Gold at (1:30 am est) $1156.70 down $6.80
silver at $16.91: down 21 cents
Access market prices:
Gold: 1158.40
Silver: 16.93
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
.
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
TUESDAY gold fix Shanghai
Shanghai morning fix Dec 13 (10:15 pm est last night): $ 1193.75
NY ACCESS PRICE: $1163.10 (AT THE EXACT SAME TIME)/premium $30.65
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 1193.44
NY ACCESS PRICE: 1161.60 (AT THE EXACT SAME TIME/2:15 am)
HUGE SPREAD 2ND FIX TODAY!!: $30.82
China rejects NY pricing of gold as a fraud
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Fix: Dec 13: 5:30 am est: $1157.35 (NY: same time: $1157.90 5:30AM)
London Second fix Dec 13: 10 am est: $1158.55 (NY same time: $1158.20 10 AM)
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.
end
For comex gold:
NOTICES FILINGS FOR DECEMBER CONTRACT MONTH: 1 NOTICE(S) FOR 100 OZ. TOTAL NOTICES SO FAR: 8478 FOR 847,800 OZ (26.37 TONNES)
For silver:
NOTICES FOR DECEMBER CONTRACT MONTH FOR SILVER: 209 NOTICE(s) FOR 1,045,000 OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 2999 FOR 14,995,000 OZ
Let us have a look at the data for today
.
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In silver, the total open interest ROSE by 1995 contracts UP to 163,378 with respect to YESTERDAY’S trading. In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .817 BILLION TO BE EXACT or 116% of annual global silver production (ex Russia & ex China).
FOR THE DECEMBER FRONT MONTH: 209 NOTICES FILED FOR 10450,000 OZ.
In gold, the total comex gold ROSE by 1644 contracts AS WE HAD A RISE IN THE PRICE GOLD ($4.10 with YESTERDAY’S trading ).The total gold OI stands at 396,366 contracts. We are very close to the bottom with respect to OI. Generally 390,000 should do it.
we had a 1 notice(s) filed upon for 100 oz of gold.
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With respect to our two criminal funds, the GLD and the SLV:
GLD:
We had NO changes in tonnes of gold at the GLD,
Inventory rests tonight: 856.26 tonnes
.
SLV
we had a huge change in silver, a withdrawal of 1.802 million oz
THE SLV Inventory rests at: 341.063 million oz
.
First, here is an outline of what will be discussed tonight: Preliminary data
1. Today, we had the open interest in silver ROSE by 1995 contracts UP to 163,378 as the price of silver ROSE by $0.22 with YESTERDAY’S trading. The gold open interest ROSE by 1644 contracts UP to 396,366 as the price of gold ROSE BY $4.10 WITH YESTERDAY’S TRADING.
(report Harvey).
2.a) The Shanghai and London gold fix report
(Harvey)
2 b) Gold/silver trading overnight Europe, Goldcore
(Mark O’Byrne/zerohedge
and in NY: Bloomberg
3. ASIAN AFFAIRS
i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 2.06 POINTS OR 0.07%/ /Hang Sang closed UP 13.68 OR 0.06%. The Nikkei closed UP 95.49 OR 0.50%/Australia’s all ordinaires CLOSED DOWN 0.33% /Chinese yuan (ONSHORE) closed UP at 6.9023/Oil ROSE to 53.33 dollars per barrel for WTI and 56.30 for Brent. Stocks in Europe: ALL IN THE GREEN. Offshore yuan trades 6.92660 yuan to the dollar vs 6.9023 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS MORE USA DOLLARS ATTEMPT TO LEAVE CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET TO NOT RAISE RATES IN DECEMBER.
REPORT ON JAPAN SOUTH KOREA NORTH KOREA AND CHINA
3a)THAILAND/SOUTH KOREA
none today
b) REPORT ON JAPAN
none today
c) REPORT ON CHINA
i)China now admits that its economic data is a fake:
( zero hedge)
ii)The following is extremely important as Mish talks about the upcoming global trade war with China. It will be impossible to evade:
( Mish Shedlock/Mishtalk)
4 EUROPEAN AFFAIRS
i)Business must be good as Italy’s largest bank Unicredit is laying off a huge 14,000 and raising 13 billion dollars trying to fix their balance sheet. Problem here is that there is no growth at all in Italy.
( zero hedge)
ii) That did not take long! Moody’s does not like what they see as they cut the outlook on Italian banks to negative from stable
smart move…
( zero hedge)
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
i)I wrote this last night:
This news ought to cause the boys to whack gold by 10 dollars
Iran warns of a World War and the destruction of Israel if Trump tears up the nuclear pact.
( zero hedge)
ii)If the first headline on Iran was not enough to send gold down in price the following certainly warrants our attention: gold goes down another 5 dollars:
( zero hedge)
iii)You must see the following video as Paul Watson accurately puts the bed the fabricated story of the Russians hacking the Democratic Party, them undermining of the 2016 election/
( Paul Joseph Watson/zero hedge)
iv)Syria:Russia
The battle for Aleppo is over: The militants are to be given free passage out of Aleppo/the battle is over!
(courtesy zero hedge)
6.GLOBAL ISSUES
The following is a good commentary as we witness 25 cities throughout the globe on the brink of disaster
(courtesy Mac Slavo/SHTFPlan.com)
7. OIL ISSUES
i)this is exciting: China has now ramped up its crude output by the most in 3 years taking advantage of the higher oil price.
( zero hedge)
ii)
No surprise here: oil tumbles after a huge crude and gasoline build in inventory
(courtesy zero hedge)
8. EMERGING MARKETS
none today
9. PHYSICAL MARKETS
i)Gold in India is now around 2500 to 3,000 per oz as the country is in turmoil with the suspension of the two biggest Indian notes. Huge premiums also in China.
As for understanding what is going on please read Bill Holter in this section of my commentary below.
( zero hedge)
ii)Bill Holter with his public commentary today
I also in 100% agreement with Bill.
( Bill Holter/Holter Sinclair collaboration)
iii)The collusion in the gold market will come (gold fixing case)
(courtesy Bloomberg/GATA)
iv)Mining giant Agnico Eagle purchases a huge vast of properties up in the Yukon’s White Gold district. This will be a good purchase for them:
( David Croft/GATA)
v)A must read…interest rates are rising as central banks are losing control of interest rates. Inflation is getting a foothold throughout the globe as Turk states that we must beware of huge problems forthcoming:
(courtesy James turk/Kingworldnews)
vi)Welcome to India 2.0/Venezuela follows India to the tee by cancelling big notes:
( Bloomberg/Rosati/GATA)
vii)At least these robbers will put the gold to good use, rather than our bankers using it in the price suppression scheme
( zero hedge)
10.USA STORIES
i)Not good news out of Boeing last night: they have decided to cut production on their Boeing 777’s. However the stock is rising due to an increase in dividends and buyback.
( zero hedge)
ii)The Republicans have now discovered the huge cost to Trump’s massive stimulus proposal. They now state that they will block tax cuts
( zero hedge)
iii)Not only is the pension fund of Dallas in trouble but also twin city Fort Forth has also got serious problems .
( Mish Shedlock/Mishtalk)
iv)I knew this was going to happen: 29 electors are demanding more information of Russian interference in the election: a soft coup is upon us:
if this happens civil war!!
(courtesy zero hedge)
Let us head over to the comex:
The total gold comex open interest ROSE BY 1644 CONTRACTS UP to an OI level of 396,366 AS THE PRICE OF GOLD ROSE $4.10 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 229 contracts DOWN to 1096.We had 0 notices served upon yesterday so we LOST 229 contracts or 22,900 oz will NOT stand for delivery. THERE IS NO DOUBT THAT THESE WERE CASH SETTLED!!!
For the next delivery month of January we had a LOSS of 87 contracts DOWN to 2356. For the next big active delivery month of February we had a GAIN of 2140 contracts UP to 272,335.
We had 1 notice(s) filed upon today for 100 oz
And now for the wild silver comex results. Total silver OI ROSE by 1995 contracts FROM 161,383 UP TO 163,378 as the price of silver ROSE BY $0.22 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 77 contracts DOWN to 590 CONTRACTS . We had 118 notices served upon yesterday so we GAINED 41 contracts or an additional 205,000 oz will stand for delivery
The next non active delivery month is January and here the OI fell by 34 contracts down to 1858. 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 ROSE by 2102 contracts UP to 134,992 contracts.
We had 209 notices filed for 1,045,000 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 146,271 contracts which is fair.
Yesterday’s confirmed volume was 174,563 contracts which is fair
| Gold | Ounces |
| Withdrawals from Dealers Inventory in oz | nil |
| Withdrawals from Customer Inventory in oz |
164,164.137 oz
Scotia
REAL GOLD
LEAVING
|
| Deposits to the Dealer Inventory in oz | nil oz
|
| Deposits to the Customer Inventory, in oz |
32,150.000 oz
SCOTIA
1000 KILOBARS
FAKE GOLD OR PAPER GOLD
|
| No of oz served (contracts) today |
1 notice(s)
100 oz
|
| No of oz to be served (notices) |
1095 contracts
109,500 oz
|
| Total monthly oz gold served (contracts) so far this month |
8478 notices
847,800 oz
26.37 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 | 3,921,010.7 oz |
For December:
Today, 0 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 1 contract(s) of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.
March 2015: 2.311 tonnes (March is a non delivery month)
| Silver | Ounces |
| Withdrawals from Dealers Inventory | nil |
| Withdrawals from Customer Inventory |
NIL
|
| Deposits to the Dealer Inventory |
nil OZ
|
| Deposits to the Customer Inventory |
38,467.923 oz
DELAWARE
|
| No of oz served today (contracts) |
209 CONTRACT(S)
(1,045,000 OZ)
|
| No of oz to be served (notices) |
301 contracts
(1,905,000 oz)
|
| Total monthly oz silver served (contracts) | 2,999 contracts (14,995,000 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 | 2,934,513.9 oz |
end
end
NPV for Sprott and Central Fund of Canada
end
More on the crime at the silver fix
the massive onslaught on gold and silver occurred on Sunday April 10 through Monday April 11/2011
“In a chat on April 4, 2011, they discussed putting on short trades against the silver market, while a month later they talked of keeping bullish positions over a weekend, according to the records.”
that is your smoking gun!!!!
such criminals!!!
(COURTESY FINANCIAL POST/TORONTO/BERTHELSON/BLOOMBERGNEWS)
(COURTESY FINANCIAL POST/TORONTO/BERTHELSON/BLOOMBERGNEWS)
‘If we are correct and do it together, we screw other people harder’: In chats, silver ‘mafia’ traders flexed muscle
Christian Berthelsen, Bloomberg News | December 13, 2016 9:14 AM ET
More from Bloomberg News
Until 2014, the global reference price for silver and other precious metals was set each day in a phone call or at a meeting with traders at a handful of banks, a century-old ritual known as the London Fix. Deutsche Bank AG was one of the banks.
As early as 2008, one of its traders began conspiring with a trader at Fortis Bank, via electronic chat, to manipulate prices, according to court documents filed by silver investors seeking to broaden their claims that the market was rigged.
“Cant wait for another day when we get the bulldozer out of the garage on gold and sil,” the Fortis trader wrote on Feb. 25, 2008. “Haha yeah,” responded the Deutsche Bank trader, in a chat-room transcript included in court papers.
The two traders’ correspondence — as the Fortis trader moved to HSBC Holdings Plc and then Standard Chartered Plc over five years — are part of a cache of chat-room transcripts that for the first time provide an inside look at how traders allegedly fixed silver prices. The documents were provided to silver investors as part of a $38 million settlement in April between them and Deutsche Bank over allegations of market manipulation. In the documents filed last week in Manhattan federal court, the investors told a judge that the transcripts offer convincing evidence to warrant new claims against other banks.
Deutsche Bank declined to comment on the documents; it neither admitted nor denied wrongdoing as part of its settlement. Representatives from HSBC, Standard Chartered and BNP Paribas SA, which acquired Fortis Bank in 2009, also declined to comment.
A judge in October dismissed the investors’ claims against UBS Group AG because there was no evidence its traders participated in the daily London Fix call. She said the plaintiffs could seek to file a new complaint, which they are now asking to do. Peter Stack, a UBS spokesman, said the bank finds “no merit to the plaintiff’s allegations” and “will vigorously defend against them.”
Representatives for Barclays Plc and the other banks named in the court documents as having participated in manipulating the silver market from 2007 to 2013 declined to comment, as did the lawyer for the plaintiffs, Vincent Briganti.
The new evidence is derived from 350,000 pages of bank documents and 75 audio tapes handed over by Deutsche Bank as part of the accord. The traders aren’t identified by name in the filings.
The recorded chats — sprinkled with “dude,” “bro,” and assorted obscenities — are a “smoking gun” bolstering claims that traders rigged silver prices, impacting jewelry prices, silver investments and the earnings of mining companies that sell raw materials to refiners, the plaintiffs say. The traders acted against their own clients’ interest, triggering stop-loss orders and front-running customers trades, according to the documents.
They also gave code names to certain techniques, according to the documents, which explain that “blade” meant placing a series of small orders close to each other in price, and “muscle” referred to placing large orders — usually when they knew the market was illiquid.
On Aug. 11, 2011, for instance, a UBS trader wrote, “Dont do anything now its gonna go fast like rollercoaster going up.”
“Dude the 1 lot offer is so powerful I love it,” a Deutsche Bank trader responded.
“It depends what kinda mkt sometime u use muscle sometime u use blade this is a blade but then two guys doing it like this together is small muscle and blade,” the UBS trader said.
Many of the chats involve a UBS trader known as “The Hammer,” who on April 1, 2011, wrote a message urging coordination in trading, according to the records. “We gotta do it the same next time…if we are correct and do it together, we screw other people harder.”
A few months later, on June 8, “The Hammer” suggested to a Deutsche Bank trader that they recruit new members to join the alleged conspiracy, the records show. “We need to grow our mafia a lil get a third position involved,” the UBS trader wrote. The Deutsche Bank trader responded, “Ok calling barx,” a reference to Barclays, according to the documents.
The newly aired conversations may renew concerns about the $30 billion-a-year global market for silver trading, which because of its relatively small size and often-volatile price moves has long been suspected of being rigged.
The U.S. Commodity Futures Trading Commission launched an investigation of silver-market manipulation in 2008 amid an outcry from investors. Prices had collapsed at a time many expected them to rise. The investigation was closed in 2013, and no charges were filed. At the same time, private plaintiffs and other authorities in the U.S. and Europe have probed allegations of wrongdoing in the metals markets.
The London Fix was discontinued in 2014 after Deutsche Bank withdrew. The new process involves an electronic, auction-based mechanism for price-setting.
The documents also offer a glimpse of the years-long association between the Deutsche Bank trader and the trader who started at Fortis Bank. They kept up the same banter and tactics for at least five years, even as the Fortis banker moved to new banks, according to the transcripts.
In all, the records show at least six exchanges between the two, agreeing to quote the same spread prices to clients and disclosing their banks’ respective market positions to each other.
In all, the records show at least six exchanges between the two
In a chat on April 4, 2011, they discussed putting on short trades against the silver market, while a month later they talked of keeping bullish positions over a weekend, according to the records.
In an October 2011 chat, they discussed the so-called spreads on buy and sell orders they would quote to clients, the records show. Banks keep the difference between the two prices as their commission for negotiating the trade. “Thanks for info mate … Ill be in line with u,” the Deutsche Bank trader wrote to the other, then at HSBC.
By 2013, when the HSBC trader had moved to Standard Chartered, they shared their respective positions and agreed where they would pivot in the market, the records show. The Deutsche Bank trader said he would become a seller at $23.40. “Were on the same wavelength,” the other replied.
Sometimes, the two traders appeared to recognize that they should keep their conversations off platforms where they were being recorded.
“Strange silver fix,” the Deutsche trader wrote to the other, then at HSBC, on Nov. 25, 2011. “I heard a funny story about the fix the other day,” the HSBC trader responded. “But it’s definitely a beer chat.”
END
Gold in India is now around 2500 to 3,000 per oz as the country is in turmoil with the suspension of the two biggest Indian notes. Huge premiums also in China.
As for understanding what is going on please read Bill Holter in this section of my commentary below.
(courtesy zero hedge)
Indian Gold Premiums Explode After Nation’s Biggest Gold Importer Suspends Bullion Dealers Accounts
Following news last week of a surge in Chinese retail gold premiumsas demand for physical bullion soars amid China capital controls, Reuters reports that the chaos in India has sent people rushing to buy gold, paying as much as a 50 percent premium above official India prices. This renewed surge in demand for physical in india follows reports that India’s top importer of gold, Axis Bank, reportedly suspending the bank accounts of some bullion dealers and jewelers following the arrest of some executives over money laundering.
Last week saw news of reported gold import curbs in China (and looming capital controls) has sent gold premiums in China near three-year highs amid limited supply of the precious metal (as Reuters reports)…
The import curbs may be part of China’s efforts to limit outflows of the yuan after the currency’s slide to its weakest in more than eight years, traders say. China allows only 15 banks to import gold, including three foreign lenders.
“There is severe restriction on the banks’ quota to import gold into China. Each one of them have to justify their need,” a Hong Kong-based banker said.
Gold was sold in China at about $24 an ounce above the international spot benchmark this week. Premiums went as high as $30 last week, the most since January 2014,according to Thomson Reuters data.
“Supply has been limited and so the premiums have held firm,” said Cameron Alexander, analyst with Thomson Reuters-owned metals consultancy GFMS.
And now, as Reuters reports, concerns are growing in India that import curbs or outright confiscation may be coming…
Axis Bank Ltd, India’s top importer of gold, has suspended the bank accounts of some bullion dealers and jewellers after two of its executives at a branch were arrested over alleged money laundering.
“We have temporarily suspended transactions in a few current accounts as a part of a larger enhanced due diligence exercise being conducted on transactions post-demonetisation,” the bank said in an e-mailed reply to questions from Reuters.
Axis did not directly comment on the arrests. Last week the Enforcement Directorate, a government agency that fights financial crime, said it had arrested two Axis bank employees for allegedly helping launderers to buy gold with the help of scrapped notes.
The bank said the suspended gold dealers’ accounts will be restored over the next few days after an “enhanced due diligence process”.
A Chennai-based bullion dealer, who declined to be named, said the bank had frozen his account without giving a reason. Half a dozen other dealers in Kolkata, Mumbai, Ahmadabad and New Delhi also confirmed the freezing of their Axis accounts.
The move has brought bullion trading to a standstill,with jewellers fearing attention from government agencies if they make large purchases, said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the eastern Indian city of Kolkata.
The move is likely to curtail imports by the world’s second-biggest gold consumer this month and could weigh on global prices already near their lowest level in ten months.
In November the country’s gold imports jumped to around 100 tonnes, the highest in 11 months.
Jewellers and bullion dealers are deferring purchases and gold imports in December could fall to 30 tonnes, down from 107 tones in the same month a year ago, said a Mumbai-based dealer.
It is estimated that one-third of India’s annual demand of around 800 tonnes is paid for in “black money” – the local term for untaxed funds held in cash by citizens that do not appear in any official accounts.
And this has sparked a surge in physical demand (amid limited supply concerns)… (as Reuters reports)
There have also been reports of people rushing to buy gold by paying as much as a 50 percent premium above official prices using their unaccounted money to skirt the note ban.
And as we noted previously, it’s not just Asia.
In the US, physical gold demand has soared post-election in The United States as the paper prices were pummeled…
END
So much for China stopping its purchases of gold.
In the month of November, gold withdrawals which equals gold demand came in at 215 tonnes of gold. At this rate, demand should approximate around 2,000 tonnes per year, if you subtract out gold mined in China (460 tonnes) and 150 tonnes of scrap gold.
(courtesy Koos Jansen/Bullionstar)
Posted on 13 Dec 2016 by Koos Jansen
NOVEMBER: Gold Price Down, Chinese Demand Strong Despite Import Curbs
From the moment Donald J. Trump got elected as the next President of the United States, on November 8, 2016, the price of gold tumbled 8 % in the remainder of the month – from $1,282 USD/oz to $1,178 USD/oz. Usually these cascades in the gold price go hand in hand with physical sell-offs in the West and strong demand Asia. It appears November has been no exception. The volume of physical gold withdrawn from vaults of the Shanghai Gold Exchange (SGE) in November accounted for 215 tonnes, the highest amount in ten months. Year to date SGE withdrawals have reached 1,774 tonnes.
There have been rumours in the gold space about the People’s Bank Of China (the PBOC) curbing gold import into the Chinese domestic market in response to capital flight. Although my sources have confirmed these rumours, Chinese gold import in November was still very strong at an estimated 140 tonnes. I don’t expect the PBOC will halt gold import all together…
-END-
Lawrie Williams comments on the big story above in which China has a big uptick of 40% demand for gold in November
(Lawrie Williams/Koos Jansen) Sharp’s Pixley
LAWRIE WILLIAMS: Big 40% uptick in November gold withdrawals on Shanghai Exchange
DEC
13
As we had predicted the monthly report from the Shanghai Gold Exchange (SGE) for gold withdrawals during November showed a sharp upwards move to 214.72 tonnes – a remarkable increase of some 40% over the October figure. If this kind of level, or better, is maintained into December this gives us the realistic possibility that the full year total could still reach 2,000 tonnes – well down on last year’s record 2,596 tonnes, but would keep China in its position as being comfortably the world’s largest gold consumer. See table below for month by month SGE gold withdrawal figures for the past three years.
Shanghai Gold Exchange Monthly Gold Withdrawals (Tonnes)
| Month | 2016 | 2015 | 2014 | % change 2015-2016 | % change 2014-2016 |
| January | 225.08 | 255.42 | 246.00 | – 11.8% | -8.5% |
| February* | 107.60 | 156.36 | 171.67 | – 31.2% | -37.3% |
| March | 183.24 | 213.35 | 146.56 | -14.1% | +25.0% |
| April | 171.40 | 195.45 | 129.59 | -12.3% | +32.2% |
| May | 147.28 | 162.15 | 129.34 | -9.2% | +13.8% |
| June | 138.51 | 195.67 | 128.03 | – 29.2% | +8.2% |
| July | 117.58 | 285.50 | 137.53 | – 58.8% | -14.4% |
| August | 144.44 | 265.27 | 161.95 | – 45.6% | -10.8% |
| September | 170.90 | 259.98 | 202.43 | -34.3% | -15.6% |
| October | 153.25 | 176.29 | 201.11 | -13.1% | -23.8% |
| November | 214.72 | 202.71 | 212.49 | +5.9% | +1.0% |
| December | 228.21 | 235.66 | |||
| Year to end November | 1,774.00 | 2,368.15 | 1,866.70 | -25.1% | -5.0% |
| Full Year | 2,596.37 | 2,102.36 |
Source: Shanghai Gold Exchange, Lawrieongold.com
The above figures also show, that for the first time this year the monthly total actually exceeded that for the same month a year ago, but this could be due to the fact that the 2017 Chinese New Year holiday starts 11 days earlier than the 2016 one which means gold traders and fabricators could be bringing their restocking ahead of the holiday forward by a few days.
| In the mining sector, there is an old adage that is often invoked at the beginning of a new bull market – “producers will move before explorers and developers.” It might make intuitive sense, but the adage rings false…
Gold producers will always draw interest from generalist investors and the media due to their cash flows and larger market caps; however, gold explorers and developers are where the real gains can be made. We completed an analysis of 40 producers, 95 developers, and 360 explorers to observe the relative performance of each group since the beginning of 2016. Our first chart measures the performance of the three groups relative to the price of gold, which was up 25% from January to August. |
|
|
| Cumulatively, producers notched impressive gains, rising 140% from January through August. Still, the producers underperformed explorers and developers substantially. Explorers gained 231% during the same period, while developers rose 264%.
Seeing that producers had the smallest gains of the three groups through August, rational observers might assume that the recent pullback in the gold sector would have affected them the least. That assumption would be totally wrong! Take a look at our next chart. |
|
|
| Since August, our sample of 40 producers has declined by 31%. Meanwhile, developers pulled back by 27% and explorers only fell by 13%.
The next logical question to ask is if this underperformance by producers is endemic to the early stages of gold bull markets or if this cycle has been an anomaly. To that end, we also examined the 2008 – 2011 bull market, this time using a basket of 21 producers, 76 developers, and 221 explorers. |
|
|
| Once again, explorers and developers clearly outperformed the producers. From start to finish, the performance of the producers clearly lagged behind explorers and developers, though the divergence did become particularly wide in the latter stages of the bull market.
Overall, during the 2008 to 2011 gold bull market, producers gained 298%, while developers and explorers rose an eye- popping 711% and 605% respectively. It is obvious, then, how to best take advantage of the recent gold correction – target the best gold exploration and development companies in the market and buy their shares. We expect the current bull market to last another four or five years, with the price of gold potentially breaking $5,000 per ounce. This means that explorers and developers are poised to reach astronomical heights. |
As we have also noted there is considerable argument amongst gold analysts as to whether SGE withdrawal figures are an accurate representation of China’s true gold demand with the mainstream analysts coming up with far lower figures for Chinese gold consumption. In part this is due to what is actually classified as consumption, but also the reluctance on the part of the analysts to accept that the SGE figures are indeed equivalent to Chinese gold demand coming up with various, and sometimes conflicting, reasons why they are not an accurate measure. Other China followers, like bullionstar’s Koos Jansen, disagree and have published some impressive data supporting their case: See: Gold, GFMS, China Demand – Koos speaks out.
As we have also pointed out, known Chinese gold import figures from countries which publish a full country-by- country breakdown of their own gold export statistics, plus China’s own gold production, would tend to suggest that the SGE figures are nearer the true total of Chinese gold flows than the mainstream analysts’ figures might appear to indicate.
Whatever the truth of the matter, the SGE withdrawal figures, and their comparisons with previous years, are very definitely an important measure of Chinese gold consumption trends and on this basis, although the year to date data show a 25% year on year fall compared with 2015 one should recall that Chinese gold demand in 2015 was a huge new record and even a 25% fall from this to an annual level of around 2,000 tonnes still represents a huge slice of global gold demand from a single nation – more than 60% of global new mined gold output. It makes one wonder where other gold consuming nations are sourcing their gold and helps explain why SGE gold benchmark prices (the SGE deals in physical gold) hav e recently been consistently higher than COMEX and London prices which are largely based on paper gold transactions.
-END-
Bill Holter with his public commentary today
I also in 100% agreement with Bill.
(courtesy Bill Holter/Holter Sinclair collaboration)
What do you think?
BILL Holter
end
Major gold/silver stories for TUESDAY
GOLDCORE/BLOG/MARK O’BYRNE
Silver Fixing By Banks Proven In Traders Chats
Silver Bullion Manipulation By Banks Proven In Traders Chats
- Evidence of traders rigging the silver market
- Court documents detail private chats between bank traders
- Lawsuit alleges widespread rigging of precious metal market
- “Avalanche can be triggered by a pebble if u get the timing right” – UBS trader
- “If we are correct and do it together, we screw other people hard” – UBS trader
Since 2003, we have believed and written about how the silver and gold markets are manipulated and “fixed” by banks. Even then there was circumstantial evidence to suggest this was the case.
Now we have definitive proof and the smoking gun that the “silver market mafia” in the form of leading bullion banks – such as Deutsche Bank, UBS and HSBC – were coordinating the manipulation of the price of silver and suppressing prices as alleged by the Gold Anti Trust Action Commitee (GATA).
While this is a joke to the young, naive, greedy and overpaid traders, it is important to remember that this is not a victimless crime. These traders were allowed to this by the banks they work for, thereby defrauding retail silver investors and bullion buyers around the world.
From Bloomberg:
A cache of documents from Deutsche Bank AG include what a group of silver investors claim is a “smoking gun”: private electronic chats showing traders from numerous banks conspiring to rig prices from 2007 to 2013, according to a court filing in New York last week.
The bank provided the documents to the investors after settling a lawsuit accusing it of rigging markets in precious-metals. As part of the accord in April, the bank paid $38 million and turned over more than 350,000 pages of documents and 75 audio tapes. The investors now want to use the chats to win permission from a judge to file a new complaint against other banks.
The traders aren’t named in the chats now in court filings; instead, they are identified by their bank, such as UBS Trader A. The chats have not been edited for spelling or grammar:
In Chats, Silver ‘Mafia’ Traders Flexed Muscle, Drew Blades
UBS and Deutsche Bank silver traders agreed to follow the “11 o’clock” rule where they would short silver at 11 a.m., timing their trades with a countdown sequence, according to court papers.
See ‘3, 2, 1, Boom’ – Silver-Fixing Allegations in a Dozen Chats &Bloomberg Silver fixing video
Hopefully business and finance journalists will now spend more time looking at this story and take the lead in exposing such fraud and indeed help prevent it from happening again.
It is hoped that the acquiescence of central banks in tolerating such manipulation and the possible collusion in manipulating the gold market as alleged and indeed documented by GATA here will now be considered with a fresh pair of eyes and an open mind.
Silver Fixing Transcripts (Excerpts)
The important point to remember here is that this involves the smallest of retail bullion buyers and investors being ripped off and defrauded by the largest players in the market – massive banks with massive liquidity provided to them by central banks.
It is also important to remember that this creates an opportunity as the suppression of gold and silver prices in recent years means that gold and silver remain undervalued – especially versus the assets that banks and central banks favour – property, stocks and especially bonds.
Manipulation is an opportunity for investors as it allows them to accumulate gold and silver at artificially depressed prices. The history of gold market rigging and manipulation is of short term success followed by ultimate failure and then much higher prices. This was seen after the failure of the “London Gold Pool” in the late 1960s and gold’s massive bull market in the 1970s.
The gold and silver beach balls have been pushed near the bottom of the ‘precious metals pool.’ The lower they are pushed in the short term, the higher it will surge in the medium and long term.
Nick Laird of goldchartsrus.com has done an excellent job of exposing the nature of silver price suppression by juxtaposing the silver traders chats with the price of silver in a great silver chart which has a magnifying glass icon to view chat transcripts related to silver price action and market manipulation here.
Gold and Silver Bullion – News and Commentary
Gold holds gains as dollar slips ahead of Fed meeting (IndiaTimes.com)
Gold futures log first gain in 3 sessions (MarketWatch.com)
Gold drifts ahead of US FOMC meeting (BullionDesk.com)
Gold suffering second-worst quarter in 18 years (CNBC.com)
November budget deficit $137 billion – U.S. Treasury (MarketWatch.com)
Silver Fixing Allegations in a Dozen Chats – ‘3, 2, 1, Boom’ (Bloomberg.com)
QE “Addiction” – “There’s no non-messy way out of this…” (WSJ.com)
2007 All Over Again – Stock Valuations Enter “Crash” Territory (DollarCollapse.com)
War in Cash in India Destroys Sales, Jobs & Economy (ZeroHedge.com)
Venezuelans Rush to Stash Cash Before Biggest Bill Is Voided (Bloomberg.com)
Gold Prices (LBMA AM)
13 Dec: USD 1,157.35, GBP 911.18 & EUR 1,090.80 per ounce
12 Dec: USD 1,154.40, GBP 916.82 & EUR 1,089.41 per ounce
09 Dec: USD 1,168.90, GBP 927.64 & EUR 1,100.75 per ounce
08 Dec: USD 1,174.75, GBP 925.47 & EUR 1,088.64 per ounce
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
Silver Prices (LBMA)
13 Dec: USD 17.01, GBP 13.39 & EUR 16.04 per ounce
12 Dec: USD 16.86, GBP 13.34 & EUR 15.90 per ounce
09 Dec: USD 16.95, GBP 13.45 & EUR 16.03 per ounce
08 Dec: USD 17.13, GBP 13.50 & EUR 15.88 per ounce
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
Recent Market Updates
– Euro Crisis and Contagion Coming In 2017
– ECB ‘Bazooka’ Reloaded Until At Least December 2017 – Euro Gold Rises 1%; 13% YTD
– UK £6 Billion Worse Off After Multi Billion Pound Gold “Accounting Error”
– Buy Silver – May Replace Gold As Money In India
– Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market
– Potential “Systemic Crisis In Eurozone” After Italy Votes No, Renzi Resigns
– Gold and Silver Will Protect From Coming Financial Crash – Rickards
– RBS Fail Bank of England Stress Test
– Peak Silver – Supply Deficits Mean Higher Prices
– 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
END
The collusion in the gold market will come
(courtesy Bloomberg/GATA)
Bloomberg notes silver riggers’ collusion, so how about central banks’ collusion vs. gold?
Submitted by cpowell on Mon, 2016-12-12 17:48. Section: Daily Dispatches
12:53p ET Monday, December 12, 2016
Dear Friend of GATA and Gold:
Bloomberg News today excerpts some of the most incriminating electronic exchanges between bullion bank traders colluding to manipulate the silver market, exchanges documented by Deutsche Bank as part of its settlement of the class-action lawsuit brought against it in federal court in New York.
Bloomberg’s report is headlined “‘3, 2, 1, Boom’ — Silver-Fixing Allegations in a Dozen Chats” and it’s posted here:
https://www.bloomberg.com/news/articles/2016-12-12/-3-2-1-boom-silver-fi…
Maybe someday Bloomberg will muster the courage to report the collusion of central banks in manipulating the gold market, collusion documented by GATA here —
http://www.gata.org/node/14839
— and brought to Bloomberg’s attention by GATA many times over many years.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
Mining giant Agnico Eagle purchases a huge vast of properties up in the Yukon’s White Gold district. This will be a good purchase for them:
(courtesy David Croft/GATA)
Mining giant Agnico Eagle buys into Yukon’s White Gold district
Submitted by cpowell on Mon, 2016-12-12 18:03. Section: Daily Dispatches
By Dave Croft
Canadian Broadcasting Corp., Toronto
Monday, December 12, 2016
Yukon prospector Shawn Ryan says a deal has been struck to bring another major gold mining company into the White Gold district, south of Dawson City.
Agnico Eagle Mines Ltd. has bought a stake in thousands of mining claims originally owned by Ryan. A statement from the company says it bought 19.93 percent of the shares of the soon-to-be-named White Gold Corp. for $14.52 million.
Ryan said an associate of his formed the new Vancouver-based company, which then bought all his claims in the district — 12,300 of them, spread over 21 properties. Ryan said he received $3.5 million and 7 million shares in the new company.
Together they then offered a package deal to major mining companies that included a stake in the shares and a three-year exploration program conducted by Ground Truth Exploration, a company jointly owned by Ryan’s wife, Cathy Wood, and long-time associates Isaac Fage and Tao Henderson. …
… For the remainder of the report:
http://www.cbc.ca/news/canada/north/yukon-agnico-eagle-gold-buys-stake-1…
END
A must read…interest rates are rising as central banks are losing control of interest rates. Inflation is getting a foothold throughout the globe as Turk states that we must beware of huge problems forthcoming:
(courtesy James turk/Kingworldnews)
Central banks are losing control of interest rates, Turk tells King World News
Submitted by cpowell on Mon, 2016-12-12 19:36. Section: Daily Dispatches
2:36p ET Monday, December 12, 2016
Dear Friend of GATA and Gold:
Central banks are losing control of interest rates, which are signaling inflation and trouble for bonds and banks, GoldMoney founder and GATA consultant James Turk tells King World News today. An excerpt from his interview is posted at KWN here:
http://kingworldnews.com/james-turk-central-banks-are-finally-losing-con…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
END
Welcome to India 2.0/Venezuela follows India to the tee by cancelling big notes:
(courtesy Bloomberg/Rosati/GATA)
Venezuelans rush to stash cash before biggest bill is voided
Submitted by cpowell on Tue, 2016-12-13 03:16. Section: Daily Dispatches
By Andrew Rosati
Bloomberg News
Monday, December 12, 2016
Venezuelans on Monday were wearily rushing to deposit bank notes or dump their cash savings entirely following an announcement by President Nicolas Maduro that he was invalidating the country’s biggest bill because of what he says is an attack on the nation’s liquidity.
The socialist leader shocked the country on Sunday when he said the 100-bolivar note would be removed from circulation within 72 hours. For months, the South American nation has suffered a hard-cash shortage as inflation spirals toward 500 percent, which Maduro insists is the product of an “economic war” and an attempt by his political foes to smuggle currency out of Venezuela.
Maduro doubled down on those claims Monday evening, ordering an “inevitable, necessary, radical” measure to close his country’s border with Colombia for three days while authorities yank the bills from circulation. …
… For the remainder of the report:
https://www.bloomberg.com/news/articles/2016-12-12/venezuelans-rush-to-s.
END
At least these robbers will put the gold to good use, rather than our bankers using it in the price suppression scheme
(courtesy zero hedge)
In Dramatic Heist, French Robbers Steal $1.5 Million In Gold From Armored Truck
While not nearly as brazen as the recent theft of a bucket full of $1.6 million in gold from an armored truck in midtown Manhattan, French police said they are hunting for four men suspected of stealing 70 kilograms of gold worth an estimated €1.5 million from an armored truck Monday before setting cars ablaze near a major highway and fleeing.
Seemingly inspired by a combination of The Usual Suspects and The Italian Job, the robbers, operating in multiple cars, surrounded the armored truck and forced it off the A6 highway between Paris and Lyon, a national gendarme service spokesman and a judicial official said, cited by ABC. They then seized the gold, locked the two delivery men in the back of the truck, and set one of their own cars on fire before fleeing, according to the spokesman.
Tthe flames then spread to three cars nearby and were threatening to engulf the armored truck as well, but local police intervened thanks to a tipoff from a witness and rescued the two men in time. The other cars were unoccupied, the judicial official said.
Police vehicles and a helicopter searched the surrounding fields and forests Monday near the town of southeastern town of Dardilly, the spokesman said. The spokesman and judicial official spoke on condition of anonymity to be able to give details about an ongoing investigation. Scientific police studied the charred hulls of the cars and the empty truck, operated by security company Loomis.
While France occasionally sees big jewel thefts and has seen a couple of high-profile highway heists, it’s rare to see a large-scale gold robbery like this, gendarmes said.
The judicial official said about 70 kilograms of gold dust were stolen worth an estimated 1.5 million euros ($1.6 million). He said it appeared to be an organized crime gang, but said the identities of the attackers are unclear. He would not release details about who owned the gold dust or where it had been headed.
As AFP adds, France has experienced a growing number of motorway hijackings in recent years. In March 2015, a group of around 15 robbers held up two vans carrying jewellery worth around nine million euros (US$9.5 million) at a toll booth on the A6, near the central city of Auxerre.
More recently, two Qatari women were held in their chauffeur-driven Bentley after leaving Le Bourget airport north of Paris in November. The masked robbers made off with valuables worth more than five million euros in jewels and other valuables.
end
Your early TUESDAY morning currency, Asian stock market results, important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight
1 Chinese yuan vs USA dollar/yuan UP to 6.9023(SMALL REVALUATION NORTHBOUND /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.92660 / Shanghai bourse CLOSED UP 2.06 POINTS OR 0.07% / HANG SANG CLOSED UP 13.68 OR 0.06%
2. Nikkei closed UP 95.49 POINTS OR 0.50% /USA: YEN RISES TO 115.28
3. Europe stocks opened ALL IN THE GREEN ( /USA dollar index RISES TO 101.09/Euro DOWN to 1.0611
3b Japan 10 year bond yield: FALLS +.083%/ !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.01/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!
3c Nikkei now JUST BELOW 17,000
3d USA/Yen rate now well below the important 120 barrier this morning
3e WTI:: 53.33 and Brent: 56.30
3f Gold DOWN/Yen DOWN
3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS AND SELLING THE SHORT END
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil UP for WTI and UP for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS TO +355.%/Italian 10 yr bond yield FALLS 12 full basis points to 1.914%
3j Greek 10 year bond yield RISES to : 6.74%
3k Gold at $1159.15/silver $17.07(7:45 am est) SILVER BELOW RESISTANCE AT $18.50
3l USA vs Russian rouble; (Russian rouble UP 27/100 in roubles/dollar) 60.74-
3m oil into the 53 dollar handle for WTI and 56 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 REVALUATION UPWARD from POBC.
JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 115.28 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 1.0122 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0742 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.
3p BRITAIN VOTES AFFIRMATIVE BREXIT
3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to +.355%
3s The Greece ELA NOW at 71.4 billion euros,AND NOW THE ECB WILL ACCEPT GREEK BONDS (WHAT A DISASTER)
The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Next step for Greece will be the recapitalization of the banks and that will be difficult.
4. USA 10 year treasury bond at 2.441% early this morning. Thirty year rate at 3.131% /POLICY ERROR) GETTING DANGEROUSLY HIGH
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Global Stocks Jump, Dow Set For 16th Post-Election Record High After UniCredit Restructuring; Fed Looms
Yesterday’s brief hiccup in what has been an otherwise relentless rally in global risk assets is all but forgotten this morning, as European and Asian stocks, and US equity futures, all rise in quiet trading ahead of tomorrow’s FOMC meeting, with the Dow set to make a 16th consecutive post-election all time high.
Global shares rose on Tuesday, helped by gains in banks after Italy’s largest lender unveiled a €13 billion euro share issue, while the dollar held steady before a Federal Reserve meeting expected to deliver higher interest rates. European bourses have been led higher this morning by consumer discretionary names after China reported a better than expected retail sales report. Meanwhile, focus has also been on Italy’s largest bank, UniCredit, which announced a share sale plan of €13bn and to cut 14,000 jobs. UniCredit launched Italy’s biggest share issue to clean up its balance sheet and boost profitability in the latest move to strengthen the Italian banking sector, which has been a major concern clouding the outlook for European stocks.
Meanwhile in the US, ongoing hopes for fiscal easing in the U.S. will drive growth, despite a report that the GOP may in fact block Trump’s proposed tax cuts, is pushing investors into the stock market, while bonds yields have been climbing amid bets on higher U.S. interest rates. With the market assigning 100 percent odds to a Fed rate hike Wednesday, investors are focusing on the path for 2017, and see a two-in-three chance of additional tightening by June.
Aside from the well-known Trumpflation rally, markets are focused on the two-day Fed meeting which starts today and which is certain to conclude with only the second rise in U.S. interest rates since the global financial crisis. While a hike of 25 basis points in the Fed’s target range of 0.25-0.50 percent is priced in, investors will be examining the Fed’s statement and economic forecasts for any signs of how the central bank thinks Trump’s election has affected the outlook for growth and inflation.
“The big question is what sort of pace can we expect from the Fed for next year?” said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
“The market has already priced in a 25-basis-point rate hike this time, so now the focus is on the outlook,” says Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo. “There are many investors who haven’t been able to completely jump on the current rally, and they’ve been waiting for the market to dip.”
The looming Fed decision meant little changes to the FX landscape, with the dollar barely moving against a basket of major currencies. The euro fell 0.1 percent to $1.0624 and the yen fell 0.2 percent to 115.24 per dollar. Sterling, however, rose 0.2 percent to $1.27, buoyed by comments from finance minister Philip Hammond that Britain should have a transition period to smooth its exit from the European Union.
Global shares, as measured by MSCI’s all-country world index, rose 0.1 percent but held below Monday’s 16-month high, touched as crude oil prices surged after the Organization of the Petroleum Exporting Countries and non-OPEC producers reached their first deal since 2001 to reduce output.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1 percent, while Japan’s Nikkei stock index shrugged off losses as the yen pulled off its highs and ended 0.5 percent higher, while Chinese shares reversed earlier declines amid strong economic data. “The market has already priced in a 25 basis point rate hike this time, so now the focus is on the outlook,” says Toshihiko Matsuno, a senior strategist at SMBC Friend Securities Co. in Tokyo. “There are many investors who haven’t been able to completely jump on the current rally, and they’ve been waiting for the market to dip.”
In Europe, the Stoxx Europe 600 Index was led by a 23% surge in Mediaset SpA after Vivendi SA said it may buy a 20% stake in the broadcaster. UniCredit was the second-biggest gainer with a 7.4% advance. The broader index rose 0.7 percent as of 9:52 a.m. London time, with trading volume 30 percent higher than the 30-day average at this time of day. Banca Monte dei Paschi di Siena SpA climbed after a European Union official said the lender may be eligible for a precautionary recapitalization if efforts to plug the private sector fail.
European Eco Data update:
- (GE) Nov. CPI EU Harmonised MoM 0.0%; est. 0.0%
- (GE) Nov. CPI EU Harmonised YoY 0.7%; est. 0.7%
- (SP) Nov. CPI EU Harmonised MoM 0.2%; est. 0.2%, prior 0.2%
- (SP) Nov. CPI EU Harmonised YoY 0.7%; est. 0.5%, prior 0.5%
- (SW) Nov. CPI MoM 0.0%; est. 0.0%, prior 0.3%
- (SW) Nov. CPI YoY 1.4%; est. 1.4%, prior 1.2%
- (IT) Oct. Industrial Production MoM 0.0%; est. 0.2%, prior -0.8%
- (IT) Oct. Industrial Production WDA YoY 1.3%; est. 1.45%, prior 1.8%
- (UK) Nov. CPI MoM 0.2%; est. 0.2%, prior 0.1%
- (UK) Nov. CPI YoY 1.2%; est. 1.1%, prior 0.9%
- (UK) Nov. CPI Core YoY 1.4%; est. 1.3%, prior 1.2%
- (GE) Dec. ZEW Survey Current Situation 63.5; est. 59, prior 58.8
- (GE) Dec. ZEW Survey Expectations 13.8, est. 14, prior 13.8
- (EC) Dec. ZEW Survey Expectations 18.1, prior 15.8
S&P 500 Index futures advanced 0.3 percent after the main gauge ended last week at a record.
Brent crude rose 0.7% on Tuesday to $56.09 a barrel but traded well below Monday’s high of $57.89.
Over in rates, Italian bonds gained for a second day, with the yield on 10-year bonds falling six basis points to 1.93% while German equivalents fell 4 bps to 0.37%. US 10Y yields dipped 1 basis point to 2.46% . The securities ended Monday little changed after rising by as much as six basis points to touch 2.53%, their highest level since September 2014.
* * *
Market Wrap
- S&P 500 futures up 0.3% to 2257
- Stoxx 600 up 0.7% to 356
- FTSE 100 up 0.2% to 6906
- DAX up 0.7% to 11267
- German 10Yr yield down 3bps to 0.37%
- Italian 10Yr yield down 7bps to 1.93%
- Spanish 10Yr yield down 2bps to 1.48%
- S&P GSCI Index up 0.5% to 398.3
- MSCI Asia Pacific up 0.3% to 138
- Nikkei 225 up 0.5% to 19251
- Hang Seng up less than 0.1% to 22447
- Shanghai Composite up less than 0.1% to 3155
- S&P/ASX 200 down 0.3% to 5545
- US 10-yr yield down 1bp to 2.46%
- Dollar Index unchanged at 101.03
- WTI Crude futures up 0.4% to $53.03
- Brent Futures up 0.7% to $56.09
- Gold spot down 0.3% to $1,159
- Silver spot down 0.2% to $17.04
Global Headlines
- Trump Choice of Tillerson as Secretary of State Sets Up Fight: President-elect plans to announce his pick on Tuesday morning, lawmakers have questioned Tillerson’s relationship with Putin; Trump Says No Deals While in Office; Sons Will Run Company
- UniCredit Plans $13.8 Billion Stock Sale to Bolster Capital: UniCredit plans loan sales, won’t pay a dividend for 2016
- Boeing Slows 777 Wide-Body Output, Boosts Dividend by 30%: Planemaker tells employees it will have to cut some jobs
- Asahi to Buy SABMiller’s European Beers in $7.8 Billion Deal: Brewer to acquire Europe brands such as Czech Pilsner Urquell
- OPEC Deal Will Create Oil-Supply Deficit in First Half, IEA Says: Stockpiles to shrink by 600,000 barrels a day as producers cut
- Disney, Fox Win Bid to Shut Sanitized Streaming Service: VidAngel strips movies of nudity, profanity, violence for $1
- Lilly to Sell Insulin at 40% Discount to Cash-Paying Diabetics: Blink Health adds Lilly’s insulin with cheap access on-line
- Morgan Stanley Favors Metals as Trump May Spur American Phoenix: Zinc, nickel and aluminum listed as the top picks over bulks
- Airbnb Said to Buy Back $94 Million in Stock From Morgan Stanley: Startup makes its first major share buyback from investor
In Asia, equity markets traded subdued following a lacklustre lead from the US, where S&P 500 and NASDAQ 100 closed negative despite another record Dow close, with participants tentative ahead of the looming FOMC. The lack of conviction seeped into Asia which resulted into subdued trade in the ASX 200 (-0.3%), while Nikkei 225 (+0.5%) was indecisive alongside a pullback in USD/JPY which fluctuated around 115.00. Hang Seng (-0.1%) and Shanghai Comp (+0.1%) initially extended on yesterday’s declines despite better than expected Industrial Production and Retail Sales data, as property names were pressured by weaker sales, while money market rates continued to climb and the PBoC also kept its liquidity injections reserved. However, Chinese markets then recovered in late trade. 10yr JGBs traded lower amid the absence of the BoJ in the market under its bond buying program, with underperformance in the super long-end resulting to a steeper curve. Today’s 5yr JGB auction also failed to support despite printing the highest bid/cover in 6-months, as the average and lowest accepted prices both declined.
Top Asian News
- Muddy Waters Targets Japan Firm as Shorts Hit Tokyo, Hong Kong: Carson Block’s firm targets precision-motor maker Nidec
- Modi Turns to Old Tricks as Cash Experiment Hurts India GDP: Increases expenditure on rural jobs program he’d once mocked
- Duterte Says Mines Chief Lopez May Not Get Nod Amid Crackdown: Lopez has led checkup in Philippines, largest nickel shipper
In Europe, bourses have been led higher this morning by consumer discretionary names after China reported a better than expected retail sales report. While focus has also been on Italy’s largest bank, UniCredit, which announced a share sale plan of EUR 13bIn and to cut 14,000 jobs. Elsewhere, MediaSet rose 25% in the wake of Vivendi further increasing their stake in the Co., consequently leading to speculation that a hostile takeover is imminent. Across the fixed income space, peripheral bonds outperform core debt amid the improved risk sentiment with the Italian-German 10yr spread narrowing to 158bps amid optimism over Italy’s troubled lenders recap plans. Additionally, a pullback in yields has also provided a lift in fixed income markets with the German 10yr yield breaking below 0.4%.
Top European News
- Mediaset Surges Most in 20 Years as Vivendi Acquires Stake: Initial 3 percent stake may rise to as much as 20 percent
- SAS to Cut 1,000 Jobs as Fuel, Competition to Hamper Earnings: Airline looks at setting up operations outside Nordic region
- UBM Agrees to Buy Rival Allworld Exhibitions for $485 Million: Acquisition gives UBM events in 11 countries
In currencies, the yen weakened by 0.3 percent to 115.32 per dollar, following Monday’s 0.3 percent climb. The euro was little changed at $1.0634. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, steadied after sinking 0.6 percent last session, its steepest drop since September.
In commodities, all asset classes are in consolidation mode ahead of the FOMC meeting and announcement tomorrow afternoon, with the impact on the USD influential on all commodities, though not least of all Oil and Gold. Ongoing losses in Gold have been largely off the back of continued record highs being posted the S&P and Dow, while OPEC coordination continues to bolster WTI and Brent, but with tighter moves of late. Base metals are also buoyed, but struggling for fresh upside as highlighted by Copper stalling around USD2.70 mark.
Looking at the day ahead, this morning in Europe we kicked off in Germany with the final revisions to the November CPI, which came in at 0.8% Y/Y as expected. We also got the Q3 employment data for the Euro area, which rose 0.2%, below the 0.3% expected. It’s pretty quiet in the US with the only data due being the NFIB small business optimism reading for last month (expected to tick up to 96.7 from 94.9) and the November import price index reading. Away from the data the ECB’s Hansson and Nowotny are both scheduled to speak this morning.
US Event Calendar
- 6am: NFIB Small Business Optimism, Nov at 98.4, est. 96.7 (prior 94.9)
- 8:30am: Import Price Index m/m, Nov., est. -0.4% (prior 0.5%)
- 8:55am: Redbook weekly sales
- 4:30pm: API weekly oil inventories
* * *
DB’s Jim Reid concludes the overnight wrap
With the recent Donald Trump victory, the oil price rally and with the ECB announcing tapering last week (the first cut is the hardest to paraphrase the song) it feels increasingly likely that we’ll get periodic rates market shocks in 2017. This fits in with view of higher rates and credit volatility and ranges from our 2017 outlook (https://goo.gl/d4d24S) 3 weeks ago. Giving us even more confidence on this was our US rate strategists’ major forecast changes over the past weekend. The head of the team, Dominic Konstam, has been a fellow paid up member of the secular stagnation camp and generally had a lower yield forecast than the street in recent years. However he’s now at the higher end after the forecast changes. He now expects the US 10y to trade at 2.75% by YE2016 (i.e. in 2 weeks) and comfortably above 3% in 2017 (YE2017: 3.10%; 2017 Q2 peak of 3.6%). The rationale is that the market is quickly looking through the Fed to the new government administration and the scope for higher inflation to come before stronger real growth. The new administration’s policies could certainly drive this view as both the Trump plan and the original Ryan plan (as detailed in a “Better Way”) involve a huge expenditure switching effort to boost exports at the expense of imports whilst encouraging domestic production – this may boost growth substantially in the medium term but should be more inflationary in the short run. Furthermore they expect Ricardian equivalence to hold initially in many respects, which is why inflation remains more of a concern than real growth early on. Thus the strategists’ outlook is less a story about normalizing the real neutral Funds rate but more about shifting inflation expectations to become rich to the Fed’s target. The forecast revision also reflects the team’s view that the market needs a much better risk/reward profile for a Fed that might end up looking to be behind the curve – so this won’t be about raising the dots but rather about the markets possibly front running the dots.
With all that said, it seems appropriate then that the last 24 hours in markets has largely been characterised by rising oil prices and a subsequent leg up in bond yields. WTI closed +2.58% last night and just below $53/bbl following the non-OPEC agreement news from the weekend (and also the positive Saudi comments) although in fairness it did close well off the peak level of $54.51/bbl early in the Asia session before the focus turned towards possible higher US supply. Brent was also up +2.02% and above $55/bbl although again a fair distance off the $57.89/bbl high mark. Bond yields peaked as the European session opened. 10y Treasury yields broke through 2.500% at one stage and touched an intraday high in yield of 2.526% (which was nearly 6bps higher on the day) before giving most of that up as oil faded into the close to end the day up just 0.4bps at 2.471%, albeit the highest since June 2015. A weak 3y Treasury auction – which attracted the lowest demand since 2009 – didn’t seem to help although a subsequent 10y auction saw demand bounce back from the seven year low set last month.
Elsewhere in Europe 10y Bund yields edged up 3.3bps to 0.393% and are now back to the highs last seen back in January. It’s amazing to think that yields are now back to within 23bps from where we started the year. Meanwhile, although energy shares got an unsurprising boost from that move higher for oil, the Santa Claus rally for equity markets finally hit a bit of a road bump yesterday. The S&P 500 closed -0.11% with weakness across financials and consumer discretionary names dragging the index lower while in Europe the Stoxx 600 (-0.46%) declined for the first time since December 2nd. Credit markets were a bit more mixed (weak in the US but slightly firmer in Europe) although it was another decent day for Italian bank sub spreads. Indeed spreads across the 4 banks in the iTraxx sub-fins index were on average 6bps tighter. As expected new Italy PM, Paolo Gentiloni, confirmed that Padoan will remain in his current post as finance minister.
To the latest in Asia now where the November activity indicators in China have been released this morning. The data has largely come in in-line to slightly better than expected. Industrial production has risen one-tenth to +6.2% yoy (vs. +6.1% expected). Retail sales were up a bumper eight-tenths to +10.8% yoy (vs. 10.2% expected) and fixed asset investment remained unchanged at +8.3% yoy, matching the consensus. That retail sales reading is in fact the highest this year. Despite the supportive data, Chinese bourses have continued to track lower this morning. The Shanghai Comp is currently -0.15% as the focus seemingly remains on the crackdown on insurers’ equity investments that we highlighted yesterday, along with concerns about recent volatility in money market rates. Elsewhere, the Hang Seng (-0.31%) and ASX (-0.32%) have also dipped lower, with just the Nikkei (+0.29%) and Kospi (+0.16%) in positive territory. Meanwhile oil is little changed and sovereign bond markets are generally mixed.
Moving on. While we’re still a few months away from the start of ECB tapering, it was interesting that yesterday we saw the announcement of the lowest full week of CSPP purchases since the end of August. They confirmed holdings at 9th December of €49.906bn. This implies net purchases settled last week of €1.663bn or an average daily run rate of €333m. The average daily run rate since the program started is €384m. The numbers will no doubt naturally fall again over the next 3 weeks with the holiday nearly upon us.
Before we look at today’s calendar, UK Chancellor Philip Hammond also spoke yesterday and confirmed that there is an emerging view amongst both businesses, regulators and politicians that a longer transition period to manage Britain’s exit from the EU will be needed. Indeed Hammond said that ‘the further we go into this discussion, the more likely it is that we will mutually conclude that we need a longer period to deliver’. Those comments align somewhat with Carney last week who said that it was ‘absolutely desirable’ for companies to be given time to adjust and ‘to restructure after the deal is agreed with the EU’. Hammond’s softer comments yesterday helped Sterling (+0.85%) to outperform.
Looking at the day ahead, this morning in Europe we kick off in Germany where the final revisions to the November CPI report will be made. Later this morning we turn over to the UK where the November inflation data docket gets released. Market expectations are running at +0.2% mom for headline consumer prices. Thereafter we’ll get the Q3 employment data for the Euro area before the focus turns to Germany with the December ZEW survey due to be released. It’s pretty quiet across the pond again this afternoon with the only data due in the US being the NFIB small business optimism reading for last month (expected to tick up to 96.7 from 94.9) and the November import price index reading. Away from the data the ECB’s Hansson and Nowotny are both scheduled to speak this morning.
3.REPORT ON JAPAN SOUTH KOREA NORTH KOREA AND CHINA
i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 2.06 POINTS OR 0.07%/ /Hang Sang closed UP 13.68 OR 0.06%. The Nikkei closed UP 95.49 OR 0.50%/Australia’s all ordinaires CLOSED DOWN 0.33% /Chinese yuan (ONSHORE) closed UP at 6.9023/Oil ROSE to 53.33 dollars per barrel for WTI and 56.30 for Brent. Stocks in Europe: ALL IN THE GREEN. Offshore yuan trades 6.92660 yuan to the dollar vs 6.9023 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS MORE USA DOLLARS ATTEMPT TO LEAVE CHINA’S SHORES / CHINA SENDS A CLEAR MESSAGE TO THE USA AND JANET TO NOT RAISE RATES IN DECEMBER.
3a)THAILAND/SOUTH KOREA/:
none today
b) REPORT ON JAPAN
none today
c) REPORT ON CHINA
China now admits that its economic data is a fake:
(courtesy zero hedge)
China Admits Economic Data Is Fake: “Some Local Statistics Are Falsified”
For years we’ve been writing about “fake data” coming out of China’s economic reports. As an example, we reported the following chart on import data back in April (see “The Chart Proving That China’s Trade Data Has Never Been This Fake“). Can anyone spot the outlier?
Now, China’s “top statistician” has confirmed via an article in the “People’s Daily” newspaper that “some local statistics are falsified, and fraud and deception happen from time to time.” Wow, so there’s a chance that China’s economy didn’t actually grow at a precise YoY rate of exactly 7.00% for the past decade…that always struck us as unlikely. Per the Financial Times:
China’s top statistician has acknowledged the country’s problems with falsification of economic data, pledging severe punishment for perpetrators in a nod to widespread suspicion that official numbers often fail to reflect true economic conditions.
“Currently, some local statistics are falsified, and fraud and deception happen from time to time, in violation of statistics laws and regulations,” Ning Jizhe, director of the National Bureau of Statistics, wrote in a column for Communist party mouthpiece the People’s Daily on Thursday.
Foreign economists and investors have long expressed doubts about China’s economic data. Most prominent are concerns about gross domestic product figures. Compared with other countries. China’s inflation-adjusted GDP growth rates are remarkably stable from quarter to quarter, even as nominal figures show considerable volatility. The NBS has denied charges that it manipulates inflation data to massage headline growth figures.
While President Xi Jinping has called for “seriously punishing statistical falsification and fraudulent behavior,” others points out that political influence over statistical data is the precisely the problem, not the solution. Of course, with local politicians evaluated on their ability to meet or exceed centrally planned growth targets, it’s no surprise that the “sum of provincial GDP figures” consistently exceeds the national calculations.
In October a powerful Communist party task force led by President Xi Jinping issued policy guidelines calling for “increasing data accuracy” through methods including harsher penalties for falsification. Mr Ning’s article lauds the achievements of his agency in implementing these guidelines.
“Seriously punishing statistical falsification and fraudulent behaviour benefits the rule of law and the upholding the credibility of the party and the government,” Mr Ning wrote.
Critics of Chinese statistics have consistently argued that political interference in statistical compilation is the problem, not the solution. Communist party officials, especially at the local level, are still evaluated largely on their ability to meet or exceed economic growth targets. For many years, the sum of provincial GDP figures has far exceeded the national total. The party has taken tentative steps in recent years to reduce the role of economic growth targets in evaluating cadres’ performance, but strong incentives remain.
Of course, while cynics may view this as a devastating admission, we suspect investors will promptly dismiss the potential impact of years of overstated GDP figures and quickly buy more stocks
END
The following is extremely important as Mish talks about the upcoming global trade war with China. It will be impossible to evade:
(courtesy Mish Shedlock/Mishtalk)
Global Trade War Baked In The Cake: Boeing Faces China’s Wrath
Submitted by Michael Shedlock via MishTalk.com,
I have been warning about the increasing likelihood of a serious global trade war for quite some time.
That warning is now my baseline scenario. Unless there is an immediate deescalation of rhetoric and a return to rational thinking, a very destructive global trade war is baked in the cake.
I seek ways that a global trade war does not start, but I come up short.
China is upset because the EU and US Rejected China’s Market Economy Status over alleged steel dumping. In response, Beijing fired counterattack charges at the WTO.
China has launched a legal challenge against the EU and US over their reluctance to treat it as a “market economy” under World Trade Organisation rules.
Beijing is unhappy with a provision that allows trading partners to use a special formula and prices in third countries to calculate punitive tariffs for non-market economies in anti-dumping cases. It is pushing for the provision to expire with Sunday’s 15th anniversary of its WTO membership.
But the EU, US, Japan and other WTO members have resisted the move, prompting China on Monday to take the first step in launching a case with the global trade regulator.
In a statement, China’s commerce ministry said it had requested consultations with both the EU and US and would seek to have a WTO panel rule.
“China has communicated through many channels for the third-country comparison to expire. What’s very regrettable is that EU and US have not acted to allow it to expire. It has had a severe impact on Chinese exports,” it said. “China is protecting its lawful rights and acting appropriately to maintain the WTO rules.”
In the EU, fears of an onslaught of cheap Chinese goods prompted the European Commission to recommend a fundamental shift in how it conducts anti-dumping cases. Under EU rules, Brussels imposed a 21 per cent tariff on the same steel products that were hit with a 266 per cent US tariff in 2015.
In a sign of the commercial stakes, the US on Friday imposed punitive anti-dumping tariffs on Chinese-made washing machines, imports of which into the US were worth more than $1.1bn last year. It also announced the launch of an anti-dumping investigation into plywood imports from China, which were also worth more than $1bn last year.
Those US cases and the fight over Beijing’s market economy status point to the trade battles already being fought with China even as Donald Trump, the incoming president, promises to get tough with Beijing over trade and other issues.
“One of the most important relations we must improve . . . is our relationship with China,” Mr Trump said last week. “China is responsible for almost half of America’s trade deficit [and] they haven’t played by the rules.”
“They have acted like a non-market economy in so many respects with their state-owned companies, with subsidies, with dumping . . . there are more dumping cases brought against China than against all the other countries combined,” said Sandy Levin, the top Democrat on the House ways and means committee.
A US official said it would continue to fight any attempt to grant China market economy status at the WTO, pointing to “serious imbalances in China’s state-directed economy”.
“China has not made the reforms necessary to operate on market principles,” the official said. “The United States is prepared to defend its right at the WTO to protect American workers and firms from the damaging effects of persistent distortions in the Chinese economy.”
Boeing Faces China’s Wrath
Please consider Boeing Faces Prospect of China’s Political Wrath Thanks to Trump.
“China Inc.,” the combined group of airlines and lessors directed or controlled by the government, is Boeing’s largest customer, an analysis of the company’s’ backlog at Dec. 5 shows.
Boeing’s website lists “China” with 292 orders in backlog. Fifty of these appear to by Unidentified orders. LNC arrived at this figure by viewing the Chinese customers in Boeing’s identified list, which amounts to 242 orders. Some believe the number of Unidentifieds attributable to China may be higher.
The data shows just how much Boeing has at risk with the so-far unpredictable foreign trade policy espoused by President-Elect Donald J. Trump.
Will the EU Benefit from a Trump Trade Policies?
After reading the above snips, readers may conclude the EU will benefit from Trump actions.
Banish the thought. Instead consider Iran, Boeing reach agreement on big aircraft order; Trump casts cloud.
Iran and Boeing reached an agreement on the 80-airplane order that includes 50 737 MAX 8s, 15 777-300ERs and 15 777-9s.
The final contract still has unspecified contingencies before it can be booked as firm orders, Boeing said. One of those contingencies is clearly President-Elect Donald Trump, who criticized the larger Iran-US-allies deal of which the Boeing order is a part.
Airbus has 116 orders pending that could also be upended if Trump, upon taking office, vitiates the deal.
The US House of Representatives passed a bill to prevent any US-sourced financing for the Boeing purchases. The Senate hasn’t acted on the bill and President Obama vowed to veto it. The legislation doesn’t kill the Boeing deal, per se–just US-sourced financing, leaving open non-US financing.
But President-Elect Trump said he opposed the Iran nuclear deal, which involves the US and five allies. Trump vowed to cancel the agreement, which would kill the Boeing order. It probably would kill the Airbus order, because of the US content in the Airbus airplanes.
Trump to Blame?
When this blows up, and it will unless cooler heads prevail immediately, Trump will undoubtedly take the blame. But as I have pointed out, Trump is no different than Hillary or Bernie Sanders.
I you disagree, please take my Trade Quiz: Donald Trump, Bernie Sanders, Hillary Clinton – Who Said It?
Close analysis shows that Hillary, Bernie Sanders, Donald Trump and even president Obama all have the same trade policies. If you disagree, please explain 266 per cent US tariff on China that Obama placed in 2015.
Dangerous Game
Earlier today I noted China Tells Trump “Nothing to Discuss” If US Drops “One China” Policy.
At best, Trump is playing a dangerous game. No one ever wins trade wars.
The Smoot-Hawley Tariff Act at the start of the Great depression is the classic example.
Retaliation
Threats of retaliation by other countries began long before the bill was enacted into law in June 1930. As it passed the House of Representatives in May 1929, boycotts broke out and foreign governments moved to increase rates against American products, even though rates could be increased or decreased by the Senate or by the conference committee. By September 1929, Hoover’s administration had received protest notes from 23 trading partners, but threats of retaliatory actions were ignored.
In May 1930, Canada, the country’s most loyal trading partner, retaliated by imposing new tariffs on 16 products that accounted altogether for around 30% of U.S. exports to Canada.[18] Canada later also forged closer economic links with the British Empire via the British Empire Economic Conference of 1932. France and Britain protested and developed new trade partners. Germany developed a system of autarky.
In 1932, with the depression only having worsened for workers and farmers despite Smoot and Hawley’s promises of prosperity from a high tariff, the two lost their seats in the elections that year.
For or Against Free Trade?
The above discussion ought to settle the hash once and for all, but economic illiteracy prevails.
Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, was the economic adviser to Vice President Joseph R. Biden Jr. from 2009 to 2011, has this March 14, 2016 Op-Ed in the New York Times: The Era of Free Trade Might Be Over. That’s a Good Thing.
In Defense of Free Trade
Sam Seitz, presents a nice case for free trade in his article In Defense of Free Trade.
I want to address NAFTA because it’s the bogeyman of the Left and according to Trump “a bad deal.” NAFTA was actually a very successful free trade agreement. When it was implemented, the number of American jobs increased. Of course, some low-skilled labor was displaced, but because NAFTA increased the size of the overall economy, it actually increased the demand for labor and boosted employment in the U.S.
Finally, I want to talk about trade surpluses/deficits because they are a common argument used by opponents of free trade. A trade surplus is just the total value of exports minus the total value of imports. However, it doesn’t mean that much. For example, the United States maintained a trade surplus throughout the entire Great Depression, yet it clearly didn’t make life easier or the economy stronger. Conversely, the U.S. has a significant trade deficit now, yet it has the largest, most dynamic economy of any country on the planet. What matters is not the total amount of net-trade income, it’s the amount of goods and services American citizens can access. To quote Thomas Sowell, “If the goods and services available to the American people are greater as a result of international trade, then Americans are wealthier, not poorer, regardless of whether there is a ‘deficit’ or a ‘surplus’ in the international balance of trade.” It’s also important to realize that even though Americans don’t produce as much as the Chinese, we invent pretty much everything that other countries produce. So, while iPhones are built in China, the profits flow back to an American company that pays taxes to the American government and employs American computer scientists and engineers. Instead of focusing only on where the end product is produced, it is crucial to also account for the non-tangible elements of production: the innovation, R&D, and investment. It is easy to pretend that the U.S. is weakened because of the trade deficit, <atarget=”_blank” href=”http://www.slate.com/articles/business/the_edgy_optimist/2014/03/u_s_china_trade_deficit_it_s_not_what_you_think_it_is.html”>butif one actually accurately accounts for the value of American innovation, it becomes clear that the U.S. possesses a trade surplus with China. Just don’t tell Trump or Sanders.
The Question of “Fair Trade”
The best case I have seen for free trade comes from Ana Eiras, Senior Policy Analyst on International Economics, Center for Trade and Economics (CTE).
Eiras explains Why America Needs to Support Free Trade.
Eiras provides five well thought out positions why free trade is good. More importantly she puts a knife in the ridiculous discussion about “fair trade”. Let’s pick up the discussion from that point.
The Question of “Fair Trade”
Politicians, opinion makers, journalists, and businessmen commonly talk about the need to support “fair trade.” Seldom, however, does anyone explain either what fair trade is or–even more to the point–to whom trade should be fair. In the name of fairness, different groups advocate different protections for their specific industries and call the comparative advantage of other countries “unfair.”
For example, U.S. manufacturers think it is unfair that labor in China is cheaper than labor in the United States, and therefore ask for tariffs against Chinese products. But those tariffs would, in reality, be unfair to millions of U.S. consumers and producers who would be forced to pay higher prices for locally manufactured goods. “Fairness” assumes a dubious character in policies that pick and choose whom to treat “fairly.”
Others argue that America needs to enact barriers to free trade in order to strengthen national defense. For example, a tariff to protect steel would be justified because we need our own steel to support the construction of tanks, missiles, and arms. This argument is built on the faulty assumption that America’s wealth is at least constant. But a constant level may imply that the U.S. is falling behind other nations in relative terms. The strongest national defense depends on a relatively strong economy, and a strong economy is possible only with economic freedom.
Once economic barriers begin to emerge, a nation’s wealth begins to decline. America’s relative economic freedom and wealth have already begun to decline. In fact, according to the Index, the United States has lost considerable ground in economic freedom (declining from 4th freest economy to 10th freest in 2004), which means it has also lost more and more opportunities to increase wealth.
The only form of fair trade–if such thing exists–is free trade. When facing competition from Chinese manufacturing, U.S. manufacturers have two options: either adopt new technologies to cut costs and become more competitive or shift the focus of their operations to different areas in which they can be more competitive. Neither of these two options harms consumers, since they will continue to have access to the least expensive, best-quality products.
Most workers benefit as well. For some people, free trade requires change, but they also now have opportunities to use their skills in more efficient, advantageous, and productive ways that are created by the innovation and prosperity that competition promotes. Likewise, for a strong national defense, America needs the resources, innovation, and income that are derived from the absence of barriers to trade and investment.
Consumers Key to Debate
Consumers are key to this debate. If it’s good for consumers, it’s good for the economy, and by default it is good for trade.
I encourage everyone to read the rest of Eiras’ excellent article.
Fair Trade Fantasy
“Fair trade” is nothing but a misguided fantasy from producers who cannot compete in the real world.
It makes no economic sense for US citizens to pay double or triple for underwear, TVs, phones or anything else to “save American jobs”.
The amazing irony in this debate is no jobs will be saved anyway!
NAFTA did not cause a loss of manufacturing jobs, productivity and robots did. No matter what Trump or anyone else promises, those jobs are not coming back.
Sure, the US has misguided tax policy that encourages foreign production. But that is a separate issue. At least Trump is correct on that score. Lowering corporate taxes is the right thing to do.
Tariffs are precisely the wrong thing to do. I fear we are going to find that out again, while the parrots all chant “Fair Trade, Not Free Trade”.
Related Articles
- Reflections and Reader Comments on Free Trade: “China Doesn’t Play Fair!”
- Fair Trade is Unfair; In Praise of Cheap Labor; Are Bad Jobs at Bad Wages Better than No Jobs at All?
- Obama’s Trans-Pacific Partnership Fiasco vs. Mish’s Proposed Free Trade Alternative; How Will TPP Function in Practice?
- Stacked Deck: US Bullies WTO, TPP Revisited
- Legacy Skills and Capital; Sugar and Steel; Turning TPP to TP
Trade is not between nations. Trade is between individuals who make constant decisions about what and when to buy.
Tariffs distort that relationship, and only the weak produces benefit. Everyone else loses.
Consumers benefits are what’s important in trade.
No one wins trade wars. As as side note, and I as often pointed out, the Fed, and its foolish policy of insisting on inflation in a deflationary world is largely to blame.
For discussion of that point, please see Decade of Negative Real Interest Rates: Who Benefited?
end
4 EUROPEAN AFFAIRS
Business must be good as Italy’s largest bank Unicredit is laying off a huge 14,000 and raising 13 billion dollars trying to fix their balance sheet. Problem here is that there is no growth at all in Italy.
(courtesy zero hedge)
Italy’s Largest Bank Laying Off 14,000, Raising €13 Billion In Business Overhaul
UniCredit announced on Tuesday a major restructuring plan to raise €13 billion in capital to return the Italian bank to profitability, hoping that a balance-sheet cleanup and cost cuts will persuade investors that Italy’s biggest bank can restore profitability even without much revenue growth. As part of the three-year strategy, the bank plans to shed an additional 6,500 jobs, bringing the total to 14,000, as it aims for 1.7 billion euros of annual cost savings. The bank is targeting 4.7 billion euros of net profit in 2019 with a return on tangible equity above 9%, Milan-based UniCredit laid out in a presentation this morning.
UniCredit’s new CEO Jean Pierre Mustier, a 55-year-old Frenchman, in July took the helm of a lender burdened by a mounting pile of bad loans, record-low interest rates and Italy’s longest recession since World War II. According to Bloomberg, the bank had the slimmest capital buffer among those deemed important to the financial system in the latest European stress tests.
“We are taking decisive actions to deal with our non-performing-exposure legacy issues to improve and support recurring future profitability,” Mustier said in a statement.
The capital increase will take place in the first quarter of next year, Mustier said on a conference call with journalists Bloomberg reported. The CEO said he’s confident Monte Paschi’s efforts to raise capital will be resolved this month and will have “no impact” on his own bank’s fundraising. The UniCredit CEO also insisted political turmoil in Italy will put obstacles in the way of the plans. “The referendum was a No but it doesn’t change our business model,” Mustier told the Financial Times.
While the bank expects annual costs to drop, it sees revenue rising by just 0.6 percent per year through 2019. UniCredit sees falling net interest income, with growth coming from fees and commissions, it said in a presentation in London. “With almost no revenue growth in the foreseeable future, the plan is focused on cutting costs and improving the asset quality and capital levels,” Luigi Tramontana, an analyst at Banca Akros, said in a note to clients. “The rights issue stands at the top of the expectations, given the stronger-than-expected effort” to boost loan-loss reserves.
UniCredit will focus on organic growth and doesn’t plan further acquisitions, the CEO said at a press conference, ruling out acquisitions. The company’s German unit, formerly Hypovereinsbank, is a strategic asset in a country that is core to the bank, Mustier said, adding that he also isn’t looking to sell the company’s shipping business or other major operations.
The restructuring will help UniCredit to increase its common equity Tier 1 ratio to more than 12.5 percent by 2019 from 10.8 percent at the end of September. The bank won’t pay a dividend for 2016 and targets a 20 percent to 50 percent payout ratio in subsequent years.
The main “use of proceeds” from the newly raised funds will be to cover losses from disposals of bad loans. UniCredit said it will set aside €8.1 billion for non-performing loans as it plans to move €17.7 billion of soured debt off its books for securitization and a subsequent sale. The bank said one-offs this quarter will total €12.2 billion. Fortress Investment Group and Pimco will take majority stakes in the two units that will take on the non-performing loans, UniCredit said.
“We welcome the focus on cleaning up the balance sheet, although some may have hoped the extent of provisions could have delivered a larger upfront non-performing loan reduction,” Jefferies Group LLC analysts including Benjie Creelan-Sandford said in a note, repeating their buy rating. “Given lack of control over the external environment, we think the focus on capital and costs is important.”
Italian banks, some of the continent’s worst performing stocks of 2016, have been contending with expectations of low economic growth, pressure from European regulators to meet stricter capital standards and political instability following the fall of Matteo Renzi’s government. The prospect that Monte Paschi may need a state rescue if its capital plan fails has also affected confidence in Italian lenders across the board.
The bank’s €4.7 billion profit target compares with a consensus of €3.9 billion for 2019, according to the Jefferies analysts. On a comparable basis the bank made €1.5 billion in 2015.
Whether or not UniCredit can reach its lofty asipirations remains to be seen, but the market’s initial reaction was positive, with the bank’s 1 billion euros of 6.75 percent additional Tier 1 bonds, the first notes to take losses in a crisis, rising 2.5 cents to about 92 cents, near a 2016 high, according to data compiled by Bloomberg. They fell to as low as 70 cents in February. The stock was up as around 8% following the news.
Italian and European regulators have been pushing lenders to clean up their balance sheets, strengthen capital buffers and cut an estimated 360 billion euros in non-performing loans. UniCredit has sold more than €10 billion of bad loans in the past three years and has set aside almost €25 billion for loan-loss provisions since 2013.
end
That did not take long! Moody’s does not like what they see as they cut the outlook on Italian banks to negative from stable
smart move…
(courtesy zero hedge)
Moody’s Cuts Outlook On Italian Banks To Negative From Stable
One week after Fitch downgraded Italian banks to a negative outlook due to soaring bad debt, and risks resulting from the failed referendum, moments ago Moody’s did the same, when it announced it was changing its outlook on the Italian banking sector to negative from stable due to increasing capital needs and weakening confidence.
While hardly a surprise, Moody’s said that “Italian banks currently have one of the highest problem loan ratios in Europe at 16.4% of total loans, more than three times the 5.4% European average, as data from the European Banking Authority as of June 2016 showed.”
For those who missed it, a good breakdown of imapired loans to capital was shown by Fitch last week.
Moody’s says its negative outlook reflects a view that the recognition of losses will depress the banking sector’s profitability and erode its capital over the next 12 to 18 months – as UniCredit confirmed earlier today with Italy’s largest ever proposed equity issuance – as well as the adverse effect upon confidence following the country’s rejection of constitutional reforms.
The rating agency also said that the success of Italian banks’ recapitalisation will also hinge on the viability of their business models and on market confidence, which could be undermined by increased political uncertainty following the “No” vote in the recent referendum. In addition, Moody’s notes that a failure to restructure a weak bank such as Monte dei Paschi di Siena could further undermine confidence.
Full press release:
Moody’s changes outlook on Italian banking sector to negative from stable due to increasing capital needs and weakening confidence
Moody’s Investors Service has changed its outlook on Italy’s banking system to negative from stable, reflecting the rating agency’s view that the recognition of losses will depress the banking sector’s profitability and erode its capital over the next 12 to 18 months, as well as the adverse effect upon confidence following the country’s rejection of constitutional reforms.
Moody’s report, entitled “Banking System Outlook — Italy: Negative outlook driven by capital needs and weakening confidence,” is available on www.moodys.com. Moody’s subscribers can access this report via the link provided at the end of this press release.
Italian banks currently have one of the highest problem loan ratios in Europe at 16.4% of total loans, more than three times the 5.4% European average, as data from the European Banking Authority as of June 2016 showed.
Although problem loan formation in Italy has slowed considerably, a reduction in the outstanding amount will be gradual, according to Moody’s. This is because banks have limited resources in the form of excess capital over minimum requirements and private investors little appetite to finance the restructuring of Italian banks.
As a result, the rating agency expects higher loan-loss provisions, leading to depressed profitability or losses for the banking system in 2016 and 2017. Banks will need to recognize additional impairments and losses when selling problem loans, given the aforementioned limited market demand for bad loans at current book values.
The success of Italian banks’ recapitalisation will also hinge on the viability of their business models and on market confidence, which could be undermined by increased political uncertainty following the “No” vote in the recent referendum. In addition, Moody’s notes that a failure to restructure a weak bank such as Monte dei Paschi di Siena could further undermine confidence.
Operating conditions more generally will not be very favorable for Italy’s banks over the outlook period. The country’s economic growth will remain well below that of European Union peers, with Moody’s estimating real GDP growth of 0.8% in 2016 and 2017 and 1% in 2018, after 0.7% in 2015, as noted earlier this month.
Demand for credit and banking services will remain subdued, offering only modest revenue growth opportunities for banks, while spreads are under pressure from low interest rates and high competition in a fragmented market.
More positively, though, the banking system’s liquidity should remain strong, according to Moody’s, supported by the European Central Bank’s second targeted long-term refinancing operations (TLTRO2) and subdued loan demand.
5. RUSSIAN AND MIDDLE EASTERN AFFAIRS
This news ought to cause the boys to whack gold by 10 dollars
Iran warns of a World War and the destruction of Israel if Trump tears up the nuclear pact.
(courtesy zero hedge)
Iran Warns Of “World War, The Destruction Of Israel”, If Trump Tears Up Nuclear Pact
Ten days ago, we reported that as a result of Obama’s vow to extend the Iran Sanctions Act for another 10 years, Iran threatened to retaliate, saying it violated last year’s deal with six major powers that curbed its nuclear program.
While US officials said the ISA’s renewal would not infringe on Obama’s landmark nuclear agreement (which may or may not be voided by Trump), and under which Iran agreed to limit its sensitive atomic activity in return for the lifting of international financial sanctions that harmed its oil-based economy, senior Iranian officials took odds with that view. Iran’s nuclear energy chief, Ali Akbar Salehi, who played a central role in reaching the nuclear deal, described the extension as a “clear violation” if implemented.
“We are closely monitoring developments,” state TV quoted Salehi as saying. “If they implement the ISA, Iran will take action accordingly.” Iran’s most powerful authority, the Supreme Leader Ayatollah Ali Khamenei, warned in November that an extension of U.S. sanction would be viewed in Tehran as a violation of the nuclear accord.
To be sure, that was merely jawboning by Iran, which has far less leverage and far more to lose if it antagonizes Washington and provokes the US into reimposing sanctions upon the Gulf nation, amounting to the tune of over 1 million barrels per day in foregone oil exports that would be taken offline, should the US impose similar sanctions as those which took the country’s crude export production largely offline in the 2013-2015 timeframe.
It is also the lesser of Iran’s worries: a far bigger concern is whether Trump will tear up Obama’s landmark nuclear agreement.
This was confirmed today when the Iranian defense minister warned that Donald Trump could trigger a world war and the ‘destruction’ of Israel and small Gulf Arab states if he provokes the Middle Eastern power. The warning comes as Trump is signalling he may follow through with his campaign promise to pull out of the nuclear pact. This has led to panic among US allies in the Gulf, Iranian Defense Minister Hossein Dehghan has claimed quoted by the Mail.
“Even though a businessman, the assistants that … (Trump) has chosen may map a different path for him, and this has led to unease, particularly among Persian Gulf countries,’ Dehghan told a security conference in Tehran, according to Iran’s Mehr news agency.’Considering Trump’s character and that he measures the cost of everything in dollars, it does not seem likely that he would take strong action against our country,’ he said.
Iran test firing ballistic missiles.
“Enemies may want to impose a war on us based on false calculations and only taking into consideration their material capabilities… Such a war would mean the destruction of the Zionist regime (Israel) … and will engulf the whole region and could lead to a world war,’ Mehr quoted Dehghan as saying.
“Among other consequences of the war, would be the destruction of the city-states on the southern shore of the Persian Gulf, because they lack popular support,’ Dehghan said, referring to small Western-allied Gulf states such as the United Arab Emirates, Bahrain and Qatar.
Naturally, what’s bad for Iran is great for Israel, which is why Israeli Prime Minister Benjamin Netanyahu, who has been a fierce critic of the agreement, said he was hoping to work with Trump to dismantle the deal. He said: ‘I know Donald Trump. And I think his attitude, his support for Israel is clear. He feels very warmly about the Jewish state, about the Jewish people.’
Pressed on what those options might be, Netanyahu said he had ‘about five things in my mind’, but did not elaborate.
Meanwhile, John Brennan, the outgoing director of the CIA, last month warned that Trump’s opposition to the Iran deal was the “height of folly” and “would be disastrous” he told the BBC adding “It really would: for one administration to tear up an agreement that a previous administration made would be almost unprecedented.”
He added that it “could lead to a weapons program inside of Iran that could lead other states in the region to embark on their own programs with military conflict, so I think it would be the height of folly if the next administration were to tear up that agreement.”
Another foreign policy expert, Jacob Parakilas of the London-based think tank Chatham House, told Reuters that “It’s difficult to see the advantage for the US in abrogating the deal at this stage. It would be nearly impossible to convince Europe, Russia and China to restore their sanctions on Iran int he absence of clear evidence of Iranian violations of the deal. So any sanctions to the US restored would have much less impact on the Iranian economy.”
* * *
A vastly different read of the rapidly changing geopolitical narrative in the middle east, however, was laid out by the Wall Street Journal, which explained that “Donald Trump proposes a big mideast strategy shift”, one which would seek less regime intervention and government overthrow.
As the WSJ writes, Donald Trump told us something important a few days ago about the profoundly different approach he intends to take toward the Middle East and the threat of Islamic extremism. The president-elect’s message was largely overlooked because it came in the middle of a typically raucous and rambling “thank you” rally in Cincinnati. News reports focused on his announcement that he would nominate as secretary of defense Gen. James Mattis — “Mad Dog Mattis” as he seems destined to be called by his new boss.
In a separate passage, one in which Mr. Trump clearly was following a script rather than freelancing, he said: “We will stop looking to topple regimes and overthrow governments, folks.” After wasting “$6 trillion” in Middle East fights, he said, “our goal is stability not chaos.”
He then added that “we will partner with any nation that is willing to join us in the effort to defeat ISIS and radical Islamic terrorism…In our dealings with other countries, we will seek shared interest wherever possible and pursue a new era of peace, understanding and goodwill.”
Hinting at a U-turn from the legacy US foreign policy, one dominated by CIA intervention and a neocon desire to interfere in domestic affairs, those words are “freighted with deep meaning, and offer some powerful indicators of the approach a Trump presidency will take in a region that has bedeviled every president since Richard Nixon. Mr. Trump is signaling an approach that is different not just from the one pursued by President Barack Obama, but even more different from the one followed by the last Republican president, George W. Bush.”
As the WSJ summarizes, on their face, these statements suggest:
- An end to the effort to oust Syrian President Bashar al-Assad, for the effort to throw out Mr. Assad is nothing if not an effort to topple a regime.
- A partnership with Russia in the region, for Russian President Vladimir Putin certainly has demonstrated he is “willing to join in the effort” to defeat Islamic State in Syria.
- A warmer relationship with Egyptian President Abdel Fattah Al Sisi, a strongman who has demonstrated an unmistakable ferocity in his own fight against Islamic extremism, while also being largely shunned by the Obama administration for shredding civil liberties in Egypt.
- A policy toward Iran that doubtless will be hostile and include an attempt to dissolve the Obama-negotiated deal on nuclear arms, but one that won’t include regime change in Tehran as an explicit goal.
A clear departure from the diplomatic aspirations of Clinton and Kerry, Trump labeled his approach “a new foreign policy that finally learns from the mistakes of the past.” It’s one that proposes to be tougher on Islamic State than Obama has been, while also less willing to intervene in the region militarily than Bush was.
That could be tricky. The WSJ explains why:
The Trump formula suggests an approach unburdened by the need for consistency or adherence to any ideological framework. One problem with that approach, though, is that it is full of inherent contradictions and potential unintended consequences.
For example, a partnership with Russia to defeat Islamic State also means empowering not just Russia’s friend there, Syrian President Assad, but also Mr. Assad’s chief regional ally, Iran. Iran has placed a huge bet on its relationship with Mr. Assad as the key to its hopes to expand its regional influence.
So teaming up with Russia and tolerating Mr. Assad in Syria to defeat Islamic State could have the unintended consequence of further empowering Iran – much as the war to topple Saddam Hussein in Iraq had the unintended consequence of clearing the path for expanded Iranian influence in the region.
While that would be great news for Iran, which would have far less to be concerned about, and likely would be spared the contingency of Obama’s Nuclear deal falling appart, it would infurate America’s other Persian Gulf allies, such as Israel and Saudi Arabia, who abhor Iran’s leadership, “and surely isn’t the goal of Mr. Mattis and incoming national security adviser, retired Lt. Gen. Michael Flynn, whose antipathy toward Iran’s clerical regime is well documented” the WSJ adds. Unless, it is Trump’s goal in which case his opinion would override that of his advisors.
At the same time, the WSJ notes, abrogating the nuclear deal with Iran risks undermining that potential new partnership with Mr. Putin. Mr. Putin supports that deal and its provisions ending international economic sanctions, and has moved in smartly to cash in. Russia is seeking deals on nuclear energy projects in Iran, and the Russian news agency reported last month that the two nations are discussing a $10 billion arms deal.
“If you end the Iran deal you’re going to end up with a lot of awkwardness and unpleasantness with Mr. Putin,” says Mr. Miller. As that suggests, the Middle East has a way of befuddling new American presidents and their best-laid plans.
Ultimately, the question will be just how much does Trump want to be on Putin’s good side (and, to a lesser extent, vice versa), and how far will Trump go to pressure Iran before reaching the Kremlin’s own breaking point.
* * *
For now, Iran is not waiting with arms crossed to find out which path Trump will take and as the Free Beacon writes, Iran has been conducting a series of massive war-drills meant to demonstrate the Islamic Republic’s “supremacy” and show Western forces that the country is prepared to attack forces stationed in the Persian Gulf region, according to Iranian military leaders and reports in the country’s state-run media.
The war drills, which began on Sunday in southeastern Iran and continued into Monday, include ground and air forces as well as unmanned drones. The war games coincided with the public release by Iran of a new unmanned drone, the latest in a series of such aircraft publicly flown by Tehran in recent months.
Fearing that Trump is indeed closer to tearing up the Nuclear deal than not, Iran military leaders warned the United States against taking any provocative action in the region and promised a swift military response, according to comments over the weekend as the war drills began.
“The Islamic Republic of Iran’s military forces enjoy supremacy over the Persian Gulf region more than any other time,” Brigadier General Massoud Jazzayeri, the deputy chief of staff of Iran’s Armed Forces, was quoted as saying over the weekend. “The military and security conditions of the Persian Gulf are in a way that the enemy’s forces and equipment are fully within the range of the Iranian military men.”
The war drills, which are expected to carry on into Wednesday, also included the introduction of a new jamming system that Iran claims is capable of bringing down enemy drones. Iran also displayed several precision missiles and helicopters armed with heavy ammunition.
Meanwhile, Iranian leaders have accused the United States of launching a new hacking operation on Tehran’s infrastructure. “At present, the US has launched a project named Nitro Zeus with the aim of attacking Iran’s defense and telecommunication infrastructures,” Alireza Karimi, a member of Iran’s Civil Defense Organization, was quoted as saying on Monday.
“Based on studies that we have carried out, the project is assessed to be much more dangerous than the Stuxnet project,” Karimi was reported as saying, referring to a joint U.S.-Israeli cyber effort to disrupt Iran’s nuclear network.
* * *
In short, Trump – who still has one month until his inauguration, and who has already managed to create a modest diplomatic rift with China over the “One China” policy – will soon have to decide how he will approach Iran: as friend, and keep his amicable relationship with Putin but backing down on his promise to tear up Obama’s nuclear deal, or foe, in the process angering Saudi Arabia and Israel and also sending the price of oil soaring once Iran is forced to remove over 1 million barrels in oil from global markets as its crude exports are again halted.
END
If the first headline on Iran was not enough to send gold down in price the following certainly warrants our attention: gold goes down another 5 dollars:
(courtesy zero hedge)
Iran Lashes Out At US, Will Build Nuclear-Powered Boats In Retaliation To US Deal “Violation”
Until now, Iran’s angry outbursts in response to alleged breaches of Obama’s nuclear deal as well as extensions of the Iran sanctions, have been relegated to verbal outbursts, culminating most recently with the threat by Iran’s defense minister Denghan that should Trump end Obama’s landmark arrangement with Iran, it would result in a war which “would mean the destruction of the Zionist regime (Israel) … and will engulf the whole region and could lead to a world war.”
Overnight, however, Iran moved beyond the merely verbal and in its first concrete response to last month’s decision by the US Congress to extend legislation making it easier for Washington to reimpose sanctions on Tehran, Iran’s President Hassan Rouhani ordered scientists from the national nuclear agency, and specifically Ali Akbar Salehi, the head of the Atomic Energy Organization of Iran, to prepare a project for development of both reactors for maritime use and fuel production for this purpose in three months.
“The United States has not fully delivered its commitments in the Joint Comprehensive Plan of Action (the nuclear deal),” Rouhani wrote in a letter published by state news agency IRNA. “With regards to recent (U.S. congress) legislation to extend the Iran Sanctions Act, I order the Atomic Energy Organization of Iran to … plan the design and construction of a nuclear propeller to be used in marine transportation to be used in marine transportation.”
Rouhani described the technology as a “nuclear propeller to be used in marine transportation,” but did not say whether that meant just ships or possibly also submarines. Iran said in 2012 that it was working on its first nuclear-powered sub.
While the technology is different from nuclear weapons, banned by last year’s nuclear deal, it has a definite military leaning. The only operator of nuclear-powered civilian vessels at the moment is Russia, mostly due to its fleet of icebreakers. The US and Germany had nuclear-propelled merchant ships in the past, while the Japanese ship ‘Mutsu’ was finished but never carried commercial cargo.
U.S. Congress members have said the extension of the bill does not violate the nuclear deal agreed last year to assuage Western fears that Iran is working to develop a nuclear bomb. The act, Congress added, only gave Washington the power to reimpose sanctions on Iran if it violated the pact. Washington says it has lifted all the sanctions it needs to under the deal between major powers and Iran.
But Iran’s Supreme Leader, Ayatollah Ali Khamenei said last month that the extension was a definite breach and Iran would “definitely react to it”.
The Iran nuclear deal was negotiated by Tehran and six leading world powers, and sought to address concerns that Iran may have a clandestine project to develop nuclear weapons. Iran denied the accusation, but agreed to restrict its nuclear industry in exchange for the lifting of economic sanctions imposed by the UN Security Council, the US and the EU. The deal also allowed Iran to resume oil exports, leading to this year’s Saudi relent over oil production cuts, after it started losing market share to Tehran.
The deal was hailed as a breakthrough at the time of its signing in 2015 by all parties involved, despite dissenting voices from Republicans in the US, hardliners in Iran and Israel in the Middle East. Iran has since held its part of the bargain and is complaining that the US continues its anti-Iranian policy and imposes new sanctions under different pretexts.
* * *
While it is debatable whether Congress breached the terms of the Iran deal, Iran’s actions will certainly stoke tensions with Washington, already heightened by comments from Donald Trump who has vowed to scrap the deal, under which Iran agreed to curb its nuclear activities in exchange for lifted sanctions. It is certain that Trump will see Iran’s escalation as further evidence of Iran non-compliance with the terms of the agreement, potentially leading for a stronger push to pull the US out of the atomic deal.
Meanwhile, there was no immediate reaction from the Vienna-based International Atomic Energy Agency, which monitors Iran’s nuclear work.
Iran always argued its nuclear program was for peaceful purposes.
end
Syria:Russia
The battle for Aleppo is over: The militants are to be given free passage out of Aleppo/the battle is over!
(courtesy zero hedge)
Assad Retakes Aleppo: The Military Operation Is Over, Says Russian Envoy
The Syrian war is on the verge of the biggest shift in the balance of power since 2011, with the Assad regime – with support from Russian forces – having retaken Aleppo. And, as Russia’s UN envoy Vitaly Churkin notes, an arrangement has been reached for militants to leave the besieged areas of eastern Aleppo “within hours”, confirming earlier media reports that Assad is about to have full reign of the hotly contested city – a symbolic center of the anti-Assad insurgency.
As RT futher adds citing Churkin, “the military operation in Eastern Aleppo is now over, and the Syrian government has begun restoring control.”
“My latest information is that they indeed have an arrangement achieved on the ground that the fighters are going to leave the city,” Churkin said Tuesday ahead of the emergency UN Security Council meeting in New York. According to Churkin, the militants, who have been holed up in eastern Aleppo for years, are scheduled to leave the city “within hours.”
While this marks the biggest victory for Assad, and his Kremlin-based backers, it is also the biggest regional humiliation for the US ally-backed Syrian “rebels”, who have just lost their biggest resistance outpost.
The envoy added that the withdrawal of militant fighters will put the city under the control of the Syrian government and there will be no need for eastern Aleppo residents to leave their homes.
During his speech at the meeting, Churkin told the UNSC members that the “counterterrorist operation in Aleppo will conclude in the next few hours.” The fighters are currently leaving the city through corridors that they chose themselves, including ones leading to Syria’s Idlib province, Churkin stressed.
“The counter-terrorist operation in Aleppo will be completed within a few hours. All the militants along with their families and the wounded are now withdrawing through the agreed corridors in the directions they themselves have chosen, including in the direction of Idlib,” the Russian envoy said.
An official with one of the militant groups in Aleppo earlier told Reuters that an agreement had been reached with Russia on Tuesday, while another rebel representative reported, “There are signs of a breakthrough in the coming hours.” However, UN Secretary-General Ban Ki-moon has urged the Syrian government and its Russian and Iranian allies to “urgently allow the remaining civilians to escape” Aleppo and facilitate humanitarian aid access to the city.
“In recent days and hours, we appear to be witnessing nothing less than an all-out effort by the Syrian government and its allies to end the country’s internal conflict through a total, uncompromising military victory,” Ban told the UN Security Council.
Aleppo has been divided between the government forces and the militants since the start of the Syrian conflict in 2011. However, in recent weeks, the Syrian Army has made significant gains in eastern Aleppo and is close to liberating it from the militants.
* * *
So what happens next? Here is a quick primer from Bloomberg on “life after Aleppo’s fall.”
Syrian President Bashar al-Assad, assisted by Russia and Iran, is on the verge of re-taking Aleppo in what would be the biggest victory for his troops against rebels in almost six years of civil war. Assad says he’ll turn his attention to the remaining rebel strongholds. His opponents vow to keep fighting in the absence of a political solution. There could be a surge in guerrilla conflict in areas reclaimed by Assad’s troops, while jihadists look to exploit any weaknesses. The world’s reaction to all this may depend on the emerging relationship between Russia and the incoming U.S. president, Donald Trump.
1. Is an end to fighting any closer?
Much of eastern Aleppo, a symbolic center for the anti-Assad insurgency, is in ruins, leveled by Syrian and Russian bombing that led European and U.S. officials to speak of possible war crimes. But the opposition isn’t ready to give up. “Aleppo is an important place for the revolution, but it’s not the last,” George Sabra, chief negotiator for rebel forces, told the BBC in November. Assad agrees. “Aleppo will be a gain, but to be realistic, it doesn’t mean the end of the war,” he said in an interview with pro-government al-Watan newspaper published on Dec. 8.
2. Where will Assad focus next?
Assad said in October Aleppo would serve as “the springboard” for other offensives, singling out Idlib. His regime lost almost all of this region — about 60 kilometers (35 miles) southwest of Aleppo near the Syrian-Turkish border — in mid-2015. Idlib borders Latakia, the heartland of the Assad regime, and is close to the Damascus-Aleppo highway.
3. Who’s winning?
Taking Aleppo, whose eastern neighborhoods had been held by rebels since 2012, will give Assad control over Syria’s biggest cities, representing more than 40 percent of the country’s territory and about 60 percent of its people. But Syria has distinct areas outside Assad’s base in the west, including Kurdish-held enclaves in the north, Islamic State controlling much of the east, and other groups left with shrinking pockets of influence.
4. How will the nature of the conflict change?
Some 150,000 rebels, including jihadists, are fighting Assad, and they’ll be assuming a more prominent role, according to Charlies Lister, a senior scholar at the Middle East Institute in Washington. “The biggest losers from Aleppo’s collapse are Syria’s moderate opposition groups, which had remained the city’s primary actors ever since conflict first erupted there in early 2012,” he wrote. In northern Syria, the mainstream opposition looks set to “transform itself into a guerrilla-style insurgency in 2017,” he added.
5. What does all this mean for Assad?
He’ll have a hard time keeping local and foreign militias in check and administering cities he controls. That’s been the case in Homs and most recently the historic city of Palmyra, where Islamic State took advantage of the focus on Aleppo to attack a city it had held until March. “Aleppo will be even more difficult to police and stabilize,” said Raphael Lefevre, author of “Ashes of Hama: the Muslim Brotherhood in Syria.” Insecurity has persisted in areas liberated from rebel control, he said, with civilians threatened by outbreaks of criminality and revenge attacks.
6. Will other nations intervene?
The big unknown hanging over the future of the conflict is the shifting agendas of global and regional powers. Will Russia and Iran stand by Assad if he continues to insist on reconquering the entire country? With their support, Assad is in a better shape than he was before Russia’s intervention more than a year ago. What will Turkey do? Its forces in neighboring Syria are combating both Islamic State and Kurdish fighters linked to the PKK, a group that has been considered Turkey’s main terrorist threat since the 1980s.
7. How might Trump change things?
The U.S. president-elect has said he’s open to a more cooperative relationship with Russian leader Vladimir Putin and has vowed to concentrate on defeating Islamic State rather than helping rebels defeat Assad. That could give Russia a freer hand to press for a military victory in Syria that boosts its status as a great power in the Middle East.
You must see the following video as Paul Watson accurately puts the bed the fabricated story of the Russians hacking the Democratic Party, them undermining of the 2016 election/
(courtesy Paul Joseph Watson/zero hedge)
Paul Joseph Watson Dismantles Fabricated Russian Narrative
Paul Joseph Watson’s latest video, once again, systematically deconstructs the hypocrisy of the left and their latest dangerous effort to undermine the entire 2016 presidential election by utilizing their friends in the media to spin the Russian election hacking narrative without a single shred of actual evidence. While the full video is posted below, as always below are a couple of our favorite lines.
On the left’s inability to process their loss and willingness to risk anything and everything to have it overturned:
The post-election riots failed. The death threats against electoral college members failed. Jill Stein’s recount failed. Your entire “fake news” narrative failed.
The left is willing to risk civil war in American and nuclear war with Russia because they’re butt-hurt about losing. Let that sink in.
Not a single shred of evidence has been presented to support the claim that Russia hacked the election.
On the left’s plotting to organize a coup by turning electoral college voters against Trump:
The left is now conspiring with rogue elements of the CIA to initiate an internal coup within the United States and overthrow a democratically elected President. Let that sink in.
And, of course, the hypocrisy of the left that saw no problem with Saudi Arabia bankrolling Hillary’s campaign…guess they didn’t consider that to be a foreign government interfering in a U.S. election?
Isn’t it funny how all you democrats who cry over foreign influence had no objection whatsoever to Saudi Arabia bankrolling Hillary’s campaign. You had no problem taking all that George Soros money, did you? You had no problem with the Obama State Department overthrowing the government of Ukraine. You had no problem with Obama interfering in the U.K.’s referendum on leaving the EU.
And here is the full video…Enjoy….
END
6.GLOBAL ISSUES
The following is a good commentary as we witness 25 cities on the brink of disaster
(courtesy Mac Slavo/SHTFPlan.com)
25 Cities On The Brink Of Disaster: “Don’t Be Here When Things Get Violent, Unsafe, & Fragile”
ubmitted by Mac Slavo via SHTFPlan.com,
The 21st Century is inching ever closer towards chaos… and the time to get out of the big city is upon us.
With economic conditions, growing crises, desperate populations looking to scratch by, and more hatred and division than at any previous point in American history, the city has become a dangerous and unruly setting – and finding yourseld in one that is falling apart could be the worst mistake you ever make.
People are living in bigger urban zones than ever before… these megacities are the hotspots of global activity. But many are also proving to be the most dangerous place to be in a collapse. Crime is rampant, order is shaken and many people become willing to take advantage of the situation. Many areas are vulnerable to natural disasters, and have already lost control during past emergencies.
In other places, widespread unemployment is simply taking its toll through increases in theft and violence. Whatever the reason, there are many places where things are falling apart, badly.
As Wired reported, disaster is looming on a worldwide basis, but some are approaching total collapse, thanks to a storm of factors:
Using data on 2,100 cities, Robert Muggah has found which factors make an area more likely to become violent, unsafe and fragile. The data show 30 cities on the brink of disaster and what could cause it.
Infographic via Signal Noise.
Cities were rated based on factors including: conflict, fragility, population growth, unemployment rate, access to services, income inequality, air pollution, homicide rate, killings in terrorist attacks, political violence and the risk of natural disaster.
Natural disaster has proved very disruptive lately, as tsunamis and earthquakes have recently devastated New Zealand and rattled nearby Australia. Though things are fairly stable in these Western democracies, their geographical vulnerability to serious tectonic activity makes their civilization far than stable. Auckland, New Zealand made the list for risky cities.
But Haiti was even harder hit. The 2010 earthquake caused widespread devastation in a place that was already one of the poorest on the planet. The 2016 hurricane in Haiti proved that despite billions of dollars in donation, philanthropy and intervention by the likes of the Clinton Foundation, Haiti was still extremely vulnerable. Hundreds of thousands of people were once again displaced as their homes were destroyed; local governments and global NGOs did little to nothing to secure basic necessities, and the place remains one crisis away from total instability. Port-au-Prince, the capital and most populous city there is already a very risky and poverty prone place, and could become much worse in the wake of a disaster.
Of course, any number of urban areas in the war-torn Middle East and perpetual conflict zones of Africa has also made for very dangerous cities, with populations on the brink of disaster, and many individuals vulnerable to crime and violence on a daily basis. Ibb, Yemen, Kirkuk, Iraq, Aden, Yemen, Kabul, Afghanistan and Mosul, Iraq have become some of the worst locales, along with cities spread across the Congo, Mogadishu, Somalia and other highly disputed areas.
Brazil’s megacities are so saturated with the urban poor, and short on basic resources including drinking water, they literally millions of people are on the brink. Riots are possible, and a survival crisis could factor in for Sao Paolo, where 8 million people are at risk of having no access to water. Predictably, many cities in Colombia remain extremely fragile due to the ongoing drug war conflicts that have claimed lives, and left millions of people at the mercy of gang rule.
Venezuela has proven to be a special case, of near precision collapse, as its currency tanks and economic warfare brings people to their knees as they are forced to wait in line for rations, trade on the black market and deal in worthless cash. Socialism has worsened the problems created by the emergency drop in the oil prices. Caracas remains the biggest pool of hungry, poor and increasingly fed up people.
Guatamala City, Mixco and Villa Neuva, Guetemala as well as San Pedro Sula, Honduras were identified as particularly vulnerable cities in Central America, as refugees continue to seek amnesty in the United States to escape the ongoing turmoil in their own countries.
Perhaps surprising to some, many major European cities are quite vulnerable as well to global economic pressures via sharp increases in immigration, “rape” scandals and social concerns about terrorism.
London, UK is one of the wealthiest cities, and yet it faces enormous pressures from overwhelming immigration, from growing economic disparity and from cultural clashes, threats of terrorism – and now, fighting between political factions over Brexit and other issues.
The Eastern bloc is especially vulnerable to these pressures that could lead to a growing unrest. France, Germany, Sweden and Norway also face major instability over immigration and cultural issues.
But some of the most unstable cities on the planet rank among those in the United States.
Places like Baltimore, Detroit, Washington D.C., New York, Philadelphia and other cities across the map are still deeply divided often police and race issues. Many have seen serious riots, looting and unrest. These social wedge issues are still being pushed from moneyed political interests, while political divide after the direction of the country has become sharp.
Dallas, Texas just suspended pension payments for some of its civil servants, a sign that financial insolvency could create an epidemic during the next crisis. Several states, like California, have over promised benefits to state employees in the pension programs, without ever planning to pay for them. If people lose it, Los Angeles,San Francisco, San Diego and the whole of the surrounding areas could simply erupt. Similar problems have left Detroit, Michigan and Puerto Rico, the commonwealth island, extremely vulnerable to bankruptcy and economic apocalypse that could contaminate the nation and global within hours.
If a natural disaster, such as a hurricane, hits the East or Gulf Coast, tens of millions of people could be caught up in traffic, locked in cities without food, and desperate to cling to order and survive. Likewise, if a major earthquake hit the West Coast, millions could be displaced and left without many options. That’s when things turn ugly.
The world is reaching a tipping point, and much chaos and instability could come crashing down anytime now. Many cities have made themselves open targets for collapse, with economic normalcy already hanging by a thread and populations already restless and growing increasingly discontent.
Be prepared. These things are building, and there are quite a few places you’d rather not be when the SHTF.
END
7. OIL ISSUES
this is exciting: China has now ramped up its crude output by the most in 3 years taking advantage of the higher oil price.
(courtesy zero hedge)
Don’t Tell The Saudis, But China Just Ramped Crude Output By Most In 3 Years
China’s oil output is rebounding. Production in the world’s second-biggest buyer rose from a seven-year low last month as OPEC (and NOPEC) negotiated with each other over an output cut deal. As Bloomberg data shows, November saw the biggest rise in Chinese crude production since October 2013.
Chart: Bloomberg
And refining is soaring…
Chart: Bloomberg
All ready to be exported?
Did someone forget to invite China to the ‘deal’ talks?
END
No surprise here: oil tumbles after a huge crude and gasoline build in inventory
(courtesy zero hedge)
Oil Tumbles After Big Surprise Crude, Gasoline Build
After two weeks of huge builds at Cushing (most since 2008),expectations were for a 3rd big weekly build at Cushing (and draw in overall crude). Oil prices kneejerked lower as API reported a major build in overall crude inventories (4.68mm build vs expectations of a 1.5mm draw). While Cushing saw a smaller than expected build, Gasoline inventories also soared most since January.
API
- Crude +4.68mm (-1.5mm exp)
- Cushing +632k (+3.2mm exp)
- Gasoline +3.905mm – biggest since Jan
- Distillates +233k
Biggest gasoline build in 11 months and a big surprise crude build…
Cushing inventories are soaring…
The reaction in crude was an immediate kneejerk lower as oil was“Gartman”‘d again…
“There’s obvious optimism from the bulls on OPEC’s ability to come to an agreement with non-OPEC,” Paul Crovo, Philadelphia-based oil, equities analyst at PNC Capital, says by phone. “At the same time, there’s a reasonable level of trepidation” regarding supply response from U.S. shale
8. EMERGING MARKETS
none today
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings TUESDAY morning 7:00 am
Euro/USA 1.0611 DOWN .0030/REACTING TO + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES
USA/JAPAN YEN 115.28 UP 0.296(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA: HELICOPTER MONEY ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST
GBP/USA 1.2709 UP .0038 (Brexit by March 201/UK government loses case/parliament must vote)
USA/CAN 1.3115 DOWN .0010 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)
Early THIS TUESDAY morning in Europe, the Euro FELL by 30 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0611; 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 AND NOW THE ECB TAPERING OF ITS PURCHASES/ 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 2.06 0r 0.07% / Hang Sang CLOSED UP 13.68 POINTS OR 0.06% /AUSTRALIA IS LOWER BY 0.33% / 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 TUESDAY morning CLOSED UP 95.49 POINTS OR 0.50%
Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN
2/ CHINESE BOURSES / : Hang Sang CLOSED UP 13.68 OR 0.06% Shanghai CLOSED UP 2.06 POINTS OR 0.07% / Australia BOURSE IN THE RED /Nikkei (Japan)CLOSED UP 95.49 POINTS OR 0.50%/ INDIA’S SENSEX IN THE GREEN
Gold very early morning trading: $1159.90
silver:$17.08
Early TUESDAY morning USA 10 year bond yield: 2.449% !!! DOWN 3 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING
The 30 yr bond yield 3.131, DOWN 2 IN BASIS POINTS from MONDAY night.
USA dollar index early TUESDAY morning: 101.09 UP 17 CENT(S) from MONDAY’s close.
This ends early morning numbers TUESDAY MORNING
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And now your closing TUESDAY NUMBERS
Portuguese 10 year bond yield: 3.76% DOWN 7 in basis point yield from MONDAY (does not buy the rally)
JAPANESE BOND YIELD: +.086% DOWN 1/5 in basis point yield from MONDAY/JAPAN losing control of its yield curve
SPANISH 10 YR BOND YIELD:1.43% DOWN 7 IN basis point yield from MONDAY (this is totally nuts!!/
ITALIAN 10 YR BOND YIELD: 1.874 DOWN 13 in basis point yield from MONDAY
the Italian 10 yr bond yield is trading 44 points HIGHER than Spain.
GERMAN 10 YR BOND YIELD: +.360% DOWN 3 IN BASIS POINTS ON THE DAY
END
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IMPORTANT CURRENCY CLOSES FOR TUESDAY
Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM
Euro/USA 1.0621 DOWN .0021 (Euro DOWN 21 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/
USA/Japan: 115.20 UP: 0.226(Yen DOWN 23 basis points/
Great Britain/USA 1.2658 DOWN 0.0012( POUND DOWN 12 basis points)
USA/Canada 1.3134 UP 0.0006(Canadian dollar DOWN 6 basis points AS OIL FELL TO $52.86
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This afternoon, the Euro was DOWN by 21 basis points to trade at 1.0621
The Yen FELL to 115.20 for a LOSS of 23 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016
The POUND FELL 12 basis points, trading at 1.2658/
The Canadian dollar FELL by 6 basis points to 1.3134, AS WTI OIL FELL TO : $52.86
Your closing 10 yr USA bond yield UP 1/3 IN basis points from MONDAY at 2.475% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic USA 30 yr bond yield: 3.131 DOWN 2 in basis points on the day /
Your closing USA dollar index, 101.08 UP 16 CENTS ON THE DAY/1.30 PM
Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY: 1:30 PM EST
London: CLOSED UP 78.15 POINTS OR 1.13%
German Dax :CLOSED UP 94.44 POINTS OR 0.91%
Paris Cac CLOSED UP 43.10 OR 0.91%
Spain IBEX CLOSED UP 144.90 POINTS OR 1.58%
Italian MIB: CLOSED UP 457.29 POINTS OR 2.49%
The Dow was UP 114.78 points or 0.58% 4 PM EST
NASDAQ UP 51.29 points or 0.95% 4.00 PM EST
WTI Oil price; 52.41 at 5:30 pm;
Brent Oil: 55.23 5:30 EST
USA /RUSSIAN ROUBLE CROSS: 60.67 (ROUBLE 34/100 roubles from YESTERDAY)
TODAY THE GERMAN YIELD FALLS TO +0.360% FOR THE 10 YR BOND 2:30 EST
END
This ends the stock indices, oil price, currency crosses and interest rate closes for today
Closing Price for Oil, 5 pm/and 10 year USA interest rate:
WTI CRUDE OIL PRICE 5 PM:$52.41
BRENT: $55.23
USA 10 YR BOND YIELD: 2.473%
USA DOLLAR INDEX: 101.06 UP 14 cents(huge resistance at 101.80)
The British pound at 5 pm: Great Britain Pound/USA: 1.2654./ DOWN 17 BASIS POINTS.
German 10 yr bond yield at 5 pm: +.360%
END
And now your more important USA stories which will influence the price of gold/silver
TRADING IN GRAPH FORM
VIX Up, Stocks Up, Bonds Up… Fed Up!
Dow 20,000 teases everyone ahead of The Fed…
Trannies and Small Caps underperformed as The Dow pushed on once again to new record highs (Nasdaq best on the day)
Stocks were spooked in the last few minutes as The ECB denied Monte Paschi’s capital plan…
While The Dow failed to make 20k today, we note it is up over 2000 points from the pre-Trump lows…
With Goldman accounting for over 20% of all those gains…
Financials remain lower on the week but Tech was the winner today…and Energy rebounded despite oil unch
But today saw a replay of last week’s chaos with VIX and Stocks perfectly correlated (as opposed to perfecvtly anti-correlated norms)…
Here is last week…
And today…
It appears the negative gamma is strong this week.
The Dow has now been overbought for 23 days in a row…at the most overbought in 20 years…
The Dollar index was unchanged by the close, hovering around 101.00…
Treasuries were mixed today with the long-end modestly outperforming (lower in yields) as the rest of the curve leaked higher in yields…
Interestingly copper continued to slide today, gold and silver remain unch along with crude…
So – just as a note to self – stocks are surging on Trumpflation hype but the long-bond, copper, and the yield curve are flattening in deflationary signals?
Inflation market expectations have gone nowhere as stocks have continued to rip…
end
Not good news out of Boeing last night: they have decided to cut production on their Boeing 777’s. However the stock is rising due to an increase in dividends and buyback.
(courtesy zero hedge)
Boeing Stock Jumps To New Record Highs After Cutting 777 Production, But Raising Dividend, Buybacks
It’s been a volatile week for Boeing but all’s well that ends well for the aircraft-manufacturer. Having rallied off Trump “Air Force One” tweet lows, the last 24 hours have been dominated by the massive Iran deal (and its controversies), Trump tweets on Lockheed Martin, and shortly after the close Boeing announced it will cut 777 production (for a second time) sending the stock briefly lower until news of a dividend hike and new buyback authorization sent the stock to a record high.
As Bloomberg reports, there is bad news…
Boeing Co. is planning a deeper cut in production next year for the 777 jetliner, its second-largest source of profit, as the planemaker contends with waning demand for long-range jets.
The manufacturer plans to slow output of its largest twin-engine model
to five aircraft a month starting in August 2017, according to a company
statement to employees Monday. That is a decrease from a previously
announced cut to a seven-jet monthly rate that takes effect early next
year. The decrease in next year’s 777 output won’t affect 2016 financial
guidance.
But the good news is better (for shareholders, perhaps not for employees)..
Boeing Co. boosted its dividend 30 percent to $1.42 a share, topping the $1.25 a share analysts had anticipated.
The
board authorized $14 billion in share buybacks,replacing a previous
program of the same size. The company has repurchased $7 billion of its
shares this year.
And the result – record highs above $158.83…
END
The Republicans have now discovered the huge cost to Trump’s massive stimulus proposal. They now state that they will block tax cuts
(courtesy zero hedge)
The Narrative Changes: Republicans “Pour Cold Water” On Trump’s Massive Stimulus, Will Block Tax Cuts
The driving catalyst behind the furious market rally since the presidential election has been the market’s hope that Trump will unleash a “huge”, still undetermined, debt-funded financial stimulus package, which will grease the volatile handover from monetary to fiscal policy, boosting inflation and rerating risk assets higher. Indeed, the market was so transfixed by this hope, that it has so far ignored all warning signs, duly noted previously on this website.
Nearly a month ago, we warned that when comparing Trump’s proposed budget and the House’s own budget blueprint, “An Unexpected $12 Trillion Hole Emerges In Donald Trump’s Plan To “Make America Great Again“.”
As we first demonstrated, there was a massive $12 trillion debt difference between the plan that Trump espoused, which envisioned a $5 trillion cumulative increase in debt…
Debt Under Central Estimate of Candidates’ Proposals (Percent of GDP)
… compared to the budget blueprint approved by the house earlier this year, which in turn seeks to reduce the deficit versus current projections by $7 trillion over the next ten years, mainly through spending cuts: the result is a $12 trillion “hole” between the Trump and the House budgets.
Needless to say, the market didn’t care.
We followed up just a few days later with “A “Big Problem” Emerges For Trump’s Economic Plan“, where we reported that while the market may (still) be blissfully unaware about the emerging conflict between Trump’s debt-fueled vision for the future, Republican politicians had started to notice. As we wrote, Republican lawmakers warned “that there could be a major obstacle to enacting President-elect Donald Trump’s agenda: the national debt.”
“I was disappointed that it wasn’t brought up in the campaign — anybody’s campaign really — it really wasn’t mentioned,” Sen. Jeff Flake (R-Ariz.) said of deficits and debt. “So I’m very concerned about it. It’s going to be tough to address if there’s no push from outside of the Congress,” he added. “I’m very concerned about it. It’s the biggest problem we face, by far.”
“We did not hear anything about entitlement reform from either of the candidates, and that’s a serious issue,” said Michael Sargent, a research associate at The Heritage Foundation. “You cannot address the growth in spending without addressing entitlement issues.” Well, perhaps if the campaign was engaged in non-stop daily midslinging between Trump and Clinton, someone would have “heard” about it. Alas, now it is a little too late.
Compounding the problem is the expected Federal rate hike to arrest rising inflation, which would increase the cost of the nation’s debt. Flake noted on the Senate floor in September that for every quarter point that interest rates rise, the federal government would have to spend an additional $50 billion annually to service the debt.
Ultimately, the problem regarding the US debt is not so much Trump’s, as that of Republicans who would have to support it. Readers will recall that Congressional Republicans assailed President Obama early in his tenure over soaring federal deficits, which exceeded $1 trillion dollars during his first four years in office. As a result, debt reduction was the main focus of GOP leaders after they took back control of the House in 2010. “It is a problem and going to be a problem. Don’t forget that Obama has doubled the debt and if interest rates were at their historic norms, the deficit would be $612 billion bigger,” said former Sen. Phil Gramm (R-Texas).
The market, once again, did not care.
That may change now, however, with Bloomberg reporting what we have been saying for the past month, namely that republicans, under Mitch McConnell, have “poured cold water on the idea of a massive stimulus package, effectively laying out markers on taxes and spending that that could cramp Trump’s ambitions.“
As Bloomberg explains, Trump’s race to enact the biggest tax cuts since the 1980s went under a caution flag Monday when during a news conference, “Senate Majority Leader Mitch McConnell warned he considers current levels of U.S. debt “dangerous” and said he wants any tax overhaul to avoid adding to the deficit.“
In other words, the market’s narrative that Trump will be the president to pursue a seemingly “liberal” economic growth agenda, one funded by trillions in new debt issuance, just got a very rude wake up call.
“I think this level of national debt is dangerous and unacceptable,”McConnell said, adding he hopes Congress doesn’t lose sight of that when it acts next year. “My preference on tax reform is that it be revenue neutral,” he said. There is one problem with revenue neutral growth when it comes to risk asset prices: they, too, remain neutral.
In other words, if McConnell – who now appears set on collision course with the biggest drier of Trump’s growth strategy – gets his way, the entire Trumpflation rally may be unwound.
Here, Bloomberg repeats what we have warned all along: “The Committee for a Responsible Federal Budget, a nonpartisan think tank, has projected that Trump’s plans would increase the debt by $5.3 trillion over a decade, with deficits already over $600 billion a year and rising on autopilot. If Trump achieves the plans he has laid out, “the deficit’s going to be a lot higher than expected, at least in the short term,” said Stan Collender, a budget expert and former Democratic congressional aide. It could rise to $1 trillion per year for four years, he said.”
As for Trump’s infrastructure plan, touted as costing roughly $1 trillion but with more than 80 percent of the financing coming from the private sector, McConnell said he’s looking forward to seeing the details.
“What I hope we will clearly avoid, and I’m confident we will, is a trillion-dollar stimulus,” he said. “Take you back to 2009. We borrowed $1 trillion and nobody could find that it did much of anything. So we need to do this carefully and correctly and the issue of how to pay for it needs to be dealt with responsibly.”
Then there is the debt limit, which will need to rise next year to avoid defaulting on government obligations; McConnell said he wasn’t sure if that would be paired with any deficit-reduction measures next year as it was in 2011, when Republicans held the debt limit hostage and extracted more than $2 trillion in deficit cuts over a decade from President Barack Obama.
House Speaker Paul Ryan has also said he wants tax changes to be deficit-neutral, indicating that Republicans will assume positive macroeconomic benefits from tax cuts to ease the projected budgetary hit – a process known as dynamic scoring that is popular on the right.
McConnell offered little specificity on changes to Obamacare, saying the Senate would kick off the new year with an Obamacare resolution and then start working on a replacement. Simply waiting wasn’t an option, he said. “The notion that we could do nothing and allow the current law to implode is unacceptable,” McConnell said. “So, I hope no one believes no action is possible or appropriate.”
That replacement process could take as long as three years, according to Republican senators, although some conservatives, particularly in the House, want a much faster timeline. In the short term, eliminating all of Obamacare — including its taxes and Medicare cuts — would add to the deficit, the Congressional Budget Office concluded in 2015. Before the election, McConnell had said he hoped to work on limiting eligibility for programs like Medicare and Social Security if Hillary Clinton was elected. He didn’t repeat that call Monday. That in turn would make the optionality of any Trump debt-funded stimulus even more remote, and could forece Trump to choose between repealing Obamacare and pursuing tax cuts and economic stimulus.
Finally, even if all the changes are implemented immediately, and the GOP rolls over, virtually none of Trump’s stimulus package will generate any impact on the economy until some time in 2018 as Goldman calculated last week.
One interesting wrinkle, as Bloomberg notes, is that Trump has named McConnell’s wife, former Labor Secretary Elaine Chao, to head the Department of Transportation, which would likely make her one of his point people on any infrastructure package. That particular “horse trade”, may be the wildcard that helps Trump clinch his desired stimulus package, especially if no other Republicans dare to defy the President-elect.
end
I knew this was going to happen: 29 electors are demanding more information of Russian interference in the election: a soft coup is upon us:
if this happens civil war!!
(courtesy zero hedge)
The ‘Soft Coup’ Builds: More ‘Electors’ Demand “Russian Interference” Briefing Before They Vote
Donald Trump could have the election legally stolen from him on either December 19th when the Electoral College casts their votes or on January 6th when a joint session of Congress gathers to count those votes. As The Economic Collapse blog’s Michael Snyder notes, the establishment is in full-blown panic mode at this point, and they seem to have settled on “Russian interference in the election” as the angle that they will use to unleash this ‘soft coup’ as today, the Hill reports more Democratic electors are joining the call for an intelligence briefing before they cast their votes for president on Monday.
Twenty-nine electors now are pressuring Director of National Intelligence James Clapper to disclose more information about the CIA’s conclusion that Russian interference helped sway the election in President-elect Donald Trump’s favor.
On Monday, 10 electors — spearheaded by Christine Pelosi, the daughter of House Democratic Leader Nancy Pelosi (Calif.) — wrote an open letter to Clapper, demanding more information ahead of next week’s vote.
“The Electors require to know from the intelligence community whether there are ongoing investigations into ties between Donald Trump, his campaign or associates, and Russian government interference in the election, the scope of those investigations, how far those investigations may have reached, and who was involved in those investigations,” the letter reads.
“We further require a briefing on all investigative findings, as these matters directly impact the core factors in our deliberations of whether Mr. Trump is fit to serve as President of the United States.”
Twenty-eight Democrats and one Republican have now signed the letter.
On Monday, the Clinton campaign voiced support for the effort.
“Each day that month, our campaign decried the interference of Russia in our campaign and its evident goal of hurting our campaign to aid Donald Trump,” said John Podesta, Hillary Clinton’s campaign chairman, in a statement.
“Despite our protestations, this matter did not receive the attention it deserved by the media in the campaign. We now know that the CIA has determined Russia’s interference in our elections was for the purpose of electing Donald Trump. This should distress every American.”
But ultimately, as The Economic Collapse blog’s Michael Snyder warns,this is not about Russian interference in our election.
Rather, this is all about the elite doing whatever is necessary to stop Donald Trump. The elite are going to fight against him every step of the way, and they are never, ever going to give up. This is a point that I made during an interview with Alex Jones on Monday…
The next key date that we need to be watching for is December 19th.
On Monday, members of the Electoral College will gather in Washington D.C. and in all 50 state capitols to cast their votes. We know that at least one Republican elector that is supposed to be pledged to Trump will not be voting for him, and that elector claims that there are others that also will not be voting for Trump.
If 37 Republican electors can be persuaded to cast their votes for someone other than Trump, that would throw the election into the House of Representatives, and it is unclear what the House would do in that scenario.
If Trump is not stopped at the Electoral College, there is also the possibility that he could be derailed when a joint session of Congress gathers to count the Electoral votes on January 6th.
As I discussed yesterday, all it takes to force a vote on the validity of Electoral College votes is an objection in writing that is signed by at least one member of the House and one member of the Senate. As the official House.gov website explains, if both the House and the Senate vote to approve the objection, the votes covered by the objection are not counted…
Since 1887, 3 U.S.C. 15 sets the method for objections to electoral votes. During the Joint Session, Members of Congress may object to individual electoral votes or to state returns as a whole. An objection must be declared in writing and signed by at least one Representative and one Senator. In the case of an objection, the Joint Session recesses and each chamber considers the objection separately in a session which cannot last more than two hours with each Member speaking for no more than five minutes. After each house votes on whether or not to accept the objection, the Joint Session reconvenes and both chambers disclose their decisions. If they agree to the objection, the votes in question are not counted. If either chamber does not agree with the objection, the votes are counted.
In both the Senate and the House, there are anti-Trump Republicans that would absolutely cherish the opportunity to deny him the presidency.
I don’t know if it will happen, but this Russian interference issue is the kind of thing that could be used to justify taking this kind of action.
Of course if the election was stolen from Donald Trump that would likely throw the entire nation into a state of chaos, but I think that at this point the elite would be willing to risk just about anything to keep Donald Trump out of the White House.
* * *
If you think this is all too far-fetched for modern-day Western democracies, here is Keith Olbermann literally losing it over “the Russian coup under way in America”…
Not only is the pension fund of Dallas in trouble but also twin city Fort Forth has also got serious problems .
(courtesy Mish Shedlock/Mishtalk)
Not Just Dallas; Fort Worth Employees’ Pension Plan In Deep Trouble
Submitted by Michael Shedlock via MishTalk.com,
Dallas isn’t the only city in Texas with a sick retirement fund. Nearby Fort Worth is also in deep trouble.
Let’s dive into the Comprehensive Annual Financial Report for the Fort Worth Employees’ Retirement Fund for fiscal years ended September 30, 2015 & 2014 to see what we can find.
Fort Worth Retirement Fund
The Fort Worth “City” Pension plan has a liability of $1.271 Billion
on assets of only $2.094 billion. The plan is 62% funded and covers
389,528 employees.
The “Staff” plan which covers the people running the pension plan is in better shape. But there is only 1,542 people covered.
For the fiscal year ending September 30, the numbers got much worse.
City Plan Has More Net Liabilities than Assets
The pension liability for the “City” plan for fiscal year ending
September 2015 jumped to $2.124 billion. The plan has more net
liabilities than assets.
Staff Plan in Much Better Shape
Congratulations to the staff running running the retirement plan. They are in much better shape.
Plan Assumptions
- The plan assumes 8% returns plus an extra 2% COLA in some cases.
- Projected salary increases are a “modest” 3.5% to 18.0%.
- The plan uses 5-year smoothed averages. That means the great recession was already factored out.
What is In the Plan?
The above image is not all the assets, I just clipped an interesting page.
More documents are available for download at the Fort Worth Report Center.
The person who emailed the above link wishes to remain anonymous, and offers this comment:
“Missing from the report are all the vacation hours the employees
have stashed away. Some of the grandfathered ones have over 1,000 hours
that will pad their benefits at retirement.”
It’s safe to say this pension fund will never make it, for numerous reasons. Benefit haircuts are coming.
For some reason, Fort Wort escaped the scrutiny of Dallas. I suspect that will change soon.
end
WELL THAT IS ALL FOR TODAY
I WILL SEE YOU TOMORROW NIGHT
H
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