Nov 18/Bond bloodbath across the globe/higher yields pose future problems for corporates/We have a huge gain of 107,000 oz of gold standing and thus in Nov 8.3 tonnes standing/Chinese yuan (offshore) plummets to 6.91 to the dollar/Yen plummets to 110 to the dollar as most currencies falter with the higher dollar/

Gold closed at $1208.50 DOWN $8.00

silver closed at $16.61:  DOWN $0.15

Access market prices:

Gold: 1208.40

Silver: 16.58

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

Shanghai morning fix Nov 18 (10:15 pm est last night): $  1218.64

NY ACCESS PRICE: $1207.50 (AT THE EXACT SAME TIME)/premium $11.14 

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1219.26

NY ACCESS PRICE: 1209.75 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $9.51 

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Nov 18: 5:30 am est:  $1206.10   (NY: same time:  $1206.15    5:30AM)

London Second fix Nov 18: 10 am est:  $1211.00 (NY same time: $1211.00,    10 AM)

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

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

end

For comex gold: 

 NOTICES FILINGS FOR NOVEMBER CONTRACT MONTH:  522 NOTICE(S) FOR 52,200 OZ  TONNES

For silver:

 NOTICES FOR NOVEMBER CONTRACT MONTH FOR SILVER: 0 NOTICE(s) OR nil  OZ

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Let us have a look at the data for today

.

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In silver, the total open interest ROSE by 119 contracts UP to 173,552 with yesterday’s trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .867 BILLION TO BE EXACT or 124% of annual global silver production (ex Russia & ex China).

In November, in silver, 0 notice(s) filings: FOR NIL  OZ

In gold, the total comex gold ROSE by 1,398 contracts DESPITE THE FALL IN THE PRICE OF GOLD ($6.90 yesterday ).The total gold OI stands at 485,381 contracts.

In gold: we had 522 notice(s) filed for 52,200 oz

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

GLD:  

We had no changes in tonnes of gold at the GLD

Inventory rests tonight: 920.63 tonnes

.

SLV

we NO CHANGES at the SLV

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 ROSE  by 119 contracts UP to 173,552  as price of silver FELL by $0.15 with YESTERDAY’S trading.  The gold open interest ROSE by 1,398 contracts UP to 485,381 as the price of gold FELL BY  $6.90 in YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) COT report

(Harvey)

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 15.60 POINTS OR 0.49%/ /Hang Sang closed UP 81.33  OR 0.37%. The Nikkei closed UP 104.78 points or 0.37%/Australia’s all ordinaires  CLOSED UP 0.34% /Chinese yuan (ONSHORE) closed UP at 6.8840/Oil ROSE to 45.55 dollars per barrel for WTI and 46.67 for Brent. Stocks in Europe: ALL IN THE RED     Offshore yuan trades  6.8927 yuan to the dollar vs 6.8840  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS DEEPLY AS MORE USA DOLLARS   LEAVE CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN

i)The yen has the biggest plunge against the dollar in over 18 years’

( zero hedge)

ii)I have been highlighting to you the dangers of the devaluation of the yuan against the dollar.  A lower yuan cheapens Chinese goods like steel etc making mfg in other sovereign jurisdictions difficult to make money as it would be part to compete.  This is what we mean by spreading deflation across the globe. China today stated that it may slow down the devaluation of the yuan hoping that capital outflows subside.  That may be wishful thinking

a must read…

( zero hedge)

iii)Trump beginning to look statesmanlike.  Abe states that Trump is a leader Japan can trust

( zero hedge)

c) REPORT ON CHINA

 

i)Chinese offshore yuan: 6.909520 at 8:30 pm est last night

( zero hedge)

ii)Home prices are still on the rise in China although sales have slowed dramatically as attempts to prick the bubble seem to be working:

( zero hedge)

4 EUROPEAN AFFAIRS

i)Volkswagen, caught in the emissions scandal is to cut 30,000 jobs worldwide or 5% of their entire force:

( zerohedge)

ii)Judy Bergmann of the Gatestone Institute comments that free speech has ended in Europe

an important read.

(courtesy Judy Bergmann)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

i)INDIA

The Indian economy is basically 90% and thus the elimination of the big notes has caused the their economy to grind to a halt with farmers not being paid.  It has shaken the faith in the system and more of its citizens will turn to gold

( zero hedge)

 

ii) CATERPILLAR

7.OIL ISSUES

i)Oil refuses to listen to “optimistic” comments out of OPEC

( zero hedge)

ii)WTI slides after the biggest rig count rise in over 1 1/4 yrs

( zero hedge)

8.EMERGING MARKETS

none today

9.PHYSICAL STORIES

i)a HUGE PAPER  from Egon Von Greyerz as he explains why the USA debt will exponentially and why we should own gold

( Egon Von  Greyerz)

ii)Craziness in India; the tax man may be calling on gold jewellers as they bought prior to the elimination of the high rupee notes

( Times of India/GATA)

10.USA STORIES

i)Trump’s first victory:  Ford does not move its truck production to Mexico

( zero hedge)

ii)Trump offers the post of Attorney General to Jeff Sessions and National Security advisor to Michael Flynn

( zero hedge)

iii)The background on Jeff Sessions:

( zero hedge)

 

iv  a)  Trading early this morning: a huge move to the dollar and a sell with everything else:

7:40 am

( zerohedge)

iv b)And this puts the 10 yr treasury yield rising to 2.35% along with the other maturities.  The entire treasury yield curve is now lower than at any time in 2016:

( zero hedge)

iv c) End of day results showing global bonds suffering the biggest crash in over 25 years:

(courtesy zerohedge)

v)The following is extremely important as Albert Edwards previews the next Trump recession: we will have -1% yield on the 10 yr and helicopter money will be upon us

( Albert Edwards/)
vi Wrap up courtesy of Greg Hunter/

 

Let us head over to the comex:

The total gold comex open interest ROSE by 1,398 CONTRACTS to an OI level of 485,381 DESPITE THE FACT THAT GOLD FELL $6.90 with YESTERDAY’S trading. In the front month of November we had 1075 notices standing for a GAIN of 1016 contracts.  We had 1 notice served on yesterday so we GAINED 1074 contracts or 107,400 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 5,652 contracts down to 220,480. The December contract month is still highly elevated compared to a year ago.  On Thursday Nov 19/2015 comex reading day, we had a total of 173,288 contracts standing ( a loss of 15,395 contracts from Nov 18/2015) 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 522 notice(s) filed for 52,200 oz of gold.
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And now for the wild silver comex results.  Total silver OI ROSE by 119 contracts from  173,433 UP TO 173,552 as the price of silver FELL BY $0.15 with yesterday’s trading. 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 1 and thus a loss of 0 contracts. We had 0 notice(s) filed yesterday so we neither  gained nor lost any contracts that  will stand for delivery in this non active month of November.  The next major delivery month is December and here it FELL BY 9,290 contracts DOWN to 73,349. The December contract month is also highly elevated compared to a year ago.  On Nov 18/2015 reporting day, we had a level of 66,615 contracts having lost 3,706 contracts on the day).

In silver had 0 notice(s) filed for NIL 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 272,288  contracts which is very good.

Friday’s confirmed volume was 271,869 contracts  which is very good

INITIAL standings for NOVEMBER
 Nov 18.
Gold Ounces
Withdrawals from Dealers Inventory in oz  NIL
Withdrawals from Customer Inventory in oz  nil
 42,857.108 OZ
SCOTIA
MALCA
  INCL 175 KILOBARS
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 NIL oz
No of oz served (contracts) today
522 notice(s) 
52,200 oz
No of oz to be served (notices)
553 contracts
 55,300
oz
Total monthly oz gold served (contracts) so far this month
2119 contracts
211,900 oz
6.5909 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     630,529.6 oz
Today we had 1 kilobar transaction   and massive 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 deposits;
total customer deposits; nil  oz
We had 2 customer withdrawal(s)
i) out of Scotia; 5,625.25 oz
175 kilobars
ii) Out of Malca:  37,230.858 oz
interestingly this Israeli company removed all of their customer gold
they are left with 0.
total customer withdrawal: 42,857.108  oz
We had 1  adjustment(s)
 i) Out of Brinks:
50,059.110 oz was removed from Brinks customer and this landed into the dealer account of Brinks.
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Total dealer inventor 2,082,452.026 or 64.77 tonnes
Total gold inventory (dealer and customer) =9,865,051.603 or 306.844 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 306.844 tonnes for a  gain of 4  tonnes over that period.  Since August 8 we have lost 47 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!
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 522 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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To calculate the initial total number of gold ounces standing for the NOV. contract month, we take the total number of notices filed so far for the month (2119) x 100 oz or 211,900 oz, to which we add the difference between the open interest for the front month of NOV (1075 contracts) minus the number of notices served upon today (522) x 100 oz per contract equals 267,200 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 (2119) x 100 oz  or ounces + {OI for the front month (59) minus the number of  notices served upon today (522) x 100 oz which equals 165,500 oz standing in this non active delivery month of Nov  (8.311 tonnes).
we GAINED 1074 contracts or an additional 107,400 oz will stand for delivery.
Last yr at the conclusion of November we had .6656 tonnes of gold eventually stand
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I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 12 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for 2016:
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.311 tonnes.
total for the 11 months;  191.75 tonnes
average 17.432 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: 168.89 tonnes per the 7 months or 24.12 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 8.311 tonnes compared to last yr 0.6656 tonnes
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The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST TWO MONTHS  47 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
 
NOV INITIAL standings
 Nov 18. 2016
Silver Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
12,004.310 oz
CNT
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
 300,042.599  oz
CNT
No of oz served today (contracts)
0 CONTRACT(S)
(nil OZ)
No of oz to be served (notices)
0 contracts
(nil  oz)
Total monthly oz silver served (contracts) 465 contracts (2,325,000 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  5,520,202.7 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 CNT:  12,004.310 oz
Total customer withdrawals: 12,004.310  oz
 We had 1 customer deposits:
i) Into CNT: 300,042.599 oz
total customer deposits; 300,042.599  oz
 
 
 we had 0 adjustment(s)
.
Volumes: for silver comex
Today the estimated volume was 94,084 which is huge
YESTERDAY’S  confirmed volume was 92,441 contracts  which is also huge
yesterday’s volume in oz = 462 MILLION oz or 66% of annual global production of silver.
(EX CHINA/EX RUSSIA)
The total number of notices filed today for the Nov. contract month is represented by 0 contracts for nil 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  465 x 5,000 oz  = 2,325,000 oz to which we add the difference between the open interest for the front month of NOV (1) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the NOV contract month:  465(notices served so far)x 5000 oz +(1) OI for front month of NOV. ) -number of notices served upon today (0)x 5000 oz  equals  2,330,000 oz  of silver standing for the NOV contract month.
we neither gained nor lost any silver ounces standing in this non active delivery 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:  30.905 million (close to record low inventory  
Total number of dealer and customer silver:   178.248 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

 

At 3:30 pm, we receive the COT report which gives us position levels of our major players

WHAT!!!

Let us first head over to the gold COT:

In one word:  the bankers are criminals

 

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
245,750 68,090 69,056 115,191 315,157 429,997 452,303
Change from Prior Reporting Period
-44,110 -4,532 -3,357 276 -45,344 -47,191 -53,233
Traders
154 99 88 52 50 253 196
 
Small Speculators  
Long Short Open Interest  
49,240 26,934 479,237  
-1,775 4,267 -48,966  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, November 15, 2016

Our large specs:

Those large specs that have been long in gold pitched a gigantic 44,110 contracts from their long side.
Those large specs that have been short in gold covered a huge 4532 contracts from their short side.
Our criminal bankers; the commercials
those commercials who have been long in gold pitched a tiny 276 contracts from their long side
those commercials who have been short in gold covered a monstrous 45,344 contracts from their short side.
Our small specs;
those small specs that have been long in gold pitched 1775 contracts from their long side
those small specs that have been short in gold added 4267 contracts to their short side.
Conclusions:
extremely bullish as commercials go net long by 45,620 contracts.  And they will no doubt increase their net longs with next week’s reading.
Advise: I urge everyone please do not play the comex at all.  Forget the leverage game: the crooks will defeat you time and time again.  Now if you want gold go to your friendly bullion dealer
And now for our silver COT:
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
85,575 22,969 10,612 51,359 129,880
-3,785 -1,122 -6,570 -2,502 -6,242
Traders
91 50 42 37 37
Small Speculators Open Interest Total
Long Short 174,831 Long Short
27,285 11,370 147,546 163,461
-577 500 -13,434 -12,857 -13,934
non reportable positions Positions as of: 154 110
Tuesday, November 15, 2016
same story as gold.
Our large speculators.
Those large specs that have been long in silver, pitched a large 3785 contracts from their long side
Those large specs that have been short in silver covered 1122 contracts from their short side.
Our commercials:
Those commercials that have been long in silver pitched 2502 contracts from their long side.
those commercials that have been short in silver covered a good sized 6,242 contracts
from their short side.
Our small specs:
Those small specs that have been short in silver pitched 577 contracts from their long side.
Our small specs:
those small specs that have been short in silver added 500 contracts to their short side.
Conclusions: bullish because the commercials go net long by 8744 contracts and same advice as above/do not play the comex at all/buy physical at your local bullion dealer.
And now the Gold inventory at the GLD
Nov 18/no changes at the GLD/Inventory rests at 920.63 tonnes
Nov 17/ A HUGE WITHDRAWAL OF 5.63 TONNES FROM THE GLD/INVENTORY RESTS AT 920.643 TONNES
Nov 16/ changes in gold inventory at the GLD/Inventory rests at 927.45 tonnes
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 11/A  MONSTROUS WITHDRAWAL OF 13.35 TONNES OF PAPER GOLD AND THIS GOLD WAS USED IN THE COMEX WHACKING TODAY.
Nov 10/ A HUGE ADDITION OF 5.34 TONNES OF GOLD  (WITH GOLD WHACKED??)/INVENTORY RESTS AT 955.03 TONES
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 4/NO CHANGES IN THE GOLD INVENTORY AT THE GLD/INVENTORY RESTS 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 2/ A DEPOSIT OF 2.67 TONNES OF GOLD INTO GLD/INVENTORY RESTS AT 945.26 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
OCT 27/NO CHANGES AT THE GLD/INVENTORY REMAINS AT 942.59 TONNES
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Nov 18/ Inventory rests tonight at 927.45 tonnes
*IN LAST 34 DAYS: 28.37 TONNES REMOVED FROM THE GLD

end

Now the SLV Inventory
Nov 18/no changes in silver inventory at the SLV/Inventory rests at 356/253 million oz
Nov 17/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 356.253 MILLION OZ/
Nov 16.no change in silver inventory at the SLV/Inventory rests at 356.253 million oz/
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 4/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 2/ A DEPOSIT OF 569,000 OZ INTO THE SLV/INVENTORY RESTS AT 361.242
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/
Oct 28/NO CHANGE IN SILVER INVENTORY AT THE SLV/iNVENTORY RESTS AT 360.673 MILLION OZ
OCT 27/A MONSTROUS WITHDRAWAL OF 5.987 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 360.673 MILLION OZ  (AND YET NO CHANGE IN THE SILVER PRICE???)
.
Nov 18.2016: Inventory 356.253 million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.4 percent to NAV usa funds and Negative 7.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.5%
Percentage of fund in silver:37.9%
cash .+0.6%( Nov 18/2016)
.
2. Sprott silver fund (PSLV): Premium FALLS to -0.22%!!!! NAV (Nov 18/2016) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.24% to NAV  ( Nov 18/2016)
Note: Sprott silver trust back  into NEGATIVE territory at 0-.22% /Sprott physical gold trust is back into NEGATIVE territory at -0.24%/Central fund of Canada’s is still in jail.
 

END

Major gold/silver stories for FRIDAY

Early morning gold TRADING

Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”

Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”

Gold prices in dollar terms came under renewed pressure today testing strong support at the $1,200/oz level. Gold dropped another 1% to near a 6 month low and is set for a second week of falls after the dollar soared again after Federal Reserve Chairwoman Janet Yellen suggested a U.S. interest-rate hike could come “relatively soon.”


Source: New York Federal Reserve for Fed Funds Rate, LBMA.org.uk for Gold (PM fix)

Yellen’s prepared comments to U.S. lawmakers yesterday sent gold in dollar terms to its lowest finish since June 2, at $1,216.90 an ounce. It is worth noting that gold’s weakness this week is very much a case of gold prices in dollar terms. Gold in euros has risen from €1,130/oz to €1,137/oz and is essentially flat in sterling pound terms. Gold has risen in Swiss francs, Japanese yen and Australian dollar terms.

Yellen did little to dispel expectations of an interest-rate hike as early as December. The prospect of higher interest rates is considered by less informed market participants to be negative for gold, ignoring the fact that gold prices tend to rise when interest rates rise as was seen in the 1970s and again from June 2003 to June 2007 when interest rates rose from 1% to 5.25% and gold rose from $346 to $651 per ounce (see table above).

Gold is vulnerable when there are positive real interest rates and we are a long way from that now. Indeed, gold tends to be vulnerable towards the end of an interest rate tightening cycle – not at the beginning.

As ever, it is best to ignore both the “all powerful” Fed noise and indeed the market noise regarding rising interest rates being negative for gold. This is clearly wrong as evidenced in the data. It is also the case that the interest rate-hike expectations of just 25 basis points from record lows were already reflected in the market prior to this week.

It is prudent to ignore the incorrect narrative and consensus of gold in much of the “echo chamber” of market “experts”.  The experts and “the market” have got most big calls – such as Brexit and Trump – very wrong in recent times.

As we told Marketwatch“gold will likely need a few days to base prior to moving higher again” given “the speed and scale of the recent sell off”:

interesting-times

“The election of Trump has not radically changed the positive fundamentals in the gold market – quite the opposite.

The risk of a Fed rate increase next month likely contributed to the fall and the dollar’s strength. We believe that should the Fed rise rates even 25 points, it will lead to risk aversion and falls in risk assets. This and the very uncertain state of the world – economically and geo-politically – bodes well for gold in 2017.

We are living in ‘interesting times’ and these interesting times should support gold.”

As long as central banks continue to debase their currencies by trying to inflate their way out of fragile economic growth and recessions through zero and negative interest rate policies and massive digital currency creation, gold should continue to build on the gains seen so far in 2016.

Today, interest rates remain close to zero not just in the U.S but in most major economies. There is no opportunity cost to owning the non yielding gold. Indeed, with negative interest rates in many creditor nations, gold has a higher yield then many major currencies.

Gold’s safe haven asset attributes mean that it remains a vital diversification for investors internationally today.

See 5 Key Charts Show Rising Interest Rates Good For Gold & Positives For Gold – Negative and Rising Interest Rates

Gold and Silver Bullion – News and Commentary

Gold slips on strong dollar, Fed rate hike comments (Reuters.com)

Gold set for second weekly loss on impending US rate hike (CNBC.com)

Dollar charges to 14-year high, bonds in full swing (Reuters.com)

Wall St. pulls back from record; utilities slump (Reuters.com)

Gold imports jump over 2-fold to $3.5 bn in October (MoneyControl.com)

India’s currency changes caused a gold rush last week – Washington Post (WashingtonPost.com)

Strong US dollar, a tumbling yuan – so why aren’t markets collapsing? (MoneyWeek.com)

No, inflation isn’t bad for gold – Business Insider (BusinessInsider.com)

Watching The Yuan and Gold (TFMetalsReport.com)

Operation: Shanghai Gold (UnCommonWisdomDaily.com)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

18 Nov: USD 1,206.10, GBP 997.11 & EUR 1,135.54 per ounce
17 Nov: USD 1,232.00, GBP 998.81 & EUR 1,148.10 per ounce
16 Nov: USD 1,225.70, GBP 998.43 & EUR 1,144.68 per ounce
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

Silver Prices (LBMA)

18 Nov: USD 16.51, GBP 13.30 & EUR 15.54 per ounce
17 Nov: USD 17.04, GBP 13.65 & EUR 15.87 per ounce
16 Nov: USD 16.95, GBP 13.64 & EUR 15.85 per ounce
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


Recent Market Updates

– Islamic Gold – Vital New Dynamic In Physical Gold Market
– Peak Gold Globally – “Bullish For Gold”
– Gold Price Should Go Higher On Global Risks and Trump – Capital Economics
– 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

Mark O’Byrne
Executive Director

end

 

a HUGE PAPER  from Egon Von Greyerz as he explains why the USA debt will exponentially and why we should own gold

(courtesy Egon Von  Greyerz)

Trump Will Grow US Debt Exponentially

Trump Will Grow US Debt Exponentially
By Egon von Greyerz

Screen-Shot-2016-11-17-at-23.28.14

There is a total misunderstanding of the role of gold and why it is so critical to own physical gold. Gold should not be bought or sold based on rumours or events. In connection with the US election, gold moved for totally the wrong reasons.

The whole Western world had forecast a Clinton victory. The Western media, which does no analysis but only reports what they are fed, spent no time trying to understand what the mood of the people was. It was exactly the same with Brexit. The elite in London, New York and the big metropolitan areas has totally different objectives to ordinary people.

Change in public mood

The trend change in public reaction, which we are seeing now, is not just a temporary phenomenon. Ordinary people are tired of a small elite of bankers, industrialists and politicians helping themselves to unlimited power and wealth whilst normal people are just getting poorer with lower incomes and more debt. And it is the masses which ultimately are responsible for repaying debt which is increasing exponentially in most countries. They will of course not repay the debt because they can’t. Instead, they will suffer immeasurably when global debt of around $250 trillion implodes leading to a severe depression. The gap between the rich and the poor in the West is wider than ever. In the US, the top 0.1% have 22% of total wealth. US top professionals have had an increase in real pay of 51% since 1973 whilst normal workers have seen a reduction of 4.6%. This is a very dangerous trend and when the economic downturn comes, it is likely to lead to violent protests and social unrest.

The Trump win was totally unexpected in the US as well as in other countries. Most politicians in Europe and around the world have ridiculed Trump and assumed that he would never be elected. They all certainly must eat humble pie now.

Investors must ignore paper gold volatility

Coming back to gold, we saw the most incredible volatility during last week. As the Trump victory became clear, gold went from $1,270 to $1,335 in under 4 hours’ overnight trading. Then massive selling of gold futures pushed the price down to $1,270 where it started before election. On Friday last week it was pushed down further to $1,225 which is $110 from the euphoric election peak. Initially, heavy paper speculative buying of gold took place around the world but very little serious physical buying. Some gold experts predicted that gold would go up by at least $100 if Trump won. Well, it did go up $65 but then declined over $100 from there. A dealer in London ran out of physical stock due to panic retail buying. But when the stock markets turned around from down 4-5% to up, the paper longs in gold were liquidated and speculative funds flowed into stock markets instead. Two years of gold production was traded after the election – all in the paper market.

As usual when gold is dumped in the futures market there is little selling of physical. Thus, the paper price of gold is totally false and in no way reflects what is happening in the physical market. It is likely that commercial gold buyers, who are already long, will add to positions at these suppressed levels. The paper market has 100-300 oz of paper gold for every 1 oz of physical gold. When the commercials add to positions at these artificially low levels, there is likely to be a major short squeeze.

Gold investors should totally ignore these short term moves as well as any news or events that temporarily move gold. Sadly, many investors buy gold when it goes up and sell it when it goes down. This behaviour shows a total ignorance of the role of gold and why it is so important to hold physical gold. Because gold is not an investment and should definitely not be seen as a speculative commodity. But futures traders and the bullion banks have no interest in gold for wealth protection purposes. For them it is just a commodity traded in the paper market with no intention of ever taking delivery.

Obama achieved in 8 years what took the US more than 200 years

When gold moves strongly based on events, the move is seldom sustained. Those moves are mostly speculative and in the paper market. Sustained moves in gold are due to the debasement of paper money and nothing else. Since the creation of the Fed in 1913, all major currencies have declined 97-99% against gold. The US has not had a real budget surplus since 1960 so the trend is very clear and unlikely to be reversed any time soon. Since 1971 when Nixon abolished the gold backing of the dollar US debt has grown by an average of 9% per year. This means that US federal debt has doubled every eight years. And Obama is no exception. He duly complied with the trend of exponential debt increases and doubled US debt from $10 trillion to $20 trillion. It took the US 232 years to go from zero debt to $10 trillion and Obama managed to double it in just 8 short years. What an achievement!

Neither Clinton nor Trump had any intention of breaking the trend of massive debt expansion. Trump’s proposed tax reductions and major infrastructure investments will add over $5 trillion to the debt. But with this expansive policy, there is absolutely no reason why debt in the next four years will grow by less than the 9% annual average. This would take the US debt to at least $28 trillion by 2021.

Presidents-Graph-171116

But it is likely to get a lot worse. Rising interest rates, higher unemployment, stress in the debt markets and major problems in the global financial system are likely to lead to substantially higher debt as well as massive money printing.

The 35 year interest rate cycle has turned up

Long term US interest rates turned up earlier this year with 10 year Treasury yield up 63% from 1.4% to 2.28%. The 35 year rate cycle has now turned and rates are likely to go back to at least the 16% we saw in 1980 but probably a lot higher as the biggest bond bubble in history bursts. Due to the massive size of this bubble on a global scale, the increase in rates could happen very quickly. This will not just affect debt markets and the ability of governments to pay the interest but also the derivatives market. The $1.5 quadrillion of global derivatives are extremely sensitive to interest rate increases and that market will not survive much higher interest rates.

Bond-bubble-10-yr-LT-chart-171116

And if we look around the world, the risks are unprecedented. Japan is totally bankrupt; China has a major debt problem and the European banking system is unlikely to survive in its present form. Also, what started with Brexit is likely to continue in many European countries. Just like in the US, many Europeans are tired of an elite in Brussels ruling over 500 million people with little understanding of the resentment that this unaccountable and unelected elite is causing. The Italian election is next in December and then we have France and Germany in 2017. The breakup of the EU and the end of the Euro is just a matter of time and it could happen a lot faster than anyone expects.

Trump will not reverse chronic trend of deficits and debts

With all these problems around the world, Trump will have major difficulties reversing the trend of debts, deficits and no real growth of the US economy. Global trade is already declining and is likely to deteriorate substantially in the next few years. With both global and US problems of unparalleled proportions, it is not the best time to become president of the biggest and most indebted economy in the world. Clearly, Trump is determined to succeed but running an insolvent economy in a virtually bankrupt world will be a lot harder than building a property empire. But he has made it clear that he is hell-bent on expanding the US economy at all costs. The problem is that he will probably spend more money than anyone can imagine. But sadly, he will be pushing on a string since borrowing and printing money can never repair an economy which is fatally broken.

Reasons for holding gold more compelling than ever

As the world enters a period with risk exponentially greater than in 2006, the reasons for holding physical gold as insurance and wealth protection are more compelling than ever. The continued debasement of the currencies will guarantee a higher gold price. During Obama’s eight years, gold went up by 36% only whilst debt doubled and Trump is likely to grow debt exponentially. In addition, the failure of the paper gold market could happen at any time. When this happens there will be no physical gold available at any price until there is equilibrium in the physical market. At what price that will take place is impossible to forecast but it is certain to be multiples of the current price.

Egon von Greyerz

Founder and Managing Partner
Matterhorn Asset Management AG
matterhorn.gold
goldswitzerland.com

 

end

 

Craziness in India; the tax man may be calling on gold jewellers as they bought prior to the elimination of the high rupee notes

(courtesy Times of India/GATA)

 

India’s income tax men may come calling on gold buyers

Section:

By Ram Sahgal
The Times of India, Mumbai
Friday, November 18, 2016

MUMBAI — The taxman may knock on your door if you bought gold immediately before or after high denomination currency notes were withdrawn — even if you paid for the precious metal by cheque or credit card.

Excise authorities have issued notices to 600 jewellers to give details of stocks and sales for each day from Nov 7, a day before the announcement, to Nov 10, the India Bullion & Jewellers Association told The Times. This might be one of the reasons to have caused jewellery and bullion demand to fall sharply in the days after the notices were issued last Friday.

… For the remainder of the report:

http://economictimes.indiatimes.com/markets/stocks/news/-income-tax-men-..

 

 

end

Newmont opens a new gold mine in Suriname.  This mine is seen helping this struggling economy

(Reuters/GATA)

Newmont gold mine opens in Suriname, seen boosting struggling economy

Section:

By Ank Kuipers
Reuters
Thursday, November 17, 2016

MERIAN MINE, Suriname — Suriname President Desi Bouterse and Newmont Mining Corp Chief Executive Gary Goldberg inaugurated Thursday the open-pit Merian gold mine, which is expected to give a boost to the small, economically struggling South American country.

The mine has gold reserves of about 5.1 million ounces and its annual production is expected to average between 400,000 and 500,000 ounces during the first five full years of operation. Suriname’s state-owned oil company, Staatsolie, has a 25 percent stake in the mine.

“Never before did our country have the courage to participate as an equal partner in such a mining venture,” Bouterse told hundreds of guests and mine employees at the opening ceremony. …

… For the remainder of the report:

 

http://www.reuters.com/article/us-suriname-mining-newmont-idUSKBN13D08Z

end

 

We have been highlighting to you the extreme physical gold buying coming from Asia. We also pointed out that gold in  London is in backwardation and also premiums are occurring in India and of course in Shanghai which I report to you on a daily basis

a must read…

(courtesy Dave Kranzler/IRD)

Physical Gold Buying Soars In Asia

Gold was pushing $1230/oz overnight, as the methodical take-down of gold and silver in the NYC and London paper markets has triggered an avalanche of demand for physical gold in the eastern hemisphere.

Last night ex-duty import premiums in India were $14 over spot gold.  In Shanghai the premium to world gold was $9.76.  Delivery volume into the Shanghai Gold Exchange rocketed to an extraordinary 86.55 tonnes (it was 35.9 tonnes on Wednesday).  The open interest on the SGE was 807 tonnes.  To one observer’s recollection, John Brimelow of John Brimelow’s Gold Jottings, this is the first time the open interest has been over 800 tonnes.

In Viet Nam the premium paid by the public was $90 over world gold.  The spread has been wider over the last 15 years, but not much and only during times when there’s been high “backwardation” between the physical delivery bullion markets in the east vs. the fraudulent paper gold markets in London and NYC.

To reinforce this nebulous idea of gold flowing from west to east, and unusually high amount of gold was shipped out of the Comex kilo bar vaults yesterday.  320,434 ozs left the Comex.  Over 12,000 kilobars have left JP Morgan’s kilobar vault account in the last two days.  This is being attributed as evidence of Asia’s voracious demand right now, as NY and London – when those two conduits actually clear real metal – trade 400oz LBMA grade bars whereas Asia prefers kilobars.

The price of gold is being attacked right now in a manner that is quite reminiscent of the way it was attacked in the summer of 2008, right before the global financial markets collapsed, led by the fall of Lehman.

Something really ugly is coming toward the global economic and financial system.   The dollar index soared from 72 to 86 between June 2008 and October 2008, while gold and silver were systematically taken a lot lower.   We know how that played.

Similarly, the dollar has gone parabolic in the last week without any visible news or events that would have triggered this move.   Too be sure, if Trump implements his borrow and spend program for infrastructure projects, the Fed will have to print a lot of money to monetize the avalanche of Treasury debt issuance, given that the rest of the world is now dumping their Treasuries.

Both of those factors should be dollar-bearish and gold-bullish.  In good time that’s how this will play out.

In the latest episode of the Shadow of Truth, we discuss the extraordinary “backwardation” that has developed in the price of gold between the west and the east.  We also discuss evidence of the ongoing collapse in the U.S. economy.

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

 
 

:

1 Chinese yuan vs USA dollar/yuan UP to 6.8840(HUGE DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.8927 / Shanghai bourse CLOSED DOWN 15.60 POINTS OR 0.49%   / HANG SANG CLOSED UP 81.33 OR 0.37%

2. Nikkei closed UP 104.78 points or 0.59%  /USA: YEN RISES TO 110.29

3. Europe stocks opened ALL IN THE RED    ( /USA dollar index FLAT AT 100.95/Euro UP to 1.0625

3b Japan 10 year bond yield: RISES TO    +.04%/     !!!!(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/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  45.55  and Brent:46.67

3f Gold DOWN /Yen DOWN

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

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

3h Oil 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 +.275%   

3j Greek 10 year bond yield FALLS to  : 7.14%   

3k Gold at $1211.10/silver $16.60(7:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 12/100 in  roubles/dollar) 64.76-

3m oil into the 45 dollar handle for WTI and 46 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 110.29 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.007 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0710 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.275%

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

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

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

4. USA 10 year treasury bond at 2.296% early this morning. Thirty year rate  at 3.000% /POLICY ERROR)

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

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

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

Euro In Historic Slide As Dollar Surge, Bond Rout Continues

It has been more of the same this morning as the dollar extended its advance on the still undeteremined Trump reflationary policy measures after Yellen signaled an interest-rate hike could be imminent, while bond yields around the globe rose again, metals declined,  European stocks advanced and futures were modestly in the red just shy of all time highs.

A quick recap of what Yellen said: she reinforced the message that the Fed was close to raising rates, noting that the case for hiking ‘relatively soon’ would continue to strengthen as long as incoming data held strong. She also signalled the need for the FOMC to avoid delaying rate increases for too long, as “it could end up having to tighten policy relatively abruptly” in the future if the economy began to overheat. Yellen also quelled some fears that the pace of rate hikes would speed up in the future by noting that the FOMC expected that the economy would warrant only “gradual increases” in rates, reasoning that monetary policy was only moderately accommodative at the moment and the risk of “falling behind the curve” in the near future was limited. Yellen also noted her intention to serve out her full four-year term as Fed Chair – thus ending speculation that she might resign following Trump’s criticism of her policies during the former’s presidential campaign. There was some political tension in her remarks though as she defended financial regulations that President elect Trump has sought to partially reverse.

She also cautioned against Congress providing the economy with too much of a budgetary boost and suggested that they should target any stimulus towards the long run productivity of the economy. All in all markets have taken her testimony as signalling a near certain rate hike at the December meeting, with such a scenario now priced in at 96% on Bloomberg (vs. 94% yesterday).

As a result of Yellen’s hawkishness, overnight the dollar DXY index rose as high as 101.43, a new 13 year high, sending the offshore Yuan to record lows above 6.90, and unleashing a Yen selling frenzy, before moderating some of its gains after the European open. The Bloomberg Dollar Spot Index climbed 0.4 percent to trade at its highest level since February. The yen retreated 0.4 percent.

“Right now it is a dollar-dominated story,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note. “But beyond a Fed rate hike next month, many questions remain over the path of policy going forward – for both fiscal and monetary.”

Japan’s Nikkei 225 Stock Average entered a bull market after it extended its rally from a June low to more than 20 percent after the S&P 500 Index came within four points of a record on Thursday. Equities in Europe rose for a second day. The greenback’s gain weighed on oil, gold and copper, with the industrial metal set for its first weekly slide in four weeks. Global bonds headed for their steepest two-week loss in at least 26 years.

As we reported yesterday, the EUR was about to make a dubious historic record, as it fell for the 10th consecutive day.

It has never done so before, and the last time the European currency declined for 9 straight sessions was just days before the Lehman collapse.

The latest driver of USD strength was Janet Yellen, who In her first public statement since the U.S. election told lawmakers that the Fed is close to hiking rates. The comments torpedoed Treasuries, while American financial stocks pushed their rally since Donald Trump’s presidential victory back above 10 percent Thursday. Speculation that he will boost fiscal stimulus continues to lift industries that are perceived to benefit from economic growth.

“The fact that she didn’t push back against market expectations for a December hike is perhaps the most significant takeaway,” said Jack Spitz, managing director for foreign exchange at National Bank of Canada in Toronto, referring to Fed Chair Yellen. “The dollar is higher as a result.”

In early trading, European equities rose with the Stoxx Europe 600 Index adding 0.3%, heading for a 1.2% weekly advance. Industrial shares contributed the most to the measure’s Friday rally, while mining companies fell with commodities prices. Shippers and carmakers led gains on the Topix index in Tokyo, which rose 0.4 percent. The Nikkei 225 closed at its highest level since January. Telecommunications and consumer stocks drove Australia’s S&P/ASX 200 Index up 0.4 percent, while South Korea’s Kospi index slipped 0.3 percent. Hong Kong’s Hang Seng China Enterprises Index advanced 0.2 percent, while the Shanghai Composite Index dropped 0.5 percent on the mainland.

S&P 500 futures slipped 0.1 percent to at 2,181, following a 0.5% advance in the S&P on Thursday. Bank shares led the index to its highest level since Aug. 15, when the gauge reached an all-time high. “Markets have arrived at a point where they need to weigh the risks of being caught out by the potential stimulatory impacts of the Trump administration’s policies, against the risk of being caught by those policies not being implemented,” Ric Spooner, chief market analyst at CMC Markets, told Bloomberg by email.

Away from the frenzied dollar rally an the equity reflation trade, the biggest concern remained global bonds and at what point will the rising yields put a damped on the risk-on euphoria. As noted earlier, the bond selloff deepened Friday, with yields on U.S., European and Asia-Pacific sovereign debt increasing. The Bloomberg Barclays Global Aggregate Index fell 4 percent from Friday Nov. 4 through Thursday. It’s the biggest two-week rout in the data, which go back to 1990. Yields on Australia’s 10-year notes jumped 15 basis points to 2.72 percent. Yields on similar-maturity Italian debt rose 9 basis points, while those on Treasuries increased two basis points to 2.33 percent, extending the eight basis-point jump last session.

At some point very soon, the financial tightening as a result of surging yields and USD will become self-defeating and lead to a revulsion from risk assets, however for now the markets continue to ignore this flashing red warning.

* * *

Bulletin Headline Summary from RanSquawk:

  • The stronger USD has taken its toll on mining, energies and utilities sectors this morning, leading the main indices lower
  • A morning of consolidation in the FX markets, but not without a further test higher in the key USD rates where spot JPY has tested 111.00 but held back modestly as yet
  • Looking ahead, highlights include Canadian CPI, comments from Fed’s Bullard, Kaplan and George and BoE’s Broadbent

Market Snapshot

  • S&P 500 futures down 0.2% to 2181
  • Stoxx 600 down 0.3% to 340
  • FTSE 100 down 0.6% to 6752
  • DAX down 0.3% to 10658
  • German 10Yr yield up 3bps to 0.31%
  • Italian 10Yr yield up 3bps to 2.12%
  • Spanish 10Yr yield up 6bps to 1.65%
  • S&P GSCI Index down 0.6% to 355.7
  • MSCI Asia Pacific down 0.6% to 134
  • Nikkei 225 up 0.6% to 17967
  • Hang Seng up 0.4% to 22344
  • Shanghai Composite down 0.5% to 3193
  • S&P/ASX 200 up 0.4% to 5359
  • US 10-yr yield up 2bps to 2.32%
  • Dollar Index up 0.28% to 101.17
  • WTI Crude futures down 1.1% to $44.91
  • Brent Futures down 0.8% to $46.12
  • Gold spot down 1% to $1,205
  • Silver spot down 1% to $16.51

Top Headline News

  • VW to Cut 30,000 Jobs in Landmark $3.9 Billion Savings Pact: Savings deal aimed at boosting the VW brand’s margin to 4%
  • Bank Bosses Soften Tone on Brexit as May Extends Olive Branch: Finance executives say London’s status not under threat
  • Tesla Shareholders Overwhelmingly Approve SolarCity Deal: SolarCity holders approved deal earlier
  • HRG, Owner of Spectrum Brands, Considers a Sale as CEO Exits: Owner of consumer brands, Fidelity insurance seeks advisers
  • Copper Miner Says Price Rally May Stall as World Glut Lasts: Antofagasta sees global surplus of up to 400,000 tons in ‘17
  • Yum! Brands to Buy Back Up to $2b in Additional Shares

* * *

Looking at regional markets, we start in Asia, where stocks traded mostly higher following the firm lead from Wall St where the post-election rally resumed and financials led as a December rate hike looks all but certain. Nikkei 225 (+0.9%) surged to bull-market territory and 10-month highs after briefly breaking above the 18,000 level with exporters benefitting as USD/JPY printed 5-month highs, while ASX 200 (+0.4%) was also in the green, although gains were capped as USD strength weighed on commodities. In China, Hang Seng (+0.2%) and Shanghai Comp (-0.5%) traded indecisive despite a firm liquidity injection by the PBoC, as participants also digested rampant house prices which could attract funds away from stocks as well as dampen hopes for looser policy. 10yr JGBs were weaker alongside increased demand for riskier assets, with the curve steepening amid underperformance in the super-long end in which Japanese 40yr yields rose to an 8-month high.

Top Asian News

  • Nikkei 225 Enters Bull Market After Rising 20% From June Low: Topix index advances for seventh day as yen extends declines
  • Malaysia Central Bank Says It’s Intervening in Currency Market: Fears of capital controls are “baseless,” Assistant Governor Adnan Zaylani says
  • China Home-Price Growth Slows as Property Curbs Start to Bite: Prices in red-hot cities stabilized after curbs
  • Trump Win Gives Kuroda Breathing Room, Ex-BOJ Executive Says: BOJ can remain on hold unless yen strengthens past 100/USD, Hideo Hayakawa says
  • Thomas Cook India Sees Holiday Booking Delays on Demonetization: Indian economy to “undergo adjustment” on govt’s demonetization decision, Chairman Madhavan Menon says.

In Europe, the stronger USD has taken its toll on mining, energies and utilities sectors this morning, leading the main indices lower (EUROSTOXX -0.5%), with the mining and energy heavy FSTE 100 down by 0.6%. In company specific news, Volkswagen (+1.7%) are trading higher after the German carmaker announced that it will make job cuts, with labour unions agreeing to 30,000 job cuts by 2021. In Fixed income markets supply is short today, but prices have risen after gapping lower on the open due to the general adverse risk sentiment in markets today. We also saw the UK/Eurozone 10 spread widen to a post Brexit high of 117 bps. Elsewhere in Italy, 10 year bonds are on course for the worst month since 2012 as the run up to referendum intensifies.

Top European News

  • LafargeHolcim Cuts 2018 Profit Targets; Raises Dividend: Cement maker also plans to buy back 1 billion francs of stock
  • Draghi Says Recovery Still Highly Reliant on ECB Policy Support: ECB sees no consistent strengthening of inflation pressures
  • SNB Able to Deliver Further Rate Cut If Needed, Maechler Says: Swiss National Bank Board Member Andrea Maechler speaks at event in Geneva

In currencies, Bloomberg’s dollar gauge climbed for a third session. Odds on the Fed raising the benchmark rate are now at 96 percent, up from 80 percent a week ago and less than 65 percent a month ago, according to futures trading tracked by Bloomberg. The yen weakened 0.4 percent to 110.62 per dollar and is on track for its second weekly retreat of more than 3 percent. The won slipped 0.6 percent. Malaysia’s ringgit retreated 0.5 percent as the nation’s central bank said it’s intervening in the currency market. China’s yuan slid to its weakest level since June 2008.

In commodities, gold tumbled to the lowest in more than five months, dropping as much as 1.1 percent to $1,202.96 an ounce. The precious metal has plunged as investors digested the implications of Trump’s policies, which may boost the economy and lead to higher borrowing costs. Rising bond yields and a stronger dollar are also weighing on gold, which doesn’t pay interest.Oil futures declined 1.6 percent in New York, trimming the first weekly advance since late October, despite a spike in OPEC related headlines. Nickel fell 1.4 percent in London to lead declines by industrial metals. Copper retreated 0.8 percent, heading for a weekly loss after entering a bull market last week.

It’s a quiet end to the week today in terms of data: we have the Conference Board Leading Index for October (+0.1% mom expected; +0.2% previous) and the Kansas Fed manufacturing survey for November due, while Baker Hughes at 1pm will reveal if the US shale industry continues to ramp up production.

DB’s Jim Reid concludes the overnight wrap

If you’re looking for the first flapping of a butterfly’s wings that might eventually cause a tidal wave further down the road perhaps the most interesting development before Monday is the French Les Républicains party and its centre-right allies primaries on Sunday. The general consensus is that the winner will end up being the candidate up against Marine Le Pen in the second round run off for the Presidential elections in the middle of next year. For sometime now Juppe has experienced a far bigger lead against Le Pen than Sarkozy when pollsters have pitted them against each other. Complicating matters is another ex-PM Fillon who has seen his support increase. If no candidate gets 50% the run off will take place next Sunday. So one to watch in these political times.

Yesterday we were all waiting for Yellen’s testimony on the economic outlook delivered before the Joint Economic Committee. She reinforced the message that the Fed was close to raising rates, noting that the case for hiking ‘relatively soon’ would continue to strengthen as long as incoming data held strong. She also signalled the need for the FOMC to avoid delaying rate increases for too long, as “it could end up having to tighten policy relatively abruptly” in the future if the economy began to overheat. Yellen also quelled some fears that the pace of rate hikes would speed up in the future by noting that the FOMC expected that the economy would warrant only “gradual increases” in rates, reasoning that monetary policy was only moderately accommodative at the moment and the risk of “falling behind the curve” in the near future was limited. Yellen also noted her intention to serve out her full four-year term as Fed Chair – thus ending speculation that she might resign following Trump’s criticism of her policies during the former’s presidential campaign. There was some political tension in her remarks though as she defended financial regulations that President elect Trump has sought to partially reverse. She also cautioned against Congress providing the economy with too much of a budgetary boost and suggested that they should target any stimulus towards the long run productivity of the economy. All in all markets have taken her testimony as signalling a near certain rate hike at the December meeting, with such a scenario now priced in at 96% on Bloomberg (vs. 94% yesterday).

Global stock markets responded well to Yellen’s testimony and erased yesterday’s dips as both the STOXX 600 (+0.63%), FTSE (+0.67%) and the S&P500 (+0.47%) all ticked up. The STOXX had a particularly strong day given that every underlying sector ended the day in the green. After a rough showing the previous day, banks (+1.25%) were the top performing sector for the S&P and are now up nearly 10% since the US election results.

At the other end of the risk spectrum we saw US treasuries yields climb across the entire maturity spectrum, with the 2Y and 10Y increasing by +3bps and +7bps respectively, and the 30Y once again heading up just above 3% (+8bps). German 10Y yields ticked down by about -2bps while UK 10Y yields increased by nearly +3bps. Italy, Spain and Portugal 10 year yields rose 5-6bps.

Over in currency markets we saw the US dollar continue its strong rally as it rose against major peers (dollar index +0.6% and highest since February). Oil slipped slightly after being up over 2% earlier in the session with the dollar rally seemingly offsetting optimism from Saudi’s minister for Energy and Industry that OPEC will find a satisfactory agreement to cut output.

Overnight the dollar continues to edge higher with equities in Asia mostly stronger with the exception of China (Shanghai Comp -0.25%). The Nikkei is up +0.78% as we type. 10 year JGBs are 3bps higher at 0.03% as the market digests the consequence of yesterday’s BoJ operations shorter down the curve where they managed to intervene without actually buying any paper. It feels like this story will run and run with the BoJ at some point having to actually spend some money to anchor yields where they want them.

Taking a look now at some of the data out yesterday, we saw Q3 employment numbers out of France where the headline unemployment rate ticked up to 10% and disappointed against expectations of no change (9.9% expected; 9.9% previous). Turning to the UK we saw the October retail sales numbers surprise significantly on the upside by growing at +2.0% mom (vs. +0.4% expected; +0.1% previous) and +7.6% YoY (vs. +5.4% expected; +4.0% previous). These were the highest growth figures seen since July. While this is generally a noisy series, the numbers do still signal resiliency in consumer spending. We also received the final Eurozone October CPI numbers which were unrevised from the flash estimate (+0.5% YoY).

Over in the US, we saw strong data points across inflation, labor market and housing indicators that all seemed to enhance the case for a rate hike in December. Headline CPI numbers ticked up in October and printed in line with expectations at +0.4% mom (+0.3% previous). Labor markets also remained resilient as initial jobless claims (235k actual vs. 257k expected; 254k previous) fell to their lowest levels in over 40years, while continuing claims fell to 1977k (vs. 2030k expected; 2043k previous) and are at their lowest levels since 2000. Homebuilding also picked up as Housing starts reached a nine year high (1323k vs. 1156k expected; 1054k previous) and building permits (1229k vs. 1193 expected; 1225k previous) increased in October to beat expectations. The only weak data point came in the form of the Philadelphia Fed PMI for November which came in at 7.6 (vs. 7.8 expected; 9.7 previous).

It’s a quiet end to the week today in terms of data. In Europe the only data of note is the October PPI report out of Germany (+0.2% mom expected; -0.2% previous) where wholesale inflation is expected to head back into positive territory but remain fairly subdued. In the US we have the Conference Board Leading Index for October (+0.1% mom expected; +0.2% previous) and the Kansas Fed manufacturing survey for November due.

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 15.60 POINTS OR 0.49%/ /Hang Sang closed UP 81.33  OR 0.37%. The Nikkei closed UP 104.78 points or 0.37%/Australia’s all ordinaires  CLOSED UP 0.34% /Chinese yuan (ONSHORE) closed UP at 6.8840/Oil ROSE to 45.55 dollars per barrel for WTI and 46.67 for Brent. Stocks in Europe: ALL IN THE RED     Offshore yuan trades  6.8927 yuan to the dollar vs 6.8840  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS DEEPLY AS MORE USA DOLLARS   LEAVE CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER.

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN

The yen has the biggest plunge against the dollar in over 18 years’

(courtesy zero hedge)

Japanese Yen Set For Biggest Plunge Versus Dollar In 18 Years

With the US dollar soaring to its highest since 2003, unprecedented moves in the Euro, Yen, and Yuan are now daily headine-makers. Overnight saw USDJPY near 111.00 (before rolling over a little this morning), pushing the pair to its best 2 week gain since 1988… and its second best 2-week gain since currencies floated.

As Reuters reports, further underpinning the dollar was a speech by Federal Reserve Chair Janet Yellen, who on Thursday provided a signal that U.S. interest rates would rise next month, in line with most market participants’ expectations.

“What we’re looking at is a broad shift of investment back to the U.S.,” said Richard Cochinos, Citi’s head of G10 currency strategy in London.

“There are expectations for tax cuts next year – which were part of the Trump campaign’s promises – and then there’s also the idea of what type of fiscal boost are you going to have. That’s what’s driving asset prices – it’s people’s expectations for the fiscal impulse next year,” he said.

Cochinos added that political and economic worries in Europe, Britain and Japan were keeping investors away from those currencies, providing the dollar with another boost.

“Dead cat bounce”?

Trump beginning to look statesmanlike.  Abe states that Trump is a leader Japan can trust

(courtesy zero hedge)

Abe Says Trump “Is A Leader We Can Trust”, Gives Him A Golf Club As Present

Following Trump’s first official meeting with a foreign leader on Thursday night (one which took place in Trump’s apartment at the Trump Tower), Japanese Prime Minister Shinzo Abe said Trump was a trustworthy leader in comments after his first meeting with the U.S. President-elect, whose statements on trade and security have sparked concern in Japan. Abe told reporters that he had frank discussions in a “warm atmosphere” at Trump Tower, and said he explained his views on a range of issues, but declined to comment on the substance of the talks in a meeting that lasted more than an hour.

“He made time for me, even though he is busy with personnel matters,” Abe said after the meeting. “I am convinced that President-elect Trump is a leader we can trust.” The pair agreed to meet again for broader and deeper talks when their schedules allow, he said.

It was not always so amicable: while campaigning, Trump vowed to drop a Pacific trade deal which shifts the balance of trade power in the Pacific to China, and accused Japan of manipulating its currency. Trump also threatened to pull U.S. troops out of the country unless it pays more for their upkeep, and has suggested Japan might have to develop its own nuclear weapons.

Quoted by Bloomberg, a condescending Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University Japan campus in Tokyo said that “it’s good that Abe saw Trump. Trump has little foreign policy knowledge and it’s worth trying to educate him. The approach may fail but it’s worth a try.”

As Bloomberg notes, Japan is America’s second-largest trading partner behind China, with two-way commerce reaching almost $200 billion last year. Japanese businesses provide upward of 800,000 jobs in America. Relations are also prominent in the military realm where Japan, whose own military is restricted by a pacifist constitution drafted by the U.S. after World War II, relies heavily on America’s troops and nuclear weapons for deterrence against growing threats from North Korea and an increasingly powerful China. About 50,000 U.S. military personnel are stationed in Japan.

Trump’s daughter Ivanka, rumored to be groomed as a potential ambassador to Tokyo, was at her father’s residence to greet Abe.

Also present was retired Lieutenant General Michael Flynn, a key military surrogate throughout his campaign, whom Trump offered the job of national security adviser. According to Bloomberg, on a visit to Tokyo last month Flynn said Japan and the U.S. should discuss the cost-sharing arrangement for American troops in Japan. Defense Minister Tomomi Inada said last week that the country makes sufficient contributions to the upkeep of U.S. forces in Japan.

Meanwhile, to cement the goodwill between Japan and the new administration, Abe presented the real estate mogul with a golf club (Japanese media said it was a driver). Trump gave Abe a golf shirt in return. The gift is symbolic: in 1957, then Prime Minister Nobusuke Kishi, Abe’s grandfather and political role model, played a round of golf with President Dwight D. Eisenhower on a course in Maryland outside of the U.S. capital. News reports described the game as a “triumph for diplomacy.”


Nobusuke Kishi and Dwight D. Eisenhower play golf in 1957

The pair are known to be avid golfers. Abe spends his summers playing at courses close to his vacation home near Tokyo. Trump is affiliated with 17 golf properties worldwide, with the golf division of Trump Organization Inc. owning and managing most of the courses. It’s not the first time Abe has used golf diplomacy. On a trip to Vietnam in 2006, during his first spell as prime minister, Abe gave then President George W. Bush a photograph of their grandfathers playing in Maryland. He also gave President Barack Obama a putter made by a Japanese manufacturer

end

c) Report on CHINA

Chinese offshore yuan: 6.909520 at 8:30 pm est last night

(courtesy zero hedge)

Yuan Smashes Through 6.90… What Next?

While the Renminbi basket (Chinese currency basket relative to biggest world trade partners’ currencies) has been ‘stable’ for almost 5 months, the catchdown in the Yuan’s purchasing power against the US Dollar is accelerating rapidly. Busting through 6.90/$ in early Asian trading, the last time offshore Yuan cratered this quickly, stocks plunged in January. The question is – how much further can the Yuan fall before the Trump bump gets damaged?

Judging by the transition to weakness against the Dollar… 6.90 may be nothing as 7.20 looks likely…

Notice how the PBOC rotates between USD-prone moves and non-USD-prone.

Luckily – this time is different…

For now.

 

 

end

 

I have been highlighting to you the dangers of the devaluation of the yuan against the dollar.  A lower yuan cheapens Chinese goods like steel etc making mfg in other sovereign jurisdictions difficult to make money as it would be part to compete.  This is what we mean by spreading deflation across the globe. China today stated that it may slow down the devaluation of the yuan hoping that capital outflows subside.  That may be wishful thinking

a must read…

(courtesy zero hedge)

China Warns It Is Ready To Slow Yuan Plunge On Capital Outflow Fears

It was just one year ago when the biggest worry for the market – which culminated with a near 10% S&P correction in in early 2016 – was the daily plunge in the Yuan driven by the surging dollar, which in turn prompted China to engage in an unprecedented reserve liquidation (in which it sold both government bonds and equities), leading to a daily selloff in risky assets on days when the Yuan was fixed lower.

Fast forward a year later, when the US Dollar has blown through last year’s highs and is now at levels not seen since 2003, the Yuan is trading at record lows, just shy of 7.00, and yet stocks stubbornly ignore the one catalyst that led to so much headache for the bulls one year ago.

In his daily note, RBC’s cross-asset strategist Charlie McElligott points out that while the market may be oblivious, what is taking place in China is something to be concerned about:

ONE IMPORTANT TACTICAL MACRO POINT WITH REGARDS TO THE NEAR-TERM DIRECTION OF USTs / GLOBAL LONG-END: The yuan ‘slow bleed’ devaluation by the PBoC versus the USD seen since the start of October has without question been tied to at least some of the weakness in the US long-end, as the central bank sells USTs to try and mitigate the depreciation of the yuan against the SDR basket—see here:

 

One notable distinction from last year is that while bond yields would slide on days when the PBOC intervened to stabilize the currency by selling TSYs, this time around the selling of both assets is taking place concurrently – as shown in the chart above –  which may suggest that China’s capital outflow pressure is far greater than what the PBOC would be willing to admit.

It may also explain why the market has been oblivious to the collapse in the Yuan:so far China has kept a very low profile when it comes to its market response to the aggressive devaluation of its currency. But that may be about to change.

As Reuters writes overnight, “Chinese policymakers have been unfazed by the yuan’s recent slide, but are ready to slow its descent for fear of fanning capital flight if the currency falls too quickly through the psychologically important 7-per-dollar level, policy advisers said.”

The inertness of China’s central bank stems from the fact that “Chinese policymakers believe the decline in the yuan since October reflects market trends, especially of late when most currencies have fallen in the face of a resurgent U.S. dollar.”

A policy advisor said that “the central bank is following the trend as the dollar is rising. It’s not necessary for it to resist market forces.”

Not necessary for now.

Ironically, just as Trump has been a blessing in disguise for Europe and Japan, both of whose currencies have plunged against the dollar in the past week on expectations of Trumpflation, so China has also benefited from the weaker currency: “appropriate yuan depreciation will be good for stabilizing market expectations and the economy, as long as there is no sharp, run-away depreciation.”

All of that is about to change however, if the dollar continues its relentless push higher, in the process tripping the 7.00 stops in the Yuan:

Beijing’s biggest concern is that a sharp fall in the yuan will trigger the sort of capital flight that followed August’s surprise devaluation of the currency, which sparked fears the health of the economy was worse than Beijing had let on. China’s currency reserves slumped by more than $400 billion by the end of January as Chinese moved cash overseas.

 

Outflows from the $3 trillion-plus reserves, by far the world’s largest, have since continued at a much more subdued pace but the yuan’s decline in recent weeks has raised some concerns that capital flight could pick up again if the yuan slides too fast.

Asked about when the Yuan may cross the psychological barrier, a PBOC advisor told Reuters that “I don’t think the breaking of 7 is imminent. We may have to wait until next year.” Actually, at this rate, “breaking” of 7 may happen as soon as next week, to which he adds :”If the pace of depreciation is too fast, if it hit 7 before the end of this year, the central bank will control it.”

And that’s when the liquidation of Chinese USD-denominated reserves begins in earnest, among all those other measures the PBOC implemented a year ago when the market was far less sanguine about the Chinese devaluation:

The policy insiders said the central bank was likely to intervene in currency markets and enforce capital controls to slow the rate of decline in the yuan.

As we expected, the intervention has already started:

traders said large Chinese state banks had offered dollars in the domestic currency market on Thursday in an apparent effort to slow down the depreciation of the yuan. They said there had been no sign of state dollar selling in previous sessions.

Another way of saying “offering dollars” is selling US assets.

And then there are other threats, like how China will respond to the foreign policy programs soon to be adopted by the president-elect who had made trade with China, and the imposition of tariffs, one of the biggest policy points in his presidential campaign.

Concerns about a sharp slowdown in China’s economy have eased to be replaced by worries that Beijing could be heading into a trade war with the United States if Trump follows through on his campaign rhetoric. Trump lambasted China throughout the election, drumming up headlines with pledges to slap 45 percent tariffs on imported Chinese goods and to label the country a currency manipulator.

 

China was regularly criticized by the United States and some other western governments who argued it used a cheap currency to boost exports. But that criticism has died down in recent years as economic growth slowed and as the government sought to shift away from a reliance on exports and more towards consumption.

 

“Imposing tariffs on China would do more harm than good for the United States, including its employment, and it has to consider that China could counter with its own measures,” said a commerce ministry researcher.

For now China, like the market, is hoping that Trump won’t rock the boat…

“I don’t think the exchange rate will become an imminent problem. The yuan is depreciating but won’t depreciate too much and many people believe the dollar could fall if Trump takes some radical measures.”

 

Chinese President Xi Jinping told Trump that cooperation was the only choice for relations between the world’s two largest economies, with Trump saying the two had established a “clear sense of mutual respect”.

 

Assuming no major ructions from a Trump presidency, some government economists expect the yuan to fall to 7.2 per dollar by the end of 2017, which would imply a drop of 4.2 percent from the current level.

… which, however, may prove to be idealistic. Ultimately, the question will be at what point do China’s residents and savers start pulling out their funds and transferring them offshore – as they did last year   – to avoid further loss in purchasing power. 7.00 on the Yuan sounds as good a point to “call it” as any, which means. Which incidentally is dangerously close from the latest print in the USDCNH, now trading just above 6.90.

Another week at the current pace of devaluation, or just a 1-2% increase in the DXY, should do it.

END

 

Home prices are still on the rise in China although sales have slowed dramatically as attempts to prick the bubble seem to be working:

(courtesy zero hedge)

China Home Price Inflation Hits New Record High, Despite Curbs To Cool Overheating Market

On one hand, China’s recently implemented home-buying curbs to cool the runaway property market worked in October, when following a slump in property sales volume new-home prices gained last month in 62 of the 70 cities tracked by the government, declining from the 63 recorded in September, the National Bureau of Statistics said Friday. Prices dropped in seven cities, compared with six a month earlier.

According to Goldman’s population-weighted calculations, house price inflation decelerated across all tiered cities: In tier-1 cities, October price growth was 0.9% month-over-month after seasonal adjustment, down visibly from the 3.1% month-over-month growth in September. In tier-2 cities, housing price growth was 1.5% month-over-month in October, vs. 2.7% in September. Price growth was also lower in tier-3 and tier-4 cities.

“The property market in China’s first and second-tier cities apparently has cooled in October, while it remained relatively stable in third-tier cities,” Liu Jianwei, a statistician from China’s NBS said in a note accompanying the data.

Housing price growth slowed in October on the back of tightening measures

Source: GS

“Buyers and developers are now taking to the sidelines, creating a standoff in the market,” said Xia Dan, a Shanghai-based analyst at Bank of Communications Co.

As confirmation that its bubble-busting policies are working, China’s statistics bureau said that home prices in first-tier and red-hot second-tier cities “apparently cooled” in the second half of October after those regions announced fine-tuned curbs. Monthly growth slowed in most of China’s first- and second-tier cities. Five cities, from the capital Beijing to southern port city Xiamen, snapped a streak of price gains. New-home prices in Shenzhen, the nation’s hottest property market earlier this year, fell 0.5 percent in October from September, the first decline since October 2014 suggesting restrictions in the hottest markets to curb speculative
buying are starting to bite. Prices in Beijing fell 0.4% in the second half of October, and declined 0.1 percent in Shanghai.

* * *

On the other hand, Beijing’s curbs have a long way to go as October home prices grew at the fastest rate since record-keeping began in 2011, despite a significant slump in property sales volume as local governments stepped up measures to cool skyrocketing prices, and as more discriminating buyers appear to have stepped back from the recent buying frenzy. Despite the fewer transactions, the average property price change in October was up a whopping 12.7% YoY, another record high, following September’s 11.7% surge from the prior year.

Year-over-year basis price growth continued to increase to new all-time highs.

Source: GS

As we noted in the late summer, in an attempt to cool China’s second housing bubble in three years, the housing ministry cracked down on rogue players, started investigating developers and agents for alleged false advertising, urging probes on “illegal” sales and cracking down on investment by online finance and peer-to-peer lenders.

A cooling of the property market may provide some relief to policy makers, who are seeking to avoid a housing bubble without denting economic growth.

It may have its work cut out for it however: in a nation in which capital spending and building empty cities has been synonymous with growth for a decade, even amid the curbs in major cities, property development investment rose 13% from a year earlier in October, the most since at least 2015, Bloomberg calculated. New housing starts, an early indicator of real estate investment, gained 20% from a year earlier, the biggest increase since April.

As Liu Feifan, analyst at Guotai Junan Securities, confirmed, the drop in sales volumes in cities that have imposed restrictions was “a lot milder” than he expected, adding that the 10% drop in transactions was below his prediction of more than 30%, suggesting that the euphoria mentality is still present.

“But momentum is going to slow further, otherwise authorities will step up curbs,” Liu said.

The good news is that just as the housing bubble is bursting, China has not a new commodity market euphoria to look forward to, but a fledging stock market bubble to boot, just like in 2015. Because in China, with its roughly $30 trillion in deposits, bubbles never go away, they just roll over from one asset class to another.

 

 

 

end

4 EUROPEAN AFFAIRS

 

Volkswagen, caught in the emissions scandal is to cut 30,000 jobs worldwide or 5% of their entire force:

(courtesy zerohedge)

Volkswagen To Cut 30,000 Jobs, 5% Of Workforce

Following a tumultuous year of declining sales as a result of its emissions-cheating scandal, today Volkswagen agreed to cut 30,000 jobs at the core VW, roughly 5% of its global salesforce of 624,000. After months of intense talks, labor and management agreed on a package to balance cost-cutting with investment as the auto industry shifts away from traditional combustion engines and adapts to car-sharing services and self-driving technologies.

The job cuts will come through attrition in the form of early retirement and not replacing workers that leave; the company vowed to refrain from forced layoffs until 2025. The savings comprise 3 billion euros at its German factories and another 700 million euros abroad. Argentina and Brazil will be hit hardest by the staff reduction outside Germany, with Volkswagen’s personnel chief Karlheinz Blessing describing the Brazil cuts as “brutal.”

“This is a big step forward, maybe the biggest in the company’s history,” VW brand chief Herbert Diess said at a press conference in Wolfsburg. “All manufacturers must rebuild themselves because of the imminent changes for the industry. We need to brace for the storm.”

The deal is expected to result in €3.7 billion in expense reductions as the company tries to streamline operations and cut costs. However the compromise leaves the carmaker’s profitability still lagging rivals: the plan is expected to lift the VW brand’s operating margin to 4% by 2020, from 2% this year, but still below rival European carmakers such as Renault and Peugeot Citroen which are targeting an operating margin of 6 percent in 2021.

Volkswagen, Europe’s largest automaker is trying to increase savings at its biggest business in its home base of Germany, where its costs are high. Reuters notes that VOW must also find billions of euros to pay fines and settlements stemming from its diesel emissions cheating scandal as well as fund a strategic shift toward electric and self-drive cars. Volkswagen’s labor leaders said management had agreed to avoid forced redundancies in Germany until 2025 a step which clears the path to cutting 23,000 jobs via buyouts, early retirements and by reducing part-time staff.

Jobs will also be cut in North America, Brazil and Argentina, VW said. Around 114,000 employees work for VW brand in Germany.

Labor leaders agreed to the cuts in exchange for a management pledge to create new 9,000 new jobs in the area of electric cars, mainly at factories in Germany. As all mass layoff announcements, this one too was initially cheered by markets, which sent the company’s shares more than 2% higher to the top of the blue-chip DAX index in early Frankfurt trading, and reducing the drop since the scandal broke in September 2015 to 27 percent. However, later in the day, the gain was all but wiped out.

Hedge fund TCI, which has been critical of Volkswagen management, said it looked like a good deal all round provided it could be made to stick.

“As long as they are net savings – the savings are not given back by increased costs elsewhere in the organization,” said TCI partner Ben Walker. “They’ve just to deliver now. It’s easy to talk. They now have to delivery and execute,” he added.

Labour leaders were also pleased with the outcome. “The most important message is the jobs of the core workforce is secure,” Volkswagen’s powerful works council chief Bernd Osterloh said at a news conference in Wolfsburg. “We have agreed that forced redundancies are ruled out until end 2025. When I see what is going on at other companies, this is a big success in difficult times,” Osterloh said.

There was also some bad news for Tesla. In a concession to workers, Bloomberg notes that the manufacturer agreed to build two electric cars at German sites, one in Wolfsburg and one in Zwickau. The company will add as many as 9,000 positions for future-oriented projects such as electric vehicles and digital features. The state of Lower Saxony, where Volkswagen is based, will become a technology hub for the manufacturer, and many of the 1,000 jobs to be created there will be for software engineers and cloud-technology experts. Electric motors will be built in Kassel, and VW will start battery cell production and development in Salzgitter. Volkswagen will also build battery packs for electric and hybrid cars at its plant in Braunschweig, the company said.

 

 

end

 

Judy Bergmann of the Gatestone Institute comments that free speech has ended in Europe

an important read.

(courtesy Judy Bergmann)

Europe: Let’s End Free Speech!

Submitted by Judith Bergmann via The Gatestone Institute,

  • According to New Europe, in Leeuwarden, “about twenty opponents of the plans [to establish asylum centers] in the region received police visits at home.” In other words, the Netherlands are engaging in state censorship, thereby raising the question: Is the Netherlands now a police state?
  • In the town of Sliedrecht, police came to Mark Jongeneel’s office and told him that he tweeted “too much” and that he should “watch his tone”: his tweets “may seem seditious”. His offense? One tweet said: “The College of #Sliedrecht comes up with a proposal to take 250 refugees over the next two years. What a bad idea!”
  • In September 2015, Die Welt reported that people who air “xenophobic” views on social media, risk losing the right to see their own children.
  • While ordinary European citizens risk arrest and prosecution for “xenophobic” remarks, a German EU Commissioner, Günther Oettinger, called a visiting Chinese delegation of ministers “slant eyes” (“Schlitzaugen“). European Commission President Jean-Claude Juncker has promoted Oettinger to be in charge of the EU budget.
  • Clearly, the law is not equal. EU Commissioners can make “xenophobic” remarks and get a promotion; European citizens, for exercising their right to free speech, are arrested and prosecuted.

In Europe, is the enemy now the governments? Evidence is mounting that expressing even a mild opinion that runs counter to official government policy can land you in prison, or at least ensure a visit from your friendly local Kafkaesque police. Has Europe effectively become a police state?

Several European governments are making it clear to their citizens that criticizing migrants or European migrant policies is criminally off limits. People who go “too far,” according to the authorities, are being arrested, prosecuted and at times convicted.

In the Netherlands, the police visited people who naïvely made critical comments about asylum centers on Twitter in October 2015. In the town of Sliedrecht, police came to Mark Jongeneel’s office and told him that he tweeted “too much” and that he should “watch his tone”: his tweets “may seem seditious”. His offense? The town had held a citizens meeting about a refugee center in the region, and Jongeneel had posted a few tweets. One said: “The College of #Sliedrecht comes up with a proposal to take 250 refugees over the next two years. What a bad idea!” Earlier he had also tweeted: “Should we let this happen?!”

He was not the only one. In Leeuwarden, according to New Europe:

“…about twenty opponents of the plans [to establish asylum centers] in the region received police visits at home. It also happened in Enschede, and in some places in the Brabant, where, according to the Dutch media, people who had been critical of the arrival of refugees and ran a page on social media on the topic were told to stop”.

A spokesperson for the national police explained that ten intelligence units of “digital detectives” monitor Facebook pages and Twitter accounts in real time, looking for posts that go “too far,” so that they can visit with people to tell them “what effect a post or tweet on the internet can have.” In other words, the Netherlands are engaging in state censorship, thus raising the question: Is the Netherlands now a police state?

In the United Kingdom, Scott Clark was arrested in February 2016 for writing on the Facebook page of the Scottish Defense League that Syrian refugees would “see the nasty side to us.” According to a news report, he referred to sexual assaults on women in Cologne, Germany on New Year’s Eve by men of Arab or North African appearance as justification for his online comments, in which he also wrote, “If anything happens to any young girl I will personally spit in the face of councilors who pushed and pushed to get them housed here…” He also wrote, “There’s defo an Islamic invasion. Defo something going down. Just witnessed 15 Syrians in the local boozer… I opposed their arrival from the start.”

Inspector Ewan Wilson from Dunoon police office told the Guardian:

“I hope that the arrest of this individual sends a clear message that Police Scotland will not tolerate any form of activity which could incite hatred and provoke offensive comments on social media.”

In Germany, a married couple, Peter and Melanie M., were prosecuted in a criminal trial for creating a Facebook group that criticized the government’s migration policy. According to news reports, the page stated, “The war and economic refugees are flooding our country. They bring terror, fear, sorrow. They rape our women and put our children at risk. Make this end!”

At the trial, Peter M. defended his remarks online and said, “One cannot even express a critical opinion of refugees without getting labelled as a Nazi. I wanted to create a discussion forum where you can speak your mind about refugees…” He said that in his role as an administrator of the group, he removed pro-Nazi or radical remarks, but since Facebook had deleted the page, he could not present the evidence to the court.

In his verdict, the judge said, “The description of the group is a series of generalizations with a clear right-wing background.” Peter M. was sentenced to a nine-month suspended prison sentence and his wife to a fine of €1,200 with the judge adding, “I hope you understand the seriousness of the situation. If you sit in front of me again, you will end up in jail.”

In Germany, being critical of migrants and the government’s migrant policies can have other draconian consequences. In September 2015, Die Weltreported that people who air “xenophobic” views on social media, risk losing the right to see their own children. There need not even be a criminal offense for a court to consider the child’s welfare to be endangered and to restrict the parents’ right to see his or her child or to order “an educator” present during a meeting between parent and child, who can “intervene as required.” It is also possible to forbid certain actions, expressions or meetings in the presence of the child. As a last resort, the court can take the child out of the parent’s care entirely.

According to Eva Becker, Chairwoman of the Working Group on Family Law in the German Bar Association (DAV), “The decisive factor is a healthy understanding of people.” Becker estimates that it would not be enough to consider the child’s welfare endangered, if a parent said that he would rather not have any Syrian migrants living in his neighborhood. On the other hand, if a father or a mother makes comments that contain verbal threats against refugees in the presence of the child, he or she would “clearly exceed the critical limit.”

It is not even relevant whether those comments are criminal according to German law. Even a comment that is not punishable under German law can push a parent over the “critical limit.” It is not crucial whether the act is criminal, but whether it “influences” the child in a way that endangers its welfare. If a court establishes that the child’s welfare is at risk, the parent may have his or her rights of access to the child initially limited.

Actions, rather than talk, are considered even more incriminating. According to Becker, it is one thing to talk disparagingly with acquaintances about asylum seekers in the presence of the child, but much worse to take the child to “xenophobic” demonstrations.

Becker never defines what is meant by “xenophobic.” It seems implied that the talk is of one-way xenophobia, not Islamic xenophobia against non-Muslims, for example, but no attempt is made at a definition, although this is clearly the most crucial part of the matter.

While ordinary European citizens risk arrest and prosecution for “xenophobic” remarks, it is an entirely different matter for those at the top echelons of the European Union.

In a speech in Hamburg in October, Germany’s EU Commissioner for digital economy, Günther Oettinger, called a visiting Chinese delegation of ministers “slant eyes” (“Schlitzaugen“), an expression that is generally considered racist. Oettinger did not even bother to apologize, but toldDie Welt that it was important to see his comments in a “larger context.”

The European Commission also refused to apologize for, or investigate, Oettinger’s remarks (which were apparently also disparaging of women and homosexuals). Commission Chief Spokesman Margaritis Schinas told incredulous reporters that, “We have nothing to add.” Asked if there would be an investigation into the remarks, he said, “We do not have an FBI at the Commission.”

As recent as October 28, European Commission President Jean-Claude Juncker promoted Oettinger to the highly coveted and powerful position of vice-president with responsibility for the EU budget.

Clearly, the law is not equal. EU Commissioners can make “xenophobic” remarks and get a promotion; European citizens, for exercising their right to free speech, are arrested and prosecuted.

 end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

INDIA

The Indian economy is basically 90% and thus the elimination of the big notes has caused the their economy to grind to a halt with farmers not being paid.  It has shaken the faith in the system and more of its citizens will turn to gold

(courtesy zero hedge)

Indian Economy Grinds To A Halt After Cash-Ban: “Faith In System Shaken”

Amid scenes of panic across India, following PM Modi’s shock decision to withdraw high-value bills in the middle of the sowing and wedding season, Reuters reports the move, aimed at cracking down on the shadow economy, has brought India’s cash economy to a virtual standstill. With over 90% of all transactions done in cash, money flows in and out of the black-and-white system… until now, as Devangshu Datta exclaims, “The system works because everybody believes that those pieces of paper will be accepted by everybody else… This move has shaken that trust.”

Farmers have been left stranded as traders have no cash to pay for their produce, while millions of Indians lined up outside banks and post offices for the ninth day to exchange old banknotes or withdraw rationed money from their accounts.

Many of India’s 260 million farmers have no bank accounts and depend on local money lenders to fund sowing, which means those that have to borrow to sow winter crops like wheat or rapeseed could face debt trouble without a good harvest.

And so India’s government on Thursday announced immediate steps to ease a cash crunch for farmers amid widespread criticism. In the latest in a series of ad hoc steps, Modi allowed farmers to withdraw up to 25,000 rupees ($368) a week against their crop loans to ensure that sowing of winter crops “takes place properly”, a senior finance ministry official said.

But, as Devangshu Datta explains, the demonetisation of Rs 500 and Rs 1,000 currency notes came as a surprise to almost everyone. The details of re-monetisation are still to become entirely clear. What follows is a set of personal opinions of likely outcomes arising from this move to demonetise. Each of those opinions could be entirely wrong but they are all centred on subjects that are worth thinking about.

But, first, some basic statistics.

About 85% of all currency in circulation has just been turned into coupons that can only be exchanged in specific places. These notes can be converted into currency again only with identity proofs (which hundreds of millions don’t have) and the additional hardship of standing in many queues for many hours.

Over half of India’s population doesn’t have any sort of bank account at the moment and about 300 million don’t have basic ID such as Aadhaar either and hence, cannot access the banking system at all. About 130 million Indians have mobile wallets (about 25 million have credit cards) and there are maybe 550 million-600 million debit cards in circulation. So access to cash is very, very important for average Indians.

Liquidity in the economic system will be sucked out for several weeks at the very least, due to the very stringent restrictions on cash withdrawals from ATMs, and bank accounts. Plus there’s the sheer logistics of getting that massive volume of new notes into circulation. In addition there will be a cost to printing and distributing the new notes and taking the old currency out of circulation.

India is a cash economy. Well over 90% of all transactions are done in cash. Most of these transactions are legal, consisting of relatively small amounts, and frequently done by people who don’t make enough money to pay income tax. Your domestic worker pays for her bus ticket. You pay her husband, the plumber, for fixing your flush. The security guard at the bank ATM buys cigarettes.

Money flows in and out of the black-and-white system. The paan-wallah pays the fast-moving consumer goods companies for the cigarettes and chewing gum he sells, and keeps the retail margin. That’s white. He ploughs the surplus cash into buying paan leaves in undocumented transactions: the farmer who grows the paan pays no tax; the trader who sells paan under-reports the transactions. That’s black. The mechanic (who is outside the tax net) receives an (undocumented) tip for changing a flat tyre and buys a metro token (putting cash back into government coffers), or goes to see a movie (paying service tax).

Industries like fashion, retail, interior decoration, furniture, laundry and dry-cleaning services, hospitality, medical services, gems and jewellery, et cetera., are large conduits for these flows. We could call them black and white industries. Construction and real estate are totally built around black and white. Land is always sold with part of the price being paid in cash. The real-estate developer buys in black and white and he sells in black and white. The construction process is also black and white (carrying ghost workers on the construction rolls is one easy way to generate black money for example).

These are the facts.

Slowdown in growth

And now for some estimates and opinions.

By all estimates, the size of the black economy in India is large and the undocumented, informal but legal economy is also large. Estimates range from 20% of official Gross Domestic Product to 40% of official GDP. Many assets are held in the form of real estate and jewellery or assets stashed abroad in bank accounts or real estate, etc. However, political parties and religious bodies tend to hold trunkfuls of physical cash and some cash-intensive businesses also have large floats sitting around.

Now we come to the opinions.

The informal economy will be badly impacted. The non-cash assets will remain but those will be “frozen” for a while in that it will be difficult to convert those assets immediately. Cash assets will need to be laundered in some fashion (maybe by opening religious trusts and trustees “donating” notes to the trust, etc.) and will probably incur massive discounts in conversion. There will be blackmarket conversions to hard currencies and bullion, with rupee notes being accepted at massive discounts (anecdotal conversations suggest that the United States dollar is now trading at 15% premium to the Reserve Bank of India rate).

All the black and white and cash-intensive industries will be impacted for a while by the liquidity freeze. So will other industries with high cash turnovers (such as roadside vegetable sellers). This will show up in serious economic under-performance and in a slowdown in GDP growth.

The slowdown in GDP growth will not be completely captured in official statistics but there will be signs for sure in terms of consumption falling. Since consumption contributes much more than investment to India’s GDP growth, it will certainly hurt. Almost certainly, GDP growth estimates will be revised downwards (even if the government is reluctant to do so).

Who will it hurt?

This move will certainly hurt cash-intensive political parties, which have undeclared trunkfuls of cash. in fact, the conspiracy theorists will assume that this move is largely driven by tactical considerations about funding the upcoming assembly elections in Punjab, Gujarat and above all, Uttar Pradesh.

Political parties can now accept donations from abroad and the Bharatiya Janata Party has an obvious advantage, given its major outreach to non resident Indians. So the BJP could produce money from abroad which it can convert into rupees. The BJP is also aided by its links to a non-governmental organisation, the Rashtriya Swayamsevak Sangh, which can campaign on its behalf, with the tab for that campaigning not picked up by the BJP.

The move to demonetise will hurt the very rich in absolute terms but it will mean marginal damage to their assets. It will impact the middle class in terms of inconvenience for several months. It will gut the very poor and the lower income groups. These are people with little in the way of ID proof and they often keep cash stashed under the bed because they have no bank accounts.

Your domestic worker, whose ID (if she has one) says she lives in a village a 1000 km away. Your driver, who saves a chunk of his salary and sends it home to his family. The disabled flower seller/beggar at the traffic lights. The 12-year-old selling pirated books who ran away from an abusive home. The waiter-cum-delivery boy at the local dhaba. The massage parlour therapist. These are the people who will get really badly hurt. They all have high proportions of their income stashed in cash and they will have to pay large sums under the table to legitimise it.

What next?

The long-term impact of this move might be hard to assess. Once cash liquidity comes back to the economy, will there be reforms in the actual way that black and white business work? Or will people simply find new ways to game the system? I am cynical enough to suspect the latter will happen. It happened in 1978 when the Janata Party demonetised. While the Indian economy has changed considerably since 1978, Indians have also developed a global reputation for ingenuity and jugaad in the last 40 years. A lot of very smart people now have skin in the game when it comes to gaming the demonetisation.

There could be two types of political backlash as a result of this move. The rich trader class may move away from the BJP because many stand to lose large sums in absolute terms, and their assets will be frozen for a while. The second backlash will come in terms of voteshare shift from lower income groups, who will lose a large proportion of their savings and spend large quantities of time trying to convert hard-earned cash.

There are a couple of other points to ponder. The Income Tax and Excise Departments’ ability to gather data will increase exponentially. So will their discretionary powers, when they can query people who pay large sums in cash into their accounts. This might lead to an exponential rise in demands for under-the-table payoffs to officials in those departments in the next year. Also, India has no Privacy or Data Protection Laws. That data could be sold to all sorts of people and I cannot begin to guess what the consequences could be. Let us see.

A final philosophical point. Our entire monetary system depends on trust. A banknote is a piece of paper that says the RBI will give the bearer another similar piece of paper, or make an entry in an electronic ledger for that amount. The system works because everybody believes that those pieces of paper will be accepted by everybody else and therefore, money serves as an useful medium of exchange. This move has shaken that trust.

7.OIL ISSUES

Oil refuses to listen to “optimistic” comments out of OPEC

(courtesy zero hedge)

OPEC Jawbone Fail – Oil Slides Despite “Optimistic” Comment

 

Did OPEC just run out of short-squeeze ammo?

On any normal day the following two headlines from OPEC would have sent oil prices soaring….

  • IRAQ OIL MINISTER ‘OPTIMISTIC’ OPEC WILL CLINCH OUTPUT DEAL
  •  IRAQ OIL MINISTER SAYS DIFFERENCES NARROWING OVER OPEC OUTPUT DATA

But it appears the jawbone ammo has run dry…

 

end

 

WTI slides after the biggest rig count rise in over 1 1/4 yrs

(courtesy zero hedge)

WTI Slides After Biggest Rig Count Spike In 16 Months

The US oil rig count surged by 19 to 471 last week – the biggest weekly rise since July 2015 back to 9-month highs.This is the 22nd weekly rise in the last 24 weeks and is occurring as US crude production is beginning to rise once again.

  • *U.S. OIL RIG COUNT UP 19 TO 471 , BAKER HUGHES SAYS :BHI US
  • *U.S. GAS RIG COUNT UP 1 TO 116 , BAKER HUGHES SAYS :BHI US

Tracking lagged WTI prices still…

 

And US production is on the rise…

 

WTI prices slipped on the print…

8.EMERGING MARKETS

none today

 

end

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

 

Euro/USA   1.0625 UP .0003/REACTING TO  + huge Deutsche bank problems + USA election:Clinton LOSES/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/

USA/JAPAN YEN 110.37  UP 0.042(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2414 UP.0006 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3500 up .0035 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION)

Early THIS FRIDAY morning in Europe, the Euro ROSE by 23 basis points, trading now JUST above the important 1.08 level RISING to 1.0730; 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 15.60 0R .49%     / Hang Sang  CLOSED UP 81.33 OR 0.37%   /AUSTRALIA IS HIGHER BY 0.34% / EUROPEAN BOURSES ALL IN THE RED 

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

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

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

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

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

The NIKKEI: this FRIDAY morning CLOSED UP 104.78 POINTS OR 0.59% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 81.33 OR 0.37%   ,Shanghai CLOSED DOWN  15.60 POINTS OR 0.49%   / Australia BOURSE IN THE GREEN /Nikkei (Japan)CLOSED IN THE GREEN/  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1211.15

silver:$16.56

Early FRIDAY morning USA 10 year bond yield: 2.296% !!! UP 2 IN POINTS from THURSDAY 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  3.000, UP 2 IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 100.95 DOWN 0 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

END

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And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 3.854% UP 11  in basis point yield from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.04% up 3  in   basis point yield from  THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.593%  PAR IN basis point yield from  THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.093  PAR  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 49 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.272% DOWN 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.0596 DOWN .0026 (Euro DOWN 26 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.69 UP: 0.458(Yen DOWN 46 basis points/ 

Great Britain/USA 1.2351 DOWN 0.0056( POUND DOWN 56 basis points

USA/Canada 1.3601 down 0.0035(Canadian dollar up 35 basis points AS OIL fell TO $45.36

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 26 basis points to trade at 1.0596 

The Yen FELL to 110.69 for a LOSS of 46 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 56 basis points, trading at 1.2351/

The Canadian dollar rose by 35 basis points to 1.3501, AS WTI OIL FELL TO :  $45.36

The USA/Yuan closed at 6.8792

the 10 yr Japanese bond yield closed at +.04% UP 3 POINTS  IN BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 7   IN basis points from THURSDAY at 2.34% //trading well below the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.026 up 3   in basis points on the day /

 

Your closing USA dollar index, 101.27 UP 32 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 FRIDAY: 2:30 PM EST

London:  CLOSED DOWN 18.94 POINTS OR 0.67%
German Dax :CLOSED DOWN 20.98 POINTS OR .20%
Paris Cac  CLOSED DOWN 23.42 OR .52%
Spain IBEX CLOSED DOWN 95.10 POINTS OR 1.09%
Italian MIB: CLOSED DOWN 289.41 POINTS OR 1.75%

The Dow was down 35.89 points or 0.19%  4 PM EST

NASDAQ  down 12.46  points or 0.74%  4.00 PM EST
WTI Oil price;  45.36 at 2:30 pm; 

Brent Oil: 46.66   2:30 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.67 (UP 21 roubles from YESTERDAY)

TODAY THE GERMAN YIELD FALLS  TO +0.272%  FOR THE 10 YR BOND  2:30 EST

END

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

 

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

WTI CRUDE OIL PRICE 5 PM:$45.61

BRENT: $46.82

USA 10 YR BOND YIELD: 2.357%

USA DOLLAR INDEX: 101.34 up 39  cents

The British pound at 5 pm: Great Britain Pound/USA: 1.2318 down .0089 or 89 basis pts.

German 10 yr bond yield at 5 pm: +.272%

 

END

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

TRADING IN GRAPH FORM

 

Trumpgasm Sends Stocks To Longest Win Streak In 13 Years Despite Currency, Curve, & Credit Carnage

Collapsing currencies, bond bloodbaths, soaring cost of funds, and crumbling crude… Fuck that! Stock indices are at record highs!!!!

 

Some context for the recent moves…

  • Russell 2000 Biggest 2 week gain since July 2009
  • Dow Biggest 2 week gain since Dec 2011
  • S&P Biggest 2 week gain since Oct 2014
  • EURUSD Longest win streak since Lehman (Oct 2008)
  • Dollar Index Biggest 2 week gain since Lehman (Oct 2008)
  • US Treasury Bond Biggest 2 week loss since Jan 2009
  • Global Bonds Biggest 2 week loss EVER
  • Gold Biggest 2 week loss since June 2013
  • Copper Biggest 2 week gain since Feb 2010

Which leaves asset classes at extremes…

  • USD Index Most Overbought since September 2014
  • USDJPY Most Overbought since June 2015
  • USDCNH Most Overbought since Aug 2015
  • Dow Most Overbought since Nov 2014
  • Russell 2000 Most Overbought since Jan 2013
  • Major Financials SPDR Most Overbought since April 2010
  • Regional Financials Most Overbought EVER
  • Copper Most Overbought EVER
  • Gold Most Oversold since Nov 2015
  • Global Bonds Most Oversold since April 2000
  • EM Bonds Most Oversold since Dec 2014
  • Treasury Bond Most Oversold since June 2007

Spot the odd ‘market’ out… US Equities are the only winners…

 

Post-Trump…

 

 

The Russell 2000 is now up 11 straight days – the longest streak since 2003…

 

The Dow scraped out a gain on the week (while Trannies and Small Caps ripped)… (Nasdaq hit its intraday record highs today and Small Caps at record highs)

 

After 7 straight days of major short-squeeze, the last 3 days have been flatish, perhaps suggesting the squeeze ammo has run dry…

 

Note how the VIX/S&P complex ended the week… VIX was slammed to a 12 handle BUT created no bid in stocks…

 

Bonds had another ugly week (but the belly underperformed)…

 

So while everyone is excited about growth, the yield curve is flattening dramatically…

The entire US Treasury market is now underwater for 2016…

 

As the USD soared, so Gold and Silver have been hit but Copper and crude are holding gains post-Trump…

 

END

 

Trading early this morning: a huge move to the dollar and a sell with everything else:

7:40 am

(courtesy zerohedge)

“Massive Blocks All Went Off At The Same Time” – Investors Dump Stocks, Bonds, Oil, & Gold As Dollar Soars

The Dollar Index just broke to fresh 13.5 year highs, up an unprecedented 10 days in a row. The USD buying panic began as US equities opened…

and sparked selling in every USD-priced asset as stocks, bonds, gold, and oil all tumbled…

As Bloomberg reports, “Massive blocks in several asset classes all went off at the same time,” including UST and E-mini S&P 500, Mischler Financial trader Glen Capelo said; “Must be a program of some type”

 

end

And this puts the 10 yr treasury yield rising to 2.35% along with the other maturities.  The entire treasury yield curve is now lower than at any time in 2016:

(courtesy zero hedge)

End of day results showing global bonds suffering the biggest crash in over 25 years:

(courtesy zerohedge)

 

Trump’s first victory:  Ford does not move its truck production to Mexico

(courtesy zero hedge)

Ford CEO Folds? Trump Confirms Carmaker Won’t Move Production To Mexico

 

 

end

 

Trump offers the post of Attorney General to Jeff Sessions and National Security advisor to Michael Flynn

(courtesy zero hedge)

Trump Offers Jeff Sessions Post Of Attorney General

 

 

end

 

The background on Jeff Sessions:

(courtesy zero hedge)

Jeff Sessions Accepts Trump’s Offer To Serve As US Attorney General

Update 2: U.S. SENATOR JEFF SESSIONS HAS ACCEPTED TRUMP’S OFFER TO SERVE AS U.S. ATTORNEY GENERAL -TRANSITION OFFICIAL

Some background on the Sessions appointment, courtesy of Bloomberg,  which elevates one of Trump’s earliest congressional backers, and one of the most conservative senators, to serve as the nation’s top law enforcement official.

The 69-year-old, four-term Alabama Republican is a hard-liner on free trade and immigration, arguing that prospective immigrants don’t have constitutional protections. He has opposed efforts to overhaul prison sentencing, back off the war on drugs and legalize marijuana.

Sessions, a former federal prosecutor, was one of the few lawmakers to defend Trump after he proposed a complete shutdown on Muslims entering the U.S. He told Stephen Bannon on a radio show in 2015 that Trump was “treading on dangerous ground” but it is “appropriate to begin to discuss” the issue.

The attorney general represents the U.S. in legal matters and gives advice to the president and government agencies. The Justice Department’s broad portfolio includes prosecution of white-collar crime and enforcement of antitrust and civil rights laws. Sessions would oversee all the U.S. attorneys’ offices.

Sessions was born in Selma, Alabama, the son of a country store owner. An Eagle Scout, Sessions received his undergraduate degree from Huntingdon College in Montgomery and his law degree from the University of Alabama. After some time in private practice, he became the U.S. attorney for Alabama in 1981 at age 34. Sessions has served as a captain in the Army Reserve and Alabama state attorney general.

One of his earliest decisions would be whether to follow through on Trump’s campaign promises to appoint a special prosecutor to investigate the e-mail practices of his election opponent, Hillary Clinton. Before the election, Sessions called for a special prosecutor.

Trump also has yet to say whether he’ll ask for the resignation of Federal Bureau of Investigation Director James Comey, who he criticized over the handling of the investigation into Clinton and for not recommending criminal charges against her.

Sessions would also be deeply involved in vetting potential Supreme Court picks for Trump, including one to fill the seat of Antonin Scalia, who died in February.

Sessions opposed all of President Barack Obama’s U.S. Supreme Court picks and also voted against the nomination of Attorney General Loretta Lynch, citing her support for the president’s executive actions that shielded some undocumented immigrants from deportation.

* * *

and also: TRUMP HAS OFFERED CIA DIRECTOR POSITION TO U.S. REPRESENTATIVE MIKE POMPEO, POMPEO HAS ACCEPTED -TRANSITION OFFICIAL

Update: NBC confirms the news, reporting that Trump has offered Jeff Sessions the post of Attorney General

* * *

 

end
The following is extremely important as Albert Edwards previews the next Trump recession: we will have -1% yield on the 10 yr and helicopter money will be upon us
(courtesy Albert Edwards/)

Albert Edwards Previews The Trump Recession: “Minus 1% Yields, Helicopter Money”

In his interview with the Hollywood Reporter’s Michael Wolff, Donald Trump’s chief strategist, Steve Bannon made one particularly notable statement. When discussing his vision for the economy, he answered with the following explanation of how he views the interplay of monetary and fiscal policy under president Trump:

“Like [Andrew] Jackson’s populism, we’re going to build an entirely new political movement,” he says. “It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”

There is just one problem with Bannon’s comprehensive vision to inject $1 trillion in the economy: absent a central bank backstop to soak up the soaring deficits, rates will explode uncontrollably as the furious bond vigilantes – awoken after nearly a decade of being frozen in carbonite – return and wreak havoc after years of impotent inactivity, sending yields soaring, in the process making any fiscal stimulus plan impossible, while the economy tumbles into a stagflationary recession.

Which brings us to the latest note by SocGen’s Albert Edwards, in which he rhetorically asks if “a continued US Treasury bond rout will mean Trump is in for a big surprise?”

Needless to say, Edwards thinks the answer is yes. Here’s why.

Was it really only one month ago that I reviewed our secular bullish call on long-term government bonds? A sell-off that was already underway since July has turned into a rout since Donald Trump’s election. Most commentators now believe the 35 year secular downtrend in bond yields is over and that US yields will rise further, causing havoc in financial markets. This is already apparent with the dollar’s surge and resultant weakness in emerging market currencies, most particularly the renminbi. At some point very soon the bond sell-off will even adversely impact equity markets!

Indeed, and as we noted earlier today, the tipping point may have already arrived. While we wait for confirmation, this is what Edwards thinks will happen next:

In the very near term a fragile, highly indebted US economy will suffer a traditional end of cycle acceleration in consumer prices, and more importantly wages, which the Fed simply cannot ignore. I think it is entirely plausible that bond vigilantes could force them into two rate hikes in the first half of next year, with more being quickly discounted. Even if the Fed refuses to tighten, monetary conditions will tighten dramatically anyway as bond yields and the dollar surge, exacerbating the profits recession. This very long economic recovery will then suffer a very traditional death.

This is oddly reminiscent of a very similar and just as skeptical note from Goldman Sachs released previously, and which predicted that any variation of Trump’s policies will lead to a global slowdown, and eventually recession, no matter how generous the stimulus. Perhaps Trump’s administration is merely a carefully planted pretext by the Fed to unleash the next – and final – step of QE and/or helicopter money. Because Bannon’s plan of injecting a $1 trillion fiscal stimulus will certainly not work without the Fed’s blessing, especially at a time when foreign central banks have been forced to sell a record amount of debt as we highlighted earlier this week.

So how does it all end according to SocGen? Badly.

Over the next 12 months little will happen on the fiscal side in the US
as any stimulus is slated for 2018/19.
Meanwhile in the near term the
oil price will drive a pick-up in headline US CPI inflation into the
2½-3% range, forcing wage inflation decisively higher. Bond vigilantes
could easily decide the Fed is way behind the tightening curve and the
current bond rout could then extend all the way to the long-term trend
line.

 

 

A move in US 10y yields to 3¼% is entirely plausible and
would still not negate the long-term bullish trend.Indeed in the next
recession I still expect 10y yields to ultimately fall to minus 1% as
helicopter money is adopted to finance Trump’s double-digit fiscal
deficits.

Of course, the real purpose of this exercise has little to do with the economy or interest rates, and everything to do with the Fed’s one and only mandate: making sure artificially propped up stock markets  never have a chance of fair price discovery, somewhere around 60-70% lower, because if the biggest bond bubble in history is about to burst, that would mean a complete wipe out of equities as well. And that is never allowed to happen. 

Let us closed out the week with this wrap up courtesy of Greg Hunter/USAWatchdog

Weekly News Wrap-Up-Greg Hunter 11.18.16By Greg Hunter On November 18, 2016 In Weekly News Wrap-Ups

The mainstream media (MSM) is in full panic mode as it realizes it is becoming irrelevant. Now there is a so-called list of “fake news” sites out and Breitbart.com and InfoWars.com are on the list. That is an outrageous claim considering President Elect Trump has called Alex Jones at InfoWars.com to thank him for the coverage. It is preposterous to think Trump would call a “fake news” site to thank them. Also, Steve Bannon, who used to run Breitbart, is being tapped by Trump to be his top advisor. The MSM is losing power to the alternative news. So, it is attacking legit sites like InfoWars.com and Breitbart.com that called the election correctly and fairly to try and discredit them with false narratives and charges of racism and anti-Semitism. Top trends researcher and Publisher of The Trends Journal, Gerald Celente, says the MSM is on its way out and alternative media is on the rise. It is that simple. Celente will be the guest on the “Early Sunday Release” and will give a preview of top trends for 2017.

Obama is making his last trip abroad as President of the United States. While out of the country, he is pushing the New World Order agenda to the very end. The headlines from Greece read “Obama Urges Nations Not to give in to Isolationist Impulses.” Another one reads “Obama Warns against ‘a crude sort of nationalism’ taking root in the U.S.” This is the polar opposite of the results of the landslide election where Donald Trump won with the slogan “Make America Great Again.”

The 10-year Treasury is signaling trouble in the debt market. Since July, the interest rate on the 10-year has shot up nearly 1%. It doesn’t seem like much, but the percentage of increase is more 59% in less than four months. Gregory Mannarino of TradersChoice.net says this could be the beginning of a bond market meltdown caused by spiking rates if rates don’t stop rising soon.

 

Video Link

http://usawatchdog.com/weekly-news- wrap-up-greg-hunter-11-18-16/

Join Greg Hunter as he analyzes these stories and more in the Weekly News Wrap-Up.

After the Wrap-Up:

 

end

Well that about does it for the week

I will see you Monday night

harvey

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3 comments

  1. Roger Chipperfield · · Reply

    Thank you for all the hard work Harvey. One request: is it possible to periodically post the open interest on longer dated COMEX contracts, ie for the 12m through 2017

    Like

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