Dec 14/Fed raises rates by .25%/highlights 3 more rate hikes for 2018/states there will be no need for Trump fiscal stimulus/another massive raid on gold and silver today after announcement of the Fed hike/

Gold at (1:30 am est) $1161.30 UP $4.60

silver  at $17.15:  UP 15 cents

Access market prices:

Gold: 1143.40

Silver: 16.85

 

Today, the USA probably ignited their destruction and no doubt the entire globe. They have decided to raise rates which will cripple the emerging nations.  China will reciprocate  by devaluing the yuan as the Chinese currency is pegged to the dollar and thus the yuan actually rises against all other currencies except the dollar. So we should expect a huge devaluation in the next few days from China and thus the yuan should hit 7.00 to the dollar and then fall from there.china will be sending deflation throughout the globe.The Japanese yen is now 117 to the dollar and the citizens of Japan will now experience huge price increase in food imports.  They will not be happy campers although the export side of things will be thrilled with the lower yen. The USA economy is not robust at all and the higher dollar will kill its exports.  Donald Trump will not be a happy camper as he wants lower interest rates while he undergoes fiscal stimulation. He will not be a happy camper being told by Yellen that fiscal stimulus is not necessary.  The world’s finances begins to implode tonight.

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:

WEDNESDAY gold fix Shanghai

Shanghai morning fix Dec 14 (10:15 pm est last night): $  1194.69

NY ACCESS PRICE: $1160.20 (AT THE EXACT SAME TIME)/premium $34.49

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1193.13

NY ACCESS PRICE: 1162.30 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $30.83

China rejects NY pricing of gold  as a fraud  

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Dec 14: 5:30 am est:  $1162.30   (NY: same time:  $1161.20    5:30AM)

London Second fix Dec 14: 10 am est:  $1162.25 (NY same time: $1162.60    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:  0 NOTICE(S) FOR nil OZ.  TOTAL NOTICES SO FAR: 8478 FOR 847,800 OZ    (26.37 TONNES)

For silver:

 NOTICES FOR DECEMBER CONTRACT MONTH FOR SILVER: 40 NOTICE(s) FOR 200,000  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 3039 FOR 15,195,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 178 contracts UP to 163,556 with respect to YESTERDAY’S trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .818 BILLION TO BE EXACT or 117% of annual global silver production (ex Russia & ex China).

FOR THE DECEMBER FRONT MONTH:  40 NOTICES FILED FOR 200,000  OZ.

In gold, the total comex gold ROSE by 668 contracts EVEN THOUGH WE HAD A FALL IN  THE PRICE GOLD ($6.80 with YESTERDAY’S trading ).The total gold OI stands at 397,034 contracts. We are very close to the bottom with respect to OI.  Generally 390,000 should do it.

we had 0 notice(s) filed upon for NIL oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:  

We had ANOTHER HUGE change in tonnes of gold at the GLD,  a withdrawal of 6.82 tonnes of gold/

Inventory rests tonight: 849.44 tonnes

.

SLV 

we had no changes in silver,

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 178 contracts UP to 163,556 DESPITE THE FACT THAT  the price of silver FELL by $0.21 with YESTERDAY’S trading.  The gold open interest ROSE by 668 contracts UP to 397,034 even as the price of gold FELL BY  $6.80 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  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 14.50 POINTS OR 0.46%/ /Hang Sang closed UP 9.92  OR 0.04%. The Nikkei closed UP 3.09 OR 0.02%/Australia’s all ordinaires  CLOSED UP 0.70% /Chinese yuan (ONSHORE) closed UP at 6.9049/Oil FELL to 521.5 dollars per barrel for WTI and 54.89 for Brent. Stocks in Europe: ALL IN THE RED.  Offshore yuan trades  6.9086 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

The Bank of Japan intervenes in their bond market forcing the yield down to 0.  It did not last long as the yield is now up to 0.059%.  However the lower yields on the 10 year bond also drove yields on the 30 yr bond lower and the yield curve is relatively flat and very bad for bankers:

 

( zero hedge)

c) REPORT ON CHINA

The war of words with China is escalating.  Now China is ready to slap a penalty on an unnamed automaker for monopolistic pricing behaviour:

 

( the Real Fly)

4 EUROPEAN AFFAIRS

i)Tsipras is one complete idiot:  he actually thought that there was going to be some Greek debt relief?  He should have exited the euro when he had a chance:

( zero hedge)

ii) As Bill Holter has highlighted to us on several occasions, collateral is scarce especially in Europe.  This is why the ECB has now allowed cash to be used as collateral. However this is not enough as the German 2 yr falls to -.778%

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

next stop on the war on cash is Australia as they are going to ban the 100 dollar note Together with the 50 dollar note, that represents 92% of the value in circulation. I guess they want to follow India into the toilet

(courtesy Mish Shedlock/Mishtalk)

7. OIL ISSUES

Oil tumbles to the 51 dollar handle. OPEC warns that the glut may continue longer than expected.  (As we promised)

( zero hedge)

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)Donald Trump’s victory causes the dollar to get stronger and this is totally opposite to what he wants: a lower dollar to help USA firms be competitive in the manufacturing sector:

( London’s Financial Times/Sam Fleming)

10.USA STORIES

i)More trouble in Dallas as a great number of police resignations (99) were slapped on city desks

( zero hedge)

ii)Who on earth selects these people to be electors? Trouble ahead as it seems this guy was paid to change his vote to Clinton

( GotNews/zero hedge)

iii)It is now up to 40 electors demanding a briefing from Clapper on the Russian interference.  However all of these save one is already for the Democrat.  However it shows how desperate are the democrats

( zero hedge)

iv)Another disappointing data point today:  industrial production disappoints for the 15th straight month:

( zero hedge)

v)The all important retail sales disappoints post Trump victory: coming in at only .1% month over/month!

( zero hedge)

vi) The bond king Jeff Gundlach believes that if the 10 year yield rises to 3% that will be enough to punish the markets and end the bond bull;

(courtesy Jeff Gundlach./zero hedge)

vii)Business inventories fade .2% month over month as excess inventory is being shed. The problem here is that 4th quarter GDP will falter badly.

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 668 CONTRACTS UP to an OI level of 397,034 AS THE PRICE OF GOLD FELL $6.80 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 INCREASE of 63 contracts UP to 1159.We had 1 notice(s) served upon yesterday so we GAINED 64 contracts or 6400 oz will stand for delivery.

For the next delivery month of January we had a GAIN of 53 contracts UP to 2407. For the next big active delivery month of February we had a GAIN of 627 contracts UP to 272,962.

We had 0 notice(s) filed upon today for NIL oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI ROSE by 178 contracts FROM 163,378 UP TO 163,556 even though the price of silver FELL BY $0.21 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 136 contracts DOWN to 454 CONTRACTS . We had 209 notices served upon yesterday so we GAINED 71 contracts or an additional 355,000 oz will stand for delivery

The next non active delivery month is January and here the OI fell by 151 contracts down to 1707. This level seems highly elevated. Maybe we are going to see the same huge metals gains in silver as we have witnessed in gold.

The next big active delivery month is March and here the OI FELL by 109 contracts UP to 134,833 contracts.

We had 40 notices filed for 200,000 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 126,455  contracts which is POOR.

Yesterday’s confirmed volume was 154,740 contracts  which is fair

Initial standings for DECEMBER
 Dec 14.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 16,396.500 oz
Scotia
 510 kilobars
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 49,345.571 oz
Brinks
Scotia
incl 10 kilobars
No of oz served (contracts) today
 
0 notice(s)
NIL oz
No of oz to be served (notices)
1159 contracts
115,900 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     3,937,407.2 oz
Today we HAD 2 kilobar transactions/
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil  oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 2 customer deposit(s):
i) into SCOTIA: 49,024.07 oz
ii) into Brinks: 321.500 oz (10 kilobars)
total customer deposits; 49,345.571 oz
We had 1 customer withdrawal(s)
 i) out of Scotia; 16,396.500 oz
(510 kilobars)
total customer withdrawal: 16,395.500 oz
We had 2  adjustment(s) AND IT WAS A DILLY
 i)OUT OF HSBC:  54,399.492 OZ LEAVES THE DEALER HSBC AND ENTERS THE CUSTOMER HSBC.
ii) Out of Brinks:  24,604.96 oz leaves the dealer Brinks and this enters the customer of Brinks
total :79,003 oz or 2.4 tonnes)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventor 1,660,071.694 or 51.635 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 9,428,689.415 or 293.27 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 293.27 tonnes for a  loss of 10  tonnes over that period.  Since August 8/2016 we have lost 61 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

For December:

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the DECEMBER. contract month, we take the total number of notices filed so far for the month (8478) x 100 oz or 847,800 oz, to which we add the difference between the open interest for the front month of DEC (1159 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 963,700 oz, the number of ounces standing in this non  active month of DECEMBER.
 
Thus the INITIAL standings for gold for the DEC contract month:
No of notices served so far (8478) x 100 oz  or ounces + {OI for the front month (1096) minus the number of  notices served upon today (0) x 100 oz which equals 963,700 oz standing in this non active delivery month of DEC  (30.2748 tonnes)
WE GAINED 64 CONTRACTS OR AN ADDITIONAL 6400 OZ OF GOLD WILL  STAND FOR DELIVERY.
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I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 12 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for 2016:
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.3950 tonnes.
DEC.   30.2748 tonnes
total for the 12 months;  222.854 tonnes
average 18.487 tonnes per month vs last yr 51 tonnes total for 12 months or 4.25 tonnes average per month. From May 2016 until Dec 2016 we have had: 198.589 tonnes per the 8 months or 24.824 tonnes per month (which includes the non delivery months of May, June and Sept).  In essence the demand for gold is skyrocketing.
Something big is going on inside the gold comex.
Just take a look at Nov 2016 deliveries at 8.3950 tonnes compared to last yr 0.6656 tonnes
December so far:  30.2748 tonnes are standing vs last year’s  24 tonnes on first day notice and 6.45 tonnes on the completion of it’s delivery month.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST FOUR MONTHS  61 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE DECEMBER DELIVERY MONTH
DECEMBER INITIAL standings
 Dec 14. 2016
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 NIL
Deposits to the Dealer Inventory
nil  OZ
Deposits to the Customer Inventory 
579,635.08 oz
SCOTIA
No of oz served today (contracts)
40 CONTRACT(S)
(200,000 OZ)
No of oz to be served (notices)
414 contracts
(2,070,000  oz)
Total monthly oz silver served (contracts) 3039 contracts (15,195,000 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
today, we had nil deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 0 customer withdrawal(s):
TOTAL CUSTOMER WITHDRAWALS: NIL
 we had 1 customer deposit(s):
i) into SCOTIA:  579,635.08 OZ
total customer deposits;  579,635.08  oz
 
 
 we had 0 adjustment(s)
Volumes: for silver comex
Today the estimated volume was 47,074 which is VERY GOOD
YESTERDAY’S  confirmed volume was 49,950 contracts  which IS VERY GOOD.
The total number of notices filed today for the DEC. contract month is represented by 40 contracts for 200,000 oz. To calculate the number of silver ounces that will stand for delivery in DEC., we take the total number of notices filed for the month so far at  3039 x 5,000 oz  = 15,195,000 oz to which we add the difference between the open interest for the front month of DEC (454) and the number of notices served upon today (40) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the DEC contract month:  3039(notices served so far)x 5000 oz +(590) OI for front month of DEC. ) -number of notices served upon today (40)x 5000 oz  equals  17,265,000 oz  of silver standing for the DEC contract month.
we GAINED 71 contracts or an additional 355,000 oz will stand for delivery in this active month of December..
 
Total dealer silver:  37.922 million (close to record low inventory  
Total number of dealer and customer silver:   180.346 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

 

And now the Gold inventory at the GLD
DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/
DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes
Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes
Dec 9/another huge withdrawal of 3.26 tonnes of gold leaves the GLD vaults on its way to Shanghai/Inventory rests this weekend at 857.45 tonnes
Dec 8/ANOTHER HUGE WITHDRAWAL OF 2.96 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 860.71 TONNES (THIS GOLD IS HEADING TO SHANGHAI)
DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes
Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes.
Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes
Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes
Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes
NOV 30/A SMALL WITHDRAWAL OF 1.18 TONNES FROM THE GLD/INVENTORY RESTS AT 883.86 TONNES/MAYBE THEY ARE AT THE BOTTOM OF THE BARREL FOR PHYSICAL GOLD TO TRANSFER TO THE BANKERS.
Nov 29/no changes in gold inventory at the GLD/inventory rests at 885.04 tonnes
Nov 28/no change in gold inventory at the GLD/Inventory rests at 885.04 tonnes
Nov 25 We had a massive 19.87 tonnes of gold leave the GLD/this would be a paper loss not real gold (they only have paper gold in their inventory/total inventory: 885.04 tonnes
Nov 23/a huge withdrawal of paper gold from the GLD equal to 4.66 tonnes/inventory rests at 904.91 tonnes
NOV 22/no changes at the GLD/Inventory rests at 908.76 tonnes
Nov 21/A MASSIVE 11.87 TONNES OF PAPER GOLD WERE SUPPLIED BY THE CROOKS TO SUPPRESS THE PRICE OF GOLD/INVENTORY RESTS AT 908.76 TONNES/ AND GOLD RISES???
Nov 18/no changes at the GLD/Inventory rests at 920.63 tonnes
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Dec 14/ Inventory rests tonight at 849.44 tonnes
*IN LAST 50 TRADING DAYS: 100.37 TONNES REMOVED FROM THE GLD

end

Now the SLV Inventory
Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/
DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz
Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/
Dec 9/no change in silver inventory/inventory rests at 342.865 million oz/
Dec 8/a huge withdrawal of 3.09 million oz from the SLV/Inventory rests at 342.865 million oz
DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/
Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz
Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/
Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/
Dec 1/no changes in silver inventory at the SLV/inventory rests at 346.150 million oz/
NOV 30/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 346.150 MILLION OZ
Nov 29/no changes in silver inventory /inventory rests tonight at 346.150 million oz/
Nov 28/no change in silver inventory/inventory rests tonight at 346.150 million oz/
Nov 25/we had another withdrawal of 949,000 oz from the SLV/Inventory rests at 346.150 million oz
Nov 23/A HUGE WITHDRAWAL OF 3.083 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 347.099 MILLION OZ
NOV 22/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 350.182 MILLION OZ
Nov 21/a MASSIVE 6.071 MILLION OZ OF SILVER WITHDRAWN FROM THE SLV VAULTS/INVENTORY RESTS AT 350.182 MILLION OZ/AND SILVER HOLDS IN PRICE???
Nov 18/no changes in silver inventory at the SLV/Inventory rests at 356/253 million oz
.
Dec 14.2016: Inventory 341.063  million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 9.5 percent to NAV usa funds and Negative 8.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 59.9%
Percentage of fund in silver:39.9%
cash .+0.3%( Dec 14/2016)
.
2. Sprott silver fund (PSLV): Premium FALLS to +.14%!!!! NAV (Dec 14/2016) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.61% to NAV  ( Dec 14/2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.14% /Sprott physical gold trust is back into NEGATIVE territory at -0.61%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver stories for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE

Shariah Gold Standard Is “Revolutionary” – Mark Mobius

GoldCore's picture

(courtesy London’s Financial Times/Sam Fleming)

Allan Flynn: ‘When gold goes above 1430, we whack it’

Submitted by cpowell on 04:01PM ET Wednesday, December 14, 2016. Section: Daily Dispatches

11:07a ET Wednesday, December 14, 2016
Dear Friend of GATA and Gold:

Gold researcher Allan Flynn today examines the electronic exchanges of bullion bank traders plotting their manipulation of the gold market, exchanges recently disgorged by Deutsche Bank to settle the anti-trust lawsuit against it in federal court in New York.

Flynn notes what seems to be a reference in the exchanges to the Bank of China, a government-owned operation. Flynn also finds it curious that while the exchanges disgorged by Deutsche Bank powerfully incriminate Union Bank of Switzerland, a 2014 Swiss government report about misconduct in the currency market by UBS overlooked the gold market.

There would be a more than plausible explanation for these angles: that, as GATA long has maintained, governments and central banks are the real parties in interest in rigging the gold and currency markets and so have been giving a pass to bullion banks and investment banks, which borrow gold from central banks for trading purposes, as long as the bullion banks and investment banks push the markets where governments and central banks want them to go.

Surreptitious trading by governments and central banks, direct and indirect, is the far bigger issue here, since governments and central banks are authorized to create infinite money and maintain the capacity for totalitarianism.

Flynn’s analysis is headlined “‘When Gold Goes Above 1430, We Whack It'” and it’s posted at his internet site, Comex, We Have a Problem, here:

http://comexwehaveaproblem.blogspot.com.au/2016/12/when- gold-goes-above-…

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

 

end

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

 
 

1 Chinese yuan vs USA dollar/yuan UP to 6.9049(SMALL DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS  TO 6.9086 / Shanghai bourse CLOSED DOWN 14.50 POINTS OR 0.46%   / HANG SANG CLOSED UP 9.92 OR 0.04%

2. Nikkei closed UP 3.09 POINTS OR 0.02% /USA: YEN FALLS TO 114.96

3. Europe stocks opened ALL IN THE RED     ( /USA dollar index FALLS TO  100.89/Euro UP to 1.0643

3b Japan 10 year bond yield: FALLS    +.059%/     !!!!(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!!/JAPANESE INTERVENTION LAST NIGHT

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.15  and Brent: 54.89

3f Gold UP/Yen UP

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

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

3h Oil DOWN for WTI and DOWN 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 +314.%/Italian 10 yr bond yield FALLS 11 full basis points to 1.807%    

3j Greek 10 year bond yield RISES to  : 6.82%   

3k Gold at $1162.00/silver $17.11(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 52 dollar handle for WTI and 54 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 114.96 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  1.0099 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0748 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  +.311%

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

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

4. USA 10 year treasury bond at 2.446% early this morning. Thirty year rate  at 3.10% /POLICY ERROR) GETTING DANGEROUSLY HIGH

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

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

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

With All Eyes On The Fed, Stocks And Crude Slip, Bonds Rise

European stocks slipped from an 11 month high, Asian stocks and S&P futures were flat as caution pervades global markets before the Federal Reserve’s expected interest-rate hike on Wednesday. Crude dropped to session lows near $52 after API data showed U.S. stockpiles increased, and after a Manaar Group consultant said Iraq won’t cut output by 180k b/d-220k b/d as it committed to do under Nov. 30 OPEC agreement. 

Top corporate news stories include Johnson & Johnson ending Actelion pursuit, IBM vowing to add 25,000 jobs, Hertz replacing its CEO, the WSJ reporting that Goldman is planning to appoint Harvey Schwartz and David Solomon to succeed President Gary Cohn.

“Markets are very much on hold ahead of the Fed,” said Marc Ostwald, strategist at ADM Investor Services International in London told Bloomberg. “The Treasury rally is also helping to pull yields elsewhere lower, along with a slip in oil prices and a softer tone to equities. Changes to the Fed dot plot and economic forecasts will be key to watch.”

Today’s FOMC decision has been overshadowed by some big events over recent weeks. As DB’s Jim Reid writes in his overnight piece, today’s outcome has barely registered on people’s radar as a potential macro event. Consensus is the expected 25bp hike but with a wait and see approach from Yellen where she’ll reiterate that it’s too early to second guess potential upcoming fiscal changes. A December rate hike is now fully priced in by the market.

However DB’s Peter Hooper does think that the overall message will be modestly hawkish given the shift in risks toward higher growth and inflation ahead. The more hawkish signs should come from a mention of the decline in unemployment and further increase in market based measures of inflation compensation while near term risks should now be noted as fully balanced rather than roughly balanced. The interesting and more uncertain element will be how they treat forward guidance. DB thinks that it’s quite possible that they add ‘changes in fiscal policy’ to the list of factors that will determine ‘the timing and size of future adjustments to the funds rate’. More important is whether they decide to change expectations of ‘gradual’ increases in the fed funds rate and rates remaining ‘for some time’ below levels expected to prevail in the long run.

The economic projections and the dots are clearly the other big focus. Consensus expects only modest upward revisions to growth and possibly inflation forecasts, and unemployment to be revised down. In terms of the dots, Peter highlights that while it will take only two dots moving up to raise the median from two to three rate increases next year, he does not expect the Committee leadership to change their view significantly just yet. He notes that they will need to see more about how events unfold with the new Administration and the new Congress before making appreciable changes.

The Fed’s path to tighter monetary policy has been delayed throughout 2016, as first instability in Chinese markets, then the shock votes for Brexit and Donald Trump, put policy makers on the defensive. The U.S. central bank is expected to boost borrowing costs just as the focus shifts back to governments, with fiscal easing at the hands of incoming U.S. President Trump speculated to drive economic growth. After Wednesday, traders see a two-in-three chance of additional rate increases from the Fed by June, futures show.

“Last year the Fed guided the markets to expect at least four rate rises this year, guidance that proved to be woefully wide off the mark, and it is likely that they won’t want to make the same mistake again,” Michael Hewson, chief market analyst at CMC, wrote in note. That “suggests that Fed chief Janet Yellen can expect some serious cross examination of how the FOMC view not only the economy, but also President-elect Donald Trump’s plans for it.”

To be sure, not even the Fed really knows how to approach 2017, a year in which Trump’s Fiscal stimulus is expected to play a greater role than monetary policy, which has been dominant in the past 7 years, so expect another year of dot-plot driven confusion.

An additional consideration this year is how Trump may respond to the Fed announcement, and whether he will tweet his reaction in response to the Fed announcement. As Bloomberg put it, “if you’re looking for drama surrounding this week’s meeting of Federal Reserve officials, don’t look for it in their post-meeting statement. Policy makers are almost universally expected to raise their benchmark lending rate. Keep an eye, instead, on President-elect Donald Trump’s Twitter feed.”

He was a harsh critic of Fed Chair Janet Yellen during the election campaign, and how the nation’s incoming chief executive reacts to the expected hike on Wednesday may reveal much about whether and to what extent Trump will try to pressure the central bank through the remainder of her current term, which expires in February 2018.

Investors have already pushed up bond yields since Trump’s surprise Nov. 8 election win in anticipation of higher inflation. They are likely to take note of any White House bullying of the Fed, which is expected to continue raising rates next year, albeit at a very gradual pace.

“It’s an important thing to keep an eye on,” said Donald Kohn, a former Fed vice chair who is now a senior fellow at the Brookings Institution in Washington. “It helps policy making, and the public perception of policy making, if the administration is not publicly commenting. It reinforces the idea of a monetary authority independent from short-term political pressure. Eroding that would be moving in the wrong direction.”

So keep a close eye on what Trump tweets after 2:00 pm ET, a moot notice considering how much single-name volatility Trump’s tweets have generated in recent weeks.

The Stoxx Europe 600 Index retreated before the conclusion of the Fed’s two-day meeting, as investors awaited clues on the likely path of rates in 2017. Yields on 10-year U.S. Treasuries slipped, after reaching the highest level in more than two years on Monday, while European bonds also climbed. Oil in New York slid to near $52 a barrel before an official inventories report, and currencies of commodity-exporting nations fell. Gold headed for its biggest gain in a week.

Europe’s Stoxx 50 Index declined 0.6% after the gauge surged more than 20 percent from its low in February, entering a so-called bull market on Tuesday. The Stoxx 600 Index fell 0.4 percent as of 10:24 a.m. in London.

  • Actelion Ltd. dropped 8.4 percent after Johnson & Johnson said it ended discussions for a potential deal.
  • Mediaset SpA added 5.8 percent, following its biggest gain in 20 years on Monday, as Vincent Bollore’s Vivendi SA and Silvio Berlusconi’s Fininvest SpA battled for control of the Italian broadcaster.
  • Metro AG gained 4.7 percent after the German retailer forecast a rise in sales and earnings for the full year.

S&P500 index futures dropped 0.1% after the S&P 500 Index rose 0.7% to an all-time high and the Dow Jones Industrial Average neared 20,000 points.

In rates, the yield on 10-year Treasuries fell three basis points to 2.44 percent, after touching 2.53 percent on Dec. 12. The yield on similar-maturity German bonds dropped three basis points to 0.33 percent, while Italy’s fell five basis points to 1.82 percent. Japan’s 30-year government bonds climbed as the nation’s central bank stepped up purchases of longer-term debt. The Markit iTraxx Europe Crossover Index of credit-default swaps declined one basis point to 294 basis points, the lowest since April. The investment-grade Markit iTraxx Europe Index was little changed after falling for 11 days, the longest stretch in more than nine years.

Market Snapshot

  • S&P 500 futures down less than 0.1% to 2267
  • Stoxx 600 down 0.5% to 356
  • FTSE 100 down 0.3% to 6950
  • DAX down 0.3% to 11251
  • German 10Yr yield down 2bps to 0.34%
  • Italian 10Yr yield down 5bps to 1.82%
  • Spanish 10Yr yield down 1bp to 1.42%
  • S&P GSCI Index down 0.6% to 394.4
  • MSCI Asia Pacific up less than 0.1% to 139
  • Nikkei 225 up less than 0.1% to 19254
  • Hang Seng up less than 0.1% to 22457
  • Shanghai Composite down 0.5% to 3141
  • S&P/ASX 200 up 0.7% to 5585
  • US 10-yr yield down 3bps to 2.45%
  • Dollar Index down 0.09% to 100.98
  • WTI Crude futures down 1.1% to $52.41
  • Brent Futures down 1% to $55.16
  • Gold spot up 0.3% to $1,161
  • Silver spot up 1% to $17.08

Top Global News

  • J&J Ends Deal Talks With Actelion in Potential Boost for Sanofi: Swiss biotech says it’s in discussions with another company
  • Hertz Global Replaces CEO After Earnings Misses, Stock Slump: Former airline executive leaves after 2 disappointing years
  • Goldman to Name Solomon, Schwartz to Succeed Cohn, WSJ Reports: Chavez likely to replace Schwartz as CFO, newspaper says
  • Fox Said to Stick With Initial Price for Now in Sky Bid: Murdochs said to not rule out raising offer to help seal deal, official offer expected to be announced as soon as Thursday
  • Wells Fargo Faces Limits After Second Living Will Failure: Company kept from growing its non-bank activity, agencies say
  • GM China Venture Said to Be Under Government Anti-Trust Probe: GM trails only VW among foreign automakers in China sales
  • China Said to Lift Tax on Smaller Cars to 7.5% Through 2017: Tax was halved to 5% from 10% in October 2015 to spur demand
  • Morgan Stanley Group Offers $5.5 Billion for Lotteries Giant: Bid for Australia’s Tatts valued at up to A$5 a share
  • Newmont Sees Up to $1.2 Billion Writedown on Peruvian Mine: Charge probably will be booked in fourth quarter, company says
  • Oil Retreats After OPEC Deal Rally on Reported U.S. Supply Gain: U.S. crude inventories increase by 4.68 million last week, API says
  • Disney Said to Ask Other Studios to Join Digital Movie Service: Studio’s Movies Anywhere lets users access films bought online
  • AMD Says Zen, Chip That Must Win, Ready to Compete With Intel: New desktop PC processor to debut in first quarter of 2017
  • SkyWest to Take Charge of Up to $490 Million in Fleet Shift: Regional airline removes some of the industry’s smallest passenger jets from service

Asia equity markets traded mostly higher following another record day in the US, where all major indices printed fresh all-time highs and DJIA advanced to within 100 points from the 20,000 level. ASX 200 (+0.7%) took the impetus from US with outperformance in consumer discretionary as Tatts Group shares gained around 9% after a consortium launched a competing bid for the firm. Elsewhere, Nikkei 225 (Unch.) was indecisive amid a firmer JPY and after a somewhat disappointing BoJ Tankan survey, while the Shanghai Comp (-0.5%) was choppy as participants counterbalanced rising money market rate concerns with the PBoC finally boosting its liquidity injection. Furthermore, the Hang Seng (+0.2%) gained with Sinopec among the leaders following reports it is to sell a 50% stake in a major pipeline for USD 3.3bIn.

Top Asia News

  • Copper Supply From Top World Mine Threatened as Export Ban Looms: Indonesian government’s ban on overseas concentrate shipments is scheduled to come into force from the middle of January
  • Billionaire Shi Boosts Investment in China’s Minsheng Bank: Now has stake, including derivatives, equivalent to 9.6% of Minsheng Bank’s currently issued Hong Kong stock
  • China Credit Expands Most Since March on Robust Mortgage Lending: Aggregate financing rose to 1.74 trillion yuan in November
  • China Economy Defies Prophets of Doom as 2017 Risks Loom: Industrial output and fixed-asset investment maintained brisk expansions in November and retail sales accelerated, data released Tuesday showed
  • Sinopec Said to Revive Up to $10 Billion IPO of Retail Unit: Has asked banks to submit proposals by this month for roles to manage potential Hong Kong listing next year

European equities trade with marginal losses as participants await the FOMC rate decision in which the US central bank is expected to hike the Federal Fund Rate by 25bps (Full preview in the research section). In terms of notable movers of the morning, Actelion shares plunged 8% after Johnson & Johnson withdrew their takeover bid. Elsewhere, the troubled Italian lender Monti Paschi hit limit down amid reports that the ECB rejected request for more time to raise capital. In fixed income markets, the pull back in yields continues, while peripheral bonds yet again outperform with the Italian 10yr yield falling to 1-month lows after Italy’s interim PM won a vote of confidence, in turn the Italian-German 10yr spread has narrowed to 148bps. Additionally, overnight JGB yields outperformed in the long-end after the BoJ increased bond purchases to curb rising yields.

Top European News

  • U.K. Employment Declines for First Time in More Than a Year: Jobless rate remains at 4.8%, statistics office data show
  • Inditex Sales Growth Accelerates on Zara’s Online Expansion: Retailer posts fastest start to a quarter in more than a year
  • Moguls’ Feud Puts Berlusconi’s Italian Media Empire in Play: Billionaire Bollore’s Vivendi builds 12% stake in Mediaset

In currencies, the Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was little changed after rising 0.1 percent on Tuesday. Traders say the dollar should have a muted reaction to the Fed’s expected 25 basis-point hike, but may see more volatile price action in reaction to Chair Janet Yellen’s subsequent press conference. Russia’s ruble fell 0.3 percent against the dollar, and Norway’s krone declined 0.2 percent

In commodities, West Texas Intermediate crude retreated for the first day in five, falling 1.2 percent to $52.37 a barrel. Crude is retreating as focus shifts to expanding U.S. crude stockpiles. U.S. inventories rose by 4.68 million barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show supplies fell. Gold added 0.3 percent to $1,161.45 an ounce in the spot market. Zinc led a rally in most industrial metals, climbing 1 percent to $2,732 a metric ton on the London Metal Exchange, after a data showed credit in top consumer China expanded the most since March.

DB’s Jim Reid concludes the overnight wrap

As we count down to Xmas, today’s FOMC decision has been overshadowed by some big events over recent weeks. Indeed in all my many 2017 outlook meetings today’s outcome has barely registered on people’s radar as a potential macro event. It seems the consensus is the expected 25bp hike but with a wait and see approach from Yellen where she’ll reiterate that it’s too early to second guess potential upcoming fiscal changes. However DB’s Peter Hooper does think that the overall message will be modestly hawkish given the shift in risks toward higher growth and inflation ahead. The more hawkish signs should come from a mention of the decline in unemployment and further increase in market based measures of inflation compensation while near term risks should now be noted as fully balanced rather than roughly balanced. The interesting and more uncertain element will be how they treat forward guidance. Peter thinks that it’s quite possible that they add ‘changes in fiscal policy’ to the list of factors that will determine ‘the timing and size of future adjustments to the funds rate’. More important is whether they decide to change expectations of ‘gradual’ increases in the fed funds rate and rates remaining ‘for some time’ below levels expected to prevail in the long run.

The economic projections and the dots are clearly the other big focus. Peter expects only modest upward revisions to growth and possibly inflation forecasts, and unemployment to be revised down. In terms of the dots, Peter highlights that while it will take only two dots moving up to raise the median from two to three rate increases next year, he does not expect the Committee leadership to change their view significantly just yet. He notes that they will need to see more about how events unfold with the new Administration and the new Congress before making appreciable changes.

All that to look forward to later this evening. In the mean time one of the events which has overshadowed the Fed for now is the twist and turns in the Italian banking sector saga. The sector got a big boost yesterday however after Italy’s largest lender, UniCredit, announced a bumper €13bn rights offer to shore up its balance sheet. In conjunction, the bank also announced a host of restructuring, cost cutting measures and an €8bn NPL clean-up. Despite the share price initially opening some -6% lower, it rallied back over the course of the day and closed up nearly +16%. That helped the sector surge higher with the FTSE Italia All-Share Banks Index closing up +5.83% which puts it about +30% above the intraday lows at the end of November. Yesterday’s move is in the context of a +2.49% bounce for the wider FTSE MIB and a +1.06% gain for the Stoxx 600. Credit indices in Europe were also tighter although financials didn’t particularly outperform. The iTraxx Main and Crossover indices finished 1bp and 7bps tighter respectively while Senior Fins and Sub Fins were 1bp and 3bps tighter respectively. The Italian banks were unsurprisingly at the front of the pack though with the average sub-spread of the 4 banks 11bps tighter. In rates BTP’s were also the big outperformer with yields -12.1bps lower at 1.870% versus -7bps for the rest of the periphery and -4.0bps for Bunds. It’s worth also noting the new Italy PM candidate, Gentiloni, comfortably won the first of two confidence votes from Italian Parliament yesterday. The Senate vote is this afternoon.

Meanwhile, it was back to business as usual for US equity markets yesterday afternoon where we saw the Dow (+0.58%) come within 100pts of the 20,000 level and the S&P 500 (+0.65%) record a fresh new record high. It’s impressive to note now that since Trump was confirmed the election winner, on the 24 trading days the S&P 500 has risen on 16 of those days has returned +6.18%. 10y Treasury yields hovering just shy of 2.5% (closing at 2.472% and little changed last night) failing to dampen spirits while commodity markets were mixed. WTI rose +0.28% and was up for the fourth session in a row while Gold (-0.32%) edged a bit lower ahead of the Fed.

Refreshing our screens this morning it’s been a fairly subdued session for Asia equity markets. That said most bourses are currently in positive territory including the Nikkei (+0.13%), Hang Seng (+0.51%), Shanghai Comp (+0.06%) and ASX (+0.69%). Only the Kospi (-0.05%) is in the red. There’s been a bit of action in JGB’s though after the BoJ offered to buy more longer-dated debt at today’s reverse auction. The Bank offered to buy 200bn Yen of debt due in 10-25 years which is up from 190bn previously and also 120bn Yen of bonds maturing in more than 25 years, versus 110bn Yen previously. The >25y buyback also drew 3.06x of interest, which is up from 2.39x last week. The JGB curve has bull flattened as a result. 2y yields are down 0.6bps at -0.203% while 10y yields are down -2.0bps to 0.050% having crept up as high as 0.096% just yesterday and the highest since February. 30y yields are down 3.4bps at 0.761%.

Meanwhile the Q4 Tankan survey was also out in Japan this morning. The survey revealed improvement for large manufacturing companies (to +10 from +6) while non-manufacturing companies were stable at +18. Meanwhile there was some modest improvement in the data for both manufacturing and non-manufacturing small companies.

Moving on and wrapping up the dataflow yesterday. In the US the NFIB small business optimism reading in November was reported as rising 3.5pts to 98.4 (vs. 96.7 expected). That post-election reading is in fact the highest reading since December 2014 with firms reported as being significantly more optimistic about the outlook for sales and also plans to hire. The other data in the US was the import price index reading for November (-0.3% mom vs. -0.4% expected) which was clearly weighed down by the strengthening US Dollar over the month.

Meanwhile the latest inflation data in the UK was out yesterday. Headline CPI printed bang in line at +0.2% mom for November, helping to raise the YoY rate to +1.2% from +0.9%. The core also rose to +1.4% yoy from +1.2%. Yesterday’s data means that headline CPI is in fact now running at the highest level since October 2014. Elsewhere, there were no surprises in the final revisions to the inflation data in Germany where CPI was confirmed as rising +0.1% mom and +0.8% yoy in November. There was some upside surprise from the latest ZEW survey however. The current situations index was reported as rising to 63.5 this month from 58.8 and to the highest level since September last year. Interestingly the expectations component held relatively stable however.

Looking at today’s calendar, this morning in Europe we’re kicking off in France where the final November CPI revisions will be made. Shortly after the focus turns to the UK where we’ll get the October and November labour market data. Industrial production data for the Euro area will also be released. It’s a packed afternoon for data in the US meanwhile. The early focus will be on the November retail sales figures. Market expectations are running at +0.3% mom for the headline and +0.4% for the core. The control group component is expected to come in at +0.3%. Also released today is the November PPI report along with last month’s industrial and manufacturing production prints (both expected to decline modestly). Business inventories data for the month of October will also be out. All that comes before the aforementioned main event this evening (7pm GMT) with the conclusion of the FOMC meeting. As a reminder, Fed Chair Yellen will host a press conference shortly after.

3.REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 14.50 POINTS OR 0.46%/ /Hang Sang closed UP 9.92  OR 0.04%. The Nikkei closed UP 3.09 OR 0.02%/Australia’s all ordinaires  CLOSED UP 0.70% /Chinese yuan (ONSHORE) closed UP at 6.9049/Oil FELL to 521.5 dollars per barrel for WTI and 54.89 for Brent. Stocks in Europe: ALL IN THE RED.  Offshore yuan trades  6.9086 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

The Bank of Japan intervenes in their bond market forcing the yield down to 0.  It did not last long as the yield is now up to 0.059%.  However the lower yields on the 10 year bond also drove yields on the 30 yr bond lower and the yield curve is relatively flat and very bad for bankers:

 

(courtesy zero hedge)

Bank Of Japan Intervenes, Boosts Bond Buy Ahead Of Fed Decision

Having seen 10Y JGB yields spike to 10bps (highest since Feb), The Bank of Japan has decided enough is enough and intervened to bring yields back to the stable 0.00% level they decree as fair. The entire Japanese curve is bull-flattening as the long-end is also rallying after Kuroda and his cronies up their purchases to 200 billion yen, from 190 billion previously. All else equal, this will prompt more demand for US paper from Japanese sources.

10Y Yields had risen to their highest since Kuroda unleashed NIRP.

And so it was time to step in

And the 30Y rallying even more

As Bloomberg’s Mark Cranfield noted, The Bank of Japan is back in the JGB market. Yields sliding across the longer end of the bond curve as the BOJ buys super longs. If the Fed does a dovish hike later today, that could be the end of rising yields for this year.

This move also follows Jeff Gundlach’s earlier bond bull case, noting that he’s increasing duration and investor fear of bonds seems to be getting overdone.

END

c) REPORT ON CHINA

The war of words with China is escalating.  Now China is ready to slap a penalty on an unnamed automaker for monopolistic pricing behaviour:

 

(courtesy the Real Fly)

China to Slap Penalty On Unnamed American Automaker for ‘Monopolistic Behavior’

The_Real_Fly's picture

(courtesy zero hedge)

 

China Warns “Peace Will Be Impacted” If Trump Violates “One China”, Installs Weapons On Disputed Islands

If anyone thought that China would blissfully ignore Trump’s diplomatic snub, in which the President-elect most recently stated over the weekend that he could use the “One China” principle as a bargaining chip to extract trade concessions from Beijing, they may want to reconsider. As we already pointed out, China overnight warned that a US carmaker (ostensibly GM) would be penalized for “monopolist behavior” and in a China Daily editorial, Beijing urged Trump to recognize the importance of close economic ties between China and the United States rather than “trying to gain an upper hand in what is essentially a win-win relationship”.

“History proves that what is good for Sino-U.S. relations is good for their economies,” it said, noting that Chinese customers bought more than a third of the 9.96 million vehicles GM sold worldwide last year.

That was just the start of the warnings.

In a separate statement, China warned on Wednesday that any interference with or damage to the “one China” principle would have a serious impact on peace and stability in the Taiwan Strait. An Fengshan, a spokesman for China’s Taiwan Affairs Office, told a regular news conference the Taiwan issue was about China’s sovereignty and territorial integrity.

“Upholding the ‘one China’ principle is the political basis of developing China-U.S. relations, and is the cornerstone of peace and stability in the Taiwan Strait,” he said.

“If this basis is interfered with or damaged then the healthy, stable development of China-U.S. relations is out of the question, and peace and stability in the Taiwan Strait will be seriously impacted,” An said, with an emphasis on peace.

At the same time, Taiwan’s policy-making Mainland Affairs Council said peaceful relations were a mutual responsibility across both sides of the Taiwan Strait. “Taiwan has repeatedly stressed that maintaining peace and stability across the Taiwan Strait and throughout the region is in the best interests of all parties,” said council spokesman Chiu Chui-cheng. “Taiwan places equal weight on the development of Taiwan-U.S. relations and cross-strait relations.”

China has repeatedly warned that hard-won peace and stability across the narrow strait that separates them could be affected by any moves toward independence.

“I think the facts tell these people that Taiwan independence is a dead end,” An said.

* * *

Meanwhile, according to a separate note from Reuters, China’s verbal warnings are being increasingly substantiated by actual deeds, and based on a report by a US think tank, citing new satellite imagery, China appears to have installed weapons, including anti-aircraft and anti-missile systems, on all seven of the artificial islands it has built in the South China Sea.

The Asia Maritime Transparency Initiative (AMTI) said its findings come “despite statements by the Chinese leadership that Beijing has no intention to militarize the islands in the strategic trade route, where territory is claimed by several countries.”

AMTI said it had been tracking construction of hexagonal structures on Fiery Cross, Mischief and Subi reefs in the Spratly Islands since June and July. China has already built military length airstrips on these islands.

“It now seems that these structures are an evolution of point-defense fortifications already constructed at China’s smaller facilities on Gaven, Hughes, Johnson, and Cuarteron reefs,” it said citing images taken in November and made available to Reuters. “This model has gone through another evolution at (the) much-larger bases on Fiery Cross, Subi and Mischief reefs.”

Satellite images of Hughes and Gaven reefs showed what appeared to be anti-aircraft guns and what were likely to be close-in weapons systems (CIWS) to protect against cruise missile strikes, it said. Images from Fiery Cross Reef showed towers that likely contained targeting radar, it said.

AMTI said covers had been installed on the towers at Fiery Cross, but the size of platforms on these and the covers suggested they concealed defense systems similar to those at the smaller reefs. “These gun and probable CIWS emplacements show that Beijing is serious about defense of its artificial islands in case of an armed contingency in the South China Sea,” it said. “Among other things, they would be the last line of defense against cruise missiles launched by the United States or others against these soon-to-be-operational air bases.”

AMTI director Greg Poling said AMTI had spent months trying to figure out what the purposes of the structures was. “This is the first time that we’re confident in saying they are anti-aircraft and CIWS emplacements. We did not know that they had systems this big and this advanced there,” he told Reuters.

In a troubling assessment, Poling added that “this is militarization. The Chinese can argue that it’s only for defensive purposes, but if you are building giant anti-aircraft gun and CIWS emplacements, it means that you are prepping for a future conflict.

“They keep saying they are not militarizing, but they could deploy fighter jets and surface-to-air missiles tomorrow if they wanted to,” he said. “Now they have all the infrastructure in place for these interlocking rings of defense and power projection.”The report said the installations would likely back up a defensive umbrella provided by a future deployment of mobile surface-to-air missile (SAM) platforms like the HQ-9 system deployed to Woody Island in the Paracel Islands, farther to the north in the South China Sea.

It forecast that such a deployment could happen “at any time,” noting a recent Fox News report that components for SAM systems have been spotted at the southeastern Chinese port of Jieyang, possibly destined for the South China Sea.

China has said military construction on the islands will be limited to necessary defensive requirements.

The United States has criticized what it called China’s militarization of its maritime outposts and stressed the need for freedom of navigation by conducting periodic air and naval patrols near them that have angered Beijing.

U.S. President-elect Donald Trump, who takes office on Jan. 20, has also criticized Chinese behavior in the South China Sea while signaling he may adopt a tougher approach to China’s assertive behavior in the region than President Barack Obama. It remains to be seen how he will react to news that China has now officially “militarized” the contested islands in the South China Sea.

 

 

end

4 EUROPEAN AFFAIRS

Tsipras is one complete idiot:  he actually thought that there was going to be some Greek debt relief?  He should have exited the euro when he had a chance:

(courtesy zero hedge)

Greek Bond Yields Surge After Debt Relief Talks Collapse

Greek bond yields are surging in the latest twist of the nearly seven year old Greek crisis, when on Wednesday Eurozone fin mins and the ESM, suspended their promise to grant short-term debt relief measures to the Greek government, as a result of pledges made by the Greek PM Tsipras to ease austerity on the country’s pensioners earlier in the week.

In a statement released by Eurogroup head Jeroen Dijsselbloem, the finance ministers chided Greece, saying that “the institutions have concluded that the actions of the Greek government appear to not be in line with our agreements“, jeopardizing the recently adopted measures to alleviate the Greek debt burden. As reported previously, last week creditors granted a series of short-term debt concession which would help reduce the country’s debt servicing burden by 20% points by 2060.

Some member states see it this way also and thus no unanimity now for implementing short-term debt measures” the statement added and noted that as a result of the Greek non-compliance with the agreement, the finmins will “await a full report of the institutions in January.”

Today’s latest breakdown in negotiations comes after the Syriza government announced it would spend €600 million to the nation’s 1 million low-income pensioners, to replace a Christmas bonus scrapped by the Greek bailout supervisors.

Following the news, Greek bond yields surged back over 7% amid fresh concerns that the Greek crisis may be coming back.

Today’s fiasco follows a snafu overnight, when Euro zone officials hit back at the IMF on Tuesday for publishing an article on the way forward for Greece’s fiscal and economic policy that thrust into the open a row between the lenders over Athens’ bailout.

“The European institutions were surprised that the IMF staff published a blog post on the ongoing negotiations with the Greek government as new talks in Athens are starting with the aim of concluding the second review,” said a spokesman for the euro zone bailout fund, the European Stability Mechanism.

“We hope that we can return to the practice of conducting program negotiations with the Greek government in private.”

The IMF article appeared as the Fund and the euro zone struggle to find common ground on Greek policies that would allow the IMF to take part in the latest bailout, the third one since 2010 and now fully financed by the euro zone.

And so, more than a year after the third Greek bailout, one which was predicted upon further debt reductions and even more austerity, nothing has been resolved, and the tensions between the Greek government (and its people), the IMF, and the rest of the Eurozone finmins, are nowhere close to a resolution

 

 

end

 

As Bill Holter has highlighted to us on several occasions, collateral is scarce especially in Europe.  This is why the ECB has now allowed cash to be used as collateral. However this is not enough as the German 2 yr falls to -.778%

(courtesy zero hedge)

German 2Y Yields Hit All-Time Lows As ECB Fails To Fix Record Collateral Shortage

When the ECB announced last week that it would expand the universe of eligible collateral for use by Eurozone institutions to include up to €50 billion in cash cash, it – and the market – hoped that the severe collateral shortage manifesting itself in an unprecedented squeeze in the repo market would be alleviated. As a reminder, last Thursday the ECB Governing Council decided that Eurosystem central banks will have the possibility to also accept cash as collateral in their PSPP securities lending (SL) facilities without having to reinvest it in a cash-neutral manner.

The ECB added that “the introduction of cash as collateral in the context of PSPP securities lending is intended to enhance the effectiveness of the SL framework, thereby supporting the smooth implementation of the PSPP as well as the euro area repo market liquidity and functioning. ”

Following the news, 2Year Bunds quickly sold off last Thursday, with the yield rising by 6 bps to start, as suddenly it makes more sense to park cash with the ECB than to be penalized by -0.7% to hold German short-term debt.

However, it was not meant to last, and less than a week later, even with overall Eurogroup liquidity hitting new all time highs earlier this week, German 2Y yields fell as much as 2.9bps to all time low of -0.773% as repo pressures continue to support the front-end, Bloomberg reported citing two traders.

The traders added that the €50 billion in securities lending put forward by the ECB are seen as not enough, with structural issues remaining, exacerbated by year-end window dressing.

Additionally, a second trader added that some dealers prefer not to trade with the Bundesbank, due to higher failure fees.

Curiously, while Schatz futures rise to all time high of 112.275, downside continues to be bought in options, says a third trader based in London with a buyer again emerging in Feb. Schatz 112.00/111.90 put spread, 17k trades at 1 tick.

Should the collateral squeeze continue, the ECB may be forced to unveil further intervention mechanisms, as well as additional jawboning by Mario Draghi, potentially before the next scheduled ECB council meeting, especially if the year-end repo shortage drives 2Y yields meaningfully lower.

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6.GLOBAL ISSUES

next stop on the war on cash is Australia as they are going to ban the 100 dollar note Together with the 50 dollar note, that represents 92% of the value in circulation. I guess they want to follow India into the toilet

(courtesy Mish Shedlock/Mishtalk)

War On Cash Escalates: Australia Proposes Ban On $100 Bill; No Cash Within 10 Years?

Submitted by Michael Shedlock via MishTalk.com,

Global financial repression has picked up steam. Australian citizens are likely the next victim.

au-100-note

AU News reports Government Floats $100 Note Removal.

SAY goodbye to the $100 note.

 

Australia looks set to follow in the footsteps of Venezuela and India by abolishing the country’s highest-denomination banknote in a bid to crack down on the “black economy”.

 

Speaking to ABC radio on Wednesday, Revenue and Financial Services Minister Kelly O’Dwyer flagged a review of the $100 note and cash payments over certain limits as the government looks to recoup billions in unpaid tax.

 

“The whole point of this crackdown on the black economy is to make sure we close down any potential loopholes,” she said. Despite the broad use of electronic forms of payment, Ms O’Dwyer warned there are three times as many $100 notes in circulation than $5 notes.

 

“It does beg the question, ‘Why?’” she said.

 

There are currently 300 million $100 notes in circulation, and 92 per cent of all currency by value is in $50 and $100 notes.

 

A report by UBS recommended Australia scrap the $100 note. According to UBS, benefits may include “reduced crime (difficult to monetise), increased tax revenue (fewer cash transactions) and reduced welfare fraud (claiming welfare while earning or hoarding cash)”.

 

“From the banks’ perspective there would likely be a spike in deposits — if all the $100 notes were deposited into banks (ignoring hoarded $50 notes), household deposits would rise around four per cent,” the report said.

Why?

Financial Services Minister Kelly O’Dwyer notes there are currently 300 million $100 notes in circulation, and 92 per cent of all currency by value is in $50 and $100 notes.

“It does beg the question, ‘Why?’” she asked.

It would behoove O’Dwyer to think. People can have 100 pennies in their pocket (each of which is nearly worthless) or they can hold a dollar.

Similarly, people can hold a stack of ten $10 notes in their wallet or they can hold a $100 note.

Mathematically it makes perfect sense that 92 per cent of all currency by value is in $50 and $100 notes.

What the hell does $1 buy these days? Is someone going to carry a wad of fifty $1 notes to go to a movie and buy popcorn?

No Cash Within 10 Years?

Rest assured this will not stop with $100 notes. There will no cash within ten years.

*  *  *

 

But as Bloomberg reports, try as everyone may, cash registers are still bursting with paper bills and metal coins. Cash is alive and well, according to a new study of the spending habits of more than 18,000 people in seven countries.

“Many have predicted and espoused the view that cash is increasingly disappearing as a payment instrument,” the authors write. “However, to paraphrase Mark Twain, we would say that the reports of the death of cash have been greatly exaggerated.”

 

The value of dollars and euros in circulation has doubled since 2005, to $1.48 trillion and €1.1 trillion, respectively. Some of that growth can be explained by demand for these currencies in foreign countries, but there’s also plenty of evidence that Europeans and Americans are still carrying around wads of cash.

 

The new research crunches and compares data on payment choices in Australia, Austria, Canada, France, Germany, the Netherlands, and the U.S. The study shows notable differences among these countries: Germans and Austrians carry around and use the most cash; the Dutch love debit cards; paper checks are still relatively common in France and the U.S.

 

The bottom line, however, is that consumers in all seven countries use cash more often than they use any other payment method. Cash is least popular in the U.S., where it’s used for 46 percent of all transactions, vs. 26 percent for debit cards and 19 percent for credit cards.

7. OIL ISSUES

Oil tumbles to the 51 dollar handle. OPEC warns that the glut may continue longer than expected.  (As we promised)

(courtesy zero hedge)

WTI Tumbles To $51 Handle After OPEC Warns Glut May Continue Longer Than Expected

On the heels of last night’s big crude build, OPEC’s overnight report stating that supply cuts won’t re-balance the market until the second half of 2017 has sparked further losses in oil prices, almost erasing the entire OPEC/NOPEC/Saudi cut ramp.

As Bloomberg reports, OPEC said its agreement to cut production, while speeding up the re-balancing of the global oil market, won’t result in demand exceeding supply until the second half of next year.

The Dec. 10 agreement between the Organization of Petroleum Exporting Countries and non-members such as Russia and Kazakhstan “will accelerate the reduction of global inventories and bring forward the re-balancing of the oil market to the second half of 2017,” OPEC said in its monthly report Wednesday.

It’s a more pessimistic outlook than that published Tuesday by the International Energy Agency, which indicated a supply deficit in the first half.

Despite a commitment from those countries to lower their output in the first half by 600,000 barrels a day, the organization slightly increased forecasts for supplies from outside OPEC in 2017. It estimates that production in Russia, which pledged half of the non-OPEC cut, and in Kazakhstan, which also agreed to cut, will remain steady for the six months covered by the deal.

And the result is further downside on oil – almost erasing the entire OPEC/NOPEC rally…

This was also not helped by some bearish notes from analysts:

SGH says Saudi Arabia “will lead efforts to put more supply in the market” if prices rise too quickly or too far above $60/bbl. Manaar Group sees Iraq cutting output less than it pledged.

SGH analysts Sassan Ghahramani and Kevin Muehring

  • OPEC/non-OPEC agreement in Vienna on quotas and output cuts intends to stabilize prices, not drive them higher
  • Producers plan to steer prices within a $50/bbl-$60bbl range through 1H 2017, when they expect supply and demand to rebalance

Manaar Group managing director Jaafar Altaie

  • Iraq won’t cut output by 180k-220k b/d as it committed to do under Nov. 30 agreement
  • Nation will probably cut only ~100k b/d, as it seeks to defend sales in Asia and avoid reducing output at fields it operates with international oil cos
  • NOTE: Iraq subject to cut of 210k b/d under Nov. 30 deal, click here for story

JBC Energy

  • Heating oil deliveries in France rose by almost 50% y/y in October as nuclear plant closures curbed nation’s atomic-power production by 15% y/y
  • French distillate inventories in October fell by 9m bbl m/m. If confirmed, it would mean that the November middle distillate inventories in EU15 & Norway were below last year’s level for 1st time this year

 

end

Three important points today:

  1. DOE reports a much larger draw down in oil
  2. Cushing Oklahoma inventories continue to rise
  3. still a huge surge in production in the USA

Oil Jumps On Surprise Crude Draw Despite Surge In Production

After API’s surprising large gasoline, crude build overnight, prices have been under pressure (not helped by OPEC comments).However, DOE just reported a much bigger than expected draw in crude (complete opposite of API). Cushing saw a bigger than expected build and crude production surged. This is the 3rd biggest weekly surge in production since the peak in May 2015. Gasoline demand continues to slide.

API

  • Crude +4.68mm (-1.5mm exp)
  • Cushing +632k (+3.2mm exp)
  • Gasoline +3.905mm – biggest since Jan
  • Distillates +233k

DOE

  • Crude  -2.56mm (-1.5mm exp)
  • Cushing  +1.223mm (+1.0mm exp)
  • Gasoline +497k (+2.0mm exp)
  • Distillates -762k (+1.0mm exp)

4th weekly crude draw in a row but Cushing continues to see big builds…

 

According to the latest inventory data, the US now has some 483 million barrels in commercial stocks, 5.3%, or 25MM bbl above the last year’s level:

 

That said, as Reuters notes, stocks are now falling a more slowly than normal for this time of year but faster than in 2015

 

As Bloomberg notes, much of the draw came from PADD5 as Cushing built.

 

Pushing Cushing Inventories to 7-month highs.

 

And notably gasoline demand is tumbling.

 

Still, despite the 0.5mm increase in gasoline stocks to 230mm in the past week, the increase was smaller than is customary for this time of the year, which means total gasoline stocks are now just 10.7mm bbl, or 4.9%, higher than where they were one year ago.

Meanwhile US imports slowed modestly to 7.4mmbpd, compared to 8.3mmbpd last week.

 

With rising rig counts, it is likely the trend of US Crude production increases will continue, and they did this week with a big surge post-OPEC: This is the 3rd biggest weekly surge in production since the peak in May 2015.

 

Oil prices have retraced to API levels from last night…

8. EMERGING MARKETS

none today

end

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

 

Euro/USA   1.0643 UP .0016/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 114.96  DOWN 0.242(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 1.2665 UP .0007 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3104 DOWN .0019 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 16 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0643; 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 DOWN 14.50 0r 0.46%     / Hang Sang  CLOSED UP 9.92 POINTS OR 0.04%   /AUSTRALIA IS HIGHER BY 0.70% / EUROPEAN BOURSES ALL IN THE RED 

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED UP 3.09 POINTS OR 0.02%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 9.92 OR 0.04%   Shanghai CLOSED DOWN 14.50 POINTS OR 0.46%   / Australia BOURSE IN THE GREEN /Nikkei (Japan)CLOSED UP 3.09 POINTS OR 0.02%/  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1162.00

silver:$17.09

Early WEDNESDAY morning USA 10 year bond yield: 2.446% !!! DOWN 3 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.10, DOWN 3 IN BASIS POINTS  from TUESDAY night.

USA dollar index early TUESDAY morning: 100.89 DOWN 17 CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.78% UP 2  in basis point yield from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.059% DOWN 3  in   basis point yield from  TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.40%  DOWN  3  IN basis point yield from  TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.795  DOWN 7  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 40 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.301% DOWN  3 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:30 PM  (BEFORE FED ANNOUNCEMENT)

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

The USA/Yuan closed at 6.8983
the 10 yr Japanese bond yield closed at +.086% DOWN 1/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1/3   IN basis points from TUESDAY 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 WEDNESDAY: 1:30 PM EST

London:  CLOSED DOWN 19.38 POINTS OR 0.28%
German Dax :CLOSED DOWN 39.81 POINTS OR 0.35%
Paris Cac  CLOSED DOWN 34.63 OR 0.71%
Spain IBEX CLOSED DOWN 112.90 POINTS OR 1.21%
Italian MIB: CLOSED DOWN 221.29 POINTS OR 1.18%

The Dow was DOWN 118.68 points or 0.60%  4 PM EST

NASDAQ DOWN  27.16  points or 0.50%  4.00 PM EST
WTI Oil price;  52.41 at 5:30 pm; 

Brent Oil: 55.23   5:30 EST

USA /RUSSIAN ROUBLE CROSS:  61.71 (ROUBLE DOWN 1 AND 4/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD FALLS  TO +0.301%  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:$50.69

BRENT: $53.69

USA 10 YR BOND YIELD: 2.571%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.181%

EURO/USA DOLLAR CROSS:  1.0530 DOWN .0095

 

USA/JAPANESE YEN:117.06  UP1.888

USA DOLLAR INDEX: 102.05 UP 97  cents(BREAKS HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2555./ DOWN 105  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.301%

 

 

END

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

TRADING IN GRAPH FORM

Fed Hike Sparks Biggest Selloff Since Election

This seemed an appropriate place to start… Make sense right?

 

Which made us think this…

 

So, the market’s reaction post-Yellen… (banks were bid, puked, and then ramped)

 

Nasdaq almost made it back to unchanged on the ramp…Small Caps and Trannies slammed hardest but this was the market’s worst day since October 11th.

 

Small Caps and Trannies have been notably ugly the last few days…

 

Dow 20,000 was on the cards – everyone expected it… but we stalled 35 points shy of it, before tumbling…but then there was the panic bid on JPY carry which ultimately failed…

 

Seems like a big Yen-arb correlation catch up…

 

Also, as we noted earlier, VIX and stocks had been rising together into this…

 

And did again this morning…before chaos was unleashed by The Fed…

 

The biggest reaction was a surge back to the upper end of the recent range in the Dollar Index…(at 14 year highs)

 

Jamming Yuan weaker…

 

And crushing JPY…back above 117.00 for the first time since Feb 8th and EURUSD below 1.05 – lowest since March 2015…

 

Treasury yields spiked across the curve but 30Y notably outperformed, flattenin the curve by 9bps on the day…

 

Crushing the yield curve to 3mo lows…

 

Crude plunged to a $50 handle…

*  *  *

Finally, let’s just remember what happened last time The Fed hiked rates on the Wednesday before a Friday Quad-Witch…

 

Everything was awesome before…

 

Bonds rallied…

 

And crude tumbled…

 

END

 

The Fed hikes rates for the first time in 2016 and increases the number of hikes to 3 for 2017.  Now we wait for Donald:

(courtesy zero  hedge)

Fed Hikes Rates For First Time In 2016, Increases Pace Of Rate ‘Normalization’ Forecast

With 100% chance of at least a 25bps hike (and 10% chance of 50bps),this was perhaps the most ‘priced in’ of any Fed meeting ever. Of course, it is not whether the Fed hikes or not at a given meeting that matters, but rather what kind of overall hiking cycle it communicates, and so attention is focused on changes to the ‘dot-plot’. No surprise here: FED RAISES RATES BY 25 BPS, REPEATS GRADUAL POLICY PATH PLAN, but the forecast is more hawkish: FED OFFICIALS SEE THREE 2017 RATE HIKES VS TWO IN SEPT. DOTS. Of course now all eyes will be on Donald Trump’s Twitter account for any response.

*  *  *

December meeting rate expectqation are now:

  • *FED MEDIAN EST. FOR LONGER-RUN FUNDS RATE 3% VS 2.9% IN SEPT.
  • *FED: MEDIAN FEDERAL FUNDS EST. 2.1% END-2018 VS 1.9% IN SEPT.
  • *FED: MEDIAN FEDERAL FUNDS EST. 2.9% END-2019 VS 2.6% IN SEPT.

As a reminder, these were September’s Fed estimates for rate trajectory:

  • 1.125% median for 2017
  • 1.875% median for 2018
  • 2.625% median for 2019

And the market has risen towards Fed expectations in the last few weeks… (This is the September FOMC Dot Plot)

“Priced In”…

 

Since The Fed last hiked rates, Financials are the best performers, bonds are unchanged and stocks are edging out gold…

*  *  *

Key changes and changes from the December statement:

  • Fed says labor mkts continued to strengthen, growth moderate
  • Fed says job gains have been solid in recent months
  • Fed says spending rising moderately, investment stayed soft
  • Fed says inflation has increased since earlier this year
  • Fed lifts rate paid on excess reserves to 0.75% vs 0.5%
  • Fed raises discount rate to 1.25% from 1.0%
  • Fed officials see three 2018 rate hikes, unch vs sept. dots
  • Fed median est. for longer-run funds rate 3% vs 2.9% in sept.
  • FOMC instructs ny fed to raise rrp rate to 0.5% vs 0.25

END

 

Initial reaction: to the rate hike/3 hikes to be in 2017

(courtesy zero hedge)

 

 

Dollar Spikes But Fed Hike Slams Stocks, Bonds, Gold Lower

end

 

Then this happened as Janet states that Trumps’ fiscal stimulus is not needed!!!

everything plummets!

 

Stocks Slip As Yellen Says Trump Fiscal Boost “Not Needed”, May Not Improve Productivity

Reading between the lines, Janet Yellen squirmed her way through question after question focused on the effect of Trump’s potential fiscal stimulus plan without a definitive answer except to say that a “fiscal boost not obviously needed to get back to full employment” warning that “policymakers must take GDP-to-Debt ratio into account”, and questioned whether a tax reduction plan would improve the economy or productivity at all.

Question from CNBC: In recent testimony your advice was for fiscal authorities to increase productive capacity of the economy. Do individual and business tax cuts increase the productive capacity of the economy? And how would the fed’s reaction be different to fiscal policies that increase the productive capacity of the economy and those that don’t?

 

Yellen: So, the statement that I made that it would be useful to increase the productive capacity of the economy reflects my concern that productivity growth has been very low. It is the ultimate determination of the evolution of living standards. Policies that would improve productivity growth would include policy changes that enhance education, training, workforce development, policies that spur either private or public investment to enhance the quality of capital, in the United States, that workers have to have to work with, and policies that spur innovation or competition or the formation of new firms. So tax policies can have that effect. It really depends on the specifics. I don’t think there is anything that I could say in general about what tax policy would do, but and I really can’t tell you what the fed’s response would be to any policy changes that are put into effect. I wouldn’t want to speculate until I were more certain of the details and how they would affect the likely course of the economy.

 

Follow up from CNBC: If there was a rush of fiscal policy, that did not increase the productive capacity of the economy, would that mean the Federal Reserve would have to move more quickly with raising rates?

 

Yellen: It is something I can’t generalize about, because while it would be desirable to have tax policies that do increase the productive capacity of the economy, an increase in the pace of productivity change is one of the factors that does affect the economy’s neutral rate, a boost to productivity could spur investment. As we have been saying, we estimate that the value of the neutral federal funds rate is quite low, and one of the reasons for that is slow productivity growth. So it’s very hard to generalize about it, because it could affect that neutral rate.

 

*  *  *

 

Question from the Washington Post: I’m curious, you and your predecessor had both at times called for more fiscal stimulus, to help with the outlook, the growth outlook. I’m wondering how much do you judge the economy has capacity for fiscal stimulus right now? It’s a version of Steve’s question but I think we are trying to get at, how much can happen before we run the risk of overheating?

 

Yellen: Well, I believe my predecessor and I called for fiscal stimulus when the unemployment rate was substantially higher than it is now. So with a 4.6 percent unemployment, and a solid labor market, there may be some additional slack in labor markets, but I would judge that the degree of slack has diminished. So I would say at this point that fiscal policy is not obviously needed to provide stimulus to help us get back to full employment. But nevertheless, let me be careful that I am not trying to provide advice to the new administration or to Congress as to what is the appropriate stance of policy. There are many considerations that Congress needs to take account of, and many bases for justifying changing fiscal policy. I’ve continued to highlight the importance of spurring productivity growth, that I think that would be something that is beneficial for the economy. Of course, it’s also important for congress to take account of the fact that, as our population ages, that the debt to GDP ratio is projected to rise, and that needs to continue to be taken into account. So there are many factors that I think should enter into such decisions.

And it appears to have taken the shine off of stocks…

Evercore: “More Hawkish Than Expected Fed” Leaves Markets Behind The Curve: 2Y/USD Headed Higher

While Goldman was mostly delighted with the Fed’s statement, Evercore ISI is far less sanguine about what the Fed revealed today,

More hawkish than expectations...investors we have talked to understood that the “supertanker” that is Fed policy was likely to turn, but was more likely to wait in forecasting a faster pace of rate hikes until till the new administrations fiscal policy plans became clear. Since the Fed did not even wait to raise the DOT plot until fiscal plans became clear, will the reality of tax-cut fiscal policy increase the DOT’s even further at some point?

 

Market expectations for rate hikes are still behind the Fed. With German 2yr rates -0.72% and the U.S. 2yr making very little sense at 1.2 if the Fed funds rate is going to be above 2% in 2018, upward pressure on the USD should persist.

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The all important retail sales disappoints post Trump victory: coming in at only .1% month over/month!

(courtesy zero hedge)

Retail Sales Disappoint As Post-Trump Animal Spirits Fail To Appear

Retail Sales growth for November rose just 0.1% MoM, missingexpectations of a 0.3% jump, and saw notable downward revisions to October’s surge. The biggest drover of the weakness was sales of motor vehicles tumbled 0.5% MoM in November.

October’s 0.8% growth suyrge was marked down to just 0.6% and November rose just 0.1% MoM…

 

Leaving YoY growth sliding back into its average for the year – no escape velocity post-Trump…

 

The biggest driver of the weakness appears to be a slump in Sporting Goods and and Motor Vehicle sales…

(courtesy zero hedge)

(courtesy zero hedge)

(courtesy Jeff Gundlach./zero hedge)

Jeff Gundlach Warns 10Y Yields Above 3% Will “Punish Markets”, Would Mark End Of Bond Bull

Having previously noted the 10Y yield bogeys by SocGen, Goldman and JPM, above which the S&P would start to groan, which are at 2.60%, 2.75% and 2.75%, respectively, overnight we got yet another datapoint to add to this series: that of Jeffrey Gundlach, who during yesterday’s webcast to DoubleLine investors said 10Y rates may climb to 3% by next year as deficits and inflation rise under the Trump presidency, “a move that would hurt markets.” The 10Y is currently trading just below 2.50%

“We’re getting to the point where further rises in Treasuries, certainly above 3 percent, would start to have a real impact on market liquidity in corporate bonds and junk bonds,” Gundlach said on Tuesday as reported by Bloomberg.

 

Also, a 10-year Treasury above 3 percent in my view starts to bring into question some of the aspects of the stock market and of the housing market in particular.

Bonds are ‘cheapest’ to stocks in over two years…

In just under 5 hours, the Fed is expected to raise its Fed Funds rate by 0.25% for the first time this year and only the second time since the 2008 financial crisis.

Gundlach said on the webcast that he will be looking after the meeting for signs that Fed members are growing inclined to raise rates more aggressively in the next couple of years as the economy heats up.

Gundlach also said that he has increased the average duration of holdings in his fund as rates have risen since July, while still holding debt with a shorter duration, and lower risk, than the benchmark Bloomberg Barclays U.S. Aggregate bond index.

It certainly appears bond yields have run up relative to inflation expectations post-Trump…

In a follow up call with Reuters, Gundlach repeated that “3 percent is a problem. If the 10-year goes above 3 percent, you would also have to say unequivocally you have seen the end of the bond bull market.”

Gundlach also said it is reasonable to be nimble and do some purchasing of Treasuries. “I think it is an okay buy right now,” he said. “We hate the market less. We are a little bit less defensive,” Gundlach said. When bond prices are down, DoubleLine likes it more, he said.

If the 10-year yield exceeds 3 percent next year, high-yield “junk” bonds will drop into a “black hole of illiquidity,” Gundlach said.

Gundlach said the Standard & Poor’s 500 Index, which is up 6.5 percent since the election, could reverse their solid momentum at the latest by Trump’s Jan. 20 inauguration. Gundlach said he thinks the dollar is going to soften in the weeks ahead as “bullishness in the dollar is pretty entrenched.”

For those who missed it, Gundlach’s full presentation from yesterday’s webcast is below.

 

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More trouble in Dallas as a great number of police resignations (99) were slapped on city desks.

(courtesy zero hedge)

Dallas Police Resignations Soar As “Insolvent” Pension System Implodes

 

 

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Who on earth selects these people to be electors? Trouble ahead as it seems this guy was paid to change his vote to Clinton

(courtesy GotNews/zero hedge)

Anti-Trump Elector Chris Suprun Paid For Ashley Madison While Bankrupt And Married With 3 Kids

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It is now up to 40 electors demanding a briefing from Clapper on the Russian interference.  However all of these save one is already for the Democrat.  However it shows how desperate are the democrats

(courtesy zero hedge)

40 Electors Demand Russian Interference Briefing Before They Vote

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One comment

  1. In reference to the Fed rates, they had no choice but to raise, and it wasn’t nearly enough to balance rates. The Fed rate follows the 10-yr-Treasury, which is an open market rate. 10-yr-Treasury has raised 85 bips since mid-Fall: ~1.72-2.57. There is still an imbalance, a large one. Last time they raised rates (12/15), it was listed only; loans went out at .12 instead of the listed .35. So the open market 10-yr-Treasury is still much higher than the Fed rate. If you are doing an arbitrage between these rates, you will still make gobs of money, if, in fact, any of us have any money to arbitrage.

    Fred the Timneh says, “Hail Caesar. Pretty bird.” I hope he’s doing well. Fred’s a … at the moment.

    Like

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