Jan 12 Gold rises during Asian/European and comex time zones but then pushed back in access time zone (non physical)/silver unchanged/Obama escalates war with China as they initiate an aluminium complaint/Tillerson states that he will block China’s access to the South China seas/US soldiers enters Poland to station right across Russia/Now it is Fiat Chrysler that is tagged with an emission scandal/Trial balloons by the Fed as they are trying to reduce their balance sheet/

Gold at (1:30 am est) $1198.90 UP $3.30

silver  at $16.78:  unchanged

Access market prices:

Gold: $1195.70

Silver: $16.83



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:

THURSDAY gold fix Shanghai

Shanghai FIRST morning fix Jan 12/17 (10:15 pm est last night): $  1211.01

NY ACCESS PRICE: $1197.00 (AT THE EXACT SAME TIME)/premium $14.01


Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1216.25



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


London Fix: Jan 12/2017: 5:30 am est:  $1206.25   (NY: same time:  $1204.60   (5:30AM)


London Second fix Jan 12.2017: 10 am est:  $1205.05 (NY same time: $1204.80  (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 3,491  contracts UP to 168,531 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .842 BILLION TO BE EXACT or 120% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold ROSE BY ONLY 1,589 contracts WITH THE RISE IN  THE PRICE GOLD (11.40 with YESTERDAY’S trading ). I would have expected a higher OI so we must have had some short covering. The total gold OI stands at 445,590 contracts.

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


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


We had no  change in tonnes of gold at the GLD/

Inventory rests tonight: 805.00 tonnes



we had no changes in silver into the SLV:

THE SLV Inventory rests at: 338.356 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 3,491 contracts UP to 168,531 AS SILVER FELL by  $0.02 with YESTERDAY’S trading. The gold open interest ROSE by 1,589 contracts UP to 445.590 AS THE  PRICE OF GOLD ROSE BY $11.40 WITH YESTERDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 17.46 POINTS OR 0.56%/ /Hang Sang closed DOWN 106.33 OR 0.46%. The Nikkei closed DOWN 229.97 POINTS OR 1.19% /Australia’s all ordinaires  CLOSED DOWN 0.04%/Chinese yuan (ONSHORE) closed WELL UP at 6.8940/Oil ROSE to 52.90 dollars per barrel for WTI and 55.91 for Brent. Stocks in Europe: MOSTLY IN THE RED. Offshore yuan trades  6.8420 yuan to the dollar vs 6.8940  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE COMPLETELY NARROWS AGAIN AS  DOLLARS STOP LEAVING CHINA’S SHORES /



none today


 none today


i)The POBC orders banks to keep capital controls a secret..we are not supposed to know (but we do)

( zero hedge)

ii) Beijing is not amused after Sec. of State hopeful Tillerson says the USA will block Chinese access to the South China sea islands:

( zero hedge)

iii)My goodness:  Free trader Obama just escalated the war with China as it issues an aluminium complaint:

( zero hedge)


i)Oh no!! not again?  After Volkswagen got tagged with a 4.3 billion USA criminal fine the EPA accuses Fiat Chrysler of using software to defeat diesel emission laws;

down goes Fiat Chrysler shares:

( zerohedge)



Let’s get this straight:  Greece is totally broke and cannot even pay interest on what it owes.  So what do the doorknobs at the EU do:  they borrow money that they do not have to loan it to Greece who have no chance whatsoever to repay it..great deal..

(courtesy London’s Express) and special thanks to Robert H for sending this down to us>


i)This ought to be good for gold.  USA troops march into Poland landing right next door to Russia.  I am glad that Trump will take off a week from tomorrow

(courtesy zero hedge)

ii) In the confirmation hearings General Mattis describes Russia as our principal threat. The cold war is officially back.

( zero hedge)


none today


none today


none today


none today


i)Continuing jobless claims are now over 100,000 higher since Nov 8 2016, the night of the election.  They stand at 4 month highs:

( zero hedge)

ii)The Bank of America consumer reports are pretty good.  Last night they found that consumer spending tumbled in December and thus they have given us an initial warning that retail sales for the last month of year (and Christmas sales) will be dismal

( zero hedge/Bank of America)

iii)Interesting:  Trulia comments on a very disturbing increase in home sales failures and this is no doubt due to the higher interest rates.  Starter homes are most affected

(courtesy Trulia/zero hedge)

iv)The all important USA consumer confidence report appears to show that  confidence is waning

( zero hedge)

v)The fun begins:  The senate passes the repeal of Obamacare. It now goes to the House which is expected to pass the bill. They will wait until Trump is inaugurated before it is sent to him for final signing.

(courtesy zero hedge)

vi)My goodness!! the FBI sought to launch a surveillance operation against an active USA presidential campaign under FISA  (Foreign Intelligence Surveillance Act).  The rarely used FISA was targeted against 4 of Trump’s high ranking officials of his campaign:

“including Carter Page, Paul Manafort, and Lt. Gen. Michael Flynn, along with Trump’s personal lawyer Michael Cohen, meaning some of them may well be among the targets.”

(courtesy Ditz/AntiWar.com)


vii)The following is another biggy!! Today we got two trial balloons by Fed officials, Harker and Bullard.  The Fed has always realized that it must unwind its balance sheet if it is to have any credibility in the future.  Today we got word that the Fed is contemplating such a move.  Except one major problem:  who on earth is going to buy this stuff and not only that but interest rates will skyrocket which will drown the entire globe/  Please note that the Fed is doing this as the Donald is to spend 10 trillion extra dollars on infrastructure.  The two acts are totally incompatible

(courtesy zero hedge)

viii) Morgan Stanley is leading off the earning seasons with this bad news:

  1. Cutting Investment banking bonuses by 15%
  2.  Firing 5 % of senior managing directors.

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 1,589 CONTRACTS UP to an OI level of 445,590 AS THE  PRICE OF GOLD ROSE $11.40 with YESTERDAY’S trading. We must have had some short covering as I would have expected that the OI would have been much higher. 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 1 contract(s) DOWN to 135.  We had 9 notices filed yesterday. so we LOST 1 contract(s) or AN ADDITIONAL 100 oz WILL NOT 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 12,135 contracts DOWN to 241,061. March had a gain of 67 contracts as it’s OI is now 528. We are on a par with respect to OI when we compare data for open interest Feb 2016.

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


And now for the wild silver comex results.  Total silver OI ROSE by 3,491 contracts FROM 165,040 UP TO 168,531 AS the price of silver FELL BY $0.02 with YESTERDAY’S trading.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI FELL by 4 contracts falling TO  230. We had 0 notice(s) filed on yesterday so we lost 4 silver contracts  or an additional 20,000 oz will not stand for metal in this non active month. The next non active month of February saw the OI rise by 5 contract(s) RISING TO  207.

The next big active delivery month is March and here the OI ROSE by 1774 contracts UP to 133,405 contracts.

We had 0 notice(s) filed for nil oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 289,361  contracts which is excellent.

Yesterday’s confirmed volume was 383,083 contracts  which is excellent

Initial standings for january
 Jan 12/2017.
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 
No of oz served (contracts) today
0 notice(s)
nil oz
No of oz to be served (notices)
135 contracts
13,500 oz
Total monthly oz gold served (contracts) so far this month
1046 notices
104,600 oz
3.2534 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     4,705,430.2 oz
Today we HAD 0 kilobar transaction(s)/
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 3 customer withdrawal(s)
i) Out of Scotia: 62,597.863 oz
ii) out of Brinks; 96.22 oz
iii) Out of HSBC: 65,308.59 oz
total customer withdrawal: 128,002.673 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 0 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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 (1046) x 100 oz or 104,600 oz, to which we add the difference between the open interest for the front month of JANUARY (135 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 118,100 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 (1046) x 100 oz  or ounces + {OI for the front month (135) minus the number of  notices served upon today (0) x 100 oz which equals 118,100 oz standing in this non active delivery month of JANUARY  (3.6734 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/     3.6702 tonnes
total for the 13 months;  226.061 tonnes
average 17.389 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month.
Total dealer inventor 1,455,213.516 or 45.263 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,958,378.300 or 278.64 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.64 tonnes for a  loss of 24  tonnes over that period.  Since August 8/2016 we have lost 75 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 12. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 1,159,753.990 0z
Deposits to the Dealer Inventory
NIL oz
Deposits to the Customer Inventory 
1,287,675.723 oz
No of oz served today (contracts)
(nil OZ)
No of oz to be served (notices)
230 contracts
(1,150,000  oz)
Total monthly oz silver served (contracts) 432 contracts (2,160,000 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  13,489,962.3 oz
today, we had 0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of CBT: 608,201.510 oz
ii) Out of Scotia: 551,552.480 oz
 we had 2 customer deposit(s):
i) Into JPMorgan:  607,847.343 oz**
** JPMorgan has deposited a huge amount of silver on each and every day starting in 2017:
ii) Into Scotia; 679,828.340 oz
total customer deposits;  1,287,675.723   oz
 we had 0  adjustment(s)
The total number of notices filed today for the JANUARY. contract month is represented by 0 contract(s) for nil 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  432 x 5,000 oz  = 2,160,000 oz to which we add the difference between the open interest for the front month of JAN (230) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the JANUARY contract month:  432(notices served so far)x 5000 oz +(230) OI for front month of JAN. ) -number of notices served upon today (0)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 4 contracts or an additional 20,000 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 65,393 which is excellent
YESTERDAY’S  confirmed volume was 93,642 contracts  which is huge.
Total dealer silver:  29.202 million (close to record low inventory  
Total number of dealer and customer silver:   180.785 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 12/2017/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

Jan 11/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 10/no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes


Jan 6/no changes in gold inventory at the GLD/inventory rests at 813.87 tonnes
Jan 5/no change in gold inventory at the GLD/inventory rests at 813.87 tonnes
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 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
Jan 12/2017/ Inventory rests tonight at 805.00 tonnes


Now the SLV Inventory
Jan 12.2017/ no changes in the SLV Inventory/ rests at 338.356 million oz
JAN 10/no changes in inventory at the SLV/Inventory rests at 341.199 million oz
JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/
jan 6/no changes in inventory at the SLV/Inventory rests at 341.199 million oz
Jan 5/no changes in inventory at the SLV/Inventory rests at 341.199 million oz
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 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 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/
Jan 12.2017: Inventory 338.356  million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.5 percent to NAV usa funds and Negative 7.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.0%
Percentage of fund in silver:38.7%
cash .+0.3%( jan 12/2017) 
2. Sprott silver fund (PSLV): Premium RISES to +.25%!!!! NAV (Jan 12/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.26% to NAV  ( Jan 12/2017)
Note: Sprott silver trust back  into POSITIVE territory at +0.25% /Sprott physical gold trust is back into NEGATIVE territory at -0.26%/Central fund of Canada’s is still in jail.


Major gold/silver trading/commentaries for THURSDAY


Gold Rallies To $1,207 After Trump Press Conference Shambles

Gold has rallied to $1,207/oz today as stocks globally have weakened after the first press conference of incoming President Trump turned into a bit of a debacle.

Gold prices made further gains today amid reduced focus on the Fed and speculation regarding their potential rate hikes and more focus on the next four years of the Trump Presidency.

The dollar declined alongside US Treasury bond yields, although U.S. stock indices were supported yesterday and remained buoyant. Declines in Asian and European bourses today have seen U.S. futures decline this morning and the dollar has seen further losses pushing gold higher in all currencies.

Gold is likely to be supported and should rise due to the ongoing Trump versus the U.S. intelligence agencies saga which worsened yesterday amid vicious claim and counter claim. These included salacious allegations of lewd sexual acts by Trump while in Moscow and the allegation that the incoming President is being blackmailed and controlled by Russia.

There would appear to be a tussle for power and supremacy between more hawkish elements in the intelligence agencies and the incoming President. The extremely adversarial public disagreement between an incoming President with senior members of the FBI and the CIA is absolutely unprecedented.

As we told Dow Jones Marketwatch yesterday:

“Whether you like Trump or not, whether you are a Republican or a Democrat or neither, one has to acknowledge that the situation is a mess and is impacting America’s standing on the world stage.

It highlights the continuing political uncertainty in the U.S. and does not bode well for the next four years as it will likely contribute to heightened geopolitical uncertainty.”

There are also concerns about the increasing likelihood of trade wars, currency wars and even the potential for “hot” wars. Tensions with Russia and indeed China will not have been calmed by the Trump press conference yesterday.

Trump has angered Beijing since his election by reaching out to Taiwan, appointing China skeptics to his team, accusing China of stealing a drone and threatening punitive tariffs on the country’s exports.

The revelations and tensions between the incoming U.S. President and his intelligence agencies and indeed the media first began to affect markets yesterday and again today. If this continues we may see a more meaningful impact and risk assets such as stocks and bonds will be vulnerable.

The U.S. stock markets in particular look vulnerable, as they are near record highs and looking increasingly overvalued with the Dow near 20,000. As does the dollar which is near multi year highs against many fiat currencies.

A new safe haven bid in the gold market is being seen and looks like it will continue in the coming weeks and in 2017. Indeed, in terms of the gold market, there is a good possibility that the four years of the Trump Presidency may be the “gift that keeps on giving.”

The Trump press conference yesterday and its impact on markets, highlights the importance of real diversification and having an allocation to physical gold in a diversified portfolio. This will be more important than ever in the coming years.



Your early THURSDAY 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 DOWN 229.97 POINTS OR 1.13%   /USA: YEN FALLS TO 114.00

3. Europe stocks opened ALL IN THE RED EXCEPT SPAIN       ( /USA dollar index FALLS TO  100.79/Euro UP to 1.0683


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.90  and Brent: 55.91

3f Gold UP/Yen UP

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

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

3h Oil 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 FALLS TO  +.323%/Italian 10 yr bond yield DOWN  to 1.897%    

3j Greek 10 year bond yield FALLS to  : 6.88%   

3k Gold at $1204.40/silver $16.91(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP  46/100 in  roubles/dollar) 59.30-

3m oil into the 52 dollar handle for WTI and 55 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.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0060 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0746 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.323%


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 2.334% early this morning. Thirty year rate  at 2.926% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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


Dollar, Futures Slump; Gold Spikes Over $1,200 After Trump Disappoints Markets

Risk assets declined across the globe, with European, Asian shares and S&P 500 futures all falling, while the dollar slumped against most currencies after a news conference by President-elect Donald Trump disappointed investors with limited details of his economic-stimulus plans, and the Trumpflation/reflation trade was said to be unwinding.

“The risk was always that a president like Trump would end up upsetting that consensus (of faster U.S. growth, stronger dollar) view by introducing more political uncertainty,” said asset manager GAM’s head of multi-asset portfolios Larry Hatheway.

The biggest mover, and perhaps the key driver of risk since the election, was the dollar which tumbled as much as 0.8%, falling below its 50DMA for the first time since the election, and back to where it was during the December 14 Fed rate hike announcement, while Treasuries gained alongside commodities, as Donald Trump’s press conference sent a wake-up call to the market about exalted expectations for fiscal stimulus in the U.S.

“Overall, investors are wary ahead of Trump’s inauguration – a case of buy the talk (Trumpflation), but sell the news,” analysts at Societe Generale said in a note.

However while negative for the US, that Trump did not mention possible tariffs against Chinese exports, was a relief for Asian share markets that have feared the outbreak of a global trade war.

The lack of detail about a potential stimulus also put safety plays such as bonds and gold back in favor, cooling bets that have built in recent months on significantly higher global inflation and series of U.S. interest rate hikes. It was enough to send the dollar tumbling back below 114 yen for the first time in five weeks and brought some welcome relief to Brexit-bruised sterling and Turkey’s lira, which has been badly beaten up this year. The USD/JPY broke below the prior session low of 114.25 to reach its weakest level in a month as broad assets position adjustments after recent rally continues to lower the pair’s range, said Satoshi Okagawa, senior global market analyst at Sumitomo Mitsui Banking Corp. in Singapore. Eventually the pair slid as low as 113.77 shortly after the European open before rebounding to just above 114.

The euro was back at $1.0650 for the first time in a month, shaky sterling climbed above $1.22 and Sweden’s crown hit a four-month high and cracked its 200-day moving average against the euro after pacy inflation data. It was also bliss for bond markets that have been in reverse since Trump’s election fuel led bets on higher U.S. interest rates that tend to set the bar for global borrowing costs.

Gold spiked on the weak dollar, rising above $1,200 since November 23, and at the 38.2% Fibonacci of the Trump-Led slide.

With all eyes on the dollar, the U.S. currency slumped against most major and the 10-year Treasury yield touched the lowest since November as Trump’s first press conference since his election victory gave no details on policy.

European stocks headed for their lowest close since the end of 2016 and drugmakers across the globe sold off. Turkey’s currency climbed for the first time in six days as the nation’s central bank tightened lira liquidity. Gold advanced to a seven-week high and industrial metals rallied.  The Stoxx Europe 600 Index lost 0.5 percent and the FTSE 100 fell 0.2 percent, halting a record streak of gains.     Health-care shares headed for their biggest drop since November, deepening losses that began late yesterday.

As Bloomberg, and virtually everyone else has pointed out many times already, Trump’s press conference left investors with few specifics on the timing and scope of planned policies from infrastructure spending to trade pacts. Since his victory, the dollar and global equities have rallied, while bonds sold off, on bets inflation would pick up with growth. Health-care stocks were pressured Thursday as Trump said he’d force the pharmaceutical industry to bid for government business in the world’s largest drug market.

“Markets are disappointed by a lack of detail around the much touted stimulus plans,” said Michael McCarthy, Sydney-based chief market strategist at CMC Markets Plc. “There is a growing fear that recent positive moves are based on bombast, and could unravel very quickly.”

“The news conference was a far cry from the market friendly, pro-growth “presidential” comments that Trump delivered at his acceptance speech,” wrote analysts at Westpac, adding it left a “veritable laundry list” of questions unanswered.

Futures on the S&P 500 Index fell 0.3 percent. The underlying gauge increased 0.3 percent on Wednesday, staging an afternoon rally and recouping losses of as much as 0.4 percent.

In rates, the benchmark 10-year Treasury yield fell five basis points to 2.32 percent, touching the lowest level since Nov. 30. German 10-year yields dropped three basis points to 0.29 percent, while those in the U.K. slid five basis points to 1.29 percent.

Bulletin Headline Summary from RanSquawk

  • European equities trade in the red, albeit modestly so as Europe continues to digest the fallout from Trump’s press conference
  • Some sweeping moves in the USD this morning, and all spurred by the lack of substance in yesterday’s press conference by president elect Trump
  • Looking ahead, highlights include ECB meeting minutes, US import and export prices, Fed’s Yellen, Bullard and Kaplan

Market Snapshot

  • S&P 500 futures down 0.3% to 2264
  • Stoxx 600 down 0.2% to 364
  • FTSE 100 down 0.2% to 7273
  • DAX down 0.5% to 11582
  • German 10Yr yield down 1bp to 0.32%
  • Italian 10Yr yield up 1bp to 1.88%
  • Spanish 10Yr yield up less than 1bp to 1.42%
  • S&P GSCI Index up 0.8% to 398
  • Nikkei 225 down 1.2% to 19135
  • Hang Seng down 0.5% to 22829
  • Shanghai Composite down 0.6% to 3119
  • S&P/ASX 200 down less than 0.1% to 5767
  • US 10-yr yield down 5bps to 2.32%
  • Dollar Index down 0.62% to 101.15
  • WTI Crude futures up 0.6% to $52.55
  • Brent Futures up 0.9% to $55.58
  • Gold spot up 1% to $1,204
  • Silver spot up 1.2% to $16.93

Top News

  • Obamacare Repeal Effort Clears First Big Hurdle in U.S. Senate: the U.S. Senate took the first step toward repealing Obamacare in a razor-thin vote early Thursday
  • U.S. Said to Prepare WTO Complaint Against China on Aluminum: case focusing on loans said to be unveiled as soon as Thursday; global glut of aluminum threatening remaining U.S. capacity
  • Alphabet Says It Shut Down Titan Drone Internet Project: similar project pursued by Facebook has also faced setback
  • Blackstone Said to Vie With Warburg, Chinese Group for GLP: Blackstone considering offer for GLP, potentially pitting it against Warburg Pincus and a separate Chinese group
  • J&J, Actelion Said to Reach Tentative Agreement on Price: discussions now said to focus on valuing separated R&D unit; companies could reach a final deal as soon as this month
  • VW Officials Destroyed Files, E-Mails as Diesel Scheme Unraveled: co. pleads guilty, 5 more charged in emissions cheat
  • Tillerson Says China Can’t Have Access to South China Sea Isles: U.S. Secretary of State nominee says China must be denied access to artificial islands built in disputed water
  • U.S. Intelligence Chief Tells Trump He’s Dismayed by Leaks: Clapper said leak likely didn’t originate from spy agencies
  • HSBC to Pay $45 Million to Settle Euribor Price-Fixing Case
  • Floor & Decor Said to Revive IPO With >$1b Valuation: Reuters
  • Jawbone Said to Be Looking for Funds After Fitbit Approach: FT
  • CVC Capital Said in Advanced Talks to Buy MSC Software: Reuters
  • Apax Partners Sells 48% Stake in GlobalLogic For $1.5b: ET

Looking at regional markets, we start in Asia where stock markets traded lower across the board to shrug off the positive lead from Wall Street as Trump’s press conference led USD lower and as the surge in oil markets lifted the energy names. Nikkei 225 (-1.2%) underperformed on a firmer JPY as USD/JPY broke below 115.00, while comments in the US session from Trump criticising the healthcare sector led the pharmaceutical sector lower by around 3%. ASX 200 (-0.1%) pared early gains despite higher commodity prices, as a second day of double digit loss for Bellamy’s and near 2% declined in the health care sector weighed the index. In China, Shanghai Comp (-0.6%) and Hang Seng (-0.4%) were lower amid a lack of news-flow and yet another reserved liquidity operation by the PBoC. 10yr JGBs traded marginally higher amid the risk averse tone in the region, while the curve flattened amid outperformance in the long end.

Top Asian NEws

  • China Credit Growth Exceeds Estimates as Lending Remains Robust: aggregate financing was 1.63 trillion yuan in December; Broad M2 money supply increased by 11.3% percent, PBOC says
  • Macau Casinos Lead Declines in Hong Kong Amid Revenue Concerns: Casino stocks dragged Hong Kong’s benchmark equity index lower by the most in three weeks
  • Pimco Says China’s Next Big Shock May Be a Yuan Free Float: It would lead to a knee-jerk tumble, exacerbating capital outflows and sending shockwaves through global markets

All of the major European bourses trade in the red this morning with many analysts stating that President elect Trumps failure to mention any fiscal spending plans could be the main reason for the subdued sentiment. In company specific news, Tesco (-2.3%) shares are trading soft after broad sector strength earlier in the week. Elsewhere, Healthcare shares have been hit this morning after Trump stated that healthcare companies should be allowed to get away with charging extortionate prices. Luxury names have been trading well with Burberry (+1.3%) trading higher in sympathy with Richemont (7.6%) who reported a strong set of earnings pre-market. In Fixed income markets, Bunds opened higher in tandem with their US counterparts performance overnight, although prices have pulled away from best levels as markets take the opportunity to book profits. Elsewhere, supply from Europe has come in the form of Italian BTPs and a UK 2025 Gilt auction with UK paper relatively unfazed by a firm b/c of 2.52 and small yield tail.

Top European News

  • German Economic Growth Accelerated in 2016 on Domestic Spending: German economic growth accelerated more than analysts forecast in 2016 to its fastest pace in 5 years
  • Richemont Reports Unexpected Sales Gain as Watches Improve: 3Q sales +5% after falling 12% in 1H; better own-store watch sales good sign for wholesale: analysts
  • Swatch Gains; Positive Read-Across from Richemont, Short Squeeze
  • European Broadcasters Hook Up in Web Push as Viewers Move Online: Mediaset, TF1 invest in ProSiebenSat.1’s Studio71 unit
  • UBI Climbs After Offering 1 Euro to Buy 3 Rescued Small Banks; UBI plans to raise as much as EU400m through a rights offer to purchase three “good banks” at a symbolic price
  • Tesco Falls as Sales Growth Fails to Satisfy Investors; investor hopes had been raised by Wm Morrison Supermarkets’ results earlier in week

In currencies, there have been some sweeping moves in the USD this morning, and all spurred by the lack of substance in yesterday’s press conference by president elect Trump. This is all the talk at the moment, so there is everything to suggest that this may continue to a modest degree, with USD dip buyers likely to limit and significant moves from current pullback levels. USD/JPY has taken out 114.00, but still looks vulnerable to a deeper correction which sees the potential for 113.00 base on the charts. Support from here stretches down to 111.45-50 before we can start talking of a reversal. This is very much the case in EUR/USD, where sellers have come in around 1.0650-60, but the risk for a move to 1.0700-1.0800 remains as rising EU inflation raises the prospect on greater consideration of (ECB) tapering. GBP has also benefitted from the turn in the USD as we have seen 1.2300 tipped in Cable this morning. Brexit related fears will keep a lid on any major recoveries — especially against the USD — as yield differentials also dictate. EUR/GBP price action will also reflect a clearer picture, but sentiment USD based for now. USD/CAD is now threatening a move on 1.3000 on the downside, with Oil prices having held up well over the last 24 hours. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell 0.8 percent at 10:01 a.m. London time. It’s flat since the Fed’s rate decision on Dec. 14. 

In commodities, the big mover in the commodity complex is Gold, taking out USD 1,200 as the USD was hit hard during president elect Trump’s ineffective press conference yesterday. Resistance levels here into the mid USD1200’s worth noting as USD dip buyers likely. Oil prices have performed well in the last 24 hours, and indeed over last night’s key events. WTI above USD50.00 looks comfortable for now. Base metals mixed, but stable despite the lack of focus on infrastructure spending in the US. Anticipated China demand supports Copper which added 2.2% to $5,842 a metric ton, the highest in a month after Indonesia confirmed a halt to concentrate exports. Zinc rose 2.1 percent and nickel gained 1.5 percent.  U.S. natural gas rose 3% to $3.32 per million British thermal units as a Bloomberg survey showed inventories probably fell by 141 billion cubic feet last week. U.K. natural gas rose 1.3 percent to 56.70 pence a therm, a fourth day of gains amid forecasts for cold weather.

US Event Calendar

  • 8:30am: Import Price Index MoM, Dec., est. 0.7% (prior -0.3%)
  • 8:30am: Initial Jobless Claims, Jan. 7, est. 255k (prior 235k)
  • 8:30am: Fed’s Harker Speaks in Malvern, Pennsylvania
  • 8:30am: Fed’s Evans and Lockhart Take Part in Panel in Naples, Florida
  • 9:45am: Bloomberg Consumer Comfort, Jan. 8 (prior 45.5)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change
  • 12pm: Monthly World Agriculture Supply and Demand Estimates
  • 1:15pm: Fed’s Bullard Speaks in New York on U.S. Outlook
  • 1:45pm: Fed’s Kaplan Speaks at Dallas Regional Chamber Event
  • 2pm: Monthly Budget Statement, Dec., est. -$26.0b (prior – $136.7b)

DB’s Jim Reid concludes the overnight wrap

Morning from Zurich. I listened to President-elect Trump’s press conference on Bloomberg radio yesterday while on the tarmac waiting to take off from Oslo to Copenhagen. I must admit that whilst there was nothing much of substance for financial markets to take from it there’s no doubting it was compelling stuff and it was one of the rare times I really didn’t want a flight to take off and lose signal. I’ve never known anything like it from an incoming or sitting leader anywhere in the world. For a start you don’t often have cheering and clapping at a press conference which came from a contingent of Mr Trump’s  supporters at the event. We also had a fierce exchange between the future President and a CNN reporter who was refused a question due to his organisation’s reporting of Trump’s alleged relationship with Russia.

We also learnt that Mr Trump turned down $2 billion last week from a Dubai developer and also a discussion over his trip to Russia to work on Miss Universe. Not the everyday stuff of governmental press conferences but when you see some of the bland stage managed versions around the world who is to say it’s the wrong approach.

There was also a very brief mention of a “major border tax on companies leaving the US” and that Obamacare will be repealed and replaced “almost simultaneously” but overall markets were disappointed at the lack of substance around policy in particular. This was most apparent in FX where the US Dollar index finished the day -0.23% (and is down another -0.22% this morning) but was actually down as much as -1.62% from the intraday high at one stage. Over in rates 10y Treasury yields were down close to 5bps at one point, touching an intraday low in yield of 2.327%, before paring that move late into the close to finish more or less unchanged around 2.373%. Meanwhile equity markets posted modest gains but in reality were propped up by the +2.81% rebound for WTI Oil – despite some bearish inventory data – which helped the energy sector to outperform. Indeed the S&P 500 closed +0.28% and the Dow +0.50% but healthcare names took a bit of hit with Trump critical of drug pricing and saying that the industry needs “more competitive drug bidding” and that its currently “getting away with murder”. The Nasdaq Biotech index tumbled -2.96% as a result and had its worst day since October 11th.

Elsewhere Gold (+0.31%) notched up yet another gain however base metals generally eased off following the recent strong run. The European session had been a bit of a sideshow prior to Trump but markets still generally closed a touch firmer with the Stoxx 600 finishing +0.23%. The FTSE 100 (+0.21%) also notched up another gain and in doing so marked the first time the index has ever closed higher for 12 days in a row. That also coincided with Sterling at one stage touching a new 3-month low of $1.2039, before bouncing back into the close. The latest leg lower came as Governor Carney spoke and warned that Brexit could “amplify” four other dangers to the UK economy including the current account deficit, further weakness in Sterling, mounting consumer credit and a weaker commercial property market. On a related note, Scotland’s Nicola Sturgeon was dealt a bit of a blow yesterday after senior Norwegian politicians argued that it would be impossible for Scotland to move to a ‘Norway-style’ model for staying in the single market while also remaining part of the UK.

This morning in Asia it’s been another mixed start for markets. Most notable has been the decline for Japanese equities with the Nikkei (-1.26%) and Topix (-1.22%) tumbling with the healthcare sector and particularly those names with revenue exposure in the US notably underperforming following Trump’s comments about the sector. The Yen has also rallied about 2% since Trump spoke, which is also weighing. Meanwhile the Hang Seng (-0.33%) is also weaker, while the Shanghai Comp (+0.20%) and Kospi (+0.12%) are posting modest gains. The ASX is little changed.

Moving on. Yesterday we published our first Euro HY strategy monthly of the year. Since we published our 2017 Credit Outlook in late November we have seen some fairly impressive moves for EUR HY credit  spreads. At this time we have no intention of changing our FY spread forecasts but given the strength of these moves we assess the implications for potential returns in 2017. At the time of the outlook our spread and default rate forecasts indicated that, whilst low, both excess and total returns should still be positive for 2017. Unsurprisingly given the positive performance in December and at the start of January we are now at a starting point where returns are likely to be negative for the coming year. Around -0.4% in terms of excess returns and -1.3% in total returns. We continue to think the intra-year range could be large for spreads and think there will be a better entry point into EUR HY than current levels even if this is not immediate. Please email Nick.Burns@db.com if you haven’t received it.

Also yesterday we published a Credit Bite “Moody’s Default Rates Tracker” (https://goo.gl/gCc5pU) detailing the agencies’ latest 12-month-trailing high-yield default rates and their forecasts for the next 12 months. The default rate was 2.08% in Europe, 5.65% in the US and 4.41% globally. The baseline forecast for the next 12 months is 2.1% for Europe, 3.8% for the US and 3% globally

In our 2017 Outlook, we forecast 2.5% for Europe (https://goo.gl/BkHYrJ) and our US colleagues predict 5% for the US having revised down their earlier 7.25% forecast (https://goo.gl/3tWmf4). This is broadly in line with Moody’s view of a continued benign default environment in Europe and peaking of US defaults in the course of the year, although our US colleagues remain more cautious. Before we wrap up, in terms of the economic data yesterday the only releases of note came from the UK. Both industrial production (+2.1% mom vs. +1.0% expected) and manufacturing production (+1.3% mom vs. +0.5% expected) surprised to the upside, while the November trade deficit was reported as widening a little bit more than expected (to £12.2bn vs. £11.1bn expected). Carney also acknowledged yesterday that “the recent data would be consistent with a further upgrade of the forecasts” of the Bank.

Meanwhile over in Italy the Italian Constitutional Court rejected a request by the largest Italian union to force a referendum to overturn the core of the labour reform introduced by Renzi’s government in 2015, including the rejecting of the easing of redundancy rules for new hires. The ruling should come as some relief to new PM Gentiloni.

Looking at today’s calendar the only notable data due out in Europe this morning is the final revision to the December CPI report in France, Euro area industrial production in November and Germany’s first  estimate of calendar year 2016 GDP growth. Over in the US the data docket contains the import price index reading for last month, last week’s initial jobless claims and the December monthly budget statement. Away from the data we’ll get the latest ECB minutes from last month’s policy meeting as well as a number of Fed speakers including Harker, Evans and Lockhart at 1.30pm GMT, Bullard at 6.15pm GMT and Kaplan at 6.45pm GMT.


i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 17.46 POINTS OR 0.56%/ /Hang Sang closed DOWN 106.33 OR 0.46%. The Nikkei closed DOWN 229.97 POINTS OR 1.19% /Australia’s all ordinaires  CLOSED DOWN 0.04%/Chinese yuan (ONSHORE) closed WELL UP at 6.8940/Oil ROSE to 52.90 dollars per barrel for WTI and 55.91 for Brent. Stocks in Europe: MOSTLY IN THE RED. Offshore yuan trades  6.8420 yuan to the dollar vs 6.8940  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE COMPLETELY NARROWS AGAIN AS  DOLLARS STOP LEAVING CHINA’S SHORES /


none today



The POBC orders banks to keep capital controls a secret..we are not supposed to know (but we do)

(courtesy zero hedge)

To “Prevent Public Panic”, Beijing Orders Banks To Keep Capital Controls Secret

China is so concerned about the ongoing surge in capital outflows that its forex regulator, SAFE, has taken the unprecedented step of ordering banks to keep its instructions about curbing capital outflows secret and also to ensure that research analysts do not publish any negative views about the yuan according to Reuters.  According to bankers from local and foreign banks, both demands are seen as an attempt by the authorities to prevent alarm that could trigger further declines in the yuan.

With the yuan losing 6% of its value against the dollar last year as a result of hundreds of billions in official outflows (and as much as $1.1 trillion in unofficial since August 2015 according to Goldman calculations), Beijing has unleashed a flurry of restrictive measures on capital outflows from the State Administration of Foreign Exchange (SAFE), including setting limits on banks’ currency volumes in some cities or provinces and requiring approval for ever smaller transactions. Overnight, the PBOC even unveiled probed into bitcoin exchanges, sending the digital currency plunging over 20%.

Reuters reports that SAFE, which is part of the People’s Bank of China, is insisting, orally, that dozens of bank don’t reveal its role in such restrictions, which was damaging their relationships with clients since they were unable to explain why they were turning away business. SAFE’s reticence began at least as far back as August, when its Shanghai branch called at least 20 of the major foreign and domestic banks operating in the city to a meeting with the regional heads of several SAFE departments.

A representative from an international bank attending the meeting said there were no written instructions, but a high-ranking SAFE official told them explicitly what was expected of them.

“You must control your forex deficit, but you can’t say that SAFE is controlling capital outflows,” the official told the bankers. The banks were told to “manage sentiment” to prevent public panic, the banker said, and the banks’ research analysts should not broadcast any negative views on the yuan.

As a reminder, while in the US, the real  Fake News is anything having to do with relations between Trump and Russia; in China fake news mostly focus on the economy and the currency (as well as virtually everything else).

“They told us not to publish bad house views – analyst house views – on the yuan”, the person said. A second banker on the forex team of an international bank said his bank had received the same instructions.

Where a bank has exceeded the SAFE-set limits for forex transactions in a month, they have to turn business away, but are unable to explain the real reason why, several bankers complained. “We’re not going to tell our customers that (our forex business) has stopped; we just have to find ways to turn down the business we’re not allowed to do,” said a banker at Chinese Commercial Bank Ping An who had received SAFE instructions from seniors.

“It’s not good for client relationships,” he added, explaining that he had told his clients to go to other banks.

Additionally, SAFE had told banks to interview clients to make sure the forex deals were not for fake transactions, or else face punishment, according to two bankers at separate listed banks. In response to those orders, one of the banks sent an internal notice to employees, seen by Reuters, to alert them to SAFE’s requirements, explaining that the regulator’s penalties could include “cancelling business qualifications” needed for the lender to conduct forex business.

The notice passed on SAFE’s instructions that staff should not mention the regulator, i.e., it was to be kept secret.

“Please do not reply to clients using wording such as SAFE controls, or SAFE doesn’t allow or strictly controls FX purchases,” it read. Instead, they should adhere to the line provided by SAFE, that the purpose of the changes was to “promote healthy development of outbound direct investment” and “crack down on fake deals”, the notice added.

* * *

While China’s foreign exchange reserves fell to $3.05 trillion in November from $3.3 trillion in the first 11 months of 2016, and many traders are betting there will be further outflows as U.S. interest rates rises make dollar assets more attractive, SAFE wants banks to advise clients to buy yuan and sell dollars, the international bank representative said, a play that is likely to lose clients money. “If a person doesn’t ave this need, how am I supposed to encourage it?” the banker said.

At the same time, SAFE is quietly choking programmes designed to open overseas markets to Chinese investors. Even where institutional investors have been granted quotas to invest overseas, they are finding it increasingly difficult to exchange yuan into another currency.

“SAFE would tell you that you still need to stand in the queue, and the waiting period is ‘uncertain’,” said an executive at Shanghai-based China equity fund house Greenwoods. An investment program set up so global funds can raise Chinese cash to invest overseas has ground to a halt without explanation. “The application process seems to be in a state of suspension,” Michael Lu, managing director of Greater China Business Development of Dutch money manager Robeco told reporters in November.

* * *

In short, China has implemented full blown capital controls, without wanting its population to know it has done so, which is understandable: fear of the unknown would lead to panic, would lead to more selling, and more panic and so on. But what we find delightfully ironic is that China is cracking down on the internationalization of its currency, just months after the IMF made the Yuan a fully “respected” member of the SDR – a token of how “liberalized” the currency is. As usual, trust Christine Lagarde to get it dead wrong.





Beijing is not amused after Sec. of State hopeful Tillerson says the USA will block Chinese access to the South China sea islands:

(courtesy zero hedge)

Beijing Not Amused After Tillerson Says US Will Block Chinese Access To South China Sea Islands

While Rex Tillerson’s confirmation hearing as Trump’s Secretary of State was for the most part uneventful, several hours into his back and forth with the Senate Foreign Relations Committee, Tillerson compared China’s actions to those of Russia in Crimea, saying a failure to respond had allowed it to “keep pushing the envelope” in the South China Sea. “We’re going to have to send China a clear signal that first the island-building stops and second your access to those islands is also not going to be allowed” and that putting military assets on those islands was “akin to Russia’s taking Crimea” from Ukraine.

With that statement, America’s likely next secretary of state “has set a course for a potentially serious confrontation with Beijing” according to Reuters, which added that his comments are “expected to enrage Beijing.”

Tillerson, the former Exxon chairman and CEO, did not elaborate on what might be done to deny China access to the islands it has built up from South China Sea reefs, equipped with military-length airstrips and fortified with weapons. Trump’s transition team did not immediately respond to a request for specifics on how China might be blocked from the artificial islands.

Tillerson said he considered China’s South China Sea activity “extremely worrisome” and that it would be a threat to the “entire global economy” if Beijing were able to dictate access to the waterway.

“This is the sort of off-the-cuff remark akin to a tweet that pours fuel on the fire and maybe makes things worse,” Malcolm Davis, a senior analyst at the Australian Strategic Policy Institute in Canberra told Bloomberg. “Short of going to war with China, there is nothing the Americans can do.”

He blamed the current situation on what he termed an inadequate U.S. response. “The failure of a response has allowed them just to keep pushing the envelope on this,” Tillerson said.

China responded when its Foreign Ministry spokesman Lu Kand said China has been acting within the limits of its sovereignty. “Like the U.S., China has the right within its own territory to carry out normal activities,” he said at a regular briefing in Beijing. When asked repeatedly about Tillerson’s comments on blocking access to islands, China’s foreign ministry spokesman said he couldn’t make any guesses as to what Tillerson was referring to and would not answer hypothetical questions, Reuters reported.

China’s right to carry out ‘normal activities’ in its sovereign territory in the South China Sea is ‘indisputable’, Lu said, speaking at a daily briefing on Thursday. He did not elaborate.

Tillerson also said he would stand by U.S. defense treaties with Japan and South Korea. These had been in doubt after Trump said in an interview last March that he would consider withdrawing U.S. troops if allies didn’t pay more for their upkeep. Asked whether he agreed with Trump’s assertion that it wouldn’t be a bad thing for the U.S. if Japan and South Korea acquired nuclear weapons, Tillerson said he “did not agree.”

“We have long-standing ally commitments with Japan and South Korea in the area and I think we would respond in accordance with those accords,” he said. “Certainly we have made commitments to Japan in terms of a guarantee of their defense.”

Pouring more gasoline on US-Sino relations, Tillerson called China’s South China Sea island-building and declaration of an air defense zone in the East China Sea it contests with Japan “illegal actions.” “They’re taking territory or control, or declaring control of territories that are not rightfully China’s.”

Tillerson also said Washington needed to reaffirm its commitment to Taiwan, which Beijing regards as a renegade province, however he stopped short of Trump’s questioning of Washington’s long-standing policy on the issue.  “I don’t know of any plans to alter the ‘one China’ position,” Tillerson said.

Curiously, Tillerson’s words went beyond Trump’s own tough rhetoric on China. Regional military sources said while the U.S. navy had extensive capabilities in Asia to stage blocking operations with ships, submarines and planes, any such move against China’s growing naval fleets would risk dangerous escalations.

Tillerson’s criticism of China was not confined solely to geopolitics: he accused China of failing to live up to global agreements on trade and intellectual property, echoing past remarks by Trump, who has threatened to impose high, retaliatory tariffs on China.

But Tillerson also stressed the “deeply intertwined” nature of the world’s two biggest economies. “We should not let disagreements over other issues exclude areas for productive partnership.”





My goodness:  Free trade Obama just escalated the war with China as it issues an aluminium complaint:

(courtesy zero hedge)

‘Protectionist’ Obama Escalates Trade War, Slams China With Subsidized Aluminum Complaint

With all the partisan narrative defining Trump as a tariff-setting, anti-trade, economy-buster, we thought it ironic that free-trade-wunderkid Obama just escalated trade wars by bringing his administration’s 16th trade-enforcement complaint against China with WTO, urging tariffs on subsidised Chinese aluminum, after accusing them of funneling artificially cheap loans from state-run banks to producers.

Despite declining global aluminum prices, China has increased production 154% over the past eight years while upping capacity by 243%, according to the U.S. government.

As Bloomberg reports, the complaint says China has harmed U.S. interests by artificially expanding Chinese capacity, production and market share, resulting in a significant lowering of the global price for primary aluminum. It is the 16th trade enforcement challenge President Barack Obama’s administration has launched at the WTO against China.

“This latest challenge once again demonstrates the Obama administration’s unwavering commitment to ensuring a fair and level playing field for American workers and businesses,” U.S. Trade Representative Michael Froman said in a written statement. “Artificially cheap loans from banks and low-priced inputs for Chinese aluminum are contributing to excess capacity and undercutting American workers and businesses.”

In a statement very reminiscent of Trump’s rhetoric on ‘fair’ not ‘free’ trade, President Obama noted he U.S. under his tenure has filed more enforcement complaints in the WTO than any other country and has won every one that’s been decided…

America succeeds when our workers and businesses have a fair shot to compete in the global economy. That’s why when other countries cut corners and break the rules on trade, my Administration stands up for strong trade enforcement,” Obama said.

“China gives its aluminum industry an unfair advantage through underpriced loans and other illegal government subsidies. These kinds of policies have disadvantaged American manufacturers and contributed to the global glut in aluminum, steel, and other sectors.”

As The Wall Street Journal reports, the complaint would represent an escalation of trade disputes between countries with the world’s two largest economies almost a week before Donald Trump assumes the U.S. presidency. Mr. Trump suggested again Wednesday in a news conference that trade relations with Beijing would be a top priority, saying the U.S. trade imbalance with China was too large.

The complaint accuses China of funneling artificially cheap loans from state-run banks to Chinese aluminum producers, helping the companies upgrade their facilities and expand production, the people said. China also subsidizes aluminum production by providing producers with cut-rate coal and electricity, the complaint says, according to people familiar with it.

Donald Trump, who will be sworn in as the president’s successor next Friday, has vowed to pull out of or renegotiate free trade deals he argues allow Chinese market manipulations. During a press conference Wednesday in New York, Trump said China had “taken total advantage of us economically” and vowed the leadership in Beijing “will respect us far more” under his presidency.

So the timing of this escalation of trade disputes appears to be just another example of the Obama administration’s “smooth transition” efforts to leave behind chaos for the Trump administration (even if this effort seems to fit with Trump’s “fair” trade rhetoric).




Oh no!! not again?  After Volkswagen got tagged with a 4.3 billion USA criminal fine the EPA accuses Fiat Chrysler of using software to defeat diesel emission laws;

down goes Fiat Chrysler shares:

(courtesy zerohedge)

Fiat Chrysler Shares Crash After EPA Accuses Automaker Of Using Software To Cheat Diesel Emissions Laws:  the company was “Skirting Rules & Got Caught”

It appears they were all doing it. Fiat Chrysler shares are collapsing following EPA accusations that the automaker engaged in a similar scheme as Volkswagen, and used cheating software to beat diesel emissions tests, and this violated pollution laws.

The U.S. Environmental Protection Authority will accuse Fiat Chrysler of using software that allowed excess diesel emissions in about 100k U.S. vehicles, Reuters reports in tweet, citing people familiar.

BREAKING: EPA to accuse Fiat Chrysler of using software that allowed excess diesel emissions in about 100,000 U.S. vehicles – sources

Why? Maybe it has something to do with Fiat’s appeasement of the Trump administration, when last Sunday it announced a plan to Invest $1 Billion in the U.S. It forgot, however, that for the next 8 days, it is still Obama’s country.

The stock is down over 10%.

The supply chain is also being hit.

As AP reports,

Two people briefed on the matter say that the U.S. government is accusing Fiat Chrysler of violating the Clean Air Act on some of its diesel engines.

The Environmental Protection Agency has scheduled a news conference for Thursday morning to release details of the matter. The people briefed on the matter didn’t want to be identified because the formal announcement hasn’t been made.

The move comes one day after federal prosecutors announced that Volkswagen would plead guilty to criminal charges and pay a record $4.3 billion penalty for cheating on emissions tests.

The Environmental Protection Agency has scheduled a call with reporters at 11 a.m. in Washington to “take questions on a recent development regarding a major automaker.” Representatives for Fiat Chrysler didn’t immediately respond to requests for comment.



Let’s get this straight:  Greece is totally broke and cannot even pay interest on what it owes.  So what do the doorknobs at the EU do:  they borrow money that they do not have to loan it to Greece who have no chance whatsoever to repay it..great deal..


(courtesy London’s Express) and special thanks to Robert H for sending this down to us>




Desperate Eurozone to borrow BILLIONS to fund Greece rescue amid fears of crash

THE eurozone’s bailout fund is borrowing tens of billions so it can fund a rescue plan for Greece, amid fears the country’s debt crisis could once again send shockwaves through the bloc.

PUBLISHED: 13:53, Tue, Jan 10, 2017 | UPDATED: 17:48, Tue, Jan 10, 2017
The Luxembourg agency responsible for doling out rescue money – the European Stability Mechanism (ESM) – is turning to markets to raise the extra cash needed for the Greek debt relief programme.

The ESM is now issuing €57billion (£49.5bn) in long-term bonds – up 14 per cent from original plans – to cover the bail-out programme.

However, Athens remains at loggerheads with creditors over the long term measures of the deal for fresh cash and debt relief – and the stand-off could last for weeks, as the two sides refuse to back down over controversial austerity measures.


The European Union is borrowing billions to fund Greece’s debt relief

Last month, the ESM froze short-term debt relief for the country, after prime minister Alexis Tsipras announced a one-off Christmas bonus for low-income pensioners.

The move is thought to have angered eurozone officials who are pressing the government to cut pension welfare spending.

It came as eurozone finance ministers approved the debt-relief measures proposed by the ESM.

In a further sign that tensions between the two sides are increasing Athens this week described proposals by the creditors as “irrational”.

The International Monetary Fund (IMF) has also spoken out against demands from the European Commission and said they are not “credible” and will hamper prospects of growth for Greece.

Only through a “Herculean effort” would Athens be able to meet the demands of its creditors under the ESM programme, and through slashing spending in vital services that will derail Greece’s long-term prospects, said the Washington-based fund.

However, the IMF said Athens is still spending far too much on pensions and not asking enough people to pay tax.



This ought to be good for gold.  USA troops march into Poland landing right next door to Russia.  I am glad that Trump will take off a week from tomorrow

(courtesy zero hedge)

American Troops “Roll Into Poland” In Largest Deployment Since The Cold War

“American soldiers rolled into Poland on Thursday, fulfilling a dream Poles have had since the fall of communism in 1989 to have U.S. troops on their soil as a deterrent against Russia.”

That’s how the AP begins its report on the first deployment of US soldiers into the central European country, previewed here earlier in the week as “One Of Largest Deployments Since The Cold War“, even as Russia warned that the move represented a threat to its national security, and the Kremlin said “Russia regarded the move as an aggressive step along its borders.”

Two convoys of have been photographed heading to Poland from Germany today

40 vehicles across two separate convoys are on their way to Poland

NATO, however, has ignored Russian concerns and threats of retaliation and as a result soldiers in camouflage with tanks and other vehicles crossed into southwestern Poland on Thursday morning from Germany and headed for Zagan, where they will be based.

The largest US military brigade since the end of the Cold War arrived in
Bremerhaven in northern Germany on Saturday

While in the past the US and other Western nations have carried out exercises on NATO’s eastern flank, this deployment, which includes around 3,500 U.S. troops and 2,800 tanks, trucks and other military equipment, marks the first-ever continuous deployment to the region by a NATO ally. It also represents a commitment by outgoing President Obama to “protect” a region that became deeply nervous over Russia’s response to the CIA-orchestrated presidential coup in Ukraine, the annexation of Crimea, and the resulting proxy war in east Ukraine.

Two convoys of 20 vehicles were pictured leaving Brueck near Lehnin in Germany today heading to Poland. They spent the night 80km from Berlin. Troops will also deployed to Romania, Bulgaria and across the Baltics.

The Pentagon now plans to keep the full deployment in Europe and immediately replace those returning after their 9-month stays. The US troops will carry out training exercises with NATO forces once there.

* * *

As AP adds, the arrival of the US troops will be feted on Saturday in official ceremonies attended by Poland’s prime minister and defense minister.

Despite the Polish celebrations, clouds hung over the historic moment. As the AP puts it, “there are anxieties that the enhanced security could eventually be undermined by the pro-Kremlin views of President-elect Donald Trump. Meanwhile, Russia appears provoked by the deployment of American troops on its doorstep.”

“We perceive it as a threat,” President Vladimir Putin’s spokesman Dmitry Peskov said. “These actions threaten our interests, our security. Especially as it concerns a third party building up its military presence near our borders,” Peskov said in a conference call with reporters. “It’s not even a European state.”

Worries about the permanence of the new U.S. security commitments are rooted in a tragic national history in which Poland has often lost out in deals made over its head by the great powers.





In the confirmation hearings General Mattis describes Russia as our principal threat. The cold war is officially back.

(courtesy zero hedge)


none today


none today


none today


Your humour story for the day:

Peso Traders Have An Unusual Solution To Halting The Collapse Of Mexico’s Currency

Following central bank governor Agustin Castens’ comments earlier in the day that intervention is a tool to smooth changes in currency value,” and “Trump’s win has created uncertainty on Mexico’s growth model,” Mexican Peso traders have come up with unusual solution: instead of dumping billions in intervention with no effect, buy Twitter and shut it down.

As Bloomberg reports, the strange idea has a certain logic to it…

It goes like this: Instead of spending its precious reserves to defend the peso, Mexico should just buy Twitter Inc. — at a cost of about $12 billion — and immediately shut it down.


The notion made the rounds this week after the central bank revealed it had already blown through $2 billion of reserves in a largely futile effort to shield the peso from a steady stream of anti-Mexico Tweets from Donald Trump.



“I would suggest they do it fast,” joked Juan Carlos Alderete, a foreign-exchange strategist at Banorte-Ixe in Mexico City. “Because we can barely afford it now.”

Of course this is unlikely to happen, but, quite frankly, it has more chance of success than the vicious circle Mexico is about to find itself in.


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



GBP/USA 1.2300 UP .0093 (Brexit by March 201/UK government loses case/parliament must vote)


Early THIS THURSDAY morning in Europe, the Euro ROSE by 89 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0683; 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 DOWN 17.46 or 0.56%     / Hang Sang  CLOSED DOWN 106.83 POINTS OR 0.46%  /AUSTRALIA  CLOSED DOWN 0.04%  / EUROPEAN BOURSES MOSTLY IN THE RED EXCEPT SPAIN 

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 THURSDAY morning CLOSED DOWN 229.97 OR 1.19% 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 106.33 OR 0.46%  Shanghai CLOSED DOWN 17.46 POINTS OR 0.56%   / Australia BOURSE CLOSED DOWN 0.04% /Nikkei (Japan)CLOSED DOWN 229.97 OR .1.19%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1204.50


Early THURSDAY morning USA 10 year bond yield: 2.334% !!! DOWN 2 IN POINTS from WEDNESDAY 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  2.926, DOWN 3 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 100.79 DOWN 94 CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING


And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.91% DOWN 6  in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.04% DOWN 2  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.403%  DOWN 1  IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.893  UP  3  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 49 points HIGHER than Spain.





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

Euro/USA 1.0643 UP .0051 (Euro UP 51 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 114.15 DOWN: 0.938(Yen UP 94 basis points/ 

Great Britain/USA 1.2179 DOWN 0.0029( POUND DOWN 29 basis points)

USA/Canada 1.3127 DOWN 0.0035(Canadian dollar  UP 35 basis points AS OIL ROSE TO $52.94


This afternoon, the Euro was UP by 51 basis points to trade at 1.0643


The POUND FELL 29  basis points, trading at 1.2179/

The Canadian dollar ROSE by 35 basis points to 1.3127,  WITH WTI OIL RISING TO :  $52.94

The USA/Yuan closed at 6.8889
the 10 yr Japanese bond yield closed at +.04% DOWN 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 1 IN basis points from WEDNESDAY at 2.33% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.920 DOWN 3  in basis points on the day /

Your closing USA dollar index, 101.13 DOWN 60 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 THURSDAY: 1:00 PM EST

London:  CLOSED UP 1.88 OR .03% 
German Dax :CLOSED DOWN 125.13 POINTS OR 1.07%
Paris Cac  CLOSED DOWN 24.74 OR 0.51%
Italian MIB: CLOSED DOWN 330.29 POINTS OR 1.69%

The Dow was DOWN 63.28 POINTS OR .32% 4 PM EST

WTI Oil price;  52.94 at 1:00 pm; 

Brent Oil: 56.04  1:00 EST




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

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


BRENT: $56.11


USA 30 YR BOND YIELD: 2.961%


USA/JAPANESE YEN:114.75  down 0.343

USA DOLLAR INDEX: 101.42  DOWN 31  cents (BREAKS AGAIN HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.21611 : DOWN 47  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.316%




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


VIX-Crushing, Panic-Buying Bounce Saves Stocks From Worse Day In 3 Months

For Nasdaq traders today…


Small Caps (and briefly The Dow) sunk into the red for 2017… (NOTE: the moment Trannies and The Dow tagged unchanged for 2017 a miracle bid appeared)…


Second day in a row if VIX-smashing, panic-V-shaped-recovery-stock-buying…


Though we note it seems all about the European close once again…


They were desperate to get Nasdaq green into the close…


In fact everything jumped after Europe closed…


Nasdaq broke it’s winning streak…


While everything bounced, financials were the day’s laggards while Utes and Healthcare managed to get green by the close…


Treasury yields rose and steepened notably after the 30Y auction…(same as yesterday) but remain lower on the week…


Not helped by clear pressure for steeper curves from The Fed…



The USD Index plunged to its 50-day-moving-average…almost erasing all the post-FOMC gains…


And bounced…


The USD bounce back was led by GBP and JPY weakness…


Gold is having a great week while crude remains red…


But as the dollar, bond yields, and stocks ramped hard in the afternoon, gold limped back below $1200…


Continuing jobless claims are now over 100,000 higher since Nov 8 2016, the night of the election.  They stand at 4 month highs:

(courtesy zero hedge)

Over 100,000 More Americans Are On Jobless Benefits Now Than Before Trump’s Election

Continuing jobless claims are up over 100,000 since Donald Trump’s election victory and stand at 4-month highs.

This is the biggest percentage rise in claims since May 2009, all happening as small business optimism, consumer confidence, and stocks soar to cyclical highs.





The Bank of America consumer reports are pretty good.  Last night they found that consumer spending tumbled in December and thus they have given us an initial warning that retail sales for the last month of year (and Christmas sales) will be dismal

(courtesy zero hedge/Bank of America)

BofA Finds Consumer Spending Tumbled In December, Warns Of Disappointing Retail Sales

With this week’s most important economic data point – this Friday’s retail sales – fast approaching, economists are keen for clues if this key datapoint giving insight into the health of the US consumer will maintain the recent outsized spike in favorable and better than expected economic data, or if adversely, it may be a downward inflection point which could have significant implications on the dollar trade as RBC explained earlier. And according to BofA’s internal debit and credit card data, always released just ahead of the retail sales report, it looks like it will be the latter.

As Bank of America’s chief US economist Michelle Meyer reports, the aggregated BAC credit and debit card data showed that retail sales ex-autos declined 1.0% mom seasonally adjusted in December. “This contrasts with other indicators of consumer strength including reports of a robust holiday shopping season, a rebound in consumer confidence and strong autos sales” according to Meyer.

Actually, based on earnings reports of those companies who have recently closed their quarter, a weak December is precisely what one should expect, further corroborated by JPM’s satellite imagery at early December showing empty parking lots (recall: “Satellite Imagery Reveals Sharp Retail Spending Slowdown After The Election“) and a plunge in brick and mortar sales, which has been greater than the offsetting pick up in online sales.

This is how the bank’s adjusted retail spending data looks when charted.

As BofA notes, “the BAC aggregated card data showed that retail sales exautos declined 1.0% mom SA in December. This reversed the strong gains over the prior few months, leaving the 3- month average growth rate to slow.

Amusingly, while in the past everyone ignored seasonal adjustments when it comes to retail sales (a reconciliation which as we have shown on various occasions, would always undermine the adjusted data), this time it is BofA which tries to justify the weakness with seasonal adjustments. This is how it “justifies” the sharp drop in data:

We think the explanation is that our BAC aggregated card data is biased lower due to our seasonal adjustment process. Note that the Census Bureau uses a similar approach, and therefore, we expect their data to be subject to a similar downward bias.

The two major holidays in December — Christmas and the New Year — are fixed in terms of the date but not in terms of the day of the week. This year, Christmas Eve and New Year’s Eve both fell on Saturdays. Spending on those dates was much weaker than on a typical Saturday, presumably since people were enjoying the holidays. However, the seasonal adjustment process treated these days like any other Saturday. This suggests that the adjustment process “over-fits” the data and biases the seasonally adjusted figures lower.

We think the bias in December should correct in January, translating to strong growth in January. A strong gain in January would support our view that the weakness we are seeing in the data is simply “noise”. However, that means waiting until February 15th for the January data to provide confirmation.

Unless, of course, January data does not rebound, in which case that bank’s economists can simply blame the “abnormally cold weather” for the lack of spending, as they have every time over the past three years.  Even so, with that caveat in mind, BofA warns, “since the Census Bureau uses a comparable approach, we think it is prudent to prepare for a similarly negative number in Friday’s report.”

And while the December, or even January, data may surprise to the up, or downside, due to quirks in seasonal adjustments, reporting, one thing is undisputable: long-term spending trends, especially when it comes to goods and products, continue to deteriorate. Here’s BofA:

  • The sector data suggests that consumers continue to spend on experiences, with airlines and lodging spending up impressively over the prior three months. Presumably, consumers are taking trips around the holidays.
  • On the flipside, consumers appear to be spending less on goods, with particular weakness in electronics spending, home goods, and clothing. As we also show in Chart 6, spending at restaurants continues to weaken.

Also, as a result of surging gasoline prices, spending at gasoline stations is rebounding but only due to nominal spending increases. Which means less disposable income available to be spent on other potential purchases.

And here is the evidence:

Restaurant spending is tumbling

Furniture and home improvement spending has flatlined

Spending on young adult clothing has tumbled.

Spending at food and beverage stores is growing at the lowest rate in 5 years.

And finally, luxury spending – that traditionally reserves to the upper middle and higher classes- continues to crash.

So aside from all that, the consumer is doing great.





Interesting:  Trulia comments on a very disturbing increase in home sales failures and this is no doubt due to the higher interest rates.  Starter homes are most affected

(courtesy Trulia/zero hedge)

American Home Sale Failures Suddenly Double In Q4 2016 – Signed, Sealed, No Deal

A stunning new analysis from Trulia suggests that rising interest rates in 4Q 2016 may actually be having the desired effect of cooling home sales, despite the best efforts of Obama to keep the party rolling at the expense of American taxpayers.  Looking at homes that go from “pending” status back to “for sale”, Trulia found that the number of home “sale failures” spiked in Q4 2016, to nearly nearly double the 2015 rate, with “starter homes” being most at risk.  

Nationally, sales have been failing at an increasing rate, rising to 4.3% in Q4 2016 from 1.4% of all listed properties during Q4 2014. On an annual basis, the failure rate has nearly doubled to 3.9% in 2016, up from 2.1% in 2015.

New homes and very old homes are least likely to see deals fail. As of Q4 2016, homes built in 2016 have among the lowest proportion of failed sales at 2.6%. That proportion increases steadily as age increases to an average of 5.2% in homes built from 1959 through 1969, then falls steadily to an average of 3.5% for homes built from 1900 through 1920.

Of all listings in the largest 100 metros, 7.1% of starter home listings failed in the most recent quarter, compared with 6.7% of trade-up homes and 3.8% of premium homes. For all of 2016, the failure rate was 6.3% for both starter and trade-up homes and 3.6% for premium homes.

During the last two years, the places with the most failed sales are predominantly in the West with Las Vegas leading the pack at 7.6% of all unique listings reverting back to “for sale” at least once.

During the most recent quarter, Tucson, Ariz., saw the highest rate of failed deals with 13.9% of all unique listings retrogressing. For all of 2016, Ventura County, Calif., had the highest fail rate at 11.6%, up from 3.1% in 2015.

Considering both the last two years and just the most recent quarter, Madison, Wis., has had the fewest listings fall back to a “for sale” status at 0.1% of all listings.

Not surprisingly, per Bloomberg, the highest rates of failure occurred in the subprime mecca of the American Southwest.


Meanwhile, starter homes performed the worst…


And while any number of things can cause a home sale to fall through, including lower than expected appraisals and bad home inspections, we suspect that rising mortgage rates are more likely the cause of the sudden surge in “failed sales” rather than a national outbreak of termites.  With Americans managing their monthly budgets down to the last penny, because you can “afford it” as long as you can cover the monthly payment, we suspect the 60bps rise in the average 30-year fixed mortgage rate during 4Q was just more than the fragile American budgets could bear.




The all important USA consumer confidence report appears to show that  confidence is waning

(courtesy zero hedge)

Trump Bump Dumps – Confidence Collapses As Inauguration Looms

Despite the latest Small Business Optimism explosion of confidence (in December), the most up-to-date surveys of US consumer confidence appear to be crumbling after the ‘Trump Bump’…

The headline confidence index has erased all its post-Trump gains…

“Buying Climate” has plunged…

And ‘Personal Finances’ are tumbling…

It appears the rose-colored glasses of hope are starting to turn grey.




The fun begins:  The senate passes the repeal of Obamacare. It now goes to the House which is expected to pass the bill. They will wait until Trump is inaugurated before it is sent to him for final signing.

(courtesy zero hedge)

Senate Takes First Step To Repeal Obamacare With 51-48 Vote

Early on Thursday morning, in a 51-48 vote, the Senate took the first concrete step toward dismantling Obamacare, when it voted to instruct key committees to draft legislation repealing Barack Obama’s signature health insurance program. Republicans needed a simple majority to clear the repeal rules, instructing committees to begin drafting repeal legislation, through the upper chamber, with the vote falling largely along party lines.

Rand Paul was the lone Republican to vote against the budget resolution because it didn’t balance. Paul said in a statement after the vote that while he supports nixing ObamaCare “putting nearly $10 trillion more in debt on the American people’s backs through a budget that never balances is not the way to get there.”

Meanwhile, no Democrat supported the repeal rules. Instead, Democrats rose one by one from their seats on the Senate floor in protest to state why they were voting against the resolution. In dramatic fashion, Bernie Sanders warned that if the GOP resolution moved forward Americans would die.

“Up to 30 million Americans will lose their health care with many thousands dying as a result,” he said. “Because when you have no health insurance and you can’t go to a doctor or a hospital, you die.”

Sanders also mocked the Republican effort saying the GOP have never united around an alternative to Obamacare. “They want to kill ACA but they have no idea how they are going to bring forth a substitute proposal,” declared Senator Bernie Sanders of Vermont.

Dianne Feinstein who had surgery to install a pacemaker, missed the hours-long “vote-a-rama” session that began Wednesday evening. Lawmakers were able to use the hours-long voting block to force a vote on any amendment to the budget resolution. Some 180 amendments were filed.

As the Hill adds, the late-night passage of the budget resolution comes despite deep divisions on when and how to replace ObamaCare, which were on full display. Lawmakers spent more than six hours on the Senate floor and voted on more than 19 amendments, none of which were successfully added to the resolution.

But Republicans managed to avoid what was expected to be the top fight of the night, when a group of five GOP senators dropped their push to delay the ObamaCare repeal legislation. Lawmakers had wanted to push the deadline for committee repeal proposals from Jan. 27 to March, which they argued was needed to give lawmakers extra time to lock down details on a replacement bill and work with the incoming Trump administration about next steps.

Sen. Bob Corker (R-Tenn.), one of the Republicans backing the amendment, said the decision was a result of a “very thoughtful discussions” within Republicans and recognizing that the Jan. 27 date is a “placeholder.”

Sen. Rob Portman (R-Ohio) added that “we have assurances from leadership that this date is not a date that is set in stone.”

But Sen. John Cornyn (R-Texas), McConnell’s deputy, had warned that pushing back the date could create a “jam” on the Senate floor with GOP lawmakers wanting to tackle an ambitious agenda with President-elect Donald Trump’s first 100 days.

The resolution now goes to the House of Representatives, which is expected to vote on it this week. Scrapping Obamacare, albeit without a ready replacement, has become a top priority for most Republican majorities in both chambers and Republican President-elect Donald Trump. Republicans have said that the process of repealing Obamacare could take months, while developing a replacement plan could take far longer, according to Goldman as much as two years. However, they are under pressure from Trump to act fast; he said on Wednesday that the repeal and replacement should happen “essentially simultaneously.” It remains unclear just how that will happen.

Trump said during a press conference on Wednesday that repeal and replace legislation would occur near simultaneously if not at the same time. “It’ll be repeal and replace. It will be essentially, simultaneously. It will be various segments, you understand, but will most likely be on the same day or the same week, but probably, the same day, could be the same hour,” he said.

At the same time, Democrats continued to warn that if Republicans break ObamaCare they will own any political backlash and roil the insurance market. Minority Leader Chuck Schumer (D-N.Y.) appealed to Republicans earlier Wednesday, urging them to back down from the healthcare fight. “If Republicans go forward with this plan, they may mollify their base, but they will ostracize and hurt the American people, and ultimately lose in the court of public opinion,” he said.

Democrats forced votes on a myriad of amendments aimed at blocking legislation that would  “make America sick again,” a new Democratic slogan on the GOP plan to repeal ObamaCare without a replacement.

Some 20 million previously uninsured Americans gained health coverage through the Affordable Care Act, as Obamacare is officially called. Coverage was extended by expanding Medicaid and through online exchanges where consumers can receive income-based subsidies. On the other hand, premiums for Obamacare members have exploded in recent year, leading to widespread anger among middle-class Americans.

* * *

The resolution approved Thursday instructs committees of the House and Senate to draft repeal legislation by a target date of January 27. Both chambers will then need to approve the resulting legislation before any repeal goes into effect. Senate Republicans are using special budget procedures that allow them to repeal Obamacare by a simple majority; this way they don’t need Democratic votes. Republicans have a majority of 52 votes in the 100-seat Senate; one Republican, Senator Rand Paul, voted no on Thursday.

Democrats passed the Affordable Care Act in 2010 over united Republican opposition. Democrats say the act is insuring more Americans and helping to slow the growth in healthcare spending. But Republicans say the system is not working. The average Obamacare premium is set to rise 25 percent in 2017.





My goodness!! the FBI sought to launch a surveillance operation against an active USA presidential campaign under FISA  (Foreign Intelligence Surveillance Act).  The rarely used FISA was targeted against 4 of Trump’s high ranking officials of his campaign:

“including Carter Page, Paul Manafort, and Lt. Gen. Michael Flynn, along with Trump’s personal lawyer Michael Cohen, meaning some of them may well be among the targets.”

(courtesy Ditz/AntiWar.com)

FBI Reportedly Sought FISA Court Warrant To Spy On Trump Campaign Officials



The following is another biggy!! Today we got two trial balloons by Fed officials, Harker and Bullard.  The Fed has always realized that it must unwind its balance sheet if it is to have any credibility in the future.  Today we got word that the Fed is contemplating such a move.  Except one major problem:  who on earth is going to buy this stuff and not only that but interest rates will skyrocket which will drown the entire globe/  Please note that the Fed is doing this as the Donald is to spend 10 trillion extra dollars on infrastructure.  The two acts are totally incompatible


(courtesy zero hedge)

Chatter Of Fed Balance Sheet Unwind Spikes Yield Curve

Morgan Stanley is leading off the earning seasons with this bad news:

  1. Cutting Investment banking bonuses by 15%
  2.  Firing 5 % of senior managing directors.

(courtesy zero hedge)

Morgan Stanley Cuts Investment Banking Bonuses By 15%, Fires 5% Of Managing Directors

Ahead of a deluge of bank earnings reports starting tomorrow morning, which include JPMorgan, Wells Fargo and Bank of America, and all of which are “whispered” to come in above expectations, an ominous harbinger hit the newswires this afternoon when Reuters reported that Morgan Stanley not only laid off various senior investment bankers last week, just ahead of bonuses season, but also slashed investment banking bonuses by roughly 15% as a result of “a decline in revenue from dealmaking and capital raising across Wall Street.”

While individual bankers bonuses fluctuated depending on performance and geographic region, many are said to have received a smaller paycheck for 2016. Furthermore Morgan Stanley, which remains a bulge bracket investment bank and ranked fourth in IB fees last year, also cut more than 20 MDs from its global investment banking division, roughly 5% of total.

While Morgan Stanley, like other major banks, typically lets go of the bottom 5% of its workforce at year-end to get rid of underperformers, the cuts to senior bankers were deeper than in years past, according to Reuters sources. Morgan Stanley also announced the promotion of managing directors on Thursday.

The layoffs will hardly come as a surprise as Wall Street banks have been shedding staff and curbing compensation for years to cut costs. They have also been losing top talent to boutique firms, which can pay a greater portion of compensation in cash. Further pressuring Wall Street’s animal spirits, global investment banking fees across Wall Street declined 7% in 2016 to a three-year low, according to Thomson Reuters data.

While drops were recorded in most IB vertical, equity capital market fees, which declined 23 percent, were hit the most as a result of a drop off in initial public offerings. IPO activity in 2016 occurred at the lowest levels since 2009. M&A also slowed from record levels in 2015, with global deal volume falling 17%.

Ironically, despite being largely shunned by Wall Street ahead of the election, there is hope that banker compensation will rebound in 2017 thanks to Donald Trump, as a result of more active trading by retail investors, as well as a rebound in bond issuance (with the first 10 days of January already above $100 billion in IG issuance, an all time record) and other M&A and advisory activity.

Well that is all for today

I will see you tomorrow night


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