Gold closed at $1189.10 down $21.90

silver closed at $16.38:  down $0.24

Access market prices:

Gold: 1187.50

Silver: 16.36



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 23 (10:15 pm est last night): $  1230.45

NY ACCESS PRICE: $1214.70 (AT THE EXACT SAME TIME)/premium $15.75 


Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1231.70




London Fix: Nov 23: 5:30 am est:  $1213.25   (NY: same time:  $1213.20    5:30AM)

London Second fix Nov 23: 10 am est:  $11.85.35 (NY same time: $1187.10,    10 AM)

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

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


For comex gold: 


For silver:




Let us have a look at the data for today



In silver, the total open interest ROSE by 709 contracts UP to 168,952 with YESTERDAY’S trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .844 BILLION TO BE EXACT or 120% 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 FELL by 21,657 contracts DESPITE THE RISE IN THE PRICE OF GOLD ($1.10 with yesterday’s trading ).The total gold OI stands at 461,062 contracts. The gold specs have been blown out of the water

In gold: we had 16 notice(s) filed for 1600 oz


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


We had another huge change in tonnes of gold at the GLD, a withdrawal of 4.66 tonnes of gold

Inventory rests tonight: 904.91 tonnes




THE SLV Inventory rests at: 347.099million oz


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

1. Today, we had the open interest in silver ROSE  by 709 contracts UP to 169,661 as price of silver ROSE by $0.11 with YESTERDAY’S trading.  The gold open interest FELL by 21,657 contracts DOWN to 461,062 as the price of gold ROSE BY  $1.40 WITH YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 7.21 POINTS OR 0.22%/ /Hang Sang closed DOWN 1.38  OR 0.01%. The Nikkei closed/Australia’s all ordinaires  CLOSED UP 1.26% /Chinese yuan (ONSHORE) closed DOWN at 6.8999/Oil FELL to 47.90 dollars per barrel for WTI and 49.03 for Brent. Stocks in Europe: ALL IN THE RED EXCEPT LONDON     Offshore yuan trades  6.9417 yuan to the dollar vs 6.8999  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.



none today



Another earthquake off of Japan’s Fukushima coast: 6.9 magnitude

( zero hedge)


none today



Collateral is scarce and is forcing firms to pay 1.5% to purchase a 2 yr  German bund yielding 0%. Bill Holter has been warning about this for quite some time

(courtesy zero hedge)



Jim Reid states that ion 2017 the USA will the forced into helicopter money

( Jim Reid/Deutsche bank)




This is a biggy!  The EU is going to tighten controls on foreign bank’s balance sheets in an obvious retaliation against the USA banks for attacks on it.  London is caught in the middle of this due to their leaving the EU once the light the candle on article 50

( Mish Shedlock/Mishtalk)


As indicated to you on several occasions, Turkey is now shifting its foreign policy to the east instead of the EU


(courtesy  Korzun/


none today


i)Will there be a deal?  Or will a glut continue!

( Nick Cunningham/Oil

ii)USA production continues to rise as rig counts has now reached their 10 month highs

( zero hedge)


i)The currency debacle inside India as citizens now lose faith in the paper game

( Pater Tenebrarum/Acting

ii)Another commentary how the backlash on “black money” is throwing India into chaos

(courtesy zero hedge)



i)Your crime scene today:  Chinese yuan down, euro down and gold smashed down 17.00 dollars with borrowed gold contracts totaling 6 billion dollars worth of non backed paper.

( zerohedge)

ii)I brought this extremely important paper to you yesterday but it is worth repeating

( Avery Goodman/seeking alpha/GATA)

iii)An advisor to the Chinese authorities suggests that China should devalue their yuan big time now before Trump takes over

(  South China Morning Post)


i)Early morning trading:  a muni bond massacre as for 10 straight days, municpal bond yields have risen

( zero hedge)

ii)The USA dollar index reaches its resistance point at 101.80, yields rise everywhere as gold, the euro and tech stocks sink

( zero hedge)

iii)Looks like we have an internal war inside the Trump team as the conservative side of things are upset at the decision to kill the Clinton probe and the possible selection of Mitt Romney as Sec Treasurer

( zero hedge)

iv)We have warned you that the following two USA banks: JPMorgan and Citibank bank are the most systemically dangerous banks in the surprises here!

( zero hedge)

v)Don’t read anything into this as durable goods increased 4.8% month over month thanks to a huge increase in transportation orders for civilian aircraft up 138.5%  and military aircraft orders (up 33.1%) as authorities  used the start of the new fiscal year to get their orders in.  However the core capital goods shipments ie. the true capex has now declined for 15 straight months year over year.

( zero hedge)

vi)USA manufacturing pMI rises on the hope category as it decouples from production

( PMI/zero hedge)

vii)Strange:  Black America consumer confidence surges to 22 month highs;

( zero hedge)

viii)New home sales are now at 4 month lows/ sharp downward revisions

( zerohedge)

ix)Great reason to whack gold today:  In a poll 63% of Americans are planning not to shop on Black Friday( zero hedge)


x)what a joke:  Illinois is now stiffing its vendors to raise cash to fund its deficit and zero hedge is correct:  this is a financial time bomb and good reason to bomb gold/silver today.

( zero hedge)

xi) The minutes of the FOMC confirmed that the buffoons are going to raise rates to preserve their credibility which is zero.(courtesy zero hedge)

xii)First the failure of the F 15 and the constant delays.  Now the Navy;s new 4 billion stealth warship breaks down at the Panama Canal.  That ought to instill confidence into the hearts of Americans.

(courtesy zero hedge)

xiii)Nathan McDonald believes that Jeff Sessions, a very good constitutional lawyer will go after Hillary.  Here is why he believes this will happen

( Nathan McDonald/Sprott Money Management)

Let us head over to the comex:

The total gold comex open interest FELL by 21,657 CONTRACTS to an OI level of 461,062 DESPITE THE FACT THAT GOLD ROSE $1.40 with YESTERDAY’S trading. I expect that the next reading on Friday will see a further deterioration in OI.In the front month of November we had 27 notices standing for a GAIN of 10 contracts.  We had 0 notices served YESTERDAY so we  GAINED 10 GOLD CONTRACTS OR AN ADDITIONAL 1000 OZ  WILL STAND FOR DELIVERY IN THIS NON ACTIVE DELIVERY MONTH OF NOVEMBER.  The next contract month and the biggest of the year is December and here this month showed a DECREASE of 35,251 contracts DOWN to 164,500. The December contract month is still highly elevated compared to a year ago.  On TUESDAY Nov 24/2015 comex reading day, we had a total of 101,283 contracts standing ( a loss of 31,877 contracts from Nov 23/2015. It certainly emphasizes the huge demand for physical gold.We have exactly 5 more trading days and it matches last’s year with 5 trading days left. 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 16 notice(s) filed for 1600 oz of gold.

And now for the wild silver comex results.  Total silver OI ROSE by 709 contracts from 168,952 UP TO 169,661 as the price of silver ROSE BY $0.11 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 3 contracts. We had 0 notice(s) filed yesterday so we LOST 3 contracts or an additional 15,000 oz will NOT stand for delivery in this non active month of November.  The next major delivery month is December and here it FELL BY 7974 contracts DOWN to 48,378. The December contract month is about even compared to a year ago.  On Nov 24/2015 reporting day, we had a level of 43,067 contracts having lost 12,477 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 224,465  contracts which is FAIR.

Friday’s confirmed volume was 257,786 contracts  which is GOOD

INITIAL standings for NOVEMBER
 Nov 23.
Gold Ounces
Withdrawals from Dealers Inventory in oz  NIL
Withdrawals from Customer Inventory in oz  nil
 3118.55 oz
(97 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
16 notice(s) 
1600 oz
No of oz to be served (notices)
11 contracts
Total monthly oz gold served (contracts) so far this month
2671 contracts
267,100 oz
8.3079 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     633,712.5 oz
Today we had 1 kilobar transaction as 97 kilobars leave the comex vaults.
Today we had 0 deposits into the dealer:
total dealer deposits:  nil  oz
We had zero dealer withdrawals:
total dealer withdrawals:  nil oz
total customer deposits; nil  oz
We had 1 customer withdrawal(s)
 i) Out of SCOTIA:  3118.55 oz (97 kilobars)
total customer withdrawal: 3118.55  oz
We had 0  adjustment(s)
Total dealer inventor 2,079,966.496 or 64.695 tonnes
Total gold inventory (dealer and customer) =9,902,498.403 or 308.00 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 308.00 tonnes for a  gain of 5  tonnes over that period.  Since August 8 we have lost 46 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 0 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the NOV. contract month, we take the total number of notices filed so far for the month (2671) x 100 oz or 267,100 oz, to which we add the difference between the open interest for the front month of NOV (27 contracts) minus the number of notices served upon today (16) x 100 oz per contract equals 268,200 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 (2671) x 100 oz  or ounces + {OI for the front month (27) minus the number of  notices served upon today (16) x 100 oz which equals 267,200 oz standing in this non active delivery month of Nov  (8.3421 tonnes).
We neither gained nor lost any gold ounces standing in this non active delivery month of November.
Last yr at the conclusion of November we had .6656 tonnes of gold eventually stand
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 12 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for 2016:
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.3421 tonnes.
total for the 11 months;  191.7811 tonnes
average 17.434 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: 168.92 tonnes per the 7 months or 24.13 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 8.3421 tonnes compared to last yr 0.6656 tonnes
The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
NOV INITIAL standings
 Nov 23. 2016
Silver Ounces
Withdrawals from Dealers Inventory NIL
Withdrawals from Customer Inventory
75,359.920 oz
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
 1,213,281.110 oz
No of oz served today (contracts)
(nil OZ)
No of oz to be served (notices)
1 contracts
(5,000  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  6,766,529.7 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 2 customer withdrawal(s):
 i) out of SCOTIA:  40,058.620 oz
ii)OUT OF CNT:  35,301.300 oz
Total customer withdrawals: 75,359.920  oz
 We had 2 customer deposits:
i) Into Brinks: 602,892.310 0z
ii) Out of CNT:  610,388.810 oz
total customer deposits; 1,213,281.110  oz
 we had 0 adjustment(s)
Volumes: for silver comex
Today the estimated volume was 56,352 which is EXCELLENT
FRIDAY’S  confirmed volume was 88,328 contracts  which is huge
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 LOST 3 contracts or an additional 15,000 oz will NOT stand for delivery 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:   178.332 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.


And now the Gold inventory at the GLD
Nov 23/a huge withdrawal of paper gold from the GLD equal to 4.66 tonnes/inventory rests at 904.91 tonnes
NOV 22/no changes at the GLD/Inventory rests at 908.76 tonnes
Nov 18/no changes at the GLD/Inventory rests at 920.63 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 9/no change in gold inventory at the GLD/Inventory rests tonight at 949.69 tonnes
Nov 8/no change in gold inventory at the GLD/Inventory rests tonight at 949.69 tonnes
Nov 7/no changes in the gold inventory at the GLD/Inventory rests  tonight at 949.69 tonnes.
NOV 3/ a huge deposit of 4.43 tonnes of gold into the GLD/Inventory rests at 949.69 tonnes
Nov 1/no change in gold inventory at the GLD/inventory rests at 942.59 tonnes
Oct 31/no changes at the GLD/Inventory rests at 942.59 tonnes
Oct 28/no changes at the GLD/Inventory remains at 942.59 tonnes
Nov 23/ Inventory rests tonight at 904.91 tonnes


Now the SLV Inventory
Nov 18/no changes in silver inventory at the SLV/Inventory rests at 356/253 million oz
Nov 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 3/ a huge withdrawal of 2.807 million oz leaves the SLV: somebody was badly in need of silver/inventory rests at 358.435 million oz
Nov 1/no change in silver inventory at the SLV/inventory rests at 360.673 million oz/
Oct 31/no change in silver inventory at the SLV/Inventory rests at 360.673 million oz/
Nov 23.2016: Inventory 347.099 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 8.5 percent to NAV usa funds and Negative 8.8% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.2%
Percentage of fund in silver:38.3%
cash .+0.5%( Nov 23/2016)
2. Sprott silver fund (PSLV): Premium falls to +.04%!!!! NAV (Nov 23/2016) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.83% to NAV  ( Nov 23/2016)
Note: Sprott silver trust back  into POSITIVE territory at 0+.04% /Sprott physical gold trust is back into NEGATIVE territory at -0.83%/Central fund of Canada’s is still in jail.


Major gold/silver stories for WEDNESDAY

Early morning gold TRADING

*Russia Gold Buying In October Is Biggest Monthly Allocation Since 1998

By Mark O’Byrne November 23, 2016

Russia gold buying accelerated in October with the Russian central bank buying a very large 48 metric tonnes or 1.3 million ounces of gold bullion.

This is the largest addition of gold to the Russian monetary reserves since 1998 and could be seen as a parting ‘gift’ by Prime Minister Putin to his rival ex-President Obama.

The Russian central bank gold purchase is the biggest monthly gold purchase of this millennium.

Concerns about systemic risk, currency wars and the devaluation of the dollar, euro and other major currencies has led to ongoing diversification into gold bullion purchases by large creditor nation central banks such as Russia and China.

Commerzbank went with the simple explanation:

“Clearly the central bank was taking advantage of the stronger ruble – which has made gold cheaper in local currency – to buy more gold.”

“By contrast, the Chinese central bank bought only around four tons of gold last month – the second-lowest gold purchases since China began publishing monthly figures back in June 2015. The currency is likely to have played a role here, too – the yuan has been depreciating noticeably since the end of September.”

However, the Russian Central Bank has quietly been buying huge volumes of gold over the last 10 years. This diversification into gold accelerated since the financial crisis and since relations with the U.S. deteriorated in recent years. Russia bought gold systematically both when the ruble was strong and when it was weak.

In 2015, Russia added a record 208 tons of gold to her reserves compared with 172 tons for 2014.

According to the World Gold Council, only the central banks of the U.S., Germany, Italy, France and China currently hold larger gold reserves than Russia.

The Central Bank of Russia has outpaced the People’s Bank of China (PBOC) by nearly 150 tonnes in the last seven years, and has been the world’s largest central bank buyer of gold reserves for some time. This trend is expected to continue.

Total gold mining production globally is around 3,200 metric tonnes per year.

Thus, Russia’s purchase of 48 metric tonnes is around 1.5% of total annual global gold production. This is a very large amount for one country to buy in just one month.

Some of the gold bought will have come from Russian gold production which is currently at about 26 metric tonnes per month. In 2014, Russia was the third largest gold miner in the world at 266.2 tonnes, just six tonnes short of Australia in second place and China in first place.

The Russian central bank is buying all of Russian gold production and sometimes buying gold on the international market.

This demand is solely from the Russian central bank. There is little data regarding investor, high net worth (HNW) and ultra high net worth (UHNW) individuals including family offices who are diversifying into gold in Russia.

Russia is an increasingly wealthy nation with thousands of millionaires and hundreds of billionaires including mega rich oligarchs. It seems likely that some of these Russian investors are also diversifying into gold.

Clearly, Russia puts great strategic importance on its gold reserves. Both Prime Minister Medvedev and President Putin have been photographed on numerous occasions holding gold bars and coins. The Russian central bank declared in May 2015 that Russia views gold bullion as “100% guarantee from legal and political risks.”

Prudent investors are following Russia’s lead by diversifying and having an allocation to physical gold coins and bars. october-biggest-monthly-allocation-since-1998/





Your crime scene today:  Chinese yuan down, euro down and gold smashed down 17.00 dollars with borrowed gold contracts totaling 6 billion dollars worth of non backed paper.

(courtesy zerohedge)





$6 Billion Puke Sends Gold Plunging Below $1200 As Dollar Index, Bond Yields Spike

As Chinese Yuan collapses to fresh lows (USD Index spikes), and bond yields surge, this morning’s durable goods data sparked an extended collapse in gold, crashing them below $1200 as over $6 billion of pressure flowed through futures.

EUR down, Stocks down, Bonds down, Gold down…

Yuan just keeps crashing…

Bonds are dumped as USD soars…

Sending gold reeling… as 50,000 contracts are dumped

The gold liquidity moment started it (around 0825ET) but the US macro data sparked the break below $1200…

Pushing Gold to its lowest since Feb…

I brought this extremely important paper to you yesterday but it is worth repeating

(courtesy Avery Goodman/seeking alpha/GATA)

Avery Goodman: Understanding elections, gold, and the U.S. dollar via market manipulation


8:41a ET Tuesday, November 22, 2016

Dear Friend of GATA and Gold:

Securities lawyer and market analyst Avery Goodman writes today that an attack on the gold price by the international gold cartel signaled the likely election of Donald Trump as president, and he predicts that as president Trump will cut off the cartel’s access to the U.S. gold reserve, the expectation of which has prompted the cartel’s current frenzy to cover its short positions in gold and long positions in the U.S. dollar. Goodman’s commentary is headlined “Understanding Elections, Gold, and the U.S. Dollar via Market Manipulation” and it’s posted at his internet site here:…

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





An advisor to the Chinese authorities suggests that China should devalue their yuan big time now before Trump takes over

(courtesy  South China Morning Post)

Devalue yuan before Trump takes over, Chinese government adviser says


China Should Let Yuan Fall Against U.S. Dollar before Trump Takes Office, Government Adviser Says

By Sidney Leng
South China Morning Post, Hong Kong
Wednesday, November 23, 2016

An influential Chinese government adviser says Beijing should stop intervening to control the value of the yuan and instead allow a fall in the currency’s exchange rate before Donald Trump takes office as U.S. president at the end of January.

Yu Yongding, a senior fellow at the Chinese Academy of Social Sciences, wrote in a co-authored article published in the Shanghai Securities News that the Chinese currency was likely to depreciate against the dollar in the coming months and Beijing should permit the yuan to fall as much as the markets dictate while maintaining controls on the flow of capital in and out of the country.

Yu, who was the only academic on the central bank’s monetary policy committee when China removed the yuan’s peg to the value of the dollar in 2005, said in the article: “Over the next few months, the possible increase of returns on dollar assets … and capital outflows will bring in bigger depreciation pressure on yuan.

“From now until the president-elect Donald Trump officially takes office is a good period to abandon market intervention and let the yuan fully release its depreciation pressure.”

Yu and fellow author Xiao Lisheng said the central bank’s current strategy of trying to manage a gradual and controlled fall in the value of the yuan was backfiring and wasting China’s hard-earned foreign exchange reserves to prop up the currency. These have shrunk by about US$800 billion from a peak in June 2014. …

… For the remainder of the report:…




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




2. Nikkei closed /USA: YEN RISES TO 111.22

3. Europe stocks opened ALL IN THE RED EXCEPT LONDON   ( /USA dollar index RISES TO  101.09/Euro DOWN to 1.0616


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  47.90  and Brent:49.03

3f Gold DOWN /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES TO +.274%   

3j Greek 10 year bond yield RISES to  : 6.91%   

3k Gold at $1211.53/silver $16.61(7:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 79/100 in  roubles/dollar) 64.48-

3m oil into the 47 dollar handle for WTI and 49 handle for Brent/

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0109 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0732 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.274%

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


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

4. USA 10 year treasury bond at 2.317% early this morning. Thirty year rate  at 2.9922% /POLICY ERROR)

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

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


Futures Flirt With Records As Asian Stocks Rise; Commodities, Dollar Take A Breather

In a quiet overnight session in which Japan was closed, European shares are mixed as financials and auto weigh, Asian stocks rise led by materials while S&P futures little changed against a backdrop of the continuing commodity rally with oil holding near $48 a barrel, up fractionally on the session. Against a basket of currencies, the dollar index was up slightly at 101.12, very close to a 14-year peak. The dollar also kept most of its recent hefty gains on the yen at 111.05 though it has met resistance around 111.35 in the last couple of sessions

“I think markets had been a bit euphoric in the wake of Trump and now they are coming around to the understanding that there is not going to be fiscal stimulus that is going to be good for everyone” said Rabobank strategist Lyn Graham-Taylor said.

Emerging markets have struggled in recent days as surging U.S. bond yields sucked much-needed capital out of Asia. President-elect Donald Trump’s past talk of trade tariffs has also weighed on sentiment in the export-intensive region.

With Japan on holiday, Australia’s main index led the action in Asia with a rise of 1.35 percent to a one-month top helped by strength in bulk commodity prices. China’s blue-chip CSI300 index advanced 0.5 percent to a near 11-month peak as the yuan touched its lowest in six years.

Ahead of tomorrow’s Thanksgiving holiday in the US, European stocks were little changed, with miners leading gains after a metals index rose to the highest since June 2015 on Tuesday. Oil fluctuated after OPEC left unresolved participation by Iraq and Iran in the group’s plan to cut output. German two-year note yields touched a new record-low amid a scarcity of collateral and speculation the European Central Bank will ease policy at next month’s meeting. Treasuries gained before the Federal Reserve releases minutes of its November meeting.

“The reflation theme in the U.S. is dominating all markets,” said Christian Stocker, a strategist at UniCredit Bank AG in Munich, Germany. “In Europe the picture is a bit more complicate.d”

As Bloomberg notes, markets are flat ahead of U.S. economic reports including jobless claims, durable goods orders and consumer confidence for confirmation the Fed will hike rates next month.  As the chart below shows, the market-implied probability of a rate hike has been at 100% for the past few days, just as S&P hit new all time highs above 2,200.

Developed-market shares and the dollar have been among the biggest winners since Donald Trump’s surprise election victory fueled speculation of more fiscal stimulus in the U.S., while government bonds and emerging markets have slumped.

Futures on the S&P 500 Index rose less than 0.1 percent at 10:12 a.m. in London, after all four major U.S. stock benchmarks climbed to records on Tuesday.

The Stoxx Europe 600 Index slipped 0.1 percent, while the U.K.’s FTSE 100 Index added 0.6 percent. U.K. Chancellor of the Exchequer Philip Hammond is scheduled to outline a series of measures to help “ordinary working-class families” and stress that a stable economy, fiscal discipline and better productivity are the best ways to raise living standards in his Autumn Statement to Parliament on Wednesday.

Earlier today Europe reported Flash November PMI Data, which largely came in stronger than expected. As BBG notes, Euro-area economic growth accelerated to its fastest pace this year as growing order books prompted companies to add more workers and raise prices. A Purchasing Managers’ Index for manufacturing and services rose to 54.1 in November from 53.3 a month earlier, IHS Markit said on Wednesday. That’s the strongest level in 11 months and above the 50 mark that divides expansion from contraction.

  • Eurozone Nov. Flash Composite PMI 54.1; Est. 53.3
  • Eurozone Nov. Flash Services PMI 54.1; Est. 52.9
  • Eurozone Nov. Flash Manufacturing PMI 53.7; Est. 53.3
  • Germany Nov. Flash Composite PMI 54.9; Est 55
  • Germany Nov. Flash Services PMI 55; Est 54
  • Germany Nov. Flash Manufacturing PMI 54.4; Est 54.8
  • France Nov. Flash Composite PMI 52.3 Vs 51.6; Est 51.9
  • France Nov. Flash Services PMI 52.6; Est 51.9
  • France Nov. Flash Manufacturing PMI 51.5; Est 51.5

The signs that recovery is gathering momentum should give some relief to
the European Central Bank as it faces a complex decision on Dec. 8
whether to extend its 1.7 trillion-euro ($1.8 trillion)
quantitative-easing program. President Mario Draghi said this week that
the recovery remains reliant on continued monetary support. However, any hints of rising inflationary pressures will be met with disappointment by the market which expects no changes from the ECB’s QE for the foreseeable future.

The yield on two-year German notes opened at a record low of minus 0.74 percent, before rising to minus 0.67 percent after the Reuters report. The rate on 10-year bunds jumped five basis points to 0.27 percent. Yields on 10-year U.S. notes were little changed at 2.32 percent. The U.S. will auction seven-year notes today. Japanese markets were for closed for Labor Thanksgiving Day. Banca Monte dei Paschi di Siena SpA said it expects holders of junior bonds to swap about a quarter of available notes for equity in the first crucial stage of its 5 billion-euro ($5.3 billion) rescue plan.

* * *

Bulletin Headline Summary from RanSquawk

  • European equities trade mixed with participants awaiting Chancellor Hammond’s inaugural Autumn budget, while Bunds have been hampered by ECB source comments regarding measures of addressing bond scarcity
  • Another relatively quiet morning in FX markets, but notable was the hit on EUR/USD, with players still gunning for 1.0500 on the downside
  • Looking ahead, highlights include FOMC minutes, UK Autumn Statement, US mfg PMI, US Durables and DoEs

Market Snapshot

  • S&P 500 futures up less than 0.1% to 2202
  • Stoxx 600 down 0.1% to 341
  • FTSE 100 up 0.6% to 6860
  • DAX down 0.3% to 10680
  • German 10Yr yield down less than 1bp to 0.22%
  • Italian 10Yr yield up 6bps to 2.09%
  • Spanish 10Yr yield up 2bps to 1.54%
  • S&P GSCI Index down less than 0.1% to 370.9
  • MSCI Asia Pacific up 0.5% to 136
  • Nikkei 225 closed
  • Hang Seng down less than 0.1% to 22677
  • Shanghai Composite down 0.2% to 3241
  • S&P/ASX 200 up 1.3% to 5484
  • US 10-yr yield down 2bps to 2.3%
  • Dollar Index up 0.11% to 101.15
  • WTI Crude futures up 0.4% to $48.22
  • Brent Futures up 0.3% to $49.26
  • Gold spot up less than 0.1% to $1,212
  • Silver spot up less than 0.1% to $16.66

Top Headline News

  • US Oil Trades Near $48 as OPEC Fails to Agree on Iraq, Iran: Iraq, Iran output levels left for Nov. 30 meeting to resolve
  • Facebook May Have Tool to Return to China, But No Government OK: Social network operator said to lack Beijing office license
  • IAC Directors Sued Over Creation of Non-Voting Class of Shares: Chairman Diller accused of seeking to cement control
  • Dollar Rally Cools Before Thanksgiving as Traders Mull 2017 Fed: Traders less certain Fed will hike aggressively in 2017
  • Trump Shifts Tone on Climate Change, Environmentalists Scoff: Says there is ‘some’ link between humans and global warming
  • Monsanto Sued Over Alleged CEO, Board Bayer Merger Conflicts: CEO Grant may collect $18 million through deal, investor says
  • Engine Capital Said Pushing Del Frisco to Seek Options: Reuters: Co. pushed to seek alternatives, including a sale

* * *

Looking at regional markets, we start in Asia where stock markets traded higher across the board following a positive lead from the US where all 3 major US indices extended on record highs, with DJIA breaking above 19,000 for the first time. The increased risk appetite filtered through to ASX 200 (+1.3%) which led the region and was also boosted by gains in the materials sector. Hang Seng (+0.1%) and Shanghai Comp (-0.2%) traded mixed, with the latter failing to extend on its best levels seen in 10-months, while Japanese markets remained shut for Labour Thanksgiving Day. PBoC injected CNY 100bIn 7-day reverse repos, CNY 80bIn in 14-day reverse repos, CNY 10bIn in 28-day reverse repos. PBoC set mid-point at 6.8904 (Prey. 6.8779).

Top Asian News

  • Ex-StanChart Global Rates Head Said to Open Singapore Hedge Fund: Three Bamboo said to plan raising external money next year
  • The ‘Widow-Maker’ Returns as Shorts Target Australian Banks: Short interest in big four lenders has climbed in past month
  • China Selfie App Said in Talks for $5 Billion Valuation in IPO: Meitu plans to test demand with investors in U.S., London
  • Crown Staff Face at Least Two Months Detainment on Arrest: Group of Crown employees were arrested last Friday
  • HSBC Said to Advise Saudi Pension Fund on Financial Hub Sale: Parties discussing sale of struggling $8b district in Riyadh

In Europe, equities trade mixed with participants awaiting the Chancellor Hammond’s inaugural Autumn budget in which there are some expectations that the budget will entail a ban on letting fees. As such, property names have come under pressure thus far with Foxtons falling as much as 11%. Additionally, after yesterday’s debacle whereby Vinci shares fell just shy of 20% following a false report the company of pared the entirety of those losses. Fixed income markets have seen a bid this morning with much of the focus in the German 2yr after the yield fell to record lows of -0.745%, however has pulled off in recent trade. While political uncertainty in Italy remains at the forefront of investors’ minds which has been observed in the ITA-GER 10yr spread, now at the widest in 3-yrs. Heading into the US crossover, ECB sources suggested that the ECB are reportedly set to issue more bonds in order to avoid a market freeze, however, details may not be finalised in December. This subsequently weighed on prices given the supply impact with the Dec’16 Bund contract falling circa 50 ticks.

Top European News

  • Euro-Area Economic Growth Gathers Pace as Orders and Prices Rise: Euro-area Nov. services PMI rises to 54.1 from 53.3
  • German Two-Year Yields Drop to Record as ECB Speculation Mounts: Benchmark 10-year bunds hold gain before 2026 auction
  • Lufthansa Cancels About 900 Flights Amid 2-Day Pilot Strike: Walkout extended to Thursday after effort to block strike
  • Ericsson Falls After Reports of Corruption in Costa Rica, Poland: Reports on wireless network contracts at end of 1990s
  • Credit Suisse’s Dougan Said to Land $3b for Merchant Bank: Firm backed by royal families, state funds to stake venture
  • Innogy, Galapagos, Cembra to Be Added to Stoxx Europe 600 Index: Effective as of Europe market open on Dec. 19
  • Crunch Time for Monte Paschi, and Italy, as Share Sale Looms: New CEO Morelli criss-crosses globe to pitch crucial offering

In commodities, the Bloomberg Commodity Index, which measures returns on raw materials, headed lower for the first time in four days, ending the longest bullish run in a month. Brent crude fluctuated after a three-day rally, trading little changed at $49.17 a barrel. Preliminary talks in Vienna ended without finalizing how OPEC’s second- and third-largest producers will participate in the deal to reduce production, deferring the matter until the group’s formal meeting on Nov. 30, two delegates said Tuesday. U.S. crude stockpiles fell last week, the industry-funded American Petroleum Institute was said to report. Government data due Wednesday is forecast to show a gain. The London Metal Exchange LMEX Index of base metals on Tuesday reached the highest level since June 2015. Copper was little changed Wednesday after the highest close in more than a year. Zinc fell while lead and tin rose.

In FX, the Bloomberg Dollar Spot Index was steady after climbing 4 percent since the election. Minutes of the Fed’s November policy meeting are expected to confirm officials were creeping closer to their first rate increase in a year even before Trump’s victory. “A December Fed funds 25 basis-point rate hike is fully priced in,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney. “The dollar will continue to be driven by the pace of the Fed’s tightening cycle beyond December.” The pound declined before Hammond’s budget update. The Australian dollar strengthened 0.4 percent, buoyed by a 7.3 percent gain in iron-ore futures in China. Malaysia’s ringgit fell 0.5 percent against the dollar, declining for an 11th day in the longest losing streak since December 2013 even as the central bank said it will continue providing liquidity for an orderly currency market. Bank Negara Malaysia held its overnight policy rate at 3 percent, a sign that policy makers have shifted their focus from spurring economic growth to supporting the ringgit. China’s yuan declined to a record in offshore trading, sliding as much as 0.1 percent to 6.9222 per dollar. The extra cost of options to sell the yuan against the dollar over contracts to buy rose to the highest since June 30.

Looking at the day ahead, the early release will be the October durable and capital goods orders data which generally speaking would be considered an important release however given that the data is for the month prior to the Election, the more important release will probably be next month’s print where we’ll get a better idea of the possible shift in order flow. Also due out in the US is the latest weekly initial jobless claims print, new home sales, FHFA house price index, flash manufacturing PMI and the final revisions to the University of Michigan consumer sentiment survey. The focus then turns to the FOMC minutes from the meeting earlier this month where most will be looking for a confirmation that the Fed will be tightening next month. Away from the data, the other big event today is the aforementioned UK Chancellor Hammond’s long awaited post-Brexit Autumn statement.

US Event Calendar

  • 7am: MBA Mortgage Applications, Nov. 18 (prior -9.2%)
  • 8:30am: Durable Goods Orders, Oct. P, est. 1.7% (prior -0.3%); Capital Goods Orders, Oct. P, est. 0.3% (prior -1.3%)
  • 8:30am: Initial Jobless Claims, Nov. 19, est. 250k (prior 235k); Continuing Claims, Nov. 12 est. 2.008m (prior 1.977m)
  • 9am: FHFA House Price Purchase Index q/q, 3Q (prior 1.2%)
  • 9:45am: Bloomberg Consumer Comfort, Nov. 20 (prior 45.4)
  • 9:45am: Markit U.S. Manufacturing PMI, Nov. P, est. 53.5 (prior 53.4)
  • 10am: New Home Sales, Oct., est. 590k (prior 593k)
  • 10am: U. of Mich. Sentiment, Nov. F, est. 91.6 (prior 91.6)
  • 10:30am: DOE Energy Inventories
  • 11am: EIA natural-gas storage change
  • 1pm: Baker Hughes rig count
  • 2pm: FOMC Minutes, Nov.

* * *

DB’s Jim Reid concludes the overnight wrap

Over in markets the pre-Thanksgiving holiday cheer has continued with the four major US equity markets once again recording fresh all time highs last night. Indeed the S&P 500 (+0.22%), Dow (+0.35%), Nasdaq (+0.33%) and Russell 2000 (+0.92%) all nudged higher despite a wobble midway through the session after Oil pared gains following a fresh batch of OPEC headlines (more on that shortly). It was also a decent session for risk in Europe with the Stoxx 600 recording a +0.23% gain with the miners leading the way following moves higher for base metals including the likes of iron ore (+6.48%), copper (+0.97%) and aluminium (+2.21%).

It was a good recovery day for European sovereign bond markets too with 10y Bund yields finishing 5.4bps lower at 0.216% and in fact having their strongest day since September 22nd. Yields in the periphery were also 5-9bps lower with the market seemingly playing catch up to the accommodative Draghi and ECB comments on Monday. In fact 2y Bund yields tumbled to -0.753% yesterday and to a fresh record low. With that move it now means that the spread between 2y Bunds and 2y Treasuries has blown out to 183bp which is in fact the highest now since 2005. It’s amazing to think that just 5 years ago Bunds traded about 130bps on top of Treasuries.

Meanwhile, as we’ve been somewhat accustomed to recently, a fresh flurry of OPEC headlines has had Oil whipsawing about again over the past 24 hours. WTI is hovering little changed around $48/bbl this morning but traded in a $2 range around that level yesterday after headlines suggested that OPEC talks in Vienna yesterday had failed to yield an agreement on whether or not Iran and Iraq would join production cuts, and instead deferred the decision to ministers at the meeting this time next week. That was despite Libya’s OPEC governor suggesting that the meeting had ended with a consensus. Yesterday our commodity strategists published a report looking ahead to the meeting. In it they sketched out a range of possible outcomes with their central case being a freeze with loose compliance in which production would be established in the 32.5 to 33.0 mmb/d range for a period of six months, to be revisited and possibly renewed. However they also believe that this is still likely to mean that compliance will both be difficult to achieve and also doubted by the market, hence their revised forecast production rate of 33.4 mmb/d in 2017 versus actual output of 33.8 mmb/d in October.

Refreshing our screens this morning, with little new news flow to change things, the positive tone on Wall Street last night has continued into the Asia session this morning with the Hang Seng (+0.37%), Shanghai Comp (+0.23%), Kospi (+0.50%) and ASX (+1.23%) all higher. Markets in Japan are closed for a public holiday while US equity index futures are also a shade higher in early trading.

Moving on. The potentially most interesting event today is the long anticipated post-Brexit UK Autumn Budget Statement at 12.30pm GMT. As a reminder our Economists last week highlighted that Chancellor, Philip Hammond, has reduced expectations for the volume of his fiscal ‘reset’. Resources are not unlimited. Even with a modest relaxation, our economists expect a GBP30bn increase in Public Sector Net Borrowing (PSNB) on average over the 5-year planning period given the general deterioration in public finances (GBP10bn in 2017/18). They also expect Hammond to say there is some “fiscal space” in reserve if needed. There may be some space relative to the UK’s low Gross Financing Needs, but the more Hammond uses this fiscal space, the steeper the debt trajectory. The more credible the fiscal down-payment, the easier it will be to convince the markets of sustainability if the policy needs to be scaled up later. Credibility is a function of how well the policy targets the problems and the balance Hammond’s new fiscal rules achieve between flexibility and commitment. The Chancellor’s ability to target spending at boosting potential GDP growth (e.g. infrastructure spending) and protect it in weaker-than-expected economic scenarios will determine the success and sustainability of the Autumn Statement. Ahead of the Statement today, yesterday we got October public finances data in the UK which showed that net borrowing excluding banking groups amounted to £4.8bn in October which was a bit less than expected (vs. £6.0bn expected) and also down from £6.4bn a year earlier.

The rest of the more interesting newsflow is unsurprisingly politics orientated again. Following on from his policy agenda video announcement, President-elect Trump confirmed that he has no intention to prosecute or investigate Hilary Clinton over the handling of her secret email information saying that it would be ‘very divisive for the country’ in an interview with the NY Times. Interestingly, in the same interview Trump also suggested that he might abandon another campaign pledge in saying that he would ‘keep an open mind’ about whether or not to withdraw the US from the climate change treaty signed last year in Paris.

Meanwhile in Italy the deputy-secretary of PM Renzi’s Democratic Party, Lorenzo Guerini, confirmed that Renzi’s party would seek early elections by the summer of 2017 in the event that Renzi loses the upcoming referendum. That news shouldn’t come as a big surprise however with Guerini also declining to say whether the premier would stay on to lead the party or honor his promise to resign, should he be defeated.

Before we wrap up, once again it was another relatively quiet day for dataflow yesterday. In the US we learned that existing home sales climbed +2.0% mom in October (vs. -0.6% expected) to an annualised rate of 5.60m which is actually the highest level since February 2007. Meanwhile the Richmond Fed’s manufacturing index rose 8pts to +4 in November with the new orders index in particular up a rather robust 19pts to +7. In Europe the flash November consumer confidence print rebounded to -6.1 from -8.0 which is actually the best print this year. Finally in the UK the CBI Distributive Trends Survey for November showed an improvement in firms’ order books with total orders rising from -17 to -3.

Looking at the day ahead, this morning in Europe it’s all eyes on the November flash PMI’s for the Euro area, Germany and France. The consensus is for a stabilisation in the Euro area composite at 53.3. Across the pond this afternoon we’ve got a reasonably busy diary with the data packed in ahead of Thanksgiving tomorrow. The early release will be the October durable and capital goods orders data which generally speaking would be considered an important release however given that the data is for the month prior to the Election, the more important release will probably be next month’s print where we’ll get a better idea of the possible shift in order flow. Also due out in the US this afternoon is the latest weekly initial jobless claims print, new home sales, FHFA house price index, flash manufacturing PMI and the final revisions to the University of Michigan consumer sentiment survey. This evening, the focus then turns to the FOMC minutes from the meeting earlier this month where most will be looking for a confirmation that the Fed will be tightening next month. Away from the data, the other big event today is the aforementioned UK Chancellor Hammond’s long awaited post-Brexit Autumn statement.


i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 7.21 POINTS OR 0.22%/ /Hang Sang closed DOWN 1.38  OR 0.01%. The Nikkei closed/Australia’s all ordinaires  CLOSED UP 1.26% /Chinese yuan (ONSHORE) closed DOWN at 6.8999/Oil FELL to 47.90 dollars per barrel for WTI and 49.03 for Brent. Stocks in Europe: ALL IN THE RED EXCEPT LONDON     Offshore yuan trades  6.9417 yuan to the dollar vs 6.8999  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.



Another earthquake off of Japan’s Fukushima coast: 6.9 magnitude

( zero hedge)

Another Earthquake Strikes Japan Off Fukushima Coast

Two days after a strong 6.9 magnitude struck Japan, just off the coast of Fukushima, moments ago JMA reported that another earthquake has hit Japan, once again off Fukushima, which according to NHK reports was modestly weaker, with a preliminary measurement of 6.1 on the Richter scale.


NHK reports that there is no tsunami risk.

Magnitude 6.2 earthquake off the coast of Fukushima now.

NHK reporting quake at 6:23am registered 4 on 7-point Shindo scale across Fukushima, Ibaraki prefectures, 3 across Tohoku. No tsunami risk.

일본이나 일본에 근접한 해역이나 타국가에 강한 지진이 발생.
주의바람 06:22:45 Seismic intensity 4 Fukushima Int. 3 Ibaraki


c) Report on CHINA

none today


Jim Reid states that ion 2017 the USA will the forced into helicopter money

(courtesy Jim Reid/Deutsche bank)

Helicopter Money Has Arrived… And Nobody Noticed: Here’s Why







This is a biggy!  The EU is going to tighten controls on foreign bank’s balance sheets in an obvious retaliation against the USA banks for attacks on it.  London is caught in the middle of this due to their leaving the EU once the light the candle on article 50

(courtesy Mish Shedlock/Mishtalk)

EU Retaliates Against US Banks & London With Global Trade War Tit-For-Tat

Submitted by Michael Shedlock via,

The EU fired a major global trade war tit-for-tat retaliation today against US banks and the UK in a single action.

Brussels will raise costs for foreign lenders while simultaneously taking a pot shot at London.



Please consider EU to Retaliate Against US Bank Capital Rules.

Brussels is proposing to tighten its grip over overseas banks operating in the EU in a tit-for-tat step against the US that will raise costs for big foreign lenders and potentially hurt the City of London after Brexit.

The European Commission will unveil provisions on Wednesday that mirror controversial US “intermediate holding company” rules that ringfence foreign bank capital. When these were announced in 2014, the EU complained to Washington of “protectionism” and threatened to retaliate.

If adopted into EU law, the commission’s proposals would force big US investment banks such as Goldman Sachs and JPMorgan to hold additional capital and liquidity in the EU so their subsidiaries can be separately wound up in a crisis by European authorities.

The counterblow from Brussels, slipped into late drafts of the proposal, will be welcomed by European banks that have been complaining about an unlevel playing field with their US rivals. But it underlines the accelerating trend towards further fragmentation in financial rules, as jurisdictions assert control even at the risk of duplicating international requirements.

Although EU officials insist the proposal was drafted without Brexit in mind, the reforms would potentially affect London as a non-EU financial centre. The proposal could add costs and complexity to UK-based banks by forcing them to establish a separate pool of capital in the EU after the country leaves the bloc.

“This is a taste of what is to come,” said one adviser to an investment bank that would be affected by the rules. “At a time when everyone is rethinking bank structures, it adds one more point of uncertainty.”

He added: “If you must create an EU holding company that acts as your hub, the question becomes: how many European hubs do you want?”

The move is likely to stoke tensions between the US and Europe, which have already been ignited by a $14bn claim on Deutsche Bank from the US Department of Justice to settle claims of mis-selling mortgage securities.

European officials have also pushed back against US-led pressure for tough capital requirements to be introduced by the Basel Committee of global regulators in a move that some European banks claim would put them at a disadvantage to their US rivals.

US banks say they are already forced to hold significant amounts of capital and liquidity in their large UK operations. But if Europe presses ahead with the latest proposals, it could force them to increase the amount of resources they have tied up in Europe.

In 2014 Michel Barnier, then EU’s financial services commissioner, warned that US plans to force foreign banks to hold more capital were “protectionist” and risked bringing a “fragmentation of global banking markets”. Mr Barnier is now the commission’s chief Brexit negotiator.

The US and EU both want to be in control of a very fragmented and essentially insolvent global banking system.

It appears the UK was caught in the middle of a US-EU dispute, but in reality, the EU wanted to punish the UK and would have done this anyway.

Regardless, this adds fat to the fires of retaliations even as far bigger problems loom. Italy may be one vote away from leaving the Eurozone.






Collateral is scarce and is forcing firms to pay 1.5% to purchase a 2 yr  German bund yielding 0%. Bill Holter has been warning about this for quite some time

(courtesy zero hedge)

Bunds Tumble On Report ECB May Lend Out More Bonds To “Unfreeze” Broken Repo Market

As we showed yesterday, while the rest of the European bond markethas suffered from the some “trumpflation-linked” weakness in the long end as US Treasurys in the aftermath of the Trump election as inflation and new supply fears grow, short-dated German bund yields unexpectedly plunged to record lows…

… as a result of what appears to be a massive year-end collateral shortage (which has come in about a month early) with demand for German collateral soaring and reflected in repo funding levels as funds are now forced to pay up to 1.5% to borrow a 10-year Bund, up from some 0.40% a year ago, according to Icap data..

Today we saw more of the same in early trading, as the German 2Y continued to outperform on collateral shortage fears, which likely prompted Reuters to report that the ECB is looking for ways to lend out more of its huge pile of government debt to avert a freeze in the €5.5 trillion repo market that underpins the financial system, manifesting in the surge in short-term Bunds.

While the ECB has bought more than a trillion euros ($1.06 trillion) of euro zone government bonds in a bid to shore up economic growth and inflation in the euro zone, in doing so, it has taken away the key ingredient for repurchase agreements, or repos, whereby financial firms lend to each other against collateral, typically high-rated government bonds such as Germany’s. Repo, as covered here extensively over the years, is the core lubrication of debt capital markets, and is used by investment funds to finance trading and is regarded by the ECB as a key avenue to transmit its own monetary stimulus to the economy. More details:

A freeze in repo activity risks undoing some of the ECB’s stimulus by hampering lending between financial companies and leaving bond markets vulnerable to sharp selloffs.

To avert this, the ECB wants to make it easier for banks to borrow the bonds that it has bought so that they can be used as collateral for repo loans, the sources said.

Possible changes include reducing charges for firms which fail to return on time the bonds they have borrowed, accepting new types of collateral and extending the duration of loans.

“If liquidity dries up there are more fails and banks are more cautious when it comes to making the market,” one of the sources said. The sources added the issue will be discussed at the ECB’s Dec. 8 meeting, when rate setters will decide on whether to continue purchases beyond March and ensure they can still find enough bonds to buy.

Any decision on bond lending will depend on what other changes the ECB makes to its asset-purchase program and might not be finalised in December.

While Europe is not alone in its central bank dominating the repo market, with the Fed likewise having quietly become the biggest player in the US repo market as well, the problem appears to be most severe in Germany.

With the ECB now owning more than a quarter of all outstanding German bonds as it continued to slowly nationalize European debt, funds pay up to 1.5% to borrow a 10-year Bund, up from some 0.40 percent a year ago, according to Icap data.

This is putting a strain on investors as they face increasingly frequent demands to put up cash or liquid collateral againsttheir derivative positions due to new regulation.

“If a pension fund can’t borrow a bond in time, it may have to sell its own cash bond, foregoing a potential return in the future to fulfill a short-term obligation,” Godfried DeVidts of the International Capital Market Association industry body said. “So basically the pension funds are getting poorer and the pensioners too.”

Any ECB decision how to remedy the “repo freeze” would meet further roadblocks as it would then have to be implemented by national central banks, which own the bulk of the debt bought by the ECB and bear the risk for their own bond-lending schemes. “This means the most radical proposals may run into resistance, the sources said.”

And while the actual remedy to be implemented by the ECB is yet to be determined, the concern that the ECB may inject more securities to unfreeze repo has quickly rippled through the bond market, and as a result Germany’s two-year bond yields rose: the two-year Schatz yield shot up 6 basis points from the day’s lows to minus 0.69 percent, having hit a record low earlier in the day. Other euro zone bond yields also rose, reversing earlier falls.

The most notable move was in 10Y bunds which jumped to 0.278% after hitting a session low of 0.21%. French 10Ys also rose over 7 bps, as did Italian bonds.

Bund futures slid to a session low of 160.78, losing as much as 62 ticks, following the Reuters report.

The best summary of the quandary the ECB has found itself in comes from David Schnautz, interest rate strategist at Commerzbank, who first pointed out the collateral shortage, and who said that “there is something going on with the repo markets and we can see that as soon as the ECB starts talking about tackling these problems we see a market reaction.

For now, despite the modest pick up in yields, the market is confident that the collateral shortage, something we have warned about since 2013, will be resolved although the specifics could lead to another major asset repricing, especially if it comes at a time when the ECB and BOJ are expected to provide the “cross-border” helicopter money to finance Trump’s stimulus plan, as reported yesterday.




As indicated to you on several occasions, Turkey is now shifting its foreign policy to the east instead of the EU


(courtesy  Korzun/

Major Foreign Policy Shift: Turkey Abandoning EU For SCO

Submitted by Peter Korzun via,

Turkish President Tayyip Erdogan said on November 20 that Turkey did not need to join the European Union «at all costs». Instead, it could become part of the Shanghai Cooperation Organization (SCO), or Shanghai Pact. The Turkish leader said he had already discussed the idea with Russian President Vladimir Putin and his Kazakh counterpart Nursultan Nazarbayev.

The SCO is a Eurasian political, economic, and military organization founded in 2001 in Shanghai. Its members are Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Kazakhstan, Kyrgyzstan and Uzbekistan speak Turkic languages.

India and Pakistan are to become full-fledged members by the next meeting at Astana in 2017. Mongolia, India, Iran, Pakistan and Afghanistan are SCO observers. In 2013, Turkey got the status of SCO’s «dialogue partner». The other country with the same status is Belarus. Dialogue partners are entitled to take part in ministerial-level and some other meetings of the SCO, but do not have voting rights.

Turkey formally applied to become a member of the European Union in 1987 and accession talks began in 2005. Its ambition to become part of the bloc dates back to the 1960s. Its prospects of joining look dim after 11 years of negotiations. The human rights are a divisive issue.

The EU has stepped up its criticism of Ankara since the failed July 15 coup d’état, saying the country’s anti-terror laws were being applied too broadly. Luxembourg and Austria, as well as some European lawmakers, called on the bloc to halt membership talks with Turkey or punish it with other sanctions.

For its part, Turkey is frustrated with the long stalemate over EU membership. Ankara has accused the EU of treating the country differently regarding its accession attempt and failing to unlock all the cash it had promised to disburse to Turkey on the back of the refugee deal. Turkey plans to revive the death penalty. The move will make EU accession impossible. President Erdogan plans to call a referendum on the future of Turkey’s EU membership bid.

Turkey’s SCO accession would be a milestone bringing together the organization and the Cooperation Council of Turkic-Speaking States (CCTS) – an international organization of Turkic countries, comprising Azerbaijan, Kazakhstan, Kyrgyzstan and Turkey. The General Secretariat is in ?stanbul, Turkey. Turkmenistan and Uzbekistan are possible future members of the council.

The international organization also functions as an umbrella body for all other autonomous collaboration mechanisms like the Parliamentary Assembly of Turkic Speaking Countries (TURKPA), International Organization of Turkic Culture (TURKSOY), and Turkic Academy.

Since its establishment in 2009 the CCTS has made meaningful progress on institutionalizing the interaction. The 6th Summit of the Heads of States of the Turkic Council is expected to take place till the end of the year in Cholpon-Ata (Kyrgyzstan).

President Erdogan’s statement is another sign of Ankara’s moving away from the West to other partners. For instance, Turkey has just announced it is in talks with Russia on purchasing the advanced long-range S-400 air defense systems to protect its skies. It also seeks procurement deals in electronic systems, ammunitions and missile technology. General Hulusi Akar, the head of the Turkish armed forces’ General Staff, visited Russia this month to discuss military cooperation.

During Erdogan’s two-day visit to Pakistan on November 16, the editor of a pro-government newspaper in Turkey said the country needed to develop its own nuclear deterrent. He might have expressed his personal opinion but it confirms the general trend of Turkey’s reorientation away from the NATO’s concept of cooperative security under the US umbrella.

During the August 9 summit in Saint-Petersburg, Russia and Turkey signed a declaration on unprecedented partnership in defense industry. The parties also agreed to form a joint military and intelligence mechanism to coordinate their activities in the Middle East. Russian-Turkish economic cooperation is expected to make further progress with the revival of Turkish Stream gas project.

It should be noted that Russia, not the US or any other NATO member, was the first country to be visited by the Turkish president after the failed coup.

In late October, Turkey and China also held a trade symposium in Istanbul, signing a total of 36 new deals amounting to $300 million in value. Due to its geography, Turkey has a crucial role to play in implementation of China’s One Belt One Road (Silk Road) project. Turkey is again taking the position as a key investment and cooperation partner that will help bridge the East and the West.

It has risen to become the world’s 17th largest economy and an increasingly important destination for Chinese companies that want to trade and invest. Currently, China is Ankara’s third-largest trading partner, with trade amounting to $28 billion. Turkey is popular among Chinese tourists, and cultural relations between the two countries are developing.

Turkish Customs Minister Bulent Tüfenkci announced in January that the country now aims to triple trade with Iran, an SCO observer, to $30 billion «as soon as possible».

Turkey’s gradual shift from the West to Eurasia and other partners is part of a broader process as the West gets weakened and divided. The very notion of “Western unity” is fading away. Unsurprisingly, as its relations with the West sour, Turkey is reaching out to other poles of power. Further progress on the way of Ankara’s to integration with the SCO will facilitate the multi-dimensional foreign policy to strengthen Ankara’s standing in the world.




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Will there be a deal?  Or will a glut continue!

(courtesy Nick Cunningham/Oil


Is OPEC Playing The Oil Markets Again?

Submitted by Nick Cunningham via,

Oil prices moved back up closer to $50 per barrel on the sudden surge in optimism surrounding an OPEC deal. With the meeting just days away, everybody is playing ball and sticking to the script, and the odds of an agreement have improved markedly compared to a few weeks ago.

Iraq offered three proposals to OPEC members, showing a renewed willingness to negotiate after weeks of disputing production data and demanding an exemption from the proposed cuts. Details of the proposal were kept quiet, but Iraqi officials sounded cooperative in an emailed statement. “Iraq’s legitimate demands should not be perceived as an obstacle to reaching a new agreement to freeze production,” Iraqi oil minister Jabbar al-Luaibi said, according to Bloomberg. Iraq is optimistic about “reaching a fair agreement that would take into consideration everyone’s interests and that puts an end to the glut.” Officials from Iran, Nigeria and even Russia also offered positive wordsabout the prospects of an accord.

Oil prices shot up by more than 4 percent on Monday on the news. Oil has rallied once again in recent days after dropping into the low-$40s per barrel. Now back up close to the $50 per barrel threshold, OPEC has once again succeeded in jaw-boning the oil market.

Goldman Sachs hiked its oil price forecast this week by a substantial amount. The investment bank expects oil prices to average $55 per barrel in the first half of 2017, up sharply from the previous estimate of $45 to $50. The bank is now “tactically bullish” on oil. “With greater confidence that the global oil market can finally shift into deficit later next year, we now believe that there is a strong rationale for low-cost producers to deliver a swift production cut to normalize inventories,” Goldman analysts wrote in a research note this week. In fact, Goldman Sachs sees prices rising across a range of commodities next year.

The optimism has not trickled over into the oil futures market, at least not yet. Hedge funds and other money managers have stepped up their short bets on crude oil ahead of the OPEC meeting, covering against a steep downfall in prices should OPEC fail to come to terms. While the short positions on oil were notable, trading volume in general is way up. Bloomberg notes that as of mid-November, oil price volatility was at a seven month high. Bets on oil futures reached 1.47 million contracts for the week ending on November 15, the largest trading volume in nearly a decade.

But since mid-November, oil prices have increased, suggesting that some oil traders are closing out short positions, which could be because sentiment around the chances of an OPEC deal have improved. Further gains are possible as shorts are closed out.

At the same time, John Kemp of Reuters notes that the oil futures curve still does not look very good. The market is still in a state of contango, in which front month contracts are cheaper than oil futures further out. That is a sign that the markets still expect the glut of supply to continue. In fact, the difference between front month oil contracts and delivery six month out are actually wider than they were back in September when OPEC reached the Algiers agreement, which suggests an even gloomier outlook than two months ago.

In short, an OPEC agreement might spark a short-term rally, but unless they agree to real and sustained cuts, the poor fundamentals could ensure the price increases are temporary.

That last point is also key. OPEC may agree to something, but the details matter. OPEC is now producing at least 236,000 barrels per day (as of October) more than they were in September. That means that instead of needing to cut between 200,000 and 700,000 barrels per day in order to reach the stated goal of bringing output down into the range of 32.5-33.0 mb/d, OPEC will now need to make even sharper cuts – somewhere on the order of 600,000 to 1.1 mb/d. On top of that, the latest reports suggest that OPEC is discussing a six month agreement rather than one that would last a year. The idea is that it would require less of a sacrifice for OPEC members, particularly for Iraq and Iran who are still holding out. Of course, if OPEC cuts for six months and then the agreement expires, the effort will produce very little in the way of balancing the market.

Finally, assuming OPEC does the unthinkable and actually agrees to substantive and sustained cuts in output, they will likely succeed in pushing up oil prices. But that then merely throws a lifeline to U.S. shale, which could come back to life if oil prices move closer to, say, $60 per barrel. Even today, with prices below $50 per barrel, the rig count has been climbing for half a year, and now stands at 588 rigs as of last week, up almost 200 rigs from May. Gains in the rig count will only pick up pace of OPEC agrees to cut its output.




USA production continues to rise as rig counts has now reached their 10 month highs

(courtesy zero hedge)


US Crude Production Rises As Rig Count Reaches 10-Month Highs

For the 24th week of the last 26, oil rigs rose (by 2) to 474, the highest since January 2016. US crude production rose again last week tracking the lagged trend of rising rig counts in the US.



Notably US crude production looks set to rise given the rig count moves (and if OPEC agrees a deal and spooks prices higher, that production may well arrive sooner).


The currency debacle inside India as citizens now lose faith in the paper game

(courtesy Pater Tenebrarum/Acting

India’s Currency Debacle: “Consider It A Warning”

Submitted by Pater Tenebrarum via,

A Major Crisis

Last week Jayant Bhandari related the story of the overnight ban of certain banknotes in India under cover of “stamping out corruption” (see Gold Price Skyrockets In India after Currency Ban Part 1 and Part 2 for the details).


Banned 500 rupee banknotes

The problem is inter alia that the sudden ban of these banknotes has hit the Indian economy quite hard, given that 97% of all transactions in the country are cash-based. Not only that, it has certainly created fresh avenues for corruption – which should have been expected (whether it will succeed in its aim of stamping out other types of corruption remains to be seen – we doubt it).

Moreover, the poorest of the poor are suffering the most on account of the ban, not least because the promised replacement of the banned banknotes is apparently hitting major logistical snags and may take much longer than thought.

Readers interested in this story may want to listen to an interview Jayant has recently given to Maurice Jackson of “Proven and Probable”, which we have embedded below.  A quick note on errata: at 1:45 and 1:57, Jayant says “2,000 dollars” – he obviously meant to say “2,000 rupees”.

Maurice Jackson interviews Jayant Bhandari

Further updates on the still developing situation can be expected soon.

Consider it a Warning

We would note on this occasion that although what India’s citizens are facing these days may seem a remote danger to most Westerners, it does demonstrate an important point: state-issued paper currency exists only at the sufferance of the State. It can be made worthless by decree.

As we pointed out in “Why Does Fiat Money Seemingly Work?”, the main reason why irredeemable paper money is accepted at all are not only legal tender laws which enforce its use as a means of payment, but primarily the fact that the State insists that its fiat currency be used for the payment of taxes. This is what creates a secondary market demand for fiat money, without which it could probably not exist.

Surprisingly, the concept is not really a modern one – it was tested in Great Britain for a considerable stretch of time with the tally sticks system. Although that particular system ultimately failed (just as every currently extant paper currency eventually will), it did show the way to governments. It was indeed possible to do more than merely usurp the production of gold and silver coins.

So obviously, governments do have considerable influence on what is used as the means of final payment in the economy. What governments have been unable to do though is to effectively “demonetize” the money previously chosen by the market – namely gold. Governments may well be able to make the possession of gold illegal, but they cannot possibly destroy the metal’s monetary qualities by decree.


Gold – the market-chosen money. No agreements, convocations or force were needed – people adopted gold voluntarily as a money commodity all over the world, after a long period of trial and error with a variety of monies.

When Nixon was persuaded to abandon the gold exchange standard in favor of a pure fiat dollar, many monetarists (one of whom was advising him on the move) and other mainstream economists were convinced that gold prices would decline from the $35 fixed exchange rate to something like $6 per ounce, reflecting its  value as an industrial commodity.

In other words, they reckoned that the act of officially “demonetizing” gold would erase all monetary demand for it. As is often the case with predictions agreed on by a majority of economists, this turned out to be rather wildly mistaken.