Jan 16/Martin Luther King holiday special report/gold trading in Europe/Trump takes on Merkel et al in Germany/Trump and the Chinese spar off/Everybody to be insured with the repeal of Obamacare/Obama sends troops into Norway which angers the Russians even more/ Theresa May planning a hard BREXIT/

Gold at (1:30 am est) $1202.90 UP $7.60

silver  at $16.81:  UP 9 CENTS

Access market prices:

Gold: $1202.90

Silver: $16.81

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

MONDAY gold fix Shanghai

Shanghai FIRST morning fix Jan 16/17 (10:15 pm est last night): $  1219.16

NY ACCESS PRICE: $1202.00 (AT THE EXACT SAME TIME)/premium $17.16

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1219.16

NY ACCESS PRICE: $1205.80 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $13.36

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 16/2017: 5:30 am est:  $1202.75   (NY: same time:  $1202.70   (5:30AM)

London Second fix Jan 16.2017: 10 am est:  $1203.00 (NY same time: $1103.00  (10 AM)

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

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

end

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

1)Comex data tomorrow

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

 

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed DOWN 9.34 POINTS OR 0.30%/ /Hang Sang closed DOWN 219.23 OR 0.96%. The Nikkei closed DOWN 192.04 POINTS OR 1/00% /Australia’s all ordinaires  CLOSED UP 0.30%/Chinese yuan (ONSHORE) closed UP at 6.9003/Oil FELL to 52.20 dollars per barrel for WTI and 55.29 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.8593 yuan to the dollar vs 6.9003  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE COMPLETELY NARROWS AGAIN AS  DOLLARS STOP LEAVING CHINA’S SHORES /

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

South Korea seeks the arrest of their CEO on bribery embezzlement and perjury charges after he paid multi million dollars to his friend, impeached President of the country Park Guen-hye

( zero hedge)

b) REPORT ON JAPAN

 none today

c) REPORT ON CHINA

Your next Chinese time bomb:  bitcoin which seems to have imploded.  The recipient of this good fortune is gold

( zero hedge)

4 EUROPEAN AFFAIRS

i)Saturday evening

Theresa May is now calling for a clean and Hard Brexit break from the EU:

( zero hedge)

ii)Sunday morning, New Zealand time trading causes the Pound to plummet to 1.1986 to the dollar with news of a hard Brexit

( zero hedge)

iii)Germany

Merkel et al slam Trump’s criticism.  Gabriel and Merkel suggest to Trump that the USA must make better cars in order for Germans to buy USA cars. Merkel and Gabriel also state that it is Washington’s cause for creating the refugee crisis and they are right:

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Israel/Palestine:

Last night the 70 nations convened and provided a draft certifying Kerry’s blueprint for a two state solution.  The problem is that the wailing wall in West Jerusalem and all of Eastern Jerusalem are now part of Palestinian territory along with settlements built in those 50 years.  Instead of helping the peace process along, this will further hinder it and it may cause the USA under Trump to move their embassy to Jerusalem from Tel Aviv

6.GLOBAL ISSUES

Horseman capital management are one of the smartest people on the planet and yet these guys are having an awful year.

We bring you their statement to their clientele to give you a perception as to what is going on

 

( Horseman Capital/zero hedge)

7. OIL ISSUES

Well that did not last long.  The Saudis are now suggesting an early end to the OPEC deal.

(courtesy zero hedge)

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)To all our coin collectors:  the new USA Lady liberty will be a black woman:

( McCann/NYTimes)

ii)Chris Powell will speak at the Singapore and Hong Kong conferences in March and April:

( GATA)

iii)Two important commentaries from Egon Von Greyerz and Andre Maguire.

The Maguire commentary is a must read as he states that the physical markets are over powering the paper gold market

( Von Greyerz/Maguire/Kingworldnews)

10.USA STORIES

i)SATURDAY

Trump states that he is open to the lifting of Russian sanctions.  He also states that he will not label China a currency manipulator on day one.  However he still is quite adamant about our two individual Chinas : Taiwan and Mainland China.

( zero hedge)

ii)China’s response: SUNDAY

there is only one China

( zero hedge)

iii)The USA response to that: SUNDAY NIGHT

USA deploys a third carrier group to Asia and the disputed South China Sea

( zero hedge)

iv)CHINA RESPONDS AGAIN TO TRUMP: MONDAY MORNING

China does not like being provoked:

( zero hedge)

v)My goodness:  Trump promises insurance for everybody in the Obamacare repeal. How on earth is he going to pay for this?

( zerohedge)

vi)Nor good!! Death threats to Opera star Bocelli forces him to pull out of the inauguration performance:

( zerohedge)

vii)USA marines land in Norway which angers the Russians even more:

( zero hedge)

end

Major gold/silver trading/commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE

Physical Gold Will ‘Trump’ Paper Gold

Physical Gold Market Will Trump Paper Gold

John Hathaway of Tocqueville Funds says the physical gold market will defeat the paper gold market leading to a much higher price for the monetary metal in the coming months and years in his Tocqueville Gold Strategy Investor Letter (Fourth Quarter 2016 Investor Letter):

Gold rose 8.5% for the year while gold-mining stocks (XAU – Philadelphia Gold and Silver Index stocks) rose 75%. On an annual basis, results were highly satisfactory. However, there was considerable drama beneath the surface that left precious metals investors in a state of anxiety by year-end. Precious metals and mining shares rose sharply through August, and then spent the rest of the year giving back much of the first-half gains. The second half downtrend accelerated into early December, following the unexpected victory by Trump and a hawkish statement after the December Federal Open Market Committee (FOMC) meeting.

The question of the hour is whether the 2016 gains were merely a countertrend rally following a four-and-a-half-year decline from all-time highs in 2011, or the beginning of a new leg in the secular bull market that began in 1999, during which gold rose from less than $300/oz. to $1900 in August 2011. We judge the weight of current sentiment, mainstream media opinion, and technical analysis to be extremely bearish, comparable to year-end 2015 just prior to the dramatic gains that followed. We believe that, based on prevailing negativity, the next big change in the gold price will be substantially higher. If so, the 2016 second-half correction will have established a durable higher low from the advance that began at year-end 2015, and would be the precursor to the continuation of the secular advance that began in 2000.

Fundamentals of physical supply and demand remain positive, and are reinforced by the current extended regime of precious metals prices too low to justify expanded mine supply. Global mine output has plateaued; it now seems likely to decline through 2020 and perhaps into the middle of the next decade. As shown in the chart below, discoveries of new ore bodies are at a 25-year low, while the time required to bring new ore bodies into production continues to lengthen, and now stands at nearly 20 years.

Physical demand continues to show steady secular growth, primarily in Asia. Consumption by Turkey, India, China, and Russia alone have exceeded global mine supply since 2013, which means that inventories of physical metal held in Western vaults are being depleted to meet that demand.

Two recent developments (largely ignored by mainstream media) will, in our opinion, significantly strengthen the demand for and usage of physical metal. First, a new Shariah gold standard was approved in December 2016:

The AAOIFI [Accounting and Auditing Organization for Islamic Financial Institutions], in collaboration with the World Gold Council (WGC) and Amanie Advisors, has approved what will become known as the Shariah Gold Standard. This is a set of guidelines that will expand the variety and use of gold-based products in Islamic Finance. (Jan Skoyles, Goldcore Research, 12/16)

We believe that this will lead to the creation of investment products such as gold ETFs for the Islamic world (25% of global population), a market that has not been penetrated. While estimates of the potential market size vary wildly, and this development is in its early days, it seems to us that it is a major positive for future physical gold consumption …

This is an excerpt and the full letter can be accessed at the Tocqueville website here

http://www.goldcore.com/us/gold-blog/physical-gold-will-trump-paper-gold/

END

 

To all our coin collectors:  the new USA Lady liberty will be a black woman:

(courtesy McCann/NYTimes)

Lady Liberty will be a black woman on a U.S. gold coin in April

Section:

And she’s as beautiful as can be.

* * *

By Erin McCann
The New York Times
Friday, January 13, 2017

The United States Mint will release in April a commemorative gold coin that will feature Lady Liberty as a black woman, marking the first time that she has been depicted as anything other than white on the nation’s currency.

The coin, with a $100 face value, will commemorate the 225th anniversary of the Mint’s coin production, the Mint and the Treasury Department announced on Thursday. Going on sale April 6, it will be 24-karat and weigh about an ounce.

It is part of a series of commemorative coins that will be released every two years. Future ones will show Lady Liberty as Asian, Hispanic, and Indian “to reflect the cultural and ethnic diversity of the United States,” the Mint said in a statement. …

… For the remainder of the report:

https://www.nytimes.com/2017/01/13/us/black-lady-liberty-us-coin.html

END

 

Chris Powell will speak at the Singapore and Hong Kong conferences in March and April:

(courtesy GATA)

 

GATA secretary to speak at Singapore and Hong Kong conferences in March and April

Section:

10:39a Sunday, January 15, 2017

Dear Friend of GATA and Gold:

Your secretary/treasurer will speak at the end of March at the Mining Investment Asia conference in Singapore and at the beginning of April at the Mines and Money Asia conference in Hong Kong, Asia being more sympathetic to gold’s monetary functions than North America is.

The Mining Investment Asia conference will be held from Tuesday-Friday, March 28-31, at the Marina Bay Sands conference center in downtown Singapore. Information about the conference and registration is posted here:

http://www.mininginvestmentasia.com/

The Mines and Money Asia conference will be held Wednesday-Friday, April 5-7, 2017, at the Hong Kong Convention and Exhibition Centre in the Wan Chai section of the city. Participants in the conference can obtain discount lodging rates at the two adjacent hotels, the Grand Hyatt and Renaissance Harbour View. Information about the conference and registration is posted here:

http://asia.minesandmoney.com/

Of course both cities are spectacular and, being former British colonies, are easily navigable for those who speak only English. So your secretary/treasurer would be delighted to see some of GATA’s friends there.

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

END

 

Two important commentaries from Egon Von Greyerz and Andre Maguire.

The Maguire commentary is a must read as he states that the physical markets are over powering the paper gold market

(courtesy Von Greyerz/Maguire/Kingworldnews)

Von Greyerz and Maguire interviewed at King World News

Section:

4:27p ET Sunday, January 15, 2017

Dear Friend of GATA and Gold:

Interviewed by King World News, Swiss gold fund manager Egon von Greyerz says gold long has been outperforming stock markets around the world even as those markets are in bubble territory:

http://kingworldnews.com/the-greatest-secret-of-this-century-and-why-gol…

And London metals trader Andrew Maguire says the U.S. government has been using psychological war operations to control markets but that gold is beginning to overcome them:

http://kingworldnews.com/whistleblower-andrew-maguire-us-government-usin…

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

END

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

 
 

1 Chinese yuan vs USA dollar/yuan UP to 6.9003(SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS COMPLETELY   TO 6.8593 / Shanghai bourse CLOSED DOWN 9.34 POINTS OR 0.30%   / HANG SANG CLOSED DOWN 219.23 OR 0.96% 

2. Nikkei closed DOWN 192.04 POINTS OR 1.00%   /USA: YEN FALLS TO 114.19

3. Europe stocks opened ALL IN THE RED      ( /USA dollar index RISES TO  101.64/Euro DOWN to 1.0588

3b Japan 10 year bond yield: RISES TO    +.053%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.14/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.20  and Brent: 55.29

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.365%/Italian 10 yr bond yield UP  to 1.923%    

3j Greek 10 year bond yield RISES to  : 7.03%   

3k Gold at $1203.40/silver $16.81(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 7/100 in  roubles/dollar) 59.65-

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 SMALL   REVALUATION UPWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 114.14 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0121 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0717 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.365%

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

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

4. USA 10 year treasury bond at 2.398% early this morning. Thirty year rate  at 2.990% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

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

Tumbling Pound Rattles Global Markets; Chinese Stock Slide Forces Government Intervention

While US markets take the day off for MLK holiday, the rest of the trading world has been busy, perhaps nowhere more so than the sterling which continued its volatile session in advance of May’s pre-hard Brexit speech, falling below $1.20 for the first time since October after the Sunday Times said May is ready to withdraw from tariff-free trade with the region in return for the ability to curb immigration and strike commercial deals with other countries. As a result, overnight pound-dollar volatility surged the most since the summer, and breached just twice previously: ahead of the Brexit vote, and before the Bank of England’s July and August meetings.

The dollar rose, in an apparent bid for safety, rebounding after suffering its worst week since November when it was hit by a lack of clarity over the policies of U.S. President-elect Donald Trump, whose inauguration is on Friday.

“(The movement) shows that people are looking ahead this week with Trump’s inauguration and discussions on Brexit. There is a lot of uncertainty moving forward,” Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central, told Reuters.

Yields on low-risk German government bonds fell but those on Italian equivalents edged up after rating agency DBRS cut Italy’s credit rating after markets closed on Friday in a move that could raise borrowing costs for the country’s banks. Italy’s downgrade will mean Italian banks will have to pay more to borrow money from the European Central Bank when they use the country’s sovereign bonds as collateral. It may also make Italian debt less attractive for foreign buyers. German 10-year bond yields fell 2 basis points to 0.32 percent. Italian 10-year yields rose marginally to 1.90%.

Elsewhere, equities slid and gold climbed over the same Brexit concerns while Donald Trump suggested in an interview other countries could break from the EU block.

Having traded quietly lower for the past few days, Chinese stocks tumbled in early trading on the mainland and in Hong Kong’s offshore mkt amid weakness in Asian equities. The Shanghai Composite Index dropped as much as 2.2% to head for its fifth loss in as many days, its longest losing streak since Aug. 2015.However a sudden bout of late afternoon buying sent the loss down to just -0.3%, on speculation China’s national team was once again back in the markets.

A similar fate befell stocks in China’s second-largest equity market, the Shenzhen Composite, which plunged the most in 10 months, underscoring the increasing fragility of the nation’s financial assets. The Shenzhen Composite Index sank as much as 6.1%, the biggest loss since Feb. 29. Traders pointed to concern that regulators will accelerate the pace of initial public offerings, already at a 19-year high, diverting liquidity from existing shares. The Shanghai Composite Index dropped as much as 2.2 percent in minutes before paring losses amid speculated buying by state-backed funds.

About 60 stocks fell by the daily 10% limit on the Shenzhen Composite Index, with turnover totaling 259.2 billion yuan ($37.6 billion), the highest in more than a month. Nearly 100 stocks were halted limit down on China’s Nasdaq-equivalent Chinext exchange.

Meanwhile, in Europe banks led European stocks lower after Goldman Sachs Group Inc. downgraded Royal Bank of Scotland Group Plc, citing exposure to volatile politics.

In reaction to concerns about the May and Trump statements, markets have seen a subdued risk off tone, with the EURUSD sliding, and USDJPY hitting 113.65 overnight before rebounding back over 114. Bloomberg notes that British government officials are trying to limit damage to the pound will speak to major banks in London before the U.K. leader sets out her vision for leaving the bloc in a speech on Tuesday, according to people familiar with the situation. Meanwhile Trump predicted that Britain’s exit will be a success that will encourage others to do the same. He also branded NATO obsolete.

“Markets are trading in risk aversion mode,” said Neil Jones, the head of hedge-fund sales at Mizuho Bank Ltd. in London. “Investors and corporates around the world are concerned by the prospect of a hard Brexit. Pound rallies are limited and weak, while plunges are harsh and prolonged.”

Among the key notable risk moves, the Stoxx Europe 600 Index dropped 0.5 percent after retreating as much as 0.8 percent. Banks and insurers led losses in Europe after Royal Bank of Scotland slid 2.8%. The U.K.’s FTSE 100 Index dropped less than 0.1 percent, poised to halt a record streak of daily gains and 10 consecutive all-time highs, despite the latest slump in sterling.

S&P 500 futures declined 0.2% to 2,267. US stock markets are closed on Monday.

In currencies, sterling traded 1.1% lower to $1.2052 at 10:49 a.m. in London after touching $1.1986, its weakest level since October. Overnight implied volatility in the pound against the dollar climbed to a five-month high before May’s speech. The measure exceed 30% a level only breached before three events in 2016 – Britain’s EU vote and the Bank of England’s July and August meetings. The euro dropped 0.5 percent to $1.0588. The yen rose 0.2 percent to 114.25 per dollar, extending gains for the longest winning streak since June. Turkey’s lira resumed its slide after it weakened 1.2%.The currency jumped 3.7 percent over Thursday and Friday after the central bank took steps to prop it up by tightening liquidity.

In commodities, gold climbed 0.4 percent, extending last week’s surge to trade at $1,202.25 an ounce. Oil rose 0.3 percent to $52.51 a barrel. Iron ore futures jumped as much as 6.4% to $82.12 a metric ton, the highest level since October 2014.

* * *

DB’s Jim Reid concludes the overnight wrap

Martin Luther King Day means a quiet start to a busy week culminating in Donald Trump’s inauguration on Friday. I say quiet but I’ll be forever haunted by suggesting back in January 2008 that the MLK Day ahead was likely to be very quiet only for it to herald one of the worst days in stock market history after the rouge trader’s positions were discovered at SocGen. The CAC and DAX were down -6.83% and -7.16% respectively that day and I’ve never taken public holidays lightly since.

It’s hard to see the inauguration being a market moving event (famous last words given what I’ve said above) but it will mark the point where we’ll start the landmark first 100 days in office when the phoney war will end and action starts. Of more market interest will likely be the UK PM’s speech tomorrow night where it was reported in the Sunday Times that Theresa May will signal plans for a “hard Brexit’’ by saying she’s willing to quit the single market in order to regain control of migration and law making. Sterling fell -1.83% and -0.85% against the Euro and Dollar last week as speculation mounted about this speech. In Asia it’s down -1.34% as we go to print at $1.202 although it did temporarily test the waters below the $1.200 mark at one stage – a level not seen since the October flash crash. There’s some suggestion that comments from President-elect Trump, who said that the US is prepared to offer the UK a quick and fair trade deal, as well as a Bloomberg report suggesting that the UK Government is putting in place plans to speak to major Banks to calm any nerves in the event of another big selloff, is helping to at least put a bit of a floor in the price for now.

On a related note, interestingly Mark Carney speaks tonight with no details on what he’ll discuss while we’ve also got the Supreme Court appeal on the government’s Triggering of Article 50 around the corner (DB expects this to be on one of the forthcoming two Wednesday’s). So plenty to keep the market on its toes in the short term.

The other main events of the week are discussed at the end but the highlights are the ECB lending survey tomorrow which was a bit soft last quarter but may be helped by a rebounding European banking sector. UK, US and Euro inflation numbers and a Yellen speech appear on Wednesday. We have what might be a lower profile ECB policy meeting on Thursday with Friday seeing the mass China monthly data dump. We also see a ramping up of US earnings and the annual Davos shindig which will guarantee plenty of headlines. I’ll know I’ve made it in life if I ever get invited this event.

In the meantime the moves for Sterling this morning appear to have sparked a bit of across the board risk aversion in Asia to begin the week. The Shanghai Comp is currently -1.40% and is on a run of 5 consecutive down days which is actually the longest since August 2015. The Hang Seng (-1.03%), Nikkei (-1.09%) and Kospi (-0.56%) are also in the red while the ASX (+0.50%) is the only index currently trading higher with materials leading the way. Currencies in Asia are also generally weaker while 10y JGB yields are little changed around 0.040%. Interestingly they’ve now held above that 0% band for over 2 months now.

Moving on. As we highlighted above, with earnings likely to be one of the events to keep an eye on this week, the early signal from Friday’s releases were fairly encouraging after JPM, BofA and Wells Fargo all came in with Q4 reports that bettered market expectations. A combination of cost cuts and strong FICC revenues seemed to be the driving force for JPM and BofA in particular while the former encouragingly said on the conference call that they are starting to see better data at a US retail level too. The results helped the S&P 500 Financials index to close +0.55% which compares to a +0.18% gain for the wider S&P500. The Dow closed -0.03% and it does feel like there is some unwinding of the Trump trades passing through still. The European session had been a much better story though with the Stoxx 600 closing +0.95% to help the index nudge back into positive territory for the week. Financials also outperformed in credit, particularly so in Europe where Senior and Sub Fins closed 4bps and 10bps tighter respectively, compared to a 2bp tighter move for Main.

Away from earnings, the US data was also in the spotlight on Friday. Most notable was the December retail sales numbers where headline sales (+0.6% mom vs. +0.7% expected) missed by a smallish margin. There was a much bigger miss for the ex auto and gas component though (0.0% vs. +0.4% expected) while the control group component (+0.2% mom vs. +0.4% expected) also disappointed. The rest of the data was a bit of a wash. Headline PPI (+0.3% mom) printed in line, as did the core ex food, energy and trade print (+0.1% mom). Business inventories rose a little bit more than expected in November (+0.7% mom vs. +0.6% expected) while the flash University of Michigan consumer sentiment reading for this month was a touch on the softer side (98.1 vs. 98.5 expected; from 98.2 in December). That said 1y inflation expectations were bumped up from 2.2% to 2.6% while 5-10y inflation expectations were nudged up to 2.5% from 2.3%. The Atlanta Fed revised their Q4 GDP forecast down one-tenth to 2.8% following the retail sales numbers, while the USD index (-0.17%) softened a touch to finish with a -1.02% weekly loss. 10y Treasury yields did nudge up 3.3bps to 2.397% but still finished the week a few basis points down from the prior week close.

There wasn’t much of note in Europe although it’s worth highlighting that our economists reported that their SIREN momentum and surprise indicators are now in the top deciles of their respective readings over the past decade. It’s been almost six years since both indices were in their top deciles. Indeed, their combined message stands close to the top 1% of its historical readings. They also go on to note that the SIREN momentum per reference quarter points to annualised euro area growth in Q4 2016 close to, if not above 2%, which would be the strongest quarter since Q1 2015. So while we’re expecting no fireworks from the ECB this week, the recent data – should it continue – could force the outright tapering debate into a sooner than expected timeframe.

Staying in Europe, it’s worth noting that Canadian rating agency DBRS downgraded Italy’s sovereign rating on Friday to BBB High from A Low, citing their ability to pass reforms and the weakness in the banking sector and fragile growth. The decision will add to banking pressures for Italy given that it’ll force an increase in haircuts on some Italian collateral posted at the ECB. The move has also stripped Italy of what was its final A rating amongst the big 4 rating agencies.

Turning now to the week ahead and expanding on the brief highlights at the top. With markets closed in the US today for Martin Luther King Day it’s an unsurprisingly quiet start to the week with just the Euro area trade balance reading in November due. Tuesday kicks off in Japan where industrial production data is due. In Europe there will be plenty of focus on the ECB’s bank lending survey due early on, while the December inflation report in the UK will also be under the spotlight. The January ZEW survey for Germany is also due out. Over in the US tomorrow the only data due out is the January Empire manufacturing print.

Turning to Wednesday, Germany and the Euro area will release the final revisions to December CPI reports while the UK will release the latest labour market data. Over in the US inflation data will also be the focus with the December report due out. Industrial and manufacturing production, as well as the NAHB housing market index will also be due. With little else of note on Thursday morning the main focus will be on the ECB policy meeting. In the US we’ll get housing starts and building permits data as well initial jobless claims and the Philly Fed business outlook print. It’s a blockbuster end to the week in China on Friday with the Q4 GDP print due along with December activity indicators including industrial production, retail sales and fixed asset investment. During the European session we’ll get PPI in Germany and retail sales in the UK. There’s nothing of note in the US on Friday.

As well as the above, there’s also plenty of Fedspeak this week. Both Dudley and Williams are scheduled to speak tomorrow, before Kashkari and Yellen speak on Wednesday. The latter is taking part in a   discussion at the Commonwealth Club in San Francisco however is also expected to give an economic assessment. The Fed Chair then speaks again on Friday, along with Harker and Williams. The ECB’s Villeroy and Praet also speak today along with the BoE’s Carney while we’ll also get the usual ECB press conference on Thursday. Earnings will also be in the spotlight with Morgan Stanley tomorrow, Goldman Sachs, Citigroup and Netflix on Wednesday, IBM on Thursday and Schlumberger and General Electric on Friday due. Away from that world leaders will also congregate in Davos this week for the World Economic Forum while UK PM Theresa May is due to outline Brexit plans on Tuesday. Clearly the other big focus this week is the inauguration of Donald Trump as US President on Friday.

END

i)Late  SUNDAY night/MONDAY morning: Shanghai closed DOWN 9.34 POINTS OR 0.30%/ /Hang Sang closed DOWN 219.23 OR 0.96%. The Nikkei closed DOWN 192.04 POINTS OR 1/00% /Australia’s all ordinaires  CLOSED UP 0.30%/Chinese yuan (ONSHORE) closed UP at 6.9003/Oil FELL to 52.20 dollars per barrel for WTI and 55.29 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.8593 yuan to the dollar vs 6.9003  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE COMPLETELY NARROWS AGAIN AS  DOLLARS STOP LEAVING CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

South Korea seeks the arrest of their CEO on bribery embezzlement and perjury charges after he paid multi million dollars to his friend, impeached President of the country Park Guen-hye

(courtesy zero hedge)

South Korea Seeks Arrest Of Samsung Chief For Bribery, Embezzlement And Perjury

South Korea political crisis spilled over into the corporate sector overnight, when the country’s special prosecutor on Monday sought a warrant to arrest the head of Samsung Group, the country’s largest conglomerate, accusing him of paying multi-million dollar bribes to a friend of impeached President Park Geun-hye.


Samsung Electronics vice chairman Jay Y. Lee

According to Reuters, investigators had grilled the head of Samsung, the world’s biggest maker of smartphones, flat-screen TVs and memory chips, Jay Y. Lee for 22 straight hours last week as a suspect in a corruption scandal, which last month led to parliament impeaching president Park.

The special prosecutor’s office accused Lee of paying bribes total 43 billion won ($36.42 million) to organizations linked to Choi Soon-sil, a friend of the president who is at the center of the scandal, in order to secure the 2015 merger of two affiliates and cement his control of the family business.

The 48-year-old Lee, who became the de facto head of the Samsung Group after his father, Lee Kun-hee, was incapacitated by a heart attack in 2014, was also accused of embezzlement and perjury, according to the prosecution’s application for an arrest warrant.

In a startling admission that in Korea the concept of “Too Big To Prosecute” does not hold sway, the special prosecutors’ office told a media briefing that “in making this decision to seek an arrest warrant, determined that while the country’s economic conditions are important, upholding justice takes precedence.” South Korea, an exporting powerhouse, is Asia’s fourth-largest economy.

Special prosecution spokesman Lee Kyu-chul added that prosecutors have evidence showing that Park and Choi shared profits made through bribery payments. Lee is due to appear on Wednesday morning at the Seoul central district court, which will decide whether to grant the arrest warrant.

Meanwhile Samsung, whose companies generate $230 billion in revenue, equivalent to about 17 percent of South Korea’s economy, rejected the accusation that Lee paid bribes. “It is difficult to understand the special prosecutors’ decision,” it said in an emailed statement.

Prosecutors have long been looking into whether Samsung’s support for foundations and a company backed by Choi was linked to the National Pension Service’s 2015 decision to support a controversial $8 billion merger of Samsung C&T Corp and Cheil Industries Inc. Samsung, which has acknowledged providing funds to the institutions, has repeatedly denied accusations of lobbying to push through the merger.

“It is especially hard to accept the special prosecutor’s assertion that there was improper request for a favor related to the merger or succession of control,” it said on Monday.

The special prosecutor’s office said in its indictment of Moon that Park, through her aides, ordered Moon to ensure the merger of the two Samsung companies succeeded.

Park, 64, remains in office but has been stripped of her powers while the Constitutional Court decides whether to make her the country’s first democratically elected leader to be forced from office.

Park has denied wrongdoing but admitted to carelessness in her relationship with Choi, a friend for four decades. Choi, in jail as she undergoes criminal trial and also denies wrongdoing.

On the news, shares of Samsung Electronics closed 2.14% lower, underperforming the 0.61% drop in the broader market. Investors say that while key Samsung businesses are run by professional CEOs and would not be hurt on an operational basis if Lee is arrested, his absence would slow bigger-picture decision-making. The Korea Employers Federation, a business lobby, said arresting Lee would undermine confidence both in Samsung and the country’s economy, Asia’s fourth-largest, and called the special prosecutor’s probe “very regrettable.”

The proposed arrest is merely the latest in a long strink of corporate scandals to rock South Korea, and Samsung in particular. Jay Y. Lee’s father Lee Kun-hee was himself handed a three-year suspended jail sentence in 2009 for tax evasion. He was later pardoned. Public opinion has in recent years grown less tolerant of leniency extended to the heads of conglomerates, or chaebols, for the sake of the economy.

The Samsung crackdown is the latest fallout from a political crisis that has impacted South Korea, stemming from the impeachment of president Park in December. If the impeachment is upheld by the Constitutional Court, an election would be held in two months, with former U.N. Secretary General Ban Ki-moon expected to be a candidate. Choi, in detention and on trial on charges of abuse of power and attempted fraud, again denied wrongdoing on Monday in an appearance at the Constitutional Court’s impeachment trial.

END

b) REPORT ON JAPAN

c) REPORT ON CHINA

Your next Chinese time bomb:  bitcoin which seems to have imploded.  The recipient of this good fortune is gold

(courtesy zero hedge)

“China’s Next Time Bomb” – A Look Inside The Insane World Of China’s Bitcoin Traders

The recent tumble in bitcoin, driven by a stampede of Chinese sellers who until last week were willing buyers at any price, has exposed the weakest link in bitcoin’s until recently exponential rise: the mood and social psychology of Chinese momentum and bubble chasers, who like clockwork rush into any one given asset, bid it up to ridiculous levels, watch the bubble burst, before moving on to the next bubble.

The good news is that courtesy of $25 trillion in local savings, or more than double the amount in the US, the bubble eventually returns to where it burst. The bad news is that in the meantime, those who chased the original bubble lose most if not all of their money.

Unfortunately, for most of China’s bitcoin traders, the bad news may be just starting.

Take the story of Ding Wen, who by the age of 34 had built up a personal fortune of more than two million yuan after years of hard work at an internet company in Nanjing, in east China’s Jiangsu province. But, as SCMP recounts his tale, Wen saw most of that wealth go up in smoke on January 5, when China’s bitcoin market crashed, sending the price of the virtual currency plunging 40 per cent in just a few hours after lunch.

With the market in free fall, Ding was unable to log into his account with China’s biggest bitcoin trading platform, Huobi, meaning he could not sell off his holdings or top up his principal to meet the margin call. By the time he managed to log on in the evening, most of the bitcoins in his account had been compulsorily sold off by Huobi for 6,361 yuan each, lower than his purchase price of 8,101 yuan. This included the part of his investment he had bought using a loan he obtained from Huobi by pledging the bitcoins he owned originally.

“I have taken on big risks when making leveraged betting, but the collapse of the trading system made me unable to run stop-loss orders, so I think the platform should compensate for investors’ losses,” Ding said.

The platform disagrees.

Ahead of the market crash, Ding had borrowed 995 million yuan from Huobi by pledging a principal consisting of the 409 bitcoins he already owned. He then bought a further 1,228 bitcoins with the loan. Most of his holdings were compulsorily sold out by Huobi during the price collapse while he was unable to access his account.

Meanwhile, Wu Xing, head of marketing at Huobi, said the log-in delay was caused by a torrent of visits and selling orders, which exceeded the capacity of the website. “[The loss] was due to irresistible factors and not included in the compensation scope. We are sorry and understand the feelings of the investors,” she said.

So to recap… trading the extremely volatile bitcoin on massive, unregulated margin, in an exchange that arbitrarily locks out its clients?

What can possibly go wrong.

* * *

According to SCMP, “many analysts and investors fear China’s bitcoin market is quickly turning into another time bomb like the scandal-hit peer-to-peer (P2P) lending sector. A series of P2P lending platform frauds rocked the country last year and washed away tens of billions of yuan of investment from small investors, creating a headache for local and central governments, which feared social unrest.”

Now speculation, derivative products, leveraged betting and program trading appear to be spreading in the largely unregulated bitcoin market. Such practices are thought to be responsible for pushing up the price of bitcoin by more than 260 per cent since early 2016.

The market hit a historic high of 8,995 yuan on January 5… Just ahead of the crash.

Most of the transactions are happening on three privately owned platforms or through P2P trading.

Data provider Bitcoinity shows trading volume in China accounted for more than 98% of the global total during the past 30 days amid more pronounced price fluctuations. Until now, no regulator has overseen this market, which sees daily turnover worth tens of billions of yuan. However, things appear to be changing fast.

After the great bitcoin crash, the People’s Bank of China announced on Wednesday afternoon that it had sent inspection teams to the country’s top three bitcoin trading platforms to scrutinise their practices. It is the first regulatory move China’s central bank has made publicly involving the virtual currency.

The PBOC has been in talks with the platforms from time to time in private since 2013 and asked them for data and information, according to an executive from a major trading platform, who asked not to be named. But the authorities have not formally listed bitcoin under their regulatory framework. Nor have they issued any rules to govern the market.

Like all other central banks, the PBOC defines bitcoin as a commodity rather than a currency, which ruled it out of their existing regulatory coverage in late 2013. Aurélien Menant, founder and chief executive of Gatecoin, a cryptocurrency and blockchain assets trading platform based in Hong Kong, said: “Given the dominant role of Chinese exchanges, which represent 95 per cent of global bitcoin trading activity, at more than 50 billion yuan every day, it’s likely that the PBOC recognises the growing significance of this new and so far unregulated alternative financial market.

“The PBOC has been engaging with the major cryptocurrency exchanges in China for several years, but given the sudden price movements and high volumes traded over the past few weeks, it’s very clear that now it just wanted to step up their checks on market manipulation and money laundering.”

In an announcement issued on Wednesday, the central bank said it was joining forces with the Beijing Financial Bureau to probe trading platforms including Huobi and OKCoin to check if they were running in accordance with foreign-exchange management, anti-money-laundering and trading exchange rules.

Mainland media reported in recent months that bitcoins had become a popular tool for investors to export money out of China, circumventing capital controls that had been tightened by the regulators amid the yuan’s sharp depreciation. Cheung Chun-yin, a PwC China fintech partner, said it was possible for bitcoin holders in China to circumvent domestic capital control limits by selling bitcoin to an overseas buyer in exchange for foreign currency.

“In theory, the bitcoin market is borderless, and as long as you could find a buyer overseas, you would be able to get US dollars, and the trade could happen without leaving a trace, with no record in the traditional banking system,” he said, adding that the volume of capital flow through this channel was likely to be quite limited.

Feeling attacked, the local industry quickly rose up in defense. Zhao Dong, owner of Jiandong Tech, a company that buys and sells bitcoin, agreed that the actual amount of capital leaving the country through bitcoin was not likely to be very high.

“Among the 16 million bitcoins already dug out across the world by now, there are around four to five million held by the Chinese. That already caps the total value, while most of the owners are more interested in short-term speculation on the mainland market than exporting them for foreign currencies,” he said. Cheung said that although neither the mainland nor Hong Kong financial regulators had included bitcoin in the existing regulatory framework, bitcoin-related activities were “evolving and bearing the features of traditional financial market activities” and overlapping with the traditional financial system. That makes it more important than ever that the regulators start to take notice.

The biggest problem for the Chinese bitcoin market, according to Zhao, is that “the trading platforms are facing the challenge of having to prove themselves innocent” because many investors accuse them of inside trading or market manipulation. The market boom and the quick build-up of leverage had left the market in urgent need of official regulation, he said. Chen Yunfeng, a senior partner with Zhonglun W&D law firm, based in Shanghai, said he was dealing with an increasing number of bitcoin-related disputes. These included cases of bitcoin theft and scams in which investors have been unable to verify their trading partners.

“The bitcoin market is facing great risks, with turnover and leverage climbing quickly, and mixed up with unregulated foreign-currency trading and money laundering. I think it is time that the PBOC prepared new policies,” he added.

Industry players said the PBOC was mulling the idea of introducing third-party custodian services to govern the market by taking care of the account records, cash or bitcoins on behalf of the platforms. In early August, investor confidence in bitcoin took another knock when Bitfinex, a prominent Hong Kong-based digital currency exchange, reported the theft of about US$65.8 million worth of bitcoins. About 119,756 bitcoins were lost in a security breach, the company said.

In early 2014, Japan-based bitcoin exchange MtGox collapsed over the loss of nearly US$390 million worth of the virtual currency. Police later arrested its chief executive, Mark Karpeles, who was suspected of having accessed the computer system of the exchange and falsifying data on its outstanding balance.

* * *

Meanwhile, overnight BTCChina announced (and other exchanges allegedly followed) that it had suspended its margin loan service indefinitely. The move came after the exchange received “informal guidance” from the PBoC, which has been more actively engaged with domestic bitcoin exchanges amid the run-up in bitcoin prices seen at the start of the year.  While the move may flush out much of the bubbly euphoria, it may also lead to a far more stable market.

Alternatively, it may just accelerate the blow up of China’s “bitcoin time bomb.”

 

end

4 EUROPEAN AFFAIRS

Saturday evening

Theresa May is now calling for a clean and Hard Brexit break from the EU:

(courtesy zero hedge)

Theresa May To Call For “Clean And Hard Brexit” As UK Warns Of “Market Correction”

While the track record of the Sunday Times over the past 24 hours is somewhat spotty, following a report that as his foreign trip abroad once officially president, Trump is planning a summit with Putin in Reykjavik, which in turn was promptly denied by Trump staffers who called the story “fantasy”, overnight the paper also reported that UK Prime Minister Theresa May will announce that Britain is “seeking a clean and hard Brexit” in a speech this week that will promise to create a “strong new partnership” with the European Union.

The paper further notes that in the speech, scheduled for Tuesday, the PM will “finally lay her cards on the table”, making clear that the UK is set to pull out of the single market and the European customs union in return for the ability to curb immigration, strike commercial deals with other countries, and escape the jurisdiction of the European Court of Justice, the Sunday Times said without saying how it obtained the information.

In a separate interview with German newspaper Welt am Sonntag, May’s finance chief, Philip Hammond, said Britain would be willing to abandon “mainstream economic and social thinking” if it is unable to craft a favorable post-Brexit EU deal. Hammond said he hoped the U.K. could remain in the mainstream, but was prepared for the consequences for a hard Brexit.

“If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term. In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.”

To avoid fallout from the breakup and grant businesses some certainty over the outlook, May will seek a transitional phase between splitting from the EU and the beginning of a new trading relationship, the Sunday Times said, citing Brexit Secretary David Davis. “We don’t want the EU to fail, we want it to prosper politically and economically, and we need to persuade our allies that a strong new partnership with the U.K. will help the EU to do that,’’ Davis wrote in the newspaper. “If it proves necessary, we have said we will consider time for implementation of new arrangements.’’

The market is likely to have an adverse reaction to the leaked (if unconfirmed speech): as Bloomberg points out, “May’s blueprint for Brexit risks alarming investors, bankers and company executives who will fret that May is prioritizing social issues over economic growth.” A Downing Street source said that May had “gone for the full works”, although the prime minister’s staff admitted her words were likely to cause a “market correction” that could lead to a fresh fall in the pound.

Of course, that may be inaccurate, because as the recent record streak of 14-winning days in the British FTSE100 index to daily record highs has shown, the one thing that UK stocks like more than anything, is a crashing currency and the uncertainty that comes from a “hard Brexit.”

Perhaps this time will be different.

The PM’s office refused to comment on the report when contacted by Bloomberg, while in separate statement it said that May will declare in her speech that having divided over Brexit, voters are now uniting behind making it a success. “The overwhelming majority of people – however they voted – say we need to get on and make Brexit happen,” May will say. “So the country is coming together.”

Separately, Bank of England Governor Mark Carney, who has come under fire in
recent months for being too involved in the Brexit debate, is also due
to deliver a speech on Monday evening in London although the has declined to
comment on what he will discuss. More from Bloomberg:

Speaking on the BBC’s “Andrew Marr Show” on Sunday, U.K. opposition Labour Party leader Jeremy Corbyn said May “appears to be heading us in the direction of a sort of bargain-basement economy on the shores of Europe.” “We will lose access to half of our export markets — it seems to me an extremely risk strategy,” he said.

The Sunday Telegraph reported that the opposition Labour Party will introduce an amendment in the House of Commons demanding that members get to vote on a final Brexit deal, and if defeated they will speak out in the House of Lords to urge the government to make the guarantee of a vote.

In many ways May is motivated to finally engage the Article 50 process, as staying in the customs union would prevent the U.K. from lining up free-trade pacts with non-EU countries such as the U.S. and China. Foreign Secretary Boris Johnson returned from a trip to the U.S. last week saying he’d been told President-elect Donald Trump’s administration will want a fast trade pact with Britain.

Meanwhile, European leaders including Angela Merkel have held steadfast to the line that they won’t allow May to “cherry pick’’ the best parts of membership without accepting the responsibilities, including allowing free movement of labor. That requirement has become a pressure point in the U.K. with net migration to the U.K. from the EU reaching 189,000 in the year ended June. May has repeatedly indicated she views June’s referendum as a call from voters to slash that number.

As Bloomberg concludes, “Tuesday’s speech is likely to be closely watched by the financial markets, with currency traders increasingly seeing May’s pronouncements on Brexit as a trigger to sell the pound. Sterling fell following her speech at the Conservative Party conference in October, which fanned speculation she was eyeing a clean break with the EU, and dropped again following her first television interview of 2017.”

It remains to be seen if May’s hard line speech will lead to a spike in sterling volatility, which coming in an illiquid session due to the US MLK holiday on Monday, may result in yet another flash crash in the British currency, and if it will also lead to another all time high in the FTSE100 index.

end

Sunday morning, New Zealand time trading causes the Pound to plummet to 1.1986 to the dollar with news of a hard Brexit

(courtesy zero hedge)

Cable Plunges To Flash-Crash Lows On May’s “Hard Brexit” Speech; DB Eyes GBPUSD 1.06; Euro Parity

As cautioned earlier, following headlines about potential comments from UK PM Theresa May calling for a “clean and hard” Brexit in her Tuesday speech, cable has plunged to a 1.19 handle in very early (and illiquid) AsiaPac trading. This is the lowest level for sterling relative to the dollar since the October flash-crash.

It appears the New Zealand FX traders are active early, having pushed the pound as much as 1.6% to $1.1986 in Auckland on Monday, the lowest level since Oct. 7.

“The prospect of another speech from PM May is likely to see sterling yet again on a something of a roller-coaster,” Jeremy Stretch, head of Group-of-10 foreign-exchange strategy at Canadian Imperial Bank of Commerce, wrote in an e-mailed note before markets opened. “Fresh sterling lows versus the dollar seem almost inevitable.”

Meanwhile, in an ad hoc note from the DB FX team, the German banks sees much more downside: “in terms of market implications we see today’s press reports as a material negative should they prove accurate and a catalyst for the rmarket beginning to price hard Brexit. As per our recent FX Blueprint publications, we see a deterioration in political rhetoric around Brexit as a key catalyst for further sterling weakness and see the large terms of trade shock from full exit from the Single Market consistent with GBP/USD at 1.06 or EUR/GBP close to parity respectively.”

Incidentally, should cable tumble to a full “hard Brexit” level of Euro parity, we full anticipate that the FTSE100 will rise above 8,000 in no time.

end

Germany

Merkel et al slam Trump’s criticism.  Gabriel and Merkel suggest to Trump that the USA must make better cars in order for Germans to buy USA cars. Merkel and Gabriel also state that it is Washington’s cause for creating the refugee crisis and they are right:

(courtesy zero hedge)

Angry Germany Slams Trump Criticism: Urges US To “Build Better Cars”, Accuses Washington Of Causing Refugee Crisis

An angry Berlin has responded with a staunch defense of its policies after President-elect Donald Trump criticized German Chancellor Angela Merkel in two separate Sunday interviews, one with Germany’s Bild and one with the Sunday Times, for her stance during the refugee crisis while threatening a 35% tariff on BMW cars imported into the US.

Germany’s deputy chancellor and minister for the economy, Sigmar Gabriel, said on Monday morning that a tax on German imports would lead to a “bad awakening” among US carmakers since they were reliant on transatlantic supply chains. “I believe BMW’s biggest factory is already in the US, in Spartanburg [South Carolina],” Gabriel, leader of the centre-left Social Democratic party, told the Bild newspaper in a video interview.

“The US car industry would have a bad awakening if all the supply parts that aren’t being built in the US were to suddenly come with a 35% tariff. I believe it would make the US car industry weaker, worse and above all more expensive.” Playing Trump’s threat off Congress, Gabriel added that he “would wait and see what the Congress has to say about that, which is mostly full of people who want the opposite of Trump” as quoted by The Guardian.

In his interviews with Bild and the Times, the US president-elect had indicated that he would aim to realign the “out of balance” car trade between Germany and the US. “If you go down Fifth Avenue everyone has a Mercedes Benz in front of his house, isn’t that the case?” he said. “How many Chevrolets do you see in Germany? Not very many, maybe none at all … it’s a one-way street.”

So, when asked what Trump could do to make sure German customers bought more American cars, Gabriel had a simple suggestion: “Build better cars.”


Asked what Trump could do to make sure German customers bought

more American cars, Sigmar Gabriel said: ‘Build better cars.

Trump’s interview had an adverse impact shares in carmakers BMW, Daimler and Volkswagen, which fell on Monday morning following the President-elect’s comments. BMW shares were down 0.85%, shares in Daimler were 1.54% lower and Volkswagen shares were trading 1.07% down in early trading in Frankfurt. The reason for Trump’s latest outburst at Germany’s car giants is that all three carmakers have invested heavily in factories in Mexico, where production costs are lower than the US, with an eye to exporting smaller vehicles to the American market, a move which Trump vocally disapproves.

Meanwhile, a BMW spokeswoman said a BMW Group plant in the central Mexican city of San Luis Potosi would build the BMW 3 Series starting from 2019, with the output intended for the world market. The plant in Mexico would be an addition to existing 3 Series production facilities in Germany and China.

* * *

Responding to Trump’s comments that Merkel had made an “utterly catastrophic mistake by letting all these illegals into the country”, Gabriel said the increase in the number of people fleeing the Middle East to seek asylum in Europe had partially been a result of US-led wars destabilising the region.

Slamming US foreign policy – and thus the Obama regime, not to mention Angela Merkel’s close friend Hillary Clinton – as a culprit for the European refugee crisis, Gabriel said that “there is a link between America’s flawed interventionist policy, especially the Iraq war, and the refugee crisis, that’s why my advice would be that we shouldn’t tell each other what we have done right or wrong, but that we look into establishing peace in that region and do everything to make sure people can find a home there again,” Gabriel said.

“In that area Germany and Europe are already making enormous achievements – and that’s why I also thought it wasn’t right to talk about defence spending, where Mr Trump says we are spending too little to finance Nato. We are making gigantic financial contributions to refugee shelters in the region, and these are also the results of US interventionist policy.”

Gabriel, who will likely run as the centre-left candidate against Merkel in Germany’s federal elections in September, said Trump’s election should encourage Europeans to stand up for themselves.

“On the one hand, Trump is an elected president. When he is in office, we will have to work with him and his government – respect for a democratic election alone demands that,” Gabriel said. “On the other hand, you need to have enough self-confidence. This isn’t about making ourselves submissive. What he says about trade issues, how he might treat German carmakers, the question about Nato, his view on the European Union – all these require a self-confident position, not just on behalf of us Germans but all Europeans. We are not inferior to him, we have something to bring to the table too.

“Especially in this phase in which Europe is rather weak, we will have to pull ourselves together and act with self-confidence and stand up for our own interests.”

While Merkel has yet to provide a direct response to Trump’s statements and refused to comment on the interview during a news conference with New Zealand Prime Minister Bill English, saying she would wait until after Trump’s inauguration and then planned to work with him at all levels of government, her spokesman, Steffen Seibert, said the chancellor had read the Trump interview “with interest”, but declined to comment in more detail until the president-elect had been sworn in.

“We are now waiting for President Trump to start his term and will then work closely with the new government,” he said, adding that “It’s a clear statement of the positions of the new American president, but the positions of the chancellor on many of these issues are equally clear.”

Martin Schäfer, a spokesman for the German foreign ministry, rejected Trump’s labelling of the EU as a “vehicle for Germany”. He said: “For the German government, Europe has never been a means to an end, but a community of fate which, in times of collapsing old orders, is more important than ever.”

The foreign ministry also rejected Trump’s criticism that creating “security zones” in Syria would have been considerably cheaper than accepting refugees fleeing the war-torn country. “What exactly such a security zone is meant to be is beyond my comprehension and would have to be explained,” said Schäfer, adding that there had not been enough willingness among the international community to lend military support to create a no-fly zone in Syria.

* * *

Germany was not the only nation unhappy with Trump’s statement: Pierre Moscovici, European economic affairs commissioner, also found fault with Trump’s assertion that other European countries would follow in Britain’s footsteps and leave the EU.

“I’m not worried, I think this idea that Brexit is going to be contagious is a fantasy, a bad fantasy,” Moscovici told reporters in Paris. “Brexit is not a great thing,” he said, warning Trump that comments advocating a break-up of the EU would not get the trans-Atlantic relationship off to the best start.

* * *

Yet while Germany and Brussels were unhappy with Trump’s criticism, Moscow was delighted, and sure enough Trump’s remarks on Nato were met more favourably in Moscow, where Dmitry Peskov, spokesman for the Russian president, Vladimir Putin, agreed with the US president-elect that the alliance was “obsolete”.

“Since Nato is tailored toward confrontation, all its structures are dedicated to the ideals of confrontation, you can’t really call it a modern organisation meeting the ideas of stability, steady growth and security,” he said.

But Trump’s suggestion that the US could lift its sanctions on Russia in exchange for an agreement to reduce the countries’ nuclear arsenals elicited a cooler response. Peskov said Russia had not been conducting talks with the US about nuclear arsenal reduction and said cancelling sanctions was not a political goal in Russia. “Russia wasn’t the initiator in introducing these restrictions, and Russia, as the president of Russia has underlined, doesn’t intend to raise the issue of these sanctions in its foreign contacts,” he said.

Last month, echoing similar comments by Trump, Putin said Russia needed to strengthen its strategic nuclear forces. Leonid Slutsky, a Russian MP, said he “wouldn’t connect these two issues and make the cancellation of sanctions a negotiating point in such a delicate area as nuclear security”. Konstantin Kosachyov, head of the foreign affairs committee in the Russian senate, said the cancellation of sanctions was “definitely not an end in and of itself for Russia”.

“It’s not even a strategic goal for which something needs to be sacrificed, especially in the security sphere,” he told state news agency RIA Novosti. “We think [sanctions] are a bad legacy of the departing White House team that need to be sent after it into history.”

* * *

And yet, perhaps Trump’s bluster was merely the latest ruse to get everyone on the negotiating table. It may be working already: as Reuters reports, Chancellor Merkel is working to set a date this spring for a meeting with Donald Trump, who will be sworn in as U.S. president on Friday, German government sources said on Monday. Merkel had offered to meet Trump in the United States in her capacity as chairman of the Group of 20 leading economies, the sources said.

The chancellor has spoken with Trump only once, shortly after his election to succeed U.S. President Barack Obama. Following Trump’s latest “stunning” public statements, she now appears to be in a hurry to not only speak with him again, but also meet face to face.

 

 

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Israel/Palestine

Last night the 70 nations convened and provided a draft certifying Kerry’s blueprint for a two state solution.  The problem is that the wailing wall in West Jerusalem and all of Eastern Jerusalem are now part of Palestinian territory along with settlements built in those 50 years.  Instead of helping the peace process along, this will further hinder it and it may cause the USA under Trump to move their embassy to Jerusaelm from Tel Aviv

 

(courtesy silver doctors/Michael Snyder)

The 70 nations that are gathering in Paris, France on Sunday are literally in danger of cursing the entire planet.

From Michael Snyder:

A draft of the summary statement that will be released at the conclusion of the 70 nation conference in Paris on Sunday has been leaked. As you will see below, this communique is going to call for the division of the land of Israel, for the establishment of a Palestinian state, for the 1967 borders to serve as the basis for final negotiations between the Israelis and the Palestinians, and for the condemnation of any officials that refuse to support a two state solution.

Of course this comes on the heels of UN Security Council Resolution 2334, which many believe represented America’s greatest betrayal of Israel. Israeli government officials are publicly warning that there is a possibility that the principles agreed upon at this conference may form the basis for another Security Council resolution before January 20th, and this is something that we should all be watching for very closely.

Haaretz exclusively obtained a copy of a draft of the summary statement that will be released following the conference on Sunday, and you can read it for yourself right here. Reportedly, there was a major meeting of diplomats last Friday, and the latest draft reflects feedback that was received from those diplomats during that meeting…

Last Friday, there was a meeting of senior diplomats from the dozens of Western and Arab countries that will attend the conference. The French delegate, Pierre Vimont, presented them with the first draft of the conference’s summary communiqué and asked for comments.

According to Western diplomats, Vimont said France wants to reach a consensus among the participating states on a balanced statement that would stress the centrality of the two-state solution to the international community, but would take this month’s transfer of presidential power in the United States into account.

In many ways, the document very closely tracks the language of UN Security Council Resolution 2334. Here are some of the things that really stood out to me in the draft…

-It makes a clear commitment to “two states, Israel and Palestine, living side by side in peace and security”.

-It insists that there must be an end to “the occupation that began in 1967”.

-It calls on Israeli and Palestinian leaders to publicly renew their commitment to a two state solution.

-It also calls on Israeli and Palestinian leaders to publicly renounce any of their officials that do not support a two state solution.

-It states that the 70 nations gathered in Paris only recognize the June 4th, 1967 borders, and that the only future changes to those borders they will recognize will come as the result of negotiations between the Israelis and the Palestinians. And just like UN Security Council Resolution 2334, Jerusalem is specifically mentioned. So according to this document, Israel does not own the Wailing Wall, the Temple Mount, a single inch of the West Bank or a single inch of East Jerusalem.

-The summary statement will also call on all countries to clearly distinguish between the State of Israel and territories that would belong to the Palestinians based upon the 1967 borders in all of their dealings.

Needless to say, this is a horribly anti-Israel document and the Israeli government is already strongly denouncing it.

At this point, Israeli Prime Minister Benjamin Netanyahu is most alarmed about the possibility that this summary statement could be used as the basis for another UN Security Council resolution just a few days later…

Netanyahu fears that the final communiqué of the Paris conference will be adopted next Monday by the EU foreign ministers’ council and the foreign ministers of the Quartet, and might also be the basis for another resolution at the Security Council, which is scheduled to convene next Tuesday for its monthly debate on the Israeli-Palestinian issue.

“We find ourselves only a few days before the Paris conference and, only a few days later, a Security Council debate,” Netanyahu said at the start of the weekly cabinet meeting on Sunday. “We are making a great effort to prevent another Security Council resolution.”

By organizing this conference and trying to lead the way in the effort to divide the land of Israel, France is in danger of greatly cursing itself.

Recently I was asked why God cares so much about Israel. Well, I think that a very basic illustration can help us to understand this better.

If you want to greatly anger any man, just go after his home and his family. This will be true in just about any culture all across the globe.

Similarly, when the rest of the world attempts to divide the land of Israel and hurt the Jewish people, they are going after the family that Jesus was born into and the city where He will rule and reign for 1000 years after He comes back.

When Jesus was being crucified, Roman soldiers divided up his clothing, and that was a deeply disgraceful thing to do.

But now just before Jesus returns, the entire globe is trying to divide up His land and divide up the one city on the entire planet that He has identified as His city (Matthew 5:35).

Why are our leaders being so foolish? In the Scriptures, God specifically warns us that in the last days He will judge the nations for dividing up His land. This is what Joel chapter 3:1-2 says in the Modern English Version…

In those days and at that time, when I restore the fortunes of Judah and Jerusalem, I will gather all the nations, and bring them down to the Valley of Jehoshaphat. I will enter into judgment with them there regarding My people and My heritage Israel, whom they have scattered among the nations; they have also divided up My land.

Those that bless Israel will be blessed, and those that curse Israel will be cursed.

And the 70 nations that are gathering in Paris, France on Sunday are literally in danger of cursing the entire planet.

Let us just pray that there will not be another UN Security Council resolution following this conference, because that would be absolutely disastrous for Israel, for the United States, and for the rest of the globe.

end

Turkey

We witness again more trouble with Turkey’s economy.  The Lira plummeted last Wednesday to almost 4:1 to the dollar and today rests at 3.80.  The plummeting Lira is causes Turkey to face double digit inflation.  Erdogan needs to raise interest rates, something he is loathe to do. In December they had another disastrous budgetary deficit of 27 billion euros (7.1 billion dollars)

We illustrate the problems in Turkey because it borrows to finance its burgeoning deficit. It has very little USA reserves to fight a global attack on its country’s finances:

(courtesy zero hedge)

Turkey Faces Double-Digit Inflation Due To Crashing Lira, As Budget Deficit Hits Record

Turkey’s biggest headache, its crashing currency which the central banks appears unable to contain due to an Erdogan order not to hike rates, could soon translate into another major problem. According to two senior economy officials, Turkish inflation could reach double digits in the first quarter for the first time in almost five years as a result of the lira’s falls, putting more pressure on the central bank to hike interest rates.

The lira has dropped as much as 10 percent since the start of 2017, battered by concern over Turkey’s political and economic outlook and doubts about whether the authorities will take decisive steps to arrest the slide. Earlier in the day, Turkey’s deputy prime minister, Numan Kurtulmus in an interview with AHaber TV, reiterated the party line that the lira weakening is the result of political manipulation. He also said that “an intelligence organization” might be behind the new year’s eve attack in a nightclub in Istanbul, the latest terrorist attack on Turkish soil, which has added to concerns about local geopolitical instability, further destabilizing the tourism-heavy economy.

According to Reuters, President Tayyip Erdogan, a vocal opponent of higher interest rates, will meet with economy officials including the central bank governor later on Monday to discuss developments including the lira, government sources said. Earlier on Monday, the central bank effectively shut off two of its lira funding taps, bankers said, in an attempt to push lenders to borrow at a higher rate and defend the currency without an outright rate hike.  The lira was trading at 3.80 to the dollar, at the day’s lows, off a recent record low of 3.9417 hit last Wednesday.

On Monday, the bank opted not to hold a repo auction for the third straight day. The daily auctions, at 8 percent, are an important source of funding for banks. Price quotations for the Borsa Istanbul repo market were also withdrawn after some funding was provided at 8.5 percent, bankers said. By closing off these two taps the central bank would effectively force banks to borrow using its “late liquidity window” at around 10%.

“The central bank withdrew the 8.5 percent quotation,” the manager of a liquidity desk at one bank said. “There is always the possibility it could offer a quotation again during the day. But if it does not give a quotation, banks will have to fund around 15 billion lira ($4 billion) above 8.5 percent – at 10 percent or at a rate near that.”

The central bank next meets to set interest rates on Jan. 24, with financial analysts eager to see a sharp rise although they may be disappointed.

The reason why the Turkish central banks finds itself in a bind is that Erdogan, a populist who favors cheap credit to spur lending and bolster the economy, wants borrowing costs to be low, although he said last Thursday that the bank had the ability to take “all necessary steps” to defend the lira. He and the government are keen to prevent the economy losing too much momentum ahead of an expected referendum in the coming months on constitutional changes that would create a full presidential system and hand him greater powers.

Meanwhile, in another indication that the Turkish economy is deteriorating, overnight Turkey announced that its December budget deficit rose to 27.1 billion liras, according to central government budget data published by Ministry of Finance in Ankara. This was the biggest on record, and confirm recent observations of a substantial slowdown in the economy; it also implies that Turkey will need to borrow in the foreign market to fund its deficits going forward.

In an attempt to debunk “fake news’ about the sorry state of the economy, one economy officials told Reuters that growth in 2016 is expected to have been just 2.5%, while inflation is about to soar, unleashing a period of stagflation.

“Inflation will be in double digits in the first quarter,” the economy official told Reuters, speaking on condition of anonymity because it is not an official government forecast.

That said, he expected pressure on the lira to ease after the referendum, a major source of uncertainty for investors, and forecast inflation would drop to 8% at most by the end of the year, above the central bank’s 6.5% forecast.

Helping in part will be the central bank’s recently rolled out measures to reduce liquidity and effectively drive up borrowing costs without hiking interest rates outright, in moves that some economists have referred to as “veiled” monetary tightening. The bank halved borrowing limits on Friday on the interbank money market to 11 billion lira ($2.9 billion) in a further bid to support the currency.

In a cryptic threat, an adviser to Erdogan said on Monday that the central bank has “strong weapons” other than interest rates and will continue to take measures in the face of the weaker lira. It has yet to be revealed what those are, especially since several months ago Erdogan appealed to his countrymen to convert their dollars and gold into lira in a failed attempt to boost the currency.

 

 

end

 

6.GLOBAL ISSUES

Horseman capital management are one of the smartest people on the planet and yet these guys are having an awful year.

We bring you their statement to their clientele to give you a perception as to what is going on

 

(courtesy Horseman Capital/zero hedge)

The “Most Bearish Hedge Fund” Capitulates: “We Are Beginning To Close Parts Of Our Short Book”

One month ago we reported that having successfully avoided a calamity for most of 2016 despite being massively net short, somewhere to the tune of around -90%, at times rising as high as -105%, Horseman Globa, finally had a bad month. In fact, losing -12.80% in November the hedge fund which we previously dubbed “the world’s most bearish hedge fund” due to its staggering net bearish bias, had just suffered its worst month in history as “the short book, the bond book and the forex book lost money.”

And, with just one month left in the year, we wondered if Horseman, which was down over 16% in the first 11 months, would also have it worst year ever, outpacing the -24.7% return in 2009.  We now have the answer, and it’s no… but just barely. After a 7.81% drop in December, Horseman Global has closed the books on 2016 with a 24.03% net loss, its second worst in history.

So what happened? Instead of paraphrasing, here is the answer straight from the horse’s mouth.

* * *

Horseman Capital December Letter by Russel Clark, CIO

Your fund lost 7.81% net this month to end the year down 24.03% net.

So how did a year that started so well end so badly? Since the Trump election, we have lost money in currency, bonds, and the short book. But in total over the year, we have made money in bonds and currencies. The real losing trade for 2016 has been short equities.

The losses in the short book came during two periods. The first was in February and March of this year. The bear market in commodities and emerging market had a huge reversal, and they have continued to rally all year. The fund held on to these shorts for a while, but in March decided that the dollar was in a weakening bias, and closed emerging market and commodity shorts, and in fact reversed Brazilian short positions to go long. The flip side of this was to move the fund to European and Japanese short positions, and to be long Euro and yen.

This strategy worked well into Brexit, but with the Trump election, the previously well performing short book in Europe and Japan as well as airlines reversed. Unusually, a strong dollar has also been accompanied by higher commodity prices and bond proxies have held up despite the selloff in bonds.

Shorting has been hard this year. I would say that most of my shorts have been down 30% at some point this year, but the majority have finished the year much higher. A good proxy for this would be the Dow Jones Transport Index. This was down 16% for the year in January. From the lows, it has rallied as much as 48%, to close the year up 20%.

One of the reasons that I run the fund the way that I do is that I do believe that a Chinese financial or currency crisis (probably both at the same time) seems inevitable. The implications of this to me have been that commodities would do badly, deflation would become prevalent, and exporters to China would suffer. Given the unreliability of Chinese data, I feel it right to be bearish on China as long as its banks continue to trade sideways to down, as they have done since 2011.

For many years, I have been able to play into market trends that would also do well in a China crisis. But suddenly, with the election of Trump, the broader market trends are all the opposite of how you want to be positioned in a China crisis. Higher commodity prices, higher US yields, and cyclicals over staples. One answer would be to go to cash and wait it out. The problem with this is that, if you believe that a Chinese crisis is inevitable then what would be the signals to begin to put on a China crisis trade? The answer would be capital flight from China, rising Chinese yuan deposit rates in HK (as this is a commercial rate, not set by the PBOC), and increasing market talk of capital controls. Unfortunately, these are all happening today.

I prefer using non-equity market indicators in deciding whether to close a short or not. And most of the non-equity indicators I look at tell me to be net short. However, I do not like to short a sector, market or stock where the 200 day moving average has begun to trend higher. Most of my shorts were well behaved prior to the Trump election, but with the move in the markets, that is no longer true.   

So despite what I think, we are beginning to close parts of our short book. We have largely exited airline related shorts. We have also closed staple shorts, as they were largely there to protect against a fall in yields, which they did to a degree. We have also closed many developed financial shorts to make some space for Chinese financial shorts. We have also reduced the bond position and moved much of in to German bunds. The majority of the bund position is in 5 year bunds, the buy case I made a few months ago.

2016 has been a chastising year. The sharp move higher in yen, and the flattening of the yield curve in the US led me think we were in a period of stagnation in the US. Spreads on auto lending and emerging markets while slightly elevated, were nowhere near levels I would have associated with a buy signal, while a continuing RMB devaluation was in the backdrop. That a Trump election has caused a strong dollar, higher yields, strong equities and strong commodities caught me by surprise. Market trends now seem higher despite what looks like a dangerous background to me. Your fund will be reducing its gross, but still long bonds and short equities.

* * *

On the other hand, despite some short covering, it appears that Clark still has a ways to go.

7. OIL ISSUES

Well that did not last long.  The Saudis are now suggesting an early end to the OPEC deal.

(courtesy zero hedge)

Oil Slides After Saudis Suggest Early End To OPEC Deal

Following a brief spike overnight (as China intervened in its equity market), crude prices slipped lower, testing towards a $51 handle after Saudi Arabia says OPEC is on track to wrap up its production curbs by the middle of the year, potentially leaving its aim of clearing a global oil glut unfinished.

As Bloomberg reports, OPEC and Russia won’t need to prolong output cuts beyond June because the agreed reductions will have already ended the oversupply in world crude markets, Saudi Minister of Energy and Industry Khalid Al-Falih said in Abu Dhabi on Monday. However, ending the deal by mid-year and restoring production would mean the surplus just starts building again, thwarting OPEC’s ambition of whittling down bloated oil inventories.

The Organization of Petroleum Exporting Countries said that draining off a stockpile “overhang” of more than 300 million barrels — enough to supply China for almost a month — was the main aim of supply curbs agreed with Russia and other producers. Twenty-four nations signed up to a joint cutback of 1.8 million barrels a day on Dec. 10.

If they extend the deal for six months beyond its scheduled expiry in June, that surplus will be entirely eliminated by the end of the year, according to Bloomberg calculations based on data from the International Energy Agency. If they don’t extend the deal, and restore output to previous levels, about two-thirds of that glut will remain in place.

“If the reduction is of such short duration, this will hardly be sufficient to balance the oil market,” said analysts at Commerzbank AG led by Eugen Weinberg in Frankfurt. “In this case the market participants who bet on rising prices will probably withdraw from the market, putting corresponding pressure on prices.”

And that is what we are seeing begin to occur on this illiquid US holiday trading day…

When OPEC announced its original deal in Vienna, the group said it could be extended for another six months to “take into account prevailing market conditions and prospects.” Al-Falih said OPEC will reassess the situation when it meets again and the group’s members have said they’re will to extend the pact if necessary.

8. EMERGING MARKETS

none today

end

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

Euro/USA   1.0588 DOWN .0028/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA FALLING RATE

USA/JAPAN YEN 114.19 DOWN 0.473(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2054 UP .0008 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY MAY DECIDE ON A HARD BREXIT)

USA/CAN 1.3139 DOWN .0011 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS MONDAY morning in Europe, the Euro FELL by 28 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0588; Europe is still reacting to Gr Britain HARD 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 9.34 or 0.30%     / Hang Sang  CLOSED DOWN 219.23 POINTS OR 0.96%  /AUSTRALIA  CLOSED UP 0.30%  / EUROPEAN BOURSES ALL IN THE RED 

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

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

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

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

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

The NIKKEI: this MONDAY morning CLOSED DOWN 192.04 OR 1.00% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 219.23 OR 0.96%  Shanghai CLOSED DOWN 9.34 POINTS OR 0.30%   / Australia BOURSE CLOSED UP 0.30% /Nikkei (Japan)CLOSED DOWN 192.04 OR 1.00%  /  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1203.40

silver:$16.83

Early MONDAY morning USA 10 year bond yield: 2.398% !!! Par IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.99, PAR IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 101.64 UP 20 CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

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And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 3.85% down 6  in basis point yield from FRIDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.053% UP 1/3  in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.429%  PAR  IN basis point yield from  FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.912  UP  2  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 48 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.323% DOWN1/ 2 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.0603 DOWN .0012 (Euro DOWN 12 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 114.10 DOWN: 0.564(Yen UP 56 basis points/ 

Great Britain/USA 1.2069 DOWN 0.0095( POUND DOWN 95 basis points)

USA/Canada 1.3154 DOWN 0.0004(Canadian dollar  UP 4 basis points AS OIL FELL TO $52.47

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This afternoon, the Euro was DOWN by 12 basis points to trade at 1.0603

The Yen FELL to 114.10 for a LOSS of 56 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 95  basis points, trading at 1.2069/

The Canadian dollar ROSE by 4 basis points to 1.3154,  WITH WTI OIL FALLING TO :  $52.49

The USA/Yuan closed at 6.8985
the 10 yr Japanese bond yield closed at +.053% UP 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield PAR IN basis points from FRIDAY at 2.398% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.99 DOWN 1  in basis points on the day /

Your closing USA dollar index, 101.56 UP 12 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 MONDAY: 1:00 PM EST

London:  CLOSED DOWN 10.68 OR 0.15% 
German Dax :CLOSED DOWN 74.47 POINTS OR 0.64%
Paris Cac  CLOSED DOWN 40.31 OR 0.82%
Spain IBEX CLOSED DOWN 101.60 POINTS OR 1.07%
Italian MIB: CLOSED DOWN 267.29 POINTS OR 1.37%

The Dow was closed  4 PM EST

NASDAQ WAS closed  4.00 PM EST
WTI Oil price;  52.60 at 1:00 pm; 

Brent Oil: 55.63  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.62 (ROUBLE DOWN 23/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD FALLS TO +0.323%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$52.47

BRENT: $55.86

USA 10 YR BOND YIELD: 2.398%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.990%

EURO/USA DOLLAR CROSS:  1.0603 DOWN .0012

USA/JAPANESE YEN:114.10  down 0.564

USA DOLLAR INDEX: 101.56  UP 12  cents (BREAKS AGAIN HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2054 : DOWN 95  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.323%

END

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

TRADING IN GRAPH FORM

NEW YORK CLOSED TODAY/MARTIN LUTHER KING HOLIDAY

SATURDAY

Trump states that he is open to the lifting of Russian sanctions.  He also states that he will not label China a currency manipulator on day one.  However he still is quite adamant about our two individual Chinas : Taiwan and Mainland China.

(courtesy zero hedge)

Trump Says He Is Open To Lifting Russia Sanctions, Won’t Label China Currency Manipulator “On Day One”

In his first full interview of the new year, President-elect Donald Trump explains his approach to foreign policy from a “realpolitik” lens, when he told the WSJ overnight that relations with China and Russia will depend on the degree to which the two countries cooperate with U.S. economic, diplomatic and military priorities.

The interview comes one day after China’s incensed press rebuked a statement by Rex Tillerson during his confirmation hearing, when he said that China will not be granted access to the disputed South China Sea islands, responding that “such remarks are not worth taking seriously because they are a mish-mash of naivety, shortsightedness, worn-out prejudices, and unrealistic political fantasies” and  “would set a course for devastating confrontation between China and the US.
Trump says he would keep intact sanctions against Russia imposed by the Obama administration “at least for a period of time”; says he is prepared to meet Russian President Vladimir Putin after he is sworn in

Assuing further media vitriol, Trump told the WSJ he wouldn’t commit to America’s “One China” agreement with Beijing, i.e., he would continue to use Taiwan’s independence as a bargaining chip, until he saw what he considered progress from Beijing in its
currency and trade practices. Asked if he supported the One China policy on Taiwan, Mr. Trump said: “Everything is under negotiation including One China.”

Mr. Trump seemed impatient with diplomatic protocols involving China and Taiwan. After his victory he took a congratulatory phone call from Taiwan’s leader, triggering objections from Beijing and stoking concerns among some U.S. foreign policy experts who questioned whether he understood the implications of such a conversation.

Speaking of Taiwan, he said: “We sold them $2 billion of military equipment last year. We can sell them $2 billion of the latest and greatest military equipment but we’re not allowed to accept a phone call. First of all it would have been very rude not to accept the phone call.”

On the other hand, Trump also made a point of showing a holiday greeting card he received from China’s leader, Xi Jinping. “I have a beautiful card from the chairman,” he said.

Trump also made news when he said that he would not label China a currency manipulator on his first day in the White House. Previously Trump has said in the past he would label China a currency manipulator after he takes office. In the interview, he said he wouldn’t take that step on his first day in the White House. “I would talk to them first,” he said.

He added: “Certainly they are manipulators. But I’m not looking to do that.” But he made plain his displeasure with China’s currency practices. “Instead of saying, ‘We’re devaluating our currency,’ they say, ‘Oh, our currency is dropping.’ It’s not dropping. They’re doing it on purpose.

“Our companies can’t compete with them now because our currency is strong and it’s killing us.”

As explained previously China is indeed manipulating its currency, although over the past 18 months it has been doing so in the other direction, intervening to support it from weakening further as a result of hundreds of billions in capital outflows, which have resulted in unprecedented capital controls.

Naturally, Trump also discussed the ever present topic of Russia and his relationship with Putin. Trump told the WSJ that while he would be open to lifting sanctions on Russian, “at least for a period of time,” he would keep intact sanctions against Russia imposed by the Obama administration in late December in response to Moscow’s alleged cyberattacks to influence November’s election. “But he suggested he might do away with those penalties if Russia proved helpful in battling terrorists and reaching other goals important to the U.S.

“If you get along and if Russia is really helping us, why would anybody have sanctions if somebody’s doing some really great things?” he said.

* * *

On Saturday morning, Trump was once again active on Twitter, first slamming Congressman John Lewis, who made news on Friday saying that Trump is “not a legitimate president”, saying “John Lewis should spend more time on fixing and helping his district, which is in horrible shape and falling apart (not to mention crime infested) rather than falsely complaining about the election results. All talk, talk, talk – no action or results. Sad!”…

Congressman John Lewis should spend more time on fixing and helping his district, which is in horrible shape and falling apart (not to……

mention crime infested) rather than falsely complaining about the election results. All talk, talk, talk – no action or results. Sad!

… and then reverted back to the key political topic of last week, namely the US intel report on Trump, tweeting that “INTELLIGENCE INSIDERS NOW CLAIM THE TRUMP DOSSIER IS “A COMPLETE FRAUD!” ”

INTELLIGENCE INSIDERS NOW CLAIM THE TRUMP DOSSIER IS “A COMPLETE FRAUD!” @OANN

end

 

China’s response: SUNDAY

there is only one China

(courtesy zero hedge)

Beijing Responds: Tells “Relevant Parties” In The U.S. That “One China” Principle Is Non-Negotiable

The USA response to that: SUNDAY NIGHT

USA deploys a third carrier group to Asia and the disputed South China Sea

(courtesy zero hedge)

US Deploys Third Carrier Group In Asia To Boost “Naval Air Forces” In Disputed South China Sea

For a brief but tense period, two weeks ago the US found itself without a single aircraft carrier in any area of the globe. The absence of a deployed U.S. Navy aircraft carrier, long seen as a symbol of American power projection, was noteworthy because according to Fox, “it is believed to be the first time since World War II that at least one U.S. aircraft carrier has not been deployed.”

However, things are gradually getting back to normal following the recent deployment of ships and units from the Carl Vinson Carrier Strike Group, which departed San Diego for a regularly scheduled deployment to the western Pacific last week.

Nimitz-class aircraft carrier USS Carl Vinson (CVN 70), Carrier Air Wing (CVW) 2, and embarked Destroyer Squadron (CDS) 1 deployed with Ticonderoga-class guided-missile cruiser USS Lake Champlain (CG 57) and Arleigh Burke-class guided-missile destroyers USS Michael Murphy (DDG 112) and USS Wayne E. Meyer (DDG 108).

The Vinson Strike Group is deployed to “support” the diplomatically tense situation in the Pacific Rim. According to Naval Technology, this new deployment is part of US Navy’s attempt to boost its naval air forces in disputed part of the Asian region.

“Our forward presence contributes to freedom of navigation and lawful use of the sea, as well as furthers operational training and enabling the exchange of culture, skills, and tactical knowledge,” said Commander, CSG 1, Rear Adm. James W. Kilby. Ported in Pearl Harbor, Michael Murphy will join the Carl Vinson CSG later this month as the strike group makes their way to the western Pacific according to the Navy’s website.

The Carl Vinson CSG deployed with approximately 7,500 Sailors and will focus on maritime security operations and theater security cooperation efforts. The strike group assets will conduct bilateral exercises in the Indo-Asia-Pacific region to include anti-submarine warfare, maneuvering drills, gunnery exercises, and visit, board, search, and seizure (VBSS) subject matter expert exchanges.

Carl Vinson also deployed with the embarked aviation squadrons of CVW-2 which include the “Black Knights” of Helicopter Sea Combat Squadron (HSC) 4, the “Blue Hawks” of Helicopter Maritime Strike Squadron (HSM) 78, the “Bounty Hunters” of Strike Fighter Squadron (VFA) 2, the “Blue Blasters” of VFA-34, the “Kestrels” of VFA-137, the “Golden Dragons” of VFA-192, the “Black Eagles” of Carrier Airborne Early Warning Squadron (VAW) 113, the “Gauntlets” of Electronic Attack Squadron (VAQ) 136, and the “Providers” of Fleet Logistic Support Squadron (VRC) 30.

* * *

In Asia, the Carl Vinson will join the Carrier Strike Groups of the aircraft carriers USS John C. Stennis (CVN-74) from the U.S. Navy Third Fleet (currently back at home base in Kitsap-Bremerton in Washington) and the USS Ronald Reagan (CVN-76) from the U.S. Navy Seventh Fleet (currently at home port in Yokosuka, Japan).

The South China Sea is also where China’s only aircraft carrier, in a recent show of force to Taiwan, conducted naval drills in late December and early January.

end

 

USA marines land in Norway which angers the Russians even more:

(courtesy zero hedge)

US Marines Land In Norway For The First Time Since World War II, Angering Russia

Just one week after thousands of US troops arrived in Poland to “support NATO’s Anti-Russian buildup” across Eastern Europe, 300 U.S. Marines from Camp Lejeune landed in Norway on Monday for a six-month deployment, marking the first time since World War II that foreign troops have been allowed to be stationed there, in a deployment breaking with decades of tradition by Norway not to host foreign forces, and angering Norway’s Arctic neighbor Russia, according to Reuters.


A 747 carrying 300 Marines arrived on Monday. Photo: Ned Alley / NTB scanpix

After leaving North Carolina aboard a chartered 747 on Sunday evening, the troops landed at 10am CET on Monday with their luggage and weapons at the Vaernes airport near Trondheim, Norway’s third-largest city, television footage showed. The Marines will be hosted at the Vaernes base of the Norwegian Home Guards near Trondheim, Norway’s third-largest city.

The US soldiers, which will stay in Norway for a year with the current batch of Marines being replaced after their six-month tour is complete. Until now, the US has had large quantities of military materiel pre-positioned in tunnels dug into Norway’s mountains, but no troops.

A spokesman for the Norwegian Home Guards, who will host the Marines at the Vaernes military base, about 1,500 km (900 miles) from the Russian border, said the U.S. troops will learn about winter warfare. “For the first four weeks they will have basic winter training, learn how to cope with skis and to survive in the Arctic environment,” said Rune Haarstad, a Home Guard spokesman. In March, the Marines will take part in the Joint Viking exercises, which will also include British troops, he added.

As the deployment coincides with the U.S. sending several thousand troops to Poland to beef up its Eastern European allies worried about Moscow’s assertiveness, Russia has been understandably concerned. However, both Norway and the US deny the notion that the deployment is meant to “irk” Russia as part of NATO’s wider campaign to oppose what it calls “Russian aggression” in Europe, by sending additional troops and weapons closer to the Russian border. A spokeswoman for Norwegian Ministry of Defence also said the arrival of U.S. Marines had nothing to do with concerns about Russia.

“It has nothing to do with Russia or the current situation” Haarstad doubled down.

Moscow disagrees. While the Russian Embassy in Oslo did not immediately reply to a request for comment by Reuters on Monday, it previously questioned the need for such a move and when the rotational deployment of US Marines in Norway was confirmed last year, Russia said it was puzzled by it.

“Taking into account multiple statements of Norwegian officials about the absence of threat from Russia to Norway we would like to understand for what purposes is Norway so … willing to increase its military potential, in particular through stationing of American forces in Vaernes?” it told Reuters at the time.

This “for sure won’t make better (the) security situation in Northern Europe,” a spokesman for the Russian embassy in Oslo, Maxim Gurov, told AFP in an October email.

Norway, which is a founding member of NATO, has pledged not to host foreign forces to allay Moscow’s concerns that it could serve as a platform for a surprise attack. According to RT, for decades the Scandinavian country stashed massive stockpiles of weapons in preparation for a possible conflict, but only allowed in other allies’ troops for training purposes. Oslo dismisses the notion that the deployment goes against the old commitment, saying that American troops would be rotated rather than stationed permanently. NATO routinely applies the same reasoning to all its deployments in Eastern Europe as a way to circumvent the alliance’s agreement with Russia, which bans permanent deployments of “significant” forces near Russia.

Meanwhile, the US Marine Corps touted the practical benefits of a full-time deployment as the reason for the move. “We’ve been going to Norway for 25 years. So I don’t really know what the hype is about,” Maj. Gen. Niel Nelson, commander of Marine Corps Forces Europe and Africa, told Military.com ahead of the deployment. “We’re just doing our job, from a more economical standpoint. I don’t put a lot of stock in people pointing back and forth.”

“By putting Marines in Norway and above the Arctic Circle for 30-60 days at a time, that’s a whole different environment,” Nelson added. “You not only learn to survive, you are surviving. It’s a harsh environment; it takes a lot of tough lessons and we reinforce that by the length of time.”

Norway and Russia share a small land border far in the north. The Vaernes base is located 1,500km from any part of Russia, but the Arctic training program involves traveling closer to it. We anticipate that the inevitable retaliatory Russian deployment of troops in proximity to the Norwegian border, will be promptly dubbed by NATO, and western media, as a provocative act.

CHINA RESPONDS AGAIN TO TRUMP: MONDAY MORNING

China does not like being provoked:

(courtesy zero hedge)

China Warns Trump “It Will Take Off The Gloves” If He Continues To Provoke Beijing

In the latest indication that China is becoming increasingly unsettled by Trump’s relentless attacks on legacy diplomacy with China, and especially the “One China” policy, two leading state-run newspapers warned on Monday that Beijing will “take off the gloves” and take strong action if Trump continues to provoke Beijing over Taiwan once he assumes office.

The reaction was provoke by Trump’s latest US interview, in which he told the WSJ that the “One China” policy was up for negotiation. China’s foreign ministry, in response, said “One China” was the foundation of China-U.S. ties and was non-negotiable.

“If Trump is determined to use this gambit in taking office, a period of fierce, damaging interactions will be unavoidable, as Beijing will have no choice but to take off the gloves,” the otherwise calm English-language China Daily said. It added that Beijing’s relatively measured response to Trump’s comments in the Wall Street Journal “can only come from a genuine, sincere wish that the less-than-desirable, yet by-and-large manageable, big picture of China-U.S. relations will not be derailed before Trump even enters office”.

But China should not count on the assumption that Trump’s Taiwan moves are “a pre-inauguration bluff, and instead be prepared for him to continue backing his bet”. “It may be costly. But it will prove a worthy price to pay to make the next U.S. president aware of the special sensitivity, and serious consequences of his Taiwan game,” said the national daily.

The far more fiery state-run nationalist tabloid, The Global Times, echoed the China Daily, saying Beijing would take “strong countermeasures” against Trump’s attempt to “impair” the “One China” principle.

“The Chinese mainland will be prompted to speed up Taiwan reunification and mercilessly combat those who advocate Taiwan’s independence,” the paper said in an editorial.

The official statement, while less provocative, was just as terse: Chinese Foreign Ministry spokeswoman Hua Chunying said the United States was clearly aware of China’s position on “One China”. “Any person should understand that in this world there are certain things that cannot be traded or bought and sold,” she told a daily news briefing. “The One China principle is the precondition and political basis for any country having relations with China.”

Hua added, “If anyone attempts to damage the One China principle or if they are under the illusion they can use this as a bargaining chip, they will be opposed by the Chinese government and people. “In the end it will be like lifting a rock to drop it on one’s own feet,” she concluded, without elaborating.

Meanwhile, The Global Times ratcheted up its war rhetoric, saying Trump’s endorsement of Taiwan was merely a ploy to further his administration’s short term interests, adding: “Taiwan may be sacrificed as a result of this despicable strategy.”

Other joined in. “If you do not beat them until they are bloody and bruised, then they will not retreat,” Yang Yizhou, deputy head of China’s government-run All-China Federation of Taiwan Compatriots, told an academic meeting on cross-straits relations in Beijing on Saturday. Taiwan independence must “pay a cost” for every step forward taken, “we must use bloodstained facts to show them that the road is blocked,” Yang said, according to a Monday report on the meeting by the official People’s Daily Overseas Edition.

Trump has yet to tweet a response, if any, this morning.

END

Trump over the weekend gave a pair of interviews with BILD and London’s financial times.  This time he talks about what his policies will be:

  1. He slams NATO as a totally useless organization  (he is right)
  2.  He threatens BMW with import taxes unless they manufacture in the USA
  3. He is prepared to cut ties with Merkel
  4.  He predicts other European nations will leave the EU
  5. He is willing to make a deal with England upon their separation from the eu

very important..

(courtesy zero hedge)

In Stunning Pair Of Interviews, Trump Slams NATO And EU, Threatens BMW With Tax; Prepared To “Cut Ties” With Merkel

In two separate, and quite striking, interviews with Germany’s Bild (paywall) and London’s Sunday Times (paywall), Donald Trump did what he failed to do in his first US press conference, and covered an extensive amount of policy and strategy, much of which however will likely please neither the pundits, nor the markets.

Among the numerous topics covered in the Bild interview, he called NATO obsolete, predicted that other European Union members would join the U.K. in leaving the bloc and threatened BMW with import duties over a planned plant in Mexico, according to a Sunday interview granted to Germany’s Bild newspaper that will raise concerns in Berlin over trans-Atlantic relations. Furthermore, in his first “exclusive” interview in the UK granted to the Sunday Times, Trump said he will offer Britain a quick and “fair” trade deal with America within weeks of taking office to help make Brexit a “great thing”. Trump revealed that he was inviting Theresa May to visit him “right after” he gets into the White House and wants a trade agreement between the two countries secured “very quickly”.

Trump told the Times that other countries would follow Britain’s lead in leaving the European Union, claiming it had been deeply ­damaged by the migration crisis. “I think it’s very tough,” he said. “People, countries want their own identity and the UK wanted its own identity.”

Elsewhere, quoted in German from a conversation held in English, Trump predicted Britain’s exit from the EU will be a success and portrayed the EU as an instrument of German domination with the purpose of beating the U.S. in international trade. For that reason, Trump said, he’s fairly indifferent whether the EU breaks up or stays together, according to Bild. According to Bloomberg, Trump’s comments “leave little doubt that he will stick to campaign positions and may in some cases upend decades of U.S. foreign policy, putting him fundamentally at odds with German Chancellor Angela Merkel on issues from free trade and refugees to security and the EU’s role in the world.”

Trump then attacked another carmarker, previosuly unnoticed by the president-elect, when he warned the United States will impose a border tax of 35 percent on cars that German carmaker BMW plans to build at a new plant in Mexico and export to the U.S. market.  A BMW spokeswoman said a BMW Group plant in San Luis Potosi would build the BMW 3 Series starting from 2019, with the output intended for the world market. The plant in Mexico would be an addition to existing 3 Series production facilities in Germany and China. Trump said BMW should build its new car factory in the United States because this would be “much better” for the company.

He went on to say Germany was a great car producer, borne out by Mercedes Benz cars being a frequent sight in New York, but there was no reciprocity. Germans were not buying Chevrolets at the same rate, he said, making the business relationship an unfair one-way street. He said he was an advocate of free trade, but not at any cost. The BMW spokeswoman said the company was “very much at home in the U.S.,” employing directly and indirectly nearly 70,000 people in the country.

Going back to foreign policy, Trump discussed his stance on Russia and suggested he might use economic sanctions imposed for Vladimir Putin’s encroachment on Ukraine as leverage in nuclear-arms reduction talks, while NATO, he said, “has problems.”

“[NATO] is obsolete, first because it was designed many, many years ago,” Bild quoted Trump as saying about the trans-Atlantic military alliance. “Secondly, countries aren’t paying what they should” and NATO “didn’t deal with terrorism.”

While those comments expanded on doubts Trump raised about the North Atlantic Treaty Organization during his campaign, he reserved some of his most dismissive remarks for the EU and Merkel, whose open-border refugee policy he called a “catastrophic mistake.” He further elaborated on this stance in the Times interview, where he said he was willing to lift Russian sanctions in return for a reduction in nuclear weapons.

When asked about the prospect of a nuclear arms reduction deal with Russia, Trump told the newspaper in an interview: “For one thing, I think nuclear weapons should be way down and reduced very substantially, that’s part of it.”

Additionally, Trump said Brexit will turn out to be a “great thing.”  Trump said he would work very hard to get a trade deal with the United Kingdom “done quickly and done properly”.

Trump praised Britons for voting last year to leave the EU. People and countries want their own identity and don’t want outsiders to come in and “destroy it.” The U.K. is smart to leave the bloc because the EU “is basically a means to an end for Germany,” Bild cited Trump as saying. “If you ask me, more countries will leave,” he was quoted as saying.

While Trump blamed Brexit on an influx of refugees he said that Britain was forced to accept, the U.K.’s number of asylum applications in 2015 was a fraction of the 890,000 refugees who arrived in Germany that year at the peak of Europe’s migrant crisis.

With Merkel facing an unprecedented challenge from the anti-immigration Alternative for Germany as she seeks a fourth term this fall, Trump was asked whether he’d like to see her re-elected. He said he couldn’t say, adding that while he respects Merkel, who’s been in office for 11 years, he doesn’t know her and she has hurt Germany by letting “all these illegals” into the country.

Among Trump’s other comments to Bild::

  • the Bush administration’s decision to invade Iraq may have been the worst in U.S. history;
  • that Jared Kushner, Trump’s son-in-law, is a natural talent who will bring about an accord with Israel
  • Trump plans to keep using social media including Twitter once he’s in the White House to sidestep the press and communicate directly with his followers
  • People entering the U.S. will face “extreme” security checks, possibly including some European nationals

But perhaps the most troubling, if only to legacy US diplomatic relations, was that, as the Times noted, “despite all of Mr Trump’s expressions of admiration for Mr Putin and Mrs Merkel, he revealed that he was prepared to cut ties with both: “Well, I start off trusting both –  but let’s see how long that lasts. It may not last long at all.”

It is unclear if this litany of strategic and tactical announcements, many of which quite shocking in their audacity and scope, is merely meant to serve as a launching pad for further negotiations, something Trump has proven quite adept at doing by stunning his counterparties into a state of abrupt silence, or if these are actually meant to serve as a basis for future US policy; if it is the latter, when US markets reopen they may have a distinct case of indigestion because while the market had desperately hoped for more clarity out of Trump on his policies, what emerged in these two interview is hardly it.

END

My goodness:  Trump promises insurance for everybody in the Obamacare repeal. How on earth is he going to pay for this?

(courtesy zerohedge)

Trump Promises “Insurance For Everybody” In Obamacare Repeal

Just two days after both the House and Senate passed a budget resolution clearing the way to repeal and replace Obamacare, the President-elect has told the Washington Post that his replacement bill is nearly complete and envisions “insurance for everybody.”  Although no specific timeline was given for the announcement of legislation, the CR passed by Congress last week gives the various committees until January 27th to present a bill.  Per Reuters:

“It’s very much formulated down to the final strokes. We haven’t put it in quite yet but we’re going to be doing it soon,” Trump told the Post, adding he was waiting for his nominee for health and human services secretary, Tom Price, to be confirmed.

The plan, he said, would include “lower numbers, much lower deductibles,” without elaborating.

“We’re going to have insurance for everybody,” Trump said. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.”

“It’ll be another plan. But they’ll be beautifully covered. I don’t want single-payer. What I do want is to be able to take care of people,” he added.

Meanwhile, taking a similar approach to his efforts with Boeing and Lockheed Martin to lower costs, Trump vowed to bring down drug prices by forcing big Pharma companies to negotiate directly with the government for Medicare and Medicaid pricing.

Moving ahead, Trump said that lowering drug prices is central to reducing health-care costs nationally — and that he will make it a priority as he uses his bully pulpit to shape policy. When asked how exactly he would force drug manufacturers to comply, Trump said that part of his approach would be public pressure “just like on the airplane,” a nod to his tweets about Lockheed Martin’s F-35 fighter jet, which Trump said was too costly.

Trump waved away the suggestion that such activity could lead to market volatility on Wall Street. “Stock drops and America goes up,” he said. “I don’t care. I want to do it right or not at all.” He added that drug companies “should produce” more products in the United States.

The question of whether the government should start negotiating how much it pays drugmakers for older Americans on Medicare has long been a partisan dispute, ever since the 2003 law that created Medicare drug benefits prohibited such negotiations.

“They’re politically protected but not anymore,” he said.

Of course, as we mentioned last week, Kellyanne Conway hinted that the Pharma industry would be in the crosshairs of Trump’s new healthcare law, telling Bloomberg that “to repeal and replace Obamacare without having a conversation about drug pricing seems like not a reasonable prospect.”

Without giving a timeline, Trump said that he expects Republicans in Congress to work quickly to pass his new healthcare legislation and threatened that any splintering of the Republican party would be met with an aggressive appeal directly to the American people to put pressure on their Congressmen.

Trump said he expects Republicans in Congress to move quickly and in unison in the coming weeks on other priorities as well, including enacting sweeping tax cuts and beginning the building of a wall along the Mexican border.

Trump warned Republicans that if the party splinters or slows his agenda, he is ready to use the power of the presidency — and Twitter — to usher his legislation to passage.

“The Congress can’t get cold feet because the people will not let that happen,” Trump said during the interview with The Post.

Of course, as we’ve said before, while Democrats and some Republicans will certainly fight it, whatever bill is introduced by the Trump administration will almost certainly be better than the status quo.

END

Nor good!! Death threats to Opera star Bocelli forces him to pull out of the inauguration performance:

(courtesy zerohedge)

Death Threats Force Opera Star Bocelli To Pull Out Of Inauguration Performance

“Andrea is very sad to be missing the chance to sing at such a huge global event but he has been advised it is simply not worth the risk…” according to a source close to blind opera singer Bocelli who had been determined to ‘press ahead’ and sing at Donald Trump’s inauguration.

As The Daily Mail reports, when blind tenor Bocelli announced he would not sing at this Friday’s celebration, it was widely reported it was because fans had said they would boycott his concerts and records.

But a source said the 58-year-old had been determined to ‘press ahead’ and sing but had pulled out on the advice of his security team after receiving threats to his life.

The revelation came as another singer – Broadway legend Jennifer Holliday – last night pulled out of the President-elect’s festivities after being threatened and branded an ‘Uncle Tom’.

Singer Holliday, 56, famed for her performance as Effie in Dreamgirls, had originally said she was ‘determined’ to sing for Trump despite voting against him.

She also denounced the abuse she was getting and called it an attack on freedom of speech.

Stars including Elton John and Celine Dion have declined invitations to sing at the ceremony.

Isn’t it great just how ‘non-violent’ and ‘accepting’ Americans are (when they get their way)?

end

I will see you tomorrow night

harvey

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