Final version: Jan 3/Silver shines by advancing 41 cents/Gold also advances $10.40/Germany has repatriated its entire 300 tonnes from the USA/Another huge 9.49 tonnes leaves the GLD/Nothing leaves the SLV/More capital controls in China/Bitcoin rises above $1050.00 per coin/Chinese bond trading frozen last night/overnight rates rise to 18% as banks are afraid to loan to one another/Another Islamic attack in Turkey (Istanbul)/Iraq claims Kurds producing more oil than scheduled/Bundesbank claims that the 1237 tonnes of gold held in NY is really gold obligations and not real bars/Trump today orders GM not to build cars in Mexico/Ford cancels their movement to Mexico/ Trump gets ready to build the wall with Mexico/USA senate gets ready to repeal Obamacare/

Gold at (1:30 am est) $1160.40 UP $10.40

silver  at $16.35:  UP 41 cents

Access market prices:

Gold: $1159.25

Silver: $16.29



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

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

TUESDAY gold fix Shanghai

Shanghai morning fix Jan 3/17 (10:15 pm est last night): $  1181.81

NY ACCESS PRICE: $1157.00 (AT THE EXACT SAME TIME)/premium $24.81


Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   119.39



China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully


London Fix: Jan 3/2017: 5:30 am est:  $.1148.65   (NY: same time:  $1148.09    5:30AM)

London Second fix Jan 3.2017: 10 am est:  $1151.00 (NY same time: $1151.10    10 AM)

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

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


For comex gold: 


For silver:


Let us have a look at the data for today



In silver, the total open interest ROSE by 386 contracts UP to 164,787 with respect to FRIDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .824 BILLION TO BE EXACT or 118% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold ROSE BY 7844 contracts WITH THE FALL IN  THE PRICE GOLD ($6.40 with FRIDAY’S trading ).The total gold OI stands at 423,354 contracts.

we had 2 notice(s) filed upon for 200 oz of gold.


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


We had a huge  change in tonnes of gold at the GLD, a withdrawal of 9.49 tonnes of gold leaving the GLD

Inventory rests tonight: 813,87 tonnes



we had n0 changes in silver into the SLV

THE SLV Inventory rests at: 341.348 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 386 contracts UP to 164,787 DESPITE THE FACT THAT the price of silver FELL by  $0.22 with FRIDAY’S trading. The gold open interest ROSE by A WHOPPING 7,844 contracts UP to 423,354 DESPITE THE FACT THAT the price of gold FELL BY $6.40 WITH FRIDAY’S TRADING (AND WHACKING OF GOLD).

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


2c) FRBNY report on earmarked gold movement



i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 32.28 POINTS OR 1.04%/ /Hang Sang closed UP 149.84 OR .68%. The Nikkei closed  /Australia’s all ordinaires  CLOSED UP 1.15%/Chinese yuan (ONSHORE) closed DOWN at 6.9605/Oil ROSE to 54.93 dollars per barrel for WTI and 58.02 for Brent. Stocks in Europe: ALL IN THE GREEN  .  Offshore yuan trades  6.9716 yuan to the dollar vs 6.9605  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS A BIT AS  MORE USA DOLLARS ARE ATTEMPTING TO  LEAVE CHINA’S SHORES /



none today



i)Sunday night

More capital controls in China and that sends bitcoin over $1,000 to $1024

( zero hedge)

ii)Monday night:

The yuan slumped last night which caused bitcoin to rise over $1050.00 Many researchers have suggested to China to do a one off huge devaluation and avoid capital controls

( zero hedge)


iii)Monday night:

Government bond trading froze last night after huge increases in interbank lending rates. The POBC withdraw huge amounts of money trying to drain liquidity: Overnight lending rates: 18%

( zero hedge)

iv)Capital controls seems to have worked on day one of the new year.

( zero hedge)

v)If Donald Trump recognizes Taiwan as independent, this would cross China’s one China policy.  The Chinese military are considering measures now to cripple Taiwan by cutting off trade etc.

( zero hedge)




Why Italian government cannot or will not stop the refugee smuggling.

( Gefira)


This does not look good: The popular ambassador to the EU who was set to negotiate England’s exit from the EU unexpectedly resigns

(courtesy zero hedge)


i)Islamic attack in Istanbul.  Now there are 39 dead:

( zero hedge/two stories)


India announced that 14.9 of the 15 trillion in old notes have been handed in.  Thus almost zero has been withheld because of the tax evasion.  The government was set to make a killing on notes not being returned to the banking system.  However the economy tanked as India is basically a cash economy.  The central bank of India immediately lowered rates but confidence is waning

( zero hedge)


The following email sent to me by Robert should give you a good idea as to why there will not be peace between Israel and Palestine
(courtesy Dr Eldad/Robert h)




i)Oil rises on reports that Kuwait and Oman will cut output:

( zero hedge)

ii)Libya is set to increase production to over 900,000 barrels per day.  The increase of 125,000 barrels per day represents 1/3 of cut production by other OPEC/non OPEC members

( zero hedge)

iii)The non compliance in the OPEC oil production curtailment is already is jeopardy as Iraq accuses the Kurds of producing more oil than permitted

( zero hedge)


Very strange:  Venezuela’s government is selling 5 billion USA to its central bank. They have no means whatsoever of getting dollars. It is well known that China advanced huge sums of money with collateral being the oil.  It looks like China has now asked for a bond to back up the collateral.

( zero hedge)


i)Iran receives huge amounts of cash and gold for sanction relief:

( Wall Street Journal/GATA)

ii)Interesting:  almost all of the outlawed money has been redeposited in the bank. The government was expecting almost 1/3 not to be returned because of tax evasion. They guessed wrong and thus their plan was basically gone for naught.

( zero hedge)

iii)The USA dollar’s share of global currency reserves slips a bit in the 3rd quarter

( Lang/Reuters/GATA)

iv)This should be very alarming:  Germany’s gold reserves in the uSA were only paper claims.  Now Peter Boehringer, the head of the organization that wants all of Germany’s gold on its soil will pound the table asking for the gold to be repatriated in full at once.

It think it would be appropriate for the uSA to change their definition of “earmarked gold”

( Peter Boehringer/Chris Powell)

v)A terrific commentary from Alasdair Macleod showing the stupidity of Modi in his attempts to curb the appetite of gold by Indian citizens

( Alasdair Macleod)
vi)First Majestic silver, a large primary silver producer is set to join the class action suit. They have little gold so they would be ideal in this action.  Neumeyer is one angry CEO!!

( Mac Slavo)


vii)Interview of Bill Holter with SGT

( Bill Holter)


i)Early uSA trading:

( zero hedge)

ii)There is a criminal witch hunt with respect to the Dallas police pension fiasco

( Mish Shedlock)

iii)The Donald is at it again.  This time it is General Motors. “Either you make your cars in the USA or you pay a big border tax”:

( zero hedge)

iv)GM responds to Trump; you are wrong. We make the Chevy Cruze in Ohio:

( zero hedge)


( zero hedge)

vi)Next up for Donald; the repeal of Obamacare:

( zero hedge)

vii)Trump picks Robert Lighthizer as USA trade representative, a very tough negotiator and a tough critic on China: China again will not be too happy!

( zero hedge)

viii)Trump is on a roll: He now ours DHS to prepare for a border wall construction with Mexico:

( zero hedge)

ix) An extremely important commentary from Steve St Angelo on the true USA deficit. He removes the accounting gimmicks used to prop up the system as well as adds to the deficit items like student loans and auto loans which are not assets and should be part of the deficit.  The true deficit for the fiscal year ending Sept 30/2016 was 1.2 trillion USA. It will be much higher this year!

( Steve St Angelo/SRSRocco report)

Federal Reserve Bank of New York:

Earmarked gold movements


December report:

Last Oct/2016 we had 7,841 million dollars worth “gold” in inventory at the FRBNY

valued at $42.22 per oz

Last November/2016 we had 7,841 million dollars worth of gold in inventory at FRBNY valued at $42.22 per oz

thus 0 oz moved at $42.22


So far officially, the following has been repatriated to  BuBa from NY:

2013: 5 tonnes

2014: 120 tonnes

2015:  99.5 tonnes


2016: to be officially announced


Their total  quota from NY is scheduled to be 300 tonnes and another 374 tonnes from Paris of which 177 tonnes of gold has officially been sent (Dec 2015) and thus another 197 tonnes to cross the English channel.

Germany has officially 1237 tonnes of gold “stored ” in NY. On conclusion of the repatriation, Paris will have 0 stored there.






Let us head over to the comex:

The total gold comex open interest ROSE BY 7,844 CONTRACTS UP to an OI level of 423,354 DESPITE THE FACT THAT THE  PRICE OF GOLD FELL $6.40 with FRIDAY’S trading. We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a loss of 136 contracts down to 1007.  We had 133 notices filed so we lost only 3 contracts or 300 oz standing for gold in this non active delivery month of January. For the next big active delivery month of February we had a GAIN of 3046 contracts UP to 282,871. March had a gain of 24 contracts as it’s OI is now 24.


We had 2 notice(s) filed upon today for 200 oz


And now for the wild silver comex results.  Total silver OI ROSE by 386 contracts FROM  164,401 up to 164,787 DESPITE THE FACT THAT the price of silver FELL BY $0.22 with FRIDAY’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 non active delivery month of January and here the OI FELL by 291 contracts FALLING TO  467. We had 195 notices filed on Friday so we lost 96 or an additional 480,000 oz will not stand and no doubt were cash settled.  The next non active month of February saw the OI rise by 3 contracts up to 108.

The next big active delivery month is March and here the OI FELL by 276 contracts DOWN to 133,802 contracts.

We had 1 notice(s) filed for 5,000 oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 233,456  contracts which is very good.

Yesterday’s confirmed volume was 161,797 contracts  which is fair

Initial standings for january
 Jan 3/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
  nil oz
No of oz served (contracts) today
2 notice(s)
200 oz
No of oz to be served (notices)
1005 contracts
100,500 oz
Total monthly oz gold served (contracts) so far this month
135 notices
13,500 oz
.420 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     4,475,021.1 oz
Today we HAD 0 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 0 customer deposit(s):
total customer deposits; nil oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil oz
We had 0  adjustment(s)

For January:

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

To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (135) x 100 oz or 13,500 oz, to which we add the difference between the open interest for the front month of JANUARY (1007 contracts) minus the number of notices served upon today (2) x 100 oz per contract equals 114,100 oz, the number of ounces standing in this non  active month of JANUARY.
Thus the INITIAL standings for gold for the JANUARY contract month:
No of notices served so far (135) x 100 oz  or ounces + {OI for the front month (1007) minus the number of  notices served upon today (2) x 100 oz which equals 114,000 oz standing in this non active delivery month of JANUARY  (3.5458 tonnes)
On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex.
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for all of 2016 and the first month of January 2017
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.   29.931 tonnes
JAN/     3.5458 tonnes
total for the 13 months;  225.904 tonnes
average 17.377 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month.
Total dealer inventor 1,568,121.556 or 48.885 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 9,158,885.147 or 284.87 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 284.87 tonnes for a  loss of 18  tonnes over that period.  Since August 8/2016 we have lost 69 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!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
 Jan 3. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 974,476.700 0z
Deposits to the Dealer Inventory
  515,901.35 OZ
Deposits to the Customer Inventory 
nil oz
No of oz served today (contracts)
(5,000 OZ)
No of oz to be served (notices)
466 contracts
(2,330,000  oz)
Total monthly oz silver served (contracts) 196 contracts (980,000 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  4,725,668.6 oz
today, we had 1 deposit(s) into the dealer account:
 i) Into Brinks: 515,901.35 oz
total dealer deposit: 515,901.35 oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of CNT:  633,291.560 oz
ii) Out of Scotia:  341,185.140 oz
 we had 0 customer deposit(s):
total customer deposits;  nil  oz
 we had 0  adjustment(s)
The total number of notices filed today for the JANUARY. contract month is represented by 1 contract(s) for 5,000 oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  196 x 5,000 oz  = 980,000 oz to which we add the difference between the open interest for the front month of JAN (467) and the number of notices served upon today (1) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the JANUARY contract month:  196(notices served so far)x 5000 oz +(467) OI for front month of JAN. ) -number of notices served upon today (1)x 5000 oz  equals  3,310,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We lost 96 contracts or an additional 480,000 oz will not stand.
At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand.
Volumes: for silver comex
Today the estimated volume was 83,311 which is huge
YESTERDAY’S  confirmed volume was 48,229 contracts  which is very good.
Total dealer silver:  27.452 million (close to record low inventory  
Total number of dealer and customer silver:   183.006 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.



And now the Gold inventory at the GLD
Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes
DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes
Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes
Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes
Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes
Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes
DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes
Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes
Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes
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 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
Jan 3/2017/ Inventory rests tonight at 813.87 tonnes


Now the SLV Inventory
Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/
DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/
Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz
Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/
Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz
DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz
Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes
Dec 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/
Jan 3.2017: Inventory 341.348  million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.8 percent to NAV usa funds and Negative 6.8% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.3%
Percentage of fund in silver:38.4%
cash .+0.3%( jan 3/2017) 
2. Sprott silver fund (PSLV): Premium RISES to +.40%!!!! NAV (Jan 3/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.79% to NAV  ( Jan 3/2017)
Note: Sprott silver trust back  into POSITIVE territory at +0.40% /Sprott physical gold trust is back into NEGATIVE territory at -0.79%/Central fund of Canada’s is still in jail.


Major gold/silver stories for TUESDAY


Holiday will be back soon



Iran receives huge amounts of cash and gold for sanction relief:

(courtesy Wall Street Journal/GATA)

A tally of Iran sanctions relief includes more than $10 billion in cash, gold


By Carole E. Lee and Jay Solomon
The Wall Street Journal
Friday, December 30, 2016

WASHINGTON — In the three years since a preliminary nuclear deal was struck with Iran, Tehran has received more than $10 billion in sanctions relief from around the world in the form of cash and gold, according to current and former U.S. officials.

The large shipments of gold and cash, from oil funds unfrozen in numerous countries, represent the kind of financial relief that made Iran’s leaders eager to complete the international nuclear accord. Some of the cash and gold went to Iran while the U.S. and other world powers negotiated with Tehran on a final nuclear deal. More shipments took place after final deal went into effect last January.

This tallying of the sanctions relief to date includes payments previously announced and others that haven’t been. In one previously unreported payment, the U.S. authorized Iran to receive $1.4 billion in sanctions relief between when the final deal was struck in July 2015 and when it took effect, according to the U.S. officials.

Some U.S. lawmakers and Middle East allies contend that the shipments of cash and gold, a highly liquid form of money, can be used to fund Iran’s allies in the region, including the Assad regime in Syria, the Lebanese militia Hezbollah, and the Houthi political movement in Yemen. …

… For the remainder of the report:…




Interesting:  almost all of the outlawed money has been redeposited in the bank. The government was expecting almost 1/3 not to be returned because of tax evasion. They guessed wrong and thus their plan was basically gone for naught.

(courtesy zero hedge)

Currency revocation seems unlikely to generate windfall for Indian government


Indians Rush to Exchange Cash Ahead of Deadline

Demonetisation Has Seen More Money Returned to the System than Originally Expected

By Kiran Stacey
Financial Times, London
Friday, December 30, 2016

Indians rushed to exchange the last of their expired currency notes ahead of a deadline on Friday, amid initial signs that the country’s controversial demonetisation policy will fail to generate the windfall expected by the government.

New Delhi has claimed its decision, announced last month, to scrap 86 per cent of India’s currency and replace it with a smaller quantity of new banknotes would eliminate illicitly earned or unaccounted for income that has been beyond the reach of tax authorities.

But figures show that as Indians queued to deposit the last of their old Rs500 and Rs1,000 notes, almost all of the old currency had been returned. Economists said this suggested the move had not eliminated as much illicit cash as expected, and would derail the government’s hope of a windfall gain from the scheme.

Narendra Modi, India’s prime minister, defended his experimental demonetisation policy on Friday evening, saying it had been necessary to root out India’s well-established black economy.

“Some politicians criticised the demonetisation exercise saying the government broke a mountain only to catch rats,” he said during the final hours of a 50-day transition period. “They are right. We want to catch the rats who are stealing the poor people’s hard-earned money.”

The Reserve Bank of India has not said when it will publish the final figures on how much has been returned. However their latest data show that over Rs14tn out of the Rs15.5tn that was scrapped has now successfully been deposited despite stringent checks for untaxed income — far more than the Rs10 trillion that the government initially predicted.

According to some experts, this means the RBI will not be given a sudden windfall for the government to disperse in the new year.

“The government thought that trillions of rupees wouldn’t come back, and those liabilities could then be written off by the Reserve Bank of India,” said Sanjeev Ahluwalia, an adviser at the Observer Research Foundation think-tank.

“They thought they would be able to pull out that money as a windfall in what would have been a neat accounting trick, but at best, they were only ever going to get 5-10 per cent remaining outside the system.”

However, “people have been clever at finding ways round the rules”, he said.

Mr Modi first announced his decision to scrap 86 per cent of the country’s currency on November 8, in what amounted to the biggest economic experiment since Japan’s trial of negative interest rates.

With banks overwhelmed by customers looking to change money in the immediate aftermath of that announcement, Mr Modi pleaded with Indians to give him 50 days for normality to return.

By Friday — the end of that 50-day period — some sense of calm had returned to the banking system, albeit in the middle of holiday season and with most ATMs still shut for lack of new notes.

But as economists processed the initial results of the policy, many warned that the early signals show that it has significantly slowed growth.

“Growth will definitely have been lower because of demonetisation,” said Kunal Kundu, India economist at Societe Generale. “Inflation data looks weak, as do early figures on consumer durables.” Reports on Friday suggested spending on durable consumer goods fell by up to 38 per cent in November on the previous year.

India’s army of small traders have reported a similar effect, with customers staying away either to stand in bank queues or simply to conserve their supplies of cash.

Kailash Ashtakwani, a hardware store owner from Delhi, said he had lost 70 per cent of his business as a result of demonetisation. Standing in line to deposit cash at his bank in New Delhi, Mr Ashtakwani said: “Putting the [old] money in is easy but to take anything out is impossible when queues are eight or nine hours.”

India’s finance minister, Arun Jaitley, has announced a jump in tax revenue in the period from April until mid-December, which he said showed that the move had not damaged growth. Economists warned, however, that the increase was also caused by multiple tax rises in that period.

Mr Modi will give another speech on Saturday during which he is expected to announce a sweetener to win over voters ahead of regional elections next year.

He may also say when the curbs on withdrawals from ATMs will be lifted. Bank customers can currently only take out Rs24,000 per week over the counter from banks, and some had predicted this limit would be lifted on Friday. With banks lobbying for the limits to be extended, neither the government nor the RBI has said when they will finally end.




The USA dollar’s share of global currency reserves slips a bit in the 3rd quarter

(courtesy Lang/Reuters/GATA)


U.S. dollar’s share of global currency reserves slips in third quarter


By Jason Lange
Friday, December 30, 2016

The U.S. dollar’s share of currency reserves reported to the International Monetary Fund slipped in the third quarter of 2016 to its lowest level in two years, data from the IMF showed today.

The July-September period was the third consecutive decline in the dollar’s share of allocated currency reserves, or those reported to the IMF. The decline could reflect increased optimism about the global economy, with the European economy seen on improved footing.

In the third quarter the dollar comprised 63.3 percent of allocated reserves, the smallest share since the third quarter of 2014. The dollar made up 63.8 percent of allocated reserves in the second quarter.

The euro’s share rose to 20.3 percent in the same period from 20.0 percent the quarter before, while the yen’s share increases to 4.5 percent from 4.4 percent. …

… For the remainder of the report:





This should be very alarming:  Germany’s gold reserves in the uSA were only paper claims.  Now Peter Boehringer, the head of the organization that wants all of Germany’s gold on its soil will pound the table asking for the gold to be repatriated in full at once.

It think it would be appropriate for the uSA to change their definition of “earmarked gold”

(courtesy Peter Boehringer/Chris Powell)

Peter Boehringer: Germany’s gold reserves in U.S. were only paper claims


That explains why the Bundesbank and New York Fed could never produce proof of the gold’s existence.

* * *

By Peter Boehringer, Founder
German Precious Metals Society
Saturday, December 31, 2016

As it often has done before, Germany’s Bundesbank has released news at Christmastime to avoid critical examination and discussion, this time news about its repatriation of the nation’s gold reserves.

The repatriated tonnage volume reported — “approximately 200 tonnes,” bringing the total of gold repatriated to approximately 1,580 tonnes or 47 percent of Germany’s gold reserves — is OK, not spectacular. And this month there was far more important news about Germany’s gold, though it was overlooked.

The important news came December 21 from the major German news agency, DPA-AFX, and most likely was written by the Bundesbank itself for DPA-AFX. The news agency published a German-language news brief that was uncritically republished by most German newspapers and magazines without anyone recognizing its political, economic, and historical sensitivity.

The news item said: “… in den 1950er und 1960er Jahren wuchs der deutsche Goldschatz rasant. Denn. … Bundesrepublik [hatte] dank des Exports viele Dollar, die bei der US-Zentralbank gegen Goldforderungen eingetauscht werden konnten.”

In English: “Germany’s gold hoard grew rapidly in the 1950s and 1960s. Thanks to its export surplus, the Federal Republic amassed many dollars that could be exchanged at the U.S. central bank against gold claims.”

The news brief’s term was “gold claims” — not “physical gold bars,” which both the Bundesbank and the U.S. Federal Reserve contend have constituted the German gold reserves held in the United States.

We have the official text from DPA-AFX from December 21 containing the cited sentence, which was published without change by at least 20 major news organizations by the next day. As an example, here’s the item in the German news magazine Der Spiegel:…

We as yet have no proof that Bundesbank itself wrote this sentence. (DPA-AFX would have that proof.) But it would be unusual if a mere apprentice at the news service had fabricated the term.

So it is reasonable if we now consider nearly official what gold “conspiracy theorists” have been assuming for decades. That is, the German gold reserves supposedly stored abroad and especially at the Federal Reserve Bank of New York most likely never existed in physical form since the 1960s. Rather the German gold supposedly stored abroad most likely has been only a matter of accounting book entries.

Of course the Bundesbank is unlikely to admit this. Otherwise its tale of its melting gold bars stored untouched at the New York Fed for more than 50 years would have been in vain.

For years now the German Precious Metal’s Society’s “Repatriate our Gold” campaign has demanded to see the original German gold bars in the New York, London, and Paris vaults where they supposedly were stored. But neither the Bundesbank nor the New York Fed have ever provided any evidence — photos, complete bar numbers, videos of the bar melting, etc.

All we ever received were foggy statements with incomplete bar numbers, worthless bar lists, and incomplete “internal audit” reports.

But if Germany’s gold bars stored abroad were actually only paper gold claims and book entries, everything that has happened would make perfect sense.

Only now, after years of public pressure, some of the gold seems to be becoming physical in the course of its transmission over the Atlantic Ocean.

Only now does the Federal Reserve seem to “wire” the gold to Europe, where the Bundesbank can buy new gold bars.

Now the Fed and Bundesbank can avoid forever having to display 120,000 bars of German gold from the 1950s and 1960s, most of which likely never existed.

Thank you, DPA-AFX, and thank you, Bundesbank, for some truth after all this time. Thank you for this overdue admission of the Bretton Woods “gold book entry” world of the 1960s.

Thank you for a peek into the obscure world behind the curtains and vaults of central banking, back in the 1960s as well as today.

Unfortunately, the misleading news about our gold continues in Germany.

While Bundesbank director Carl-Ludwig Thiele announced December 24 that the Bundesbank has “repatriated” another 200 tonnes of gold from New York and Paris —

— details will come only in January, and we still lack transparency in the Bundesbank’s own vault in Frankfurt. Here too we have never received a full bar number list — an “inventory number” list, which we have, is worthless — have never seen photos or video of the approximately 125,000 bars that supposedly are in Frankfurt now, have never seen a signature by an external auditor who has performed a physical audit on site in the Frankfurt vault.

Our conclusion: Our Repatriate our Gold campaign is satisfied with some material progress both on the physical and information front. Here at the end of 2016, Germany now has about 47 percent (1,580 tonnes) of its gold in Frankfurt.

But we remain unsatisfied with the evidence given by the Bundesbank to support its claim that “all bars are in Frankfurt physically and ownership is exclusive — that is, no multiple owners of individual bars, no fractional gold banking.”

And the DPA-AFX news item indicating that the German gold held at the New York Fed was just paper gold, just book entries, prompts us again to urge the Bundesbank to repatriate not just half our gold, the Bundesbank’s official objective since 2013, but all of it.

A golden currency reserve has to be on a country’s own soil without counterparty risk, especially when our new currency, the euro, is being rescued every day with billions in guarantees and illegal bond purchases by the European Central Bank and seems to be approaching the natural end of its unnatural existence as a supranational currency.

* * *



A terrific commentary from Alasdair Macleod showing the stupidity of Modi in his attempts to curb the appetite of gold by Indian citizens

(courtesy Alasdair Macleod)

The economic consequences of Mr Modi
 — Published: Friday, 30 December 2016 | Print  | 3 Comments 

By: Alasdair Macleod – .com

Two weeks ago, India’s Prime Minister Narendra Modi demonetised an estimated 86% of rupees in circulation, offering conversion into a bank account or into smaller currency notes until 31 December, after which these notes will have no redemption value.

Together with forgeries in circulation, it could be over 90% of all circulating money. The terms of redemption are so inconvenient for anyone other than black-marketeers, that for all purposes $50bn equivalent of rupees have been eliminated from the economy at a stroke, pending the introduction of new currency notes.

The sadness in all this is that Modi should have foreseen the extent of the disruption to the poor and rural communities, but has obviously forgotten the hard lessons of life learned in his youth as a lowly chai wallah. It could be that the Reserve Bank went along with it as a government puppet, consoling itself with the thought it would be a good way to write off obligations, believing a significant quantity of notes is likely never to be redeemed by black-marketeers and tax evaders. It effectively reduces the central bank’s obligations to the private sector at the expense of those the state likes least. However, the $10-20bn equivalent the state will make from it is less important than the disruptive economic effect and the likely impact on the rupee’s future purchasing power.

The purpose of this article is to look at the economic consequences of Modi’s action. Initial estimates by western macroeconomists of the effect on GDP seems to be benigni. It could be because their contacts in India are typically the more highly-paid city bourgeoisie, who rarely spend cash except for tips, using bank and credit cards more normally for everyday purchases. These people would almost certainly welcome moves to bring illegal trading under control and extend the income tax base, playing down the negatives. However, the cash immediately removed amounts to about 2.5% of GDP, eventually to be replaced at an unspecified time in the future by the new notes bearing a portrait of the Mahatma. But while these notes are shortly to become available, it could take months to convert ATMs and ensure their widespread availability.

If the long-term consequences will be to bring unrecorded transactions into the GDP statistic, some western macroeconomists postulate recorded GDP could end up rising faster than anyone expected before Modi’s action. This misses the point. Banning high denomination notes worth as little as $7.50 equivalent to be replaced by the new Ghandi notes has been a major disruption in most Indians’ lives, particularly for the rural population. Removing everyday money is like trying to run an engine without any oil in it. It seizes up, which is what the Indian economy is certain to do. India’s economy is therefore likely to face a short-term slump, which government economists will counter by reflating, in other words by increasing the quantity of money. It will do the economy no good, but nominal GDP, which is not the same thing, will eventually rise, to the satisfaction of the central planners.

Behind the confusion in government economists’ minds is a false conviction that GDP records the performance of an economy. This is wrong. GDP is just a money-total at a previous point in time, and no more than that. It is not a measure of economic progress or regress. A change in GDP reflects only a change in the quantity of money in the economy, so it is perfectly possible for an economy to contract, or even collapse, while nominal GDP rises. Not only is this fatally misunderstood by today’s economists, but this outcome has become far more likely for India, and will simply end up generating more monetary inflation from the banking system. Behind the Indian authorities’ poor grasp of the economic consequences of their actions are misconceptions common with establishment economists everywhere. However, it is likely that central bankers in India and elsewhere are at least vaguely aware of the long-term danger of increasing price inflation. But the consensus in banking circles is that more money and credit may be required to stave off recession, and even systemic risk. And in the case of systemic risk, cash is a danger because it allows the public to expose a bank’s insolvency. If only cash was somehow replaced, there could perhaps be greater control over economic and systemic outcomes.

All the signs of this loose thinking are there. We keep on hearing of central banks planning to do away with cash, and Modi’s action is consistent with this standpoint. His government is not only trying to eliminate black markets, but it is also brutally trying to eliminate economic dependence on physical cash. It rhymes with the direction of travel for central bank policy in the advanced economies as well as in the emerging.

Doubtless, for this reason, central banks everywhere will be watching the Indian experiment closely. But we can easily guess what their analysis will conclude. If the experiment succeeds, it will encourage them to proceed with their own plans to digitise money and dispense with the folding sort. If it doesn’t, failure will be deemed to be due to the peculiarities of the Indian economy and the failure of the Reserve Bank to implement policy effectively, so they will proceed with their plans anyway.

However, hopes that the elimination of cash will give central banks greater control over inflationary outcomes appear to be badly misplaced. Not only does history tell us the exact opposite is the case, and that the reality is central banks have no control over price outcomes, but subjective price theory also confirms. The pricing power of money is not and never has been in the control of central banks; it is a matter only for the users of money in their day-to-day transactions. Money’s use as money is wholly down to its public acceptance as money, as experience proves, and central banks’ abuse of this trust is ultimately dangerous, as so often demonstrated. For example, despite government diktats and heavy-handed enforcement, Zimbabwe’s currency has become at best, to put it politely, a replacement for another form of paper whose vital supply has been disrupted. The digital version has even less value, because it has no alternative use.

India and Gold

We must return to the specific subject of India, and the likely outcome of Modi’s clumsy attempt to eliminate means of payment using cash. It is almost certainly going to backfire. Indians have little respect for government as it is, and this action will only convince them with renewed purpose to have as little to do with the government and its money as possible. When the new Gandhi notes come into circulation, they will likely be rejected as the preferred money by growing numbers of a rightly suspicious public. This means that the rupee’s purchasing power will diminish more rapidly than if Modi had not disrupted what had become a relatively stable monetary situation.

Ordinary people in their actions are well ahead of western financial analysts, having quickly anticipated this outcome for themselves. Despite longstanding government attempts to persuade them otherwise, they are rushing to convert worthless rupees into the one form of money they have trusted for millennia and over which government has no control, gold. They know that priced in rupees, gold will be more expensive in the months to come, so anything that can be encashed will be encashed for gold, not rupees.

This is the reason why gold in India is now trading at a substantial premium to international prices. The Indian government restricts its supply because it has always seen gold, correctly, as a challenge to its own fiat money. Accordingly, the central planners condemn gold as being more appropriate to history than today’s economic environment. And having dismissed its relevance as money and as a superior store of value to the rupee, they see gold imports as unproductive hoarding. The government and central bank also appear to make the mistake of believing that if gold imports were eliminated, the balance of trade would improve accordingly. The result is various acts and regulations since the Gandhi era have only encouraged gold smuggling. The importation of gold has never halted, and responding to every twist and turn of monetary policy has increased over the long-term, and will continue to do so following Modi’s clumsy action.

The impact of government ineptness on the gold market is likely to be considerable. After a period of relative currency stability, gold demand, at the officially recorded level, had in fact declined earlier this year. The premium on gold was less than the new sales tax, putting many jewellers out of business, because they could not compete with smuggled gold, which bore no tax and attracted a lower premium than the sales tax. More jewellers will probably be put out of business by this latest action. Smuggling will consequently rise and rise, particularly if the rupee’s purchasing power declines because of escalating public distrust of it as money.

The central banking community, headed by the Bank for International Settlements, was concerned at Indian gold demand increasing at a time when Chinese citizens were absorbing most of the world’s free supply of newly-mined and scrap gold. It is almost certain that the appointment of Raghuram Rajan in September 2013 as Governor of the Reserve Bank of India had much to do with the urgency to bring Indian demand for gold under control, because he was and still is the BIS’s establishment man. He has generally failed in this mission, and his tenure was not renewed for reasons unknown, other than he preferred to return to the calmer pastures of academe and his Vice-Chairmanship of the Bank for International Settlements.

This is not characteristic of a career central banker at the height of his powers and influence. Perhaps Rajan realised his attempt to manage gold demand would never work, and Modi was proving too dangerous for his own legacy at the Reserve Bank to survive unblemished. He was recently quoted as saying that the RBI’s ability to say no to the government must be protected, some months after he declined the opportunity to serve a second term. Was this a reflection of something that happened?

In conclusion, the surprise money-grab by the Indian authorities intensifies the public’s perception of a corrupt, overly-bureaucratic, and ineffective government. The public’s suspicion that government paper money is ultimately worthless will have, in its collective mind at least, gained immeasurable credence. An accelerating decline in the purchasing power of the rupee is the most likely economic consequence of Mr Modi, ultimately destabilising for both the country and his government.

By: Alasdair Macleod – .com

First Majestic silver, a large primary silver producer is set to join the class action suit. They have little gold so they would be ideal in this action.  Neumeyer is one angry CEO!!
(courtesy Mac Slavo)

It’s War: World’s Purest Silver Producer Prepares To Join Class Action Lawsuit Against Bullion Banks For Price Rigging

Mac Slavo
January 2nd, 2017

Comments (20)

Though Wall Street regulators and the mega-banks they purport to regulate have long said that there exists no manipulation in markets and that anyone making claims to the contrary is nothing short of a conspiracy theorist, recent revelations suggest that even the most well known financial institutions on the planet have been actively involved in rigging asset prices. We need look no further for confirmation of this fact than Deutsche Bank, which last year admitted the precious metals market has been rigged all along and agreed to pay nearly $100 million in settlements resulting from their direct involvement in the manipulation of gold and silver prices.

Now that the cat is out of the bag and Deutsche Bank has agreed to turn over documents implicating other banks in related schemes, major mining companies are preparing lawsuits of their own. Straight-shooting First Majestic Silver CEO Keith Neumeyer, who in 2015 was the first mining company head to issue a public statement on the manipulation of precious metals prices by a small concentration of players, has said that the company’s legal team is closely monitoring the situation

Citing loss of revenue, jobs and shareholder value Neumeyer said in an interview with SGT Report that his company will likely be preparing legal action against the bullion banks involved in the rigging of prices.

I have an intimate knowledge of what goes on on the trading floors… how front running occurs, how wash trading occurs, how spoofing occurs… I’ve been looking for an opportunity to step in… I’ve been very vocal… I’ve talked to many executives that are running other silver companies… When the Deutsche news came out I sent an email to the law firm that’s responsible for this lawsuit and I had a conference call with two lawyers… we spoke about this case… I can tell you that a couple of the CEO’s of some very prominent silver companies in the States have no interest in pursuing this… Other CEOs have said that they are interested in pursuing this with First Majestic.

We’re monitoring this. We’re going to follow it. We’re likely going to, at some point, add our name to the class action lawsuit.

Watch the full interview detailing Neumeyer’s views on global cash bans, what silver prices may do once the manipulation comes to an end, how precious metals will be affected by the incoming Trump administration, current supply and demand fundamentals and an update on his latest projects including Silver One Resources:

(Watch At Youtube)

Neumeyer and what appears to be a handful of other CEO’s in the industry are preparing to declare war on the banks that have been responsible for the price suppression schemes many knew to exist but couldn’t prove until now.

The problem was that the fox was left to guard the hen house, which of course led to an inevitable bloodbath:

It’s quite shocking to me… It’s very harmful to the shareholders…

…It is manipulation and it’s used frequently. There’s ways that the regulators can monitor it. They can see it happening. The exchanges know when false bids and offers get put into the system… Yet, the exchanges don’t step in because the exchanges are owned by the banks… and the banks are doing that kind of trading… It’s the self policing system, which doesn’t work because no one wants to police themselves because they’re all making too much money. 

How does Bank of America or JP Morgan not have a losing day year-after-year of trading… it’s actually impossible… traders lose money… it happens all the time… yet they have not had a single losing day for at least a couple of years as far as I know.

As Neumeyer correctly highlights, it’s impossible for a trader or firm to have such a perfect record, unless of course they are working the system, which certainly appears to be the case based on the evidence.

Now that market manipulations have been proven at the highest levels of the bullion banking system, and with the pressure of lawsuits mounting, there is a distinct possibility that precious metals prices will be allowed to trade freely on the open market.

Such a development bodes well for precious metals investors, especially with Donald Trump set to take over the Presidency in a few short weeks. Neumeyer notes that several Trump appointees are gold-friendly, which could add further upside potential:

On a positive note regarding Trump, he’s got a couple of pro-gold individuals that he’s appointed to his inner circle and I’m looking forward to them starting to make some gold favored policies that will help us as a mining company and our investors as well.

Summing up, Neumeyer hints that precious metals could do very well in the years to come:

We’re in very uncertain times… the world is changing.

If history is any guide, global changes of this magnitude mean that the entrenched systems run by central banks and Deep State politics are set to be destabilized on a level we may have not witnessed in our lifetimes, which means assets like bitcoin, gold, and silver could become the safe havens of choice for investors.



Interview of Bill Holter with SGT
(courtesy Bill Holter)


Bill Holter with his message for the New Year:

by Bill Holter, JS Mineset:

 While I had not planned on writing until next week, current events warrant commentary. This past week has been an absolute embarrassment for the U.S. The actions taken by Mr. Obama are unprecedented for any outgoing president. Thousands of pages of executive orders, land grabs, multiple accusations against Russia and of course throwing Russian diplomats out and the placing of new sanctions.

It is crystal clear Obama is trying his best to sabotage Mr. Trump’s presidency, whether he starts World War III in the process is the obvious danger. The next three weeks may be the most dangerous three weeks in our planet’s history as the “launch codes” are in the hands of someone obviously not thinking correctly. Most all of the hurdles and traps being laid by Obama can be corrected, altered or abolished. I would imagine the easiest way to do this would be to investigate and prove that Obama is not a natural born citizen and thus never eligible to sit in the office of U.S. President. If this avenue is pursued (I truly hope it will be), anything signed by Obama’s pen would then be null and void. The ramifications could be far reaching and include all sorts of appointments including federal judges.

The one draconian act which cannot be reversed as I see it is the UN vote recognizing Palestinian land. The U.S. did not veto the vote which every previous president has done. I do not see a remedy for this as the vote was 14-0 with the U.S. abstaining and not using our veto power. This vote truly looks like it was brokered by Mr. Obama, one of his few well thought out dangerous acts. The situation with Israel and the Middle East will now be altered permanently unless I am missing something?

The question of whether Mr. Trump is a Trojan horse or not should be answered almost immediately after the inauguration. I personally believe (and truly hope) Mr. Trump is real and does care about the United States as a nation. One area I am skeptical of is Congress. It is not clear to me whether or not both houses will do what the American people put them in office to do. It is very possible the republicans try to obstruct Mr. Trump’s nationalist/populist policy with their own bought and paid for globalist policy. It is 100% clear to me the takedown of the U.S. (from within) has been the plan for many years. I do not believe Mr. Trump was any part of “the plan” but we will soon find out.

We may even find out on January 6th as Congress counts the electoral votes. They do have a Constitutional avenue to still rebuff the vote and make their own choice. I do not believe this will be done as riots will follow with Congressman hanging from lampposts across the nation. Rather, I do believe it’s a good possibility the republican Congress will be obstructionist in subtle if not outward ways.

Folks, do not let your guard down. The next three weeks are certainly scary, any number of false flags could be unleashed. At least the previous efforts to spread bogus news have not worked as the evidence has not existed and the American people (for the most part) have seen through it. These are unprecedented times in every fashion, the “normal” we as Americans used to know will unfortunately never return during our lifetimes. Stay focused, whether you know it or not yet, we are at war!

Standing watch,

Bill Holter

Holter-Sinclair collaboration



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



2. Nikkei closed  /USA: YEN RISES TO 118.22

3. Europe stocks opened ALL IN THE GREEN      ( /USA dollar index RISES TO  103.50/Euro DOWN to 1.0384


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  54.93  and Brent: 58.02

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +238.%/Italian 10 yr bond yield UP 3  full basis points to 1.836%    

3j Greek 10 year bond yield FALLS to  : 6.97%   

3k Gold at $1150.75/silver $16.06(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP   59/100 in  roubles/dollar) 60.56-

3m oil into the 53 dollar handle for WTI and 56 handle for Brent/

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.03.06 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0701 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.196%


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 2.501% early this morning. Thirty year rate  at 3.115% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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


2017 Starts Off With A Bang: US Futures, Oil Jump On Upbeat China Data; Europe Enters Bull Market

Rumors of the Trumpflation rally’s death have been greatly exagerated, and not only is the Dow 20,000 back on the radar, following a 124 point surge in Dow futures, bringing the “key psychological level” back within 100 points, but European stocks rose for a third day and entered a bull market, rising 20% from theor lows set last February, following strong Chinese manufacturing and services PMI data, both of which ended 2016 on robust notes well inside expansion territory.

While much of Europe had been open on Monday, it was the first day back for its biggest stock market, Britain’s FTSE 100 and it wasted no time in hitting a new record high of 7,196 points with a 0.7% gain. Germany’s DAX and France’s CAC 40 climbed too and among individual stock movers, Italian banks were back amongst the top risers, with newly-merged Banco BPM up 4.6 percent on its second day of trading.  Overall, the Stoxx Europe 600 Index advanced 0.8% at 8:33 a.m. in London, with 18 of 19 industry segments climbing. The benchmark index, up 20 percent since a low last February, will confirm a bull market should the day’s gains hold into the close. The U.K.’s FTSE 100 Index, trading for the first time in 2017, is up 0.7 percent and heading for a record close.

US equity futures on the S&P 500 Index rose 0.7 percent, back over 2,251, while the Dow Jones was set to open back over 19,900.

In a reversal from the first trading days of 2016, when a selloff in Chinese equities roiled markets globally, the world’s second-largest economy has been a source of strength at the start of 2017. Weekend reports showed China’s official factory gauge steadied while services remained robust, capping a year of improvement in both indicators. A private manufacturing measure released Tuesday came in better than anticipated.

“A year ago, the Chinese markets kept everyone on their toes,” said Jingyi Pan, a market strategist at IG Asia Pte. “A year later, the outlook certainly appears to be more optimistic, though we may have to bring back the catchphrase of ‘cautious optimism’ going into the new year as we search for clarity.” “I don’t think that we will see a repeat given that the global economy has a better foothold compared to a year ago,” Pan said.

Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares rose 0.6 percent as most regional markets reopened after the New Year holiday although Japan’s Nikkei was still closed. Australian shares were the best performers in the region, closing up 1.2 percent. Hong Kong’s Hang Seng .HSI rose 0.7 percent while in China, both the CSI 300 index and the Shanghai Composite .climbed 1 percent.  China was Asia’s worst performing major stock market in 2016 with a 11.3 percent loss in its worst year in five.

Commodity-linked stocks jumped 1.3 percent as oil and metals prices cheered the China data that had showed output from the country’s giant manufacturing sector reaching a near six-year high. It bolstered the ‘reflation’ theme that dominated the latter stages of 2016 and helped get currency and bond markets back in their pre-break rhythm after a mixed recent run. The U.S. dollar racked up its biggest rise in almost three weeks against a basket of the world’s other major currencies to leave it just 1 percent off December’s 14-year high. As shown in the chart below, the Dollar Index (DXY) jumped as US yields moved sharply higher, w/ 10y yields rising from 2.4350% to over 2.51%.

In commodities, oil prices jumped over 2% in Europe as the China data fed into a market that is being buoyed by hopes a deal including OPEC and non-OPEC producer countries will drain the recent global supply glut. Oil was the world’s best-performing major asset class in 2016, with a gain of around 50 percent and global benchmark Brent was up 2.7% at $58.31 by 0945 GMT as U.S. crude topped $55 a barrel.

“Markets will be looking for anecdotal evidence for production cuts,” Ric Spooner, chief market analyst at CMC Markets said. “The most likely scenario is OPEC and non-OPEC member countries will be committed to the deal, especially in early stages.”

The positive Chinese news lifted the Australian dollar, which added 0.6 percent to $0.7230, while gold sagged, with the precious metal dropping 0.3 percent to $1,148 an ounce. Back in Europe, the pick ups in Germany and French inflation came on the heels of data on Monday showing manufacturers ramped up activity at the fastest pace in more than five years in December.

In China, Starting on Jan. 1, the number of currencies in the CFETS basket increased to 24 from 13, with new entrants including the Korean won, the South African rand and the Mexican peso. The country’s foreign exchange regulator also said it would step up scrutiny of individuals’ foreign currency purchases and strengthen punishment for illegal outflows, although the $50,000 annual individual quota will remain unchanged. The renminbi posted its biggest annual loss since 1994 last year, with the dollar up almost 7 percent versus the Chinese currency.

Long-term inflation expectations in the euro zone, measured by the five-year, five-year forward rate are near their highest levels in more than a year and close to the ECB’s near 2 percent target, as the central bank prepares to pare back the pace of its money-printing scheme. “Until just a few weeks ago, the general consensus was that upside inflation risks were very limited however… the inflation rate scheduled to be published today is likely to reveal a significant uplift,” DZ Bank strategist Birgit Figge told Reuters.

So with stocks rising on hopes of a return in inflation, it would mean that rates should dip, and indeed Treasuries dropped, with 10-year yields rising 7 bps basis points to 2.514%. U.S. cash bonds opened in London this morning having been closed since Dec. 30. German bonds fell as regional data showed inflation is accelerating. The yield on the nation’s 10-year securities dropped to the lowest level since November on Monday. French bonds were among the biggest decliners in Europe after the nation was said to mandate banks for the sale of a new Green bond in the 15- to 30-year area. France is due to sell 10-, 20-, 30- and 50-year bonds on Jan. 5.

* * *

Market Snapshot

  • S&P 500 futures up 0.7% to 2251
  • Stoxx 600 up 0.7% to 366
  • FTSE 100 up 0.7% to 7194
  • DAX up less than 0.1% to 11603
  • German 10Yr yield up 2bps to 0.21%
  • Italian 10Yr yield up less than 1bp to 1.75%
  • Spanish 10Yr yield up 2bps to 1.36%
  • S&P GSCI Index up 0.7% to 400.9
  • MSCI Asia Pacific down 0.2% to 135
  • Nikkei 225 closed
  • Hang Seng up 0.7% to 22150
  • Shanghai Composite up 1% to 3136
  • S&P/ASX 200 up 1.2% to 5733
  • US 10-yr yield up 4bps to 2.48%
  • Dollar Index up 0.38% to 103.17
  • WTI Crude futures up 1.4% to $54.46
  • Brent Futures up 1.6% to $57.71
  • Gold spot down less than 0.1% to $1,151
  • Silver spot up 0.4% to $16.00

Top Healdine News

  • Jain Finds His Second Act as Ex-Deutsche Bank Chief Joins Cantor: Smaller firm hires global bank’s former rainmaker as president
  • China’s Sogou Targets IPO at $5 Billion Valuation to Chase Baidu: Listing of about 10% of shares in U.S. may happen this year
  • LSE Agrees to Sell Clearing Unit to Euronext for $533 Million: Deal may be completed by the end of the second quarter
  •     China’s Factories, Services Cap Year of Gains as Prices Rise: Private manufacturing PMI by Caixin and Markit confirmed the strength in official data
  • SpaceX Plans Return to Flight With Jan. 8 Launch After Explosion: Liftoff from Vandenberg Air Force Base first since Sept. 1
  • BlackRock ETFs Attract Record $140 Billion on Bonds, Smart Beta: Investors added $27 billion to U.S. Core ETF after price cut
  • Fiat Chrysler Pauses From Gas-Guzzlers to Show Electric Minivan: Automaker unveils self-driving Chrysler Portal concept at CES
  • ‘Rogue One’ Takes in $64.3 Million for Disney Over Weekend: Movie industry sets record with $11.4 billion in annual sales
  • Pence, House Republicans to Talk Obamacare Repeal Wednesday
  • Comcast, 21st Century Fox Reach Agreement on Fox News: WSJ

Asian equity markets began the first session of 2017 on the front-foot despite last Friday’s negative close on Wall St where all 3 major indices finished lower and the DJIA retreated further away from 20,000. ASX 200 (+1.1%) led the Asia-Pac region and posted a fresh 16-month high amid broad based gains, with only the gold sector trading in the red. Shanghai Comp. (+1.0%) and Hang Seng (+0.6%) conformed to the upbeat tone following better than expected Chinese Caixin Manufacturing PMI data which rose to a near 4-year high and printed a 6th consecutive month in expansion territory, although gains across the region have been somewhat reserved amid rising money market rates in China and several market closures including Japan.

Top Asian News

  • China Gets Stricter on Forex Transactions to Limit Outflows: Citizens face extra disclosure requirements even as yearly quota of foreign currency was unchanged
  • Indonesia Terminates JPMorgan Partnerships After Downgrade: Finance ministry will stop using JPM as primary dealer, underwriter of sovereign bonds
  • South Korea Halts Some Nissan, BMW Sales in Emissions Probe: Total fines of $5.9 million slapped on three companies
  • Infosys, Wipro Leaders Warn of Challenging Times for Indian IT: Warn that industry faces grave threat from rising political, economic conflict around the world
  • China to London Freight Train Kicked Off as Xi Boosts Trade Ties: Train will cover more than 7,000 miles in about 18 days

In Europe, 2017 has kicked off as 2016 finished, with equities trading higher for much of the morning as the FTSE hits fresh all-time highs (+0.6%). Stock specific news has been relatively light so far today, however notable outperformance has been seen in the financial sector, with energy names also outperforming amid WTI crude futures printing 18-month highs. The Stoxx Europe 600 Index advanced 0.8% at 8:33 a.m. in London, with 18 of 19 industry segments climbing. The benchmark index, up 20 percent since a low last February, will confirm a bull market should the day’s gains hold into the close. The U.K.’s FTSE 100 Index, trading for the first time in 2017, is up 0.7 percent and heading for a record close. The latest data has been supportive of bond yields, with the German 10Y briefly moving above 0.24% amid the higher than previous regional CPIs, which have printed around 1.8-1.9% Y/Y so far. The latest German unemployment figures saw a fall in unemployment, further supporting yields. Elsewhere, Gilt yields have also seen strength this morning in the wake of a significant beat in UK Manufacturing PMI (56.1 vs. Exp. 53.3), seeing the highest reading since June 2014.

Top European News

  • Pound Drop Boosts U.K. Manufacturing, Pushes Up Factories’ Costs: Manufacturing grew at the fastest pace in 2 1/2 years in December
  • German Unemployment Extends Drop as Economic Growth Picks Up: Unemployment fell by 17,000 versus estimated 5,000 decline
  • Paris Eyes Luring 20,000 Bankers From London Amid Brexit Rupture: French lobby group sees banks ‘accelerating’ their planning
  • Biggest Swedish Business Group Predicts Weak Krona Won’t Last: Stronger currency could have ‘fast and unpleasant’ effect

In commodities, crude oil rose to $55.24 a barrel in New York, touching the highest level since July 6, 2015, buoyed by hopes that a deal between OPEC and non-OPEC members to cut production, which kicked in on Sunday, will drain a global supply glut. Benchmark Brent crude jumped more than 2 percent to a high of $58.37, up $1.55 a barrel and its highest since July 2015. By 0940 GMT (4:40 a.m. ET), Brent eased slightly to trade at $58.22, up $1.40. Gold added 0.1 percent to $1,148.5. Aluminum increased 0.1 percent to $1,694 per metric ton on the London Metal Exchange, while nickel jumped 1.6 percent to $10,180 a ton and copper rallied 1 percent to $5,593 an ounce.

In currencies, the Dollar Index was up 0.7 percent. The yen slid 0.5 percent to 118.14 per dollar, giving up an earlier advance. The euro erased earlier gains against to trade down 0.4 percent against the greenback. South Korea’s won rose 0.4 percent, while the Australian dollar strengthened 0.3%.

US Event Calendar

  • 9:45am: Markit U.S. Manufacturing PMI, Dec. F, est. 54.2 (prior 54.2)
  • 10am: ISM Manufacturing, Dec., est. 53.7 (prior 53.2)
  • 10am: Construction Spending MoM, Nov., est. 0.5% (prior 0.5%)

* * *

DB’s Jim Reid concludes the overnight wrap

A very Happy New Year to all our readers this morning and a warm welcome to 2017. Today’s EMR is a bit of a bumper edition and concludes with the December, Q4 and 2016 performance review at the end. It would probably be an understatement to say that 2016 has been – more than ever – a year in which we’ve all had to put our political analyst hats on. Trump and Brexit were the obvious headline events which characterised 2016 but that’s not to say that Central Banks haven’t been busy too with the Fed, BoJ, ECB and BoE all keeping us busy and laying the platform to what we think will be a volatile year ahead for rates. Commodity markets have also more than played their part, with a number of benchmark commodities hitting record lows early in the year before staging a remarkable rebound into year end. The good news is that the vast majority of assets ended the year on a high in December with 30 of the 39 assets within our sample (excluding currencies) delivering a positive total return last month in USD hedged terms.

As well as this, we’ve also got the usual week ahead preview at the end. Despite it being a holiday shortened week there’s little easing into the New Year with the diary fairly jam-packed with important releases. One of the highlights will be the FOMC minutes from the December meeting, due on Wednesday evening, which could be interesting given the slightly more hawkish than expected elements from the statement and of course the excitement caused by the moves in the dots. Also on the cards for this week is the US December employment report on Friday including the ever-important nonfarm payrolls print. We’ll preview that later in the week. The manufacturing and services ISM prints will also be due out while in Europe we’ll also get a number of December inflation reports due out over the next few days. Away from the data President-elect Trump should also continue to fill in the blanks of his administration ahead of his official inauguration later this month. So plenty to keep us on our toes and to talk about.

For those that took a break over the holiday season, in truth you haven’t missed too much. Markets did reopen in parts of Europe yesterday although unsurprisingly with the usual holiday impacted low volumes. That said it was a decent start for the most part to 2017. The Stoxx 600 kicked off the year by closing up +0.49% with all sectors ending a tad higher while the DAX (+1.02%) and the periphery (IBEX +0.71% and FTSE MIB +1.73%) also closed firmer. European Banks (+0.89%) also started the year stronger while in sovereign bond markets it was BTP’s which outperformed. Indeed 10y BTP yields were 7.3bps lower at 1.735% while 10y Bund yields edged down 1.8bps to 0.182%. The outperformance in Italy likely reflected the better than expected December manufacturing PMI yesterday with the print rising a full point to 53.2 and the highest reading since June. There were no surprises in the final revision for the data for the Euro area at 54.9 while France and Germany were also little changed at 53.5 and 55.6 respectively. Spain however also surprised to the upside after printing 0.8pts higher at 55.3 (vs. 54.6 expected).

Two days ago we also got the official PMI’s for China for last month with the manufacturing PMI down slightly to 51.4 (vs. 51.5 expected) from 51.7 the month prior and the non-manufacturing PMI coming in at 54.5 versus 54.7 in November. This morning we’ve also had the Caixin manufacturing PMI for China which, unlike the official data last week, surprised to the upside at 51.9 (vs. 50.9 expected) from 50.9 in November. As we look across markets this morning, bourses have started the year in a fairly upbeat mode. In China the Shanghai Comp and CSI 300 are currently +0.75% and +0.82% respectively while the Hang Seng is +0.51%. The Kospi is +0.52% and the ASX +1.17%. Markets in Japan are closed for a public holiday. Elsewhere Oil is a shade higher while Gold and other precious metals are up close to +1%. US equity index futures are also pointing to a reasonable start (up around +0.35% as we type).

Much of the remaining newsflow this morning and over the past few days revolves around other developments in China and also the tragic terrorist attack in Istanbul on New Year’s Day which follows a number of other geopolitical events in the month of December and which will do little to ease tensions. The Turkish Lira has weakened about half a percent in the last two days since that attack. With regards to the former, there are various reports out there suggesting that China is looking to tighten controls on personal FX transactions in a bid to curb money laundering. According to the FT the $50k resident quota on foreign currency buying was also reset as of January 1st. In addition to this, last week we learned that China has also expanded the currencies included in its official CFETS basket to 24 from 13. The associated statement highlighted that this change is aimed at improving the mechanism generating the RMB index and so making the basket more representative. It also means that the US Dollar’s weighting in the new basket falls to 22.4% from 26.4% and so the lower USD weight means that less USD strength translates into the basket.

Turning over to the week ahead now. This morning in Europe we’re kicking off the New Year in France where the preliminary December CPI report will be released. We’ll also get last month’s CPI report in Germany along with unemployment data while in the UK the December manufacturing PMI is due to be released. It’s a reasonably busy start to the week in the US this afternoon with the main focus likely to be on the December ISM manufacturing print, while the final manufacturing PMI and construction spending in November is also due. Wednesday starts in Japan where the final manufacturing PMI for December is due while China will also release the MNI consumer sentiment print for last month. Over in Europe all eyes will be on the final December PMI revisions (services and composite prints) along with a first look at the data for the periphery. Euro area CPI in December will also be released along with money and credit aggregates data for the UK. In the US tomorrow the lone data release is December vehicle sales before all eyes turn to the FOMC minutes later in the evening from last month’s meeting. Turning to Thursday, Japan and China get the day started again with the remaining December PMI’s (services and composite). In the UK we’ll also get the remaining services and composite PMI’s while PPI data for the Euro area will also be released. In the US we’ll also get those final PMI’s (services and composite) along with the ADP employment change print for last month, initial jobless claims and ISM non-manufacturing for December. We close out the week on Friday in Europe with retail sales and factory orders data in Germany, trade data in France and confidence indicators for the Euro area. In the US we’ll get the November trade balance along with the all important December employment report including nonfarm payrolls. Also due out will be November factory orders and the final revisions to November durable and capital goods orders.

Away from the data there’s also a bit of Fedspeak this week with both Evans and Lacker due to speak on Friday, while over at the ECB Mersch is also scheduled to speak on Friday. Also potentially interesting this week is a planned television interview in France on Thursday with Socialist Party nominee Manuel Valls.


i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 32.28 POINTS OR 1.04%/ /Hang Sang closed UP 149.84 OR .68%. The Nikkei closed  /Australia’s all ordinaires  CLOSED UP 1.15%/Chinese yuan (ONSHORE) closed DOWN at 6.9605/Oil ROSE to 54.93 dollars per barrel for WTI and 58.02 for Brent. Stocks in Europe: ALL IN THE GREEN  .  Offshore yuan trades  6.9716 yuan to the dollar vs 6.9605  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS A BIT AS  MORE USA DOLLARS ARE ATTEMPTING TO  LEAVE CHINA’S SHORES /


none today



Sunday night

More capital controls in China and that sends bitcoin over $1,000 to $1024

(courtesy zero hedge)

Bitcoin Surges Above $1,000 As China Unveils New Capital Controls

As noted yesterday, for the first time in three years, and only the second time in history, bitcoin rose above $1,000 in Yuan-denominated Chinese trading, however it was limited to the lower side of this “round number” psychological barrier in US trading, as BTC flirted with $999.99 for most of the day on the popular Coinbase exchange, without crossing it.

Overnight, however, Chinese demand proved too great and US markets had no choice but to arb the difference. So with Bitcoin trading in China at an implied price of over $1,050 at this moment, bitcoin finally soared above $1,000 in the US as well, trading just around $1,024 on Coinbase as of this moment.

Various catalysts for the recent surge have been cited, chief among which is the ongoing crackdown against cash in India providing a new source of demand for bitcoin. However, the most immediate driver of the recent burst in Chinese demand originates, not unexpectedly, from China where Beijing over the weekend implemented even more of what we have said since September 2015 will keep pushing bitcoin relentlessly higher: capital controls.

Recall that as we noted over the weekend, in order to further curb capital outflows, Chinese banks will be required to report all yuan-denominated cash transactions exceeding 50,000 yuan (around 7,100 US dollars) to the People’s Bank of China (PBOC), down from the current level of 200,000 yuan, according to a PBOC document released on Friday. Cross-border transfers more than 200,000 yuan by individuals will also be subject to the report process. In terms of foreign currencies, the report threshold remains at the equivalent of 10,000 US dollars for both cash transactions and overseas transfers.

How do we know that this latest PBOC intervention in capital markets was merely the latest form of capital controls? Because the PBOC immediately said it wasn’t.

As Xinhua reported overnight, “the policy stoked worries that the government is trying to impose capital control in a disguised form.”

“It is not capital control at all,” central bank economist Ma Jun said.

Actually, imposing limits on capital movement, i.e. controls, is by definition just that.

Logic, however, did not prevent Ma from continuing on a tangent, and he “explained” that the responsibility of report will be assumed by financial institutions, and there will be neither extra documentation nor official approval procedures for businesses and individuals. “They will not feel any change,” Ma added. He also noted that each person’s current annual foreign exchange purchase quota of 50,000 US dollars is unchanged, and normal activities, ranging from business investment and operation abroad to individuals’ overseas trips and study, will not be affected, Ma said.

The PBOC has said the move aims to improve monitoring of money laundering, financing for terrorists, graft and tax fraud, instead of targeting common business activities. Appealing to the Chinese savers not to withdraw their money out of fears of even more capital controls, Ma said that the world’s major countries also have similar rules, citing that transactions worth 10,000 US dollars or more are subject to reporting in the United States, Canada and Australia.  Regulators in those countries can even adopt stricter rules if necessary after obtaining legal authorization, Ma said.

Judging by the move in Bitcoin since the announcement, nobody believes Mr. Jun.

And yet, what is surprising is that if China indeed wishes to limit capital flight by bitcoin it could easily do so with the flip of a switch, sending the price plunging. As we noted recently, according to Bloomberg sources, Chinese officials have been considering policies including restricting domestic bitcoin exchanges from moving the cryptocurrency to platforms outside the nation and imposing quotas on the amount of bitcoins that can be sent abroad. Further indicating that Chinese regulators were “just a little behind the curve”, they allegedly noticed only recently that some investors bought bitcoins on local exchanges and sold them offshore, evading rules on foreign exchange and cross-border fund flows, the report further reveals.

A quick look at the uncanny correlation between the decline in the Yuan and the rise in the bitcoin, confirms that the digital currency has indeed been largely used to evade capital controls. 

Based on this chart alone, the recent surge in Bitcoin would imply that a substantial devaluation of the yuan is looming. That, or even more aggressive capital controls.

As for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.





Monday night:

The yuan slumped last night which caused bitcoin to rise over $1050.00 Many researchers have suggested to China to do a one off huge devaluation and avoid capital controls

(courtesy zero hedge)

Yuan Dumps, Bitcoin Jumps As China Researchers Suggest “One-Off Devaluation” & Capital Controls

As we have detailed numerous times recently, the recent move in Bitcoin has been strongly suggesting increasing fears of capital controls and/or expectations of a looming (and quite notable) devaluation of the Yuan against the US Dollar. Tonight saw China’s largest nationalist tabloid suggesting that China should consider one-off yuan devaluation to keep the currency stable at equilibrium level. Offshore Yuan is tumbling – to new record lows.

As we noted earlier, a quick look at the uncanny correlation between the decline in the Yuan and the rise in the bitcoin, confirms that the digital currency has indeed been largely used to evade capital controls. 

Based on this chart alone, the recent surge in Bitcoin would imply that a substantial devaluation of the yuan is looming. That, or even more aggressive capital controls.

And tonight, researchers with State Information Center led by Zhu Baoliang wrote in an article published on Shanghai Securities News, that China should consider one-off yuan devaluation to keep the currency stable at equilibrium level and suggest capital controls and as well as what seems like a reference to “virtual currency”…

…the effect of monetary policy continues to weaken. After repeatedly cut interest rates, lowering after registration, our short futures money market interest rates have dropped to about 2.2%, in the history of a relatively low level. Money supply growth rate far exceeds the rate of economic growth, social capital is abundant. But because of the lack of investment opportunities, more funds through the state-owned enterprises and financing platform to invest in less efficient infrastructure, or real estate, or idle in the virtual economy. Capital continues to off real to the virtual, will breed all kinds of asset bubbles, a huge impact on financial stability. At the same time, state-owned enterprises, financing platforms, real estate and other sectors and industries a large number of financing, but also pushed up the financing costs of financial markets, private enterprises and small and medium-sized enterprises to reduce the financing cost is not large, thus out of private investment.

It is suggested that the total social financing and broad money growth should be about 12%, and maintain a reasonable and reasonable liquidity scale. The second is to further improve the RMB exchange rate market-oriented level, and enhance the flexibility of the RMB exchange rate, or even a one-time devaluation of the renminbi, so as to maintain the stability of the RMB in the equilibrium level.

At the same time, the proper control of foreign exchange outflow, the state-owned enterprises in overseas real estate, antiques, teams and other non-substantive, non-technical M & A activities to be strictly limited. Third, closely tracking study American influence elected president’s economic policies on China, the foreign exchange market volatility and prevent cross-border capital outflows triggered massive financial risk domestic bond market, the real estate market.

And for now the reaction is offshore Yuan selling to record lows…

And Bitcoin (in China) surging very close to record highs…

7,588 Yuan per Bitcoin in the record high and volume in this most recent surge is dramatically higher. But as we noted earlier, for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.




Monday night:

Government bond trading froze last night after huge increases in interbank lending rates. The POBC withdraw huge amounts of money trying to drain liquidity: Overnight lending rates: 18%

(courtesy zero hedge)

Chinese Interbank Lending Freezes; Government Bond Trading Halted After Massive PBOC Liquidity Drain

Earlier today, we were surprised to note that having aggressively drained liquidity from the interbank funding market, on the first trading day of 2017, the PBOC not only fixed the Yuan well lower (sy 6.9498 vs 6.9370 on the last day of 2016, even if this was well stronger than the Offshore Yuan), but the People’s Bank of China withdrew even more liquidity. It did that by injecting CNY20 billion via 7-day reverse repos and another CNY20 billion via 14-day reverse repos in its open-market operations Tuesday, according to traders, while continuing to skip 28-day reverse repos.

The move resulted in a net drain of CNY155 billion for the day, and followed a substantial drain of a net CNY245 billion last week – the first removal of liquidity in three weeks. We promptly followed up with a warning:

PBOC drains a net CNY155 billion for the day. Keep an eye on overnight SHIBOR/ HIBOR/ Repo

Just over an hour later, it appears our warning was warranted, because according to the latest daily fixing of the Treasury Market Association, as a result of the PBOC’s massive liquidity drain which soaked up a nearly a third of a trillion Yuan in the past two weeks, the interbank market is freezing again as follows:

  • 1-month yuan interbank rate in Hong Kong rises 1.16ppts to 13.01%,
  • 3-month CNH Hibor +89bps to 10.02%;

Most importantly, the overnight CNH Hibor rate soared 4.95% to 17.76%, the highest since September, and confirming of yet another daily freeze in interbank lending simply so that the PBOC can punish all those who are still short the Yuan. 

The good news: at least the USDCNH tumbled by as much as 200 pips on the session. The bad news, it is unclear how much more of this daily volatile punishment Chinese and Hong Kong banks can take.

But wait, because the interbank freeze was not all, and in a repeat of two weeks ago when China’s halted the trading of its government bond future, the Shanghai Stock Exchange announced that Shanghai halted trading of the 3.99% government bond due May 2065 after “abnormal fluctuations.”  It was not exactly clear what that particular phrase meant aside from “aggressive selling” as per the chart below.

According to a statement, trading was set to resume at 11:06 am after being halted at 10:36am, but not before the exchange called on investors to “remain rational and reminded them of trading risks.” In other words, please don’t sell, especially when the central bank just yanked a near record amount of liquidity from the market.





Capital controls seems to have worked on day one of the new year.

(courtesy zero hedge)

Few Chinese Sell Yuan On First Day Of New Year After Barrage Of New Capital Controls

As observed yesterday, one of the main reasons for the post New Year’s Day surge in Bitcoin to above $1,000 both in China and the US, is that over the past week, in order to further curb capital outflows, Beijing implemented a new set of capital controls according to which Chinese banks would be required to report all yuan-denominated cash transactions exceeding 50,000 yuan (around 7,100 US dollars) to the People’s Bank of China (PBOC), down from the current level of 200,000 yuan, according to a PBOC document released on Friday. Cross-border transfers more than 200,000 yuan by individuals will also be subject to the report process. In terms of foreign currencies, the report threshold remains at the equivalent of 10,000 US dollars for both cash transactions and overseas transfers.

Amusingly, as Xinhua reported over the weekend, “the policy stoked worries that the government is trying to impose capital control in a disguised form” to which PBOC economist Ma Jun had the following retort “It is not capital control at all.” Translation – it is.

And that’s not all, because overnight, China’s currency regulators, the State Administration of Foreign Exchange (SAFE) added its own round of capital controls when it said that it wanted to close loopholes exploited for purposes such as money laundering and illegally channeling money into overseas property. While the regulator left unchanged quotas of $50,000 of foreign currency per person a year, citizens faced draconian new disclosure requirements from Jan. 1, first and foremost requiring foreign currency buyers to indicate how they plan to use the money and when they plan to spend it.

Additionally, mainlanders will now have to fill in a more detailed form when applying to use their renewed US$50,000 foreign exchange quota, which restricts foreign exchange from being used to buy overseas property, securities, life insurance or other investment-style insurance products, according to the Standard.

Bloomberg summarizes the key elements of the latest set of FX conversion requirements:

  • Customers must pledge money won’t be used for overseas purchases of property, securities, life insurance or investment-type insurance. While such rules aren’t new, citizens previously didn’t have to sign such a pledge
  • Customers must give a more detailed account of the planned use of funds, such as business travel, overseas study, family visits, medical treatment, merchandise trade or purchases of non-investment insurance policies, including the timing, by year and month
  • Violators of foreign-exchange rules will be be added to the currency regulator’s watch list, denied foreign-exchange quota for three years and subjected to anti-money-laundering investigations
  • Customers must confirm compliance with restrictions on money laundering, tax evasion and underground bank dealings
  • Customers must now confirm they aren’t lending or borrowing quotas to or from other citizens

Approved uses of funds are restricted to non-investment including tourism, schooling, business travel and medical care. Those who violate rules will be fined 30 percent of the illegal purchase amount and an additional penalty of less than 50,000 yuan (HK$55,795). Violators will also be deprived of their foreign exchange quota for the year when they break the rule and for the following two years, according to the form.

The measures followed said on Saturday that from this month it will step up scrutiny of individual foreign currency purchases and strengthen punishments for illegal money outflows, although the US$50,000 (HK$387,750) annual individual quota will remain unchanged.

Capital outflows have been a growing concern for the government in the past year as it attempts to put the economy back on track and keep the currency stable without exhausting its foreign exchange reserves, which tumbled to US$3.052 trillion in November, the lowest in almost six years.

* * *

Meanwhile, whether due to these brand new measures or for some other reason, Reuters reports that despite concerns of a flood of FX conversions from Yuan to Dollars on the first day following the Yuan reset, there was little evidence at Beijing and Shanghai banks on Tuesday that Chinese individuals were rushing to lock in 2017 quotas to buy foreign exchange.

As we reported in late December, under China’s capital controls, individuals are permitted to buy up to $50,000 in foreign exchange a year, and data shows January is typically a standout month for onshore foreign currency deposits.

Only a trickle of people at banks were seen selling yuan for dollars on the first business day of the new year, when buyers in theory could have made use of their quotas. At major bank branches in two of China’s biggest cities, there were no queues on Tuesday, and the few individuals who changed money reported doing so with relative ease.

People enter a branch of the ICBC bank in Beijing, China, January 3, 2017.

“The whole process of changing money was pretty smooth and quick,” said an office worker surnamed Xu, who withdrew $500 from an ICBC branch in Beijing on Tuesday for a coming vacation in the United States. Several other customers at banks in the two cities reported similar ease when changing amounts of money well below the quota.

Yang Zhao, chief China economist at Nomura in Hong Kong, said there wasn’t any widespread panic about the falling yuan, so he had not expected a surge in demand.

However, as Reuters adds, it is unclear how much foreign currency exchange was being conducted online on Tuesday. Central bank data shows onshore foreign exchange deposits rose by almost 32 percent in the first 11 months of 2016, propelled in part by the yuan’s fall to eight-year lows.

Aside from the rising forex deposits, there has been little indication of growing unease among ordinary Chinese – although the authorities were taking no chances, repeating a mantra that the economy is improving and there is no basis for depreciation of the yuan in the long term. In recent months, analysts have noted that the yuan was not alone in falling against the dollar, with most other emerging market currencies also suffering, which has helped keep sentiment around the yuan from souring too much.

Ultimately, however, it just may be that the unprecedented rollout of capital controls is finally forcing the Chinese to keep their funds at home. As Nomura’s Zhao said, restrictions on use of foreign exchange limited anyone’s options and so acted as a disincentive anyhow.

“You can’t buy real estate. You can’t purchase anything. Basically you can only park that FX in your deposit account onshore with interest rates that are very low,” he said.

Which means even more focus on the unregulated bitcoin, which has emerged as the last uncontrolled means of escaping China’s draconican FX capital controls – as confirmed by its soaring price – but a more relevant question is how long until China finally does as it threatened in early November, when as BBG reported, China’s regulators were studying measures to limit transactions that use bitcoins to take funds out of the country, citing people familiar with the matter.

According to Bloomberg sources, Chinese officials were considering policies including restricting domestic bitcoin exchanges from moving the cryptocurrency to platforms outside the nation and imposing quotas on the amount of bitcoins that can be sent abroad. Further indicating that Chinese regulators were “just a little behind the curve”, they allegedly noticed only recently that some investors bought bitcoins on local exchanges and sold them offshore, evading rules on foreign exchange and cross-border fund flows, the report further reveals.

Curiously, for now, both SAFE and the PBOC has left Bitcoin mostly alone, perhaps because the total market cap of Bitcoin is still tiny in the grand scheme of things (Chinese outflows amount to roughly $1.1 trillion since they began in earnest in 2015), and maybe because members of China’s politburo are themselves using bitcoin as a means of circumventing capital controls; however the higher the price of bitcoin rises, the sooner that particular status quo is likely to change, with adverse consequences for the price of bitcoin.

If Donald Trump recognizes Taiwan as independent, this would cross China’s one China policy.  The Chinese military are considering measures now to cripple Taiwan by cutting off trade etc.

(courtesy zero hedge)

“This Would Cross Our Red Line” – Chinese Military Considering Measures To “Cripple” Taiwan




Why Italian government cannot or will not stop the refugee smuggling.

(courtesy Gefira)

Why The Italian Government Can’t Stop Refugee-Smuggling Boats? Because It Doesn’t Want To


The rule of law is often invoked by as a Western value that “populist” movements want to destroy, yet the establishment’s own governments have long suspended that very same rule of law when it comes to immigration. The most evident example of this is the immigration policy started by the Italian Letta government in 2013 and continued since then under the Renzi government.

In October 2013, the Letta government, facing waves of refugees escaping the chaos of Western backed-Arab Spring in Libya, which later transpired as nothing more than insurgencies of Islamic radical groups, launched the operation “Mare Nostrum” or “Our Sea”, which consisted in the use of the Italian navy near Libyan waters to rescue asylum seekers from the African coast.

As noble as its motivation may be, a side effect of the operation was to encourage even more people to undertake sea travel because now they are certain that the Italian navy will rescue them. The result was a 224% increase in the number of boats leaving Libya, which translates into an average of almost 10 million euro a month for the Italian government.

In November 2014 Mare Nostrum was replaced with the EU-coordinated and funded Triton, covering a smaller part of the Mediterranean at the cost of 3 million euro a month. The official reason for the Triton operation is to control borders, however once we look at facts the goal of the operation is simply to bring in as many people as possible, regardless of whether they are refugees, economic migrants, legals or illegals. Since then, smuggling channels instead of being stopped have multiplied.
An established practice since the “Mare Nostrum” operation, continued under Triton, was for smugglers to launch a rescue signal to the patrolling navy and request assistance. In the meanwhile, NGOs pursuing the “open borders” have joined forces with them, assisting anyone, legal, illegal, refugee, who wants to reach Europe.


The European Commission that is responsible for Frontex, and what follows border controls, has a clear opinion on the matter. Commissioner for Home Affairs, Migration and Citizenship Dimitris Avramopoulos said: Another important element that emerged strongly from the discussions on countering smuggling is that NGOs – and local and regional authorities – which provide assistance to smuggled migrants shall not be criminalised. I fully agree with this, of course, as I also agree on the need to protect the fundamental rights of those who are being smuggled. Those who we need to punish are the smugglers!”

Punishing the smugglers, unless they are part of NGOs, meaning the problem can’t and won’t be solved, because NGOs will always be free to smuggle migrants. This continues a well established tradition; during the Monti government in 2011-12 a Ministry for Immigration was created and given to Andrea Riccardi of the “Comunità of Sant’Egidio”, the prominent Italian open borders NGO. “Comunità of Sant’Egidio” runs projects such as “Humanitarian corridors”. The project funds an alternative route to bring people into Italy. Andrea Riccardi told the French media that he is convinced that Europe must open its borders. The Ministry was then given to Cecile Kyenge, a black woman born in the Democratic Republic of the Congo, who set herself a task of drastically reducing the requirements for acquiring Italian citizenship. She proposes a law that would give citizenship to the children of immigrants if they are born on Italian soil. Under Renzi, the ministry was reduced to a department within the ministry for Home Affairs, and handed to Mario Morcone, again affiliated with the “Comunità di Sant’Egidio”.

But what happens once migrants of all kinds reach Italian soil? They are sent to refugee centers, where they can apply for the status of refugees. It should be noted that Italy has long run out of places for asylum seekers, and so the government is paying hotels, hostels or citizens in general to take in people.

Here a common practice for those who know that their application will be rejected is to destroy their documents beforehand so that the time to identify them increases exponentially. Experience has shown that centers eventually become overcrowded, which turns out to be an occasion for migrants to riot, destroy properties and finally escape and become illegals. If they do not escape and their application is rejected, they are expelled. Expulsion however is voluntary and data shows that approximately only 50% of expelled migrants actually leave, probably to an other EU-Schengen country, the rest become illegals as well.

Moreover, as the “Mafia Capitale” scandal has shown, a collusion between members of the ruling Democratic Party controlling immigration-related institutions within the Italian state, including refugee centres, NGOs and the organized crime ensures that migrants are employed at the expense of Italian taxpayers and for insignificant hourly rates ensuring massive illegal profits for the racketeers. An infamous quote of a member of organized crime reveals how immigration is now a more profitable business than drug trafficking.

“Do you have any idea how much I make on these immigrants?” Salvatore Buzzi, a mafia affiliate says in a 1,200-page wiretap from early 2013. “Drug trafficking is not as profitable”. “We closed this year with a turnover of 40 million but… our profits all came from the gypsies (Roma people),on the housing emergency and on the immigrants,” Buzzi said. That was in 2013, when 20.000 immigrants arrived in Italy. In 2016, 180.000 immigrants arrived in Italy.

Corrupt politicians like Giuseppe Castiglione (NCD, partner of the ruling Democratic party), working for the Home Office, with the official mission of ”favouring the integration of those in need of international protection” in reality work to ensure profiteering from the crisis.

Illegal activities range from all levels; starting with the assignation of the construction of refugee centers to Democrat-related cooperatives in exchange for bribes; asylum seekers and illegals are then transferred to the Italian countryside and employed in the agricultural sector for an hourly rate between 1 and 3 euro.

When it comes to women, immigrants themselves organize prostitution rings within the refugee centers or sell them to work in the Italian streets.

Immigration, a tale of willingly lax enforcement of rule of law, smuggling, dishonesty, slavery and destroying Europe.






This does not look good: The popular ambassador to the EU who was set to negotiate England’s exit from the EU unexpectedly resigns

(courtesy zero hedge)


Troubles In Brexit-land: UK’s EU Ambassador Abruptly Resigns

Sir Ivan Rogers, Britain’s ambassador to the EU has unexpectedly quit, just a few months before the UK is expected to start formal Brexit negotiations, leaving officials in shock over the loss of one of Britain’s most experienced EU negotiators.

As The FT reports, Rogers did not explain the reasons for the move, according to people who have seen his note to diplomatic staff. Sir Ivan played down the decision, saying he was leaving a few months earlier than his original departure date of November.

Since his appointment in late 2013, Sir Ivan was one of the leading advisers in former prime minister David Cameron’s pre-referendum renegotiation of EU membership terms and in his successor Theresa May’s preparations for Brexit.

While he had a longstanding relationship with Mrs May and was consulted by her on the government’s Brexit strategy, Sir Ivan’s relations with some of the prime minister’s team began to deteriorate in recent months.

This culminated in December with a leak to the BBC of Sir Ivan’s advice to the prime minister suggesting it could take until the early mid-2020s for the EU to agree and ratify a comprehensive trade deal with Britain.

Although the advice was months old and reflected Sir Ivan’s conversations with senior EU officials, the leak prompted a series of negative articles in the pro-Brexit newspapers. The Daily Mail reported that “knives were out” for Britain’s ambassador to the EU because of his “gloomy pessimism”.

Cable is lower this morning, and while Rogers was highly regarded by other EU ambassadors, who expected Sir Ivan to see through the Brexit negotiations, it does not appear to have legged lower on this news.






Islamic attack in Istanbul.  Now there are 39 dead:

(courtesy zero hedge/two stories)

At Least 35 People Killed After Shooters Dressed As Santas Open Fire In Istanbul Nightclub – Live Feed

Turkey greeted the New Year with another tragedy after at least 35 people were killed and 40 wounded around 1:15 am local time, when gunmen dressed as Santas opened fire on New Year’s revelers at a nightclub in Istanbul on Sunday morning, Istanbul Governor Vasip Sahin told reporters.

Ambulances line up in front of the Reina nightclub in Istanbul, where a gun
attack took place during a New Year party.

The assailant shot a police officer and a civilian as he entered the Reina nightclub before opening fire at random inside according to Reuters. The club lies on the shore of the Bosphorus Strait in the Ortakoy district of Turkey’s most populous city.

“A terrorist with a long-range weapon … brutally and savagely carried out this incident by firing bullets on innocent people who were there solely to celebrate the New Year and have fun,” Sahin told reporters at the scene.

Dozens of ambulances and police vehicles were dispatched to the club in Ortakoy, a cosmopolitan neighborhood nestled under one of three bridges crossing the Bosphorus, and home to clubs, restaurants and art galleries. Reina is one of Istanbul’s best-known nightclubs, popular with locals and tourists alike.

View image on TwitterView image on Twitter

Sahin told local media that the assailants first killed the police officer, who was standing at the door of the club, and then went on a rampage inside, killing innocent civilians. A policeman and a civilian are reported to be among the two known casualties at the nightclub. There were two attackers involved, according to NTV, but conflicting reports also described a lone gunman.

The gunmen were dressed in Santa Claus outfits, wielding assault rifles, Turkish media said.

View image on TwitterView image on Twitter

According to RT, one of the gunmen has reportedly hidden inside the club, while the whereabouts of the second one were not immediately clear. The number of casualties may rise, as local press estimates that between 500 and 600 people could have been in the club at the time of the attack, Mynet Haber reports.

Emergency crews have been evacuating injured people from the building as the police search for suspects. Some people jumped into the waters of the Bosphorus to save themselves and were being rescued by police.

A search and rescue operation for those who jumped in the water is being carried out by maritime police.


Manhunt Underway For Gunman Who Killed 39 At Istanbul Nightclub


India announced that 14.9 of the 15 trillion in old notes have been handed in.  Thus almost zero has been withheld because of the tax evasion.  The government was set to make a killing on notes not being returned to the banking system.  However the economy tanked as India is basically a cash economy.  The central bank of India immediately lowered rates but confidence is waning

(courtesy zero hedge)

As Cash Shortage Leads To Manufacturing Contraction, Economic Shockwaves, Indian Banks Slash Interest Rates

Over 50 days after Indian Prime Minister Narenda Modi stunned India’s population when he announced on November 8 he would unexpectedly eliminate 86% of the existing currency in circulation in what was supposed to be a crackdown on the shadow economy, but instead has resulted in a significant hit to the broader, cash-based economy, overnight we noted the first official confirmation of how substantial the impact of Modi’s demonetization has been, when the Nikkei India Manufacturing Purchasing Managers Index printed at 49.6 in December, the first contraction reading since December 2015, as the war on cash crippled demand.

According to the report, output and new orders fall for first time in one year; companies reduced buying levels and payroll numbers; Input cost inflation accelerated, while charges rose at softer rate.

Commenting on the report, IHS Markit economist Pollyanna De Lima said that “having held its ground in November following the unexpected withdrawal of 500 and 1,000 bank notes from circulation, India’s manufacturing industry slid into contraction at the end of 2016. Shortages of money in the economy steered output and new orders in the wrong direction, thereby interrupting a continuous sequence of growth that had been seen throughout 2016. Cash flow issues among firms also led to reductions in purchasing activity and employment.

Looking at the upcoming timeline of cash exchanges, she noted that “with the window for exchanging notes having closed at the end of December, January data will be key in showing whether the sector will see a quick rebound.

As Bloomberg added, other recent data also mirror the stress. Motorcycle maker Bajaj Auto Ltd.’s total sales slipped 22 percent in December, the steepest fall in at least 21 months. Motorcycle sales, a key indicator of rural demand, declined 18%. India’s biggest automaker by volume, Maruti Suzuki Ltd., reported a 4.4 percent drop in domestic December sales, the first decline in six months, while overall sales fell 1 percent from a year earlier.

A continued slowdown will strip India of its position as one of the world’s fastest-growing big economies and risk a political backlash against Modi. On Wednesday another key economic report is due, when the Service PMI data is due before focus shifts to the government’s first official growth estimate for the year through March.

India’s economy, which until recently was expected to be the world’s fastest growing, large economy, outpacing China…

… is now expected to grow 6.9% in the year through March, according to a consensus estimate. That’s well below the 7.3% predicted by a survey in November and the previous year’s 7.6% actual expansion. At this rate of deterioration, China, and its “goalseeked” 6.5% annual growth rate may soon regain the top spot among world economies.

Meanwhile, in an attempt to offset the slowing economy as a result of the Prime Minister’s unprecedented demonetization gamble, overnight Indian banks, led by market leader State Bank of India, announced sharp cuts to their lending rates after the recent surge in deposits as ordinary Indians brought their cash to the bank for “safekeeping”, raising hopes that lower borrowing costs will help spark credit growth in Asia’s third-largest economy.

On Sunday, State Bank of India, India country’s biggest lender by assets, said it had cut its so-called marginal cost of funds-based lending rates (MCLR) by 90 bps, while unveiling new products for mortgage loans, one of the fastest-growing areas. Other lenders including Punjab National Bank, Union Bank of India, Kotak Mahindra Bank and Dena Bank followed suit and also cut their lending rates by 45-90 basis points across tenures. Analysts expect more lenders to follow suit.

Banks have received 14.9 trillion rupees ($219.30 billion) in old 500, and 1,000 rupees notes from depositors since Modi’s cash overhaul. That had raised expectations banks would have room to cut lending rates, which is seen as vital to increase credit growth and spark a revival in private investments.

Cited by Reuters, Arundhati Bhattacharya, chairman of SBI, said at a news briefing on Monday, the rate cuts were intended to “jump start” credit growth and could raise it by 100-200 bps in the year ending in March. Even if accurate, it remains to be seen if such credit growth will have an offsetting impact on economic growth.

SBI now expects credit growth for 2016/17 fiscal year to be 8-9%, Bhattacharya said, still lower than the lender’s previous formal guidance of 10-12% growth. Any signs of a revival in credit could ease some of the worries from Modi’s move, which has sparked a severe cash shortage that has paralyzed parts of the economy.

The rate cuts also come after Modi on Saturday warned banks to “keep the poor, the lower middle class, and the middle class at the focus of their activities,” and to act with the “public interest” in mind.

Modi’s comments were made in a special New Year’s eve speech in which he defended his ban on higher-value cash notes and announced a slew of incentives including channeling more credit to the poor and the middle class.

Some have expressed optimism that the combined impact of banks cutting lending rates and subvention provided by the government to small businesses is likely to help turn around growth faster than expected in the next fiscal year,” said Saugata Bhattacharya, chief economist at Axis Bank, the third-biggest Indian lender. Many others remain skeptical.

For now, however, the immediate impact was on Indian Bonds, which rose after SBI’s interest cutting announcement, pushing the yield on the sovereign note due September 2026 to 6.4% from 6.51%. If anything, this is the latest sign that in a world drowning in leverage, and whose economy is priced to perfection, any ongoing “tightness” and rising rates, will only lead to adverse consequences not only in Emerging Markets, but developed ones as well.




The following email sent to me by Robert should give you a good idea as to why there will not be peace between Israel and Palestine
(courtesy Dr Eldad/Robert h)
The (Muslim) Arab Mentality…
It is really hard for western society to understand this kind of thinking. It is counter to civilized understanding. The (Muslim) Arab Mentality…
I was instrumental in establishing the Israeli National Skin Bank, which is the largest in the world. The National Skin Bank stores skin for every day needs as well as for war time or mass casualty situations. The skin bank is hosted at the Hadassah Ein Kerem University hospital in Jerusalem where I was the Chairman of plastic surgery. This is how I was asked to supply skin for an (Muslim) Arab woman from Gaza, who was hospitalized in Soroka Hospital in Beersheva, after her family burned her. Usually, such atrocities happen among (Muslim) Arab families when the women are suspected of having an affair.
We supplied all the needed Homograft for her treatment. She was successfully treated by my friend and colleague, Prof. Lior Rosenberg and discharged to return to Gaza. She was invited for regular follow-up visits to the outpatient clinic in Beersheva.
One day she was caught at a border crossing wearing a suicide belt. Her mission was to explode herself in the outpatient clinic of the hospital where they saved her life. It seems that her family promised her that if she did that, they would forgive her.
This is only one example of the war between Jews and Muslims in the Land of Israel. It is not a territorial conflict. This is a civilizational conflict, or rather a war between civilization and barbarism. Bibi (Netanyahu) gets it, Obama does not.
Dr. Arieh Eldad  01/01/17



Oil rises on reports that Kuwait and Oman will cut output:

(courtesy zero hedge)

Oil Hits 18 Month High On Reports Kuwait, Oman Cut Crude Output

Oil prices hit 18-month highs on the first full trading day of 2017, following reports by Al-Ansa newspaper that OPEC member Kuwait has cut output by 130,000 barrels a day to about 2.75 million a day, according to Kuwait Oil Co. Chief Executive Officer Jamal Jaafer. Meanwhile, Oman was said to cut 45,000 barrels a day from 1.01 million, the Oil Ministry’s Director of Marketing Ali Al-Riyami said on Oman TV.

And so, the surge which made oil the best performing asset class of 2016, driven by expectations of an OPEC production cut, continued following reports that this production cut was being implemented, if only for the time being by nations close to Saudi Arabia, and this unlikely to challenge the Vienna deal: the real question is whether the more “rogue” OPEC members will comply with their part of the bargain and certainly how the non-OPEC members will react.

“The new year sees the start of the output cuts that were agreed between OPEC and some non-OPEC producers,” Hamza Khan, head of commodities strategy at ING Bank NV in Amsterdam, told Bloomberg.

As a result of the favorable production cut news, West Texas Intermediate gained as much as $1.52 to $55.24 a barrel on the New York Mercantile Exchange and was at $55.05 as of 9:37 a.m. London time. Total volume traded Tuesday was 7% above the 100-day average.

Brent for March settlement climbed $1.33 to $58.15 on the London-based ICE Futures Europe exchange, trading at a $2.22 premium to WTI for the same month. The global benchmark contract rose 52 percent last year, the most since 2009.

“First signals suggest the OPEC and non-OPEC production cuts are raising hopes that the global oil oversupply will diminish,” said Hans van Cleef, senior energy economist at ABN AMRO Bank N.V. in Amsterdam. Ric Spooner, chief market analyst at CMC Markets, agreed: “Markets will be looking for anecdotal evidence for production cuts,” he said. “The most likely scenario is OPEC and non-OPEC member countries will be committed to the deal, especially in early stages.”

On the other hand, should oil prices continue to rise much higher, it will likely mean even greater shale production: last Friday, Baker Hughest announced that drillers in the U.S. increased the rig count by two to 525 last week, the highest level in one year, while in December Russia pumped 11.2 million barrels a day just shy of the post-Soviet record and near a 30 year high. Russia has agreed to cut output by 300,000 in 2017. It remains to be seen if it will comply.

OPEC output in December was largely unchanged from November, and also remains near record high levels.

Meanwhile, assuming the Kuwait and Oman news are accurate, production among other OPEC members continued to rise, and Libya, one of two OPEC countries exempt from the output cuts, has increased its production to 685,000 bpd, from around 600,000 bpd in December, an official at the National Oil Corporation said on Sunday.



Libya is set to increase production to over 900,000 barrels per day.  The increase of 125,000 barrels per day represents 1/3 of cut production by other OPEC/non OPEC members

(courtesy zero hedge)


Crude Is Crashing

As the Dollar Index surged post-manufacturing data, WTI Crude began to lose altitude from its overnight ramp. Combined with ongoing concerns over Libya’s production ramp, crude just crashed from over 55.00 to under 53.00 in minutes on heavy volume…

It seems the catalyst was the USD index breaking recent highs…


But as Bloomberg notes, Libya, the holder of Africa’s biggest crude reserves, is ramping up output from its biggest oil field again after two years of internal conflict, the latest reminder of just how vulnerable OPEC’s quest to clear a global crude glut might be.

The Sharara deposit in the Libya’s south west will ship almost 1.9 million barrels this month from its Zawiya port near Tripoli, according to a loading program obtained by Bloomberg. That compares with a pumping rate from the field of almost 9 million barrels a month as recently as late 2014, before internal conflict halted flows.

If maintained, the amount Libya is pumping would be about 125,000 barrels a day higher than the North African country was producing in October, thestarting point for when most other OPEC nations are supposed to limit their collective supply.

Mustafa Sanalla, the chairman of Libya’s National Oil Corp., said Dec. 21 that output would reach 900,000 barrels a day early of this year. By hitting that target, Libya would replace about one third of the supplies being cut by other OPEC nations.





The non compliance in the OPEC oil production curtailment is already is jeopardy as Iraq accuses the Kurds of producing more oil than permitted

(courtesy zero hedge)


Very strange:  Venezuela’s government is selling 5 billion USA to its central bank. They have no means whatsoever of getting dollars. It is well known that China advanced huge sums of money with collateral being the oil.  It looks like China has now asked for a bond to back up the collateral.

(courtesy zero hedge)

In “Mysterious” Bond Sale, Venezuela Issues $5 Billion In Debt To Itself With China As Underwriter

While Venezuela CDS suggest the country’s default odds remain well over 90%, and its currency on the black market continues to plunge into the abyss of hyperinflation, something odd happened today: Venezuela’s government issued $5 billion in dollar debt for the first time in more than five years, selling bonds in an opaque transaction to the state bank Banco de Venezuela SA and the central bank, Reuters and Bloomberg report. What makes this “unorthodox operation” particularly strange, is that the government is effectively selling debt, and raising dollar funds from itself – it owns both the Banco de Venezuela and the central bank; it is also strange in that the transaction, according to Reuters, does not immediately bring in new funds for the cash-strapped OPEC nation.

State-run Banco de Venezuela bought the dollar-denominated notes issued on December 29, which had a 6.5% coupon and mature in 2036, in local currency at a heavily subsidized exchange rate of 10 bolivars per dollar, according to a Reuters source, meaning there was no net increase in hard currency for state coffers. The country’s exchange control system sells dollars at 10 bolivars for preferential goods such as food and medicine and for 672 bolivars for other items. Dollars on the black market currently fetch close to 3,200 bolivars.

A branch of Banco de Venezuela in San Antonio del Tachira, Venezuela

Ever since Venezuela’s economy entered into a hyperinflationary tailspin over two years ago, Maduro’s government has struggled to borrow abroad because of investor concern that the country could default, sending its market-determined yields soaring and its default odds at almost 100%, which has made borrowing exceptionally expensive.

As a result, the dollar-strapped nation – struggling under triple-digit inflation, Soviet-style product shortages and low oil prices – has been forced over the past several years to reduce imports of essential items including food and medicine to stay current on its foreign debt obligations. As Bloomberg notes, In October, state oil company Petroleos de Venezuela executed a debt swap in which creditors holding $2.8 billion of bonds agreed to extend maturities after weeks of tense negotiations that included what was effectively an ultimatum from Caracas of a financial collapse should creditors hold out.

Maduro says his government is the victim of an international financial blockade and blames the country’s problems on an “economic war” led by political adversaries. He says talk of default is a smear campaign against him.

But back to Venezuela’s “mysterious” new bond issuance, about which Bloomberg admits that “few details are known” and which might be linked to Chinese lending, according to Francisco Rodriguez, the chief economist at Torino Capital in New York.

“My guess – but it’s just a guess – is that given uncertainty as to whether Venezuela would be able to deliver the oil necessary for repayment, the Chinese may have asked for the loan to be also guaranteed with a bond,” he told Bloomberg by email, adding that he had been expecting a disbursement of $5 billion related to the renewal of a loan from China.

Reuters adds some additional color, noting that Venezuela’s first sovereign issue since 2011 was underwritten by China’s Haitong Securities, according to two bond traders who had seen preliminary details of the issue. The country, meanwhile, kept the transaction under wraps: an official at the Finance Ministry, which coordinates the country’s sovereign bond issues and oversees Banco de Venezuela, said there was no one available to comment.

Adding to the mystery, a central bank official told Reuters she had seen “no evidence of the operation taking place.”

So will Venezuela see new funds emerge as a result of this deal? It appears that the answer is yes, if Banco de Venezuela were to sell the notes on the international market, though the total issue would only fetch around $2 billion due to the heavy discounts on Venezuela bonds. Currently, Venezuela’s dollar-denominated 2038 bond issue prices near 43 percent of face value, according to Thomson Reuters data.

Meanwhile, bond traders are just as confused as reporters and analysts: Russ Dallen, a managing partner at Caracas Capital, told Bloomberg that “bond markets will likely react with “befuddlement” when they open back up on Tuesday after being closed on Monday for the New Year’s holiday.

“Taking place on Dec. 29 with no approval by the National Assembly and no promulgation notice in the Official Gazette, this smells of some kind of end of the year financial shenanigan from a government that is out of cash and is desperately trying to hide it,” he said in an e-mailed response to questions.

Which is why China’s involvement is hardly surprising: recall that the last time Venezuela arranged a direct loan from China was in March of 2015, when a similar number of $5 billion was also floated.  This time it appears that both Caracas and Beijing decided to be even more opaque in how China funds its vassal oil provider, with what likely amounts to nothing more than vendor financing – China funds Venezuela by helping it to issue a few billion in debt, meanwhile it collects tens of billions in crude oil pre-sold at a price that is particularly beneficial to China.

With that assumption in place, we look forward to learning the details of just how China is now funding insolvent supplier sovereigns by the back door, and where else besides Venezuela is this arrangement in place.




Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings TUESDAY morning 10:00 am



GBP/USA 1.2277 DOWN .0002 (Brexit by March 201/UK government loses case/parliament must vote)


Early THIS TUESDAY morning in Europe, the Euro FELL by 71 basis points, trading now WELL BELOW the important 1.08 level FALLNG to 1.0384; 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+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 32.28 0r 1.04%     / Hang Sang  CLOSED UP 149.84 POINTS OR 0.68%  /AUSTRALIA  CLOSED UP 1.15%  / EUROPEAN BOURSES ALL IN THE GREEN 

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 149.84 OR .68%  Shanghai CLOSED UP 32.28 POINTS OR 1.04%   / Australia BOURSE CLOSED UP 1.15% /Nikkei (Japan)CLOSED   /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1148.60


Early TUESDAY morning USA 10 year bond yield: 2.501% !!! UP 5 IN POINTS from FRIDAY 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  3.114, UP 5 IN BASIS POINTS  from FRIDAY night.

USA dollar index early TUESDAY morning: 104.50 UP 120 CENT(S) from FRIDAY’s close.

This ends early morning numbers TUESDAY MORNING


And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.91% UP 15  in basis point yield from FRIDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.046% PAR  in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.419%  UP 4  IN basis point yield from  FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.865  UP  5  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 44 points HIGHER than Spain.





Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.0426 DOWN .0031 (Euro DOWN 31 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 117.47 UP: 0.018(Yen DOWN 2 basis points/ 

Great Britain/USA 1.2261 DOWN 0.0017( POUND DOWN 17 basis points)

USA/Canada 1.3426 UP 0.0014(Canadian dollar DOWN 14 basis points AS OIL FELL TO $52.46


This afternoon, the Euro was DOWN by 31 basis points to trade at 1.0426


The POUND FELL 17  basis points, trading at 1.2261/

The Canadian dollar ROSE by 14 basis points to 1.3424,  WITH WTI OIL FALLING TO :  $52.46

The USA/Yuan closed at 6.9574
the 10 yr Japanese bond yield closed at +.046% PAR IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1 IN basis points from FRIDAY at 2.457% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.055 DOWN 1  in basis points on the day /

Your closing USA dollar index, 103.09 UP 79 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY: 1:30 PM EST

London:  CLOSED UP 35.06 OR .49% 
German Dax :CLOSED DOWN 14.09 POINTS OR 0.12%
Paris Cac  CLOSED UP 16.95 OR 0.35%
Spain IBEX CLOSED UP 76.00 POINTS OR 0.81%
Italian MIB: CLOSED UP 6.95 POINTS OR 0.04%

The Dow was UP 119.16 POINTS OR .60% 4 PM EST

WTI Oil price;  52.46 at 1:00 pm; 

Brent Oil: 55.05  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  60.98 (ROUBLE UP  17 /100 roubles from YESTERDAY)



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

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


BRENT: $56.87


USA 30 YR BOND YIELD: 3.063%

EURO/USA DOLLAR CROSS:  1.0512 up .0049

USA/JAPANESE YEN:116.90  UP 0.643

USA DOLLAR INDEX: 102.40  down 25  cents (BREAKS HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2318 : up 36  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.265%


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


Dow 20k Disappoints For 14th Day As Crude Crumbles, Peso Pounded

Disappointment again…


Early exuberance in stocks – as overnight gains suggested panic buying at the US open, faded rapidly as financials and tech faded and crude plunged (despite better than expected data)… then after NYMEX closed VIX was smashed lower and stocks lifted…


S&P was best on the day, Trannies were red (thanks to Ford news impacting rails)… NOTE – stocks ripped at the open, then dumped into the European close, then went nowhere…


This is the 14th day of disappointments for Dow 20k fans…


Bets on Regional bank declines are soaring in the last few weeks… (Put/Call ratio is highest since Feb 2014)


Restaurant stocks tumbled for the 8th straight day, to the lowest since Nov 17th… (today was worst since Oct 25th and worst 2-day drop sine September 9th)

SunTrust Robinson analyst Jake Bartlett writes that there is some risk to industry stock prices given strong performance of restaurants since election, lack of any clear improvement of sales trends (casual dining comps. appear to have decelerated, QSR promotional activity remains high)

Bonds were mixed today with most of the curve higher in yield overnight then, bonds went bid as US equities opened andas the long-end outperformed – 30Y yields were down 9bps from overnight highs…


As the yield curve continues to flatten and bank stocks are starting to realize that…


Notably the recent shifts in US, Japanese real yield differentials suggests USD weakness from here…


The US Dollar Index surge after better than expected Manufacturing data to fresh 14-year highs (before fading back)…


Led by EUR weakness…


But the Mexican Peso was pounded after Ford news…breaking above 21/$ once again…to a new record low close


Bitcoin continued to rise – up 18 of the last 21 days – topping $1000…


Silver rallied notably today – mirroring the downward move in Crude…


Big plunge in Oil priced in silver…biggest drop since July…


While headlines focused on Crude’s demise (after news that Iraqi Kurds are producing more than they are supposed to), it was NatGas that was monkey-hammered, dumping over 10% on the day (after warmer-than-expected January weather forecasts)

John Kilduff of Again Capital LLC says: “Too much faith has been put in OPEC and the other countries that have promised cuts. They have been increasing output the last few months, so the cuts will be like New Year’s crash diet, and we know how those end.”

Finally, gold is 2017’s best performing asset-class…




Early uSA trading:

(courtesy zero hedge)

USD Spikes To Highest Since Dec 2002 As EUR Tumbles

The better than expected Manufacturing data in the US has promoted further USD buying, sending the USD Index above 2016 highs back to it highest since Dec 2002.

The USD has taken out recent highs…


And EURUSD has plunged through 2016 lows to its weakest against the USD since 2003…

(note the spike and weakness since China adjusted its currency basket weightings)



There is a criminal witch hunt with respect to the Dallas police pension fiasco

(courtesy Mish Shedlock)

Criminal Witch Hunt In Dallas Pension Fiasco

GM responds to Trump; you are wrong. We make the Chevy Cruze in Ohio:

(courtesy zero hedge)


In a terse and non-deferential response to president-elect Trump’s tweet, GM has responded with a statement which can be summarized in two words: “you’re wrong.”

Following Trump’s tweet…

General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!

… GM responded with its version of the facts, according to which all Cruze sedans are built in the US, while the Mexican-produced Chevy Cruze hatchback is built for global markets, “with a small number sold in the US”

General Motors manufacturers the Chevrolet Cruze sedan in Lordstown, Ohio.


All Chevrolet Cruze sedans sold in the U.S. are built in GM’s assembly plant in Lordstown, Ohio.


GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U.S.

Now we await Trump’s counter response.






(courtesy zero hedge)

Another Trump Victory: Ford Cancels Plan For $1.6 Billion Mexican Plant, Will Invest In Michigan Instead

Trump’s “strong hints” to US-based manufacturers  are starting be heard loud and clear, and nowhere so more than at Ford, which just hours after observing the beat down Trump gave to competitor GM on Twitter, announced that it is scrapping plans for a new $1.6 billion plant in San Luis Potosi, Mexico after itself coming under criticism by Donald Trump for shifting small-car production south of the border, and announced it would instead invest $700m in a plant expansion in Flat Rock, Michigan.

Mark Fields, Ford’s chief executive officer, announced the plan today at a press conference at the automaker’s factory in Flat Rock, Michigan, south of Detroit. The second largest U.S. automaker builds the Mustang sports car and Lincoln Continental sedan from its Flat Rock plant, which employs more than 3,700 workers according to Bloomberg. Ford idled the factory for a week in October due to declining Mustang sales, which fell 13 percent in the first 11 months of 2016.

Until February of last year, Ford also built the Fusion family sedan in Flat Rock. After sales for the model slumped, the automaker consolidated production of Fusion at its primary plant in Hermosillo, Mexico. Fusion sales fell more than 10 percent last year through November.

Ford was a target of President-elect Donald Trump during his campaign for plans to move small car production from the U.S. to Mexico. The Dearborn, Michigan-based company changed course on a plan to move production of the Lincoln MKC sport utility vehicle south of the border. Fields said Trumpinfluenced the automaker’s decision to continue building the MKC in a Louisville, Kentucky, factory where it also produces the Ford Escape SUV.

And so, it would appear that Trump was right again.

We look forward to his victory lap on Twitter in moments.

* * *

From the press release:


Ford today detailed seven of the 13 new global electrified vehicles it plans to introduce in the next five years, including hybrid versions of the iconic F-150 pickup and Mustang in the U.S., a plug-in hybrid Transit Custom van in Europe and a fully electric SUV with an expected range of at least 300 miles for customers globally.

The automaker also announced plans to invest $700 million to expand its Flat Rock Assembly Plant in Michigan into a factory that will build high-tech autonomous and electric vehicles along with the Mustang and Lincoln Continental. The expansion will create 700 direct new jobs.

The moves are part of a $4.5 billion investment in electrified vehicles by 2020, offering customers greater fuel efficiency, capability and power across Ford’s global vehicle lineup. The plans are part of the company’s expansion to be an auto and a mobility company, including leading in electrified and autonomous vehicles and providing new mobility solutions.

“As more and more consumers around the world become interested in electrified vehicles, Ford is committed to being a leader in providing consumers with a broad range of electrified vehicles, services and solutions that make people’s lives better,” said Mark Fields, Ford president and CEO. “Our investments and expanding lineup reflect our view that global offerings of electrified vehicles will exceed gasoline-powered vehicles within the next 15 years.”

Ford is focusing its EV plan on its areas of strength – electrifying its most popular, high-volume commercial vehicles, trucks, SUVs and performance vehicles to make them even more capable, productive and fun to drive.

The seven global electrified vehicles announced today include:

  • An all-new fully electric small SUV, coming by 2020, engineered to deliver an estimated range of at least 300 miles, to be built at the Flat Rock plant and sold in North America, Europe and Asia
  • A high-volume autonomous vehicle designed for commercial ride hailing or ride sharing, starting in North America. The hybrid vehicle will debut in 2021 and will be built at the Flat Rock plant
  • A hybrid version of the best-selling F-150 pickup available by 2020 and sold in North America and the Middle East. The F-150 Hybrid, built at Ford’s Dearborn Truck Plant, will offer powerful towing and payload capacity and operate as a mobile generator
  • A hybrid version of the iconic Mustang that will deliver V8 power and even more low-end torque. The Mustang Hybrid, built at the Flat Rock Plant, debuts in 2020 and will be available in the North America to start
  • A Transit Custom plug-in hybrid available in 2019 in Europe engineered to help reduce operating costs in even the most congested streets
  • Two new, pursuit-rated hybrid police vehicles. One of the two new hybrid police vehicles will be built in Chicago, and both will be upfitted with their police gear at Ford’s dedicated police vehicle modification center in Chicago
  • In addition, Ford announces that its global utility lineup will be the company’s first hybrids powered by EcoBoost® rather than naturally aspirated engines, furthering improving performance and fuel economy.

The company also plans to be as aggressive in developing global electrified vehicles services and solutions. These include EV fleet management, route planning and telematics solutions.

Building the Future

To support the new era of vehicles, Ford is adding 700 direct new U.S. jobs and investing $700 million during the next four years, creating the new Manufacturing Innovation Center at its Flat Rock Assembly Plant. Employees there will build the all-new small utility vehicle with extended battery range as well as the fully autonomous vehicle for ride-hailing or ride-sharing – along with the iconic Mustang and Lincoln Continental.

“I am thrilled that we have been able to secure additional UAW-Ford jobs for American workers,” said Jimmy Settles, UAW vice president, National Ford Department. “The men and women of Flat Rock Assembly have shown a great commitment to manufacturing quality products, and we look forward to their continued success with a new generation of high-tech vehicles.”

This incremental investment in Flat Rock Assembly Plant comes from $1.6 billion the company previously had planned to invest in a new plant in Mexico.

Ford today announced it is cancelling plans for the new plant in San Luis Potosi, Mexico. It also announced that, to improve company profitability and ensure the financial as well as commercial success of this vehicle, the next-generation Focus will be built at an existing plant in Hermosillo, Mexico. This will make way for two new iconic products at Michigan Assembly Plant in Wayne, Michigan, where Focus is manufactured today – safeguarding approximately 3,500 U.S. jobs.

* * *

The Mexican peso is understandably unhappy following the news:

Trump Targets Healthcare Reform: “Obamacare Just Doesn’t Work, And It’s Not Affordable”

Highlighting what may well be his legislative priority when he takes office in 17 days, Trump tweeted out a pair of one-liners this morning taking aim at Obamacare.  In what appears to be an attempt to set the stage for a repeal, Trump said that “Obamacare just doesn’t work, and it is not affordable.”

People must remember that ObamaCare just doesn’t work, and it is not affordable – 116% increases (Arizona). Bill Clinton called it “CRAZY”


The president-elect even utilized Bill Clinton words to sell his repeal effort….which is always worth another look.


Trump also utilized the words of Democratic Minnesota Governor, Mark Dayton, who, back in October, called for changes to the healthcare exchanges in his state saying that “the Affordable Care Act is no longer affordable” (we covered it here: “Democratic Minnesota Gov. Blasts Obamacare: ‘Affordable Care Act Is No Longer Affordable’“).

Ultimately I’m not trying to pass the buck here but the reality is the Affordable Care Act is no longer affordable.”


“The Affordable Care Act has many good features to it, it has achieved great success in terms of insuring more people, 20 million people across the country and providing access for people who have pre-existing conditions alike, but it’s got some serious blemishes right now and serious deficiencies.”

The Democrat Governor.of Minnesota said “The Affordable Care Act (ObamaCare) is no longer affordable!” – And, it is lousy healthcare.


Of course, the governor’s comments came just 1 week after Minnesota Commerce Commissioner, Mike Rothman, posted a letter to the state’s website saying that the state succeeded in preserving the exchanges for one more year by agreeing to massive rate hikes but warned they are on the “verge of collapse.”  The letter went on to describe Minnesota’s healthcare rate environment as “unsustainable and unfair” and noted that “middle-class Minnesotans” were being “crushed by the heavy burden of these costs.”

”Last year at this time when rates were announced, I said there was a serious need for reform in Minnesota’s individual market,” said Rothman. “This year the need for reform is now without any doubt even more serious and urgent.”


He highlighted Governor Mark Dayton’s recent decision to reconvene his Task Force on Health Care Financing to make recommendations to ensure that Minnesota consumers have access to affordable, high-quality health insurance options in the individual market.


“While federal tax credits will help make monthly premiums more affordable for many Minnesotans, these rising insurance rates are both unsustainable and unfair,” said Rothman. “Middle-class Minnesotans in particular are being crushed by the heavy burden of these costs. There is a clear and urgent need for reform to protect Minnesota consumers who purchase their own health insurance.”


Rothman said the reconvened Task Force on Health Care Financing should consider any and all feasible reforms. Above all, he said, it should offer recommendations that can be implemented in the next year to improve market stability and rates for 2018.


“We received over 50 public comments from Minnesotans as part of our rate review,” said Rothman. “I personally read each one. They told heartbreaking stories about how hard-working families are struggling with very tough, painful choices because of these skyrocketing costs. They say that health insurance is unaffordable, and they’re right. This calls for immediate reforms as everyone’s top priority.”

Rate increases for 2017 ranged from 50% – 67% across Minnesota.



Just another example of Obama’s “Remarkable Progress” that we highlighted yesterday.



Trump picks Robert Lighthizer as USA trade representative, a very tough negotiator and a tough critic on China: China again will not be too happy!

(courtesy zero hedge)


An extremely important commentary from Steve St Angelo on the true USA deficit. He removes the accounting gimmicks used to prop up the system as well as adds to the deficit items like student loans and auto loans which are not assets and should be part of the deficit.  The true deficit for the fiscal year ending Sept 30/2016 was 1.2 trillion USA. It will be much higher this year!

(courtesy Steve St Angelo/SRSRocco report)


Accounting Gimmicks Won’t Stop The U.S.A. Titanic From Sinking

by SRSrocco on December 31, 2016

The U.S. Government has gone to great lengths in using accounting gimmicks to prop up the financial system and domestic economy.  One area where this is readily apparent is the disconnect between the rising U.S. debt versus the annual budget deficits.

Mish Shedlock wrote about this in his article, U.S. Deficit at $590 Billion But Debt Up $1.2 Trillion: Sleight Of Hand Magic:

The US deficit is up $590 billion so one might think total US debt would rise by that amount or at least something close to that amount.

The shortest answer is “deficit lies”. The longer answer involves numerous off budget items like social security do not count towards the deficit but do count towards debt.

I calculated the increase of total U.S. debt from 2000 to 2016 as well as the annual budget deficits:

From 2000-2016, the total U.S. debt increased by $13.9 trillion while the annual budget deficits equaled $9.1 trillion.  Thus, we had a net difference (or shortfall) of $4.8 trillion.  Basically, the total U.S. debt increased $4.8 trillion more than the annual budget deficits during that time period.

So, how could this be?  From the article linked above Hoisington Management stated the following about the increase in debt versus the deficits:

“From 1956 until the mid-1980s, the change in gross federal debt was always very close to the deficit (Chart 1). However, over the past thirty years the change in debt has exceeded the deficit in 27 of those years, which served to conceal the degree to which the federal fiscal situation has actually deteriorated. The extremely large deviation between the deficit and debt in 2016 illustrates the complex nature of the government accounting.

The increase in debt for that period(fiscal yr ending Sept 30/2016) was over $1.2 trillion while the deficit was $524 billion, a near $700 billion difference. The discrepancy between these two can be broken down as follows (Table 1): (a) $109 billion (line 2) was due to the change in the treasury cash balance, a common and well understood variable item; (b) $270 billion (line 3) reflects various accounting gimmicks used in fiscal 2015 to limit the size of debt in order to postpone hitting the Debt Limit. Thus, debt was artificially suppressed relative to the deficit in 2015, and the $270 billion in line 3 is merely a reversal of those transactions, a one-off, non-recurring event; (c) $93 billion (line 4) was borrowed by the treasury to make student loans, and this is where it gets interesting. Student loans are considered an investment and therefore are not included in the deficit calculation.

Nevertheless, money has to be borrowed to fund the loans, and total debt rises; (d) In the same vein, $70 billion (line 5) was money borrowed by the treasury to increase spending on highways and mass transit. It is not included in the deficit calculation even though the debt increases; (e) $75 billion (line 6) was borrowed because payments to Social Security, Medicare and Affordable Care Act recipients along with the government’s civilian and military retirees were greater during this time frame than the FICA and other tax collections, a demographic development destined to get worse; (f) Finally, the residual $82 billion (line 9) is made up of various unidentifiable expenditures including “funny money securities stuffed in various trust funds”.

What is interesting to take notice in the chart in the quoted text above, is that the high spike in total U.S. debt versus the annual budget deficit took place during the 2008-2009 U.S. financial and economic crash.  However, another large spike took place in 2016 as the total debt increased $1.2 trillion versus $590 billion in the budget deficit.

So, why such a big increase in 2016 if the U.S. economy and stock market is supposedly very strong???  Or is the financial situation much worse than we are led to believe?

Well, to get an idea of where we are going, we need to look at how the U.S. Government forecasted its budgets in the past.  Here is the CBO – Congressional Budget Office ten-year budget from 2008 to 2017.  The excel table below also includes years 2006 and 2007:

It’s kind of hard to read all the data, but the highlighted RED AREA is the annual deficits or surpluses, and the YELLOW is the debt held by the public.  Now, this public debt amount is not the entire U.S. debt, just the public debt.  The figures highlighted in YELLOW do not include the “Intragovernmental Holdings.”

For example, in 2006, the total public debt (yellow) was $4.829 trillion.  However, the total U.S. Government debt was $8.5 trillion that year.  Thus, the Intragovernmental holdings were approximately $3.7 trillion.

So, according to the CBO ten-year budget in for 2008-2017, there would be a net surplus of $800 billion (this is all the way to the right of the highlighted yellow line) and the total public debt (minus intergovernmental holdings) would fall to $4.274 trillion in 2017.

So, what really happened?  Here is the CBO’s ten-year budget for 2017-2026:

If we look at 2017, the total U.S. public debt is forecasted to reach $14.743 trillion.  Thus, the CBO blew their previous 2008-2017  budget by a cool $10 trillion.  Again, the CBO forecasted that the total public debt would only be $4.274 trillion in 2017, nowhere near the $14.473 trillion they forecast for next year.

Furthermore, the CBO forecasts the cumulative deficits will be an additional $8.571 trillion from 2017-2026 (this is all the way to the right of the yellow highlighted line).

Let’s put the CBO ten-year budget forecasts into perspective.  According to their 2008-2017 budget made in 2007, they forecasted the total pubic debt would fall from $4.995 trillion in 2008 to $4.274 trillion in 2017.  It didn’t.  Instead it is forecasted to jump by $10 trillion to $14.743 trillion in 2017.  Again, the CBO understated the rising public debt by $10 trillion.

Moreover, the CBO forecasted that the U.S. government would enjoy a $800 billion net surplus from 2008-2017.  Instead, the net annual deficits from 2006 to 2016 accounted to over $8 trillion.  So, they blew that by almost $9 trillion.  We get that $9 trillion figure by adding the $800 billion surplus to the $8 trillion deficit.

If the CBO got their ten-year budget from 2008-2017 off by $10 trillion in public debt and $9 trillion in cumulative annual deficits, how much will their 2017-2026 budget forecast be off by???

Hell, the CBO forecasts $9 trillion more in public debt by 2026 and $8.5 trillion in cumulative annual deficits.  So, in all likelihood, their forecast will be off by at least 50%, or more.

Again, total current U.S. debt is $19.9 trillion.  This includes $14.4 trillion in public debt and $5.5 trillion in Intragovernmental Holdings.  If the CBO is budgeting $23 trillion in just public debt, we can add another $6-7 trillion for Intragovernmental Holdings, for a total of $30 trillion by 2026.  But, wait… they are probably going to be off by at least another $10-$15 trillion

What kind of interest on the debt would it be if U.S. total debt reached $40 trillion? 

Actually, I doubt we are going to make it that long.  If you have been reading my energy analysis, the WHEELS FALL OFF THE ECONOMY well before 2026.  And in all likelihood, the sinking of the U.S.A TITANIC will probably take place during President-elect Trump’s administration.

Lastly…. there seems to be a many disillusioned precious metals investors who are throwing in the towel due to the supposed Trump Kool-Aid.  This doesn’t surprise me one bit.  It takes a special person to stick to their guns when the GOING GETS ROUGH.

While the U.S. debt will continue higher, along with the broader stock markets, trying to time the EXIT STRATEGY will be the worse mistake anyone can make.





Trump is on a roll: He now ours DHS to prepare for a border wall construction with Mexico:


(courtesy zero hedge)

Trump Tells DHS To Prepare For Border Wall Construction

A memo from the Department of Homeland Security, which was recently reviewed by Reuters, suggest that the Trump administration plans to hit the ground running on the construction of that U.S.-Mexico border wall when they move into the White House later this month.  The memo apparently summarized a meeting held between DHS officials and Trump’s transition team on December 5th in which requests were made for an assessment of “all assets available for border wall and barrier construction.”

In a wide-ranging request for documents and analysis, President-elect Donald Trump’s transition team asked the Department of Homeland Security last month to assess all assets available for border wall and barrier construction.


The requests were made in a Dec. 5 meeting between Trump’s transition team and Department of Homeland Security officials, according to an internal agency memo reviewed by Reuters. The document offers a glimpse into the president-elect’s strategy for securing the U.S. borders and reversing polices put in place by the Obama administration.

The Trump transition team also allegedly took aim at Obama’s executive actions, requesting “copies of every executive order and directive sent to immigration agents since Obama took office in 2009.”

The transition team also asked for copies of every executive order and directive sent to immigration agents since Obama took office in 2009, according to the memo summarizing the meeting.


Trump has said he intends to undo Obama’s executive actions on immigration, including a 2012 order to allow children brought to the U.S. illegally by their parents to remain in the country on temporary authorizations that allow them to attend college and work.


The program, known as DACA, collected information including participants’ addresses that could theoretically be used to locate and deport them if the policy is reversed. Another request of the transition team was for information about whether any migrant records have been changed for any reason, including for civil rights or civil liberties concerns, according to the internal memo seen by Reuters.



Among other immigration-related questions, the Trump transition team also hinted at expanding an aerial surveillance program and growing detention capacity for captured illegal immigrants.

One program the transition team asked about, according to the email summary, was Operation Phalanx, an aerial surveillance program that authorizes 1,200 Army National Guard airmen to monitor the southern border for drug trafficking and illegal migration.


The program once deployed 6,000 airmen under President George W. Bush but was downsized by Barack Obama, a move blasted by some conservatives who argue the surveillance is vital to border security.


The team also asked about the department’s capacity for expanding immigrant detention and about an aerial surveillance program that was scaled back by the Obama administration but remains popular with immigration hardliners. And it asked whether federal workers have altered biographic information kept by the department about immigrants out of concern for their civil liberties.

Which sent two of the largest publicly-traded operators of private detention centers soaring even higher.



Now, it seems the only question left to answer is if/how Mexico will pay for the “f**king wall”?  Cash or credit, Mr. Fox?

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