Gold at (1:30 am est) $1175.00 up $7.40

silver  at $17.20:  up 46 cents

Access market prices:

Gold: 1174.10

Silver: 17.15



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:

WEDNESDAY gold fix Shanghai

Shanghai morning fix Dec 7 (10:15 pm est last night): $  1193.75

NY ACCESS PRICE: $1169.30 (AT THE EXACT SAME TIME)/premium $24.45


Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1194.69



China rejects NY pricing of gold  as a fraud  


London Fix: Dec 7: 5:30 am est:  $1171.25   (NY: same time:  $1171.95    5:30AM)

London Second fix Dec 7: 10 am est:  $1177.65 (NY same time: $1178.70    10 AM)

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

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


For comex gold: 


For silver:


Let us have a look at the data for today



In silver, the total open interest FELL by 529 contracts DOWN to 159,337 with respect to YESTERDAY’S trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .796 BILLION TO BE EXACT or 114% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold FELL by 1170 contracts WITH THE FALL IN  THE PRICE GOLD ($6.40 with YESTERDAY’S trading ).The total gold OI stands at 393,524 contracts. The bankers have done a good job of eviscerating gold (and silver) longs. We are very close to the bottom with respect to OI.  Generally 390,000 should do it.

we had a 16 notices filed upon for 1600 oz of gold.


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


We had another huge change in tonnes of gold at the GLD, a massive withdrawal of 6.23 tonnes of gold and this gold is heading toward Shanghai

Inventory rests tonight: 863.67 tonnes



we no changes in silver inventory tonight

THE SLV Inventory rests at: 345.955 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 529 contracts DOWN to 159,337 as the price of silver FELL by $.08 with YESTERDAY’S trading.  The gold open interest FELL by 1170 contracts DOWN to 393,524 as the price of gold FELL BY  $6.40 WITH YESTERDAY’S TRADING.

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 22.59 POINTS OR 0.71%/ /Hang Sang closed UP 125.77  OR 0.55%. The Nikkei closed UP 136.75 OR 0.74%/Australia’s all ordinaires  CLOSED UP 0.89% /Chinese yuan (ONSHORE) closed DOWN at 6.8800/Oil ROSE to 50.96 dollars per barrel for WTI and 53.80 for Brent. Stocks in Europe: ALL IN THE GREEN.  Offshore yuan trades  6.90321 yuan to the dollar vs 6.8800  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AGAIN AS  MORE USA DOLLARS  LEAVING CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER.



none today


none today


i)A huge commentary:  This will no doubt be a black swan as Chinese official reserves (including FX changes) drops 69 billion USA, the biggest drop since last January.  The new official reserves are 3.05 trillion and the part that is alarming is that the Chinese authorities are claiming the loss of dollars is starting to cause problems with the businesses and the issuance of dividends etc.

( zero hedge)

ii)China newspapers  (the mouthpiece for sovereign China) blasts the “rookie” Trump for not keeping his mouth shut re the phone call to Taiwan.  The rhetoric is just beginning

( zero hedge)


i)Italy/Monte de Paschi

The fun begins:  The Italian government prepares to nationalize Monte de Paschi.

Monte needs 5 billion euros by the end of December and if they cannot get it, they will be toast.  For the Italian government is coming to the rescue to the tune of 2 billion euros  out of 5 billion needed or 40% of the new company.  The existing shareholders are now toast.  The fun begins as the government will buy the junior bonds at face value and leave the senior bonds alone and not buying their notes. That should set a showdown in bankruptcy court. Then we have the new bail in rules which suggests that all holders, bond holders, equity holders and depositors must share in the loss and not taxpayers which is must Germany has been demanding .  However they have problems with Deutsche bank and they will need a rescue. That is why I stated earlier today that the rescue of Monte de Paschi will no doubt cause contagion effects all over the place.

(courtesy zero hedge)

ii)Renzi resigns today after the approval of the budget bill.  This may precipitate early elections:

( zero hedge)

iii)This ought to hurt:  Moody’s has cut Italy’s senior unsecured government debt rating from stable to negative but leaving it at Baa2 for now. I guess that they are concerned with the Italian banks health.

(courtesy zero hedge)


A good snapshot as to what is happening on the ground in France today:

(courtesy Yes Mamou/Gatestone Institute)





Modi was counting on 5 trillion of the total 15 trillion rupees outstanding would remain undeclared due to tax invasion.  He was wrong.  Already 82% of rupees have been deposited.

Today’s data shows a complete collapse in their composite PMI.  Their economy is now in shambles and Modi has nothing to show for his stupid and senseless demonetization.

what a doorknob..

( zero hedge)


i)The truth in oil production and why OPEC cheating will cap oil at 52.00 dollars .  No doubt that oil will be heading southbound

( Nick Cunningham/Oil

ii)Crude finally falls on news of the huge Cushing buildup


none today


i)Position limits are now off the table on oil and gold and other commodities.They will leave it to the new administration and I am happy about that

( Wall Street Journal/GATA)

ii)The following is quite an understatement: “governments and the financial press falsify economic conditions”:

John Embry…

iii)Quite a report:  Market rigging is striving to save a disintegrating Europe?

(the King report/GATA)

iv)These three kingpins are getting off lightly for rigging Euribor:  HSBC, JPMorgan and Credit Agricole

( London’s Financial Times)

v)I warned you many times that this was happening in the settling process: gold in London and Hong Kong is used to settle upon comex contracts and that is why it takes so long to settle as they must wait for the gold to come:

(courtesy Koos Jansen/GATA)


i)Continuing with our story from yesterday, the Mayor of Dallas has filed a lawsuit to block withdrawals from the Dallas police and firefighter pension fund.  This is in response to a huge run on the bank in November and December.  There have been huge contributions to the fund because of the guaranteed 8% return on their investment.  Now the funds are fleeing.  Will this be the first of many Ponzi schemes to go bust?

( zero hedge)

ii)Trump is on a roll:  The huge electronic manufacturer Foxconn says it is in discussions to expand its USA operations.  Foxconn chief and Softbank CEO Son are very close friends and this may be part of the 50 billion USA dollar investment talked about yesterday.

( zero hedge)

iii)Now Trump is on the warpath on pharmaceutical companies.  It is going to bring drug prices down

(courtesy zero hedge)

iv) Janet’s favourite labour report is the JOLTS report which is simply hirings, firings and quits.  If you study the data it sure looks like the job market is rolling over in the USA

(courtesy zero hedge/JOLTS)

v)A good choice for USA ambassador to China in the choosing of Iowa Governor Branstad . Iowa is the biggest producer of soybeans, corn and pigs and the state is the biggest exporter of the first two items to China.  However the governor will have his work cut out for him on the dumping of steel and other products into the uSA

( zero hedge)

vi)This is an interesting choice:  Oklahoma’s Attorney General Scott Pruitt who spent half his time suing the EPA is going to head it:

(courtesy zero hedge)

Let us head over to the comex:


The total gold comex open interest FELL BY 1170 CONTRACTS to an OI level of 393,524 AS THE PRICE OF GOLD FELL $6.40 with YESTERDAY’S trading. We are now in the contract month of December and it is the biggest of the year. Here the front month of December showed a DECREASE of 127 contracts DOWN to 1,463.We had 37 notices served upon yesterday so we lost another 90 contracts or 9000 oz will not stand for delivery and  no doubt these were paper settled.

For the next delivery month of January we had a LOSS of 13 contracts DOWN to 2559. For the next big active delivery month of February we had a LOSS of 1977 contracts down to 269,789.

We had 16 notices filed upon today for 1600 oz


And now for the wild silver comex results.  Total silver OI FELL by 529 contracts FROM 159,866 DOWN TO 159,337  as the price of silver FELL BY $0.08 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). We are now in the next major delivery month of December and here it FELL BY 144 contracts DOWN to 1844 CONTRACTS . We had 52 notices served upon yesterday so we lost 92 contracts or an additional 460,000 oz will not stand for delivery.

The next non active delivery month is January and here the OI fell by 476 contracts down to 2665. This level seems highly elevated. Maybe we are going to see the same huge metals gains in silver as we have witnessed in gold.

The next big active delivery month is March and here the OI FELL by 3  contracts DOWN to 129,501 contracts.

We had 3 notices filed for 15,000 oz for the December contract.

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

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

VOLUMES: for the gold comex

Today the estimated volume was 138,226  contracts which is poor.

Friday’s confirmed volume was 146,975 contracts  which is fair- to poor

Initial standings for DECEMBER
 Dec 7.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 34,547.075 oz
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
51,910.665 oz
No of oz served (contracts) today
16 notices
1600 oz
No of oz to be served (notices)
1447 contracts
144,700 oz
Total monthly oz gold served (contracts) so far this month
8388 notices
838,800 oz
26.09 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     3,497,880.9 oz
Today we HAD 0 kilobar transaction as A NET 0 kilobars left the comex vaults.
ladies and gentlemen: I am telling you that the data is corrupt!
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 1 customer deposit(s):
 i) into Scotia:  51,910.665 oz
total customer deposits; 51,910.665 oz
We had 1 customer withdrawal(s)
 i) out of Scotia;  34,547.075 oz
total customer withdrawal: 34,547.075 oz
We had 1  adjustment(s)
i) Out of Scotia:  40,051.637 oz was adjusted out of the dealer and this landed into the customer account of Scotia
Total dealer inventor 2,031,701.311 or 63.194 tonnes (where are the settlements)
Total gold inventory (dealer and customer) = 9,723,536.719 or 302.44 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 302.44 tonnes for a  loss of 1  tonnes over that period.  Since August 8 we have lost 52 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 December:

Today, 1 notice(s) 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 16 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the DECEMBER. contract month, we take the total number of notices filed so far for the month (8388) x 100 oz or 838,800 oz, to which we add the difference between the open interest for the front month of DEC (1463 contracts) minus the number of notices served upon today (16) x 100 oz per contract equals 983,500 oz, the number of ounces standing in this non  active month of DECEMBER.
Thus the INITIAL standings for gold for the DEC contract month:
No of notices served so far (8388) x 100 oz  or ounces + {OI for the front month (1462) minus the number of  notices served upon today (16) x 100 oz which equals 983,500 oz standing in this non active delivery month of DEC  (30.59 tonnes). corrected from yesterday
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 12 months;  222.131 tonnes
average 18.5109 tonnes per month vs last yr 51 tonnes total for 12 months or 4.25 tonnes average per month. From May 2016 until Dec 2016 we have had: 198.892 tonnes per the 8 months or 24.86 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
December so far:  30.59 tonnes are standing vs last year’s  24 tonnes on first day notice and 6.45 tonnes on the completion of it’s delivery month.

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
 Dec 7. 2016
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
434,345.109  oz
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
902,363.109 oz
No of oz served today (contracts)
(15,000 OZ)
No of oz to be served (notices)
1841 contracts
(9,205,000  oz)
Total monthly oz silver served (contracts) 1524 contracts (7,620,000 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  1,500,437.8 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 2 customer withdrawal(s):
i) Out of SCOTIA:  237.109.309 oz
ii) Out of Brinks: 197,235.800 oz
Total customer withdrawals: 434,345.109  oz
 we had 2 customer deposit(s):
 i) Into JPM:  303,061.669 oz
ii) Into Scoitia; 599,301.440 oz
total customer deposits; 902,363.109  oz
 we had 1 adjustment(s)
i) Out of Brinks: 133,963.67 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 66,455 which is excellent
YESTERDAY’S  confirmed volume was 50,352 contracts  which is very good.
The total number of notices filed today for the DEC. contract month is represented by 3 contracts for 15,000 oz. To calculate the number of silver ounces that will stand for delivery in DEC., we take the total number of notices filed for the month so far at  1524 x 5,000 oz  = 7,620,000 oz to which we add the difference between the open interest for the front month of DEC (1844) and the number of notices served upon today (3) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the DEC contract month:  1524(notices served so far)x 5000 oz +(1844) OI for front month of DEC. ) -number of notices served upon today (3)x 5000 oz  equals  16,825,000 oz  of silver standing for the DEC contract month.
we lost 92 contracts or an additional 460,000 oz will not stand.
Total dealer silver:  35.012 million (close to record low inventory  
Total number of dealer and customer silver:   179.246 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.


And now the Gold inventory at the GLD
DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes
Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes.
Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes
Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes
Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes
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 18/no changes at the GLD/Inventory rests at 920.63 tonnes
Nov 16/ changes in gold inventory at the GLD/Inventory rests at 927.45 tonnes
NOV 15/  we had 2 monstrous withdrawal of 5.63 tonnes of gold from the GLD in the morning and another 1.48 tonnes this afternoon/Inventory rests at 927.45 tonnes
Nov 14/another monstrous withdrawal of 7.12 tonnes of gold from the GLD/Inventory rests at 934.56 tonnes
Nov 9/no change in gold inventory at the GLD/Inventory rests tonight at 949.69 tonnes
Dec 7/ Inventory rests tonight at 863.67 tonnes


Now the SLV Inventory
DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/
Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz
Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/
Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/
Dec 1/no changes in silver inventory at the SLV/inventory rests at 346.150 million oz/
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 18/no changes in silver inventory at the SLV/Inventory rests at 356/253 million oz
Nov change in silver inventory at the SLV/Inventory rests at 356.253 million oz/
NOV 15/a withdrawal of 474,000 oz (.474 million oz) from the SLV inventory/inventory rests at 356.253
Nov 14/a withdrawal of 1.329 million oz from the SLV/Inventory rests at 356.727 million oz
Nov 11/a withdrawal of 1.379 million oz from the SLV/Inventory rests at 358.056 million oz
Nov 10/an addition of 949,000 oz added into the SLV/Inventory rests at 359.435 million oz
Nov 9/no change in silver inventory at the SLV/Inventory rests at 359.435 million oz/
Dec 7.2016: Inventory 345.995 million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.3 percent to NAV usa funds and Negative 6.0% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.7%
Percentage of fund in silver:39.1%
cash .+0.3%( Dec 7/2016)
2. Sprott silver fund (PSLV): Premium RISES to +.46%!!!! NAV (Dec 7/2016) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.74% to NAV  ( Dec 7/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.46% /Sprott physical gold trust is back into NEGATIVE territory at -0.74%/Central fund of Canada’s is still in jail.


Major gold/silver stories for WEDNESDAY


Buy Silver – May Replace Gold As Money In India

Buy Silver – May Replace Gold as Preferred Money of India
Silver replacing gold as India’s preferred investment option again after 100 years?

by Fergal O’Connor, Senior Lecturer in Finance, University of York

The Indian government has been trying to reduce its citizens’ demand for imported gold through a number of means over the last few years. This is part of a wider crackdown on currency used in the black market, that included the withdrawal and replacement of its two largest-denomination bank notes in early November. The strategy will likely have some unintended consequences if we take our cues from the events of 1910.

India-gold-silverGrowth in Indian gold and silver jewellery demand. Thomson Reuters GFMS Gold 2016 and Silver Survey 2016

Indians’ famous love for gold has created serious and ongoing economic issues for the nation. In 2011, Australian investment bank Macquarie estimated that 78% of India’s household savings were held in gold.

In effect, this means that India has a dual currency system where people choose to save mostly in gold rather than rupees. This is unlike any other major economy and begs the question: how do you wean a population off a precious metal?

Bling and buy sale

Building up savings in gold rather than deposits in a bank creates a permanent drag on India’s growth. This happens because the savings do not increase the available funds for lending within the banking system. One reason it is so difficult to put this gold to work as investment capital is that 79% of it is bought as jewellery, rather than bars or coins.

2017-australian-kangaroo-1oz-silver-bullion-coin-reverse-lAustralian 2017 Silver Bullion Coin (1oz) now in stock

India is the world’s largest consumer of gold jewellery at nearly 700 tonnes in 2015 according to the GFMS Gold Survey 2016. However, it mines less than two tonnes of gold a year. This means India must import gold worth US$25 billion each year, pushing up its current account deficit and pulling down the value of the rupee.

In 2015, prime minister Narendra Modi’s government introduced a Sovereign Gold Bond scheme which allowed gold holders to swap their gold for an interest-bearing bond. At the end of the bond’s life investors would effectively be returned the same amount of gold. This move reduced the minimum amount of gold necessary to participate in such a scheme to two grams. As of November 2016, 14 tonnes of gold had been subscribed to the two gold bond issues, with another five tonnes collected through the older gold monetisation scheme (which has a larger minimum deposit of 30 grams).

However, relative to India’s estimated privately held gold stock of 20,000 tonnes, these deposits represent tiny amounts and it still doesn’t seem like a solution.

Unintended consequences

An alternative would be to permanently reduce gold imports. To that end, in 2013, the government started to increase import taxes on gold imports to 6%; this now stands at 10%. However, falling gold prices during that period meant that there was still a 12% increase in gold imports in 2015 as consumers snapped up what they saw as bargain prices.

And here is where we go back more than 100 years to see how this all worked out last time. You see, India has battled precious metals imports for quite some time. In 1910 the government of India increased the import tariffs on silver from 5% to 11%. A market report in 1912, by Pixley & Abell, a gold wholesaler, pointed to a 28% fall in silver demand in the Indian bazaars in the three years following the increase. They attributed this to not just a fall in demand for silver due to tax increases, but also a substitution of gold for silver in people’s savings as gold became more attractive on a relative basis.

Between 1910 and 1930 net imports of silver in India fell from 98m ounces to 31m, according to British Geological Survey reports. After this time India gradually became the world’s largest gold consumer, a position it finally lost to China in 2015.

And it seems a return to silver as a major investment for consumers in India may be on the cards. Following the recent import tax hikes for gold, 2015 saw Indian silver imports grow to almost 8,000 tonnes, 14% up on the previous 2014 record. At the same time, demand for gold jewellery, which accounts for 75% of all Indian gold demand, is down 30% for the 12 months to the end of September 2016, according to the World Gold Council. This points to a possible shift back to silver as a more prominent investment in India.

Gold makes up the vast majority of Indian jewellery sales. But the graph below shows the rapid growth in silver jewellery demand in India, which is up over 600% in ten years, relative to marginal growth of only 25% in gold jewellery demand.

Of course silver is not the only precious metal investment option available. If investors want a more compact form of wealth, then platinum, worth 56 times more per ounce, might suit. But a swap to silver in India, as was the norm pre-World War I, seems more likely and could have a major effect on prices. For a sense of scale, the Indian gold jewellery market in 2015 was worth US$25 billion, while the total world silver jewellery market was worth only US$3.5 billion.


Even a small substitution from gold to silver would result in a massive increase in the price of silver. A 10% reallocation from gold jewellery investment to silver in India would nearly double world silver jewellery demand. Mines and other sources would not be able to fill the gap immediately; prices would rise, further fuelling demand and creating a new, shiny headache for those trying to marshal India’s unusual economy.

This article was originally published on The Conversation. Read the original article.

Gold and Silver Bullion – News and Commentary

Gold down on US rate hike expectations; ECB meeting in focus (

Gold prices gain slightly in Asia with demand forces in focus (

US factory orders climb 2.7 percent in October, best gain in 16 months, but investment lags (

Trade Deficit in U.S. Widened to a Four-Month High in October (

UK manufacturing slides, as Italian bank rescue hopes build – business live (

America’s relationship with China could get frosty under Trump (

Fake News = Fake Markets… (

Market rigging strives to save disintegrating Europe (

From Hot to Not, Investors Exit Gold Funds in Switch to Equities (

Gold appetite hit a 5-year high in November as prices tumbled (


Gold Prices (LBMA AM)

07 Dec: USD 1,171.25, GBP 929.62 & EUR 1,092.19 per ounce
06 Dec: USD 1,171.15, GBP 918.18 & EUR 1,086.94 per ounce
05 Dec: USD 1,164.90, GBP 915.84 & EUR 1,095.36 per ounce
02 Dec: USD 1,171.65, GBP 929.00 & EUR 1,100.88 per ounce
01 Dec: USD 1,168.75, GBP 930.09 & EUR 1,099.68 per ounce
30 Nov: USD 1,187.40, GBP 952.06 & EUR 1,115.44 per ounce
29 Nov: USD 1,187.30, GBP 952.45 & EUR 1,119.98 per ounce

Silver Prices (LBMA)

07 Dec: USD 16.77, GBP 13.32 & EUR 15.64 per ounce
06 Dec: USD 16.79, GBP 13.17 & EUR 15.63 per ounce
05 Dec: USD 16.62, GBP 13.05 & EUR 15.54 per ounce
02 Dec: USD 16.35, GBP 12.95 & EUR 15.36 per ounce
01 Dec: USD 16.30, GBP 12.91 & EUR 15.35 per ounce
30 Nov: USD 16.67, GBP 13.39 & EUR 15.66 per ounce
29 Nov: USD 16.54, GBP 13.26 & EUR 15.61 per ounce

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– 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

Mark O’Byrne
Executive Director


Gold/silver trading early this morning:

Gold & Silver Spike, Erase Italy Vote Losses

After puking over $30 from post-Italy vote highs, gold prices are jumping this morning and have erased the losses. Silver is soaring, breaking back above $17, well above pre-Italy levels…

As Bloomberg notes, some analysts aren’t convinced the rally is over.

More infrastructure spending in the U.S. and low global interest rates may accelerate the pace of inflation, which would renew demand for gold as an alternative asset, Commerzbank AG analysts led by Eugen Weinberg, wrote in a note dated Dec. 2.

Gold may rise to $1,300 in the fourth quarter of 2017 and may reach $1,400 in 2018, according to Commerzbank.

There’s also the possibility of a Trump-led trade war with China, uncertainty from elections in Europe, risks to market stability from the Italian banking sector and complications from Britain’s exit from the European Union. All those could revive the appeal of bullion.

The sell-off in gold “is a little bit too violent and too short-sighted,” said Chad Morganlander, a money manager at Stifel, Nicolaus & Co. in Florham Park, New Jersey, where he helps oversee about $172 billion. The fund hasn’t pared its positions in SPDR Gold, he said. “We’re expecting gold to start to move higher over the course of the next six to 12 months as interest rates stay anchored below expectations.”

And it seems the surge in physical demand that we have noted is catching up with paper prices…

Helped by a weakening dollar…

Position limits are now off the table on oil and gold and other commodities.They will leave it to the new administration and I am happy about that

(courtesy Wall Street Journal/GATA)

CFTC leaves shaping position limits rule to Trump administration


By Andrew Ackerman and Alexander Osipovich
The Wall Street Journal
Tuesday, December 6, 2016

WASHINGTON — U.S. regulators failed to put the finishing touches on a much-debated, long-delayed rule to limit speculation in commodities like oil and gold, opting instead to propose a scaled-back version that leaves its outcome in the hands of the Trump administration.

The Commodity Futures Trading Commission voted unanimously Monday to float, for the third time since 2011, a proposed rule that would cap the size of trading positions firms could take in more than two dozen core commodity contracts, including a variety of energy and precious-metals commodities, to curb any one trader’s influence.

The move punts a decision on the rule’s final contours to the Trump administration, which has pledged to dismantle the Dodd-Frank financial law that authorized the restrictions.

“I did not want to finalize a rule that next year the commission would choose not to defend or implement,” CFTC Chairman Timothy Massad said on a call with reporters.

Specifically, the latest proposal would restrict a firm from owning more than the equivalent of 25 percent of a commodity’s estimated “deliverable supply” in a given month. In some cases, however, it would effectively raise the position limits because it would increase the estimated supply of the commodities. Monday’s version also gives traders more leeway than prior iterations of the measure if they are managing business risks. …

… For the remainder of the report:





Quite a report:  Market rigging is striving to save a disintegrating Europe?

(the King report/GATA)

King Report: Market rigging strives to save disintegrating Europe


From The King Report
Burr Ridge, Illinois
Tuesday, December 6, 2016

As always when a political event occurs, be alert for central bank intervention.

Someone intervened in European stocks before European bourses opened Monday. Unlike previous interventions, the Brexit and Italian referendum manipulations are intended to save the European Union, not just banks or stocks.

The severity of the situation across the pond cannot be understated. The EU and Europe itself are disintegrating. European nations are collapsing under the strain of busted banks and immigration that is accelerating the insolvency of welfare states.

Even worse, societal and cultural norms are collapsing. European elites’ response to increasing crime and disorder has been to allow refugee enclaves to become de-facto sovereign states that are not policed. …

… For the remainder of the report, subscribe here:





The following is quite an understatement: “governments and the financial press falsify economic conditions”:

John Embry…

Governments, financial press falsify economic conditions, Embry tells KWN


12:37p ET Tuesday, December 6, 2016

Dear Friend of GATA and Gold:

Governments and financial news organizations are falsifying the condition of the world’s economy, Sprott Asset Management’s John Embry tells King World News today, and the price action in the monetary metals is “ludicrous.” Embry’s comments are excerpted at KWN here:

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





These three kingpins are getting off lightly for rigging Euribor:  HSBC, JPMorgan and Credit Agricole

(courtesy London’s Financial Times).

Brussels to fine three banks over Euribor rate rigging


By Rochelle Toplensky and Martin Arnold
Financial Times, London
Tuesday, December 6, 2016

Brussels on Wednesday will hit HSBC, JPMorgan, and Credit Agricole with multimillion-euro fines for rigging the Euribor interest rate benchmark, closing a five-year cartel probe into a scandal that shook the financial world.

The three banks held out against a 2013 settlement with the European Commission that imposed almost E1 billion of fines on Deutsche Bank, Societe Generale, and Royal Bank of Scotland.

Margrethe Vestager, the EU’s competition commissioner, is expected to unveil fines on the trio of banks ranging from tens of millions of euros to the low hundreds, according to people familiar with the case.

The decision is an example of the long shadow that still hangs over the industry from alleged misconduct during the years of the financial boom. …

Ms. Vestager is still developing a cartel case against multiple banks for allegedly manipulating the $5.3 trillion forex market. Given the extent of evidence in the hands of investigators, officials expect any forex fines to exceed those imposed during the rate-rigging probes. …

… For the remainder of the report:




I warned you many times that this was happening in the settling process: gold in London and Hong Kong is used to settle upon comex contracts and that is why it takes so long to settle as they must wait for the gold to come:

(courtesy Koos Jansen/GATA)

Koos Jansen: Gold in London and Hong Kong is used to settle Comex futures


2:27p ET Wednesday, December 7, 2016

Dear Friend of GATA and Gold:

Gold researcher Koos Jansen shows today how gold futures contracts on the New York Commodities Exchange are being used to hedge and settle gold trades around the world, especially in London and Hong Kong. Jansen’s report is headlined “Gold in London and Hong Kong Is Used to Settle Comex Futures” and it’s posted at Bullion Star here:…

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





I have now about seen everything. India is now confiscating gold, even jewellery in amounts greater than 250 grams as officials search out hidden money

No wonder the Indian economy is tanking like a lead balloon

(courtesy Mish Shedlock/Mishtalk)


India Confiscates Gold, Even Jewelry, In Raids On Hidden Money


Submitted by Michael Shedlock via,

Global financial repression picks up steam, led by India. After declaring large denomination notes illegal, India now targets gold.

It’s not just gold bars or bullion. The government has raided houses, no questions asked, confiscating jewelry.

For background to this article, please see my November 27 article Cash Chaos in India, 86% of Money in Circulation Withdrawn; Cash Still King in Japan.

Large denomination means 500-rupee ($7.30) and 1,000-rupee notes ($14.60), which account for more than 85 percent of the money supply. They are no longer legal tender, effective immediately.

As one might imagine, chaos ensued. And it continues.

India Confiscates Gold


Picking up where we left off, please consider Message to Modi: Do No More Harm by Mihir Sharma.

The chaos accompanying “demonetization” hasn’t eased up noticeably. It seems likely the disruption to the economy, especially in cash-centric rural India, will hit growth sharply for at least a few quarters. It’s tough to say for how long and by how much; we are in uncharted territory here and guesses have varied widely. But many analysts agree with former Prime Minister Manmohan Singh, who’s predicting the new policy will knock 2 percentage points off that world-beating GDP growth rate.


Demonetization was originally sold as a “surgical strike on black money” — the illicit piles of cash many rich Indians have accumulated out of sight of the taxman. It’s now clear the policy has been anything but surgical. Worse, uncomfortable questions are being asked about whether the complicated rules and exemptions that have accompanied demonetization have allowed black-money holders to launder most of their cash. Of late, Modi’s chosen to focus instead on demonetization as means of advancing a cashless economy.


Yet the idea of a war on unaccounted-for wealth remains central to demonetization’s popular appeal, which means Modi will have to find other ways to keep that narrative going. So the government has now begun to push income-tax officials to conduct raids on those who might be concealing assets in forms other than cash, such as gold.


There’s already enough fear of such raids becoming common again that the government felt the need to step in to quell some of the anxiety. That didn’t help much. The government “clarified,”  among other things, the rules governing when tax officials could seize gold: Nothing would happen “if the holding is limited to 500 grams per married woman, 250 grams per unmarried woman and 100 grams per male.” It also said that there would be no limits on jewelry “provided it is acquired… from inheritance.” Also, the “officer conducting [the] search has discretion to not seize [an] even higher quantity of gold jewelry.”


What this means, unfortunately, is that India’s income tax officers have just won the lottery. During a raid, they can, on the spot, decide whether or not to confiscate a family’s gold holdings. And remember, India has an enormous amount of gold — 20,000 metric tons, much of it inherited. (The rules governing simple searches are different, but few know that.) Rather than cleaning up tax administration, the government has handed tax officials more power than they’ve had for decades. The rich will pay what they need to escape harassment; the rest will suffer.

Rich Escape, Poor and Middle Class Suffer

The last line in the preceding article says all you need to know about what’s happening: “The rich will pay what they need to escape harassment; the rest will suffer.”

Evidence suggests the politically connected, and their friends, knew about the ban on cash and acted in advance. Everyone else is stuck.

India’s raid on gold reinforces its ban on cash. Short term aside, these kinds of actions will increase demand for gold.

What’s Next?

I keep wondering: what’s next? People pretend they know, I admit I do not. However, I am quite sure a currency crisis is coming. Where it strikes first is unknown, but the list of likely candidates increases every year.

My spotlight has been on Japan, China, and the EU. India caught me off guard, but it adheres to my general theory this pot will eventually boil over in a cascade from an unexpected place, outside the US.

US actions may cause a currency crisis, but I believe a crisis will hitelsewhere first. If I am correct, gold will be the safe haven, regardless of currency, but especially where the crisis hits.



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



2. Nikkei closed UP 136.75 POINTS OR 0.74% /USA: YEN FALLS TO 113.99

3. Europe stocks opened ALL IN THE GREEN     ( /USA dollar index RISES TO  100.53/Euro UP to 1.0727


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  50.96  and Brent: 53.80

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS TO +.349%/Italian 10 yr bond yield FALLS 7 full basis points to 1.90%    

3j Greek 10 year bond yield RISES to  : 6.716%   

3k Gold at $1173.60/silver $16.80(7:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 14/100 in  roubles/dollar) 63.72-

3m oil into the 50 dollar handle for WTI and 53 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 SMALL   DEVALUATION DOWNWARD from POBC.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0102 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0836 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.349%

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


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

4. USA 10 year treasury bond at 2.367% early this morning. Thirty year rate  at 3.054% /POLICY ERROR) GETTING DANGEROUSLY HIGH

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

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


Longest Winning Streak For Global Stocks Since September On Monte Paschi Bailout Hopes, ECB Optimism

Global stocks extended the longest winning streak since September, with Asia up 0.8% and Europe rising 0.7% while bonds and credit markets strengthened amid hopes that the European Central Bank will prolong quantitative easing, while optimism an Italian bailout of Monte Paschi will prevent European bank contagion, has pushed European financial stocks higher. US equity futures were little changed.

A note from Goldman’s David Kostin overnight perhaps summarized it best: Large-cap fund managers embrace Hope over Fear. For now hope is certainly in the driver’s seat, leading European equities higher for a third day, with the Bloomberg World Banks Index trading at the highest level in more than a year. Bonds rose across the euro area, with the yield on the benchmark German bund falling from the highest in almost three weeks, while perceived investment-grade credit risk fell for a seventh day, the longest run since May. The pound fell after an unexpected decline in manufacturing output.

The Stoxx Europe 600 Index added 0.7% as of 10:46 a.m. in London as mining companies and banks rallied. Credit Suisse AG gained 8 percent, while Banca Monte Paschi rose 7.1 percent after La Stampa reported Italy will ask for a 15 billion euro ESM loan for the lender, among other banks.

(HARVEY:  Monte de Paschi rises 7.1% with the bailout calling for the shareholders to get wiped out completely????)

Investors’ concerns were that a defeat for Renzi in a referendum on constitutional reforms could further undermine faith in the European Union – following Britain’s decision to quit the bloc – as well as confidence in the euro currency. Market reaction to Renzi’s defeat and his resignations was relatively muted, partly as a consequence of a pledge by the ECB to buy Italian government debt if markets became unsettled. “Despite the fact that the probability of early elections has risen, the market is focusing on the banking sector and the fact the government seems to be showing more urgency in dealing with that problem,” Mizuho strategist Antoine Bouvet said.

“People had gone into the referendum with a very pessimistic view and I think the last five years have taught us that, as far as the euro is concerned, political issues often don’t have a lasting impact,” DZ Bank currency analyst Sonja Marten said.

Ahead of tomorrow’s ECB announcement (previewed here), investors are positioned for an extension of monthly asset purchases of 80 billion euros ($86 billion) past March even as uncertainty lingers that Draghi may inject an element of hawkishness and hint at tapering or even ending QE at some point in the future. With overnight volatility on the euro at the highest since the U.K.’s vote to leave the European Union in June, traders are hedging bets that ECB President Mario Draghi will carry on with accommodative policies. Last year he defied weeks of anticipation for more support with underwhelming stimulus that sent bond yields and the euro surging.

“The base expectation is that we are going to get an extension of the stimulus program by another six to nine months,” said Michael Hewson, a market analyst at CMC Markets in London. “Broad sentiment is starting to turn around — we are getting some repositioning for a better 2017 in terms of growth.”

Japan’s Topix index gained 0.9% in Tokyo as the MSCI Asia Pacific Index added 0.4%. Futures on the S&P 500 Index were little changed after the measure posted a 0.3% advance on Tuesday. The Dow Jones Industrial Average rose 0.2 percent to close at another record.

Brent and WTI rose after the Kremlin said Russian President Vladimir Putin personally agreed to output cuts with the nation’s oil companies. Brent above $54/bbl, WTI above $51/bbl.  “The headlines that Putin personally agreed to the oil output cut sent prices higher,” says Ole Hansen, head of commodity strategy at Saxo Bank. “This adds to the pressure on OPEC to deliver their own cuts.” “The market is taking that at face value and looking for at least half of the 600k b/d non-OPEC cut to be assured.” The one-minute trading volume in WTI hit day-high >1,900 lots at 9:17am London time, shortly after Russia headlines.

One of the biggest movers in the currency markets was the Australian dollar, down 0.4 percent after data showed the Australian economy shrank by 0.5 percent, its biggest contraction since 2008, in the third quarter. Australian stocks, however, closed 0.9 percent higher in anticipation of more fiscal and monetary stimulus. While rate futures imply scant chance of a Reserve Bank interest rate cut in the coming months, prospects of a hike vanished.

China’s foreign exchange reserves fell by more than expected last month to $3.05 trillion, their lowest since 2011, the central bank said. The yuan currency last stood at 6.8850 to the dollar compared to a mid-point of 6.8808 set by the central bank. The currency is down 5 percent so far this year.

In rates, Germany’s 10-year bond yield fell two basis points to 0.34 percent, after climbing to 0.38 percent, the highest since Nov. 14. The government plans to sell 3 billion euros of 2018 securities. Italian sovereign debt securities due in a decade advanced for a second day, almost erasing losses suffered in the aftermath of Sunday’s referendum. The nation’s 10-year bond yield fell four basis points to 1.91 percent, adding to a four-basis point drop from Tuesday. Portugal’s 10-year bond yield reached the lowest level since Nov. 15. Treasury 10-year note yields were little changed at 2.37 percent. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies dropped one basis point to 74 basis points, the lowest since Nov. 9. A gauge of swaps on junk-rated companies fell to a three-month low.

Market Snapshot

  • S&P 500 futures up less than 0.1% to 2211
  • Stoxx 600 up 0.7% to 347
  • FTSE 100 down less than 0.1% to 6742
  • DAX up 0.1% to 10698
  • German 10Yr yield up less than 1bp to 0.34%
  • Italian 10Yr yield down 7bps to 1.92%
  • Spanish 10Yr yield down 6bps to 1.5%
  • S&P GSCI Index down 0.1% to 389.6
  • MSCI Asia Pacific up 0.8% to 136
  • Nikkei 225 up 0.5% to 18361
  • Hang Seng up 0.8% to 22675
  • Shanghai Composite down 0.2% to 3200
  • S&P/ASX 200 up 0.5% to 5429
  • US 10-yr yield down 1bp to 2.38%
  • Dollar Indexunchanged at 100.09
  • WTI Crude futures down 0.4% to $51.59
  • Brent Futures down less than 0.1% to $54.91
  • Gold spot up 0.1% to $1,172
  • Silver spot up 0.4% to $16.82

Global Headlines

  • Credit Suisse Steps Up Cost Cuts as Revenue Eludes CEO Thiam: Lowers target for operating costs by 1 billion francs
  • Linde Chairman Said to Pitch Praxair Merger Plan to Board: Jobs in Germany said part of deliberations about Praxair plan
  • JPMorgan, HSBC, Credit Agricole Fined $521 Million Over Euribor: Banks fined by the European Commission for rigging the Euribor benchmark
  • Shell and Total Said to Sign Initial Oil Deals With Iran: Deals for S. Azadegan, Yadavaran, Kish fields, oil official says
  • Lilly Threatens Sanofi’s Dominance in Insulin With Knockoff Drug: Novo sees U.S. drugmaker as its ‘most formidable’ rival ahead
  • Blackstone to Buy Solvay’s Acetow Business for $1.1 Billion: Buyout firm agreed to pay about seven times earnings for a business supplying materials for cigarette filters
  • Western Digital in Samsung License Deal, Boosts 2Q Forecast: CFO Mark Long spoke in analyst day presentation
  • FirstEnergy Seeks to Sell $885 Million Worth of Power Plants: AE Supply unit looking to sell gas-fired, hydro power plants
  • Exxon Sees 175 Million Ton LNG Shortage by 2030 Without Spending: Financing challenges seen for new LNG developments
  • Pfizer, Flynn Fined Record $113 Million Over Epilepsy Drug: U.K. CMA imposes record fines for abusing dominant position

Asian stocks markets traded mostly higher following a positive lead from Wall St where strength in financials and telecoms underpinned sentiment and resulted in the Dow posting a second consecutive record close. ASX 200 (+0.9%) outperformed despite a poor GDP release as the recent slew of weak data keeps prospects of future easing alive, while Nikkei 225 (+0.7%) was also higher led by SoftBank shares after reports it is to invest USD 50bIn in the US and create 50,000 US jobs. Markets in China conformed to the tone, although upside in the Shanghai Comp (+0.7%) was capped after the PBoC conducted a poor liquidity operation for the third consecutive day, while Jakarta stock markets were negative after Indonesia was hit by a magnitude 6.5 earthquake. 10yr JGBs traded with marginal gains despite the mostly heightened risk appetite in the region, as the BoJ were present in the market for over JPY 1.3trl under its bond buying program, while participants also digested unwaveringly dovish comments from BoJ Deputy Governor Iwata. PBoC injected CNY 30bIn 7-day reverse repos, CNY 20bIn in 14-day reverse repos and CNY 20bIn in 28-day reverse repos. PBoC set the mid-point at 6.8808 (Prey. 6.8575). BoJ Deputy Governor Iwata stated that the BoJ will continue to expand monetary base, while he also added that they will not hesitate to take further measures if required and that yield control can only be achieved by large JGB buying by the central bank.

  • Asian Top News
  • Hong Kong Faces Housing Risks as Fed Tightening Looms, IMF Says: Stretched property valuations mean Hong Kong’s economy is vulnerable if interest rates rise faster than expected
  • Investors Lose 99% as Hong Kong Rights Offerings Go Badly Wrong: Repeat rights issuers under scrutiny as bourse link expands
  • RBA Will Look Through Australia’s Economic Shocker, Traders Bet: Swaps still see more than 75% chance RBA on hold through 2017
  • Chinese Regulators Fined Medtronic $17 Million for Price- Fixing: Penalties for fixing prices with dealers extending to 2014
  • Jho Low Family Digs in to Stop 1MDB Asset Seizure by U.S.: Relatives seek to replace trustees who refused to fight U.S.
  • Soros Alumnus Shiozumi Says Bears on Abenomics Have It All Wrong: Shiozumi, T. Rowe Price’s Ciganer see Japan stock rally

European stocks trade in positive territory this morning (Euro Stox: +1.2%) as Santa gives an early Christmas present to Banca Monte Paschi (+7.9%) in the form of source reports of the state taking a controlling stake in the Co. for EUR 2bIn as soon as this weekend. As such, the Italian bellwether lifted sentiment for financials across the continent. Material names were also among the best performers, while energy names outperformed amid positive reports suggesting Russia could be on board with the OPEC production cuts. Elsewhere, fixed income markets remain relatively muted, with the German 10Y continuing to hover just above the 160 level and trading in a tight range throughout the morning.

European Top News

•    Ahold Delhaize Plans $1.1 Billion Buyback as Cash Piles Up: Europe’s top retailer forecasts 23% increase in free cash flow
•    PostNL Rejects New Bpost Takeover Bid on Governance Concerns: Belgian state’s role prompted Dutch authorities’ objections
•    U.K. Manufacturing Unexpectedly Drops Most in Eight Months: Total production falls, led by oil and gas extraction

In currencies, the Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed. The pound dropped 0.6 percent to $1.2597 after industrial production in October fell 1.3 percent, driven by a slide in oil and gas extraction. The euro was little changed at $1.0726 after posting a 0.4 percent drop on Tuesday. Overnight volatility in the common currency versus its U.S. counterpart jumped to 23 percent, the most since June 23, based on closing prices. The Australian dollar traded as low as 74.17 U.S. cents before paring its drop to 0.1% after the statistics bureau said third-quarter gross domestic product decreased 0.5 percent from the prior quarter, the first contraction since 2011. The Reserve Bank of Australia on Tuesday kept interest rates unchanged and Governor Philip Lowe said “some slowing in the year-ended growth rate is likely.”

In commodities, oil traded near $51 a barrel amid speculation a production boost from U.S. shale producers will counter the first output cuts from OPEC in eight years. Copper gained 0.6%, recouping an earlier decline. Steel rebar in China climbed with iron ore to the highest in more than two years, as reports of a crackdown on illegal plants spurred speculation that the government is stepping up supply-side reforms. Spot gold was little changed at $1,171.62 an ounce.

Looking at the day ahead, we got the October industrial and manufacturing production reports for the UK, which both missed sharply printing -1.1% and -0.4% YoY, on expectations of a 0.5% and 0.2% rebound respectively. It’s fairly quiet in the US where we’ll get the October JOLTS job openings report along with the October consumer credit print. China released November foreign reserves which showed a surprisingly steep drop of $70 billion, the biggest since January. We’ll also get central bank decisions today from the Reserve Bank of India, which unexpectedly kept rates unchanged even as it warned the economy would slow down.

US Event Calendar

  • 7am: MBA Mortgage Applications, Dec. 2 (prior -9.4%)
  • 10am: JOLTS Job Openings, Oct. est. 5.50m (prior 5.486m)
  • 10:30am: DOE Energy Inventories
  • 3pm: Consumer Credit, Oct., est. $18.650b (prior $19.292b)

DB’s Jim Reid concludes the overnight wrap

Although there is little uncertainty in the alpine weather forecast this morning, I must admit to being quite confused by financial markets this week. In our 2017 credit outlook we suggested that we like European financial over non-financial credit as the outlook has changed markedly since the sector’s nadir in late summer where it priced in almost permanent negative yields and flat yield curves. Rising yields and a steeper yield curve partly due to Kuroda’s new policy framework helped. President-elect Trump has since given this trade a further boost with additional hopes on easier regulation ahead. However we’ve been struggling with reconciling our optimistic view with our thoughts that a ‘no’ was likely in the Italian referendum and a period of turbulence possible for the sector given the country’s banking sector problems. We thought it would be more difficult to solve them quickly and safely with a ‘no’. However we decided to ride out this expected volatility and take any near-term stresses and losses that this would entail. Given yesterday’s price action we needn’t have even bothered getting stressed as European financials saw a remarkable day in spite of (or perhaps strangely because of) the speculation of imminent government intervention in the sector that might be necessary after the ‘no’ vote.

Indeed the Stoxx 600 Banks index rallied to the tune of +5.61% yesterday for its biggest one-day gain since April. The main driver was that remarkable rebound for Italian Banks. Unicredit (+12.81%), Mediobanca (+9.94%), Unione di Banche Italiane (+9.70%), Banco Popolare di Milano (+9.03%), and Intesa Sanpaolo (+8.16%) all more than wiping out the previous day losses. With those moves the FTSE Italia All-Share Banks index rallied +8.97% and had its best day since July while the FTSE MIB closed up +4.15%. That compares to gains of +0.97% for the Stoxx 600 and +0.34% for the S&P 500.

It was much the same in credit markets. While the iTraxx Main index tightened an impressive 4bps, more eye catching were the moves for the iTraxx Senior and Sub Financials indices which ended the day 7bps and 7.5bps tighter respectively. Within the Sub-Fins constituents, spreads for Unicredit, Generali, Intesa and Mediobanca were 18bps, 16bps, 15bps and 7bps tighter respectively. There was a similar outperformance for BTP’s too where 10y yields ended the day just over 4bps lower at 1.940% which compared to a move of 4bps higher for 10y Bund yields. US Treasury yields on the other hand were little changed around 2.389%.

Although the above suits our sector view I’m still scratching my head this morning explaining the strength of the move given the week’s news. All help very welcome with aggressively short covering perhaps a big catalyst. For now then the political focus in Italy turns over to the elections and as DB’s Marco Stringa summarised yesterday in his report, the key question is not ‘when’ Italy goes to elections but ‘how’. In other words which electoral law. Since the weekend this has now become a focal point for investors and yesterday’s report from Marco has helped to summarise some of the key Q&A’s on the more specific details of the process.

Away from all things Italy related there was an important development to note on the Brexit front last night. Yesterday PM May accepted a Labour Party motion which will be debated in the House of Commons today, calling on the government to publish its plans for the leaving the EU prior to triggering Article 50. According to the BBC as many as 40 Tories were said to be prepared to support the Labour Party in demanding more parliamentary scrutiny of the government’s plans. One to watch.

To the latest in Asia now where for the most part bourses in Asia have strengthened and so following the generally positive sentiment over the last 24 hours. Indeed when will we start to hear talk of a Santa Claus rally? The Nikkei (+0.54%), Hang Seng (+0.35%), Shanghai Comp (+0.10%) and ASX (+0.87%) in particular are all firmer although the Kospi (-0.10%) is a touch weaker. Those moves have come despite WTI Oil retreating a further -0.65% this morning which follows the -1.66% decline yesterday and the first down day since the OPEC meeting last week. Meanwhile in FX markets the Aussie Dollar has weakened close to half a percent following a much weaker than expected Q3 GDP print (-0.5% qoq vs. -0.1% expected). In fact it was the first negative quarterly contraction since 2011 and the joint worst since 2008.

Moving on. Just as you might have expected primary issuance to slow down into year end, it was interesting to note the relatively busy day for issuance in the HY energy space yesterday. Indeed Chesapeake, Matador Resources, Rowan Companies and Parsley Energy priced deals after Cheniere Energy had priced a decent sized deal on Monday. The timing follows a decent rally in spreads following the OPEC meeting. Indeed based on DB pricing to the close on Monday, cash spreads for US HY energy are 32bps tighter at 510bps since OPEC. In fact that is now the tightest spread since November 2014 after spreads peaked above 1900bps back in February.

Elsewhere, with regards to the data yesterday, in the US the trade deficit was reported as widening to $42.6bn in October from $36.2bn in the month prior. That was as a result of a -1.8% mom drop in exports while imports were reported as rising +1.3% mom. Meanwhile factory orders rose a slightly above market +2.7% mom in October (vs. +2.6% expected) while durable goods orders were revised down to a still strong +4.6% mom from +4.8% in the initial flash estimate. Elsewhere nonfarm productivity was confirmed at +3.1% qoq in Q3 while unit labour costs were revised up to +0.7% qoq from +0.3%. Finally the IBD/TIPP economic optimism reading for December was reported as rising 3.4pts in December to 54.8. That’s actually the highest reading since November 2006. The Atlanta Fed did downgrade their Q4 GDP forecast to 2.6% from 2.9% yesterday although that reflected the employment and auto sales data last week.

As far as the data was concerned in Europe, Q3 GDP growth for the Euro area was confirmed at +0.3% qoq although the annual rate was revised up by one tenth to +1.7% yoy which left it unchanged versus Q2. The most eye catching print in Europe yesterday was the October factory orders reading in Germany where orders were reported as rising a bumper +4.9% mom (vs. +0.6% expected) and so helping to raise the YoY rate to +6.3% from +2.9%. That was the largest monthly jump since July 2014 although our European economists did warn that a combination of several factors likely overstates the underlying improvement. This includes a very large workday adjustment, the impact of the Paris autoshow during the month, and a post Brexit recovery.

In terms of the day ahead, this morning in Europe the early data comes from Germany where the October industrial production data is due (expected to rise +0.8% mom). Shortly after we’ll get the October trade data out of France before we then get the Halifax house price index data for the UK for last month. We’ll then get the October industrial and manufacturing production reports for the UK where both are expected to have risen +0.2% mom. It’s fairly quiet in the US this afternoon. We’ll get the October JOLTS job openings report along with the October consumer credit print. China is also due to release November foreign reserves data at some stage today. We’ll also get central bank decisions today from the Reserve Bank of India (expected to cut by 25bps) and Bank of Canada (expected to hold)





i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 22.59 POINTS OR 0.71%/ /Hang Sang closed UP 125.77  OR 0.55%. The Nikkei closed UP 136.75 OR 0.74%/Australia’s all ordinaires  CLOSED UP 0.89% /Chinese yuan (ONSHORE) closed DOWN at 6.8800/Oil ROSE to 50.96 dollars per barrel for WTI and 53.80 for Brent. Stocks in Europe: ALL IN THE GREEN.  Offshore yuan trades  6.90321 yuan to the dollar vs 6.8800  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AGAIN AS  MORE USA DOLLARS  LEAVING CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET  TO NOT RAISE RATES IN DECEMBER.




A huge commentary:  This will no doubt be a black swan as Chinese official reserves (including FX changes) drops 69 billion USA, the biggest drop since last January.  The new official reserves are 3.05 trillion and the part that is alarming is that the Chinese authorities are claiming the loss of dollars is starting to cause problems with the businesses and the issuance of dividends etc.

(courtesy zero hedge)

Chinese Reserves Tumble By $69 Billion, Biggest Drop Since January

While in recent months, the PBOC had tried to mask the real pace of reserve outflows, covering up the accelerated selling of US-denominated assets to defend its rapidly devaluing currency, we noted in October that using more accurate calculations, China’s capital outflows are once again surging, having hit $78 billion in September. Overnight, China, unable to continue “covering up” its reserve state, disclosed that, as we warned, FX reserve liquidation had soared with total reserves falling by nearly $70 billion last month as the country’s central bank burned through more of its reserves in the fight to defend the renminbi from greater depreciation on the back of accelerating capital outflows. This was the largest decline since January.

PBOC’s total reserves declined by $69.1 billion to $3.051 trillion in November, a decline of 2.2 per cent from the previous month and the largest drop since January’s fall of 3 per cent. A median forecast from economists had predicted a fall of only 1.9 per cent from October.

After adjusting for currency valuation effects, the reserves fall would be about US$34bn.

As the FT notes, this “fifth consecutive monthly fall indicates growing difficulty for policymakers. Since the renminbi’s sharp depreciation in August 2015, Beijing has sought to combat more severe softening against the greenback by selling dollars from the central bank’s foreign exchange reserves.”

The yuan’s weakness has helped to continue driving the outflows that began plaguing China after the one-off devaluation in August 2015. In the first ten months of 2016 capital outflows from China rose to $530bn, with October’s level exceeding the year’s monthly average.

A separate dataset, called “PBOC’s FX position” (usually released around the middle of the month), would give a useful cross-check on PBOC’s FX sales net of valuation effects. This data shows the amount of PBOC’s FX assets at book value. Partly reflecting the uncertainty of the size of valuation effects, there is sometimes a significant gap between this data and the reserves data after adjusting for estimated currency valuation effects (e.g., in the last few months since June, the former suggests that the monthly average of PBOC’s FX sales was about US$25bn more than implied by the latter)

The latest reserve figure come amid signs that ramped-up efforts to curb heavy capital outflows have begun to interfere with foreign businesses in China. Several European firms have been unable to remit dividends due to new foreign exchange controls that the EU Chamber of Commerce in Beijing called “disruptive to business operations”.

Media reports over the past couple of weeks suggest that the authorities would be tightening outflows through administrative means, including on outbound FDI, gold imports and cross-border net RMB payments. The impact of such measures will not be fully visible until December forex levels are released, but after November’s drop they look unlikely to be the last.

There has not been any concrete official confirmation or detail of the reported rules and implementation, so it is difficult to assess the potential effectiveness. In general, a stronger capital control could help mitigate excessive volatility in outflows driven by temporary sentiment factors. However, outflows may also reflect structural diversification demand. We have previously estimated that there could be a substantial amount of Chinese wealth to be allocated to foreign assets over time given that Chinese residents have been under-diversified. To the extent that diversification is an important driver, control measures could be effective in dampening short-term outflows but may be less so in reducing the fundamental pent-up pressure on the exchange rate.




China newspapers  (the mouthpiece for sovereign China) blasts the “rookie” Trump for not keeping his mouth shut re the phone call to Taiwan.  The rhetoric is just beginning. Things are off to a great start for Trump with his relationship with China.

(courtesy zero hedge)

China Newspapers Blast “Diplomatic Rookie” Trump For “Inability To Keep His Mouth Shut”

It seems that Trump’s phone call with Taiwan’s president Tsai Ing-wen as well a recent pair of tweets from the president-elect blasting China for devaluing their currency, taxing U.S. imports and military provocations in the South China Sea have served their purpose of ruffling some feathers in Beijing.

Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into..

their country (the U.S. doesn’t tax them) or to build a massive military complex in the middle of the South China Sea? I don’t think so!

While the “official reaction” out of Beijing to Trump’s “provocations and falsehoods” has been muted, newspapers across China, often viewed as a mouthpiece of the Communist Party, have spent the day lashing out at the “diplomatic rookie.”.  Per Yahoo News, the People’s Daily accused Trump of “provoking friction and messing up China-US relations,” a move they say will not help “make America great again.”

Donald Trump is a “diplomatic rookie” who must learn not to cross Beijing on issues like trade and Taiwan, Chinese state media said Tuesday, warning America could pay dearly for his naivety.

Trump’s protocol-shattering call with Taiwan’s president and a subsequent Twitter tirade against Beijing’s policies could risk upending the delicate balance between the world’s two largest economies, major media outlets said.

“Provoking friction and messing up China-US relations won’t help ‘make America great again'”, said a front-page opinion piece in the overseas edition of Communist Party mouthpiece People’s Daily.


The Global Times blasted Trump’s “inability to keep his mouth shut” adding that Trump “doesn’t have sufficient resources” to be provocative with China.

The nationalist Global Times newspaper’s Chinese edition also ran a page-one story on Trump’s “inability to keep his mouth shut”, damning his “provocation and falsehoods”.

Noting that Sino-US relations had reached a delicate equilibrium thanks to years of careful management, an editorial in the paper warned that Trump “can make a lot of noise but that does not exempt him from the rules of the major power game,” adding that he “doesn’t have sufficient resources” to be provocative with China.

“Trump’s China-bashing tweet is just a cover for his real intent, which is to treat China as a fat lamb and cut a piece of meat off it,” it said.

“He is trying to pillage other countries for US prosperity,” it warned, but instead he will unwittingly “smash the current world economic order” of which the US is the “biggest beneficiary.”

A companion commentary warned that Trump “will in time learn not to cross China”, threatening “a fierce competition” with Beijing if the US increases arm sales to Taiwan.

Meanwhile, the China Daily noted that Beijing would likely remain somewhat muted in their response so long as Trump is “shooting from the hip” but warned that a failure to “moderate his behavior” after taking office would result in “costly troubles” for the United States.

Meanwhile the English-language China Daily newspaper warned that “diplomatic rookie” Trump needs to moderate his behaviour or he will create “costly troubles for his country”.

“As president-elect, Trump can expect some forgiveness even when he is shooting from the hip. But things will be different when he becomes president.”

“If Trump continues talking this way after taking office… China is going to have to make some adjustments in its thinking,” Jia Qingguo, professor at Peking University, told AFP, calling the comments “sobering”.

Well, this relationship certainly seems to be off to a fantastic start…should be full of very fun developments over the next four years


Italy/Monte de Paschi

The fun begins:  The Italian government prepares to nationalize Monte de Paschi.

Monte needs 5 billion euros by the end of December and if they cannot get it, they will be toast.  For the Italian government is coming to the rescue to the tune of 2 billion euros  out of 5 billion needed or 40% of the new company.  The existing shareholders are now toast.  The fun begins as the government will buy the junior bonds at face value and leave the senior bonds alone and not buying their notes. That should set a showdown in bankruptcy court. Then we have the new bail in rules which suggests that all holders, bond holders, equity holders and depositors must share in the loss and not taxpayers which is must Germany has been demanding .  However they have problems with Deutsche bank and they will need a rescue. That is why I stated earlier today that the rescue of Monte de Paschi will no doubt cause contagion effects all over the place.



(courtesy zero hedge)


Italian Government Prepares To Nationalize Monte Paschi

After two previous taxpayer funded bailouts, and nearly five months of foreplay since the third largest Italian bank failed the latest European stress test at the end of July, in which the Italian government in September vow that “bailout for Italian banks has been ‘absolutely’ ruled out“, a third bailout, as we previewed earlier today, is now imminent.

According to Reuters, which cites two sources, Italy is preparing to take a €2 billion controlling stake in Monte Paschi as the bank’s hopes of a private funding rescue have faded after a fruitless five month search to secure an anchor investor, following Prime Minister Matteo Renzi’s decision to quit.

The government, which is already the ailing bank’s single largest shareholder with a four percent share, is planning do a debt-for-equity swap, and buy junior bonds held by ordinary Italians to take the stake up to 40%, the sources said. The bonds would then be equitized, converting the government’s bond stake into pure equity ownership, a troubling approach as it would effectively wipe out the existing equity tranche and position the bank for a potential bankruptcy fight in court where the government faces off with the equity committee.

This transaction would make the government by far the biggest shareholder, meaning the Treasury would be able to control Italy’s third biggest bank and its shareholder meetings, or in other words, the bank would be nationalized.

The sources said a government decree authorizing the deal, which would see the state buy the subordinated bonds from retail investors and convert them into shares, could be rushed through as early as this weekend. Italy’s treasury would buy the bonds held by around 40,000 retail investors at face value, the sources said.

It is unclear how the senior bondholders, who would not be made whole would feel about a government transaction which favors the juniors (who would get par) where the bulk of the retail investors are found, would feel about such a transaction which would bring memories of the US government’s “bailout” of GM which flipped the bankruptcy process on its head by prioritizing junior pensioners over senior creditors.

The way the transaction is structured, the government would ensure retail investors do not suffer any losses in the bank’s bailout, making it politically more palatable and staving off the risk of a run on deposits that could trigger a wider banking crisis.

The bank, which needs to raise €5 billion by the end of December or risk winding down, is set to raise 1 billion euros from a bond swap with institutional investors and Rome is hoping the 2 billion euros participation from the government could help persuade private investors to fill the 2 billion euros gap. Since any new equity investors would come in as the equivalent of post-petition equity, it would mean that existing equityholders, already a token amount, would be wiped out.

“It’s a de-facto nationalization with a strong presence by the state that can attract other investors and allow the transaction to be completed,” said one of the sources, speaking on condition of anonymity.

There is another problem: in the past both Merkel and Schauble, not to mention Djisselbloem, have made it expressly clear that a bail-in mechanism should be used to preserve insolvent banks, and a state-funded and taxpayer backed bailout/nationalization is no longer permitted. Allowing Italy to proceed with this transaction would make a mockery of Europe’s entire “bail-in” protocol, not to mention the European finance ministers’ resolve and ability to implement anything, which is why the European Commission would need to assess whether the government’s intervention is taking place at market prices or if it constitutes state aid, another source said.

However, since an Italian contagion wave would inevitably slam Deutsche Bank and Germany’s various other banks, Europe will find the deal to be “whatever it needs it to be, to make it possible.

Monte dei Paschi, rated the weakest lender in European stress tests this summer, had planned to arrange a private rescue, starting with a firm commitment from one or more anchor investors and then launching a share sale this week.

There is still some hope for a private rescue without a government intervention, but that is evaporating by the hour.  According to Reuters, the chances of the privately backed deal going ahead as planned were now slim. A source close to Qatar’s cash-rich sovereign wealth fund said it could inject €1.4 billion in the bank but wanted to wait to see what kind of government would succeed Renzi. Other sources were more cautious on Qatar’s willingness to back the deal.

Monte Paschi’s bank’s chief executive, Marco Morelli, held talks with European Central Bank officials in Frankfurt on Tuesday to review its options. A meeting of the bank’s board is likely to take place on Wednesday. At that point it is likely to greenlight the first major European bank bailout in a year in which the G-20 leader previously declared that the global economy is fixed and is now reflating itself back to growth.





Renzi resigns today after the approval of the budget bill.  This may precipitate early elections:

(courtesy zero hedge)

Italy PM Renzi To Resign Today After Approval Of Budget Bill

In what may be an unexpected development, following yesterday’s news that Renzi would hold off resigning for the immediate future as per the president’s request, moments ago the Italian prime minister tweeted that he would formally resign at 7pm local time, well ahead of expectations, following passage of the budget bill.

The resignation may precipitate new elections, and potentially lead to an outcome in which the anti-Euro M5S party ends up in the driver’s seat, pushing Italy further into political limbo.

More as we see it.




This ought to hurt:  Moody’s has cut Italy’s senior unsecured government debt rating from stable to negative but leaving it at Baa2 for now. I guess that they are concerned with the Italian banks health.

(courtesy zero hedge)


Moody’s Cuts Italy Ratings Outlook To Negative

Moody’s has cut Italy’s long-term senior unsecured government debt rating outlook from ‘stable’ to ‘negative’, leaving it at Baa2 for now. Citing “slow and halting progress” on economic and fiscal reform in Italy, noting that reduction in Italy’s large debt burden will be further postponed given subdued medium-term growth prospects, recent fiscal slippage.

The drivers for today’s rating action are:

(i) the slow and halting progress on economic and fiscal reform in Italy, the prospects for which have diminished further following the ‘no’ vote in Sunday’s constitutional referendum; and


(ii) the resulting rising risk that the reduction in Italy’s large debt burden will be further postponed given subdued medium-term growth prospects and recent fiscal slippage, thereby prolonging the sovereign’s exposure to unforeseen shocks.

Concurrently, Moody’s has today maintained the local-currency and foreign-currency bond ceilings at Aa2. The local-currency and foreign-currency deposit ceilings remain unchanged at Aa2. The short-term foreign-currency bond and deposit ceilings remain unchanged at P-1.



 The first driver of Moody’s decision to change the outlook on Italy’s Baa2 rating to negative relates to the diminished likelihood, following the ‘no’ vote in Sunday’s constitutional referendum, that the Italian government will make meaningful further progress on the structural economic and fiscal reforms needed in order to stabilise the government’s credit profile and improve its capacity to absorb shocks.

Real GDP growth in Italy has, on average, been flat for more than 15 years, and real productivity has barely increased in 20 years. Both nominal unit labour costs and Italy’s real effective exchange rate show a marked loss of competitiveness. Past and present administrations have identified a series of reforms to address structural weaknesses in the Italian economy and in the government’s finances. In Moody’s opinion, these reforms should, if implemented in full, support Italy’s credit profile by lifting growth over the medium term and supporting a reduction of the Italian government’s very high debt burden. In pursuit of these objectives, the Italian government has in recent years introduced pension reform, reforms to the judicial system and to the public administration, as well as labour market reform and a programme of privatisation.

However, reforms implemented to date have had only a limited impact on Italy’s medium-term growth and fiscal outlook. Many, such as the government’s public sector reforms, have been only partially implemented, and others, such as pension reform and property tax reform, have been diluted or even abandoned. As a result, Italy’s growth remains subdued and its growth prospects poor, and longer-term challenges to the government’s fiscal strength persist. If sustained over time, low growth alongside high indebtedness will contribute to a gradual erosion in Italy’s credit profile, and leave it increasingly exposed to shocks.

In Moody’s view, the popular rejection of constitutional reform in Sunday’s referendum poses a further threat to the achievement of these reforms, raising the risk of accelerating a weakening of Italy’s credit profile. The contemplated changes were aimed at streamlining Italy’s political processes which might have provided future Italian governments with the stability and continuity to implement further reforms. In addition, electoral dissatisfaction, illustrated by the referendum outcome, although varied in nature and objective, is likely to constrain further the country’s economic and fiscal reform agenda. It also raises the possibility of further policy reversals, particularly if the outcome were to precipitate a general election.


The second, closely related, driver of the change in Italy’s rating outlook to negative is the rising risk that the stabilisation and reduction in Italy’s large debt burden will be further deferred, given the likelihood that medium to long-term growth prospects will remain subdued and recent fiscal slippage.

Italy’s subdued growth outlook leaves little scope for any material reduction in the country’s very high debt burden over coming years, which represents a key credit weakness: Italy’s debt- to-GDP ratio (133% of GDP forecast for 2016) exceeds both the median of Baa-rated countries as well as its euro area peers. In fact, Italy’s debt ratio is large on a global scale: in Moody’s sovereign rating universe, only Japan and Greece have higher debt ratios.

The high debt burden leaves the sovereign vulnerable to shocks, including not just lower-than-expected real GDP growth but also higher-than-expected fiscal deficits and worsening debt affordability. By lowering the probability that further meaningful reform will be undertaken, the outcome of the referendum increases the risk of a future shock to growth. It also shifts upwards the risk of a shock to debt affordability, particularly should the outcome signal, now or in its aftermath, an increase in support for a change in Italy’s relationship with the euro area, and ultimately for membership of the euro. It may also increase the risk that contingent liabilities emanating from Italy’s very weak banking sector crystallise on the government’s balance sheet, should the ‘no’ vote lower the prospects of private capital being available to recapitalise the weaker parts of the sector.

Over the nearer term, Moody’s believes that the prospects of further fiscal slippage also weigh upon Italy’s fiscal outlook. According to European Commission forecasts, Italy’s structural deficit is expected to deteriorate significantly as compared with both euro area and wider EU peers between 2015 and 2017. Italy’s headline deficit is expected to be 2.4% of GDP in 2016, missing by some margin the target of 1.8% set in the 2015 Stability Programme. A combination of tax cuts and spending initiatives in 2016 have limited progress in reducing the deficit: particularly the government’s reversal of expected hikes in VAT and other taxes, and its decision to abolish a property tax on first residences.

A key measure in the 2017 draft budget is the EUR7 billion allocated in additional spending for retirees on the lowest pensions, to be spread over three years with EUR1.9 billion disbursed in 2017, EUR2.5 billion in 2018, and EUR2.6 billion in 2019. This measure is a significant reversal of Italy’s 2012 pension reform which introduced new minimum contribution requirements for early retirement. The 2017 draft budget also earmarks more than EUR6 billion, or 0.4% of GDP, in additional spending on migrants and to cover reconstruction costs following several major earthquakes. The European Commission has flagged concerns that Italy could deviate significantly from its medium term objective in 2017, stating that the structural deficit will increase to 1.6% in 2017 from the 1.2% estimated by the government for 2016, instead of declining, as previously expected by the government.

As a consequence, Moody’s expects that Italy’s debt burden will increase next year. The rating agency now expects Italy’s debt to be slightly over 133% in 2017, and to decline only very slowly thereafter. The outcome of the referendum suggests that risks to the deficit and the debt burden remain high.


Moody’s decision to affirm Italy’s Baa2 rating reflects a number of continuing credit strengths, including the scale of Italy’s economy and its elevated wealth levels. Italy has the third-largest economy in the euro area, after Germany and France, the fourth largest economy in the EU, after Germany, the UK and France, and its economy is significantly larger than that of Spain. Other factors underpinning the country’s economic resilience are the relatively low indebtedness of Italy’s private sector and the significant diversification of its economy. The high strength of Italy’s institutions, whilst lower than some of the country’s close peers, also supports the Baa2 rating.

Moreover, notwithstanding the shift in the balance of risk as a consequence of the ‘no’ vote, the affirmation reflects the assumption that the political process will nevertheless lead to a continuation of the reforms needed to lift growth, and that the debt burden will stabilise this year at around 133% of GDP and decline, albeit slowly, thereafter.


Moody’s would consider downgrading Italy’s Baa2 issuer rating if it were to conclude that the country’s economic prospects would remain poor over the medium term, that the stabilisation and reversal of its debt trajectory would continue to be deferred and remain weak, and that its ability to absorb shocks would continue to deteriorate. Proximate causes of a downgrade would include a material decrease in its primary surplus which the rating agency might conclude was unlikely to be reversed, a deterioration in the sovereign’s funding conditions, or further shocks to the government’s balance sheet, including the need for a significant recapitalisation of banks by the government. An emergence of elevated financial and debt market stress and/or a more turbulent political environment would also be credit negative.

The negative outlook implies that the probability of an upgrade is low. Moody’s would consider stabilising, and ultimately upgrading, Italy’s Baa2 issuer rating if a stronger consensus were to emerge in favour of the reforms needed to strengthen the economy’s growth prospects. A sustained reversal of the upward trajectory of Italy’s debt-to-GDP ratio against the backdrop of a resumption of significant growth would also be credit positive.

The referendum on constitutional reform required the publication of this credit rating action on a date that deviates from the previously scheduled release date in the sovereign release calendar, published on

  • GDP per capita (PPP basis, US$): 35,781 (2015 Actual) (also known as Per Capita Income)
  • Real GDP growth (% change): 0.7% (2015 Actual) (also known as GDP Growth)
  • Inflation Rate (CPI, % change Dec/Dec): 0.1% (2015 Actual)
  • Gen. Gov. Financial Balance/GDP: -2.6% (2015 Actual) (also known as Fiscal Balance)
  • Current Account Balance/GDP: 1.6% (2015 Actual) (also known as External Balance)
  • Level of economic development: High level of economic resilience
  • Default history: No default events (on bonds or loans) have been recorded since 1983.



A good snapshot as to what is happening on the ground in France today:

(courtesy Yes Mamou/Gatestone Institute)

France: Decomposing In Front Of Our Eyes

Submitted by Yves Mamou via The Gatestone Institute,

  • Four officers were injured (two badly burned) when around 15 “youths” (Muslim gang-members) swarmed their cars and hurled rocks and firebombs at them. Police were aggrieved when the minister of interior called the attackers “little wild ones.” Police and opposition politicians replied that the attackers were not “little wild ones but criminals who attacked police to kill.”
  • Two students at a vocational training school in Calais attacked a teacher, and one fractured the teacher’s jaw and several teeth — because the teacher had asked one of the students to get back to work.
  • “This is a warning. These young people did not attack the school by chance; they wanted to attack the institution, to attack the State.” — Yacine, 21, a student at the University of Paris II.
  • The riot, which lasted for four nights, broke out after the arrest of a driver who did not stop when asked to by a policeman.
  • This revolt of one pillar of French society, the police, was the biggest that ever happened in modern France. Yet, virtually no one in France’s mainstream media covered the event.
  • “Everything that represents state institutions (…) is now subjected to violence based on essentially sectarian and sometimes ethnic excesses, fueled by an incredible hatred of our country. We must be blind or unconscious not to feel concern for national cohesion”. — Thibaud de Montbrial, lawyer and expert on terrorism.

France will elect a new president in May 2017. Politicians are already campaigning and debating about deficits, welfare recipients, GDP growth, and so on, but they look like puppets disconnected from the real country.

What is reality in France today?

Violence. It is spreading. Not just terrorist attacks; pure gang violence. It instills a growing feeling of insecurity in hospitals, at schools, in the streets — even in the police. The media does not dare to say that this violence is coming mainly from Muslim gangs — “youths,” as they call the in the French media, to avoid naming who they are. A climate of civil war, however, is spreading visibly in the police, schools, hospitals and politics.

The Police

The most jolting evidence of this malaise was to see more than 500 French police officers demonstrating with police cars and motorcycles on the night of October 17, without the backing of labor unions, without authorization, on the Champs Elysées in Paris. According to the daily, Le Figaro, “the Interior Ministry was in panic,” frightened by a possible coup: “Police blocked access to the Avenue Marigny, which runs beside the Presidential Palace and overlooks the Place Beauvau.”

On October 18, when Jean-Marc Falcone, director-general of National Police, met the leaders of the protest, he was surrounded by hundreds of police officers urging him to resign.

The main cause of their anger seems primarily the violence often directed against police, and terrorist attacks. On the terrorist level, two policemen were stabbed to death in Magnanville in June 2016 by a Muslim extremist, Larossi Aballa. This spring, more than 300 police officers and gendarmes were injured by demonstrators. In May, police unions demonstrated in the streets of Paris to protest “anti-police hatred.”

This autumn, the last straw was an attack on a police patrol in the Paris suburb of Viry-Châtillon. Four officers were injuredwhen a group of around 15 “youths” (Muslim gang-members) swarmed their cars in the town and hurled rocks and firebombs at them. Two policemen were badly burned; one had to be placed in an induced coma. The same scenario took place a few days later: a police patrol was ambushed in another no-go zone in the “sensitive” area of Val-Fourré.

Four police officers were recently injured (two badly burned) when a group of around 15 “youths” (Muslim gang-members) swarmed their cars and hurled rocks and firebombs at them, in the Paris suburb of Viry-Châtillon. (Image source: Line Press video screenshot)

Police were also aggrieved by Bernard Cazeneuve, the minister of interior, who called the attackers “sauvageons” (“little wild ones”). Police and opposition politicians replied that the attackers were not “little wild ones but criminals who attacked police to kill.”

“Police are seen as an occupying force,” declared Patrice Ribeiro of the Synergie Officiers police commanders’ union. “It is not surprising that violence is spiking.”

On October 18, Le Figaro launched an online poll online with one question: “Do you approve the protest by policemen?” Ninety percent of the 50,000 respondents answered “yes.”

Since then, police demonstrations have spread to other cities. More than a month after the start of the discontent, police officers were still protesting in every big city. On November 24, two hundred police officers demonstrated in Paris between Place de la Concorde and the Arc de Triomphe, to express their “anger.” Police in civilian clothes, some wearing orange armbands, some hidden under a scarf or hood, supported by citizens, gathered in the evening at the Place de la Concorde, before walking the length of the Champs Elysée up to the Arc de Triomphe, where they formed a human chain around the monument and sang La Marseillaise (France’s national anthem).

This revolt of one pillar of French society, the police, was the biggest that ever happened in modern France. Yet, virtually no one in France’s mainstream media covered the event.


Tremblay-en-France (Seine-Saint-Denis close to Paris): The headmaster of the Hélène-Boucher training school was attacked on October 17 by several individuals outside the school. Some “youths” were attacking the building with firebombs, and when the headmaster tried to calm the situation, one of the “youths” answered with blows. Fifty unidentified people were involved in the incident. This was the third episode of violence to occur in the vicinity. Four days earlier, two vehicles were torched.

One month later, the daily Le Monde held a meeting with several students, The goal of this meeting was to try to understand the cause of the violence in in Tremblay. Yacine, 21, a student at the University of Paris II, said: “This is a warning. These young people did not attack the school by chance; they wanted to attack the institution, to attack the State.”

Argenteuil (Val d’Oise, suburb of Paris): A teacher at the Paul Langevin primary school, was beaten up in the street, on October 17, while leading children back to school from tennis courts a kilometer from the school. After hearing the teacher raise his voice at a child, two young men stopped their car, told the teacher he was a “racist” and beat him in front of the children. According toLe Parisien, one of the attackers justified his actions by accusing the professor of “racism”. “You are not the master,” said the man. “The only Master is Allah”.

Colomiers (Toulouse, south of France). A physical-education teacher was assaulted by a student on October 17, when the teacher tried to stop the student from leaving the school through a prohibited exit.

Calais (Pas-de-Calais): Two students at a vocational training school in Calais attacked a teacher, and one fractured the teacher’s jaw and several teeth on October 14, according the local paper, Nord-Littoral. The students attacked the electrical engineering teacher because he had asked one of the students to get back to work.

Saint-Denis (Seine Saint-Denis, suburb of Paris): On October 13, a school headmaster and his deputy were beaten by a vocational student who had been reprimanded for arriving late.

Strasbourg: A mathematics teacher was brutally attacked on October 17 at the Orbelin school. The headmaster of the institution told France Bleu that a “youth,” who is not a student at the school, had beaten the teacher. This was not the first time that the “youth” had entered the building. Earlier, when the teacher asked him to leave his class, the “youth” delivered several blows to the teacher’s face before fleeing.

All these attackers were not terrorists, but like Islamic terrorists, they apparently wanted to destroy “attack the institution, to attack the State.”


On October 16, fifteen individuals accompanying a patient sowed terror in the emergency department of Gustave Dron Hospital in Tourcoing, according to La Voix du Nord. A doctor was severely beaten; another pulled by the hair. Doctors and nurses told the newspaper they were still in shock. Said a nurse:

“Ten people forced their way into the heart of the ER. The doctors asked them to leave… When everything stopped, I realized that the ER was ravaged, patients terrorized, relatives of patients crying.”

The attackers were from the district of La Bourgogne, an area essentially populated with North African immigrants. Three people were arrested.

In the same area of La Bourgogne, there was a riot on October 4. Fourteen cars were burned and 12 people arrested. The riot, which lasted for four nights, broke out after the arrest of a driver who did not stop when asked to by a policeman.


On October 14, Nadine Morano, deputy of the opposition party Les Républicains, tried physically to prevent an Algerian businessman, Rachid Nekkaz, from entering the Center of Public Finance of Toul, in the east of France. Nekkaz is known for paying fines of Muslim women arrested because they were wearing a burqa in public, banned by law since October 2010. Police came to protect the right of Mr. Nekkaz to pay the fine. An amendment to the finance law is currently under discussion to block and punish practices, like those of Nekkaz, that circumvent the law.

President François Hollande is currently under fire after the publication of a book, A President Should Not Say That… In it, he is reported to have said, “France has a problem with Islam,” and “there are too many migrants in France” — remarks Hollande claims he never made. Another quote in the book that Hollande denies saying:

“We cannot continue to have migrants who arrive without control, in the context of the attacks… The secession of territories (no go zones)? How can we avoid a partition? Because it is still what is going to happen.”

President Hollande spends his time apologizing for things he never said, but should have said because they are true.

French People

French Chinese: The French Chinese live in the same suburbs as Muslims and are attacked and harassed, to the general indifference of police.

As crime against community members has spiraled, about 50,000 ethnic Chinese staged a protest march in Paris on September 4, after the fatal mugging of a Chinese tailor.

The protesters, all of them wearing white T-shirts reading “Security for All” and waving French flags, rallied at the Place de la République. They had organized the demonstration by themselves and were not supported by the traditional “human rights” groups, which prefer to help Muslim migrants.

Public Opinion: In January 2016, Cevipof, a think tank of the Paris Institute of Political Studies (Sciences Po), released its seventh Barometer of Political Trust, a poll published annually to measure the values of democracy in the country, and based on interviews with 2074 people:

  • What is your current state of mind? Listlessness 31%, Gloom 29%, Mistrust 28%, Fear: 10%
  • Do you trust government? Not much 58%, not at all 32%
  • Do you trust lawmakers? Not much 39%, not at all 16%%
  • Do you trust the president? Not much 32%; not at all 38%
  • Do politicians care about what the people think? Not much 42%, not at all 46%
  • How democracy is working in France? Not well 43%, not well at all 24%
  • Do you trust political parties? Not much 47%, not at all 40%
  • Do you trust the media? Not much 48% not at all 27 %
  • What do you feel about politics? Distrust 39%; disgust 33%, boredom 8%
  • What do you feel about politicians? Disappointment 54%; disgust 20%
  • Corruption of politicians? Yes 76%
  • Too many migrants? Yes, plus tend to agree: 65%
  • Islam is a threat? Yes, plus tend to agree: 58%
  • Proud to be French? Yes 79%

What this poll shows is the gap between people and politicians has never been so vast.

Thibaud de Montbrial, lawyer and expert on terrorism, declared on October 19 to Le Figaro:

The term “dislocation” of French society seems appropriate. Violence against police, hospitals, attacks that multiply against schools and teachers… are attacks against pillars of the ruling domain. In other words, everything that represents state institutions (…) is now subjected to violence based on essentially sectarian and sometimes ethnic excesses, fueled by an incredible hatred of our country. We must be blind or unconscious not to feel concern for national cohesion.”





Modi was counting on 5 trillion of the total 15 trillion rupees outstanding would remain undeclared due to tax invasion.  He was wrong.  Already 82% of rupees have been deposited.

Today’s data shows a complete collapse in their composite PMI.  Their economy is now in shambles and Modi has nothing to show for his stupid and senseless demonetization.

what a doorknob..

(courtesy zero hedge)

Indian Economy Crashes As Modi’s “Black Money” Theory Collapses

Amid social unrest and loss of faith in the nation’s currency, India’s economy has ground to a halt with its Composite PMI crashing by a record in the last month as demonetization strikes.

However, even more problematic is that Indians have validated 82% of bank notes rendered worthless by PM Modi, dramatically undermining the government’s estimate of unaccounted wealth in the economy. As Bloomberg reports,

About 12.6 trillion rupees ($185 billion) had been deposited into bank accounts as of Dec. 3, the people said, asking not to be identified citing rules for speaking with the media. The government had estimated that about 5 trillion rupees of the 15.3 trillion rupees sucked out by Modi’s move would stay undeclared, implying that this was cash stashed away to evade taxes, known locally as black money.

Lack of a meaningful cancellation could be a double blow for Modi as the measure was being used as a political and economic gauge of the success of his Nov. 8 move. One of Modi’s biggest campaign pledges was to expose black money in Asia’s No. 3 economy, and economists were viewing the cash as a potential windfall for the government.

“Some of the windfall that the government was hoping for from the cancellation of notes will be dented,”said Anjali Verma, chief economist at PhillipCapital Ltd. “That means the fiscal stimulus that was being expected might also take some hit. That is not good news at a time when direct consumption, private investment is not expected to pick up.”

“Markets are not too worried at the moment,” said Chakri Lokapriya, Mumbai-based managing director at TCG Advisory Services, which manages about $3 billion. “But if 12-13 trillion rupees comes back into the system it defeats the whole theory of black money.”

In such a situation where the gains of demonetization aren’t apparent, individuals will more closely analyze the pain. A slump in demand due to the cash shortages will hurt company revenues and government tax collections, widening the budget deficit and ultimately weakening the rupee, Lokapriya said.

So was the whole effort merely, as Modi admitted, a move towards a cashless society after all? And not in any way related to corruption? Either way, it is too late now as faith in the fiat currency has collapsed.

Finally, while most shrug and say “how does that affect us?”, the tumult in India is weighing heavily on the rest of the world via the oil market. India has been the world’s fastest-growing crude market and that may weaken as the government’s cash crackdown slows the economy. As Bloomberg reports,

Diesel and gasoline use, which account for more than half of India’s oil demand, will slow or contract this month and possibly early next year, according to Ivy Global Energy Pte., FGE and Centrum Broking Ltd.

“As the Indian economy largely depends on various cash-intensive sectors, the demonetization saga will no doubt slow down economic growth in the near term,” said Sri Paravaikkarasu, head of East of Suez oil at FGE in Singapore. “Moving into the first quarter, an expected slowdown in the economic growth should marginally drag down oil consumption, particularly that of transport fuels.”

Diesel consumption could fall as much as 12 percent and gasoline demand as much as 7 percent this month, according to Tushar Tarun Bansal, director at Ivy Global Energy.

“I expect to see a much smaller growth in diesel demand of about 2 percent in the first quarter,” Bansal said.

The possible slow down this month and into next year is a reversal of the demand spike seen in Novemberas people rushed to fill their tanks to take advantage of a rule allowing fuel retailers to accept the banned 500 and 1,000 rupee ($15) bills until Dec. 2.

So an Indian PM ‘flaps his wings’ and the rest of the world may have a hiccup.


The truth in oil production and why OPEC cheating will cap oil at 52.00 dollars .  No doubt that oil will be heading southbound

(courtesy Nick Cunningham/Oil

OPEC Cheating Will Cap Oil At $52

Submitted by Nick Cunningham, via,

OPEC succeeded in pulling off what many thought was impossible, overcoming mutual disdain and mistrust to reach a dealon reducing its oil output. Oil prices skyrocketed on the news, up more than 12 percent since the agreement was announced last week. But what if there is much less to the deal than meets the eye? What if OPEC does not actually follow through on the promised production cuts?

Several days of strong price gains ran into a wall of skepticism on Tuesday, after fresh data showed that OPEC’s November production was much higher than anticipated. The cartel’s output jumped from 33.6-33.8 million barrels per day (mb/d) in October to a record high 34.19 mb/d in November. The gains came from Angola, Gabon, Indonesia, Libya, Nigeria, Iran and Iraq.

If OPEC is to succeed in bringing production down to its stated target of 32.5 mb/d by January, it will now need to cut 1.7 mb/d, not just the 1.2 mb/d that it announced last week. But a few of those countries (Libya, Nigeria, Indonesia) are exempted from the limits agreed upon in the latest deal. That means that the rest of OPEC will need to shoulder steeper cuts if the cartel is to hit the 32.5 mb/d threshold. However, the group did not discuss this contingency – who should cut even deeper – so there is little reason to think that any individual member will voluntarily cut more than they agreed to just so that the collective output comes in lower.

On top of all of that, two key OPEC countries exempted from the deal – Libya and Nigeria – have a large volume of oil production capacity offline. Libya has already added 200,000 barrels per day in production gains this year, taking output above 500,000 bpd. They are hoping to ultimately bring output up to 900,000 bpd next year. In a sign that they could be on their way to that target, ISIS was ousted from Sirte, its last major foothold in Libya. The war-torn country still suffers from a political vacuum and splintered allegiances, but the risk to supply is likely on the upside. Nigeria too has roughly 0.5 mb/d of capacity offline because of pipeline attacks. It won’t be easy but Nigeria could bring output back online in 2017. The two OPEC countries could overwhelm the effect of the deal.

That suggests that OPEC won’t actually bring output down to the stated level of 32.5 mb/d, which essentially means that OPEC oversold its deal to the oil markets. Recognizing that the Vienna deal is not as rock solid as previously thought, investors sold off oil on Tuesday, with WTI and Brent each down more than 2 percent.

The OPEC deal may hit another stumbling block this weekend as negotiators are set to meet with non-OPEC countries to discuss their cuts. Non-OPEC producers agreed to cut an additional 600,000 barrels per day, and OPEC made their 1.2 mb/d in promised cuts contingent on non-OPEC participation. So far, four countries are set to attend (although 14 were invited), including Russia, Oman, Bahrain and Azerbaijan. Russia alone had agreed to slash 300,000 barrels per day from its production total.

But there are reasons to doubt that non-OPEC will be able to deliver. Russia’s oil production, for example, hit a post-Soviet record high in November at 11.21 mb/d, up roughly 500,000 barrels per day from August levels, just before Russia agreed in principle to cap production at the Algiers meeting. In that context, its cuts of 300,000 barrels per day seem much less impressive. Moreover, Russian officials said the cuts would be implemented gradually in 2016, not immediately in January as OPEC had hoped.

This sets up the possibility that this weekend’s OPEC/non-OPEC meeting could disappoint. OPEC’s Secretary-General Mohammad Barkindo is hyping the summit, saying the cooperation will be “the first time OPEC [and] non-OPEC will agree to a joint, binding supply-management agreement,” according to the WSJ. With expectations high, any faltering in the negotiations could undermine the bullish case for oil. “Will Russia cut 300,000?” former Saudi oil minister Ali al-Naimi said in reaction to the agreement last week. “I don’t know. In the past, they didn’t.”

Others voiced similar skepticism after the deal was put in place. “It remains unclear to us which other non-OPEC producers might be willing to commit to or even claim production cuts,” JBC Energy, a Vienna-based oil consultancy, wrote in a research note. “Although OPEC officials spoke of a 300,000 barrel-a-day contribution from Russia towards an overall 600,000 barrel-a-day non-OPEC cut, we remain quite skeptical that this will actually happen.”

That brings up another possibility – that several or most of the participants, both OPEC and non-OPEC, cheat. The cartel has a poor track record of living up to production quotas.

Dennis Gartman, author of The Gartman Letter, told CNBC that OPEC will undoubtedly cheat on their agreement. “It’s only a matter of time until they do cheat…They’ll begin cheating by February or March. Always have, always shall. It’s not going to change.” Gartman also expressed skepticism about the broader rally in oil prices, citing a questionable commitment from Russia and the resurgence of U.S. shale. “Every fracker worth his money is going to make money at $56. They’re going to be hedging that aggressively. It’s going to be hard to push WTI much passed $52 [per barrel].”

Former Saudi oil minister Ali al-Naimi admitted last week following the historic deal that sometimes OPEC cuts are not all that they are cracked up to be. “The only tool they have is to constrain production,” al-Naimi said at an event in Washington, D.C. “The unfortunate part is we tend to cheat.”

I will bet that you did not know that Middle east countries have been consuming a lot more of their production?  Guess again
A great report from Steve St Angelo
(courtesy/SRSRocco report/Steve St Angelo)


none today


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




GBP/USA 1.2595 DOWN .0074 (Brexit by March 201/UK government loses case/parliament must vote)


Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 8 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0727; 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, and now the Italian referendum defeat/ 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 22.59 0r 0.71%     / Hang Sang  CLOSED UP 125.77 POINTS OR 0.55%   /AUSTRALIA IS HIGHER BY 0.74% / EUROPEAN BOURSES ALL IN THE GREEN 

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 WEDNESDAY morning CLOSED UP 136.75 POINTS OR 0.74%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 125.77 OR 0.55%   Shanghai CLOSED UP 22.59 POINTS OR 0.71%   / Australia BOURSE IN THE GREEN /Nikkei (Japan)CLOSED UP 136.75 POINTS OR 0.74%/  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1173.50


Early WEDNESDAY morning USA 10 year bond yield: 2.367% !!! DOWN 3 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.054, DOWN 3 IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 100.53 UP 6 CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING



And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.51% DOWN 13  in basis point yield from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.032% DOWN 2  in   basis point yield from  TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.42%  DOWN 7  IN basis point yield from  TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.89  DOWN 5  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 47 points HIGHER than Spain.





Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/2:15 PM

Euro/USA 1.0749 UP .0030 (Euro UP 30 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.97 DOWN: 0.067(Yen UP 7 basis points/ 

Great Britain/USA 1.2612 DOWN 0.0058( POUND DOWN 58 basis points)

USA/Canada 1.3234 UP 0.0043(Canadian dollar UP 43 basis points AS OIL FELL TO $50.76


This afternoon, the Euro was UP by 30 basis points to trade at 1.0749


The POUND FELL 58 basis points, trading at 1.2612/

The Canadian dollar ROSE by 43 basis points to 1.3234, AS WTI OIL FELL TO :  $50.36

The USA/Yuan closed at 6.8780
the 10 yr Japanese bond yield closed at +.032% DOWN 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 5   IN basis points from TUESDAY at 2.348% //trading well below the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.029 DOWN 5  in basis points on the day /

Your closing USA dollar index, 100.28 DOWN 19 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 WEDNESDAY: 1:30 PM EST

London:  CLOSED UP 122.39 POINTS OR 1.81%
German Dax :CLOSED UP 211.37 POINTS OR 1.96%
Paris Cac  CLOSED UP 62.78 OR 1.36%
Spain IBEX CLOSED UP 67.10 POINTS OR 0.75%
Italian MIB: CLOSED UP  372.86 POINTS OR 2.10%

The Dow was UP 297.84 points or 1.55%  4 PM EST/insane!!

NASDAQ UP  24.11  points or 0.35%  4.00 PM EST
WTI Oil price;  50.96 at 2:30 pm; 

Brent Oil: 53.57   2:30 EST




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

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


BRENT: $52.97

USA 10 YR BOND YIELD: 2.344%  and the dow goes up 297 points????

USA DOLLAR INDEX: 100.24 down 23  cents(huge resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2623./ DOWN 46  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.347%



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


Buy The F**king All Time Highs: Stocks Melt-Up

Extreme Greed…



Bonds Up, Stocks Up, Gold Up, VIX Up…


Dow, S&P, Small Caps and Trannies all hit a record high today

The European close once again seemed to trigger another buying algo (although Trannies were already on their way)…but what looked like a vertical melt-up went even more vertical-er… (two words – “random walk”?)


VIX was up above 12 once again despite the melt-up…Very different regime change today in VIX complex…


3rd day in a row of massive short squeeze…


Trannies hit a new intraday record high today (for the first time in 2 years) in what can only be described a vertical meltup.


Trannies up over 24% YTD!! And up 43% from the lows…


From the pre-Trump lows (remember when Comey cleared Clinton) Nasdaq is the laggard (up just 3.6%) as Small Caps and Trannies are exploding…


When Trannies broke record highs, it appears some S&P e-mini algo panicced…


Biotechs were the day’s biggest laggards following Trump’s drug price tweet overnight…


It seems Energy stocks love falling oil prices…


And Financials love flattening yield curves…


And Goldman Sachs stock loves it when its credit risk increases…


This will not end well… 10Y Yields are below post-Italy lows as the US equity market exploded higher…


Stock and Bond correlation continues to decline..


The USD Index closed lower on the day…led by EUR strength ahead of ECB?


Treasuries were bid across the board today with notable flattenening and the long-end yields at post-Italy lows…


Crude oil dared to disobey the buying panic, breaking below $50 intraday…and closed ugly…

As Nanex notes, Crude market’s broke and went crazy this morning….

A wider look at the 9am Crude event — because it’s pretty (the blue lines are oil related)


Gold and Silver gained on the day…


Copper was also down…


There’s this…


And finally, we leave with you with this…




Continuing with our story from yesterday, the Mayor of Dallas has filed a lawsuit to block withdrawals from the Dallas police and firefighter pension fund.  This is in response to a huge run on the bank in November and December.  There have been huge contributions to the fund because of the guaranteed 8% return on their investment.  Now the funds are fleeing.  Will this be the first of many Ponzi schemes to go bust?


(courtesy zero hedge)

Dallas Mayor Files Lawsuit To Block Withdrawals From “Insolvent” Police Pension After “Run On The Bank”


Trump is on a roll:  The huge electronic manufacturer Foxconn says it is in discussions to expand its USA operations.  Foxconn chief and Softbank CEO Son are very close friends and this may be part of the 50 billion USA dollar investment talked about yesterday.

(courtesy zero hedge)

Another Trump Win: Apple Supplier Foxconn Says It Is In Discussions To Expand US Operations

Now Trump is on the warpath on pharmaceutical companies.  It is going to bring drug prices down

(courtesy zero hedge)

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