GBP 997.80 & EUR 1,136.53 per ounce
11 Nov: USD 1,255.65, GBP 999.19 & EUR 1,154.45 per ounce
10 Nov: USD 1,280.90, GBP 1,034.07 & EUR 1,175.48 per ounce
09 Nov: USD 1,304.55, GBP 1,050.42 & EUR 1,176.84 per ounce
08 Nov: USD 1,284.00, GBP 1,034.26 & EUR 1,162.02 per ounce
07 Nov: USD 1,286.80, GBP 1,036.13 & EUR 1,162.50 per ounce

Silver Prices (LBMA)

15 Nov: USD 17.00, GBP 13.68 & EUR 15.80 per ounce
14 Nov: USD 17.20, GBP 13.73 & EUR 15.95 per ounce
11 Nov: USD 18.59, GBP 14.73 & EUR 17.09 per ounce
10 Nov: USD 18.75, GBP 15.11 & EUR 17.20 per ounce
09 Nov: USD 18.81, GBP 15.12 & EUR 16.96 per ounce
08 Nov: USD 18.26, GBP 14.72 & EUR 16.54 per ounce
07 Nov: USD 18.22, GBP 14.67 & EUR 16.47 per ounce

Recent Market Updates

– President Trump – Why Market Loves Him and Experts Wrong
– ‘Helicopter Money President’ Trump To Create Inflation and Gold Will Rise
– Central Bank Gold Demand continues in Q3
– Trump Victory Sends Gold Surging 5%
– An uncertain election outcome looks good for gold
– Ignore past elections, this one’s too uncertain
– Gold may be the only winner in US elections
– The London Gold Market – ripe for take-over by China?
– Diwali, Gold and India – Is Love Affair Over?
– Silver Krugerrands By South African Mint Coming Soon – Massive Clearance Sale on Gold Krugerrands
– Trump “Will Probably Win” and Gold “May Rise $100” Overnight – Rickards
– World Is Out of Weapons
– Gold Is The “Kardashian of Commodities” – Herbert & Keiser Interview Skoyles

Mark O’Byrne
Executive Director


Avery Goodman correctly states that the removal of the high rupee notes will cause citizens to lose faith in the paper currency.  India has a history of not trusting paper assets and this will further citizen angst!

(courtesy Avery Goodman/ GATA)

Avery Goodman: India delegitimizes rupee, boosts gold demand


11:35a ET Monday, November 14, 2016

Dear Friend of GATA and Gold:

Securities lawyer and market analyst Avery Goodman writes today that India’s abrupt cancellation of the bulk of its paper currency will diminish faith in the rupee and build support for gold. Goodman’s analysis is headlined “India Delegitimizes Rupee, Lighting Fire Under Long-Term Gold Demand” and it’s posted at his internet site here:…

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


What a story!  India has severe problems with the fact that 86% of the paper money has been withdrawn.  Goods are just not moving because of this lack of liquidity.

This is what happens when you try and stop the purchase of gold with a gold loving citizenry

(courtesy Bloomberg/GATA)

Surprise! India has some troubles as 86% of its paper money is withdrawn


Truck Drivers Walk Off the Job, ATMs Run Dry After India Pulls Bills From Circulation

By Debjit Chakraborty and Saket Sundria
Bloomberg News
Monday, November 14, 2016

The crisis sparked by the shortage of cash in India following Prime Minister Narendra Modi’s anti-graft measure to ban high-value currency bills has hit the movement of goods in Asia’s third-largest economy.

More than half of an estimated 9.3 million trucks under the All-India Motor Transport Congress have been affected as drivers abandon vehicles mid-ay into their trip after running out of cash, according to Naveen Gupta, secretary general of the group. India’s roads carry about 65 percent of the country’s freight.

That adds to the worries of a government battling to keep cash-dispensing machines running after efforts to ease withdrawals failed to keep pace for the fifth straight day.
After a teary-eyed emotional appeal to citizens to bear some pain and back the fight against corruption, Modi today defended his move to withdraw 500-rupee and 1,000-rupee notes, which accounted for 86 percent of money in circulation.

“The situation is still grim and now we are getting information from various parts that drivers have started abandoning vehicles,” said Gupta of AIMTC, the country’s largest association of truckers. “Their basic needs like food are not being met because they can’t use the cash to buy food and there is not enough cash with them anyway.” …

… For the remainder of the report:…


Mnuchin is set for the Treasury job

(courtesy GATA/Bloomberg)

Trump transitioners recommend ex-Goldman partner, Soros associate for Treasury


But didn’t TV say Clinton lost the election?

* * *

Mnuchin Said to Be Top Treasury Pick Among Trump’s Advisers

By Saleha Mohsin, Kevin Cirilli, and Jennifer Jacob
Bloomberg News
Monday, November 14, 2016

Former Goldman Sachs Group Inc. partner Steven Mnuchin has been recommended by Donald Trump’s transition team to serve as Treasury secretary, according to two people familiar with the process, and the choice is awaiting the president-elect’s final decision.

Mnuchin, the campaign’s national finance chairman, has been considered the leading candidate for the job. Trump has displayed a pattern of loyalty to his closest campaign allies in early administration selections, and Mnuchin, 53, had signed on at a time when many from Wall Street stayed away.

Before joining Trump, Mnuchin rose through the kind of elite institutions the president-elect spent his campaign vilifying. Mnuchin was tapped into Yale’s Skull and Bones secret society, became a Goldman Sachs partner like his father before him, ran a hedge fund, worked with George Soros, funded Hollywood blockbusters, and bought a failed bank, IndyMac, with billionaires including John Paulson. They renamed it OneWest, drew protests for foreclosing on U.S. borrowers, and ultimately generated considerable profits, selling the business last year to CIT Group Inc. for $3.4 billion. …

… For the remainder of the report:…


Soros must be worried;  after selling most of his stake in Barrick last year, he doubled his stake with the drop in gold price.

(courtesy Bloomberg/Javier)

Soros more than doubles stake in Barrick Gold as shares drop


By Luzi-Ann Javier
Bloomberg News
Monday, November 14, 2016

After selling most of his stock in Barrick Gold Corp. in the second quarter, billionaire investor George Soros more than doubled his remaining holding in the mining company.

Soros Fund Management LLC bought 1.78 million Barrick shares in the third quarter, taking total holdings to 2.85 million, according to a regulatory filing. The fund rebuilt its stake in Barrick, one of the world’s two largest gold producers, after selling 94 percent of its holdings in the second quarter to cash in on the stock’s best first-half performance ever. …

… For the remainder of the report:…




A senior advisor to Trump:  Judy Shelton:

(courtesy Robert H to me)

NOv. 14, 2016

Apparently she’s been Trump’s economic advisor for some time now and is second to Larry Kudlow, in Trump world.

She tends to use terms like; Constitutional scholars, sound money, gold standard, founding fathers.


Judy Shelton is an economist with expertise in global finance and monetary issues. She is co-Director of the Sound Money Project at the Atlas Economic Research Foundation and author of The Coming Soviet Crash (1989), Money Meltdown (1994), and Fixing the Dollar Now: Why US Money Lost Its Integrity and How We Can Restore It (2011). Her international economics articles have been published by The Wall Street Journal, New York Times, Washington Post and Financial Times. Dr. Shelton holds a Ph.D. in business administration from the University of Utah.…d-standard-now

She mentions Ron Paul @ 20:33 (positively, almost heroically) grilling Bernanke on the Fed.

This recent Q&A with her is impressive.

This Trump Economic Advisor Wants America to Go Back to the Gold Standard…-judy-shelton/

Q&A with Dr. Judy Shelton, the only female economist advising the campaign.Donald Trump is no policy wonk.

He is pitching himself as the best man for the presidency based on his track record as businessman, and his ability to surround himself with the “best” people—not on his knack for writing white papers. This, of course, means that it is important for voters to understand whom he is surrounding himself with, and what sort of ideas they hold.

With this in mind, Fortune reached out to Dr. Judy Shelton, one of two economists recently named to Donald Trump’s economic advisory team, and the only woman to hold that title. Shelton is a senior fellow and co-director of the Atlas Sound Money Project, whose mission is to promote the principles of sound money and raise awareness of what they see as the inherent problems of our current monetary system. Dr. Shelton first rose to prominence when she predicted the economic collapse of the Soviet Union in 1989, two years before it transpired.

Fortune discussed with Dr. Shelton what sort of advice she is passing along to the Republican nominee and what she thinks about the biggest economic questions of the day. The interview has been edited for length and clarity.

How did you become involved with the Trump campaign?

Dr. Shelton: I have over the years advised a number of Republican candidates, going back to Jack Kemp and more recently Marco Rubio, Ted Cruz, and Ben Carson. I’ve worked for a long time with Stephen Moore and Larry Kudlow, and Larry asked me if I had some thoughts for the Trump campaign on the issues I discuss most, namely international monetary relations, currency, and trade issues. I’ve been intermittently sending Larry my thoughts in the form of memos on these issues.

Have you spoken with Mr. Trump directly?

I met him back in the early nineties at some gatherings, both social and business related. But I haven’t spoken directly with him since he’s been a candidate. I have been communicating through [Trump national finance chair] Steve Mnuchin and [economic advisor] Larry Kudlow.

Your first book was on the economic collapse of the Soviet Union: How does that experience inform how you look at the world?

Four years ago I wrote an article for The Wall Street Journal titled, “The Soviet Banking System—and Ours.” What concerns me is that central banks around the world, the ECB, the Bank of Japan are now buying corporate assets. I’m wondering how far away we are from the Fed thinking it needs to branch out and buy corporate assets. Will these corporate assets be those from firms that are politically connected?

My work on the Soviet Union was an analysis focused on the banking system, and how the banking system in the Soviet system became a way to channel credit to state-owned institutions and state-owned enterprises. And I worry that banks are becoming partners with the state in managing the economy. I’m very uncomfortable with how complicit banks are becoming through the their mandatory membership in the Federal Reserve.

If you had been Fed Chair in 2008, how would you have changed monetary policy?

The Fed’s ultimate responsibility is acting as the lender of last resort. They did what they had to do in terms of lending to distressed institutions, but the short answer is that I would have gotten back to normalization of interest rates much more quickly.

More broadly, I think we need a fundamental reassessment of the global monetary order. I’m glad that Chairman Kevin Brady of the House Ways and Means Committee has proposed a monetary commission and really looking at what is the relationship between economic performance and the exchange rate regime, and to whether we need a rules-based monetary policy, and what should be the role of central banks.

You’ve written before about going back to some sort of gold-based monetary system. Is that something the U.S. could do unilaterally, or would we need to convene other nations and get them on board?

I’m not opposed to a new Bretton Woods conference, and if it takes place at Mar-a-Lago, I’m fine with that. But anything the U.S. does because we print the international reserve currency, unilateral action would almost instantly be accommodated by other countries.

In terms of gold being involved, some people may think of that as a throwback, but I see it as a sophisticated, forward-looking approach because gold is neutral and it’s universal. It’s a well-accepted monetary surrogate that transcends borders and time. If you look at the foreign reserves of the most important countries, they keep them mostly in gold. I don’t want to read too much into it, but it proves that gold is not some barbarous relic.

Would the first step in that be issuing gold-convertible bonds?

Don’t attribute this idea to the Trump campaign, but it has been something that I have been proposing for years now. A gold-backed bond was first proposed in 1981 by Alan Greenspan. I think the U.S. should issue them as an experimental pilot program, similar to the TIPS bond, that compensates people who are concerned about the future value of the dollar. For those who are concerned about a big financial meltdown, these bonds would give them some insurance, as gold tends to rise in price during periods of financial stress.

The Chinese would welcome this development, because it would likely be a stabilizing force for the value of the dollar and protect their dollar holdings. I also think they are the most likely country to provide a parallel instrument. If China were to offer a similar instrument where five years from now you can get back x amount in yuan or an ounce of gold, five years from now both the U.S.-issued instrument and the China-issued instrument are worth the same thing, an ounce of gold. So now you start getting projections of a stable exchange rate determined by market forces.

If this practice starts to spread to even more countries, you would start to see the semblance of a future stable exchange rate system with those exchange rates being determined by what market forces believe about the future value of those currencies.

What would you advise the Trump campaign about what it’s been saying about trade?

I like it whenever [Trump] says “I believe in free trade.” And he says it all the time. What he doesn’t like is allowing countries to engage in activities that undermine the principles of free trade. You can’t homogenize the cost of labor or labor standards or environmental standards. But what you can do is address the problems of our international monetary system.

It used to be economic doctrine that stable exchange rates brought about optimum financial flows and investment, and optimum decisions about where to produce goods and where to buy and sell goods and services. And I still think it’s the case that the proper monetary foundation for genuinely free trade has to be stable exchange rates. That way you can’t manipulate currency to get an advantage. Currency manipulation is like saying you’re competing in the 100-meter dash, and at the last minute one runner gets to redefine a meter as a centimeter, and still be declared the winner.

It’s not fair to say that people who are criticizing currency manipulation to be called protectionist. I give Donald Trump a great deal of credit for focusing on that issue.

Donald Trump has also made comments referring to a coming economic crisis. Do you think we should worry?

I commend him for being willing to talk about it, as it’s the elephant in the room. I think it’s perfectly legitimate to question whether the current monetary system we have is working, and whether we’ve solved the imbalances that led to the last crisis.

The Trump Campaign has argued for spending big on new infrastructure at the same time that it wants to build up the military and cut taxes. It hasn’t put forward much in the way of spending cuts, however. Do you think we need to be worried about deficits and the debt?

I’m always worried about deficits and the debt and ideally [want] a balanced budget. But these are really difficult times, and I think following the model of Ronald Reagan, where the focus was on pro-growth policies, is wise right now. On corporate taxes, I think the 15% rate will have a huge impact on small and not-so-small businesses. That’s fiscal stimulus, and I like that a lot better than stimulus that’s just more government spending.

The fact that Trump is a builder and a businessman makes me confident that he can bring his track record of finishing projects on time and under budget to the federal government. It’s the wasteful government spending that ends up being the problem.








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




2. Nikkei closed DOWN 4.47 points or 0.03%  /USA: YEN RISES TO 108.24

3. Europe stocks opened ALL MIXED   ( /USA dollar index UP to 99.89/Euro UP to 1.0763

3b Japan 10 year bond yield: RISES TO    +.009%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 107.65/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE

3c Nikkei now JUST BELOW 17,000

3d USA/Yen rate now well below the important 120 barrier this morning

3e WTI::  44.63  and Brent:45.64

3f Gold UP  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS TO +.305%   

3j Greek 10 year bond yield RISES to  : 7.38%   

3k Gold at $1226.00/silver $16.97(7:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 79/100 in  roubles/dollar) 65.21-

3m oil into the 44 dollar handle for WTI and 45 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.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9968 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0752 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.365%

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


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

4. USA 10 year treasury bond at 2.205% early this morning. Thirty year rate  at 2.951% /POLICY ERROR)

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

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


Bond Rout Ends As Trump “Reflation Rally” Fizzles Sending Dollar Lower; Iron Ore Plunges

As we suggested yesterday when we posted the first in what is likely to be many contrarian reports on the “Trump Reflation Rally”, one in which Goldman predicted that no matter what policy mix is adopted by president Trump, the global outcome will be one of slowing economic growth, overnight the Bloomberg Dollar Spot Index finally ended its torried 3.2% rally from the past 4 days – the steepest since January 2009 – and retreated 0.3% from a nine-month high. After a historic pounding, benchmark Treasuries and emerging-market assets also rebounding as the dollar rally ended, while Iron ore plunged alongside other industrial metals.

Expectations Trump’s administration will cut taxes, increase spending and accelerate inflation have lifted assets, including the dollar, bank stocks, and industrial metals, and driven bond yields higher. But concern the new administration could take a more protectionist stance on trade has hit Asian stocks and currencies.

“The market is getting a little bit cautious,” said Commerzbank currency strategist Esther Reichelt in Frankfurt. “There might be some concern that the Fed gets more cautious due to the strong dollar (or) this might just be … a pause to see how other market participants are reacting to dollar strength.”

After getting massively oversold, with the US 10Y RSI hitting a level not seen since 1990 as the Bloomberg chart below shows, Treasury 10-year note yields fell from this year’s high and Italy’s bonds led gains in the euro area, outperforming German bunds. Trump’s election victory, which was seen as the catalyst for a massive fiscal stimulus including a pledges to cut taxes, spend more than $500 billion on infrastructure and restrict imports, triggered a record selloff in global bonds. Some, including Fidelity Investments’ Ford O’Neil, have already expressed skepticism that Trump’s proposals will be fully backed by Congress, while Goldman last week said the rally in iron and copper was “too much, too fast.”

“We’ve had a such a sharp move over a small period of time, and it can only extend so far without further information to fuel it,” said Richard Kelly, head of global strategy at Toronto Dominion Bank in London. “The market is going to have to see some sort of actual facts to drive this extension further. If we actually see a sizable shift of U.S. fiscal policy, it changes a number of the dynamics on growth and inflation.”

The yield US 10% TSYs dropped six basis points to 2.21% as of 10:24 a.m. London time. The 41 basis-point jump over the last three trading sessions marked the steepest climb in more than seven years and the 14-day relative strength index for the securities indicated they were the most oversold since 1990, a potential signal that they may be set for a reversal.  Richmond Federal President Jeffrey Lacker warned Monday that easier fiscal policy may require higher rates, but it’s too early for the central bank to react to potential policy changes by the incoming administration.

Euro zone government bond yields fell during a hiatus in a sell-off that has lasted six weeks.  Italy’s 10-year yield slid 11 basis points to 1.97 percent, after rising for five consecutive days, and that on Spanish securities with a similar due date dropped to 1.41 percent, from as high as 1.66 percent on Monday. German bund yields fell two basis points to 0.30 percent, as a report showed growth in Europe’s biggest economy slowed to the weakest pace in a year last quarter. Indian bonds rallied on expectations liquidity will improve in the wake of Prime Minister Narendra Modi’s surprise Nov. 8 crackdown on unaccounted wealth through the withdrawal of high denomination bills. The yield on government notes due Sept. 2026 plunged 10 basis points to 6.63 percent in Mumbai, according to prices from the RBI’s trading system. The rupee led losses in Asia as Indian markets opened after Monday’s public holiday.  The premium investors demand to own developing-nation government bonds over U.S. Treasuries narrowed three basis points to 380, according to JPMorgan Chase & Co. indexes.

Japan’s 10-year bond yield increased to zero, having been negative for almost eight weeks, as a gauge of demand weakened at a sale of five-year securities on Tuesday.

The yen rose 0.2 percent to 108.23 per dollar. It slipped to a five-month low of 108.54 on Monday, having climbed as high as 101.20 as the U.S. election results came out on Nov. 9. “The dollar’s surge from around 101 to 108, just in a few business days, is like going over the speed limit, so a bit of a correction is natural,” said Takuya Kanda, a senior researcher at Research Institute Ltd. “The dollar is currently rallying on expectations only. But the policies Trump has called for are all dollar-positive. After pausing around 107 to 108, the dollar will resume its uptrend toward 110 yen by year-end.”

The end of the reflation rally also meant weakness across industrial metals, and sure enough iron ore plunged 9% in Singapore, extending the last session’s retreat from a two-year high. The price soared by a record 27 percent last week, driven by speculative interest in China and optimism Trump’s policies will boost steel demand. Goldman Sachs said Friday that iron ore’s reaction to the Trump win was excessive, while Capital Economics Ltd. warned prices will face growing pressure from rising supply. Zinc fell 1.9 percent in London, reversing earlier gains and retreating from the highest level in almost seven years. Copper dropped 2.5 percent, pulling back from near a one-year high.

Gold added 0.3 percent, rebounding from a five-month low. It slid 4.4 percent over the last three days as the dollar strengthened.

A weaker dollar was good news for oil, with crude rising as much as 2.6% to $44.43 a barrel in New York as OPEC nations were said to be making a final diplomatic effort toward securing a deal to curb production. Qatar, Algeria and Venezuela are leading the push for a deal, while Saudi Arabia, Iraq and Iran are at odds over how to share output cuts agreed at a September meeting in Algiers.

Equities have yet to process the decide if the end, if only for the time being, of the Trump surge is good or bad: the MSCI gauge of shares in developing nations rose with U.S. stock-index futures. Iron ore tumbled as much as 11 percent in Singapore and gold pulled out of its steepest slide in more than a year. S&P 500 Index futures rose 0.2% to 2,165 after shares ended a volatile session Monday little changed.

The Stoxx Europe 600 Index was little changed. Bond-proxy sectors including utilities and real estate shares advanced as the global debt selloff abated. Among stocks active on corporate news:

  • Merck KGaA advanced 1.3 percent after reporting a jump in third-quarter profit and boosting its earnings forecast for the year on lower-than-expected research costs.
  • Deutsche Wohnen AG climbed 4.1 percent after posting an increase in nine-month profit and giving an upbeat outlook.
  • Vodafone Group Plc rose 1.6 percent after the carrier reported better-than-estimated second-quarter service revenue.
  • EasyJet Plc climbed 1.7 percent after saying it’s working to streamline operations as the slump in the pound following the Brexit vote weighs on earnings.
  • Hennes & Mauritz AB added 2.5 percent after the retailer posted a higher-than-expected increase in October sales.
  • British American Tobacco Plc gained 0.6 percent after Reynolds American Inc. was said to be seeking a higher price after dismissing the U.K. company’s $47 billion takeover offer as too low.
  • Nokia Oyj slipped 3.9 percent after predicting revenue will fall in line with the market trend.

Among the main overnight economic reports was the second estimate of Europe’s Q3 GDP, which came in as expected at 0.3%, the same as the Q2 print. The breakdown by nation is below.

The rest of Europe’s economic highlights:

  • (FR) Oct. CPI EU Harmonized 0.0% MoM; est. 0.0%, prior 0.0%; 0.5% YoY; est. 0.5%, prior 0.5%;
  • (SP) Oct. CPI EU Harmonised 0.8% MoM; est. 0.8%, prior 0.8%; 0.5% YoY; est. 0.5%, prior 0.5%
  • (UK) Oct. CPI 0.1% MoM; est. 0.3%, prior 0.2%; 0.9% YoY, est. 1.1%, prior 1.0%
  • (GE) Nov. ZEW Survey Current Situation est. 61.6, prior 59.5; (GE) Nov. ZEW Survey Expectations est. 8.1, prior 6.2
  • (EC) Nov. ZEW Survey Expectations, prior 12.3
  • (EC) 3Q P GDP SA QoQ est. 0.3%, prior 0.3%; (EC) Sept. Trade Balance NSA est. EU22.5b, prior EU18.4b

Data Tuesday on manufacturing in the New York area, retail sales and
import prices will be scrutinized for indications of the health of the
world’s biggest economy. The final trickle of earnings will also be in focus, with Home Depot Inc. posting results Tuesday. About 76 percent of companies that reported so far beat profit projections and 56 percent topped sales estimates. Analysts now expect quarterly earnings growth of 2.7 percent for the benchmark’s constituents, reversing forecasts for a 1.6 percent decline at the start of the month.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade with little firm direction as upside in energy names is offset by softness in miners
  • Some early signs that some USD correction is likely to play out over coming sessions, and this has been led by EUFt/USD which has duly held the 1.0700 level
  • Looking ahead highlights include US retail sales, Fed’s Rosengren, Fischer and Tarullo

Market Snapshot

  • S&P 500 futures up 0.2% to 2165
  • Stoxx 600 up less than 0.1% to 338
  • FTSE 100 up 0.8% to 6805
  • DAX down less than 0.1% to 10689
  • German 10Yr yield down 1bp to 0.31%
  • Italian 10Yr yield down 7bps to 2.01%
  • Spanish 10Yr yield down 7bps to 1.45%
  • S&P GSCI Index up 1% to 353.4
  • MSCI Asia Pacific up 0.2% to 134
  • Nikkei 225 down less than 0.1% to 17668
  • Hang Seng up 0.5% to 22324
  • Shanghai Composite down 0.1% to 3207
  • S&P/ASX 200 down 0.4% to 5326
  • US 10-yr yield down 6bps to 2.2%
  • Dollar Index down 0.43% to 99.68
  • WTI Crude futures up 2.5% to $44.41
  • Brent Futures up 2.1% to $45.36
  • Gold spot up 0.3% to $1,226
  • Silver spot up 0.6% to $17.04

Global Top Headlines

  • Apple Said to Explore Smart Glasses in Deeper Wearables Push: Early product testing comes as company searches for next hit, similar Google Glass project flopped
  • OPEC Said to Start Final Diplomatic Push on Oil-Cuts Plan: Qatar, Algeria, Venezuela in shuttle-diplomacy to secure deal
  • BP CEO Sees Oil Market ‘Pretty Pessimistic’ About OPEC Cuts
  • Euro-Dollar Parity Is Back on Traders’ Radar Since Trump Win: Deutsche Bank says euro will decline below $1 in 2017
  • Google, Facebook Move to Punish Fake News Sites With Ad Rules: Publishers running “misrepresentative content” restricted
  • U.S. Delays Dakota Pipeline as Trump Promises Quicker Reviews: More talks needed given land’s importance to tribe, Army Corps says
  • Amazon to Soften Employee Review Process After Critical Report: Amazon will change its employee review process in 2017 to soften its image as a survival-of-the-fittest environment
  • Citi Unseats Wells Fargo in Satisfaction Survey on Digital Gains: Wells Fargo drops to No. 2 spot by ‘standing still’ on digital
  • Icahn Said to Fail in Bid to Buy Federal-Mogul: NYP
  • Giuliani Emerges as Favorite for Trump’s Secretary of State: AP

Looking at regional markets, we start in Asia where stocks traded mixed following a similar lead from Wall St, where tech names underperformed again and financials extended on post-US election gains. Nikkei 225 (-0.1%) fluctuated between gains and losses as USD/JPY struggled to maintain a 108.00 handle. ASX 200 (-0.4%) declined as prospects of a protectionist trade policy by Trump weighed on the index. In China, multiple positive profit alerts for H1 led to outperformance in Hang Seng (+0.6%), however Shanghai Comp (-0.1%) was undecided, with a firm interbank liquidity injection overshadowed by trade concerns and ongoing expectations of a policy-prudent PBoC. 10yr JGBs were lower with 10yr yields increasing to above 0% for the first time since September when the BoJ overhauled its monetary policy, while underperformance was observed in the belly following a disappointing 5yr JGB auction in which b/c, lowest accepted and average prices all declined from the prior month. PBoC injected CNY 100bIn 7-day reverse repos, CNY 70bIn in 14-day reverse repos and CNY 15bIn in 28-day reverse repos. PBoC set yuan mid-point at 6.8495 (Prey. 6.8291), the weakest since 2008.

Top Asian News

  • India Wholesale Inflation Unexpectedly Eases Before Rate Review: Oct. wholesale prices rise 3.39% y/y vs est. +3.74%
  • Rupee Leads Asia Losses While Modi’s Cash Ban Boosts India Bonds: Currency drops 0.7% in third straight day of declines
  • China Plan Seen Signaling Harsher Line on Local Government Debt: Scope of such debt under plan narrower than expected, BofA says
  • RBA Grapples With Uncertain Job Market, Accelerating Housing: Global inflation risks are “more balanced” than for some time
  • Evergrande Boosts Stake In Vanke, Plans Lockup for Other Stakes: Evergrande holds 10.16% of Vanke’s Shenzhen-traded shares

In Europe, bourses also trade mixed as EUROSTOXX (-0.1%) and DAX (+0.1%) lag behind the FTSE (0.92%) in early trade. The FTSE has been bolstered by several factors this morning, energy names have seen a reprieve, after a few days of losses WTI and Brent crude futures have retraced on the back of reports that Saudi Arabia are looking to resolve their differences with Iran and Iraq. Also, supermarkets in the UK were boosted by the latest Kantar report which saw Sainsbury’s (SBRY LN) gain some ground on Tesco’s (TSCO LN), this saw Sainsbury’s shares rise 2%. Property names also received a bid this morning as Land Securities (LAND LN) posted stellar results. Fixed income markets have remained quiet this morning with prices retracting some of the moves seen over the past of days. Bunds up by 60 ticks higher but supply is light in today’s session.

Top European News

  • German Economy Slows More Than Estimated as Trade Weakens: GDP increased 0.2% in third quarter versus 0.3% estimate
  • U.K. Inflation Unexpectedly Slows as Carney Prepares to Testify: Consumer-price growth rate drops to 0.9 percent from 1 percent
  • Vodafone Quarterly Service Revenue Rises on European Revival: Carrier’s quarterly service growth beats analysts’ estimates
  • Tesco Charge Curbs Discounter Growth as Grocer Regains Shoppers: Aldi and Lidl record slowest growth since 2011, Kantar says
  • Fiat Declines After U.S. Dodge Truck Owners Sue Over Emissions: The consumer lawsuit against Fiat’s Michigan- based unit is the first against a U.S. carmaker over emissions cheating
  • Merck KGaA Raises Profit Forecast Aided by Health-Care Unit: German drugmaker has 24 percent jump in 3Q profit
  • Paschi Offers Up to 100% Face Value in $4.6 Billion Debt Swap: Debt-for-equity swap is part of lender’s recapitalization plan

In currencies, the Bloomberg Dollar Spot Index retreated 0.3 percent from a nine-month high. It jumped 3.2 percent over the last four trading sessions, the steepest rally since January 2009, amid speculation Trump’s proposed policies will fuel economic growth and hasten interest-rate increases by the Fed. Futures indicate a 92 percent chance that rates will be raised at the central bank’s December policy meeting.The yen rose 0.2 percent to 108.23 per dollar. It slipped to a five-month low of 108.54 on Monday, having climbed as high as 101.20 as the U.S. election results came out on Nov. 9. “The dollar’s surge from around 101 to 108, just in a few business days, is like going over the speed limit, so a bit of a correction is natural,” said Takuya Kanda, a senior researcher at Research Institute Ltd. “The dollar is currently rallying on expectations only. But the policies Trump has called for are all dollar-positive. After pausing around 107 to 108, the dollar will resume its uptrend toward 110 yen by year-end.” The pound fell for a second day versus the dollar, dropping 0.5 percent to $1.2429, as a report showed U.K. inflation unexpectedly slowed in October. The MSCI Emerging Markets Currency Index rose 0.3 percent, spurred by a 1.7 percent jump in South Africa’s rand, the best performer among 31 major currencies tracked by Bloomberg. China’s yuan slipped to its weakest level since 2008, while India’s rupee dropped 0.6 percent as trading resumed following a holiday on Monday.

In commodities, iron ore tumbled 9 percent in Singapore,extending the last session’s retreat from a two-year high. The price soared by a record 27 percent last week, driven by speculative interest in China and optimism Trump’s policies will boost steel demand. Goldman Sachs said Friday that iron ore’s reaction to the Trump win was excessive, while Capital Economics Ltd. warned prices will face growing pressure from rising supply. Zinc fell 1.9 percent in London, reversing earlier gains and retreating from the highest level in almost seven years. Copper dropped 2.5 percent, pulling back from near a one-year high. Gold added 0.3 percent, rebounding from a five-month low. It slid 4.4 percent over the last three days as the dollar strengthened. Crude oil rose as much as 2.6 percent to $44.43 a barrel in New York as OPEC nations were said to be making a final diplomatic effort toward securing a deal to curb production. Qatar, Algeria and Venezuela are leading the push for a deal, while Saudi Arabia, Iraq and Iran are at odds over how to share output cuts agreed at a September meeting in Algiers. Natural gas futures extended gains after rising the most since July as colder-than-normal temperatures are seen hitting the U.S. East Coast next week.

DB’s Jim Reid concludes the overnight wrap

The bond market sell-off continues to take the market by surprise too although the rebound this morning and the move off the highs yesterday in yield for Treasuries is evidence perhaps that we are starting to finally see a bit of resistance at these levels. Having reopened following the public holiday, 10y Treasury yields initially surged nearly +15bps by mid-morning in the European session yesterday to touch 2.300%. That marked the high point however with yields moderating since, closing at 2.262% last night (although still up +11.1bps on the day and the highest since January 1st) and have since retraced a bit more this morning to around 2.208% as we go to print. It’s the same across Asia too where yields in the likes of Australia (-1.1bps), South Korea (-3.2bps), New Zealand (-4.2bps) and also EM Asia like Indonesia (-14.5bps) and Thailand (-3.7bps) are all lower. It’s emerging markets which have really bore the brunt of this bond selloff however and particularly in LatAm where yesterday hard currency 10y bond yields in Mexico and Brazil were +20.7bps and +22.3bps higher respectively taking the post election move to +98.5bps and +94.0bps now. So it’ll be interesting to see if the swing in momentum over the last 18 hours or so for Treasuries also plays out across the EM space today.

Elsewhere, all things considered European bond markets were a bit calmer yesterday. Yields in the periphery were ‘only’ 4-6bps higher, 10y Gilt yields rose +4.3bps to 1.404% and pre-Brexit levels again while 10y Bunds outperformed in relative terms with the yield just over 1bp higher at 0.316%. It doesn’t feel like all that long ago that the Bund curve was negative out to just past the 15y tenor. Yesterday 8y Bunds turned positive for the first time since April meaning the curve is only negative now out to the 7y tenor.

Away from bonds the stronger US Dollar theme continues to play out. Yesterday the Dollar index closed up +0.91% while on the other side of that EM currencies had another day to forget. The Colombian Peso (-2.17%), Argentine Peso (-1.86%), Hungarian Forint (-1.52%) and Turkish Lira (-1.19%) were amongst those that stood out. Where we did see some a bit of calm and resilience yesterday was in equity markets. That was even for EM equities where bourses in Mexico (+0.73%), Brazil (+0.80%) and Argentina (+0.22%) actually bounced back following 3 days of heavy falls, perhaps taking some comfort from Trump’s CBS interview and also the announcement of some of his early personnel appointments. In Europe the Stoxx 600 also closed +0.22% while last night the S&P (-0.01%) finished more or less flat. That did however hide another strong performance for financials with the S&P 500 Banks rallying another +3.53% and taking that index to the highest level since early 2008.

There wasn’t a huge amount else to report in markets yesterday with the overwhelming focus still very much on all things President-elect Trump related and the subsequent knock on impact to markets. That’s unlikely to change anytime soon although yesterday we did also hear from UK PM Theresa May during her first foreign policy speech. In a nutshell the speech was, at the margin, at little bit more business friendly than when she spoke at her first party conference as leader a few weeks back. May talked about using the freedoms that come from negotiating with partners directly ‘to be flexible’ and ‘to set our own rules and forge new and dynamic trading agreements that work for the whole UK’ but that also ‘it is about how business and government work together to get the best deal and the right deal for Britain and the right deal for businesses working across the continent’. In a nutshell she defended globalisation and liberalism as being the best system but said it must work better for all or be at risk of being rejected by electorates around the world.

There were also some comments out of the Fed yesterday. Late last night the Richmond Fed President, Jeffrey Lacker, said that in light of the Trump victory ‘if a more stimulative fiscal stance would materialize that would bolster the case for raising rates’ and that ‘as a general matter, doing monetary policy with a more stimulative fiscal outlook usually warrants higher policy rates’. Prior to this the Dallas Fed President, Robert Kaplan (who is a voter next year), said that he had favoured a rate increase at either the September or November meeting and reiterated that he was hopeful that a hike is coming soon.
In terms of other markets this morning, it’s been a fairly subdued session for equity markets in Asia. The Nikkei (+0.01%) is little changed along with the Kospi (-0.02%) while the Shanghai Comp (-0.27%) is a touch weaker along with the ASX (-0.42%) however the Hang Seng (+0.42%) has gained. We’ve also seen a bit of a bounceback in EM FX this morning with the USD rally abating somewhat, while Asia-Pacific credit indices are 2-3bps tighter. WTI Oil (+1.99%) and Gold (+0.32%) are also enjoying their first gains since Wednesday. So we are seeing some signs of those markets most beaten up reversing somewhat this morning.

Moving on. Aside from the early data in China and Japan in the morning, yesterday was a very quiet day for economic reports. With nothing out in the US the only data of note in Europe was a slightly better than expected Euro area industrial production print for September (-0.8% mom vs. -1.0% expected). The focus is on the political calendar however and with the clock ticking for Italy next month the latest poll run by EMG Acqua showed that 39.2% of respondents would reject PM Renzi’s constitutional reform versus 34.9% who would say yes. That leaves a still very high proportion (25.9%) of undecided voters out there. It’s worth noting that that poll was conducted over November 11th-13th and showed that the number of voters who would reject the reform as rising 0.9% versus the same poll a week earlier and before the US election.

Staying in Europe, yesterday we also got the latest ECB CSPP holdings data. As of November 11th, total holdings under the programme totalled €41.256bn. That implies net purchases settled last week of €1.8bn or an average daily run rate in that week of €360m which is a touch below the €383m daily run rate since the program started. Given that data only partly covers the post election period it’ll be interesting to see if next week’s data shows any impact from the bond selloff and general volatility in bond markets on the ECB’s overall pace of purchases.

Before we move onto today’s calendar, a quick mention that this morning our European equity strategists have published a summary on the outlook for European equities after the US election. In summary, while the markets are clearly giving Trump the benefit of the doubt and our economists expect US growth to accelerate to above 3% in H2 next year, our European equity strategists remain cautious on the outlook for their market, given: a) the Italian referendum on December 4 (peripheral spreads have already widened, but equities have not reacted yet); b) intensifying Chinese capital flight, which our Asian FX strategists think has returned to H2 2015 levels; c) the risk of further downside for the oil price and, hence, renewed upside for US high-yield credit spreads (with the broad USD index, back above its January peak levels, consistent with oil below $30/bbl); d) the impact of rising real bond yields on equity valuations; and e) the remaining Trump tail risk that some of the less savory items on his campaign agenda returns to the fore.

Looking at the day ahead, while the overriding focus will again be on election related newsflow, the diary is a little busier for data. This morning in Europe and shortly after this hits your emails we’ll get the preliminary Q3 GDP report out of Germany where the market consensus is running at +0.3% qoq. In France we’ll then get the final October CPI report before the focus turns to the UK where the CPI/RPI/PPI data docket will be released. Euro area trade data follows that before we then get the November ZEW survey in Germany and also the Q3 GDP report for the Euro area (+0.3% qoq expected). It looks set to be busy in the US this afternoon too, headlined by the October retail sales print where the market is expecting a +0.6% mom headline print and +0.5% mom ex-auto reading. Also due out will be the import price index for October, along with the NY Fed empire manufacturing survey and finally business inventories data for September. Away from the data it’s another busy day for Fedspeak with Rosengren (1pm GMT), Tarullo (2.05pm GMT), Fischer (6.30pm GMT) and Kaplan (6.30pm GMT) all scheduled to speak. It’ll also be worth keeping an eye on comments from BoE Governor Carney when he testifies to lawmakers on the November inflation report. As we highlighted yesterday, across the pond the House Republican Conference will hold its closed-door leadership election with the chatter being that Speaker Paul Ryan is likely to be re-elected.



i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 3.39 POINTS OR 0.11%/ /Hang Sang closed UP 101.69  OR 0.46%. The Nikkei closed DOWN 4.47 points or 0.03%/Australia’s all ordinaires  CLOSED DOWN 0.38% /Chinese yuan (ONSHORE) closed DOWN at 6.8566/Oil ROSE to 44.63 dollars per barrel for WTI and 45.64 for Brent. Stocks in Europe: ALL MIXED      Offshore yuan trades  6.8643 yuan to the dollar vs 6.8566  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS CONSIDERABLY AS MORE USA DOLLARS   LEAVE CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER.


none today


Japan’s ten yr bond yield finally climbs above zero as Trumpmania causes all global bond yields to rise/yield curve goes nowhere!

(courtesy zero hedge)

“Cheapest” US Treasuries In 3 Years Spark Japanese Bond Selling, Send 10Y JGB Yields Positive At 8-Month Highs

At 225bps, the extra yield gained from buying 10Y US Treasuries over 10Y JGBs appears to have been the catalyst for tonight’s sudden moves in bond markets. The widest spread since 2013 has sparked JGB selling (10Y JGB yields +2bps broke above 0.00% and back at their highest since March) and UST buying (10Y UST -6bps, 30Y<3.00%)

“Why don’t we invest in the U.S. and forget about JGBs?”said Kazuaki Oh’E, the head of fixed income at CIBC World Markets Japan Inc. in Tokyo.

And that appears to be what investors have done… (sending 10Y JGB yields above 0%)…

Leaving Japanese banks a little overextended as the yield curve goes nowhere…


c) Report on CHINA

This is what happens when the yuan rapidly declines:  China exports the most deflaiton in 6 years:

(courtesy import prices/zero hedge)

Import Prices Decline For Record 27th Month As China Exports Most Deflation In 6 Years

For a record 27th straight month, US import prices declined in October (-0.2% YoY) despite a surge in fuels and lubricants (up 7.2% MoM).

China continues to export its deflation abroad with imported prices at the lowest since Oct 2010 even as Asia near-East saw a surge in export prices.


Two major points:

  1. the offshore CNH crashes to 6.8758
  2. the spiking in yields (lowering of prices) causes cheap USA treasuries to be bid and it flattens the yield curve and thus hurts bank stocks

(courtesy zero hedge)

Banks Skid On “Cheap” Treasuries Bid As Chinese Currency Collapse Continues

With US Treasury yields spiking to extreme ‘cheapness’ relative to Japanese and German bonds (and stock dividends) it seems a ‘value’ bid has re-emerged, sparking a notable drop in long-end yields (despite the ongoing collapse in the Yuan to fresh record lows). The Treasury bid is flattening the curve dramatically which in turn is knocking the exuberance out of the ridiculous spike in bank stocks.

The offshore Yuan is crashing again to fresh record lows…

But US Treasuries have decoupled from the collapse in the Yuan…

And turmoil in the Yuan never bodes well for US stocks…

But Treasuries are bid as they have become ‘cheap’ to various assets…

To JGBs…

To Bunds…

And to Stocks…

And as the curve flattens…

US financials are starting to slide…

Which makes sense as they are couypletely decoupled from their credit markets…

The biggest bank drop in 2 months…



the relations between China and Obama has been quite abysmal.  So it is no wonder that China is ridiculing Obama’s latest foreign tour.  You can now imagine what is going to happen with Trump as he plans a 45% tariff on Chinese goods

(courtesy zero hedge)

China Ridicules Obama’s Last Foreign Tour: “Washington’s Leadership In Global Affairs Has Decayed”

Over the past several years it has become abundantly clear that China does not have a high opinion of President Barack Obama.

As a reminder, at the start of September, during his final trip to China, China “welcomed” Obama with a very undiplomatic greeting when an unusual tarmac altercation involving Chinese and U.S. officials, including national security adviser Susan Rice, devolved into a shouting match by a member of the Chinese delegation. First, there was no staircase for Obama to exit the plane and descend on the red carpet, so he had to use an emergency exit.

Then a member of the Chinese delegation began shouting at White House staff, demanding the pool leave the arrival scene. A White House official said “Obama was our president and Air Force One was our plane” and that the press was not going to move from the designated area. The Chinese official angrily responded “This is our country. This is our airport.”

It only got worse from there.

Fast forward to today when overnight in commentary released by China’s communist party mouthpiece, Xinhua, which usually is a conduit for the official of the politburo, token author Chen Shilei took a vicious stab at Barack Obama, mocking his trip abroad, and saying that Obama’s last overseas visit while in office, “which became a last-minute conciliatory trip after Donald Trump’s victory in the presidential elections, will in the end reassure nobody.

As the Chinese media outlet recaps, Obama on Monday started the trip, which will take him to Greece, Germany and Peru, amid concerns that Trump’s election will change U.S. foreign policy and affect U.S. strategic relations with its allies and partners around the world.

The three-nation trip, during which Obama is expected to discuss regional and global issues with European leaders and attend a summit of leaders of the Asia-Pacific Economic Cooperation (APEC), was planned when his Democratic colleague Hillary Clinton seemed to be winning the race to the White House.

It gets better: launching a full-on attack on Obama’s hypocrisy, the article said that “Obama, who criticized Trump during the general elections for lacking “basic knowledge” about critical issues in Europe, Asia and the Mideast, now is ironically convincing U.S. allies and partners that his successor will not behave as he predicted and America will maintain its core interests in the globe.”

As a result, Shilei adds, the inconsistency between his words before and after the presidential elections reflects the looming uncertainty of relations between the United States and its European allies, “making his final trip not so reassuring as expected.”

He continues:

In Europe, U.S. allies were alarmed by Trump’s rhetoric during his presidential campaign suggesting the United States might pull out of the North Atlantic Treaty Organization (NATO) if other NATO members do not pay more and withdraw from the Paris Agreement on climate change.

However, frankly speaking, Obama is not the right choice to disperse the anxieties of U.S. allies over the possible changes, given his role as an outgoing president who has limited influence on the incoming administration.

Never one to skip an opportunity to mock America’s “declining global influence”, the author said that “meanwhile, the deep strategic concern among those countries also mirrors a growing decay of Washington’s leadership in global affairs.

As for the punchline, China alleges that the US is becoming increasingly isolated:

The victory of Trump, who swore to “make America great again” and has been supported by nationalists and skeptics of globalization, reflects an increasing trend of isolation in U.S. society.

The trend had granted Trump firm support in the presidential race against Hillary and now it will greatly influence the foreign policy of his administration, making his allies more insecure and fretful.

Against such a backdrop, Obama’s conciliatory overseas trip is doomed to be fruitless, and will only intensify the strategic uncertainty of the U.S. allies, instead of reassuring them.

In retrospect, a very accurate assessment of the situation, although one which we doubt Obama will be too concerned about. As for Trump, it remains to be seen just how China will approach his tenure: should Trump concede on issues like the proposed 45% tariff and be agreeable with President Xi who was among the first foreign leaders to call Trump telling him “cooperation is the only choice” , he will likely be praised in Beijing; on the other hand, should Trump’s rhetoric escalate into all out war, the diplomatic war of words between China and the US will only escalate



Bail-ins begin:  Junior bondholders will exchange their bonds for shares.  The scary part will be if this extends to other Italian banks which have huge non performing loans on their books

(courtesy zero hedge)

Monte Paschi Begins Bondholder “Bail-In”: Will Equitize Over €4 Billion In Junior Bonds

Monte Paschi’s long anticipated, if largely undesired bail-in is finally a fact.

Ever since the bank failed the ECB’s latest stress test this summer, when it was advised that it needs to raise billions in capital, only to see the process fizzle with virtually no willing sources of new cash emerging due to the opaque labyrinth of the bank’s billions on NPLs, Italy’s third largest, most insolvent, bank has been hoping to avoid a debt conversion, out of fears it may spook retail bondholders across the capital structure, and in other Italian banks, who may perceive the move even if touted as “voluntary” as a creditor bail-in. Which it technically is.

Earlier today, the bank’s board bet on Monday to set the terms for a bond-to-equity conversion that is part of the lender’s capital boosting plans. As part of its sweeping restructuring, Monte Paschi was planning to lay off a tenth of its staff, shut branches and sell assets to win investor backing for a 5 billion euros ($5.4 billion) cash call, its third recapitalisation in as many years. The key part, however, due to the lack of new investor interest was the previously leaked voluntary conversion of its subordinated debt, whose successful execution would limit the amount of new funds needed.

Retail investors are estimated to hold some 2 billion euros of Monte dei Paschi’s senior subordinated debt. As Reuters reported last month, small investors could be excluded from the conversion, as involving them makes it necessary to publish a prospectus, delaying the offer’s launch. However, it now appears that everyone will be “voluntarily” equitized.

“The (conversion) operation will kick off after the shareholder meeting… and there will obviously be a premium offered to market price,” A Reuters source added. The conversion plan will also include the Fresh hybrid instrument used to partly finance the costly acquisition of rival Antonveneta in 2007.

Senior debt is not included in the plan.

The bank – assisted by JP Morgan and Mediobanca – is due to hold an extraordinary shareholder meeting on Nov. 24 to approve the turnaround plan that also includes the sale of some 28 billion euros in bad loans at below book value. To underpin the cash call, management at the 544-year old lender has been on road shows to drum up support from potential anchor investors.

Qatar’s sovereign wealth fund had allegedly expressed a preliminary interest, however that has not been confirmed. “Next week the road show will continue with a video call with U.S. and Asian investors,” the source said. On Sunday, Il Sole 24 Ore said the bank was reaching out to Asian investors, especially Singapore wealth fund Temesek.

So while we wait to learn if Monte Paschi will be successful in raising the critical outside cash, here is what Monte Paschi’s bail-in, pardon debt conversion will look like, according to sources including Ansa, Bloomberg and Reuters:

  • Monte Paschi approves voluntary debt-to-equity swap offer
  • Offer to target subordinated bonds for total outstanding amount of 4.289 billion euros; will offer between 20-100 percent of nominal value in bond swap offer
  • Holders of ~€4.5 billion of subordinated bonds will be able to convert them to shares
  • Bank is also considering possibility of launching conversion into equity of 1 billion euros of Fresh 2008 bonds
  • Senior bonds not included in the voluntary conversion plan
  • The bank is also considering conversion plan for EU1b of hybrid bonds
  • The conversion price is seen at 85% of nominal value for riskier Tier 1 bonds, according to Ansa sources.
  • The Conversion price is seen at 100% of nominal value for less risky Tier 2 bonds
  • Monte Paschi will acquire €700m of MPS Capital Trust II securities, also Tier 1, at 20%
  • It will also acquire seven series of BMPS subordinated debt at 100%
  • Offer open to investors classified as “qualified investors” only for Upper Tier 2 securities

In the aftermath of this announcement, keep an eye not so much on the Monte Paschi’s stock price, which may jump on the news that the bank will soon have a lower debt load (even if it means diluting the equity) as deposit activity – and especially outflows – at this and other Italian banks.




Another setback for Merkel as her rival Steinmeier chosen for the German Presidency totally against her wishes

(courtesy Mish Shedlock/Mistalk)

Another Merkel Setback: Rival Social Democrat Selected As German President





What took them so long: Germany launches the biggest crackdown on Islamists in 15 years as they raid 190 mosques.  They now are banning radical organizations.

(courtesy zero hedge)

What a constitutional crisis: the pound jumps as a judge warns BREXIT could take up to 2 years.  Also the will of the people is not binding on Parliament
(courtesy zero hedge)

Cable Jumps As Judge Warns Brexit Could Be Delayed 2 Years, Confirms “Referendum Not Binding On Parliament”

Having dipped below 1.24 this morning, Cable has spiked back above 1.25 after Sky News reports UK Supreme Court judge says Brexit could be delayed by up to 2 years.

Brexit could be delayed by months, even as long as two years, after a Supreme Court Judge suggested that “comprehensive” legislation was required to trigger Article 50.


Lady Hale told an audience in Kuala Lumpur that the court must question “whether it would be enough for a simple act of Parliament to authorise the Government to give notice, or whether it would have to be a comprehensive replacement for the 1972 [EEC Accession] Act”.


Sky News reported last week that the Government was preparing a short bill to push through both the Commons and the Lords to try to keep its March deadline for triggering Article 50.


Labour has said it would not block such a bill in the House of Commons.


Lady Hale’s comments, published on Tuesday, come after a High Court ruling that Theresa May cannot trigger Brexit without putting it to a vote in the House of Commons.

Not a huge surprise but it is enough to send Sterling back above 1.25…


But perhaps even more worrying is that shows that the Supreme Court could adjudicate not just the validity of the Government’s appeal against the ruling, but also the precise remedy the Government must offer to the claimants if it loses its appeal.

This means the Government could have to pass its Great Repeal Bill before triggering Article 50. The Great Repeal Bill is currently not planned to be introduced until the next session of Parliament after May.


Lady Hale, who will sit as one of the judges hearing the Government’s appeal, also said unequivocally that the“referendum was not legally binding on Parliament”.


This was a reference to the referendum legislation passed last year. She also confirmed that for the first time in its history the Supreme Court will sit with all 11 Justices.


Former Cabinet Minister Iain Duncan Smith told Sky News that the court battle could cause a “constitutional crisis”.

In other words, NoVotesMatter!



Russia launches a massive air strike against Syrian terrorist targetss

(courtesy zero hedge)

Russian Aircraft Carrier, Frigate Launch “Massive Strikes” On Syrian Terrorist Targets

Moments ago Russian Defense Minister Sergey Shoigu announced that the Russian military launched a large-scale operation against terrorists stationed in Homs and Idlib provinces of Syria.

“Today at 10:30 and 11:00 we launched a large-scale operation against the positions of Islamic State and Al-Nusra [terrorist groups] in the provinces of Idlib and Homs,” Shoigu said at a meeting between Russian President Vladimir Putin and the top leadership of the Russian Armed Forces.

The Russian “Admiral Grigorovich” frigate located next to Syria’s coast targeted terrorists in Syria with Kalibr cruise missile strikes, Shoigu said. The “Admiral Grigorovich [frigate] takes part in the operation. Today, it launched Kalibr cruise missiles on [terrorist] targets that had been confirmed by intelligence data and determined in advance,” the minister said at a meeting of Russian President Vladimir Putin with top officials of the Russian Armed Forces.

The ‘Admiral Kuznetsov’ aircraft carrier, the flagship of the Russian Navy, is also taking part. This is the first time the ‘Admiral Kuznetsov’ has taken part in a military operation according to RT. Sukhoi Su-33 fighter jets have been launched from the deck of the carrier, the defense minister said.

The strikes target factories and arms depots operated by the jihadists in Syria, he said. “The main targets of the strikes are warehouses with ammunition, [terrorist] gatherings and terrorist training centers, as well as plants for the production of various kinds of weapons of mass destruction of the population,” Shoigu detailed.

He stressed that terrorists had actual factories, not merely workshops, for weapons production. “They are factories, not workshops, more specifically the plants for the production of all sorts of rather serious means of mass destruction.”

“Clearly, this is a well-established industrial production, these are the targets for today’s strikes. And they will continue,” the minister stated. The minister noted that the Russian military had thoroughly surveilled the targets before striking them, choosing the most important.

“They [terrorists] used them twice this week. In one instance, 27 people were hospitalized and three were killed, in the other case 30 were hospitalized. I mean the fighters of the Syrian army,” he added. On November 12, the commander of the Admiral Kuznetsov said that sea-based jets of the aircraft-carrying cruiser Admiral Kuznetsov which arrived in the Syrian coast heading a group of the Russian Northern Fleet’s squadron started training flights.

“You are aware that we have sent a large group of our radiation, chemical and biological protection troops to determine the toxic substances which are used by terrorists. Within the past week they used them twice – in one case, 27 people were hospitalized and three died, in the other case 30 people were hospitalized – I mean the Syrian Army soldiers,” Shoigu said.

Russia arrests its economy minister for receiving a 2 million bribe.  Amazing Russia is behaving much different to crime that the USA  (e.g. Hillary)
(courtesy zero hedge0

Russian Economy Minister Arrested For $2 Million Bribe Over Rosneft Deal


* * *

In an unexpected move,  Russian Economy Minister Alexey Ulyukayev was detained Monday on suspicion of taking a $2 million bribe in return for his ministry’s support for a major oil company deal, Russia’s Investigative Committee said. The minister is in custody and awaiting charges.

Alexey Ulyukaev

“The circumstances of the crime are connected with Alexey Ulyukayev, who occupies a public post in the Russian Federation, receiving $2 million on November 14 for the positive assessment provided by the Economic Development Ministry that allowed Rosneft to complete the deal on purchasing the government’s 50 percent stake in Bashneft,” Svetlana Petrenko, deputy head of the Investigative Committee, said in an official statement.

President Vladimir Putin named Ulyukayev, at the time a first deputy governor of Bank of Russia, economy minister in June 2013; it is unclear what prompted his fall from grace.

The case comes as Rosneft is preparing a mandatory offer to buy out minorities in Bashneft, where it purchased a 50.08 percent stake for 329.69 billion rubles ($5 billion). Rosneft’s Oct. 12 purchase from the government was made at a premium to the market, or 3,706.4 rubles for each common share it bought. Bashneft shares closed at 3,480 rubles in Moscow on Nov. 14, or 6.1 percent below the purchase price

The Bashneft deal, around which the charges against Ulyukayev revolve, is not going to be revised during the probe, Petrenko told RIA Novosti.

“The necessary investigative actions concerning Ulyukayev are under way,” the Investigative Committee’s spokesperson said quoted by RT. Ulyukayev was detained in the act of taking a bribe amid an investigative experiment, Petrenko revealed, as cited by RIA Novosti. “Ulyukayev was caught red-handed when receiving a bribe,”she said. According to Petrenko, the minister resorted to threats, attempting to extort the money from Rosneft officials.

The experiment was prompted by evidence law enforcement obtained by wiretapping Ulyukayev’s cell phone and those of his entourage, a source told RIA Novosti. Petrenko said that a criminal case has been opened under part 6 of Article 290 of the Russian Criminal Code, which covers “large-scale bribery.”

Ulyukayev has been under investigation by Russia’s Federal Security Service (FSB) for over a year, a source told RIA Novosti.

“The minister has been monitored by FSB agents for more than a year. It is unclear if he was suspected from the beginning of what he is accused now, but he has definitely been observed for more than a year,” he said.

Petrenko told RIA Novosti that the Bashneft deal, around which the charges against Ulyukayev revolve, is not going to be revised during the probe. “The acquisition of Bashneft stock was made in accordance with the law and is not the subject of a criminal investigation,” she said.

More details on the arrest from RT:

Pursuant to Russian law, Ulyukayev faces a maximum penalty of a fine ranging from 80 to 100 times the sum of the bribe. In addition to this, if found guilty, he would be stripped of the right to serve in certain state positions or engage in certain activities for eight to 15 years.

Alternatively, the law says the suspect may face from eight to 15 years behind bars and a fine of 70 times the sum of the bribe, or would have to serve the prison term without paying monetary compensation.

Kremlin spokesman Dmitry Peskov said the accusations brought against Ulyukayev were “very serious” and required “very serious proof.”

“In any case, only a court can decide,” Peskov said, adding that he did not know if President Vladimir Putin was aware of the minister’s arrest.

In October, Russia’s largest oil company, Rosneft, purchased the state-owned stake in a major regional oil company, Bashneft, for about $5.3 billion. The deal was approved by Prime Minister Dmitry Medvedev, although back in September, President Vladimir Putin expressed his concerns over the potential takeover of one state-controlled company by another.

“Probably it’s not the best option when one company under state control acquires another purely state company,” Putin said in an interview with Bloomberg. He added however, that the biggest bid would win as Russia “cannot discriminate against market participants, not a single one of them.” As the deal was finalized, Ulyukayev said there was another competitor to acquire the stake, but Rosneft had outbid that offer.

It is unclear who Ulyukayev’s replacement will be during the criminal proceeding.

Saudi Arabia Warns Trump Not To Block Oil Imports

Saudi Arabia has had a bad week: the kingdom, having spent tens of millions in “donations” to fund not only the Clinton Foundation which is now irrelevant, but also allegedly to sponsor 20% of Hillary’s presidential campaign, has suddenly found itself with no “influence” to request in exchange for its “generosity.” Instead, it is forced to engage in something it loathes: open diplomacy.

As a result, its first attempt at engaging with the US president-elect, amounts to what is effectively a thinly veiled threat wrapped as a warning. As the FT reports, “Saudi Arabia has warned Donald Trump that the incoming US president will risk the health of his country’s economy if he acts on his election promises to block oil imports.”

In a sign of the difficulties Mr Trump faces over his campaign pledges to create “complete American energy independence” from “our foes and the oil cartels”, Saudi Arabia’s energy minister pointedly reminded the president-elect that the US “benefits more than anybody else from global free trade”, adding, “energy is the lifeblood of the global economy”.

The veiled threat is obvious: should you proceed to stimulate and subsidize the US shale industry – whose resurgence under Obama drastically cut the amount of US oil imports – in a bid for energy independence, there will be consequences.  And just like that we can add Saudi Arabia to the long list of countries – like China first and foremost – that is engaging in veiled threats that preserving the status quo is in the best interest of America.

“At his heart President-elect Trump will see the benefits and I think the oil industry will also be advising him accordingly that blocking trade in any product is not healthy,” Khalid al-Falih, who is also chairman of Aramco, the state-run oil company, told the Financial Times in Marrakesh, where he is leading Saudi Arabia’s delegation in UN climate talks.

The Saudi minister said that although the US imported millions of barrels of oil, it had also “benefited hugely” from being able to freely sell “significant amounts” of exported products. This free trade had underpinned a thriving refining industry and a shale revolution that had been able to “create a lot of jobs and value”, he said.

Appealing to Trump’s patriotism, the Saudi added that “the US is sort of the flag-bearer for capitalism and free markets.”

The gambit is risky: if Trump pushes hard with restoring shale production and providing economic benefits to US energy companies, which in turn would lead to a surge in global oil supply and a sharp drop in oil prices, Saudi Arabia – whose budget deficit has already soared in the past two years due to low oil prices – faces a financial, economic and social crisis.

The appeals continued:

“The US continues to be a very important part of a global industry that is interconnected, that is dealing with a fungible commodity which is crude oil. So having equalisation through free trade is very healthy for oil.” Falih said Saudi Arabia was still waiting to see exactly what Mr Trump does once he takes office in January and some of his campaign rhetoric had amounted to “50,000 feet announcements” that could change.


“It is common that once presidents start governing then a lot more substance comes out,” he said, adding that Saudi Arabia believed the new administration should be given time to “digest all the issues”, including how it implements the Paris climate deal being discussed in Marrakesh.

As a reminder, Trump has vowed to “cancel” the accord that almost 200 nations sealed in December and has called climate change a “hoax” fabricated by China to hurt US industry. Saudi Arabia has been among a vocal group of countries insisting that the US election outcome will not affect their plans to curb greenhouse gases under the Paris deal, which Mr Falih described as “a watershed agreement” and “a great thing” that needed to be implemented “sooner rather than later”.

Why? Because by pursuing Obama’s “clean” agenda, the Saudis have a smokescreen, pardon the pun, that eliminates some of the possible production upside from US companies. Take that away, and OPEC’s entire “production cut” calculus falls apart, especially if US shale is set to pump much more under Trump.

The Saudi energy ministry, clearly distraught about the risk of global warming, continued:

Reflecting the frustration of many countries in Marrakesh, Mr Falih said the industrial and technological strength of the US meant it would find it easier to abide by the Paris accord than poorer nations.


“If you think of economies like India and China and other energy intensive economies, I think the US has a lot more flexibility to meet Paris with less sacrifices,” he said.

And there’s the keyword: sacrifices – that’s precisely what Saudi Arabia is asking Trump to do by perpetuating the status quo, one which ultimately benefits OPEC exporters.

“The US already enjoys a competitive advantage in terms of its energy costs and I think, given what is happening in technology and renewables, especially in the US capabilities in that regard, I think the US will find that provided everybody lives by Paris, the US would retain if not improve its global competitive position.”

Other government leaders are likewise intent on forcing Obama to pick the option that benefits the global community instead of domestic US workers:

As government leaders arrived in Marrakesh on Tuesday, François Hollande, France’s president, led calls for Mr Trump to stick with the Paris accord.


“The US, the most powerful economy in the world, the second-largest emitter of greenhouse gases, must respect the commitments that were made,” he said. “It’s not simply their duty, it’s in their interest.”

Actually, it is precisely in the interest of American workers, for many of whom the “shale miracle” provided well-paying jobs, at least until the Saudi gambit with low oil prices, tried to put them all out of business.

We look forward to the decision Trump will make on this very sensitive issue: will he side with Saudi Arabia and pursue the status quo, or will he stay true to his campaign promises and push for policies that benefit American workers – and US motorists as the outcome would be even lower gas prices – even if, or rather especially if, it means the Saudi gambit to influence the Trump administration fails.


none today


More spurious headlines spike oil this morning

(courtesy zero hedge)

Oil Surges To ‘Algiers’ Lows After Obama Statement & Well-Timed OPEC Headline

Just as Morgan Stanley warned, be careful getting too bearish into the OPEC meeting as OPEC’s ability to engineer a short-squeeze (via well-placed but meaningless headlines) trumps any dismal fundamentals. Sure enough, WTI is surging by the most in 7 weeks to pre-Algiers levels on spurious headlines today, which builds on a reversal yesterday that started as President Obama discussed the Iran Deal.

As a reminder, here is what MS said last week… Be Careful About Getting Too Bearish Ahead of OPEC Meeting

Poor fundamentals don’t prevent headline-related price reversals. Skepticism about the ability for OPEC to execute on its Algiers agreement is warranted. A number of producers are claiming exemptions, OPEC production is rising, greater cuts may be required to achieve the top end of the range, and OPEC has a poor compliance history. Reuters also suggested that Saudi Arabia threatened to raise production, and former Saudi Energy Minister Ali Al-Naimi stated that OPEC can’t cut by itself. Nevertheless, we would be nervous being short from these levels going into the meeting despite what appears to be a poor fundamental backdrop and our downbeat outlook for 2017.

OPEC can still spook markets. Although OPEC’s actions have not matched its words (i.e. promoting the need for production restraint while quietly growing production), the cartel has become adept at talking up declining markets. The group has repeatedly made bullish announcements about OPEC intervention during periods of low liquidity (e.g. US holidays), and whenever short positions become large. Despite the  fact that many investors are skeptical of OPEC’s ability to change the outlook, prices still move on these headlines. Investors have proven that they are not willing to press short positions against OPEC, even if the odds of intervention are low. In essence, this is similar to the old adage of “Don’t Fight the Fed.”

And sure enough, OPEC unleashes a slew of headlines…


But these headlines merely built on oil’d reversal yesterday which seemed to begin as President Obama began to discuss the Iran deal in his press conference… (via Tips)

Obama’s jawboning about what Trump will do continues to inject uncertainty into the outlook for U.S. foreign policy decisions. As a consequence, it is lowering the probability that Iran will agree to a material oil production cut.

At his press conference yesterday (excerpt below), Obama said the Iran deal is working and there isn’t any cheating. Just last Wednesday, however, the IAEA issued a report that Iran is storing more heavy water than its provisions allow. Some would call this cheating and an indication that Iran isn’t complying. But Obama is letting it slide.

Now the question for Iran is whether or not they believe a Trump Administration will be as “understanding” as the Obama Administration. The answer is probably not, which is why Iran will continue to pump more oil and prevent a material OPEC agreement.

Obama Press Conference (Iran Q&A), 14 November 2016

President-elect Trump threatened to unravel the Iran nuclear deal that your administration worked very hard to get.  What would be a concern if he alters part of it?  And what would your advice be, considering that he said he’s open to advice?

And on Syria, sir, the Syrian regime now is threatening Aleppo with massive destruction.  You spoke passionately a few years back about Benghazi and you warned against the killing of civilians there.  Many people criticized your administration for the shortcoming of the Syria policy.  Are you willing to admit any fault under your watch?  And how do you act with President-elect Trump says that he won’t support the Syrian opposition?  Thank you.

THE PRESIDENT:  Iran is a good example of the gap I think between some of the rhetoric in this town — not unique to the President-elect — and the reality.  I think there was a really robust debate about the merits of the Iran deal before it was completed.  And I actually was pretty proud of how our democracy processed that.  It was a serious debate.  I think people of goodwill were on both sides of the issue.  Ultimately, we were able to persuade members of Congress and the public — at least enough of them — to support it.

At the time, the main argument against it was Iran wouldn’t abide by the deal, that they would cheat.  We now have over a year of evidence that they have abided by the agreement.  That’s not just my opinion, it’s not just people in my administration.  That’s the opinion of Israeli military and intelligence officers who are part of a government that vehemently opposed the deal.

So my suspicion is, is that when the President-elect comes in, and he’s consulting with his Republican colleagues on the Hill, that they will look at the facts.  Because to unravel a deal that’s working and preventing Iran from pursuing a nuclear weapon would be hard to explain — particularly if the alternative were to have them freed from any obligations and go ahead and pursue a weapon.

And keep in mind this is not just an international agreement between us and the Iranians; this is between the P5+1, other countries, some of our closest allies.  And for us to pull out would then require us to start sanctioning those other countries in Europe or China or Russia that were still abiding by the deal because, from their perspective, Iran had done what it was supposed to do.

So it becomes more difficult I think to undo something that’s working than undo something that isn’t working.  And when you’re not responsible for it, I think you can call it a terrible deal.  When you are responsible for the deal and preventing Iran from getting a nuclear weapon, you’re more likely to look at the facts.

And between Obama’s comments on Iran and the well-time OPEC headline, WTI has bounced back to pre-Deal to make a Deal levels…

What happens next?




A huge build at Cushing OK sends oil down at the end of the day

(courtesy zero hedge)

Crude Slides After Biggest Cushing Build Since August

WTI Crude prices are lower after API reported a bigger than expected build in crude inventories (+3.66 vs +1mm exp) and the biggest Cushing build since August. The machines managed to tag the stops at the high of the day for WTI as gasoline drew down (though less than expected) but Distillates saw the biggest build since September.



  • Crude +3.65mm (+1mm exp)
  • Cushing +1.13mm (+150k) – biggest since August
  • Gasoline -155k (-1.1mm exp)
  • Distillates +2.98mm – first build in 8 weeks

Bigger than expected Crude and Cushing builds (biggest since August) along with a huge build in Distillates (first in 8 week)…


The machines had no idea how to trade it, but ran stops at the high of day before tumbling…




none today

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




GBP/USA 1.2414 DOWN.01022 (Brexit by March 201/UK government loses case/parliament must vote)


Early THIS TUESDAY morning in Europe, the Euro ROSE by 18 basis points, trading now JUST above the important 1.08 level RISING to 1.0763; 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 + THE ELECTION OF TRUMP IN THE USA / Last night the Shanghai composite CLOSED DOWN 3.39 OR   0.11%   / Hang Sang  CLOSED UP 101.69 OR 0.46%   /AUSTRALIA IS LOWER BY 0.38% / EUROPEAN BOURSES ALL MIXED

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED DOWN 4.47 POINTS OR 0.03% 

Trading from Europe and Asia:
1. Europe stocks ALLMIXED 

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 101.69 OR 0.46%   ,Shanghai CLOSED DOWN 3.39 POINTS OR 0.11%   / Australia BOURSE IN THE RED /Nikkei (Japan)CLOSED IN THE RED/  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1225.90


Early TUESDAY morning USA 10 year bond yield: 2.207% !!! DOWN 4 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.95, DOWN 5 IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 99.89 DOWN 22 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING



And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.49% down 6  in basis point yield from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.009% up 1  in   basis point yield from  MONDAY

SPANISH 10 YR BOND YIELD:1.46%  DOWN 5 IN basis point yield from  MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.96 DOWN 12  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 50 points HIGHER than Spain.





Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/2:30 PM

Euro/USA 1.0721 DOWN .0025 (Euro DOWN 25 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.22 UP: 1.010(Yen DOWN 101 basis points/ 

Great Britain/USA 1.2483 DOWN 0.0030( POUND DOWN 30 basis points

USA/Canada 1.3458 down 0.0081(Canadian dollar up 81 basis points AS OIL ROSE TO $45.76


This afternoon, the Euro was DOWN by 25 basis points to trade at 1.0721 


The POUND FELL 30 basis points, trading at 1.2483/

The Canadian dollar rose by 81 basis points to 1.3458, AS WTI OIL ROSE TO :  $45.76

The USA/Yuan closed at 6.8555

the 10 yr Japanese bond yield closed at +.009% UP 1 POINT  IN BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1   IN basis points from MONDAY at 2.226% //trading well below the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.958 down 1  in basis points on the day /


Your closing USA dollar index, 100.14 UP 18 CENTS  ON THE DAY/2.30 PM 

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

London:  CLOSED UP 39.56 POINTS OR 0.59%
German Dax :CLOSED UP 41.45 POINTS OR .39%
Paris Cac  CLOSED UP 27.98 OR .62%
Spain IBEX CLOSED UP 28.90 POINTS OR 0.33%
Italian MIB: CLOSED DOWN 3.96 POINTS OR .02%

The Dow was up 54.37 points or 0.29%  4 PM EST

NASDAQ  up 57.23  points or 1.10%  4 PM EST
WTI Oil price;  45.84 at 4:00 pm; 

Brent Oil: 47.00   4:00 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.53 (UP 1 AND  53 roubles from friday)




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

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


BRENT: $46.95

USA 10 YR BOND YIELD: 2.222%

USA DOLLAR INDEX: 100.018 up 22  cents

The British pound at 5 pm: Great Britain Pound/USA: 1.24500 down .0067 or 67 basis pts.

German 10 yr bond yield at 5 pm: +.309%


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


“They’re Buying Everything” – Stocks, Bonds, Oil Surge As VIX Tumbles To 13 Handle



It appears today was the “opposites” Day

  • After days of carnage, the Mexican Peso surged
  • After a meltup, US financials tumbled (but were magically bid late on to close green
  • The divergence between Nasdaq and Dow began to close
  • After 6 straight down days, bonds rallied and the curve flattened
  • EM Stocks and Bonds rallied after bloodbathing
  • Copper traded lower

Some was more of the same..

  • Dollar Index surged to new cycle highs – biggest surge in 18 months
  • USDJPY exploded over 109.00 to 5 month highs
  • Offshore Yuan crashed to another record low
  • Stocks continue to rise
  • Despite the crazy vol, VIX dropped to 3-week lows with a 13 handle

Stocks started the day off badly, but bounced back valiantly as JPY and Oil soared…


The Dow is up 7 days in a row – the 6% gain is the best run since Dec 2011… (post-Comey clears Clinton)


But it is Small Caps that are flying…


Banks scrambled to close green – 7 days up in a row…


VIX slapped to a 13 handle…


Bonds actually rallied…


Currencies were very active…

Peso reversed its losses and gained over 2%…


The Dollar Index rose for the 7th day in a row (the biggest surge since May 2015)


USDJPY has risen 7 of the last 8 days, soaring over 8 handle post-Trump, to 5-month highs…


USDCNH bloodbathed


Despite USD strength today, gold and silver flatlined as copper and crude bounced…



The Bloodbath is the bond sector halts as yields tumble overnight

(courtesy zero hedge)

Bond Bloodbath Becomes Buying-Panic As Treasury Yields Tumble Most Since June

After 3 days of carnage in US Treasuries, pushing longer-dated bond yields notably above US equity dividend yield – and following both Citi and Goldman reports that Trumponomics may be less inflationary than expected (and the yield surge is tightening financial conditions) drastically, longer-dated bond yields are dropping notably in the early Asia session. 10Y yields are down 8bps – the most since June as 30Y drops back below 3.00%.

The yield on the 10Y US Treasury note is now 12bps ‘cheap’ to the dividend yield from the S&P 500 – the highest since Dec 2015…

And as Bloomberg reports, Fed speakers this week are unlikely to be as hawkish as the market, which could dent market pricing and lead to profit-taking on rates and USD, according to Citi managing director of G-10 FX strategy Steven Englander.

Were the Fed to indicate that it thought three hikes were possible, we could see a lot more damage than we have seen till now, Englander writes in note.

Citi however expects a far more dovish tone given:

  • Fed doesn’t know the nature of Trump’s fiscal measures that will be implemented, and they likely won’t be shovel ready
  • It’s cognizant of Dollar Index strength as it approaches log-term highs of 100.33

Fed would rather react to any revival of “animal spirits” rather than anticipate them

Bottom line to Fed view is:

  • FOMC will accelerate hikes if fiscal thrust takes economy into red zone, although where this zone lies is unclear
  • Fed may allow inflation to run and thus recoup some of the prior inflation undershoot
  • Fed won’t want to tighten prematurely and create a sinkhole for growth in 2017
  • Fed will move judiciously until the nature of the stimulus that emerges and the timing of its impact are clear

As we detailed earlier, Goldman is less enthused about Trumponomics inflationary aspect...

  • Following Donald Trump’s victory in the US presidential election, the focus now turns to the potential economic implications of his proposed policies. The November 12 US Economics Analyst used the Fed staff’s FRB/US model to analyse the consequences for the US economy. In today’s companion piece, we assess the potential global economic spillovers from the Trump agenda using our global macro model.
  • Following the US simulations, we analyse four of Mr. Trump’s policy proposals, including fiscal stimulus, trade tariffs, restrictive immigration policies and a hawkish tilt in Fed policy. We first analyse the policies individually and then combine them into possible packages, including our own assumed policy outcomes.
  • Fiscal stimulus has positive global spillovers, as stronger US demand boosts imports for foreign goods and services. Dollar strength reinforces the positive spillovers to DM economies with floating exchange rates, but limits the gains in EM economies. The spillovers to China, for example, depend on the extent to which the Renminbi appreciates with the dollar and the net effects are less positive for EM economies that rely heavily on dollar-denominated debt.
  • The other components of Mr. Trump’s agenda (trade policies, immigration and Fed) have negative global spillovers as US inflation is higher and US growth slows. The growth drag is generally muted for DM economies with floating exchange rates but significantly negative for some EM economies (including China).
  • Taken together, our analysis suggests that Mr. Trump’s policies might act as a modest drag on global growth. DM growth receives a brief boost from the fiscal stimulus but then weakens and spillovers into EM economies are negative throughout. Moreover, the risks around this base case appear asymmetric. A larger fiscal package could boost global growth moderately more in the near term, but a more adverse policy mix would likely act as a significant drag on world growth in subsequent years.

All of which appears to have sparked buying again in bond land as 30Y yield is back below 3.00%

While still relatively small compared to the surge in yields, this is still the biggest yield drop in 10Y since June…

The drop in yields could be a major problem for the exuberance in US financial stocks (which have run way ahead of credit)…

And perhaps it’s time for US stocks to catch down to the world’s reality?





Used car prices continue to rise, yet a record 25% of the used car trade ins are totally underwater

(courtesy zero hedge)

A Record 25% Of Used Car Trade-Ins Are Underwater


USA retail sales are still spiking higher yet dept sales continue to collapse.

(courtesy zero hedge)

Retail Sales Spike To 2 Year Highs As Department Store Sales Continue Collapse

US retail sales beat expectations in October (+0.8% vs +0.6% exp) and September’s gains were also upwardly revised (driven by a surge in gas prices which sparked a decline in spending on food services). This data revision sends year-over-year gains to a 4.3% – the highest since Nov 2014 – leaving Janet and her friends fewer excuses to hike rates in December.

The headline data spiked Year-over-Year…

Driven by a surge in gas prices (but notably furnture, department stores, and food services saw declines)

Department Stores sales crashed over 7% YoY as non-store retailers grew at almost 13%.

Janet better hope that EM turmoil continues or she will be out of excuses in December.

The NY Empire manufacturing index rebounds positively but still employment indicators falter as well as optimism. This was taken before the election
(courtesy NY Empire/zerohedge)

Empire Fed Rebounds But Employment Indicators Tumble, Optimism Declines




Ray Dalio of Bridgewater suggests (and hopes) that the Donald has good people surrounding him and they understand how economics works and that they will not do anything stupid

(courtesy zero hedge)

Ray Dalio: This Is What Donald Trump’s Presidency Will Look Like





This is fascinating:  Chicago and Boston both join California  (Los Angeles) in refusing to assist Trump in the deportation of criminal illegal aliens.  So what will Trump do: simply cancel all federal funding to sanctuary cities:

(courtesy zero hedge)

Chicago And Boston Join Cali In Refusing Assistance To Trump’s Deportation Efforts

On a recent “60 Minutes” interview, Trump confirmed his campaign pledges to immediately deport 2-3 million illegal immigrants with a criminal record.  Here is what he said:

“What we’re going to do is get the people that are criminal and have criminal records, gang members, drug dealers, where a lot of these people, probably two million, it could be even three million, we are getting them out of our country.”

As expected, many “sanctuary cities,” or jurisdictions around the country where law enforcement officials refuse to cooperate with federal immigration officers, are now doubling down on their vows to protect illegal immigrants.  That said, it will be interesting to see how these so-called sanctuary cities will respond if Trump follows through on his vow to “cancel all federal funding to sanctuary cities.”

After California’s LAPD Chief confirmed yesterday that his department would “not help deportation efforts,” Chicago and Boston also joined in with similar comments today.  Per WGN News, Chicago’s Mayor Rahm Emanuel made the following comments:

“You are safe in Chicago.  You are secure in Chicago.  You are supported in Chicago.  Now administrations may change but values and principles as it relates to inclusion do not.”

While CBS Boston confirmed a similar stance by Boston Mayor Marty Walsh:

He’s worried that undocumented residents will be afraid to go to the police for help, or even send their kids to school. “The police department, if you call them and you need help they will help you, and they will not turn you in to the Feds,” Jackson says.

Mayor Walsh appears to be staying the course as well, saying in a statement: “We are a welcoming city for all. These are Boston values and no policy will change them.”

Not everyone agrees. “It’s no secret that these criminal illegal aliens and terrorists are looking for places to go where they are least likely to be caught,” says Bristol County Sheriff Thomas Hodgson.

He says sanctuary cities are breaking federal law. “What’s really troubling about this is that any elected official in this country would suggest that there should be a certain class of people who do not have to abide by our laws,” Hodgson says.

In all, according to the Center for Immigration Studies, there are roughly 300 “sanctuary” jurisdictions around the country.  We suspect many of them need their federal funding more than they need to their criminal illegal aliens but time will tell…





Right now we ware witnessing a tightening bias with the dollar rising accompanied by rising bond yields. The offset to this is Trump’s future fiscal stimulus.  The question is what if the market is wrong?  What if the Fed mistakenly raises rates and furthers the tightening bias with no corresponding fiscal stimulus yet?

(courtesy zero hedge)



“Is The Market Wrong?”: Financial Conditions Are Tightening At An Alarming Pace

As a result of the recent spike in yields, and surge in the dollar, following the Trump presidency, the market’s reaction has been to assume that this is a harbinger of rising inflation and has accordingly pushed up December rate hike odds to near certainty. After all, the logical offset of the expected easing in fiscal conditions is for the Fed to tighten monetary policy, arguably the only source of market gains (and economy support) over the past 7 years.

But is the market wrong?

After all, just today the BIS issued a warning that the stronger dollar – far from an “all clear” signal of confidence in the economy, may simply signal far greater financial system risk as a result of a substantial global dollar funding shorage. On the other hand, rate hikes by Yellen could precipitate the same reserve liquidation selling that was observed in late 2015 and early 2016 that sent the market into a sharp, if brief correction.

A troubling answer for the bulls emerges when looking at the latest move in Goldman’s Financial Conditions Index: as of Monday night, it has spiked above 100, the highest level since March and topping a brief spike seen in the aftermath of Brexit.

As the WSJ notes this morning, investors watch financial conditions because they show how markets are encouraging or restraining the flow of money through the economy. When conditions get too tight, they can restrict economic growth, which has been cited in the past as a reason for the Federal Reserve to hold off on lifting interest rates. In extreme cases, Goldman has ever cited the spike in the index as a catalyst for looser monetary conditions.

As the WSJ further explains, when the Fed raises rates, it seeks to tighten financial conditions gradually, but the markets sometimes do the work for them,  and more. In February, Fed Chairwoman Janet Yellen alluded to restrictive financial conditions as one factor holding back the economy. One look at the chart above shows that conditions are once again moving in the wrong direction.

It is no surprise, that the move higher in the index has largely come since the U.S. presidential election, which injected a lot of uncertainty into financial markets. A Goldman Sachs measure of policy uncertainty spiked to its highest level in records going back to 1985 on Monday.

The Economic Policy Uncertainty Index Spiked to its Highest Recorded Level

What’s causing the tightening? Much of it is due to a rise in the dollar and climbing rates, the Goldman Sachs data show. The 10-year Treasury note yield, which rises when prices fall, is up more than a third of a percentage point since the election. The ICE Dollar Index, which measures the currency against a basket of peers, is up 2.1%.

This tightening has – for now – been offset by favorable moves in credit spreads and rising equity prices, which are pulling the index lower.

The index is self-referential, which means that once it tips too far into either side, it tends to have an overriding effect on the other components, which means that should the recent push higher in yields and the USD persist, it will eventually drown out the favorable contribution from its other constituents.

This is precisely what Ray Dalio referred to in his Op-Ed earlier, in which when referring to precisely this tightening of conditions, said that “the question will be when will this move short-circuit itself—i.e., when will the rise in nominal (and, more importantly, real) bond yields and risk premiums start hurting other asset prices.”

 His answer: “that will depend on a number of things, most importantly how the rise in inflation and growth will be accommodated.”

So while the jury may still be out, should the “Trump Reflation Rally” continue, and push both bonds lower and the dollar higher, the “tipping point” will arrive sooner rather than later. Ironically, that in itself may force the Fed to not only delay a December rate hike, but to actively consider further easing measures in the coming months should the move fail to “short-circuit” on its own.

Which in turn, goes back to Goldman’s warning from yesterday, in which the farm forecast that under any combination of Trump policies, the impact on global growth will be uniformly negative.

If that is the case, any Fed rate hike into this sharp tightening of financial conditions will be merely the latest monetary policy mistake. Ironically, it just may turn out that what Trump’s fiscal expansion needs, is a Fed that is far more accomodative when it comes to not only rates but also to deficit monetization.

So will Trump be the catalyst that ultimately launches QE4? That has been our thesis since election night. If so, the market is indeed “wrong”, and will be forced to undergo a sharp repricing in asset values in the near future to escape its “error.”




Well that is all for today

I will see you tomorrow night



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