JAN 4/Gold and silver rise/GLD holds constant/Chinese offshore yuan soars as controls take hold in China/China thinking about dumping USA treasuries/Bitcoin rises to par with gold/Mexican peso plummets/Macy’s and Kohl’s crash with poor results today

Sorry I am late/had to attend a funeral.

 

Gold at (1:30 am est) $1163.80 UP $3.40

silver  at $16.50:  UP 15 cents

Access market prices:

Gold: $1163.0

Silver: $16.56

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

WEDNESDAY gold fix Shanghai

Shanghai morning fix Jan 4/17 (10:15 pm est last night): $  1183.11

NY ACCESS PRICE: $1160.20 (AT THE EXACT SAME TIME)/premium $22.91

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1186.99

NY ACCESS PRICE: $1162.05 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $24.94

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 4/2017: 5:30 am est:  $.1165.90   (NY: same time:  $1165.95    5:30AM)

London Second fix Jan 3.2017: 10 am est:  $1164.25 (NY same time: $1165.00  (10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR JANUARY CONTRACT MONTH:  875 NOTICE(S) FOR 87500 OZ.  TOTAL NOTICES SO FAR: 1010 FOR 101,000 OZ    (3.1415 TONNES)

For silver:

 NOTICES FOR JANUARY CONTRACT MONTH FOR SILVER: 1 NOTICE(s) FOR 5,000  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 197 FOR 985,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by 975  contracts DOWN to 163,812 with respect to YESTERDAY’S TRADING  (short covering by the banks).    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .819 BILLION TO BE EXACT or 117% of annual global silver production (ex Russia & ex China).

 

FOR THE JANUARY FRONT MONTH IN SILVER:  1 NOTICES FILED FOR 5,000  OZ.

In gold, the total comex gold ROSE BY 1319 contracts WITH THE RISE IN  THE PRICE GOLD ($10.40 with YESTERDAY’S trading ).The total gold OI stands at 424,673 contracts.

 

we had 875 notice(s) filed upon for 87,500 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had no  changes in tonnes of gold at the GLD

Inventory rests tonight: 813.87 tonnes

.

SLV

we had a small change in silver into the SLV: a withdrawal of 149000 oz (probably to pay for fees)

THE SLV Inventory rests at: 341.199 million oz

.

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

1. Today, we had the open interest in silver FELL by 975 contracts DOWN to 163,812 DESPITE THE FACT THAT SILVER ROSE by  $0.41 with YESTERDAY’S trading. The gold open interest ROSE by 1,319 contracts UP to 424,673 AS THE  PRICE OF GOLD ROSE BY $10.40 WITH YESTERDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) FRBNY report on earmarked gold movement

(Harvey)

3. ASIAN AFFAIRS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 22.83 POINTS OR 0.73%/ /Hang Sang closed DOWN 15.93 OR .07%. The Nikkei closed UP 479.79 POINTS OR 2.51% /Australia’s all ordinaires  CLOSED UP 0.06%/Chinese yuan (ONSHORE) closed DOWN at 6.9348/Oil FELL to 52.62 dollars per barrel for WTI and 55.85 for Brent. Stocks in Europe: ALL IN THE RED  .  Offshore yuan trades  6.9014 yuan to the dollar vs 6.9348  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY TRYING TO STOP  DOLLARS  LEAVING CHINA’S SHORES /

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

i)Offshore yuan soars as on fears of capital controls:

( zero hedge)

ii)As stated above China may dump her USA treasuries to keep the yuan stable while preparing for additional capital controls:

( zero hedge)

iii)With the above problems in China it is now wonder that Bitcoin soars to $1100.00 per coin

( zero hedge)

4 EUROPEAN AFFAIRS

Deutsche bank’s top crime fighter (regulator) quits after only 6 months on the job as the heat was too much for him

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

i)We have heard of robots in the fast food industry; we had heard of driverless cars and now we witness computers replacing white collar workers.  Take a look at what is going on in the insurance field:

( Mish Shedlock/Mishtalk)

ii)Mexico

The Mexican peso plummets to record lows, not helped with Trump’s tweet that Ford is cancelling its move to Mexico.  Oil price rises is helping Mexico a bit but PEMEX reserves are also plummeting.  Not a good recipe for Mexico

( zero hedge)

7. OIL ISSUES

i)Crude distillates see big inventory buildup

( zero hedge)

ii)So much for Russia cutting output

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

10.USA STORIES

i)Just take a look at what happens when government interferes in the restaurant business:

a) minimum wage hikes

b) health care payments

c)Obamacare payments

d) zero interest rate policy causes land to skyrocket which in turn causes rents to rise

 

all of the above have killed the restaurant business

( zero hedge)

ii)USA Debt for Dec 31/2016 totals 19.98 trillion just 24 billion shy of the magic 20 trillion.  Exactly one yr ago we had debt of 18.92 trillion and thus a gain of a little over 1 trillion dollars of debt. This year, the total debt is expected to rise even higher by around 1.4 trillion

( zero hedge)

iii)The process begins on the repeal of Obamacare. Obama is furious!

( zero hedge)

iv)They are getting ready for Donald:  Rand Paul reintroduces legislation to Audit the Fed.  Now the fun begins in earnest:

 

end

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.

end

Let us head over to the comex:

The total gold comex open interest ROSE BY 1,319 CONTRACTS UP to an OI level of 424,673 AS THE  PRICE OF GOLD ROSE $10.40 with YESTERDAY’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 GAIN of 7 contracts UP to 1014.  We had 2 notices filed so we GAINED 9 contracts or AN ADDITIONAL 900 oz WILL STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a LOSS of 2251 contracts DOWN to 280,620. March had a gain of 92 contracts as it’s OI is now 116.

 

We had 875 notice(s) filed upon today for 87,500 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI FELL by 975 contracts FROM  164,787 DOWN TO 163,812 DESPITE THE FACT THAT the price of silver ROSE BY $0.41 with YESTERDAY’S trading.WE THUS HAD CONSIDERABLE SHORT COVERING BY THE BANKS 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 3 contracts FALLING TO  464. We had 1 notice(s) filed on yesterday so we lost 2 or an additional 100,000 oz will not stand and no doubt were cash settled.  The next non active month of February saw the OI rise by 55 contracts up to 163.

The next big active delivery month is March and here the OI FELL by 221 contracts UP to 134,257 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 191,864  contracts which is fair.

Yesterday’s confirmed volume was 255,583 contracts  which is very good

Initial standings for january
 Jan 4/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 91,997.756
Scotia
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
  59,847.756 oz
JPMorgan
No of oz served (contracts) today
 
875 notice(s)
87,500 oz
No of oz to be served (notices)
139 contracts
13,900 oz
Total monthly oz gold served (contracts) so far this month
1010 notices
101,000 oz
3.1415 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     4,534,868.9 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 1 strange customer deposit(s):
Into JPMorgan:  59,847.756 oz
(However note that 91,997.756 oz was withdrawn from Scotia/difference exactly 32,150.0000 or one tonne of gold/extremely suspicious)
total customer deposits; 59,847.756 oz
We had 1 customer withdrawal(s)
i) Out of Scotia:  91,997.756 oz was removed and landed into JPMorgan
Problem:  32,150.000 evaporated!!
total customer withdrawal: 91,997,756 oz
We had 2  adjustment(s)
i) out of Brinks:  6,376.660 oz was adjusted from the customer and this landed into the dealer account of brinks
ii) 4026.945 oz exact weight was removed from the customer account of Delaware as a counting error.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 875 notices were issued from their client or customer account. The total of all issuance by all participants equates to 875 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1010) x 100 oz or 101,000 oz, to which we add the difference between the open interest for the front month of JANUARY (1014 contracts) minus the number of notices served upon today (875) x 100 oz per contract equals 114,900 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 (1010) x 100 oz  or ounces + {OI for the front month (1014) minus the number of  notices served upon today (875) x 100 oz which equals 114,000 oz standing in this non active delivery month of JANUARY  (3.5738 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.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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/     3.5738 tonnes
total for the 13 months;  225.932 tonnes
average 17.379 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month.
Total dealer inventor 1,561,744.896 or 48.556 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 9,122,708.202 or 283.75 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 283.75 tonnes for a  loss of 19  tonnes over that period.  Since August 8/2016 we have lost 70 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.
 
IN THE LAST 4 1/2 MONTHS  69 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE DECEMBER DELIVERY MONTH
JANUARY INITIAL standings
 Jan 4. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 486,364.480 0z
Scotia
CNT
Brinks
HSBC
Deposits to the Dealer Inventory
  nil OZ
Deposits to the Customer Inventory 
902,609.96 oz oz
No of oz served today (contracts)
1 CONTRACT(S)
(5,000 OZ)
No of oz to be served (notices)
463 contracts
(2,315,000  oz)
Total monthly oz silver served (contracts) 197 contracts (985,000 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  5,212,033.1 oz
 END
today, we had 0 deposit(s) into the dealer account:
 i
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 4 customer withdrawal(s):
i) Out of CNT:  12,128.800 oz
ii) Out of Scotia:  364,520.120 oz
iii) Out of Brinks: 4538.96 oz
iv) Out of HSBC: 12,128.800
TOTAL CUSTOMER WITHDRAWALS: 486,364.480 oz
 we had 2 customer deposit(s):
 i) Into Brinks;  599,023.340 oz
ii) Into JPMorgan: 303,586.620 oz
total customer deposits;  902,609.96  oz
 
 
 we had 2  adjustment(s)
i) Out of Brinks: 598,147.360 oz was adjusted out of the customer and this landed into the dealer account of Brinks:
ii) Out of Delaware:  1,519,209.626 oz was adjusted out of the customer account and this landed into the dealer account
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  197 x 5,000 oz  = 985,000 oz to which we add the difference between the open interest for the front month of JAN (463) 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:  197(notices served so far)x 5000 oz +(463) OI for front month of JAN. ) -number of notices served upon today (1)x 5000 oz  equals  3,300,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We lost 2 contracts or an additional 100,000 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 53,842 which is very good
YESTERDAY’S  confirmed volume was 88,158 contracts  which is huge.
 
Total dealer silver:  28.050 million (close to record low inventory  
Total number of dealer and customer silver:   181.903 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD
Jan 4/no change in inventory/inventory rests at 813.87 tonnes
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 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 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 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES
Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes
Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/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 8/ANOTHER HUGE WITHDRAWAL OF 2.96 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 860.71 TONNES (THIS GOLD IS HEADING TO SHANGHAI)
DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes
Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes.
Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes
Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes
Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Jan 4/2017/ Inventory rests tonight at 813.87 tonnes
*IN LAST 62 TRADING DAYS: 135.94 TONNES REMOVED FROM THE GLD
*LAST 9 TRADING DAYS: 10.67 TONNES HAVE LEFT

end

Now the SLV Inventory
Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz
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 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/
Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 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 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ
Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/
Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/
Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/
DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz
Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/
Dec 9/no change in silver inventory/inventory rests at 342.865 million oz/
Dec 8/a huge withdrawal of 3.09 million oz from the SLV/Inventory rests at 342.865 million oz
DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/
Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz
Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/
Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/
.
Jan 4.2017: Inventory 341.199  million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 8.0 percent to NAV usa funds and Negative 7.8% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.9%
Percentage of fund in silver:38.8%
cash .+0.3%( jan 4/2017) 
.
2. Sprott silver fund (PSLV): Premium RISES to +.42%!!!! NAV (Jan 3/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.58% to NAV  ( Jan 3/2017)
Note: Sprott silver trust back  into POSITIVE territory at +0.42% /Sprott physical gold trust is back into NEGATIVE territory at -0.58%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver stories for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE

Holiday will be back soon

END

 

This is huge:  Turkey imports 36.7 tonnes into their country in December. This is very unusual for them: do they know that something is up with respect to declining gold inventory?

(courtesy Lawrie Williams/Sharp’s Pixely)

 

 

Mike Kosares: The gold owner’s guide to 2017

Section:

2:45p ET Tuesday, January 3, 2017

Dear Friend of GATA and Gold:

In his “Gold Owner’s Guide to 2017,” Mike Kosares of USAGold in Colorado writes that gold remains in a long-term uptrend and the U.S. dollar in a long-term downtrend despite the movements of the last several years. Silver, Kosares adds, has been doing especially well. His analysis is posted at USAGold here:

http://www.usagold.com/publications/NewsViewsJan2017.html

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

 

 

END

 

Due to the huge foreign debts held by Chinese companies, the POBC is doing everything it can to slow the descent of the yuan:

(courtesy Lingling Wei/Wall Street Journal/GATA)

China Inc.’s large dollar debts fuel Beijing’s efforts to curb yuan plunge

Section:

By Lingling Wei
The Wall Street Journal
Tuesday, January 3, 2017

BEIJING — The large pile of foreign debt owed by Chinese companies, from state-owned banks to airlines, is giving added impetus to Beijing’s efforts to keep the yuan from falling too steeply against the rallying dollar.

The yuan dropped by 4 percent over the past three months, as the dollar recently hit a 14-year high against 16 currencies. The faster-than-expected depreciation is causing more businesses and individuals to try to get out of yuan, further pressuring the currency.

To bolster the yuan, the central bank and other agencies have ratcheted up controls on Chinese companies as well as citizens investing offshore. In the latest move banks were ordered over the weekend to step up scrutiny of individuals’ purchases of foreign currency. …

… For the remainder of the report:

http://www.wsj.com/articles/china-inc-s-large-dollar-debts-fuel-beijings

 

 

 

END

 

Not good:  USA libor breaks above 1% for the first time since 2009

(courtesy Reuters/GATA)

U.S. LIBOR breaks above 1 percent for first time since 2009

Section:

By Richard Leong and Dan Burns
Reuters
Wednesday, January 4, 2017

The rate banks charge each other to borrow dollars for three months rose above 1 percent today for the first time since May 2009 as global interest rates extend their climb on expectations of accelerating growth and inflation.

The London interbank offered rate, or LIBOR, for three-month dollars was fixed at 1.00511 percent, the highest level since 1.00688 percent on May 1, 2009, which was also the last date the rate topped 1 percent. …

… For the remainder of the report:

http://www.reuters.com/article/us-usa-moneymarkets-idUSKBN14O1GC

 

 

end

what a bombshell!!

from Chris Powell and Bill Murphy of GATA)

 

“GATA has spent 17 years doing what we could to expose the gold/silver manipulation scheme by the U.S. Government and various bullion banks. We not only want to expose it, but do what we can to end it, if at all possible.

At least recent events are lighting a fire on the issue. First there were the scandalous revelations in Deutsche Bank paying close to $100 million dollars for manipulating the gold and silver markets, implicating other bullion banks in the process.

Now, this bombshell which confirms what we have been saying all these years”

(courtesy Chris Powell/GATA)

State Dept. cable confirms gold futures market was created for price suppression

Section:

11:27a ET Wednesday, January 4, 2016

Dear Friend of GATA and Gold:

The U.S. gold futures market was created in 1974 as a result of collusion between the U.S. government and gold dealers in London to facilitate volatility in gold prices and thereby discourage gold ownership by U.S. citizens, according to a December 1974 State Department cable obtained by Wikileaks and disclosed today by the TF Metals Report:

http://www.tfmetalsreport.com/blog/8075/42-years-fractional-reserve-alch…

The cable was sent to the State Department from the U.S. embassy in London by someone named Spiers, apparently Ronald I. Spiers, the embassy’s deputy of chief at that time:

https://en.wikipedia.org/wiki/Ronald_I._Spiers

The cable describes the embassy’s extensive consultations with London bullion dealers about the likely impact of re-legalization of gold ownership in the United States and possible substantial gold purchases by oil-exporting Arab nations.

The cable reads: “The major impact of private U.S. ownership, according to the dealers’ expectations, will be the formation of a sizable gold futures market. Each of the dealers expressed the belief that the futures market would be of significant proportion and physical trading would be miniscule by comparison. Also expressed was the expectation that large-volume futures dealing would create a highly volatile market. In turn, the volatile price movements would diminish the initial demand for physical holding and most likely negate long-term hoarding by U.S. citizens.”

The cable is interesting not just for confirming the assertion of GATA and others in the gold-price suppression camp that futures markets function largely as mechanisms of commodity price suppression and support for government currencies, an assertion perhaps first made comprehensively in 2001 by the British economist Peter Warburton —

http://www.gata.org/node/8303

— but also for showing the close connections between the U.S. government and London gold dealers, some of which are cited by name, including Samuel Montagu & Co., Sharps Pixley & Co., Mocatta & Goldsmid, and Consolidated Gold Fields.

The cable is posted at the Wikileaks internet site here:

https://wikileaks.org/plusd/cables/1974LONDON16154_b.html

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

 

end

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

 
 

1 Chinese yuan vs USA dollar/yuan DOWN to 6.9348(HUGE REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS COMPLETELY  TO 6.9014 / Shanghai bourse CLOSED UP 22.83 POINTS OR 0.73%   / HANG SANG CLOSED DOWN 15.93 OR .07% 

2. Nikkei closed UP 479.79 POINTS OR 2.51%  /USA: YEN RISES TO 117.65

3. Europe stocks opened ALL IN THE RED      ( /USA dollar index FALLS TO  103.01/Euro UP to 1.0428

3b Japan 10 year bond yield: RISES TO    +.065%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 117.65/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.62  and Brent: 55.65

3f Gold UP/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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.257%/Italian 10 yr bond yield UP 3  full basis points to 1.86%    

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

3k Gold at $1165.60/silver $16.40(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP   15/100 in  roubles/dollar) 60.76-

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   REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 117.65 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0265 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0703 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.257%

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

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

4. USA 10 year treasury bond at 2.465% early this morning. Thirty year rate  at 3.053% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

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

Risk On: 2017 Stock Rally Continues As Global Inflation Accelerates

 

Following another day of upbeat economic data, with growing signs that inflation on both sides of the Atlantic is accelerating, investors rediscovered their faith in the Trumpflation rally, pushing global stocks and US equity futures higher, fuelling a second day of 2017 equity gains ahead of today’s release of the Fed’s December minutes.

The dollar slumped and the euro moved further above $1.04 after data showed French consumer confidence hit its highest for nine years and businesses across the euro zone ended 2016 by ramping up activity at the fastest pace for five-and-a-half years. This followed similarly upbeat reports this week on U.S., UK, Chinese and Japanese business activity.

“The year has started with a stream of good macro stories which has justified a risk on position with investors,” Andrew Milligan, head of global strategy at Standard Life Investments told Bloomberg. He favors stocks and bonds of developed countries poised to benefit from a reflating U.S. economy that will boost the dollar over emerging markets.

The Eurozone composite Purchasing Managers’ Indexclimbed to 54.4 in December from 53.9 in November, IHS Markit said on Wednesday. That’s the highest in 67 months and above a Dec. 15 estimate. Strength in both the manufacturing and service sectors was due in part to a weaker euro, London-based Markit said in a statement. Economic expansion was signaled across the “big-four” nations, with Spain leading the way, followed closely by Germany.

Figures also showed that euro zone December inflation hit its highest since September 2013, which helped support a rise in oil, commodity prices and bond yields. Consumer prices rose 1.1% from a year earlier, following a 0.6% gain in November, according to Eurostat on Wednesday. That’s above a median forecast of 1 percent in a Bloomberg survey of economists. Core inflation, which excludes volatile items such as energy and food, increased to 0.9 percent last month.

The data follow the ECB’s decision to prolong quantitative easing to guarantee a sustained pickup in inflation in a year that could see economies hit by political uncertainty. Surprisingly strong accelerations of headline rates in Germany and Spain, mainly driven by a surge in the cost of oil, may strengthen the central bank’s focus on weakness in underlying price pressures as it assesses policy in coming months.

The unexpectedly strong acceleration in both regional and national inflation rates follows a 12.6 percent surge in Brent crude last month. ECB President Mario Draghi said in December that price growth remained weak, even as Executive Board member Benoit Coeure told Boersen-Zeitung last week that inflation could face upside risks. Bundesbank President Jens Weidmann, one of the ECB’s most hawkish officials, has argued in favor of a swift unwinding of stimulus once price growth allows, while Ifo President Clemens Fuest said in an interview published Tuesday the central bank may want to consider ending asset purchases as early as March.

“This latest data could mark the beginning of the end to ECB’s bond-buying program and expansive monetary policy as it edges closer to their inflation target of two percent,” Xtrade’s Chief Market Analyst, Paul Sirani, said.

Looking at global stocks, the MSCI All-Country World Index rose for a second day to trade 0.3 percent higher, and its index of major Asian shares excluding Japan rose for a seventh consecutive day, gaining 0.3%.

In Europe, The Stoxx Europe 600 Index was little changed, dragged down by declines on retailers. One of the biggest movers on major European bourses was UK retailer Next. Its shares fell as much as 14 percent after cutting its annual profit forecast and forecasting a difficult year ahead. The stock has lost nearly 40 percent over the past year.

Japan’s Topix index and Nikkei 225 Stock Average both gained at least 2.4 percent, the best first day of trading since 2013.

U.S. futures pointed to a higher opening of between 0.1 percent and 0.2 percent on Wall Street, priming the Dow Jones for another test of the 20,000-point mark.

In currencies, the potential for further U.S. rate hikes this year ensured profit-taking on the dollar’s run on Tuesday was limited to just 0.15 percent against a basket of currencies. The dollar’s strength in Asian trading helped Japan’s exporter-heavy stock market rally toward its biggest daily increase for almost two months.

The euro rose 0.3 percent to $1.0435, and the dollar gave up earlier gains against the yen to trade little changed at 117.75 yen. Euro zone inflation expectations are moving closer to the European Central Bank’s target of just below 2 percent, offering some welcome relief to ECB policymakers who for years have struggled to lift growth and inflation.

In rates, U.S. Treasury notes due in 2026 edged lower, with the yield rising one basis point to 2.457 percent.  German and UK yields were flat at 0.26 percent and 1.32 percent, respectively. Germany’s 10-year yield had hit a two-week high of 0.29 percent on Tuesday. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies declined one basis point to 69 basis points. A gauge of swaps on high-yield companies fell two basis points to 280 basis points, the lowest since July 2015.

Investors will now turn their attention to the minutes of the Federal Reserve’s policy meeting last month when it raised rates.

“What is important is the Fed’s view on inflation, especially after the (strong) ISM manufacturing survey data yesterday,” said Naeem Aslam, analyst at Think Markets. “Improvement in input prices is going to have an impact on final products which would, in turn, move the scale on inflation, upon which the Fed can no longer be reticent,” he said.

Market Snapshot

  • S&P 500 futures up 0.2% to 2256
  • Stoxx 600 down less than 0.1% to 366
  • FTSE 100 down less than 0.1% to 7177
  • DAX down 0.1% to 11572
  • German 10Yr yield up less than 1bp to 0.27%
  • Italian 10Yr yield down 2bps to 1.85%
  • Spanish 10Yr yield down 1bp to 1.41%
  • S&P GSCI Index up 0.4% to 392.2
  • MSCI Asia Pacific up 1.3% to 137
  • Nikkei 225 up 2.5% to 19594
  • Hang Seng down less than 0.1% to 22134
  • Shanghai Composite up 0.7% to 3159
  • S&P/ASX 200 up less than 0.1% to 5736
  • US 10-yr yield up 1bp to 2.46%
  • Dollar Index down 0.19% to 103.01
  • WTI Crude futures up 0.7% to $52.71
  • Brent Futures up 0.7% to $55.85
  • Gold spot up 0.6% to $1,165
  • Silver spot up 0.7% to $16.40

Top Global News

  • Ford, Toyota Form Telematics Bloc to Stymie Google and Apple: Mazda, PSA, Fuji and Suzuki join to ensure connectivity choice
  • J&J Judge Slashes $1 Billion Verdict Over Pinnacle Hip Implants: Judge found punitive-damage award was constitutionally flawed
  • Tesla Deliveries Miss Forecasts Again on Production Delays: Model S maker cites production challenges related to Autopilot
  • Bloomberg’s Winning Economic Forecasters Lay Out 2017 Calls: Most-accurate predictors of inflation, unemployment and growth explain their outlook for this year
  • Trump Tariff on GM Would Violate NAFTA. That May Not Stop Him: U.S. trade deal with Mexico and Canada forbids tariffsQualcomm’s Newest Smartphone Chip Aimed at PC Breakthrough: Snapdragon 835 will enable thinner handset with larger battery
  • Blackstone Said to Near Deal to Buy Sesac: WSJ reports company in advanced talks to buy Sesac, citing unidentified people familiar.
    Trump Says His Briefing on ‘So-Called’ Russia Hacking Is Delayed
  • China Said to Consider Options to Back Yuan, Curb Outflows
  • Qualcomm’s Newest Smartphone Chip Aimed at PC Breakthrough
  • Nikkei’s Financial Times Buys GIS Planning to Expand Services
  • Manhattan Home Prices Fall as Sellers Concede to Slowing Market

In Asia, equity markets traded mostly positive following gains on Wall Street, where strong data underpinned sentiment despite a slump in oil markets. Nikkei 225 (+2.5%) outperformed with gains of over 2.0% as the index played catch-up to yesterday’s advances on return from holiday with JPY weakness also benefiting exporters. Furthermore, the index also benefited from firm domestic manufacturing PMI data and rhetoric from PM Abe that he will continue to make the economy a priority and there will be no snap election. ASX 200 (+0.1%) stalled at 19-month highs, with weakness in real estate capping gains in the index. Shanghai Comp. (+0.8%) and Hang Seng (-0.1%) traded indecisive with cautiousness seen after another weak liquidity operation by the PBoC which effectively drained CNY 140bIn in liquidity today, while HSBC shares outperformed after the bank increased its 3-month CNH deposit rate in Hong Kong to 2.85%. 10yr JGBs traded lower despite a JPY 1.12tIn bond buying operation by BoJ as participants sought riskier assets on return to the market, while the yield curve steepened amid underperformance in the super-long end.

Top Asian News

  • China Said to Consider Options to Back Yuan, Curb Outflows: Authorites may order state-owned firms to sell dollars
  • India Sets Date for Polls Seen as Referendum on Modi’s Note Ban: Country’s most populous state heads to polls from Feb. 11
  • KFC’s Return to Malaysian Bourse Heralds Rebound in Deal Volumes: Fundraising from Malaysian IPOs is poised to rebound from the lowest in 16 years
  • Tencent Shares Losing $35 Billion Shows Depth of China Gloom: Technology giant has tumbled 13% from September record
  • Indonesia Temporarily Suspends All Military Ties With Australia: Move threatens to undermine improved relations between sides

European bourses have failed to remain afloat despite the spate of better than expected Eurozone PMI readings support by Germany and France. While the FTSE 100 continues to hover around record highs, however the index has been dragged lower by Next (-11%) after the company cut their profit guidance. Elsewhere, financials continue their strong start to the year with major financial names among the notable outperformers in Europe.

European Eco Data

  • (FR) Dec. Consumer Confidence 99, est. 99
  • (SP) Dec. Unemployment MoM Net (’000s) 86.8, est. -50
  • (SP) Dec. Markit Services PMI 55.5, 54.7 est.
  • (SP) Dec. Markit Composite PMI 55.5, est. 55
  • (IT) Dec. Markit/ADACI Services PMI 52.3, est. 52.6
  • (IT) Dec. Markit/ADACI Composite PMI 52.9, est. 53
  • (FR) Dec. Markit Services PMI 52.9, est. 52.6
  • (FR) Dec. Markit Composite PMI 53.1, est. 52.8
  • (EC) Dec. Markit Services PMI 53.7, est. 53.1
  • (EC) Dec. Markit Composite PMI 54.4, est. 53.9
  • (UK) Dec. Markit/CIPS Construction PMI 54.2, est. 52.5
  • (EC) Dec. CPI Estimate YoY 1.1%, est. 1%
  • (EC) Dec. CPI Core YoY 0.9%, est. 0.8%
  • (IT) Dec. CPI EU Harmonized MoM 0.4%, est. 0.2%
  •     (IT) Dec. CPI EU Harmonized YoY 0.5%, est. 0.3%

Top European News

  • Hard Brexit Looms Large With Resignation of U.K.’s EU Envoy: Rogers says negotiating expertise ‘in short supply’ in London
  • Euro-Area Inflation Outpaces Expectations as Oil Prices Surge: Consumer prices rise 1.1%, core inflation increases to 0.9%
  • CEZ Sees No Impact on 2017 Earnings From Czech Currency Cap Exit: Czech central bank plan to exit its currency-cap regime after 1Q will have “practically no impact” on CEZ’s 2017 earnings, CFO Martin Novak says
  • Swedish Six-Hour Workday Runs Into Trouble: It’s Too Costly: Swedes looking forward to a six-hour workday just got some bad news: the costs outweigh the benefits.

In currencies, the U.S. Dollar Index was 0.3 percent lower after touching its highest level since at least 2005. Across FX markets, the USD index has continued to run out of steam against its major counterparts with the US 10yr yield below 2.5% and USD/JPY moving further away from 118.00. Elsewhere, AUD/USD hovers at intra-day highs having tripped stops through 0.7250 while near term resistance resides at 0.7280. EUR/GBP has failed to find any firm direction with price action likely to be magnetised around 0.8500 amid a large vanilla option expiry worth lbln. Additionally, Eurozone inflation continued its upward momentum in December, accelerating at the fastest pace since 2013, however limited reaction had been observed given that the figures were largely in-line with consensus. The rand strengthened 1.4 percent as of 10:40 a.m. in London while the ruble added 0.3 percent in its second day of advances.  Citigroup strategists said in a Jan. 3 note to clients that “Russia and South Africa could be outperformers” in developing Europe, “but it might still be a bumpy ride for EMFX as the relatively hawkish FOMC signal from mid-December permeates.”

In commodities, crude oil futures climbed as much as 1.2 percent in New York after tumbling 2.6 percent Tuesday, before returning to broadly unchanged. Dampened sentiment has been due to concerns surrounding cooperation among other oil producing nations, while some note that Libya and Nigeria who are exempt from cuts have already made progress on increasing production. Elsewhere, Gold continues to remain in modest positive territory with prices in close proximity to 3-week highs while Copper rebounded of its worst levels overnight amid a mostly positive risk tone in the Asia-Pacific region.

DB’s Jim Reid concludes the overnight wrap

It hasn’t taken long for markets to dust off the holiday cobwebs and start acclimatizing to 2017. The good news is that unlike the freefall sparked by China’s equity markets this time last year, the mood in 2017 is so far so good with some decent data out of the manufacturing sector helping to set the early pace.

Indeed after the generally positive data in Europe on Monday, the UK manufacturing PMI was yesterday reported as surging to 56.1 in December (vs. 53.3 expected) from 53.6 and to the highest in two and a half years. In the afternoon we then learned that the ISM manufacturing reading in the US had risen to 54.7 in December (vs. 53.8 expected) and the highest since December 2014. The details revealed that the new orders component surged to 60.2 from 53.0 in the month prior too which is particularly noteworthy in light of the recent strength for the US Dollar. To put in perspective this component printed at 48.8 in December 2015. Meanwhile the final manufacturing PMI for the US last month was revised up a tad to 54.3 (from 54.2). It’s worth noting that Greece is the only developed nation with a manufacturing PMI below 50 but even that reading (49.3) is still at a four-month high.

Equity markets were generally firmer across the board yesterday as a result with the Stoxx 600 closing +0.70% and the S&P 500 kicking off 2017 with a +0.85% gain. European Banks (+2.84%) have also started the year in style with the catalyst yesterday appearing to be the news that the Basel Committee had postponed a meeting due for this weekend to consider a contentious reforms package, fuelling expectations that some of the proposals could potentially be watered down. Meanwhile the US auto sector was also in focus after Ford announced that they were to scrap plans for a $1.6bn expansion in Mexico and instead create new jobs in Michigan following proposals by President-elect Trump to slap tariffs on foreign made vehicles. That news also came as Trump turned to social media to criticize General Motors for production of vehicles in Mexico. The Peso (-1.82%) was a notable underperformer in FX as a result.

If that wasn’t enough then a complete reversal for Oil also added another dimension to yesterday’s session. WTI Oil peaked at $55.24/bbl in the early morning, or over 2% higher, before then plummeting some 5% from those early highs to close -2.59% on the day at $52.33/bbl. Natural Gas also tumbled -10.66% for the biggest one-day decline since February 2014. While forecasts for milder weather in the US this month were attributed to the decline for the latter, there didn’t appear to be an obvious catalyst for the sharp swing in Oil aside from the continued strength for the Greenback.

Meanwhile the rates market was an interesting microcosm of the volatility that we expect this year. Yields initially surged in Europe supported by the early gains for Oil and then later on by the bumper inflation report in Germany where headline CPI jumped +1.0% mom in December (vs. 0.6% expected) and so helping the YoY rate to hit +1.7% from +0.7% in November and the highest since July 2013. The wider Euro area CPI report is due today and a similar jump, assuming it can be maintained, will surely give the ECB some food for thought. Anyway the data helped 10y Bund yields jump +7.7bps to 0.258% while yields in the periphery were anywhere from +9.0bps to +20.8bps higher. The Treasury market opened in similar fashion with that US data also helping matters and 10y Treasury yields peaked at 2.516% (after opening at 2.445%) before the energy complex went into reverse. Treasury yields completely unwound that move higher and finished unchanged by the closing bell.

A reminder that today we’ll also get the FOMC minutes from that December meeting where we’re expecting the tone to reflect the moderately more hawkish nature of the statement. Ahead of this sentiment has remained fairly buoyant in the Asia session this morning where bourses in Japan in particular have reopened in style. The Nikkei and Topix have surged +2.14% and +2.17% respectively with financials leading the way while there are also gains in China with the Shanghai Comp +0.39% and CSI 300 +0.42%. The Kospi and ASX are little changed along with the Hang Seng while credit indices are generally tighter in Asia Pac. US equity index futures are also up modestly while Oil has rebounded about half a percent.

Moving on. Yesterday we got the latest ECB CSPP breakdown as of the end of December. The numbers took on added interest with the addition of the primary and secondary market split too. With regards to holdings, the ECB announced total holdings of €51.07bn which works out as net purchases settled during the month of €3.89bn, albeit with an unsurprising slowdown into year end. In terms of the split, of the total holdings currently, €6.93bn or 13.6% were made in the primary market and €44.14bn or 86.4% were made in the secondary market. Interestingly while the overall primary market purchases (in percentage terms) were ramped up from June to October, they have held relatively steady over the months of November and December although this may also reflect the slowdown in the new issue market into the end of the year.

Meanwhile there were some interesting developments on the Brexit front in the UK yesterday too with the announcement that Britain’s ambassador to the EU, Sir Ivan Rogers, had unexpectedly resigned just a couple of months out from the UK’s formal resignation from the EU and prior to the end of his official tenure in October. Various reports suggested that Rogers was one of most experienced EU negotiators and was heavily criticized last year by Conservative eurosceptics. His resignation letter – obtained by the FT – stated that ‘serious multilateral negotiating experience is in short supply’ and that ‘we do not yet know what the government will set as negotiating objectives for the UK’s relationship with the EU after exit’. No obvious reason was provided for his early resignation although Rogers did confirm that it would make more sense to have a team in place which see’s Britain through the entire Brexit process. The news could come as a bit of a blow to the ‘Soft’ Brexit camp though and clearly comes at a crucial time in talks so it’ll be interesting to see if there is any further fallout following this announcement.

Looking at the day ahead, this morning in Europe we’ll get the remaining December PMI’s (services and composite prints) including the final revisions for the Euro area, Germany and France as well as a first look at the data for the periphery. Also due out this morning is the CPI report for the Euro area where headline inflation is expected to have ticked up to +1.0% yoy from +0.6%. The UK will also release the November money and credit aggregates data while in France we’ll get the latest consumer confidence print. Over in the US this afternoon the lone data release is the December vehicle sales data while later on this evening we’ll get the FOMC minutes from the December meeting.

end

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 22.83 POINTS OR 0.73%/ /Hang Sang closed DOWN 15.93 OR .07%. The Nikkei closed UP 479.79 POINTS OR 2.51% /Australia’s all ordinaires  CLOSED UP 0.06%/Chinese yuan (ONSHORE) closed DOWN at 6.9348/Oil FELL to 52.62 dollars per barrel for WTI and 55.85 for Brent. Stocks in Europe: ALL IN THE RED  .  Offshore yuan trades  6.9014 yuan to the dollar vs 6.9348  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY TRYING TO STOP  DOLLARS  LEAVING CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN

c) REPORT ON CHINA

Offshore yuan soars as on fears of capital controls:

(courtesy zero hedge)

Offshore Yuan Soars Most In One Year On Fears Of Capital Controls

Following last night’s trial ballon by the PBOC, when as reported overnight the PBOC was studying possible scenarios of yuan exchange rate and capital outflows in 2017 based on models, stress tests and field research, and is preparing contingency plans, the Offshore Yuan has reacted accordingly, and soared by 0.9% to as high as 6.8950 per dollar as of 7:20pm in Hong Kong. That was the biggest increase on a closing basis since Jan. 11 last year.

Meanwhile, the onshore yuan up 0.3%, most since July. As shown in the chart below, the spread between the two is now the most negative since the start of 2016.

“China has been challenged by capital outflows and declining foreign-exchange reserves, and policy makers are taking measures to solve the problem,” said Eddie Cheung, a Hong Kong-based foreign-exchange strategist at Standard Chartered Plc, the most accurate forecaster for Asian emerging-market currencies according to a Bloomberg ranking. “Funds will continue to exit in the first half due to individuals’ purchases of the dollar and on concerns of U.S. political uncertainty.”

As further reported, in a familiar twist, China warned it may also further sell U.S. Treasuries in 2017 if needed to keep the yuan’s exchange rate stable, Bloomberg’s sources said, adding that the size of the reduction will depend on capital outflows and market intervention. The nation’s holdings of Treasuries declined to the lowest in more than six years in October as the world’s second-largest economy used its currency reserves to support the yuan.

For now, concerns of a full-blown clampdown are working, forcing yet another short squeeze in the yuan, although as usual the question remains how much of what the PBOC has warned about is it actually willing to implement, as it remains trapped: should it implement aggressive capital controls it will benefit the Yuan in the short end, however it will only lead to further capital flight in the longer run as concerns spread among the local population of what it is the PBOC is concerned about. Sure enough, earlier this morning Bitcoin hit $1,090 in US trading, the highest level in three years as capital flight using the digital – and still unregulated – currency continues.

 

 

end

 

As stated above China may dump her USA treasuries to keep the yuan stable while preparing for additional capital controls:

(courtesy zero hedge)

China Warns May Dump Treasuries To Keep Yuan Stable, Prepares More Capital Controls

In China, announcing new (and ever more ineffective) capital controls has become a daily thing.

Last week, Beijing unveiled its latest 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. Cross-border transfers more than 200,000 yuan by individuals would also be subject to the report process.

Then, overnight, China’s currency regulator, the State Administration of Foreign Exchange (SAFE) added its own round of capital control limitations, when it announced it wanted to close loopholes exploited for purposes such as money laundering and illegally channeling money into overseas property. As a result, while the regulator kept existing quotas of $50,000 of foreign currency per person a year, citizens faced draconian new currency exchange disclosure requirements, requiring foreign currency buyers to indicate how they plan to use the money and when they plan to spend it. Additionally, mainlanders would be restricted from using the FX proceeds to buy overseas property, securities, life insurance or other investment-style insurance products. In fact, among the list of approved uses of funds are tourism, schooling, business travel and medical care. Which means any offshore asset purchases have been effectively limited.

What made the above capital controls especially amusing is that as Xinhua reported over the weekend, “the policy stoked worries that the government is trying to impose capital control in a disguised form.” And since the official admission of capital controls would only lead to even more panicked outflows, PBOC economist Ma Jun intervened, saying that the new cash transaction rules, i.e. capital controls, are not capital control at all.

We leave it up to readers to decide what that means.

Then, fast forward two days when China, no longer bothering with euphemisms, admitted that it has studied possible scenarios of yuan exchange rate and capital outflows in 2017 based on models, stress tests and field research, and is preparing contingency plans”, Bloomberg reported citing people familiar with the matter.

Among the “contingency plans” are proposals recently suggested by such banana countries as Turkey and Venezuela, which include China’s government  asking state-owned enterprises to temporarily convert some foreign-currency holdings into yuan, said Bloomberg’s sources, who are clearly mostly interested in the market’s response to this particular Bloomberg-mediated trial balloon

Bloomberg adds that financial regulators have already encouraged some SOEs to sell FX under current account.

But most troubling is the admission that “China may further cut U.S. Treasury holdings in 2017 if needed to keep exchange rate stable; size of reduction depends on capital outflows and FX market intervention,” or in other words, the worst-case scenario which so many serious “economists” have said can not conceivably happen.

Well, China is now actively considering it, which means that should the Yuan continues to slide, Beijing is close to implementing it.

Not unexpectedly, as a result of this latest daily escalation in China’s capital controls, the offshore Yuan is now surging, and is back under 6.95, up nearly 200 pips on the session so far.

END

 

With the above problems in China it is now wonder that Bitcoin soars to $1100.00 per coin

(courtesy zero hedge)

 

Bitcoin China Soars To Record High Amid Capital Control Concerns

While Yuan rallied following last night’s trial balloon by the PBOC – when as reported overnight the PBOC was studying possible scenarios of yuan exchange rate and capital outflows in 2017 based on models, stress tests and field research, and is preparing contingency plans – Bitcoin in China soared to new record highs amid massive volumes.

It appears fears of crackdowns on “virtual” currency outflows – as described by China researchers – is not there yet as the momentum-chasing Chinese have found a new friend as Commodities crumble.

 

In USD, Bitcoin remains just shy of record highs:

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.

 

 

END

4 EUROPEAN AFFAIRS

Deutsche bank’s top crime fighter (regulator) quits after only 6 months on the job as the heat was too much for him

(courtesy zero hedge)

Deutsche Bank’s Top “Crime Fighter” Quits After Only Six Months At The Job

It will probably not come as a big surprise that the head of Deutsche Bank’s global anti-financial crime unit, a post also known as the bank’s top “crime fighter”, plans to leave that position after just six months at the bank, and will be replaced as soon as next week, Germany’s Manager Magazin first reported.

Peter Hazlewood, who joined Deutsche Bank to oversee anticrime compliance as recently as July 2016, could stay at the German lender in a different position, but that hasn’t been determined, the WSJ reports.

Considering the ongoing barrage of civil and criminal accusations lobbed relentless at the German lender, which over the past few years has been accused of manipulating and rigging virtually every market, culminating with the recent RMBS settlements with the DOJ which briefly sent its stock price to all time lows amid concerns of bank failure in late 2016, it is perhaps more surprising that he lasted as long as he did.

The job includes overseeing controls to prevent money laundering and assuring compliance with other financial laws and regulations. The anti-financial crime chief reports to Sylvie Matherat, Deutsche Bank’s Chief Regulatory Officer and a member of the management board.

It was not immediately clear what the reason was behind the accelerated transition.

The WSJ added that Deutsche Bank execs plan to name a replacement as soon as next week, pending management approval of an internal candidate who’s likely to take the position.

Hazlewood, whose official title is global head of anti-financial crime and group money-laundering reporting officer, previously worked at JPMorgan, as well as HSBC Holdings and Standard Chartered PLC, two other banks embroiled in allegations of global impropriety.

Deutsche Bank has faced a series of legal and regulatory hurdles including improving its policing of trades and controls to avoid violations of sanctions and money laundering. After a high-level management shake-up in 2015, which included the appointment of John Cryan as chief executive and a near-complete makeover of the management ranks, senior executives have focused in part on overhauling compliance, seeking to end a series of legal missteps that have cost Deutsche Bank billions of dollars.

Cryan is trying to resolve the bank’s remaining legal battles, following last year’s $7.2 billion settlement with the U.S. over its role in the sale of mortgage securities in the run-up to the 2008 financial crisis. Deutsche Bank is still being probed by U.S. and U.K. authorities over whether it failed to catch transactions that may have moved billions of dollars out of Russia from 2012 to 2015, Bloomberg added.

After settling the U.S. case last month, Cryan said in a memo to staff that an internal investigation by the bank had found “no indication of a breach of sanctions” in Russia. The probe did detect “deficiencies” in the bank’s systems and controls that were being addressed, according to the memo.

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6.GLOBAL ISSUES

We have heard of robots in the fast food industry; we had heard of driverless cars and now we witness computers replacing white collar workers.  Take a look at what is going on in the insurance field:

(courtesy Mish Shedlock/Mishtalk)

It’s Not Just Blue-Collar Jobs – Insurance Claim Adjusters Replaced By “IBM Watson Explorer”

Submitted by Mike Shedlock via MishTalk.com,

Manufacturing jobs have already been decimated by robots. White collar workers are next in line.

Fukoku Mutual Life Insurance in Japan is about to replace claim adjusters with a software robot from IBM.
 

insurance-adjustor

Most of the attention around automation focuses on how factory robots and self-driving cars may fundamentally change our workforce, potentially eliminating millions of jobs. But AI that can handle knowledge-based, white-collar work are also becoming increasingly competent.

 

One Japanese insurance company, Fukoku Mutual Life Insurance, is reportedly replacing 34 human insurance claim workers with “IBM Watson Explorer,” starting by January 2017.

 

The AI will scan hospital records and other documents to determine insurance payouts, according to a company press release, factoring injuries, patient medical histories, and procedures administered. Automation of these research and data gathering tasks will help the remaining human workers process the final payout faster, the release says.

 

Fukoku Mutual will spend $1.7 million (200 million yen) to install the AI system, and $128,000 per year for maintenance, according to Japan’s The Mainichi. The company saves roughly $1.1 million per year on employee salaries by using the IBM software, meaning it hopes to see a return on the investment in less than two years.

 

Watson AI is expected to improve productivity by 30%, Fukoku Mutual says. The company was encouraged by its use of similar IBM technology to analyze customer’s voices during complaints. The software typically takes the customer’s words, converts them to text, and analyzes whether those words are positive or negative. Similar sentiment analysis software is also being used by a range of US companies for customer service; incidentally, a large benefit of the software is understanding when customers get frustrated with automated systems.

 

The Mainichi reports that three other Japanese insurance companies are testing or implementing AI systems to automate work such as finding ideal plans for customers. An Israeli insurance startup, Lemonade, has raised $60 million on the idea of “replacing brokers and paperwork with bots and machine learning,” says CEO Daniel Schreiber.

This trend will accelerate at a rapid pace once its proven. If it works in Japan, it will work here.

 

 

end

 

Mexico

The Mexican peso plummets to record lows, not helped with Trump’s tweet that Ford is cancelling its move to Mexico.  Oil price rises is helping Mexico a bit but PEMEX reserves are also plummeting.  Not a good recipe for Mexico

(courtesy zero hedge)

 

7. OIL ISSUES

Crude distillates see big inventory buildup

(courtesy zero hedge)

Crude Confusion As Gasoline, Distillates See Biggest Inventory Build In A Year

Crude prices remain lower since last week’s inventory data indicated a surprise (albeit small) build (but bounced today). With expectations for a 2mm draw this week, API reported crude inventories plunged 7.431mm last week – the most since September. However, Gasoline and Distillates saw huge inventory builds (biggest since Jan 2016) and WTI prices whipsawed.

 

API

  • Crude -7.431mm (-2mm exp)- biggest draw since Sept 2016
  • Cushing +482k (+900k exp)
  • Gasoline +4.25mm (+1mm exp)- most since Jan 2016
  • Distillates +5.244mm (-800k exp) – most since Jan 2016

 

Distillates build was notably bigger than median expectations…

 

Crude kneejerked higher on the crude draw print but dropped quickly on the product builds only to rebound to unch…

 

This “Rogue” Oil & Gas Nation Just Set A Slew Of Output Records

Submitted by Dave Forest via OilPrice.com,

With 2016 now closed out, we’re getting the first looks at year-end data. And numbers from one nation in the energy space have been particularly eye-catching this week.

Russia.

Over the last 15 years, Russia vaulted upwards in oil and gas production — challenging for the world’s top producer of crude. A fact that’s especially critical given this big producer is a “rogue” nation that lies outside the purview of OPEC.

And 2016 was another big year for Russian oil output. With stats showing the country’s production rose again this past year — to an average 10.96 million barrels per day, up from 10.72 million barrels per day in 2015.

That came on the back of strong national production in December, where Russian producers pumped 11.21 million barrels per day — marking the highest output level in nearly 30 years.

That’s a very important data point for energy markets, showing that Russian supply is continuing to surge even as other big producers like Saudi Arabia are seeking production cuts.

And it isn’t just oil where Russia is having a major impact on global markets. Recent stats show the nation also had a banner year for natural gas output.

Russian natgas giant Gazprom said this past week that it increased 2016 production levels to 419 billion cubic meters, or 14.8 trillion cubic feet. A mark that exceeded Gazprom’s own forecasts for the year by 2.7 percent.

That rising production translated into higher exports, with Gazprom shipping 179 billion cubic meters to Europe during 2016 — marking a record yearly total.

It’s not just pipeline gas that’s surging either. Russia’s burgeoning LNG exports also saw a 1.1 percent rise during 2016, to 14.69 billion cubic meters, according to government reports this week.

In fact, Russian LNG has been picking up speed even in the past few weeks, with December exports up 10.8 percent, to a total 1.47 billion cubic meters.

That puts Russia’s LNG shipments on pace for a 20 percent rise this coming year.

Watch for more numbers on supply growth from this critical energy nation — and resulting effects on pricing in both oil and natural gas markets.

8. EMERGING MARKETS

end

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

Euro/USA   1.0428 UP .0011/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING RATES

USA/JAPAN YEN 117.65 UP 0.022(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2273 UP .0031 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3352 DOWN .0067 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 11 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0428; 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 22.87 0r 0.73%     / Hang Sang  CLOSED DOWN 15.93 POINTS OR 0.68%  /AUSTRALIA  CLOSED UP 0.06%  / EUROPEAN BOURSES ALL IN THE RED 

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED UP 479.79 POINTS OR 2.51%  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 15.93 OR .07%  Shanghai CLOSED UP 22.83 POINTS OR 0.73%   / Australia BOURSE CLOSED UP 0.06% /Nikkei (Japan)CLOSED IN THE GREEN   /  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1164.85

silver:$16.38

Early WEDNESDAY morning USA 10 year bond yield: 2.465% !!! UP 1 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.053, UP 0 IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 103.01 DOWN20 CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.90% DOWN 1  in basis point yield from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.065% UP 2  in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.43%  UP 2  IN basis point yield from  TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.895  UP  3  in basis point yield from TUESDAY 

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

GERMAN 10 YR BOND YIELD: +.276% UP 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/5:00 PM 

Euro/USA 1.0487 UP .0070 (Euro UP 70 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 117.28 DOWN: 0.346(Yen UP 35 basis points/ 

Great Britain/USA 1.2361 UP 0.0073( POUND UP 73 basis points)

USA/Canada 1.3307 DOWN 0.01147(Canadian dollar UP 114 basis points AS OIL ROSE TO $53.26

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 70 basis points to trade at 1.0487

The Yen ROSE to 117.28 for a GAIN of 35 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE 73  basis points, trading at 1.2316/

The Canadian dollar ROSE by 114 basis points to 1.3307,  WITH WTI OIL RISING TO :  $53.21

The USA/Yuan closed at 6.9321
the 10 yr Japanese bond yield closed at +.065% UP 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 2 IN basis points from TUESDAY at 2.441% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.041 DOWN 1  in basis points on the day /

Your closing USA dollar index, 102.54 DOWN 67 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 WEDNESDAY: 1:30 PM EST

London:  CLOSED UP 11.85 OR .17% 
German Dax :CLOSED UP 0.07 POINTS OR 0.00%
Paris Cac  CLOSED UP 0.07 OR 0.00%
Spain IBEX CLOSED DOWN 31.80 POINTS OR 0.33%
Italian MIB: CLOSED UP 53.16 POINTS OR 0.27%

The Dow was UP 60.40 POINTS OR .630% 4 PM EST

NASDAQ WAS UP 47.92 POINTS OR .88%  4.00 PM EST
WTI Oil price;  53.26 at 5:00 pm; 

Brent Oil: 56.47  5:00 EST

USA /RUSSIAN ROUBLE CROSS:  60.38 (ROUBLE UP  1 /100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD RISES TO +0.276%  FOR THE 10 YR BOND  2:30 EST

 

END

 

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

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

WTI CRUDE OIL PRICE 5 PM:$53.81

BRENT: $56.87

USA 10 YR BOND YIELD: 2.441%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.041%

EURO/USA DOLLAR CROSS:  1.0487 up .0070

USA/JAPANESE YEN:117.28  DOWN 0.346

USA DOLLAR INDEX: 102.54  down 67  cents (BREAKS HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2316 : up 73  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.276%

 

END

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

TRADING IN GRAPH FORM

Fed Fails To Deliver Dow 20k But Bitcoin Hits Record High

 

end

 

Just take a look at what happens when government interferes in the restaurant business:

i) minimum wage hikes

ii) health care payments

iii)Obamacare payments

iv) zero interest rate policy causes land to skyrocket which in turn causes rents to rise.

all of the above have killed the restaurant business

 

(courtesy zero hedge/McMaken/Mises two stories)

 

There’s A Massive Restaurant Bubble, And It’s About To Burst

In January 2009, just three days after his inauguration, an arrogant President Obama, a “community organizer” and one-term senator from Illinois, proclaimed to then Republican Whip Eric Cantor that “elections have consequences, and at the end of the day, I won.”  Unfortunately, he was absolutely right and the consequences of Obama’s election, having already crushed the coal industry, are about to bring the restaurant industry crashing down as well.

To be fair, Obama hasn’t crushed the restaurant industry single-handedly.  While Obamacare went a long way toward destroying the industry, it’s demise would not have been certain without a little help from leftist state legislators that have passed a slew of egregious minimum wage hikes in recent years (not that Obama didn’t try and fail twice to accomplish the same thing at the federal level).  Add to that a multi-year run of near 0% interest rates that have driven commercial real estate soaring and a dash of “hope” from culinary grads looking to become America’s next  famous celebrity chef and it’s easy to see that you’ve had a recipe for disaster simmering on low heat for years.

And while he avoided the political attributions we note above, a recent Thrillist article by Keven Alexander highlights the demise of one independently owned restaurant in San Francisco, AQ, that will be shutting down later this month for all the same reasons.

When it comes to minimum wage, Alexander highlights that just a $1 per hour minimum wage increase can reduce an independent restaurant’s already thin profit margins by $20,000, or 10%.  So we imagine the $5 minimum wage hike that California just passed is probably slightly less than optimal for companies like AQ in San Francisco.

I should say before I go any further that all of the restaurant owners and chefs I’ve talked to are compassionate humans who support better coverage and livable wages, and seem on the whole progressive by nature, but restaurant margins are already slim as hell. There are no political agendas here — they’re just genuinely worried about how to afford to pay extra without radically changing the way they do business.

Let’s start with the minimum wage. According to the Bureau of Labor Statistics, of the 2.6 million people earning around the minimum wage in 2015, the highest percentage came from service jobs in the food industry. Though the Obama administration’s attempt to increase the federal minimum wage above $7.25 failed, 21 states and 22 cities have raised the minimum wage starting this year, including Washington, DC ($12.50 an hour), Massachusetts ($11), New York ($9.70), and Arkansas ($8.50).

Considering that hour-wage workers are usually the lowest earners and the increase is essential to ensure they earn an actual living, this is the least controversial of the newer expenses and something almost everyone in the industry supports, in theory, but it doesn’t change the fact that it’s an additional cost that must be factored in. If you have 10 hourly employees working eight-hour shifts, five days a week and you raise the wages a dollar an hour, that comes out to a nearly $20K increase on the year. In AQ’s best year — a phenomenal year by restaurant standards — that would have been nearly 10% of profits.

And while California is certainly the poster child for misinformed liberal policies, as the Wall Street Journal recently pointed out, they’re hardly alone in their implementation of a massive minimum wage hike in 2017.

Min Wage

Meanwhile, when it comes to Obamacare, Alexander notes that AQ was hit with an incremental $72,000 of annual expenses in 2015 that didn’t exist in 2012, which eroded another ~30% of the company’s peak net income.

Then there’s health care. For the better part of its history, the restaurant business was a health care-free zone, which is ironic, given this Bureau of Labor Statistics’ description of the back-of-house work environment: “Kitchens are usually crowded and filled with potential dangers.” With the introduction of Obamacare, most restaurant workers finally got the coverage they’ve needed for years through the employer mandate, but critics often talk about the strain it puts on small-business owners due to a puzzling and controversial element that defines “full time” as 30 hours per week, and not the 40-hour workweek used almost everywhere else (the Save American Workers Act proposes to move this back to 40 hours).

Though this mainly affects bigger restaurants with staffs of 50 or more full-time workers, independent sit-down restaurants still need to provide suitable coverage (meaning it has to be affordable, less than 9.5% of the employee’s income) or face fees of $2K per employee. Consider AQ. Semmelhack told me that in 2012 they paid $14,400 for health care costs. In 2015, they paid $86,400. That’s an increase of $72K MORE per year than 2012, or 29% of their best year’s profit.

Then there are those pesky rental rates which have been driven ever higher by nearly a decade of 0% interest rates that have resulted in artificially high demand for “yieldy” commercial real estate.

In the restaurant world, rent always sucks. Unless you manage to play it perfectly, as a restaurant owner you’re either moving into a sketchy or “emerging” neighborhood where the rent is cheap but few want to go there, or you’re overpaying for an established ‘hood and need to be a runaway success from day one. And even if you do manage to make it in the former type of neighborhood, your success often ends up pricing you out of the ‘hood you helped revitalize.

In Miami, Michelle Bernstein’s Cena by Michy helped rebirth the MiMo historic district but was forced to close this year, after the landlord attempted to triple the rent. And even Danny Meyer had to close and move Union Square Cafe in New York, which, since 1985, had served as one of America’s culinary landmarks, when he couldn’t rationalize paying the huge rent hike the landlord proposed.

For all the reasons above, Alexander notes that “AQ will serve its last meal sometime in January, 2017″…an inconvenient fact that we’re sure the liberal politicians in Sacramento will promptly ignore.

And while the publicly-traded restaurant companies have potentially started to take note of some of the risks above…

Restaurant Chart

…the broader markets, which are also exposed to the same risks albeit to varying degrees, couldn’t seem to care less.

 

 

end

 

Restaurants To Eliminate More Waiters In Response To Minimum Wage Hike

Submitted by Ryan McMaken via The Mises Institute,

Colorado was among the four states where voters approved a minimum wage hike in November. Among the specific provisions for the new wage hike was the stipulation that tipped workers — such as waiters who receive tips and are paid below the standard minimum wage — will receive a mandated wage hike of 99 cents.

Naturally, this will lead to an increase in costs for restaurant owners who will then seek to raise prices and/or reduce costs.KDVR in Denver reports:

Kanatzer owns The Airplane Restaurant in Colorado Springs and said he has already increased his kids menu prices. …

 

“I increased it a dollar — my kids menu prices went from $4.99 to $5.99,” Kanatzer said.

Raising prices can only go so far, however. Contrary to what many non-economists seem to believe, it is not possible to simply “pass on the extra cost to customers.” As any economics-major undergraduate knows, it is only possible to pass on a portion of the increased cost to the customer because higher prices and competition from other firms will lead to fewer sales if the owner simply attempts to “pass on the cost.” And even if all restaurants are subject to the same wage hike, there are always substitutes in the form of take-out and other types of dining.

Specifically, in response to the forced wage hike we can expect to see more food-service business go the way of so-called “fast casual dining” which include brands such as Chipotle and Noodles and Company. These are restaurants where patrons order food at the counter, and then take their food to their tables themselves. These places often offer alcoholic beverages and higher-quality food than “fast food” places such as McDonalds, and somewhat approximate the “casual dining” experience at lower cost thanks to the elimination of servers.

Thus, in order to control costs, restaurants that have in past hired wait staff will become more like fast casual restaurants. The KDVR report suggests exactly this, in fact:

Kanatzer estimates most restaurants will adjust prices and change staffing levels as a result, which could mean fewer servers and longer waits.

 

“I’ve got a friend who has a restaurant and he’s going to do counter service from 2-4 (p.m.) so he’s not going to have a server at all,” Kanatzer said.

 

…Kanatzer suspects more restaurants will install kiosks at tables in the hopes technology might eliminate the need for most servers.

So, we should expect restaurants to hire fewer servers and move toward more counter service and use of technology to replace servers. 

Some waiters have become concerned that the new wage hike is endangering their jobs. They should be concerned:

Even some servers who are recipients of the pay raise fear possible impacts.

 

“I’m more worried about [the restaurant owner] and how it might affect him — not how it impacts me,” said Lisa Bowen, a server at The Airplane Restaurant.

The effect on workers will be that many of them will need to move to lower-wage jobs due to there being fewer waiter opportunities. Many people who are now waiters and potential waiters will have to take jobs as cashiers and other workers at fast food and fast casual restaurants instead of waiting tables. As anyone who has worked in food service knows, these sorts of jobs often pay far less per hour than traditional waiter jobs. So, the minimum wage hike will mean an actual pay cut for many people who could have made more as waiters, were it not for the minimum wage hike.

Moreover, it means that in the future, waiter positions that might have existed in the absence of the minimum wage hike will never exist. More restaurants that rely on a large wait staff will change their model, close down, or never be opened at all, further cutting the job opportunities for workers who would benefit from working as waiters.

However, these unseen positions that never came into existence will not show up in any unemployment data, and thus the proponents of minimum wage hikes will claim that higher wages to not lead to less employment. The media will interview the lucky waiters who managed to keep their jobs and wait tables in an environment of higher prices — and higher tips. Competition for these remaining jobs will become more fierce meaning lower-skill waiters will find themselves locked out of waiter jobs. In the end, proponents of minimum wage hikes will declare victory and ignore all the unseen consequences imposed on the most vulnerable, unskilled, and marginal members of the workforce. 

 

 

END

 

 

USA Debt for Dec 31/2016 totals 19.98 trillion just 24 billion shy of the magic 20 trillion.  Exactly one yr ago we had debt of 18.92 trillion and thus a gain of a little over 1 trillion dollars of debt. This year, the total debt is expected to rise even higher by around 1.4 trillion

(courtesy zero hedge)

US Ends 2016 With $19.98 Trillion In Federal Debt; Up $1,054,647,941,626.91

 

end

 

Early trading from NY:

Dow Dumps After Running Yesterday’s High Stops

Dow futures exploded vertically at the cash open – perfectly tagging yesterday’s highs, running stops – before the algos ran out of ammo. The Dow has now erased the entire opening ramp as once again, the machines were unable to squeeze to Dow 20k at the open…

 

 

 

 

end

 

The process begins on the repeal of Obamacare. Obama is furious!

(courtesy zero hedge)

Obamacare Repeal Clears First Hurdle

Rand Paul’s dad speaks on the above audit the Fed

(courtesy Ron Paul)

Ron Paul Statement On “Audit The Fed”

(courtesy zero hedge)

 

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