Nov 29/OPTIONS EXPIRY ON THE LBMA GOLD AND OTC CONTRACTS AND THUS THE REASON FOR TODAY’S RAID/TOMORROW IS FIRST DAY NOTICE FOR GOLD AND SILVER AT THE THE COMEX AND IT LOOKS LIKE A HUGE AMOUNT WILL STAND/ SHANGHAI GOLD FIX SPREADS TODAY ARE NORTH OF 28 DOLLARS AND 26 DOLLARS/CHINAHAS RISING BOND YIELDS WHICH WE MUST WATCH AS THIS WOULD HURT GLOBAL GROWTH FURTHER/ITALIAN VOTE ON SUNDAY AND MOST LIKELY 8 ITALIAN BANKS IN SERIOUS TROUBLE/OIL TUMBLES ON LITTLE CHANCE OF A CUT IN PRODUCTION BY OPEC/

Gold at (1:30 am est) $1187.90 DOWN $2.90

silver  at $16.66:  UP 8 cents

Access market prices:

Gold: 1188.50

Silver: 16.62

 

Tomorrow is the last day for option’s expiry.  We should see gold and silver rise once this criminal activity is over with for this month.  Also the low OI for the complex will no doubt help in our precious metals rise in price.  I only wish, if investors want to buy gold and silver, that they only buy physical and not paper obligations.

Tomorrow is also first day notice for both the gold and silver and both are active months.

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

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:

TUESDAY gold fix Shanghai

Shanghai morning fix Nov 29 (10:15 pm est last night): $  1219.88

NY ACCESS PRICE: $1191.25 (AT THE EXACT SAME TIME)/premium $28.63

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1216.15

NY ACCESS PRICE: 1190.85 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $25.30

China rejects NY pricing of gold  as a fraud  

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Nov 29: 5:30 am est:  $1187.30   (NY: same time:  $1187.50    5:30AM)

London Second fix Nov 29: 10 am est:  $1186.55 (NY same time: $1186.50    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:  19 NOTICE(S) FOR 1900 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 FELL by 3008 contracts DOWN to 163,166 with YESTERDAY’S trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .816 BILLION TO BE EXACT or 116% 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 4,763 contracts WITH THE RISE IN THE PRICE OF GOLD ($12.40 with YESTERDAY’S trading ).The total gold OI stands at 410,824 contracts. The bankers have done a good job of eviscerating gold (and silver) longs.

In gold: we had 19 notice(s) filed for 1900 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: 885.04 tonnes

.

SLV 

we HAD NO  CHANGES at the SLV/

THE SLV Inventory rests at: 346.150 million oz

.

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

1. Today, we had the open interest in silver FELL  by 3,008 contracts DOWN to 163,166 as price of silver ROSE by $.12 with YESTERDAY’S trading.  The gold open interest FELL by 4,763 contracts DOWN to 410,824 as the price of gold ROSE BY  $12.40 WITH 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) FRBNY foreign gold movement

(Harvey)

3. ASIAN AFFAIRS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 5.94 POINTS OR 0.18%/ /Hang Sang closed DOWN 93.50  OR 0.41%. The Nikkei closed DOWN 49.85 OR .27%/Australia’s all ordinaires  CLOSED DOWN 0.22% /Chinese yuan (ONSHORE) closed UP at 6.8988/Oil FELL to 45.88 dollars per barrel for WTI and 46.90 for Brent. Stocks in Europe: ALL IN THE GREEN EXCEPT LONDON      Offshore yuan trades  6.9232 yuan to the dollar vs 6.8988  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AS MORE USA DOLLARS ATTEMPT TO 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

none today

c) REPORT ON CHINA

 

The following will be something that I will be watching out for:  the rising Chinese bond yields (lower prices on bonds).  The fact that the USA is raising rates has caused China to tighten as well.  If they let interest rates remain pat then the yuan  would contract even more.  So China matches the USA in rising yields to prevent their yuan from collapsing

( zero hedge)

4 EUROPEAN AFFAIRS

i)This Sunday, Dec 4 is the referendum date for Italy and the polls indicate strongly that the rejection of the establishment.  Renzi may quit as promised but we are just not sure.  He does not want to be gatekeeper of a technocrat government similar to what happened when Berlusconi left and Monti was appointed.

 

The ECB is ready to purchase as many Italian bonds as possible trying to keep the yields from skyrocketing.  As I have pointed out on many occasions to you, the Italian banking system has 18% non performing loans totaling 360 billion euros.  The bank system in Italy is insolvent.

( zero hedge)

ii)Another huge paper:  Ambrose discusses the huge 360 billion euros of bad debt on the balance sheet of the banks.  The problem here is the new rules which will not allow a bailout by the sovereign Italy.  There must be a bail in and most of the bonds are owned by Italian citizens.

a must read..

(courtesy Ambrose Evans Pritchard/UKTelegraph)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)It appears that Assad’s army will on the verge of taking Aleppo and that will be a slap in the face of the USA

(courtesy zero hedge)

ii) In another slap in the face to the USA, Egypt shuns Washington and now supports the Russian backed coalition in Syria

Gorka/Stragic-Culture.org.)

iii) After months stating that Turkey was o Syrian soil to the fight ISIS, Erdogan has now changed his tune and states that he is in Syria to oust Assad!

an act of war???

(courtesy zero hedge)

6.GLOBAL ISSUES

This latest Jim Willie paper is pretty good as it outlines the 11 or more problems facing the globe:

( Jim Willie/GoldenJackass)

7. OIL ISSUES

i)Oil tumbles as it looks like there will not be a cut in production from the OPEC/Non Opec group

( zero hedge)

ii)Who would have thought that this was coming?  WTI plunges near 44 dollars after Iran states no production cuts:

( zero hedge)

iii)Iran turns the tables and states that it is the Saudis that should cut production by over 1 million barrels by themselves.

( zero hedge)

iv) Late tonight, this is where we stand with respect to the possible oil deal: it seems that Iran and Iraq are the stumbling blocks.( zero hedge)

8. EMERGING MARKETS

 

The following describes what hyperinflation is like in Venezuela: shopkeepers weight vast piles of notes instead of counting them!

( London’s the Guardian)

 

9.   PHYSICAL MARKETS

i)This is a very worthwhile organization as they are doing their utmost exposing the fraud in the gold/silver market.  I urge you do donate if you can

( Chris Powell//GATA)

ii)The real reason that India banned the large notes:  to suppress India’s gold demand and I agree 100% with the author’s assessment

( Stewart Dougherty/Dave Kranzler/IRD)

10.USA STORIES

i)Dr Price, an Orthopedic surgeon and a strong critic of Obamacare is to head the Health team along with sidekick Verma. This no doubt will seal the fate of  Obamacare

( zero hedge)

ib)We would be extremely happy if Trump selects John Allison, a former CEO of BB and T and formerly of the prestigious CATO institute.  He wants to abolish the Fed and return to the gold standard (along with Judy Shelton)

this is the man we want..

( zero hedge)

ii)With our highly backed figures, the second revision to GDP showed a gain to 3.2% beating expectations of a 3% reading

( zero hedge)

iii)Who would have thought that this was going to happen:  a Trump victory seems consumer confidence soaring?:

( Conference Board Consumer Confidence/zero hedge)

iv)UBS states that traders have got the signals wrong with respect to the USA/Yen cross due to the Trump victory. Markets are reacting to the infrastructure spending proposed by Trump as a reason for the USA/Yen to climb to 120/1.  However they do not seem to pay attention to the isolationist policy of Trump which should cause the Yen to rise to 98/1: Not only that but Japan proposing new tariff rules which will knock out major competitors. Protectionism from all angles will cause the yen to rise in value.

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL by 4,763 CONTRACTS to an OI level of 410,824 DESPITE THE FACT THAT GOLD ROSE $12.40 with YESTERDAY’S trading. In the front month of November we had 26 notices standing for a LOSS of 3 contracts.  We had 2 notices served upon YESTERDAY so we LOST 1 GOLD CONTRACTS OR AN ADDITIONAL 100 OZ  WILL NOT 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 HUGE DECREASE of 46,783 contracts DOWN to 30,773.( much higher than usual), The December contract month is still highly elevated compared to a year ago.  On FRIDAY Nov 27/2015 comex reading day, we had a total of 24,018 contracts standing ( a loss of 36,141 contracts from Nov 25/2015. To give you more detail as to how the front month of December/2015 contracted, the final Nov 30 contract had an OI of 7,849 contracts standing or 24.41 tonnes standing as we lost 16,169 contracts.) The OI for the entire complex was around 393,000 or similar to the low readings this year.  It certainly emphasizes the huge demand for physical gold.We have exactly 1 more trading day 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. It looks to me like we will have 14,000  contracts or higher standing: 43.65 tonnes of gold

Today, we had 19 notice(s) filed for 1900 oz of gold.
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And now for the wild silver comex results.  Total silver OI FELL by 3008 contracts from  166,174 DOWN TO 163,166 as the price of silver ROSE BY $0.12 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 0 and thus a LOSS of 1 contract(s). We had 1 notice(s) filed yesterday so we neither lost nor gained any contracts (oz) that will stand for delivery in this non active month of November.  The next major delivery month is December and here it FELL BY 15,293 contracts DOWN to 11,855. The December contract month is WORSE compared to a year ago.  On Nov 27/2015 reporting day, we had a level of 16,868 contracts having lost 10,053 contracts on the day. On the final day of November/2015, we had 5,975 contracts stand for 29.875 million oz.  We lost 4078 contracts on the last day prior to first day notice.  It looks like we will end up with around 5,000  contracts standing or 25 million oz.

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.

Note how much paper settlements occurred in December last yr and I surely doubt if we will get any paper settlements this year.!!

VOLUMES: for the gold comex

Today the estimated volume was 233,259  contracts which is good.

Friday’s confirmed volume was 343,641 contracts  which is excellent

INITIAL standings for NOVEMBER
 Nov 29.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil
113,245.190 oz
Brinks
HSBC
Scotia
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 68,263.496  oz
 Scotia
brinks
(incl 1 kilobar)
No of oz served (contracts) today
19 notice(s) 
1900 oz
No of oz to be served (notices)
27 contracts
 2700
oz
Total monthly oz gold served (contracts) so far this month
2692 contracts
269,200 oz
8.3732 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     746,957.7 oz
Today we had 1 kilobar transaction as 1 kilobar entered the comex vaults.
Today we had 0 deposits into the dealer:
total dealer deposits:  nil  oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
.
 we had 2 customer deposit(s):
i) Into Brinks:  32.15 oz  (one kilobar)
ii) Into Scotia:  68,231.346 oz  ???
this is a strange entry as 68,234.89 oz of physical gold left Brinks and the total that entered was 68,231.346 oz..and no other entry
thus:  3.544 oz seems to have evaporated.
total customer deposits; 68,263.496  oz
We had 3 customer withdrawal(s)
 i) Out of Brinks:  68,234.89 oz
ii) Out of HSBC: 9645.300 oz
iii) Out of Scotia: 33,365.000 oz ???
the last one is not kilobars as this entry is not divisible by 32.15 oz. How could this be an exact weight!!
total customer withdrawal: 113,245.190  oz
We had 0  adjustment(s)
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Total dealer inventor 2,028,055.746 or 63.08 tonnes
Total gold inventory (dealer and customer) =9,986,549.139 or 310.62 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 310.62 tonnes for a  gain of 8  tonnes over that period.  Since August 8 we have lost 43 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 19 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 (2692) x 100 oz or 269,200 oz, to which we add the difference between the open interest for the front month of NOV (26 contracts) minus the number of notices served upon today (19) x 100 oz per contract equals 269,900 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 (2692) x 100 oz  or ounces + {OI for the front month (26) minus the number of  notices served upon today (19) x 100 oz which equals 269,800 oz standing in this non active delivery month of Nov  (8.3950 tonnes).
We lost 1 contracts or an additional 100 oz will not stand for delivery in November.No
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.    8.3950 tonnes.
total for the 11 months;  191.694 tonnes
average 17.426 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: 168.46 tonnes per the 7 months or 24.06 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 8.3950 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 THREE MONTHS  43 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
 
NOV INITIAL standings
 Nov 29. 2016
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
24,026.65 oz
HSBC
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
38,711.830 oz
brinks
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) 469 contracts (2,345,000 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  6,790,555.7 oz
today, we had nil deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
 total dealer withdrawals: nil oz
we had 1 customer withdrawal(s):
i) Out of HSBC: 24,026.65 oz
Total customer withdrawals: 26,026.65  oz
 we had 1 customer deposit(s):
i) Into Brinks: 38,711.820 oz
total customer deposits; 83,711.820  oz
 
 
 we had 1 adjustment(s)
i) Out of Brinks:  197,235.800 oz was adjusted out of the dealer and this landed into the customer account of Brinks.
.
Volumes: for silver comex
Today the estimated volume was 76,446 which is HUGE
FRIDAY’S  confirmed volume was 125,277 contracts  which is extra 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  469 x 5,000 oz  = 2,345,000 oz to which we add the difference between the open interest for the front month of NOV (0) 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:  469(notices served so far)x 5000 oz +(0) OI for front month of NOV. ) -number of notices served upon today (0)x 5000 oz  equals  2,345,000 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:  30.708 million (close to record low inventory  
Total number of dealer and customer silver:   178.854 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

And now the Gold inventory at the GLD
Nov 29/no changes in gold inventory at the GLD/inventory rests at 885.04 tonnes
Nov 28/no change in gold inventory at the GLD/Inventory rests at 885.04 tonnes
Nov 25 We had a massive 19.87 tonnes of gold leave the GLD/this would be a paper loss not real gold (they only have paper gold in their inventory/total inventory: 885.04 tonnes
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 21/A MASSIVE 11.87 TONNES OF PAPER GOLD WERE SUPPLIED BY THE CROOKS TO SUPPRESS THE PRICE OF GOLD/INVENTORY RESTS AT 908.76 TONNES/ AND GOLD RISES???
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 29/ Inventory rests tonight at 885.04 tonnes
*IN LAST 39 TRADING DAYS: 64.77 TONNES REMOVED FROM THE GLD

end

Now the SLV Inventory
Nov 29/no changes in silver inventory /inventory rests tonight at 346.150 million oz/
Nov 28/no change in silver inventory/inventory rests tonight at 346.150 million oz/
Nov 25/we had another withdrawal of 949,000 oz from the SLV/Inventory rests at 346.150 million oz
Nov 23/A HUGE WITHDRAWAL OF 3.083 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 347.099 MILLION OZ
NOV 22/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 350.182 MILLION OZ
Nov 21/a MASSIVE 6.071 MILLION OZ OF SILVER WITHDRAWN FROM THE SLV VAULTS/INVENTORY RESTS AT 350.182 MILLION OZ/AND SILVER HOLDS IN PRICE???
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 29.2016: Inventory 346.150 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 61.1%
Percentage of fund in silver:38.5%
cash .+0.4%( Nov 29/2016)
.
2. Sprott silver fund (PSLV): Premium RISES to +.07%!!!! NAV (Nov 29/2016) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.52% to NAV  ( Nov 29/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.07% /Sprott physical gold trust is back into NEGATIVE territory at -0.52%/Central fund of Canada’s is still in jail.
 

END

FEDERAL RESERVE BANK OF NEW YORK;  FOREIGN GOLD MOVEMENTS

Last month I reported to you that 5 tonnes of gold moved out of the FRBNY which was much smaller than before as Germany was not getting its required amount of gold.

Now this month:

FRBNY gold holdings Sept:  7841

FRBNY gold holdings Oct:  7841

all figures are million dollars worth of gold at the official rate of 42.22 dollars per oz

amount leaving: 0

Amount repatriated:  zero

Germany must be royally angry!

(HARVEY)

end

Major gold/silver stories for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE

Peak Silver – Supply Deficits Mean Higher Prices

  • Peak Silver – Supply deficits continue meaning higher prices
  • May have experienced a peak in world silver production
  • Global silver market suffered another large net supply deficit in 2016
  • Peak silver likely as global silver production will decline to 887 million oz (Moz), down from 893 Moz in 2015

“While forecasted global silver production for 2016 is down only slightly versus last year, GFMS also stated this in their report:

We estimate that mine supply peaked in 2015 and will trend lower in the foreseeable future.

Declining total supply is expected to be a key driver of annual deficits in the silver market going forward.

I will get to the annual silver deficits in a minute, but let’s look at their world silver mine supply by region:

“What is interesting here, is that GFMS forecasts the number one silver producer, Mexico, to be down in 2016 by more than 6 Moz.  Last year, I forecasted that global silver production would likely be lower in 2015.  I was going by data by the “World Metals Statistics.”  However, Mexico’s INEGI (government agency) considerably revised their figures higher for 2015.  While I have seen revisions take place, the revisions by Mexico’s INEGI for 2015 were quite substantial.

Regardless, GFMS does a pretty good job with the silver mine supply data.  The important take-away here is that the trend of global silver production will likely be lower going forward.”

Read the full report on SRS Rocco here

GIVE THE GIFT OF SILVER THIS CHRISTMAS
Silver bullion coins – like Silver Maples, Philharmonics, Britannias, Nuggets (Kangaroos) and Eagles  – are great gifts for loved ones at Christmas time.

product_coins_canadian-maple-leaf-silver-bullion-coinSilver Maples 2016 (1 oz) 

Besides being a wonderful Christmas present for loved ones, they are a great way to pass on wealth to the next generation. They are a great way to teach younger generations the value of savings and the value of insurance against currency debasement and financial collapse.

We have very competitive prices – some of the most competitive internationally. We are now delivering legal tender silver coins, VAT free, in the UK and throughout the EU. Give the most precious of gifts this Christmas.

 

Gold and Silver Bullion – News and Commentary

Gold little changed as dollar holds losses (Reuters.com)

Gold Posts Biggest Advance in Four Weeks as Dollar Declines (Bloomberg.com)

Oil up ahead of OPEC meeting; dollar, stocks dip (Reuters.com)

London zinc charges to 9-yr high, lead hits 5-yr high (Reuters.com)

Islamic finance body approves standard for gold-based products (Reuters.com)

Bonds set to snap three-decade winning streak as Fed, Trump plot next moves (CNBC.com)

How Donald Trump’s economic plans will lead the Fed to reverse course on policy: Schiff (CNBC.com)

Interventions in gold and currency markets by central banks (GoldSeek.com)

Here’s what happened when ancient Romans tried to drain the swamp (SovereignMan.com)

The Hyperinflationary Endgame: Venezuela Currency Crashes 15% In One Day (ZeroHedge.com)

7RealRisksBlogBanner

Gold Prices (LBMA AM)

29 Nov: USD 1,187.30, GBP 952.45 & EUR 1,119.98 per ounce
28 Nov: USD 1,189.10, GBP 956.51 & EUR 1,117.99 per ounce
25 Nov: USD 1,187.50, GBP 953.30 & EUR 1,121.83 per ounce
24 Nov: USD 1,187.25, GBP 953.60 & EUR 1,125.04 per ounce
23 Nov: USD 1,213.25, GBP 980.00 & EUR 1,143.00 per ounce
22 Nov: USD 1,217.55, GBP 978.91 & EUR 1,144.98 per ounce
21 Nov: USD 1,214.95, GBP 984.72 & EUR 1,143.39 per ounce

Silver Prices (LBMA)

29 Nov: USD 16.54, GBP 13.26 & EUR 15.61 per ounce
28 Nov: USD 16.68, GBP 13.45 & EUR 15.73 per ounce
25 Nov: USD 16.47, GBP 13.21 & EUR 15.55 per ounce
24 Nov: USD 16.31, GBP 13.09 & EUR 15.43 per ounce
23 Nov: USD 16.56, GBP 13.36 & EUR 15.59 per ounce
22 Nov: USD 16.76, GBP 13.46 & EUR 15.77 per ounce
21 Nov: USD 16.68, GBP 13.47 & EUR 15.69 per ounce


Recent Market Updates

– Bail In Risk – €4 Trillion Banking System In Italy Poses Contagion Risk as Referendum Looms
– Gold Down 13.5% In 13 Days – Trump Bearish For Gold?
– War On Cash Just Got Real – India and Citibank In Australia
– Russia Gold Buying In October Is Biggest Monthly Allocation Since 1998
– Stocks, Bonds, Pension Funds “Will Be Wiped Out…” – Rickards
– Physical Gold Is A “Long-Term Position” as “Hedge Against Governments”
– Gold Sell Off On Fed Noise – “Interesting Times” To “Support Gold”
– 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

 

Mark O’Byrne
Executive Director

END

 

This is a very worthwhile organization as they are doing their utmost exposing the fraud in the gold/silver market.  I urge you do donate if you can

(courtesy Chris Powell//GATA)

Has GATA’s work made any difference? Will it ever?

Section:

4:05p ET Monday, November 28, 2016

Dear Friend of GATA and Gold:

If you have made a donation by credit card in response to our appeal Sunday for financial support —

http://www.gata.org/node/16947

— and have not received a personal note of thanks from your secretary/treasurer by e-mail, it’s because I did not have or could not locate an e-mail address for you. Please do e-mail me to cite any donation made by credit card so that I can acknowledge it most gratefully. Our credit card donation mechanism does not make any provision for contact information and, for security reasons, provides us with little more information about donors than their name.

If you make a donation by mailing a check, please include your e-mail address there too. This will save GATA the expense of regular postage in thanking you.

Meanwhile, a devoted friend in Canada who long has been advocating for GATA conveys this criticism he got from an acquaintance:

“GATA has been banging the drum for a long time now but what has it accomplished in a practical sense? GATA reveals information that is ignored. GATA appears before commodity market regulators who are indifferent to the evidence presented. GATA has been unable to sway the mining industry itself. This war has proven fruitless. Maybe it’s time to accept that and move on. If GATA got and spent a million dollars in donations, there would be no appreciable effect. No one who profits from the game as it is now played is going to roll over and change based on any facts or exposure, and no entity with the authority to act is going to intervene. It’s a captured market.”

This criticism is not entirely unfair. Yes, GATA has not yet wiped the tyranny of central banking from the face of the earth. But we have exposed to a wide audience — an audience including at least two major governments — the part of that tyranny that rigs the gold and currency markets, and have explained how this ultimately rigs all markets for totalitarian and imperialistic purposes. We have evidence that people are acting on this knowledge and that our work has forced the market riggers to expend even more resources and become even more obvious. If, as we believe, what they are doing is evil, it will break eventually and the ascent of man will continue. For as James Russell Lowell wrote in defiance when the Slave Power seemed to have a lock on America:

Truth forever on the scaffold, Wrong forever on the throne —
Yet that scaffold sways the future, and, behind the dim unknown,
Standeth God within the shadow, keeping watch above His own.

In any case we know one thing: Doing nothing makes nothing happen.

Yes, for those who believe in free markets, limited and accountable government, and individual liberty, these seem like our Valley Forge days, and of course many good causes are always failing from exhaustion. But what could be a grander cause than this one, a cause contending for the definitions of money and justice as they apply to all the capital, labor, goods, and services in the world?

GATA is indeed an amateur operation, doing work that should be done by others, like the World Gold Council, which, as it turns out, exists only to ensure that there never is a world gold council. But until professionals who are willing to take on the work turn up, we mean to keep at it, with the hope and faith that Arthur Hugh Clough put in rhyme:

Say not the struggle nought availeth,
The labor and the wounds are vain,
The enemy faints not, nor faileth,
And as things have been they remain.

If hopes were dupes, fears may be liars;
It may be, in yon smoke concealed,
Your comrades chase e’en now the fliers,
And, but for you, possess the field.

For while the tired waves, vainly breaking
Seem here no painful inch to gain,
Far back through creeks and inlets making,
Comes silent, flooding in, the main.

And not by eastern windows only,
When daylight comes, comes in the light.
In front the sun climbs slow, how slowly,
But westward, look, the land is bright.

We still need your help:

http://www.gata.org/node/16

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

 

 

END

 

The real reason that India banned the large notes:  to suppress India’s gold demand and I agree 100% with the author’s assessment

(courtesy Stewart Dougherty/Dave Kranzler/IRD)

 

The Deep State’s Attempt To Suppress India’s Gold Demand

November 29, 2016Financial Markets, Gold, Market Manipulation, Precious MetalsDeep State, Modi, war on cash

The primary objective of the Indian currency demonetization was to sharply reduce gold demand in the world’s most important retail market, India, one that is controlled by the Deep State oligarchy via a captured agent, its Prime Minister [Modi]. The manner in which the demonetization was carried out indicates some kind of desperation…Stewart Daugherty

Indian Demonetization Denotes Severe Stress in the Global Gold Market

By Stewart Dougherty

It is becoming clear that the Indian currency demonetization is actually a planned attack on Indian gold demand, launched to disrupt gold prices and discredit gold as an asset class. The attack was required to alleviate severe stress in the global gold market that is becoming increasingly difficult for the Deep State controllers to contain.

For two decades, physical gold has been migrating from the west to the east in increasing quantities. Numerous reports cross-confirm that the world’s leading refineries are operating at capacity to convert western gold into the kilo products demanded by Asian buyers. Refiners also confirm that the sourcing of western gold has become problematic, as supplies dry up in the face of voracious world, and particularly eastern demand.

Western central bankers and their Deep State handlers have made it clear that they intend to transition to a cashless society. However, they are not yet ready to make this transition. Therefore, their current focus is to start the process by eliminating high-denomination currency, such as Euro 500 and USD 50 and 100 notes. At the same time, they are working to digitize the payment infrastructure, a prerequisite to the elimination of cash.

Their problem is the steady awakening of the people to the disturbing implications of a cashless society, and to the assault on human liberty it represents. The Deep State oligarchs must implement their agenda before the people mobilize to prevent it from being imposed upon them.

The Deep State oligarchs understand that the western governments they commandeer are bankrupt. To continue operations, they must tap into the people’s private wealth for funding. In fact, the IMF has produced a position paper recommending a “one off capital levy of 10%” (a 10% wealth tax), to deal with western governments’ intractable fiscal problems. The authors of this paper state that the “levy” must be imposed at night and by total surprise, to prevent citizens from being able to take any steps to avoid it.

This type of ambush is exactly what just happened in India, with its shock demonetization.

The IMF’s proposal does nothing to change governments’ current trajectory of greater deficits and debt; the money raised would simply be used to service existing debt. This means the first capital levy will just be one of many going forward. Governments’ only solution is to expropriate the private wealth of the people, which is exactly what the IMF has admitted.

If people have cash and other private monetary assets outside of the banking system when the “capital levy” is imposed, governments will lose out. This is one of their primary motivations to eliminate cash: in order to maximize proceeds from the capital levy, they need the greatest possible amount of money within the banking system, in non-withdrawable, digitized form, when the levy is executed.

It is not in the interests of governments if people figure out that they are far better off being their own bankers, by privatizing their monetary assets, than handing them over to commercial bankers, who have become wards and enforcement agents of the state. Therefore, a full scale campaign is underway to demonize cash and to make precious metals appear dangerous by routinely pulverizing their prices.

In the meantime, supplies of physical metals in the west constantly diminished and are now strained. This means that the bullion banks’ LBMA and Comex paper price suppression activities must steadily escalate for them to maintain control of a market that is spinning out of their control. Unlike eastern investors, western investors tend to buy into rising prices, as they chase momentum. Rising prices can lead to a buying stampede. If a buying stampede were to break out in today’s supply-stressed precious metals market, prices would surge, which would be antithetical to the Deep State oligarchs’ agenda.

Given that Deep State operatives can do nothing to increase western gold supply, their only options are to somehow discover supply elsewhere, and/or to crush gold demand.

The “somehow” is India, a nation whose people possess an estimated 20,000 tons of gold, and who buy hundreds more tons of it each year. Prime Minister Modi, the Deep State establishment’s captured and controlled facilitator, has been instructed to obtain supply and control demand of gold in India, and he has been working overtime to achieve both objectives ever since his election.

First, Modi launched a Paper Gold scheme, whereby the Indian people were urged to tender their personal gold holdings to the state, in exchange for “notes” and “bonds” paying less-than-inflation interest rates on the value of the gold they provided. The notes are irredeemable for gold for at least five years, by which time the gold will be long gone from India and used in the bullion banks’ market rigging and other for-profit operations. Modi’s Paper Gold scheme failed, because the Indian people did not trust it, and correctly so.

Next, Modi imposed a 10% import duty on gold (India produces next to no gold, so virtually all of it is imported). This resulted in a multi-week strike by jewelers, which did reduce demand, one of the two aims of the Deep State oligarchs’ plan.

But shortly, this scheme failed, too, because gold smuggling surged, enabling the Indian people to obtain the gold they desire at prices roughly 5% over global spot, reasonable in the circumstances.

In a companion effort to crimp demand, Modi enacted a special reporting regulation. Enacted in 2015, it requires anyone purchasing jewelry or precious metals having a value of 200,000 rupees or more (the equivalent of roughly US$ 2,900) to present an Indian PAN Card. PAN stands for Permanent Account Number, a ten digit alpha-numeric number issued by India’s Tax Department to individuals and businesses. The PAN enables tax personnel to track all of a card holder’s financial transactions over their entire lifetime.

Only 17% of India’s population have obtained a PAN number to date, meaning that 83% of the population are unable to purchase $2,900 or more worth of jewelry or bullion in a single transaction; without a PAN Card, it is illegal to do so. This regulation has reduced jewelry and bullion purchases by upscale Indians who do have PAN but do not want their personal transactions permanently recorded. Alternatively, it has led them to make smaller purchases that do not require presentation of a PAN Card.

While the PAN regulation curbed demand in the $3,000+, high end of the market, it did nothing to address the vibrant, lower end, cash market. Smaller purchases of jewelry and bullion have traditionally been paid in cash, using 500 and 1,000 rupee currency notes. This was the Deep State’s Achilles’ heel in India, and they decided to deal with it.

Accordingly, on November 8, 2016, in a shock move, Modi “extinguished” all Indian 500 and 1000 rupee notes. Holders of the old notes have been required to exchange them for new ones, but the process has been extremely difficult and time consuming. Further, there are sharp restrictions on the amount of new currency citizens can obtain. Withdrawals are capped at 40,000 rupees per week, roughly $575.00. After paying for living expenses (90% of Indian purchases are made with cash), very little is left over for discretionary purchases such as gold jewelry. Given that the demonetization was specifically timed to occur in the middle of the robust festival and wedding season, the reduction in demand has been pronounced. Jewelers in Mumbai, the nation’s largest retail market by far, report sales being off by up to 90%.

We believe that the primary objective of the Indian currency demonetization was to sharply reduce gold demand in the world’s most important retail market, India, one that is controlled by the Deep State oligarchy via a captured agent, its Prime Minister. The manner in which the demonetization was carried out indicates some kind of desperation, because it defied all economic prudence, logic, humanitarian regard and common sense. India is the only country where this kind of attack on demand could have been carried out, and this is why it occurred there. It indicates to us that the bullion banking cabal is coming up against the wall, and that there is severe supply – demand stress in the global gold market that is rapidly becoming non-containable. Desperate times are producing desperate measures by the manipulators.

It is critical to note that the Governor of the Reserve Bank of India up until mid-2016, Raghuram Rajan, declined a second three year term. Rajan was a former Chief Economist at the International Monetary Fund, the “capital levy” people. He is also a member of the Group of Thirty, along with Larry Summers, the head cheerleader for the elimination of one hundred dollar bills in the United States, and cash in general. Much more important, Rajan has now become Vice Chairman of the Bank for International Settlements, the so-called “central bank of central banks,” and long regarded as the chief architect and enabler of global gold manipulation and price oppression. He has been characterized in the press as being “a vocal votary for increased coordination among central banks.” Clearly, an important Deep State global agenda is now in play.

Brexit and the Trump victory have demonstrated that the people can only be pushed so far, but the Deep State oligarchs are far too addicted to easy money and god-like power to hear the message. They are pushing forward as if nothing whatsoever has changed in the world. The retention by the people of financial liberty is far more important to them than Brexit or Trump, and we believe they will defend their rights to it, particularly as they awaken to the full implications of the tyranny that will be unleashed by its elimination.

As demand rebuilds from the shock demand reduction that has occurred in India, we believe the market for precious metals will become stronger than ever. First, India has discredited governments’ prized monopoly product: fiat currency. Second, India’s demonetization-related gold demand shock has no effect whatsoever on demand from Russia, China and the rest of Asia, which is stronger than ever. Third, the fiscal and monetary realities of governments throughout the west continue to worsen, strengthening the already compelling case for precious metals. Fourth, and as we have pointed out in previous articles, supply cannot withstand even a fractional redeployment of liquid personal assets into metals, without prices being forced significantly higher than where they are today. And fifth, the bullion banks and Deep State schemers are running out of curve balls to throw at the people. In fact, the stunt they just pulled in India might be their last, at least of anywhere near this magnitude. While we put nothing past them, including desperate dumping of remaining western central bank metals holdings (which might not even exist at this late stage) and prohibitions that the people will realize they must ignore if they are to have any chance of remaining financially free, it seems clear to us that they are fast running out of options.

Stewart Dougherty
November 28, 2016

P.S. One additional inference we draw from events in India is that it almost certainly proves the United States gold reserve is gone. What has happened in India indicates that a critical supply – demand imbalance exists in gold, which required an unprecedented, draconian and reckless “solution.” Actually, it has solved nothing; it has only bought the oligarchs some time, and probably not much of it. If western, and particularly U.S. gold reserves had been available, they almost certainly would have been deployed before a massive, destructive currency demonetization in the world’s second largest nation, by population, would have been ordered.

Stewart Dougherty is the creator of Inferential Analytics (IA), a forecasting method that applies to events proprietary, time-tested principles of human instinct, desire and action. In his view, forecasting methods not fundamentally based upon principles of human action are unlikely to be reliable over time. He is a graduate of Tufts University (BA) and Harvard Business School (MBA), is a 35+ year veteran of the business trenches and has developed IA over a period of 15+ years.

http://investmentresearchdynamics.com/the-deep-states- attempt-to-suppress-indias-gold-demand/

***

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

 
 

:

1 Chinese yuan vs USA dollar/yuan DOWN to 6.8988(SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.9232 / Shanghai bourse CLOSED UP 5.94 POINTS OR 0.18%   / HANG SANG CLOSED DOWN 93.50 OR 0.41%

2. Nikkei closed DOWN 49.85 POINTS OR .27% /USA: YEN RISES TO 112.98

3. Europe stocks opened ALL IN THE GREEN EXCEPT LONDON    ( /USA dollar index RISES TO  101.42/Euro DOWN to 1.0582

3b Japan 10 year bond yield: FALLS    +.020%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.01/ 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 AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  45.88  and Brent:46.90.

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 RISES TO +.206%   

3j Greek 10 year bond yield FALLS to  : 6.94%   

3k Gold at $1183.50/silver $16.50(7:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 41/100 in  roubles/dollar) 65.27-

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   REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.98 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  1.0165 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0755 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.205%

/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 2.329% early this morning. Thirty year rate  at 2.986% /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

Global Stocks Pressured As Oil Slides On OPEC Deal Concerns; US Futures, Dollar Rise

European stocks were little changed and oil fell as investors assessed declining prospects for an OPEC deal and risks from Italy’s referendum. Asian stocks declined, while S&P futures pointed to a fractionally higher open, erasing 3 points from yesterday’s drop.

Trader attention today – and tomorrow – will be focused on oil which retreated back under $47 as OPEC members failed to bridge differences on production cuts, while a rally in metals ran out of steam. The rand plunged after President Jacob Zuma survived a leadership threat.

“We have a very important OPEC meeting and there’s a flow of expectations in front of this meeting, therefore the oil price is shaky as well as oil-related companies,” Herbert Perus, head of equities at Raiffeisen Capital Management in Vienna, told Bloomberg. The market is giving just 30% odds to an agreement to end the oil supply glut, according to Goldman Sachs; pessimism about the make-or-break talks is helping to damp a commodities rally.

Commodity and energy producers were the biggest decliners in the Stoxx Europe 600 Index. Crude slid as Iraq and Iran raised objections over the distribution of output reductions and Russia said it’s not planning to attend crucial talks with the Organization of Petroleum Exporting Countries on Wednesday (more in a subsequent update on oil prices). “What we are seeing now is a tug of war among OPEC members to get their share of the pie,” Son Jae Hyun, a global market analyst at Mirae Asset Daewoo Co., said by phone from Seoul. “If a deal isn’t made this time, none of them will benefit.”

Copper slumped for the first time in seven days and the Bloomberg Dollar Spot Index ended a two-day loss. The rand was the biggest decliner among major currencies.

European shares posted modest gains in early trading on Tuesday, after taking a battering from banks the previous day, but weak oil prices before a meeting of OPEC producers limited gains. 8 out of 19 Stoxx 600 sectors fall with basic resources, oil and gas underperforming while financial services outperforming; about half of Stoxx 600 members decline.

Italian banking stocks staged a recovery but miners came under renewed selling pressure after a sharp decline in commodities prices. Oil prices fell more than 1.5% on jitters over whether OPEC would be able to hammer out a meaningful output cut during a meeting on Wednesday to rein in a global supply overhang and prop up prices.

The miner-heavy FTSE 100 index was down 0.38% but the FTSE Mid 250 was up 0.15% 0940 GMT (5:40 a.m. ET). “The fact that the FTSE 100 is going one way and the FTSE 250 is going the other way suggests that there is a sector specific event going on, as the FTSE 100 is more commodities heavy,” said Investec economist Philip Shaw cited by Reuters.

There was a slew of European economic data reported this morning, most of which either met or exceeded expectations:

  • (FR) 3Q P GDP 0.2% QoQ; est. 0.2%, prior 0.2%
  • (FR) 3Q P GDP 1.1% YoY; est. 1.1%, prior 1.1%
  • (FR) Oct. Consumer Spending 0.9% MoM; est. 0.25%, prior -0.2%
  • (FR) Oct. Consumer Spending 1.5 YoY; est. 1.0%, prior 0.7%
  • (EC) Nov. Economic Confidence 106.5; est. 106.8, prior 106.3
  • (EC) Nov. Industrial Confidence -1.1; est. -0.5, prior -0.6
  • (EC) Nov. Services Confidence 12.1; est. 12.5, prior 12
  • (EC) Nov. Consumer Confidence -6.1; est. -6.1, prior -6.1
  • (EC) Nov. Business Climate Indicator 0.42; est. 0.6, prior 0.6

The MSCI index of Asia-Pacific shares outside fell 0.27% after two days of gains. Tokyo stocks slipped
0.3% hit by a stronger yen. Asian stocks fell after a three-day rally as investors adopted a cautious tone ahead of key events from OPEC talks to the U.S. jobs report and Italy’s referendum.  8 out of 10 sectors fall with industrials, energy underperforming and telcos, financials outperforming.  Chinese stocks rose by 0.2% with the Shanghai Composite reaching 3,283: “The government is tightening property so maybe some of that excess liquidity is flowing into the A-share market again,” said Ben Kwong, a Hong Kong-based director at KGI Asia Ltd.

The moved higher on the yen to reach112.62 after month-end flow profit-taking pulled it down as far as111.58. It remains over 7% higher for the month. Dealers reported Japanese buying for the new month with orders today settling on Dec. 1. Against a basket of currencies, the dollar held at 101.280 .DXY and not far from last week’s14-year peak. The greenback was still on track for its strongest two-month gain since early 2015, underpinned by expectations the FederalReserve is almost certain to hike interest rates next month.

European government bond markets were also trending in this direction, with safe-haven
Germen government bond yields up 1-2 basis points and lower-rated
Italian, Spanish and Portuguese bond yields lower. Italian 10-year bonds posted a modest advance, with the yield falling five basis points to 2.02%, but the gain comes just days after the bond yields hit their highest level since September 2015. The rebound came after Prime Minister Matteo Renzi’s office denied news reports that he is considering stepping down even if he wins the Dec. 4 referendum on constitutional reform.

Italian bond yields have been rising before Sunday’s referendum on constitutional change, on which Prime Minister Matteo Renzi has staked his future.

“Citi’s base case is for a No vote to prevail with political uncertainties likely to remain elevated over the near-term,” wrote analysts at Citi. “It’s worth watching whether PM Renzi resigns in the event of a No vote as promised, before rushing into euro shorts.” The event has brought Italy’s ailing banking sector sharp relief, and earlier this week Italian banking stocks hit their lowest point since end-September on continued worries over a cash call at troubled Monte dei Paschi.

In the US, 10Y Treasury yields rose two basis points to 2.34% after falling five basis points on Monday.

Later today, investors will get further insight on the U.S. economy with gross domestic product data, followed by Friday’s payrolls report on Dec. 2.

Bulletin Headline Summary from RanSquawk

  • European equities trade modestly higher amid some mild reprieve in banking names while the FSTE 100 lags amid a firmer GBP
  • A modest resumption in the USD buying seen today, despite reports that fund managers will — on balance — be selling the greenback into month end
  • Looking ahead, highlights include German CPI, Eurozone sentiment figures, US GDP, API Inventories, Fed’s Dudley and Powell

Market Snapshot

  • S&P 500 futures up 0.2% to 2204
  • Stoxx 600 unchanged at 340
  • FTSE 100 down 0.6% to 6759
  • DAX up 0.1% to 10593
  • German 10Yr yield down less than 1bp to 0.2%
  • Italian 10Yr yield down 5bps to 2.02%
  • Spanish 10Yr yield down less than 1bp to 1.56%
  • S&P GSCI Index down 1.2% to 365.8
  • MSCI Asia Pacific down 0.3% to 136
  • Nikkei 225 down 0.3% to 18307
  • Hang Seng down 0.4% to 22737
  • Shanghai Composite up 0.2% to 3283
  • S&P/ASX 200 down 0.1% to 5457
  • US 10-yr yield up 2bps to 2.33%
  • Dollar Index unchanged at 101.33
  • WTI Crude futures down 1.8% to $46.23
  • Brent Futures down 1.7% to $47.43
  • Gold spot down 0.5% to $1,188
  • Silver spot down 0.4% to $16.54

Top Headlines

  • OPEC Said to Remain Split as Russia Says It Won’t Attend Meeting: Delegates said to fail to bridge divisions after 10-hour talks
  • Samsung Plan to Boost Share Value Falls Short of Elliott Goals: Stock buybacks, increased dividends will make up cash return
  • Chicken Producers Asked for Affidavits Confirming Price Data: U.S. chicken producers including Tyson Foods and Sanderson Farms are being asked by the Georgia Department of Agriculture to meet new requirements for a price index
  • Korea’s Scandal-Hit President Says She’s Willing to Resign: Park says will follow what parliament decides on her future
  • Strategists Shun Aging U.S. Bull Market for New One in Japan: Morgan Stanley upgrades Japan stocks, downgrades U.S. equities
  • Facebook Fake News Doesn’t Need Policing, Publisher Says: Axel Springer CEO says Facebook shouldn’t regulate content
  • Apple’s iPhone India Sales Surged Immediately After Note Ban: ET

* * *

Looking at regional markets, Asia stocks traded mixed following a negative lead from Wall St, where financials were pressured alongside weakness in their European peers and the S&P 500 testing 2200 to the downside. Nikkei 225 (-0.3%) was lower amid recent JPY strength weighing on the index after USD/JPY briefly fell below 112.00, while losses in ASX 200 (-0.1 %) were stemmed by health care and financials. Chinese markets were mixed amid continued reports China is to tighten capital controls and restrict outbound flows with profit taking in the Hang Seng (-0.2%) after yesterday’s Shenzhen stock connect-inspired gains, while the Shanghai Comp (+0.2%) initially took a breather before extending on 11-month highs. Elsewhere, the Kospi (+0.2%) rose 0.4% in reaction to news that South Korean President Park apologized for causing concern with her short-comings and stated that she will leave it to parliament to decide all affairs including reducing her term. 10yr JGBs traded flat despite a cautious tone for riskier assets, with the curve steepening as the short-end outperformed following a 2yr bond auction in which the lowest bid surpassed estimates and tail in price remained non-existent.
PBoC injected CNY 90bIn in 7-day reverse repos, CNY 70bIn in 14-day reverse repos and CNY 30bIn in 28-day reverse repos. PBoC set mid-point at 6.8889 (Prey. 6.9042).

Top Asian News

  • UBS Wealth Sees Trump Bubble Burst Driving Yen to 98 per Dollar: Protectionist policies to precede fiscal stimulus, Ibayashi says
  • Macquarie to Merge Trading Businesses Into Unit Led by Downe: Brings together securities and commodities & markets groups
  • Thailand’s Parliament to Invite Vajiralongkorn to Become King: Vajiralongkorn would succeed the late King Bhumibol Adulyadej

In Europe, equities spent the morning in modest positive territory(Euro Stoxx 50: +0.6%), with the exception of the FTSE 100 (-0.3%), which has been weighed on by a stronger GBP as well as energy and material names. Elsewhere, sentiment has also been bolstered on the continent by upside in Banca Monte dei Paschi shares (+5.6%), paring some of the significant downside seen yesterday in the wake of their debt to equity swap green light. Elsewhere, Actelion (-5%) are among the worst performers this morning after reports in the FT that the Co. is considering a complicated deal to combine with part of Johnson & Johnson, without seeing a full takeover as was previously touted. Fixed income markets have been relatively quiet with participants amid the looming month-end and Italian referendum, as such volumes are somewhat on the light side. Today has also seen a noticeable narrowing of the IT/GE spread, in terms of reports from Italy Italian PM Renzi’s office denied premarket reports suggesting that the Italian leader would resign, even in the event of Sunday’s referendum seeing a ‘yes’ vote.

Top European News

  • Actelion Slumps on Report J&J Talks Will Leave It Independent: Financial Times reported that a complex transaction being discussed with Johnson & Johnson would allow the Swiss company to remain independent.
  • Sweden’s Economy Slows as Investments Stall in Third Quarter: Growth slowed in the third quarter as an expansion in the Nordic region’s largest economy continues to abate from last year’s output peak.
  • Tesco’s Ex-CEO Clarke Avoids Prosecution Over Accounting Scandal: Clarke informed by Serious Fraud Office he won’t be charged
  • VW, BMW, Ford to Set Up Charging Network to Spur E-Car Demand: Automakers plan first stations on European highways in 2017

In currencies, Bloomberg’s dollar gauge, which tracks the greenback against 10 major peers, increased 0.1%. The yen weakened 0.6 percent to 112.57 per dollar, set for its biggest monthly drop since 2009, amid speculation that Trump will pursue inflationary spending and tax policies prompting a faster pace of monetary-policy tightening by the Federal Reserve. The rand depreciated 1.5 percent after Zuma staved off a bid by officials in the ruling party to oust him. The Norwegian krone dropped 0.3 percent. The South Korean won edged 0.1 percent higher as President Park Geun-hye said she’s willing to resign amid an influence-peddling scandal.

In commodities, WTI crude slipped 1.9 percent to $46.20 a barrel as of 10:45 a.m. in London, after rising 2.2 percent on Monday, as jitters returned that OPEC will fail to reach a successful deal when it meets tomorrow. Copper futures dropped 1.6 percent on the London Metal Exchange, nickel lost 2.2 percent while zinc declined 1.1 percent. Gold for immediate delivery fell 0.5 percent following last session’s 0.9 percent jump.

Among today’s key events, we’ll get the second reading of Q3 GDP where the market is expecting growth to be revised up modestly to +3.0% qoq from +2.9% in the first estimate. In addition to the data the BEA will also release new information concerning corporate profits which is usually worth taking a look at. Also due out across the pond will be the November consumer confidence survey and also the S&P/Case-Shiller house price index. There is also some Fedspeak with Dudley due to speak at 1.15pm GMT (albeit on the Puerto Rico economy) while Powell speaks at 5.40pm GMT.

US Event Calendar

  • 8:30am: GDP Q3 Est. 3% (prior 2.9%)
  • 8:55am: Redbook weekly sales
  • 9am: S&P CoreLogic CS 20-City y/y NSA, Sept., est. 5.20% (prior 5.13%)
  • 9:15am: Fed’s Dudley speaks in Puerto Rico
  • 10am: Consumer Confidence Index, Nov., est. 101.5 (prior 98.6)
  • 4:30pm: API weekly oil inventories

* * *

DB’s Jim Reid concludes the overnight wrap

Sunday’s referendum in Italy is coming into full view now and even though a rejection is probably the most likely scenario, what happens after that is still open to much debate. Indeed DB’s Marco Stringa published an updated report yesterday looking at the risks after and beyond Italy’s referendum. He notes that given the recent underperformance in Italian assets, the impact of a rejection may already have partially been reflected in valuations. But when looking at implied moves from options, the equity market seems to be mostly pricing in limited probability of extreme scenarios. An apparent lack of concern over contagion risks is even more apparent in broader European indices. The report goes through Marco’s various downside and upside scenarios for which his central case still remains a muddle-through government with limited scope and duration. In this case he expects an early election from June 2017.

The last 24 hours suggests, certainly in Europe, that markets have started to turn their focus fully towards Sunday. Italy’s FTSE MIB (-1.81%) was the standout underperformer yesterday with Italy’s banking sector under pressure following a number of negative newswire reports. The Stoxx 600 edged down -0.77% although the Stoxx 600 Banks index tumbled -1.90% for its biggest one-day loss since November 2nd with Italian lenders unsurprisingly at the heart of that.

Markets in the US also slipped yesterday. Having touched record highs on Friday the S&P 500 (-0.53%), Dow (-0.28%), Nasdaq (-0.56%) and Russell 2000 (-1.29%) all simultaneously declined with banks also at the forefront of the weakness. In fact that drop for the Russell 2000 was, amazingly, the first since November 3rd (15 sessions) with the run of gains since the longest for that index since 1996. Elsewhere, Treasuries seem to have hit their yield ceiling for now. 10y yields were over 4bps lower yesterday at 2.315% and are now 10bps or so down from the intraday highs in yield last week. Sovereign bond markets were also a bit stronger in Europe yesterday. 10y Bund yields dropped 3.5bps to 0.201% while BTP’s underperformed at the margin, although still edged a couple of basis points lower to 2.064%.

The other obvious mover and shaker right now ahead of tomorrow’s meeting is Oil. Yesterday WTI rebounded +2.21% to a shade above $47/bbl again, although it has dropped below that level again this morning in Asia. The constant barrage of will-they-won’t-they headlines has the makings of the next great soap opera. The suggestion yesterday was that Iran and Iraq have continued to express objections to Saudi Arabia demands for their share of output cuts and for now that appears to be the main sticking point. We’ll wait to see what the latest round of headlines bring us today.

To the latest in Asia now where it’s been another relatively mixed start to trading. The Nikkei (-0.26%) in particular is trading lower despite some signs of improvement in the data this morning. Overall household spending, while still soft, did improve to -0.4% yoy in October from -2.1% in the month prior. Retail sales were also reported as rising +2.5% mom last month (vs. +1.1% expected) – the quickest since May 2014 – while over in the labour market the jobless rate was unchanged at 3.0%. Elsewhere this morning the Hang Seng (-0.02%), ASX (+0.06%) and Kospi (-0.03%) are little changed, while the Shanghai Comp (+0.30%) has edged higher. Rates markets are similarly mixed, although moves are relatively modest, while US equity index futures are fairly flat.

Moving on. Yesterday the OECD released their twice-yearly economic outlook including updated growth forecasts. Summing up, growth was revised up for the UK to 2.0% for 2016 (from 1.8% at the September projections) and 1.2% in 2017 (from 1.0%). Growth in 2018 is expected to be 1.0% but unsurprisingly the OECD used the caveat that the unpredictability of the exit process from the EU is the major downside risk. For the US, growth has been revised up to 1.5% for this year (from 1.4%) while 2017 growth was revised up two-tenths to 2.3%. Growth is expected to be 3.0% in 2018 with the organisation painting a fairly positive picture about of the impact of President-elect Trump’s proposed infrastructure spending plans on US growth. According to the OECD, world growth is expected to be 2.9% this year (unchanged) and 3.3% in 2017 (up from 3.2%).

Meanwhile, the data flow in Europe was a little bit soft at first glance. The ECB’s money and credit aggregates revealed a slowing in M3 money supply growth to +4.4% yoy in October from +5.1% the month prior. Market expectations had been for little change. However, after adjusting for sales and securitisation household lending rose +1.8% yoy and was unchanged versus September, while the three-month average for total credit was little changed at +1.7% yoy. Private sector credit rose with the three-month average up to +0.9% yoy from +0.6%. Meanwhile, the sole release in the US was the Dallas Fed’s manufacturing survey for this month which showed headline business conditions as rising nearly 12pts to +10.2 which is actually the highest reading since July 2014.

Also released yesterday was the latest ECB CSPP holdings data. As of November 25th, total holdings amounted to €46.231bn. That implies net purchases settled last week of €1.909bn or an average daily run rate of €382m. In fact, the daily average more or less matches the daily average since the program started (€385m) so we’re still yet to see any obvious signs of a slowdown into yearend just yet.
Staying with the ECB and wrapping up, President Draghi also spoke yesterday in a testimony to European Parliament, although his comments weren’t particularly groundbreaking. Draghi spoke about the ECB’s perspective on economic and monetary developments post Brexit and talked about the ‘encouraging resilience’ that the Euro area has so far displayed. Unsurprisingly Draghi said that longer term potential spillover effects will ‘vary across countries depending on their trade links with the UK’. Following the various press reports suggesting a possible delay in the decision concerning an extension of the ECB’s stimulus program, Draghi said that the Governing Council will assess the various options that will allow the Council to ‘preserve the very substantial degree of monetary accommodation necessary to secure the sustained convergence of inflation towards level below but close to 2%’.

Looking at the day ahead, this morning in Europe we’re kicking off in France where we’ll get the second Q3 GDP reading. Following that we turn over to the UK where money and credit aggregates data is due to be released, including last month’s mortgage approvals data. Confidence indicators for the Euro area then follow before we get the flash November CPI report for Germany. Over in the US this afternoon we’ll get the second reading of Q3 GDP where the market is expecting growth to be revised up modestly to +3.0% qoq from +2.9% in the first estimate. In addition to the data the BEA will also release new information concerning corporate profits which is usually worth taking a look at. Also due out across the pond will be the November consumer confidence survey and also the S&P/Case-Shiller house price index. There is also some Fedspeak with Dudley due to speak at 1.15pm GMT (albeit on the Puerto Rico economy) while Powell speaks at 5.40pm GMT.

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 5.94 POINTS OR 0.18%/ /Hang Sang closed DOWN 93.50  OR 0.41%. The Nikkei closed DOWN 49.85 OR .27%/Australia’s all ordinaires  CLOSED DOWN 0.22% /Chinese yuan (ONSHORE) closed UP at 6.8988/Oil FELL to 45.88 dollars per barrel for WTI and 46.90 for Brent. Stocks in Europe: ALL IN THE GREEN EXCEPT LONDON      Offshore yuan trades  6.9232 yuan to the dollar vs 6.8988  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AS MORE USA DOLLARS ATTEMPT TO LEAVE CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER.

3a)THAILAND/SOUTH KOREA/:

b) REPORT ON JAPAN

c) Report on CHINA

The following will be something that I will be watching out for:  the rising Chinese bond yields (lower prices on bonds).  The fact that the USA is raising rates has caused China to tighten as well.  If they let interest rates remain pat then the yuan  would contract even more.  So China matches the USA in rising yields to prevent their yuan from collapsing

 

(courtesy zero hedge)

Chinese Bond Yields Jump Most In 10 Months On “Liquidity Fears”

It is probably a coincidence that one day after we commented on what is emerging as “the market’s next headache”, namely China’s (not so) stealth tightening, which in the last few weeks has led to a creep higher across the curve, the yield on China’s sovereign 10Y bond jumped 6.5bps to 2.94% on what Bloomberg dubbed were “liquidity fears.” This was the biggest one day spike for the benchmark bond since Jan. 25, according to ChinaBond data.

As a result of the selloff, the most actively traded 10-year govt bond futures were down 0.72%, while five-year futures dropped 0.74%.

The tightening was broad-based, with 1-year rate swaps rising 13bps to 19-month high at 3.17%; additionally the overnight repo rate also rose to 2.31%, the highest level this month.

Quoted by Bloomberg, Wu Sijie, bond trader at China Merchants Bank said “tightening interbank liquidity and the expectation of even higher short-term borrowing costs are driving up swap costs and affecting sentiment on the cash bond market.”

Meanwhile, signalling no change at all in its posture, overnight the PBOC drained funds in open-market operations for the fourth consecutive day, bringing the total withdrawal to 130 billion yuan.

Why is all of the above relevant? Because while so far the global capital markets have been immune to the substantial tightening in financial conditions resulting from the sharp rise in the US Dollar and US interest rates, a similar tightening in China – which is now clearly taking place – will be far more difficult for global risk assets to ignore.

As we reported yesterday, “since Oct 21, yield of 10Y Chinese Government Bond (CGB) has risen by 20bps, from 2.65% to 2.85%, partly in response to the strong global rates and USD move since the US election.” Bank of America expects Chinese yields to rise further to 3.40% by the end of 2017. Furthermore, with credit spreads near all-time lows, the bank warns that there is a risk that the move can widen sharply in the near future.

Judging by the biggest jump in yields in over a year taking place the very next day, this appears to be playing out as expected.

As Cui wrote, the local equity market reacted progressively less favorably to rising rates the last four times as investors turned ever less optimistic about growth outlook. The bank believes that “the rising rates this time may put pressure on equities in general as it would occur in an environment of lackluster growth.” In other words, while the US stock market may be ignoring the signal sent by rapidly rising yields, China may not have that luxury.

The biggest concern: if rising rates are caused by no-growth factors, such as inflation and the government’s desire to control debt growth (which seemed to be the case with Episodes 3 and 4), the market reacted sharply lower. This time, the pressure appears to be mainly driven by a less accommodating monetary policy as a result of housing bubble risk, debt control need and exchange rate pressure, despite a fairly lackluster economic growth outlook. In this case, Cui concludes, “the rising rate should not be a net positive to the equity market, in our view.”

Finally, what is most troubling for China, is that should financial conditions continue to grind tighter, the PBOC may have little recourse in response: as the Yuan has tumbled on the back of the stronger dollar, the central bank has been forced to tighten conditions to avoid an even steeper descent. This has eliminated the possibility of engaging in further aggressive easing as the alternative would be an even sharper drop in the Yuan, leading to even greater capital flight – something Beijing has been grappling with since early 2015.

Ultimately, the sharp move higher in Chinese yields may mean that just as “international conditions” prevented the Fed from hiking any time after the December 2015 rate hike, so this time too it may be global tightening conditions, and the stronger dollar that cause the next round of capital markets pain in a repeat of the market’s reaction to the last time the Fed hiked to telegraph the economy was “strong enough” that it could sustain a tightening cycle.  It wasn’t.

So while traders have gotten used to tracking the daily fixing of the Yuan, keep a close eye on Chinese yields too. At this point it may be they that crack first.

4 EUROPEAN AFFAIRS

This Sunday, Dec 4 is the referendum date for Italy and the polls indicate strongly that the rejection of the establishment.  Renzi may quit as promised but we are just not sure.  He does not want to be gatekeeper of a technocrat government similar to what happened when Berlusconi left and Monti was appointed.

The ECB is ready to purchase as many Italian bonds as possible trying to keep the yields from skyrocketing.  As I have pointed out on many occasions to you, the Italian banking system has 18% non performing loans totaling 360 billion euros.  The bank system in Italy is insolvent.

(courtesy zero hedge)

Brexit Redux: ECB Ready To Buy More Italian Bonds If Referendum “Rocks Markets”

In a report confirming that the ECB is preparing for a rerun of a post-Brexit scenario, Reuters writes that the ECB is ready to temporarily step up purchases of Italian government bonds if the result of next Sunday’s crucial referendum, which according to WSJ will likely determine the future of not only Monte Paschi but other insolvent Italian banks, “rocks markets” and sharply drives up borrowing costs for the euro zone’s largest debtor.

As observed here over the past week, Italian government bonds and bank shares have sold off steeply ahead of the Dec. 4 referendum on constitutional reforms as the market has grown to appreciate the risk of political turmoil. Opinion polls suggest the ‘No’ camp is heading for substantial victory, which could force out Prime Minister Matteo Renzi in the latest upheaval against the ruling establishment sweeping the developed world. Heavily indebted Italy’s borrowing costs are closely watched as a potential flashpoint for market instability in the wider euro zone.

Just like in the hours after the Brexit announcement, when the ECB and other regional central banks vowed to step in and stabilize markets, the ECB will likely use its €80 billion monthly bond-buying program – which already hold nearly €1.2 trillion in European bonds – to counter any immediate, further spike in bond yields after the vote, smoothing market moves and supporting bonds, according to four euro zone central bank sources who asked not to be named.

The sources added the scheme was flexible enough to allow for a temporary increase in Italian purchases and that such a move would not necessarily need to be rubber-stamped by the ECB’s Governing Council, which is due to meet on Dec. 8 to decide on whether to keep buying bonds after March.

But they stressed this would be limited to days or weeks, to counter any immediate market volatility, because the asset-purchase program was designed to shore up inflation and economic growth in the entire euro zone and was not intended to fight crises in individual countries.

This means that, if Italy or its banks needed longer-term financial support, Rome would need to formally ask for help.

“The Governing Council understands that there is some space to help Italy, which will be used, if needed. The asset purchase program has built-in flexibility,” said one of the sources. “The key is that the ECB has to be convinced the volatility can be overcome by using this flexibility.”

Last week ECB Vice President Vitor Constancio opened the door to a central bank intervention last week but also stressed that still-low Italian bond yields did not point to investor fears that the country may crash out of the euro zone. Indeed, concerns about deposit flight and the health of Italian banks, rather than Italy’s own borrowing costs, have become Rome’s biggest worry in the aftermath of a ‘No’ vote.

Italy’s 10-year bond yields stand at 2% the highest level in more than a year but nowhere near the 7% level that prompted emergency ECB purchases in 2010-11 and eventually led to the resignation of Prime Minister Silvio Berlusconi, when Draghi refused to intervene in capital markets in a show of force with the then-Italian PM to demonstrate who is the real boss.

Reuters also adds that Euro zone central bank sources say there is little the ECB can do about the banks’ need for capital unless Italy itself asks for a rescue program for its banking sector. This would also unlock further, country-specific ECB purchases of Italian debt, known as Outright Monetary Transactions (OMT). These, unlike the current asset-purchase program, are not tied to the “capital key”, or how much capital each country has paid into the central bank.

“There is a risk that a bout of volatility would have a broader impact on the bank sector,” one of the sources said. “At that point, it’s not for the ECB to act. That’s typically where OMT needs to come in with all the requirements, including a (rescue) program.”

Logistic aside, BTP futures briefly spiked higher, gaining ~30 ticks in 2 minutes, to session high of 135.46, after Reuters cites unidentified sources to report ECB ready to temporarily step up Italy bond purchases if referendum causes yield spike.

 

 

end

 

Another huge paper:  Ambrose discusses the huge 360 billion euros of bad debt on the balance sheet of the banks.  The problem here is the new rules which will not allow a bailout by the sovereign Italy.  There must be a bail in and most of the bonds are owned by Italian citizens.

a must read..

(courtesy Ambrose Evans Pritchard/UKTelegraph)

Subject:Fears Italy may need €40bn bail-out for its crumbling banks

Markets are bracing for a string of failures in the Italian banking system and a possible EU bail-out, fearing defeat for Matteo Renzi’s reformist government in a crucial referendum this weekend.
Shares of Banca Monte dei Paschi di Siena (MPS) crashed 11pc on fears that a €5bn plan to recapitalise the broken lender could unravel if a ‘No’ vote leads to months of political turmoil, potentially bringing the anti-euro Five Star Movement closer to national office for the first time.
Italy’s biggest bank Unicredit fell 4.3pc and is approaching lows last seen in the financial panic in July. It has lost almost two-thirds of its value over the last year.
Sources in Rome say the Italian government may have to turn to the European Stability Mechanism (ESM) for a bank rescue, a humiliating and painful course that must be approved by the German Bundestag and other EMU parliaments. It would amount to a partial ‘Troika’ administration under terms dictated by the EU.
“We think the banks will have to raise €40bn in fresh capital. This is going to need an ESM bail-out,” said one senior Italian banker.
“The problems in the banks are becoming an excuse to put Italy under an EU programme. It won’t happen under Renzi because he won’t be there any longer after a ‘No’ vote. What we expect is a technocrat government that pushes this through,” he said.
Pier Carlo Padoan, the finance minister, has been widely touted as the next premier, though his appointment at this delicate juncture would invite a populist backlash.

Italian bad debts are 18pc of bank balance sheets, but only the red ones are really, really bad. Tensions are rising. A sell-off in Italian sovereign bonds is driving a nasty ‘feedback loop’ for the financial system since the country’s banks own €400bn of this debt. They are now nursing big paper losses that must be partially ‘marked to market’ on a quarterly basis, eroding their core capital ratios even further.
Yields on Italian 10-year bonds have doubled since the late summer, pushing the risk spread over benchmark German Bunds to a two-year high of 191 basis points.
The worry is that weaker lenders such as MPS, Veneto Banca, or Popolare di Vicenza, could be forced into closure since they have lost access to the capital markets and cannot raise fresh money.
This would wipe out bondholders under the EU’s draconian resolution regime.
Premier Renzi has been lashing out at Brussels, bedecking his office with the Italian Tricolore flag and adopting an openly eurosceptic tone. “I couldn’t care less what the European Commission says. The time for Diktats is over,” he said.
Mr Renzi is angry that new rules have forced Italy to ‘bail in’ small savers, often shunted into forms of bonds without being aware of the risk. Worse yet, EU rules make it almost impossible for the Italian state to rescue the banking system and restore confidence.
The EU banking union has never got off the ground because Germany is still blocking any form of risk sharing, let alone agreeing to debt mutualisation to clear the legacy problems from the eurozone crisis. Italy is caught in the worst of all worlds.

The risk spread on Italian 10-year bonds over German Bunds is soaring
Luigi Zingales from the University of Chicago says Italy needs a state plan to recapitalize the banks along the lines of the US Treasury’s ‘TARP’ programme eight years ago, but this is prohibited by EU state aid rules.
Ignazio Visco, the Bank of Italy’s governor, said distressed lenders will be forced to conduct a “fire sale” of their non-performing loans (NPLs). “Some may have a tough time,” he said.
Mr Visco said the rules were poorly drafted and cut across the ability of national regulators to deal with systemic risk, noting acidly that North European countries bailed out their own banks during crisis but then imposed the new regime just when Italy needed to do the same. “The timing has been unfortunate,” he told the journal Central Banking.
The governor insists that Italian banks were victims of a credit crunch caused the eurozone’s double-dip recession by the “external shock” of the sovereign debt crisis. Little of this was their fault.
The Bank of Italy says NPLs have come down slightly to €356bn, or 17.7pc of balance sheets. The closely-watched ‘Texas Ratio’ of NPLs to equity capital and loan loss reserves is 101pc, above the triple-digit danger line.

Capital outflows from Italy are raising eyebrows. The data is picked up in the ECB’s ‚Target2‘ payments system
These figures are extremely high but the headlines may overstate how bad the picture really is. The NPL tally is arguably in single digits once adjusted for the long delays in clearing up old cases in Italy’s glacially-slow court system.
“If we consider bad loans proper, we end up with an amount close to €90bn. A number of large, well-capitalized and profitable banks are thriving,” said Mr Visco.
In the end, nobody is going to let large parts of the Italian banking system collapse. The problem could be solved with a capital infusion equal to roughly 2pc of GDP, less than the rescues in Germany, Belgium, Holland, or the UK after the 2008 crash.
The only question is how this is done. Mr Renzi would probably rather eat marble than accept an ESM take-over of Italy, even if it is only a ‚Troika-lite‘ variant.
He might instead order the Italian treasury to bail out the banks in breach of EU rules and present Brussels with a fait accompli. But Mr Renzi may not be prime minister in a week’s time.
Ambrose Evans-Pritchard
end

END

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

It appears that Assad’s army will on the verge of taking Aleppo and that will be a slap in the face of the USA

(courtesy zero hedge)

Assad On Verge Of Biggest Victory Since Start Of Syrian War With Imminent Capture Of Aleppo

The battle for one of the most contested Syrian cities in the nation’s long-running civil war, Aleppo, is approaching its climax. According to Reuters, the Syrian army and its allies announced the capture of a large swath of eastern Aleppo from rebels on Monday – by some estimates as much as 40% of the militant held part – in an accelerating attack that threatens to crush the opposition in its most important urban stronghold.

In a major breakthrough in the government’s push to retake the whole city, regime forces captured six rebel-held districts of eastern Aleppo over the weekend, including Masaken Hanano, the biggest of those. On Sunday, the 13th day of the operation, they also took control of the adjacent neighborhoods of Jabal Badra and Baadeeen and captured three others.

As is customary, when it comes to describing events in Syria, one has two biased narratives to choose from: one from the perspective of the Western forces, for whom the protagonist are the Syrian rebels, and Assad is the enemy, and then there is the Syrian/Russian point of view, in which the rebels are aligned with the Islamic State (and are supported by the US) and the liberation of the country entails removing both at the same time.

Covering the former “angle” first, Reuters writes that two rebel officials said the insurgents, facing fierce bombardment and ground attacks, had withdrawn from the northern part of eastern Aleppo to a more defensible front line along a big highway after losses that threatened to split their enclave. The Syrian Observatory for Human Rights – a UK funded “think tank” operated by just one man, who in 2013 was responsible for the Assad “chemical attack” fabricated YouTube clip – said the northern portion of eastern Aleppo lost by the rebels amounted to more than a third of the territory they had held, calling it the biggest defeat for the opposition in Aleppo since 2012.

Thousands of residents were reported to have fled. A rebel fighter reached by Reuters said there was “extreme, extreme, extreme pressure” on the insurgents. Part of the area lost by the rebels was taken over by a U.S.-backed Kurdish militia from another part of Aleppo in what rebels described as an agreed handover, a rare example of cooperation between groups that have fought each other.

What appears to be the imminent loss of Aleppo by rebel forces has sent shockwaves of demoralization across the war-torn country, and hundreds of miles to the south, people have started to leave the rebel-held Damascus suburb of Khan al-Shih for other parts of the country controlled by insurgents under a deal with the government, the Observatory said.

As Reuters adds, capturing eastern Aleppo would be the biggest victory for President Bashar al-Assad since the start of the uprising against him in 2011, restoring his control over the whole city apart from a Kurdish-held area that has not fought against him.

For Assad, taking back Aleppo would shore up his grip over the main population centers of western Syria where he and his allies have focused their firepower while much of the rest of the country remains outside their control. More importantly, it would be seen as a victory for his allies, Russia and Iran, which have outmanoeuvred the West and Assad’s regional enemies through direct military intervention. It would be a major slap in the face for the US and its allies.

“What happened in the last two days is a great strategic accomplishment by the Syrian army and allies,” a fighter with a militia on the government side in the Aleppo area said.

Meanwhile, animosity toward the US is building even among its erstwhile “friends” as rebels said their foreign patrons including the United States have abandoned them to their fate in Aleppo.

While some of the rebels in Aleppo have received support from states such as Turkey, Saudi Arabia, Qatar and the United States during the war, they say their foreign backers have failed them as Assad and his allies unleash enormous firepower.

“The situation is very bad and the reason is the round the clock shelling with all types of weapons,” said Abdul Salam Abdul Razaq, military spokesman for the Nour al-Din al-Zinki group, one of the main Aleppo rebel factions.

“There is very fierce fighting going on now and the regime and its supporters are destroying whole areas to allow themselves to advance,” he told Reuters. Another fighter said there was heavy attrition in “people and ammunition”.

Assad has gradually closed in on eastern Aleppo this year, first cutting the most direct lifeline to Turkey before fully encircling the east, and launching a major assault in September. A military news service run by Hezbollah declared the northern portion of eastern Aleppo under full state control. The Russian Defence Ministry said about 40 percent of the eastern part of the city had been “freed” from militants by Syrian government forces.

Russian President Vladimir Putin discussed the Syrian army’s advances with members of his Security Council on Monday, Russian news agencies quoted Kremlin spokesman Dmitry Peskov as saying.

To preserve some pride, officials with two Aleppo rebel groups said rebels had withdrawn to areas they could more easily defend, particularly after losing the Hanano housing complex area on Saturday.

It is a withdrawal for the sake of being able to defend and reinforce the front lines,” an official in the Jabha Shamiya rebel group told Reuters.  In other words, it’s not a defeat, just a strategic retreat.

* * *

Meanwhile, the same narrative from a biased Russian angle, as reported earlier by RT, sounds as follows:

More than 3,000 civilians have left the eastern part of the besieged Syrian city of Aleppo in the last 24 hours, the Russian Center for Reconciliation said. It later reported that about 40 percent of the militant-held part of the city has been liberated. Some 3,179 people, including 1,519 children – among them 138 newborn babies – have left Eastern Aleppo through the ‘humanitarian corridors’ set up by Syrian government forces, Russian Reconciliation Center said on Monday. The center reported that 12 neighborhoods, comprising roughly 40 percent of the territory previously controlled by the militants, have been cleared.

According to the Russian Center for Reconciliation, more than 80,000 people live in the newly liberated areas of the eastern part of the city. It added that more than 5,000 people fled from the southern districts of eastern Aleppo, which are still controlled by the militants, to the areas held by government forces. More than 100 militants laid down their arms and left eastern Aleppo through the special corridors, the statement said.

Despite joint humanitarian efforts undertaken by the Syrian government and Russia, thousands of civilians are still kept in the eastern part of the city by militants. To minimize damage to the civilian population, the Russian and Syrian militaries suspended airstrikes and set up ‘humanitarian corridors’ for both non-combatants and militants willing to leave the area.

However, the corridors are vulnerable to militant small arms fire and shelling, which complicates the evacuation of civilians. RT’s Lizzie Phelan, reporting from Syria, said the government army’s advance in the eastern part of Aleppo “has enabled civilians to leave the area,” and that there are thousands of people desperate to flee. Those who managed to escape told RT crew the militants deprived them of all means to survive, including food and water.

“The militants are lying, they are holding us there, even now they are holding families [in the area]. They don’t let people go,” one man said.

“Every time we tried to flee they caught us and turned us back,” a young woman added.

As RT concludes, “currently, the Syrian Army is continuing their large-scale offensive in eastern Aleppo, targeting Al-Nusra Front and other radical militants still controlling the area. The troops have already established control over important blocks and districts in the eastern part of the city.”

* * *

Readers can decide which narrative they like better, but no matter how one spins it, whether Assad’s ongoing acts are of barbaric brutality or altruistically humanistic, should Aleppo fall to the Assad regime, the Syrian civil war will enter into a new phase, one where the regime will now have the clear upper hand, and will set back the US allied effort years, giving Trump few options if he wants to reengage in Syria: expand the US presence by orders of magnitude, including overt ground forces, or simply withdraw.

 

 

 

END

 

After months stating that Turkey was o Syrian soil to the fight ISIS, Erodgan has now changed his tune and states that he is in Syria to oust Assad!

an act of war???

(courtesy zero hedge)

 

Declaration Of War? Erdogan Says Turkish Forces Are In Syria To End Assad’s Rule

Having stated in the past that the only reason Turkish forces are on Syrian soil is to combat Islamic State terrorists, today Turkish president Recep Tayyip Erdogan made a dramatic diplomatic reversal and said that the Turkish Army has entered Syria to end the rule of President Bashar Assad, whom he accused of terrorism and causing the deaths of thousands.

“We entered [Syria] to end the rule of the tyrant al-Assad who terrorizes with state terror. [We didn’t enter] for any other reason,”the Turkish president was quoted by Huyrriyet as saying at the first Inter-Parliamentary Jerusalem Platform Symposium in Istanbul. Erdogan said that Turkey has no territorial claims in Syria, but instead wants to hand over power to the Syrian population, adding that Ankara is seeking to restore “justice.”

“Why did we enter? We do not have an eye on Syrian soil. The issue is to provide lands to their real owners. That is to say we are there for the establishment of justice,” he said, taking a page out of the US playbook, which however in recent weeks has been muted following substantial advances by Syrian and Russian forces which as reported last night, have made material gains in the fight against Syrian rebels in east Aleppo.


Turkish Army tanks driving to the Syrian Turkish border town of Jarabulus

Erdogan went on to say that “in his estimation” almost 1 million people have died in the conflict in Syria, although no monitoring group has provided any similar figures according to RT.

The Turkish moral arbiter of all that is right also said that Turkey could not “endure” the unending killing of civilians and “had to enter Syria together with the Free Syrian Army.

The Turkish leader also accused the UN of inability to influence the situation in Syria and said that the organization is ineffective in its current state. “The world is bigger than five,” he said, referring to the number of permanent members on the UN Security Council, as reported by Hurriyet.

As readers will recall, Turkish troops entered Syria on August 24, launching operation Euphrates Shield. Turkey deployed ground troops and air power to northern parts of its neighboring country, with what then was a stated goal of retaking areas held by Islamic State. However, many observers have said that Ankara aims to suppress Kurdish forces in Syria and prevent them from connecting three de facto autonomous Kurdish areas into one enclave south of the Turkish border.

In October, Turkey’s air forces killed between 160 and 200 fighters of the Kurdish YPG militia group in 26 airstrikes conducted in just one night. The Turkish military campaign in Syria has also led to increasingly strained relations with Assad’s government.

Ankara was forced to halt air support for its ground incursion into Syria on October 22, after Damascus vowed to shoot down Turkish Air Force planes in Syrian skies, accusing Turkey of violating its national sovereignty. Turkey in turn accused the Syrian Army of attacking FSA fighters in the northern Aleppo province.

The announcement is hardly a surprise, coming just one day after what we reported, is set to be Assad’s biggest victory since the start of the Syrian war with the imminent capture of rebel-stronghold Aleppo, and whose eastern part had been some 40% “freed” from militants by Syrian government forces, according to the Russian Defence Ministry.

In light of today’s latest statement, which according to some is tantamount to a declaration of war by Turkey against a sovereign state, it is unclear what the Syrian response will be to the NATO member. It is also unclear how Russia – which is alligned with the Assad regime – will respond in light of recent overtures by both Erdogan and Putin to bring relations between the two nations closer.

In another slap in the face to the USA, Egypt shuns Washington and now supports the Russian backed coalition in Syria

 

END

In another slap in the face to the USA, Egypt shuns Washington and now supports the Russian backed coalition in Syria

Gorka/Stragic-Culture.org).

Egypt Shuns Washington; Supports Russia-Backed Coalition In Syria

Submitted by Alex Gorka via Strategic-Culture.org,

Finally, Egypt has taken a clear stance on Syria. This is an event of great importance to drastically change the situation. Speaking on the Portuguese TV network RTP on November 22, Egyptian President Abdel Fattah al-Sisi publicly affirmed his support for the forces of Syrian President Bashar al-Assad. In response to the question of whether Egypt will send troops to Syria or not he stated: «Our priority is to support our Army in issues such as controlling some parts of Libya and dealing with extremist forces for establishing peace, including in Syria and Iraq».

President al-Sisi restored diplomatic relations with Syria after coming to power in 2013.

Last month, Egypt backed a Russian-backed motion calling for a ceasefire in Syria. Egypt had known the support for the Russian measure would put it at odds with the West and Saudi Arabia. Riyadh responded by suspending oil shipments to the country but the Egyptian government does not give in under pressure. For instance, it has defied the US and Saudi Arabia by refusing to get involved in the Yemen’s conflict.

Citing «well-informed Arab sources», Lebanese newspaper Al-Safir reported that 18 Egyptian pilots arrived at Hamah military airbase in Syria on November 12. The servicemen are part of a special helicopter squadron. A source «close to the Syria file» told the newspaper that a large deployment of Egyptian troops will arrive in Syria in late January to take part in military operations «not limited to air support at Hama airbase».

Last month, Syrian security services chief Ali Mamlouk met with Egyptian officials in his first public foreign visit in five years to discuss Egypt publicly backing the Syrian government. According to Middle East Observer, the first group of 4 high-ranking Egyptian officers from the Egyptian General Staff entered Syria a month ago and was deployed in the Syrian army’s base in Damascus. The military officials visited the armoured division stationed near Daraa and an airbase in Sweida province.

Also last month, Syrian National Security Bureau head Ali Mamlouk visited Cairo to meet Khaled Fawzy, the head of Egypt’s General Intelligence Service. The two sides agreed to coordinate political positions and strengthen cooperation in «the fight against terror» according to Syria’s Sana news agency.

Egypt’s open support of the Russia-backed coalition in Syria is a game changing event of fundamental importance. In the West, the war in Syria has been widely believed to be a conflict between Sunni and Shia forces – the 1400 old Islam schism. Now the largest Arab Sunni state has taken the side of the Syria’s government to become a coalition ally with Russia. The sectarian interpretation of the conflict is not valid anymore.

The conflict is about fighting terrorists. As the Egyptian president noted he believes that the national army the Syrian government forces are best positioned to combat extremists and restore stability in the war-torn nation.

Recently, Russia and Egypt have intensified their bilateral ties in many areas, including defense cooperation. Joint military exercises were held in Egypt in October. Both countries see eye-to-eye on Libya and many other issues.

There is another event to demonstrate the strengthening of the Russia-supported coalition joined by Egypt. According to Iranian Fars News Agency, Iranian Defense Minister Hossein Dehghan stated on November 26 that Tehran could allow Russia to use Nojeh airbase near Hamadan for Moscow’s aerial operation against terrorists in Syria. Also, Mr. Dehghan told reporters that purchase of Russian-made Sukhoi Su-30 fighter jets is on the agenda.

The same day, Victor Ozerov, the Russian upper house of parliament’s defense committee chair, said Russia could use Iran’s Hamadan airbase in case the Admiral Kuznetsov aircraft carrier moves away from Syria. On August 16, Russian bombers used Iran’s Nojeh to launch attacks on terrorist positions in Syria.

On November 26, Syrian armed forces and allies managed to seize control of Hanano, key district in the northwestern city of Aleppo, which has been a flash point over the past few months. After Aleppo is retaken, the Russia-supported coalition in Syria will control vast swathes of land in the country. With the government of Bashar Assad firmly in power, the post-war settlement no longer seems to be a pipe dream and the US-led coalition will hardly be the one to call the shots.

Russia’s military effort in Syria has become an operation of a much broader scope than it was back in September 2015, when the first Russian aircraft flew its first sortie. The operation has marked Russia’s spectacular return to the Middle East as a major player. New actors, like China, Egypt and others, get involved. Interaction between the coalition members gets closer as illustrated by Russia and Iran.

Egypt’s decision to support the Syria’s government provides a good opportunity to influence the events in the region in a positive way.

In broad terms, the teaming up of large countries indicates that a regional anti-terrorism entity or even a military block independent from the US might emerge at some point in future.

6.GLOBAL ISSUES

This latest Jim Willie paper is pretty good as it outlines the 11 or more problems facing the globe:

(courtesy Jim Willie/GoldenJackass)

Criss-Crossed Fuses And Lit Bonfire

By: Jim Willie CB, GoldenJackass.com

 — Published: Sunday, 27 November 2016 | Print  | 4 Comments

Many are the potential fuses to be lit, which would create the conflagration, the massive bonfire of the bond vanities and bank charades. Many are the fuses lying around, all criss-crossed, all exposed, all overlapping each other in highly dangerous manner. If any single fuse is lit, then several will light and the detonation arrives. It is unavoidable since the financial world is so deeply interwoven. Never in modern history has the global financial structure been so badly weakened, so totally corrupted, so thoroughly undermined by control mechanisms, so intensely defended by sanctions even war. In 2007 and early 2008, the Jackass warned of a mortgage bust that would alter the global system forever. It happened with far reaching consequences which endure to this day. In recent months the Jackass is warning of a Systemic Lehman event, where several major national systems are at heightened risk of a similar bust like what happened in September 2008. Except this time, the entire global financial system will erupt like a debt volcano, with several epicenters, all located in the West. The big Western banks are all lashed together, all tied to each other. The banker cabal believed that the interconnectivity within their bank structures would make them all immune to failure risk. The reality is that the failure of any one major bank guarantees the systemic breakdown of all of them. It will erupt like a cave-in of the flying buttresses at the Notre Dame in Paris, with numerous bank (churches) collapsing, all located in the West.

FINAL SOLUTION

When the collapse occurs, the solution will finally be discussed, the solution avoided for eight full years. THE GOLD STANDARD WILL BE INSTALLED. It will first arrive in the trade payment system. Then it will arrive in the banking reserves system. Lastly it will be seen in the gold backed currencies. The paper game has gone on since 2008 in grand style and unspeakable corruption.

This article attempts to list many threats to a systemic breakdown from ignition of several megatons of TNT dynamite. The financial press has often mentioned derivatives as capable of inflicting damage and devastation like with nuclear explosions. The systemic breakdown is due to occur soon, actually way overdue to occur. The prevention has been a massive global project run by the major central banks in coordination with a few ministries of finance. The primary control center is the USDept Treasury and their Exchange Stabilization Fund. This truly gigantic multi-$trillion fund is a very well-kept secret. Its recent activity has been to permit the USTreasury Bond yield to rise, but without pushing down the sacred USDollar. Not much mention has come from the sleepy lapdog financial press on this unusual anomaly. The motive is to keep the Japanese happy, since they are the last holdout among the $1 trillion USGovt debt holders. The Chinese are dumping USTBonds, but the United States cannot afford for Japan to dump USTBonds at the same time.

TOO MANY CRISS-CROSSED FUSES EXPOSED

The following are numerous potential lit fuses, with brief descriptions of the risk and effect. It is in no way complete as a list, but it might be somewhat comprehensive. No attempt will be made to be very thorough in the description of each potential fuse. That role is played with the Hat Trick Letter, with fallout effects discussed and analyzed in more thorough fashion.

Deutsche Bank failure

The actual failure has been going on for at least a couple years. Recall that D-Bank unwillingly accepted the merger & acquisition of Bankers Trust back in 1998. It became the European outpost for the rafts and scads of bank derivatives, managed outside the United States, free from regulation. The giant German bank has a net worth of around minus $1000 billion, or minus EUR 1000 billion, no matter the unit. All manner of relief and patchwork and emergency liquidity and false accounting and total lies are associated with this giant cesspool of a bank. They hold all types of ruined paper debt, and hold a mountain of Gold contracts which China wants to acquire. The New York and London crime center banks are vulnerable. When it blows out of control, the Western banks go poof and the USDollar dies.

USFed rate hike

The USFed might not be able to avoid an official rate hike. Ignore the fake rate hike in December 2015, which was really a Reverse REPO episode well concealed. That event permitted more leverage by the big US banks. In the last few months, the USTreasury Bond yields are all rising, including the short maturity. The long maturity might cause a derivative accident soon, since the Tower of Bond Babel cannot tolerate the big moves seen. The USFed might have to hike rates a notch, just to keep the short maturity of the USTreasurys from fracturing. But the long maturity is also at risk. When the hike comes, the Western banks go poof and the USDollar dies.

USDollar rejection in trade payments

The United States has been paying for its massive $500 billion trade deficit with paper IOU rubbish certificates called USTreasury Bills. The US nation has been a freeloader for over 20 years, lacking critical mass in industry, covering the bills with printed money of no intrinsic value. The Asian producers object loudly. In the last year, many foreign producers have been rejecting the USDollar as payment. Bobcat Inc (warehouse forklifts, construction backhoes) is only the most visible. The port facility confusion and mayhem is given too much attribution to the Hanjin Shipping bankruptcy. The truth is that the USTBill is being rejected as valid payment, despite the many empty disputes of this claim. The other shoe from those American feet is the end of the USDollar as global currency reserve. When the rejection is more broadly understood and openly discussed, the Western banks go poof and the USDollar dies.

USTreasury Bond complex bust with derivative

The bank derivatives are a $700 trillion set of buttresses, which if capably observed, would frighten the wits out of all people who have bank accounts. They are heavily leveraged contracts which hold the financial system together like glue, but lately more like chewing gum and bailing wire. These toxic units are called assets, while bank accounts are called liabilities subject to loss and confiscation (see bail-in procedures). The derivatives cannot tolerate big movements in bond yields. They serve as the site to produce artificial bond demand for the USGovt debt, whose supply is between $1.0 and $1.4 trillion per year, but without benefit of actual real investor buyers. The Asian bond dumping has put huge strains on the derivative machinery, which cannot sustain the pressure. The derivative jig is up very soon, to reveal a massive Ponzi Scheme in USGovt debt that exceeds $20 trillion without much attention or importance given to it. When the derivative complex shows wider cracks and open gushes of bond blood, the Western banks go poof and the USDollar dies.

Italian bank collapse & exit from Common Euro Currency

The Italians have a national referendum coming up very soon. The decision to push PM Renzi aside and to go on a more independent defiant path seems imminent. All his opponents have a common theme, to bail out the banks and to exit the Euro currency, which means a return to the Old Lira currency. The implications are staggering and lethal to the sovereign bond market in Southern Europe, since the PIGS all look alike. The dire implication is to the big European banks, primarily the French and German big banks. When the Italians flip the bird to the Euro Central Bank and their big bank masters, refusing to endure the financial rape as seen in Greece, the continent will undergo widespread tumult. Leaving the Euro currency must coincide with leaving the European Union itself. Key EU leaders are certain to leave en masse, much like in the style of Schultz recently. When Italy bails out its banks and leaves the Euro currency, the Western banks go poof and the USDollar dies.

Contagion in Europe in the Southern nations

Greece could follow Italy quickly out of the common Euro currency, even with exit from the European Union. After neighbor Turkey’s intriguing stability course and success, the Greek nation might quickly fall into the arms of Russia and China. The military security from Russia combined with the commercial security from China is a significant attraction. The EU masters have raped Greece, and they wish to leave the bedroom, even the European house. Worse, Portugal could be a dark horse in the unfolding takedown of the EU. When the contagion strikes and the fracture occurs among the PIGS pen, the Western banks go poof and the USDollar dies.

European Sovereign Bond Carnage

For the last three years or more, the Euro Central Bank has been quietly, and recently not so secretly, been supporting the entire Southern European sovereign bond market. The Germans at the Bundesbank were loud in objections in 2014, but they grew quiet. The Germans despise the ECB arrogance, and greatly dislike the ruin heaped upon them by the EU itself. The EuroCB has a higher order mission and marching orders from the elite fascists. The Italian Govt debt insurance is rising fast in price, a reliable early warning system much like seen in 2008 with Lehman Brothers CDSwap. The press ignored the signal in 2007, and again ignores it now. The EuroCB activity will backfire in a bonfire of the bond vanities, exposing Prince Draghi for his incredibly offensive arrogance. His paper castle will be taken down. The entire PIGS sovereign debt will break down and go bust, taking with it many large European banks, starting with the PIGS pen but extending into Central Europe. The strangulation of the REPO markets will result in huge liquidity and collateral issues. When the bond carnage begins in earnest, the shock wave will be clear, and the Western banks go poof and the USDollar dies.

Gold Market Arbitrage Breakdown

Ever since the Shanghai Gold Exchange opened and the London Gold Fix was exposed as a grand fraud, the pressures have risen on arbitrage within the gold market. A hidden battle has been waged, sometimes intense with big gaps, often mild with smaller gaps, between the East and West. The arbitrage gap is currently around US$20-25 per ounce in price, but could change quickly and suddenly. It is likely to rise to hundreds of dollars, but gradually, and later perhaps in large chunk increments. The result will be the wreckage of paper Gold & Silver markets. Big players would be free to buy cheap in London, sell dear in Shanghai, and bust the fraudulent market wide open. When the gold market arbitrage undergoes a collision between reality of physical gold in movement and the fantasy of phony paper market pricing, the Western banks go poof and the USDollar dies.

Gold-backed currency announced in East

It is really just a matter of time. The de-Dollarization process underway in the East has been going on for over two years, another Jackass forecast coming to pass. The United States with its wars and sanctions has spurred the non-USD movement in earnest, if not hidden hyper-drive. Both Russia and China simultaneously will soon announce Gold backed currencies, while also making public their true gold holdings in the tens of thousands of gold tons. The buzz has been clear for a couple years that Russia has over 25,000 tons gold in reserves, and China has over 30,000 tons gold in reserves. When the new gold-backed currencies are announced, publicized, launched, used in commerce & banking, and compared to the Western toilet paper passing as currency, the Western banks go poof and the USDollar dies.

Saudi acceptance of RMB in Chinese oil sales

The event is overdue, except that the Saudis are tied in two ways. They own a boatload of sequestered USTreasury Bonds, held tightly in the USDept Tresasury ESFund. Tough noogies but the Saudis will never see $3 trillion in their USTBond reserves. Also, more on the ugly tarnished side, the Saudis depend upon the USMilitary for weapons purchases in their insidious Yemen War. Regardless of bondage to the US fascists, the Saudis must move forward. The Chinese are demanding the right to make oil payments in their RMB currency terms. Look soon afterwards for the Chinese to use Gold Trade Notes, possibly as an introduction in the oil market. Doing so would slam the Petro-Dollar defacto standard in force for 42 years, putting numerous nails in the USDollar coffin. The collapse in crude oil prices would result in a breakdown of the recent OPEC output freeze. When the Saudis announce acceptance of RMB payments for Chinese oil sales, the Western banks go poof and the USDollar dies.

Miscellaneous factors

Many other factors are too numerous to list, but which could also bring about the systemic breakdown described above. They are far more numerous than the following, but these are major items. The NATO alliance might be dismantled. Either publicity of its warmonger nature or its narcotics trafficking activity could bring this event about. The EU member nations object to taking orders from the Supreme Commander, trampling upon the national sovereign leadership. Then NATO would publically become irrelevant, and lead to USMilitary withdrawal from mainland Europe, save for a token unit like in Germany. Also, the ISIS exposure could explode on the scene for USGovt involvement, Mossad involvement, and even British MI-6 involvement. ISIS is a joint creation from these three national security centers, adopted from the Axis of Global Fascism. The defeat of the Islamic State in Syria and Iraq could lead to an explosion of sporadic attacks across the entire European continent. For staged terror events, see Paris, Brussels, and Nice. Another, the growing discontent and stirred racial violence in the United States might couple with political stirred violence, coming from the Soros funded groups. Riots in the United States could result in USEconomic stagnation and severe effects in consequence. These other lesser but important factors could stoke the fires, and lead to chaos as the Western banks go poof and the USDollar dies.

GOLD TRADE NOTE INTRODUCTION

The Gold Trade Notes for trade payment might be coming into view, initially with commodity transfers, later swap contracts, and finally gold-backed short-term notes which supplant the USTBill. One might think of used newspapers on the floor, or of the dodo bird. The trade might be made in exchange for either goods delivered or USTBills held. Detect a growing connection to finished goods being withheld from delivery. This is probably another sign of refusal of USTBills as payment. As footnote, be sure to know that the preliminary steps to the Global Currency RESET will not be laid out in full disclosure for public benefit. It represents a tremendous investment opportunity for the elite, which they never tend to share. In fact, the RESET might be well along before it is even recognized. End to EuroRaj main thoughts and open analysis, for which much gratitude is given. The Jackass believes a few critical elements to the RESET are in place. More details on DIP Financing feature is included in the September Hat Trick Letter report.

***A major hitch obstacle can be inferred. Payment in USD terms might be the clot in the artery. Demands might be for hard asset swaps, and the contract security from large scale commitment of commodities, facilities, and property. The swap trade is coming into view, a presage of the Gold Trade Note.***

The Jackass concludes the USD rejection could be lifting its head within a gathering storm, without clear identification. It is indeed difficult to identify all the elements when hidden deals at the highest level are underway, and friction is omnipresent. The Bobcat Corp rejection of USTBills at Pacific ports is a clear story. For every one story recounted, there are 10 to 20 not yet heard. My firm belief is that in Asian banking systems, they do not want the USTBills anymore. The banks in Asia are trying to dump them in heavy volume, not accumulate more worthless toilet paper. Finally the sharp blowback from printing QE money has hit. The USFed monetary policy saves the big insolvent banks, but kills capital. The result has finally seen manifested in USD global rejection, or at least hints toward the same. Asian banks still hold vast sums of USTBonds. They are not going to announce the rejection, but instead fight behind the walls for better terms of payment, even as they pursue the Gold Trade Note for payment at ports. It is coming, like daybreak follows the long night.

NEW SCHEISS DOLLAR & GOLD TRADE STANDARD

In time, expect an eventual refusal by Eastern producing nations to accept USTreasury Bills in payment for trade. The IMF reversal decision assures this USTBill blockade in time, and might accelerate the timetable. The United States Govt cannot continue on five glaring fronts of gross negligence and major violations. These violations have prompted the BRICS & Alliance nations to hasten their development of diverse non-USD platforms toward the goal of displacing the USDollar while at the same time take steps toward the return of the Gold Standard.

The New Scheiss Dollar will arrive in order to assure continued import supply to the USEconomy. It will be given a 30% devaluation out of the gate, then many more devaluations of similar variety. The New Dollar will fail all foreign and Eastern scrutiny. The USGovt will be forced to react to USTBill rejection at the ports. The US must accommodate with the New Scheiss Dollar in order to assure import supply, and to alleviate the many stalemates to come. The United States finds itself on the slippery slope that leads to the Third World, a Jackass forecast that has been presented since Lehman fell (better described as killed by JPM and GSax). The only apparent alternative is for the United States Govt to lease a large amount of gold bullion (like 10,000 tons) from China in order to properly launch a gold-backed currency. Doing so would open the gates for a generation of commercial colonization, but actual progress in returning capitalism to the United States. The cost would be supply shortages to the USEconomy, a result of enormous export increases to China.

The colonization has already begun, with secret deals galore. It is very unclear what deals are being struck in order to arrange for the USGovt to have a proper gold reserve hoard, for backing a new legitimate USDollar. Meetings at very high level are in progress, with little if any popular representation, only elite members present. Failure to produce a legitimate bonafide gold-backed currency would mean the United States must proceed with the New Scheiss Dollar, an illegitimate fake phony farce of a currency. It would be subjected to a series of devaluations. The result would be heavy powerful painful price inflation from the import front. The effect would be to reverse a generation of exported inflation by the United States. The entire USEconomy would go into a downward spiral with higher prices, supply shortages, and social disorder. However, the rising prices would come from the currency crisis, and not so much from the hyper monetary inflation. That flood of $trillions has been effectively firewalled off.

HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

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Jim Willie CB, editor of the “HAT TRICK LETTER”

7.OIL ISSUES

Oil tumbles as it looks like there will not be a cut in production from the OPEC/Non Opec group

(courtesy zero hedge)

Oil Tumbles As OPEC Deal Seen Increasingly Unlikely: SBC Says “Very Low Chance” Of Agreement

One day ahead of OPEC’s much anticipated meeting in Vienna, oil has slid back under $46 on rising pessimism that an oil production cut deal, taken widely for granted as recently as last week, is not going to take place.

Here is the latest rundown of events heading into the Wednesday meeting.

As Bloomberg highlights, Russia’s absence from discussions in Vienna is creating complications for OPEC members that insist on participation of non-members in supply cutbacks with one day to go before OPEC ministers meet to decide policy.  Earlier today, Russian Energy Minister Alexander Novak said he has no plans to visit Vienna on Wednesday, but Russia is ready to talk with OPEC once group reaches an internal consensus

Meanwhile, as reported yesterday, Iran, Iraq continued to express objections to cutting their own supply during lengthy meeting of OPEC officials Monday, as talks failed to bridge differences, one delegate said. In Monday’s talks, Saudi offered proposal for Iran to freeze its own output at 3.707m b/d; Iran offered to cap its output at 3.975m b/d: delegates; at the same time mediator Algeria proposed that Iran freeze at 3.795m b/d, and amount which was greater than the 3.69m b/d Iran pumped in October according to secondary sources. Yesterday’s unsuccessful talks also didn’t reach agreement on Iraq; Algeria proposed Iraq cut 240k b/d from its October level

That said, in keeping an appearance of optimism, Iraq’s minister told reporters in Vienna Tuesday he’s still very confident about OPEC meeting.

Surprisingly, today’s dose of cold water came from an unexpected source, when Indonesia energy minister Ignasius Jonan told reporters in Vienna that he has “no expectation” ahead of the OPEC meeting, and that his country has “mixed feelings” about the meeting, but will listen to major players in group. He is expected to meet his Iranian counterpart tonight.

“There are growing thoughts that after much rhetoric and bullish chatter, OPEC won’t be able to find an accord,,” says Nick Williams, commodities futures broker at GF Financial Markets. “The Indonesian minister’s comments only added to that.”

And speaking of logistics, Saudi, Iran ministers are expected to arrive in Vienna Tuesday afternoon along with other ministers. Algerian Energy Minister Noureddine Boutarfa, who has been negotiating with Russia and Iran, told reporters in Moscow he will go to Vienna today. The delayed Saudi arrival comes after energy minister Al-Falih hinted on Sunday in Dhahran that OPEC doesn’t necessarily need to cut output; comment viewed by analysts as a bargaining position that could result in price crash if no deal is reached.

As a result of all the rising chaos, oil traders are s understandably skeptical, and as Goldman calculated in a note overnight, the oil market is pricing in only a 30% chance of a deal to cut output emerging tomorrow. As Bloomberg reports, “Brent crude may swing $6 a barrel on Wednesday, based on implied volatility for options contracts, analysts including Damien Courvalin and Jeff Currie said in a report Monday. Futures would rally into the low $50s a barrel and average $55 over the first half of next year if the group agrees to a cut, according to the bank. Failure to reach an accord would mean prices would average $45 a barrel through the summer.”

As a reminder, just last week Goldman turned bullish on the OPEC agreement, saying on November 21 that it now expects OPEC to real a production cut deal, in the process raising its Q1 and Q2 2017 oil price forecast; the contrarians in the audience will note by doing so it may have doomed the deal.

Others have taken the other side of the bet, and overnight Bjarne Schieldrop, chief commodities analyst at SEB, says that he thinks there is a “very low chance” of an OPEC oil-output cut tomorrow.  The analyst expects more comments along the line of Saudi Arabia’s “don’t really need a cut” assertion from Sunday.

“It becomes imperative to save face,” Schieldrop said adding that OPEC may be “kicking the can to the next OPEC meeting in half a year’s time.”

He also noted that Iran’s offer to cap output at 3.975m b/d means effectively no cut, given avg 2000-2008 production was 3.78m b/d. “It is unacceptable for Saudi Arabia that Iran does not pitch in with a cut” and added that for Iraq, important issue is what country really produced in October, which is baseline month for cuts.

What happens if he is right? Oil is “likely to trade to the downside of $45/bbl as a no-cut is actually communicated, then will return toward $48.”

* * *

For now the market is agreeing with the SECB analyst, and WTI has tumbled below $46 in early trading.

Finally, here is a good take by Bloomberg energy analyst Julian Lee why tomorrow’s deal is “looking trickier each day”

Whatever your view on the inner workings of OPEC, achieving an unconditional deal on Wednesday is looking trickier by the day as the group pushes non-member producers to join the curbs.

OPEC so far asked non-member producers to cut their combined output by about 500k b/d to 880k b/d, according to various officials including Russia’s and Azerbaijan’s energy ministers

Failure to hold a meeting Monday between OPEC, non-OPEC — after Saudi Arabia said it would skip the gathering — took away an opportunity for both sides to negotiate the finer details of what they would accept in terms of supply restraints. Saudi Arabia’s reason for not attending was because kingdom wanted OPEC to do its own deal before talking to non-member producers, a delegate said

Alexander Novak, Russia’s energy minister, has no plans to go to Vienna on Wednesday, meaning the leader of those non- OPEC suppliers being asked to curb won’t be present

These developments suggest a growing probability that, if anything is to come out of tomorrow, it will be an internal agreement from OPEC that would then be presented to non- members, requiring their participation

While it’s possible OPEC will decide that non-members don’t have to join curbs — making an unconditional deal possible on Wednesday — this would be a reversal for Saudi Arabia, which wants the widest possible participation in supply limits

An internal deal is by no certainty either:

  • There remain divides within OPEC that are not clearly resolved at this time, particularly around Saudi Arabia, Iran and Iraq’s positions
  • For Saudi Arabia, sharing the burden is more important than simply securing an agreement at any price
  • Despite its willingness to reduce output, it still insists that the cuts are shared equitably
  • At the same time, both Iran and Iraq must make sacrifices for Saudi Arabia to accept the deal

Iran takes opposite view, insisting Saudi should cut more, as it boosted output most in recent years: oil producers that raised output in past years while Iran was subject to sanctions “will have to shoulder a bigger share of the output drop and accept more responsibility”: oil minister Bijan Zanganeh

Wider Saudi-Iranian conflicts make resolving differences even more difficult

Iraq’s favored position is to freeze, counter to a Saudi Arabian offer that it should cut

Saudi Oil Minister Khalid Al-Falih has raised the possibility of the meeting ending without agreement

end

Who would have thought that this was coming?  WTI plunges near 44 dollars after Iran states no production cuts:

(courtesy zero hedge)

WTI Plunges Near $44 Handle After Iran Oil Minister Says “No Cut In Production”

Iran just hammered another nail in the coffin of an OPEC ‘deal’ when oil minister Bijan Namdar Zanganeh told reporters in Vienna ahead of OPEC meeting on Wednesday that “Iran won’t cut oil production.” Despite confident comments from Algeria, WTI plunged to within a tick of a $44 handle to 2-week lows…

And this won’t help:

  • *SAUDIS SAID READY TO REJECT DEAL IF IRAN-IRAQ DON’T PARTICIPATE
  • *SAUDIS SAID TO ONLY ACCEPT CUT EXEMPTIONS FOR NIGERIA, LIBYA

As Bloomberg reports, Saudi Arabia is ready reject a deal unless all OPEC members, excluding Libya and Nigeria, participate in an oil-output agreement, say people familiar with the kingdom’s current position at the talks in Vienna. Saudi Arabia will not insist that Iran and Iraq make the same size reduction as other members and hasn’t decided from which production level they would be asked to cut, the people say, asking not to be identified because the information is private

It seems like Goldman Sachs top-ticked another oil move…

end

 

Iran turns the tables and states that it is the Saudis that should cut production by over 1 million barrels by themselves.
(courtesy zero hedge)

Defiant Iran Turns Tables, “Proposes” Saudis Cut Production By Over 1MM Barrels, Invokes Donald Trump

In what appears to be a material shift in the perceived OPEC balance of power, while Iran (and Iraq) have so far refused to concede to Saudi demands for production cuts, moments ago Reuters reported that in what can only be described as a demonstration of power, Iran proposed that it be Saudi Arabia that foots the entire proposed production cut, by reducing its own production to 9.5 million barrels.

  • IRAN PROPOSES IN LETTER TO OPEC THAT SAUDI ARABIA CUT OIL OUTPUT TO 9.5 MLN BPD – OPEC SOURCE

As a reminder, in October Saudi Arabia produced 10.625mmbpd, implying that according to Iran it is Saudi Arabia that should foot the entire production cut “agreed” upon in Algiers.

And at roughly the same time, Iran’s Shana news agency, issued an article titled “Irregularities of Regular OPEC Meeting“, in which Iran invoked none other than Donald Trump.

This article takes a sketchy look into general condition of the oil market, focusing on stances of three important OPEC and non-OPEC states, including Saudi Arabia, Iraq and Russia. Saudi Arabia’s stances are specially worth contemplating because it has reduced its oil production due to economic conditions and problems facing its oil industry, while trying to compromise with Iran. However, due to political competition of the country with Iran and the tough conditions that election of US President Donald Trump has posed to Saudi Arabia, the country might seek an excuse to harm Algeria agreement and accuse Iran and perhaps Iraq and Russia of defeating OPEC conference in cutting the production ceiling and restoration of stability in the oil market around the acceptable prices.

Global oil prices are affected by a collection of fundamental and non-fundamental variables, including world political developments that affect oil prices through forming expectations in the financial markets.

Over recent weeks, outcome of the US elections, appreciation of dollar compared to other forexes and growth of the indices of the capital and notary bond markets, affected oil prices. Trump victory in the US presidential elections led to growing insecurities in the market because he had in election campaigns pointed to energy policies and directives, which if they are enforced they would entail wide and contradictory consequences for OPEC and the world oil markets. In the past months, the US has imported 107 million barrels per month crude oil and oil products from OPEC on the average, which is 3.6 million barrels per day on the average. Saudi Arabia with 1.2 million barrels per day and Venezuela with 830,000 barrels per day supplied the highest amount of crude oil and related products to the US. So, any restriction on import of OPEC crude by the US would lead to a two-layer market worldwide and encourage harsh competition among the countries to gain a quota in other important oil markets such as China, Japan, India and the like.

So, the OPEC session will be held under conditions that international relations have changed as a result of the unexpected result of US elections and complicated relations among the OPEC members, especially political competitions of the Saudi government in the region with the Islamic Republic of Iran can affect the talks. Generally speaking, oil markets face global demand despite growing insecurities. However, the market faces oversupply and waits OPEC decision on November 30 so as to see whether the oversupply to the market will be removed. Oil market equilibrium is highly fragile now; due to the same reason, failure of OPEC in reaching a consensus for cut in the production to the level of 32.5 million barrels per day will result in the price decline. The main reason for fall in the oil prices will eventually culminate in oversupply to the market and the oversupply is expected to continue until end of 2017 in case of OPEC failure to reach an executive accord to cut the production to the specified level.

* * *

Oil market experts cite several reasons for seriousness and insistence of Saudi Arabia to reach an executive accord to cut the OPEC oil production ceiling. Of course, Saudi conduct after Trump election as US President has been to some extent different with that previously.

As a result, what until just a few days ago was seen a “sure thing” agreement by OPEC tomorrow, now appears to be on the edge of collapse.

 

end

 

Late tonight, this is where we stand with respect to the possible oil deal: it seems that Iran and Iraq are the stumbling blocks.

(courtesy zero hedge)

OPEC Negotiations: Here Is The Latest

With the last day of OPEC pre-negotiations almost over, the latest from Vienna is that Iran and Iraq appear to have softened their positions ahead of a crucial OPEC meeting on Wednesday, however as the WSJ reports, “it may not be enough to satisfy Saudi Arabia’s demands for a broad-based oil-production cut.”

The two main wildcards remains Iran and Iraq, the latter of which has agreed to use independent estimates of its output at 4.55 million barrels a day, however Iraq has said it would only freeze from that level, not cut.

Iran meanwhile has said it would be willing to freeze its production in early 2017 at a level of 3.797mmbpd, to claw back the market share it lost during years of Western sanctions. The negotiations continue as part of a push to reach an agreement that cuts total output by 1.2 million barrels from October levels. The latest draft of the Vienna agreement would ask 10 OPEC members to make a 4.5% oil production cut, with Libya and Nigeria exempted because they are increasing output after civil unrest disrupted their oil industries.

Earlier in the day, the Ecuador Foreign Minister said that OPEC still disagrees on individual production quotas.

The discussions continue amid a skeptical climate of as OPEC members have expressed pessimism ahead of the gathering. As reported earlier today, Indonesia’s oil minister Ignasius Jonan said his country hadn’t decided yet whether to join production cuts. Asked if Iraq and Iran remained obstacles to a deal, he made a face and declined to comment. “It’s a mixed feeling,” he said of his expectations for Wednesday’s meeting of 14 oil ministers.

Making matters worse is confusion about the role, willingness and ability of Saudi Arabia to engage in fruitful discussions. Citing one OPEC source, the WSJ notes that “there seems to be a disconnect among the Saudis,” the OPEC official said. “Their guys in Vienna have no mandate to negotiate anything.” However, another OPEC official disagreed and said the Saudis in Vienna were fully empowered. “The Saudi policy is consistent,” this official said. In an amusing interlude, Saudi Arabia oil minister Khalid al Falih is said to have entered through a hotel side door, to avoid speaking to the press. His reluctance to speak is understandable: if Iraq and Iran do not change their mind, Saudi Arabia may be stuck footing nearly all of the expected 1.2mmbpd cut, taking its production as low as 9.5 million barrels daily.

According to Reuters, the negotiations are set to continue tomorrow with OPEC ministers scheduled to meet informally at 7am on Wednesday before the formal talks begin. Additionally, the formal talks have been pushed back by an hour to start 10:00 GMT, providing the last minute discussions some additional space.

So where does that leave us? According to the latest Bloomberg matrix, there are three possible scenarios ahead of tomorrow:

  • Fudged deal: Output cuts with exemptions for Iran, Iraq, possibly without any clear production targets for those cutting.
  • Full agreement: Clear quotas and no exemptions beyond those already granted to Nigeria and Libya. Deal would probably boost prices to >$50/bbl with market switching focus to compliance with individual targets
  • No deal: OPEC fails to agree any kind of deal, probably triggering price crash to $40 or below.

All of the above  remains highly fluid, and changes with every incremental headline.

8.EMERGING MARKETS

The following describes what hyperinflation is like in Venezuela: shopkeepers weight vast piles of notes instead of counting them!

(courtesy London’s the Guardian)

 

Venezuela’s currency now worth so little shopkeepers weigh vast piles of notes instead of counting them

Scenes on the streets of Caracas said to be reminiscent of the past century’s most chaotic cases of hyperinflation

Inflation in Venezuela is expected to reach 720 per cent this year, with the largest bolívar bill now worth just five US cents on the black market.

Some shopkeepers have reportedly taken to weighing rather than counting the wads of cash customers hand them, and standard-size wallets have become all but useless in the socialistSouth American state. Instead, many people stuff huge volumes of cash into handbags, money belts, or backpacks, in scenes analysts have said are suggestive of “runaway” inflation.

In 2014, plummeting global oil prices decimated Venezuela’s economy. President Nicolás Maduro responded by fixing the official exchange rate and ordering banks to print more cash, which ultimately devalued the currency further, while goods prices soared.

The country of 30 million does not publish consumer-price data on a regular basis, but observers have said scenes on the streets of the capital, Caracas, are reminiscent of the past century’s most chaotic cases of hyperinflation.

Humberto Gonzalez, who runs a delicatessen in the city, said he uses the same scales to weigh slices of salty white cheese and the stacks of bolívar notes handed over by his customers .

“It’s sad,“ Mr Gonzalez told Bloomberg. ”At this point, I think the cheese is worth more.”

Jesus Casique, a consulting firm director, told the news site that although weighing cash was not ubiquitious, it was indicative of a financial crisis.

“When they start weighing cash, it’s a sign of runaway inflation,” he said. “But Venezuelans don’t know just how bad it is because the government refuses to publish figures.”

Oil makes up a staggering 95 per cent of Venezuela’s exports, and accounts for a quarter of the country’s economy, with oil-related revenues having historically supplied roughly half the government budget. This kind of over-reliance on a single export notoriously depresses all other industries in a country, in a phenomenon known by economists as “Dutch Disease”.

When the price of oil on the global market collapsed by two-thirds in 2014, Venezuela had little else to fall back on, so a natural reaction would have been for the bolívar to collapse. But Mr Maduro, who succeeded Hugo Chávez following the revolutionary leader’s death in 2013, instead tried to control the exchange rate, creating a massive black market for currency.

Figuring out scams to get dollars and then sell them for bolívars became hugely lucrative business for Venezuelans, setting off a feedback loop that drove the inflation rate higher and higher.

In one of Caracas richer neighbourhoods, the owner of a tiny kiosk selling newspapers, cigarettes and snacks told the Washington Post that every evening he quietly stuffs a plastic bag full of the day’s earnings, around 100,000 bolívars (about £42) in notes of 10, 20, 50 and 100 bolívars. Venezuela has one of the highest crime rates in the world, and he said carrying that much cash frightens him.

“All of Caracas is unsafe,” the 42-year-old told the newspaper, opting not to give his name.

His best-selling item is cigarettes, he said, which have climbed in price from 250 bolívars to 2,000 bolívars a pack — at least 20 bills.

The shrinking value of the currency has meant that withdrawing the equivalent of £5 from an ATM produces a fistful of more than 100 bills. Some ATMs now need to be refilled every three hours, because the machines can only hold so much cash. This means there are often a limited number of functioning ATMs in Caracas, and long queues to withdraw money.

Electronic payment is increasingly common in the country Henkel Garcia, director of the Venezuelan economic think tank Econométrica, told the Washington Post. “The use of online payments is likely to have soared,” he said.

But it is expensive for small businesses to buy and set up credit-card machines.

Mr Maduro, who has largely continued the socialist policies of his predecessor, blamed the situation on an “economic war” waged by his opponents in the business community and in the United States. But, in a sign his government recognises the severity of the problem, he recently announced the issue of larger-denomination bills, expected in January.

The notes are reportedly set to start at 500 bolivars and reach 20,000 bolivars, or just over £8.

Until the notes are issued, however, the Venezuelan people are poorer than ever, while the country is awash with cash.

Bremmer Rodrigues, who runs a bakery on the outskirts of Caracas, said his family are at a loss over what to do with their bags of bills. Every day his business takes in hundreds of thousands of bolívar, he said, which he hides around his office until packing them up in boxes to deposit at the bank. He said if someone looked in on him, he might be mistaken for a drug dealer.

“I feel like Pablo Escobar,” the 25-year-old told Bloomberg. “It’s a mountain of cash, every day more and more.”

 

 

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

 

Euro/USA   1.0582 DOWN .0035/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 112.98  UP 1.339(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 1.2470 UP.0063 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3450 UP .0051 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION)

Early THIS TUESDAY morning in Europe, the Euro FELL by 35 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0582; 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 UP 5.94 0R .18%     / Hang Sang  CLOSED DOWN 93.50 POINTS OR 0.41%   /AUSTRALIA IS LOWER BY 0.22% EUROPEAN BOURSES ALL IN THE GREEN EXCEPT LONDON  

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED DOWN 49.85 POINTS OR .27%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 93.50 OR 0.41%   ,Shanghai CLOSED UP 5.94 POINTS OR 0.18%   / Australia BOURSE IN THE RED /Nikkei (Japan)CLOSED DOWN 49.85 POINTS OR .27%/  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1184.20

silver:$16.48

Early TUESDAY morning USA 10 year bond yield: 2.328% !!! UP 1 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.986, PAR IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 101.42 UP 26 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

END

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And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.62% UP 2  in basis point yield from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.020% DOWN 1/5  in   basis point yield from  MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.510%  DOWN 5 IN basis point yield from  MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.94  DOWN 6  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 43 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.221% up 2 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/5:15 PM

Euro/USA 1.0641 UP .0022 (Euro UP 22 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.47 DOWN: 0.830(Yen DOWN 83 basis points/ 

Great Britain/USA 1.2499 UP 0.0094( POUND UP 94 basis points

USA/Canada 1.3419 DOWN 0.0017(Canadian dollar UP 17 basis points AS OIL FELL TO $45.43

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This afternoon, the Euro was UP by 22 basis points to trade at 1.0641 

The Yen FELL to 112.47 for a LOSS of 83 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 ROSE 94 basis points, trading at 1.2499/

The Canadian dollar ROSE by 17 basis points to 1.3419, AS WTI OIL FELL TO :  $45.43

The USA/Yuan closed at 6.8933
the 10 yr Japanese bond yield closed at +.020% DOWN 1/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 1   IN basis points from MONDAY at 2.311% //trading well below the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.963 DOWN 2   in basis points on the day /

Your closing USA dollar index, 100.98 DOWN 18 CENTS  ON THE DAY/2.30 PM 

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

London:  CLOSED DOWN 27.47 POINTS OR 0.40%
German Dax :CLOSED UP 37.82 POINTS OR 0.36%
Paris Cac  CLOSED UP 41.07 OR .91%
Spain IBEX CLOSED UP 47.70 POINTS OR 0.55%
Italian MIB: CLOSED UP 344.91 POINTS OR 2.13%

The Dow was UP 23.70 points or 0.12%  4 PM EST

NASDAQ UP  11.11  points or 0.21%  4.00 PM EST
WTI Oil price;  45.43 at 2:30 pm; 

Brent Oil: 46.66   2:30 EST

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  65.36 (DOWN  49/100 roubles from FRIDAY)

TODAY THE GERMAN YIELD RISES  TO +0.221%  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:$45.27

BRENT: $47.40

USA 10 YR BOND YIELD: 2.293%

USA DOLLAR INDEX: 100.94 DOWN 22  cents(huge resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2488./ UP 82  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.221%

END

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

TRADING IN GRAPH FORM

“Pause That Refreshes” Sparks Stock-Buying-Spree…But Ends Badly

This…

 

Well that didn’t last long did it? Nasdaq hit a new intraday record high… But…Ugly Close though… VIX 13, S&P 2,200, and Dow 19,100 seem all that matters.

 

Stocks were up despite oil’s tumble…

 

Stocks were up despite bond yields sliding…

 

Bank Stocks were up despite the yield curve crashing to 2-month flats…

 

Trannies and Small Caps re red on the day – note that stocks took off when Europe closed…

 

But stocks are still red from Friday… (apart from Nasdaq which seemed to get suddenly bid as it hit unch late on)…

 

Energy and financial stocks remain red on the week as Utes outperform…

 

For the 3rd day running, bond buyers were back in the US session… (30Y down 12bps from Friday yield highs, back below 2.95%, the lowest in 8 days)

 

The USD Index slipped lower for the 3rd day in a row…

 

It seems $45.00 is the line in the sand for now on OPEC headlines…

 

Gold was down once again – unable to break $1200…

 

And the Chinese commodity bubble is starting to burst as Shanghai Zinc Futures crashed by the most ever…

 

Finally we thought Bloomberg’s Richard Breslow summed things up rather well…

…if you panicked Monday, your positions are too big or you don’t really believe the story and are going with the momentum…

 

A market driven on hopeful theories, as yet unsupported by concrete actions, requires the beast to be continually fed to maintain its momentum.

 

Especially when the rate of change has been so swift…

Seems like a big gap between hope and reality…

 

And notably, the BIS new “fear” index just reached 4-month ‘highs’ as the global dollar shortage escalates…

 

 

END

 

Dr Price, an Orthopedic surgeon and a strong critic of Obamacare is to head the Health team along with sidekick Verma.

This no doubt will seal the fate of  Obamacare

(courtesy zero hedge)

Trump Picks Vocal Obamacare Critic Tom Price As HHS Secretary

In a choice that confirms Trump’s intentions to dismantle Obamacare, Reuters reports that President-elect Donald Trump will shortly announce he has chosen vociferous Obamacare critic Tom Price (R. Ga), an orthopedic surgeon from Georgia, as his Health and Human Services secretary to help him overhaul the U.S. healthcare system.


Chairman of the House Budget Committee Tom Price

“Chairman Price, a renowned physician, has earned a reputation for being a tireless problem solver and the go-to expert on healthcare policy, making him the ideal choice to serve in this capacity,” Trump said in a statement. “He is exceptionally qualified to shepherd our commitment to repeal and replace Obamacare and bring affordable and accessible healthcare to every American. I am proud to nominate him as Secretary of Health and Human Services.”

Price, who currently leads the House Budget Committee, has spent more than a decade in Congress and has become a close ally of GOP leadership. As a member of the House GOP Doctor’s Caucus, Price helped shape the healthcare plan that House Speaker Paul Ryan now pitches as his alternative to ObamaCare. Trump also slected consultant Seema Verma to lead the Centers for Medicare and Medicaid Services (CMS), a powerful agency that oversees government health programs and insurance standards.

Price is a vocal critic of ObamaCare and he brings a deep background in health legislation. In 2014 as the law faced a major challenge at the Supreme Court, Price authored his own plan to replace the law.

“I am humbled by the incredible challenges that lay ahead and enthusiastic for the opportunity to be a part of solving them on behalf of the American people,” Price said in the Tuesday morning statement. “There is much work to be done to ensure we have a healthcare system that works for patients, families, and doctors; that leads the world in the cure and prevention of illness; and that is based on sensible rules to protect the well-being of the country while embracing its innovative spirit.”

Trump is expected to cast Price and Verma as a “dream team” to help him once he takes office on Jan. 20 with his campaign pledge to repeal President Barack Obama’s signature health law, the Affordable Care Act that is better known as Obamacare. Trump has said he will replace Obamacare with a plan to give states more control over the Medicaid health plan for the poor and allow insurers to sell plans nationally. Both positions require Senate confirmation and the Trump administration will need to have agreement from Congress to repeal and replace the health law.

Price, an early Trump supporter from the U.S. House of Representatives, has long championed a plan of tax credits, expanded health savings accounts, and lawsuit reforms to replace Obamacare. Verma worked with Vice President-Elect Mike Pence, the governor of Indiana, on a compromise to expand Medicaid coverage for the state’s poor with federal funding. The Indiana program requires beneficiaries to make monthly contributions to health savings accounts.

Price also supports an idea backed by Speaker Paul Ryan (R-Wis.) to shift Medicare to rely more on private insurance. The government would provide financial assistance to help people afford private plans, or the current government-run option.  Republicans say this would save the government money, while Democrats warn it would “end Medicare as we know it” and erode the guarantee of care for seniors.

Price campaigned with Trump because he promised to overhaul Obamacare. However, Trump’s position on the health insurance program appeared to soften after he met Obama following the hard-fought Nov. 8 election.

Obama has acknowledged the law could use improvements but has credited Obamacare with cutting the number of uninsured Americans from 49 million in 2010 to 29 million in 2015. Much of that drop is due to the law’s provision allowing states to expand Medicaid.

Trump said he would consider keeping provisions in the law that let parents keep adult children up to age 26 on insurance policies and bar insurers from denying coverage to people with pre-existing conditions.

According to Reuters, Price and Verma are two of about 70 people who Trump has met so far as he looks to shape his White House and Cabinet team.

In addition to Price, Trump is expected to reveal an additional Cabinet pick on Tuesday, but is not expected to announce his choices for the three biggest positions – state, defense and treasury – as he continues to consider his options.

After seeing retired general David Petraeus on Monday – a potential candidate for the State Department or the Pentagon – Trump is expected to meet U.S. Senator Bob Corker of Tennessee, the chairman of the Senate Foreign Relations Committee on Tuesday, and later have dinner with Mitt Romney. Romney, the 2012 Republican presidential nominee, and Corker are in the running for secretary of state, along with former New York Mayor Rudy Giuliani.

 

 

 

END

 

We would be extremely happy if Trump selects John Allison, a former CEO of BB and T and formerly of the prestigious CATO institute.  He wants to abolish the Fed and return to the gold standard (along with Judy Shelton)

this is the man we want..

(courtesy zero hedge)

 

Trump Treasury Secretary Candidate Is Anti-Fed Libertarian Who Wants To Return To The Gold Standard

While speculation swirls over Trump’s pick for the next Treasury Secretary, with eyebrows raised after the President-elect unexpectedly met with Goldman COO Gary Cohn earlier in the day, one of the more interesting names to have emerged in the running for the top economic post is that of John Allison, former CEO of the bank BB&T and of the libertarian non-profit think tank the Cato Institute.

What makes Allison’s candidacy especially notable is that he happens to be a prominent critic of the Federal Reserve, as well as an advocate of the gold standard. Allison has said his “long-term ambition” for monetary policy “would be to get rid of the Federal Reserve and get back to a private banking system.” He also accurately portrayed the Fed by saying that it is “a scary organization because there’s no control.”

In a 2014 paper authored by Allison for the Cato Journal, he said he “would get rid of the Federal Reserve because the volatility in the economy is primarily caused by the Fed.” Allison said that simply allowing the market to regulate itself would be preferable to the Fed harming the stability of the financial system.

“When the Fed is radically changing the money supply, distorting interest rates, and over-regulating the financial sector, it makes rational economic calculation difficult,” Allison wrote. “Markets do form bubbles, but the Fed makes them worse.”

Allison said he would want to see rules that would constrain or define the Fed’s ability to change interest rates in response to economic conditions because of what he called “a very difficult mess.” Both Allison and Trump have said low interest rates create or exacerbate asset bubbles.

Allison also suggested that the government’s practice of insuring bank deposits up to $250,000 should be abolished and the US should go back to a banking system backed by “a market standard such as gold.”

Additionally, the libertarian ex-CEO also argued for higher capital reserves of up to 20% of assets at banks and has also argued that the government should repeal three of the broadest banking regulations.

“We should raise capital standards, but it is even more important to eliminate burdensome regulations — including Dodd-Frank, the Community Reinvestment Act, and Truth in Lending,” Allison wrote. “About 25 percent of a bank’s personnel cost relates to regulations. Banks cannot pay the regulatory costs and have high capital standards.” This is similar to Trump’s desire to roll back regulation — including Dodd-Frank — on financial institutions, though he has since backtracked somewhat.

Speaking after his meeting with Trump, Allison said it “looked like a job interview and also I think a sincere effort to get a little advice” according to Bloomberg. He told Fox News that his meeting also included Vice President-elect Mike Pence and Trump strategist Steve Bannon, and talked about how to accelerate economic growth.

“It was a very interesting conversation: Two old business guys talking about business, in a certain sense”

In an interview with CNBC, Allison said “I would certainly consider it, but I would have to reflect on it,” when asked whether he wants to be Treasury secretary. He hedged further by saying “It’s a very exciting job, but I’m in a very nice place in my career.”

Sadly, despite his libertarian leanings, Allison told CNBC that eliminating the Fed and returning to a gold standard “probably aren’t realistic in practice” adding that “how we get back to an international commodity-based standard, I’m not sure. I think it would be desirable in some ways, because it would impose some discipline on government”

* * *

In any case, the wait for Trump’s Treasury pick may be almost over. As reported late on Monday, VP-elect Pence told reporters “there will be a number of very important announcements” on Tuesday.  Another Cabinet announcement will be made Tuesday afternoon, Trump spokesman Jason Miller said on CNN.

 

With our highly backed figures, the second revision to GDP showed a gain to 3.2% beating expectations of a 3% reading

(courtesy zero hedge)

US Q3 GDP Revised Higher To 3.2%, Beating Expectations, On Stronger Consumer Spending

The unexpected economic growth spurt continued in the third quarter, when real GDP rose 3.2% according to the “second” estimate released by the Bureau of Economic Analysis, beating estimates of a 3.0% print, and 0.3% higher than the “advance” estimate released in October. This was the highest quarterly growth rate since the third quarter of 2014.

The revision was at the top of the forecast range and still the strongest quarter in two years. The PCE price index was a 1.4% annual rate, unchanged from the original Oct. 28 report and the core PCE price index stayed at 1.7%.

The upward revision to third-quarter GDP growth reflected upward revisions to consumer spending and to housing investment that were partly offset by downward revisions to business investment and to inventory investment.

The details of the revision showed the upward revision to consumer spending was in  both goods and services, with the goods measure benefiting from a tick  up in the “other” category of nondurables and to motor vehicles and  parts. In services, the upgrade was primarily to housing and utilities.

The upward adjustment in residential fixed investment was mainly  attributed to single family housing. On the nonresidential side there  were downward revisions to equipment and intellectual property  products,  partially offset by and upward revision to nonresidential structures.

For inventories, there were downward adjustments in construction, mining, utilities and manufacturing.

Some highlights: personal consumption expenditures rose an upward revised 2.8% in the third quarter, a deceleration from the 4.3% rise in the second quarter but better than the 1.6% gain in the first quarter, and higher than expected.  The increase reflected an increase in consumer spending on household services, notably on housing and utilities. Consumer spending on durable goods also increased, notably on motor vehicles and parts. However, spending on nondurable goods declined.

Exports of goods increased, notably in foods, feeds, and beverages and in consumer durable goods. Exports of services increased, mainly in travel. In addition, private inventory investment and federal government spending increased. Offsetting these contributions to growth, housing investment and state and local government spending declined.

Overall the picture remained the same, with acceleration in private inventory investment, exports and federal government spending along with smaller decreases in state/local govt spending and a  deceleration in nonresidential fixed investment.

One notable highlight in the report was that corporate profits increased 6.6% at a quarterly rate in the third quarter after decreasing 0.6% in the second quarter. This was the highest print in over three years, approaching the nearly 8% increase in Q2 2013.

Profits of domestic nonfinancial corporations increased 6.5% after decreasing 4.6%, a surprising swing higher. Profits of domestic financial corporations rose 11.5% after rising 1.3 percent. Profits from the rest of the world increased 1.6% after increasing 10.3%. Over the last 4 quarters, corporate profits increased 2.8%.

 

 

 

end

 

Who would have thought that this was going to happen:  a Trump victory seems consumer confidence soaring?:

(courtesy Conference Board Consumer Confidence/zero hedge)

Trump Victory Sends Consumer Confidence Soaring To Post-Lehman Highs

Having fallen to a 3-month low in October, Conference Board Consumer Confidence soared to 107.1 in November post-Trump – the highest since July 2007. This confirms Gallup’s survey which saw economic confidence at its highest level since before Lehman, swinging positive post-Trump after being almost uniformly negative since Obama’s election.

Americans haven’t been much more confident than this in decades… (though notably, while plan to buy a home or major appliance gained, plans to buy a car dropped)

And this confirms Gallup‘s survey results…Americans expressed more positivity about the U.S. economy last week than they have at any other time during the nine years that Gallup has been tracking the U.S. Economic Confidence Index.

Economic confidence has been below zero nearly continuously since 2008, hitting its lowest level of -65 in October 2008 at the onset of the financial crisis. Aside from the recent pair of positive index readings, Gallup’s weekly scores were positive several times during a brief, three-month span from late 2014 to early 2015, when U.S. consumers enjoyed a sustained drop in gasoline prices.

Notably, Bloomberg points out that Consumer Confidence declined markedly pre-election in the swing states of Ohio, Florida, and Pennsylvania in the run up to the election…

But November saw quite a spike…

As Gallup concludes, it’s too early to tell whether this uptick in Americans’ positivity will last as Trump’s term begins in January. But two weeks of positive index readings on the heels of his unexpected victory reveals a degree of economic confidence Americans have not expressed since the recession.

 

 

end

 

UBS states that traders have got the signals wrong with respect to the USA/Yen cross due to the Trump victory.

Markets are reacting to the infrastructure spending proposed by Trump as a reason for the USA/Yen to climb to 120/1.  However they do not seem to pay attention to the isolationist policy of Trump which should cause the Yen to rise to 98/1:

Not only that but Japan proposing new tariff rules which will knock out major competitors. Protectionism from all angles will cause the yen to rise in value.

(courtesy zero hedge)

USDJPY Could Plunge As Low As 98 After “Trump Bubble” Bursts, UBS Wealth Warns

One week after JPM made the exact same forecast, warning that the recent surge in the USDJPY will fade dramatically as Dollar euphoria shifts to concerns about protectionism, overnight UBS Group’s $2 trillion wealth-management arm said yen traders have got the Donald Trump “trade” all wrong, and the yen will strengthen to 98 per dollar by this time next year.

Cited by Bloomberg, the firm’s Tokyo-based head of Japanese equity research Toru Ibayashi echoed warnings first voiced on this website two weeks ago, and says expectations for fiscal expansion have become overblown, and protectionist policies will come first in the new U.S. administration.

The conventional wisdom that has taken hold in the days since Trump’s victory is that since the President-elect campaigned on pledges of “massive” tax cuts and spending of as much as $1 trillion over a decade to rebuild infrastructure, he will send inflation surging while unleashing a new debt-funded fiscal stimulus. This speculation has driven the yen to an eight-month low near 114 on Friday, capping the biggest three-week decline since 1995.

However, Trump also promised to tear up existing trade deals and punish companies that send jobs overseas. It is that part that has the UBS strategist worried.

“The market has latched on to only the juicy bits of Trump’s policies, and wrapped them up with unreasonable euphoria, which we think is pretty much a misinterpretation,” Ibayashi said in a phone interview Monday. A market that’s been overbought on hope will quickly fall apart.”

UBS and JPM are not the only ones to warn against the market’s uphoria. The firms join bulls including former Japanese currency chief Eisuke “Mr Yen” Sakakibara in forecasting the yen will gradually strengthen to beyond 100 per dollar next year because of Trump’s “America first” stance on trade, even as strategists raised dollar-yen estimates at the fastest pace since January of last year. A reversal of the yen’s post-election slump would negate what has been a welcome tailwind for Japan’s struggling economy.

Among the risks facing the market is that Trump may backtrack on most of his pledges. It’s unclear how much of Trump’s campaign trail promises will translate into policy. He has already backed away from a pledge to build a wall along the southern border paid for by Mexico, saying some parts could be a fence. But he reiterated last week that the Trans Pacific Partnership, also signed by Japan and 10 other nations, would be “a potential disaster for our country.”

There are also concerns about pushback from Congress: as reported last week, Republicans have already balked at Trump’s proposal to boost the national debt by as much as $5 trillion over the proposed trendline, and contrary to the House Republicans’ own deleveraging budget.

* * *

For now Sakikibara’s forecast has yet to take hold: he predicted that the yen would strengthen as far as 90 per dollar within six months of Trump’s surprise election victory. Elsewhere, JPMorgan’s Tokyo-based head of Japan markets research Tohru Sasaki sees it at 99 as of the end of 2017.

That said, there is still time: both forecasters were correct in calls made at the start of the year for the yen to appreciate, when most analysts predicted an extension of the currency’s record four years of weakness against the dollar. The yen remains the best performer among its developed-market peers in 2016, strengthening 7.4% against the greenback. That trend is something Trump and other U.S. policy makers won’t be keen to change, according to UBS’s Ibayashi.

“A strong dollar will be a drag on revenue for U.S. businesses,” he said. “It’s a headwind for employment, and Americans would find that unacceptable.”

Finally, and perhaps suggesting that Trump won’t even be necessary to unleash a regional wave of protectionism following the collapse of TPP, Nikkei reported that Japan has proposed stricter tariff rules that would knock five trading partners including China and Mexico off the list of countries receiving preferential treatment for emerging economies.

A finance ministry customs committee said Thursday that the list of nations qualifying for zero or minimal import tariffs on certain goods would be revised to exclude nations that account for 1% or more of world exports or make the World Bank’s list of upper-middle income economies for three years running. Currently, trading partners need to qualify as high-income economies for three years to have preferential status revoked. The rules change would end special treatment for China, Mexico, Brazil, Thailand and Malaysia.

It is only a matter of time before Japan’s trading partners retaliate and – if UBS and JPM are right – undo all the recent Yen losses.

 

 

end

Presented with no comment…

Source: Townhall.com

END

 

Well that about does it for tonight

I will see you tomorrow night

h

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