JAN 24/Gold and silver whacked but only in the access “paper” market/ Both GLD and SLV also hit/JPMorgan continues to hoard physical silver while selling paper comex silver/Rhetoric between China and the USA heats up again re: South China Seas/UK Supreme court rules that Parliament must vote on a BREXIT: however this will not derail her plan as she has enough votes/USA Democrats introduce their own 1 trillion USA infrastructure plan/Trump signs both Keystone and Dakota pipeline projects/FINAL DRAFT

Gold at (1:30 am est) $1210.30 DOWN $4.70

silver  at $17.15:  UNCHANGED

Access market prices:

Gold: $1209.00

Silver: $17.08



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

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

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

And now the fix recordings:

TUESDAY gold fix Shanghai

Shanghai FIRST morning fix Jan 24/17 (10:15 pm est last night): $  1237.82

NY ACCESS PRICE: $1217.55 (AT THE EXACT SAME TIME)/premium $10.27


Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1223.21



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


London FIRST Fix: Jan 24/2017: 5:30 am est:  $1213.30   (NY: same time:  $1213.25   (5:30AM)


London Second fix Jan 24.2017: 10 am est:  $1216.80 (NY same time: $1217.15  (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.



We are now entering options expiry week so expect the crooks to whack gold and silver down to allow illegal gains on options underwritten by the crooked banks.  The comex expiry is  Thursday, the 26th of January and the options for the OTC/LBMA is Tues Jan 31.


For comex gold: 


For silver:


Let us have a look at the data for today



In silver, the total open interest ROSE by 1973  contracts UP to 176,641 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .882 BILLION TO BE EXACT or 126% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold ROSE BY 4616 contracts WITH THE RISE IN  THE PRICE GOLD ($10.70 with YESTERDAY’S trading ).The total gold OI stands at 483,408 contracts.

we had 8 notice(s) filed upon for 800 oz of gold.


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


We had a big  changes in tonnes of gold at the GLD/this time a WITHDRAWAL of 5.04 tonnes


Inventory rests tonight: 804.11 tonnes



we had a rather small changes in silver into the SLV: a withdrawal of 948,000 oz

THE SLV Inventory rests at: 337.408 million oz


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

1. Today, we had the open interest in silver RISE by 1,973 contracts UP to 176,641 AS SILVER ROSE 15 CENTS with YESTERDAY’S trading. The gold open interest ROSE by 4,616 contracts UP to 483,408  WITH THE RISE IN THE PRICE OF GOLD OF $10.70  (YESTERDAY’S TRADING)

(report Harvey).

2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


 i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 5.78 POINTS OR 0.18%/ /Hang Sang closed UP 51.34 OR 0.22%. The Nikkei closed DOWN 103.04 POINTS OR .55% /Australia’s all ordinaires  CLOSED UP 0.68%/Chinese yuan (ONSHORE) closed UP at 6.8588/Oil ROSE to 52.83 dollars per barrel for WTI and 55.27 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.8139 yuan to the dollar vs 6.8588  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE COMPLETELY NARROWS AS POBC ATTEMPTS TO STOP DOLLARS FROM LEAVING CHINA’S SHORES. HOWEVER BOTH CHINESE YUANS RISE WITH THE LOWER DOLLAR 




 none today


i)China states that it has irrefutable sovereignty over the disputed islands in the South China seas.  They tell the USA to act and speak cautiously as Spicer in the press talk threatens China:

( zero hedge)

ii)Then China ups the ante by deploying their new nuclear ICBM which is capable of travelling 15,000 kilometers and delivering 10 to 12 nuclear warheads

( zerohedge)



Theresa May received the news this morning that the UK Supreme Court rules that there must be a vote before a Brexit can begin.  However the opposition will not go against the will of the people. Theresa May will trigger the clause 50 but allow the opposition to agree to a final separation

( zero hedge)

ii)And here is the timetable:

(courtesy zero hedge)



Trump will certainly have his smoking gun if he wishes to tear up the Iran deal. Iran has been caught smuggling anti tank missile systems from Ukraine under false manifests.

( zero hedge)


Most of the pundits thought Turkey would raise its interest rate trying to keep the Lira higher.  However Erdogan certainly has his finger on its central bank as again they kept their benchmark rate unchanged: down goes the Lira again

( zero hedge)



More havoc in Mexico has Mexican protesters have seized control of the USA order crossing in Tijuana,  Drug cartel members are still high jacking much of Mexican gas and selling the gas to needy motorists

( zero hedge)


Goldman Sachs correctly state that there will be an oil price shock with a border tax.  Oil produced in the USA and exported will garner no tax.  Thus USA produced oil will have a higher price than foreign oil.  Foreign oil  will probably not be used initially as its costs cannot be passed through.

This will create huge distortions in the oil market

( GoldmanSachs)


none today


i)Northern Dynasty states that it has Trump administration support to seek approvals to start mining in Alaska.  It will need to seek a major to assist them.  The most logical partner would be Agnico Eagle as they are quite good in mining in cold environments:

( Pearson/Bloomberg)

ii)Alasdair Macleod outlines how gold will now be used as money in the Muslim world especially as these countries are prone to devalue

( Alasdair Macleod)

iii)We brought this story to you yesterday. Bloomberg comments on Mnuchin;s lack of support for a strong dollar in the near term:

( Bloomberg)

iv)Central banks are seeking higher risk equities in the low interest rate environment.  This sets of high financial risks of collapse

(  Wall Street Journal)

v)Due to sanctions, Russian to sell its huge gold deposit cheap and to Russian interests.

( Devitt/reuters)



i)Rubio saves the day by voting for Tillerson in committee which should pave the way for the new Sec of State when the full senate votes:

( zero hedge)

ii)The next bombshell: we are witnessing huge numbers of leased car returns which is causing the used car pricing to fall which in turn causes less sells in the new car market:

( zerohedge)

iii)The Senate Democrats have introduced their own 1 trillion infrastructure plan and by doing so, they will offer Trump their support if he backs it.  The trouble will be tea party Republicans who want fiscal responsibility:

( zero hedge)

iv)As expected, Trump signs executive orders advancing both Keystone and Dakota pipelines: Mr Buffett and environmentalists will not be happy campers

Let us head over to the comex:

The total gold comex open interest ROSE BY 4,616 CONTRACTS UP to an OI level of 483,408 AS THE  PRICE OF GOLD ROSE $10.70 with YESTERDAY’S trading.  We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a LOSS of 9  contract(s) DOWN to 61.  We had 10 notices filed YESTERDAY so we GAINED 1 contract(s) or AN ADDITIONAL 100 oz WILL STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a LOSS of 9005 contracts DOWN to 179,787.(feb  2016: 145,830 contracts). March had a GAIN of 128 contracts as it’s OI is now 1047. We are now ahead with respect to OI when we compare data for open interest this year vs last year with the same amount of time to expire:

We had 8 notice(s) filed upon today for 800 oz


And now for the wild silver comex results.  Total silver OI ROSE by 1,973 contracts FROM  174,668 UP TO 176,641 AS the price of silver ROSE 15 CENTS with YESTERDAY’S trading.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI ROSE by 8 contract(s) RISING TO  180. We had 0 notice(s) filed on yesterday so we  gained 8 silver contracts or an additional 40,000 oz will stand  in this delivery month of January. The next non active month of February saw the OI RISE by 14 contract(s) RISING TO 228.

The next big active delivery month is March and here the OI rose by 757 contracts up to 133,925 contracts.

We had 151 notice(s) filed for 755,000 oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 257,345  contracts which is good.

Yesterday’s confirmed volume was 280,418 contracts  which is very  good

volumes on gold are getting higher!

Initial standings for january
 Jan 24/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 nil OZ
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
8 notice(s)
800 oz
No of oz to be served (notices)
53 contracts
5300 oz
Total monthly oz gold served (contracts) so far this month
1203 notices
120300 oz
3.7418 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   3000.000 oz
Total accumulative withdrawal of gold from the Customer inventory this month     4,806,084.1 oz
Today we HAD 1 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil oz
We had 2  adjustment(s)
i) Out of Delaware:  490.525 oz was adjusted out of the customer and this landed into the dealer account of Delaware:
ii) Out of HSBC: 96.45 oz was adjusted out of the customer account and this landed into the dealer account of HSBC (3 kilobars)
For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 8 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1203) x 100 oz or 120,300 oz, to which we add the difference between the open interest for the front month of JANUARY (61 contracts) minus the number of notices served upon today (8) x 100 oz per contract equals 125,600 oz, the number of ounces standing in this non  active month of JANUARY.
Thus the INITIAL standings for gold for the JANUARY contract month:
No of notices served so far (1203) x 100 oz  or ounces + {OI for the front month (61) minus the number of  notices served upon today (8) x 100 oz which equals 125,600 oz standing in this non active delivery month of JANUARY  (3.9066 tonnes)
we gained 100 oz of gold standing for delivery.
On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex.
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for all of 2016 and the first month of January 2017
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.3950 tonnes.
DEC.   29.931 tonnes
JAN/     3.9066 tonnes
total for the 13 months;  226.325 tonnes
average 17.409 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month.
Total dealer inventor 1,458,000.441 or 45.349 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,975,987.686 or 279.19 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 279.19 tonnes for a  loss of 24  tonnes over that period.  Since August 8/2016 we have lost 75 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
 Jan 24. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 608,492.901 0z
Deposits to the Dealer Inventory
754,815.720 oz
Deposits to the Customer Inventory 
1,015,570.740 oz
No of oz served today (contracts)
(755,000 OZ)
No of oz to be served (notices)
29 contracts
(145,000  oz)
Total monthly oz silver served (contracts) 710 contracts (3,550,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz
Total accumulative withdrawal  of silver from the Customer inventory this month  19,833,5365 oz
today, we had  1 deposit(s) into the dealer account:
i) Into CNT:  754,815.720 oz
total dealer deposit: 754,815.720 oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
 i) Out of Delaware: 7,682.001 oz
ii) Out of Scotia:  600,810.900 oz
 we had 2 customer deposit(s):
i) Into JPMorgan:  572,227.700 oz**
** JPMorgan has deposited a huge amount of silver on each and every day starting in 2017:
ii) Into CNT: 443,343.04 oz
total customer deposits;  1,015,570.740   oz
 we had 0  adjustment(s)
The total number of notices filed today for the JANUARY. contract month is represented by 151 contract(s) for 755,000 oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  710 x 5,000 oz  = 3,550,000 oz to which we add the difference between the open interest for the front month of JAN (180) and the number of notices served upon today (151) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the JANUARY contract month:  710(notices served so far)x 5000 oz +(180) OI for front month of JAN. ) -number of notices served upon today (151)x 5000 oz  equals  3,695,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We  gained 8 contract(s) or an additional 40,000 oz will stand.
At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand.
Volumes: for silver comex
Today the estimated volume was 48,421 which is very good
YESTERDAY’S  confirmed volume was 56,571 contracts  which is excellent.
Total dealer silver:  29.963 million (close to record low inventory  
Total number of dealer and customer silver:   181.613 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.



And now the Gold inventory at the GLD

jan 24/a huge withdrawal of 5.04 tonnes and probably this was used today in the whacking of gold/inventory rests at 804.11 tonnes

Jan 23/a big change/this time a deposit of 1.19 tonnes of gold into the GLD/inventory rests at 809.15 tonnes.  The drainage of gold from the GLD to Shanghai has now stopped!

Jan 20/no changes in gold inventory a the GLD/Inventory rests at 807.96 tonnes

Jan 19/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 18/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 17/17/a deposit of 2.96 tonnes of gold/inventory at the GLD rests at 807.96 tonnes.  I guess there is no more gold inventory to sent to C+Shanghai

Jan 13/17/there were no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes

Jan 12/2017/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

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

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


Jan 6/no changes in gold inventory at the GLD/inventory rests at 813.87 tonnes
Jan 5/no change in gold inventory at the GLD/inventory rests at 813.87 tonnes
Jan 4/no change in inventory/inventory rests at 813.87 tonnes
Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes
DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes
Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes
Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes
Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes
Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes
Jan 24/2017/ Inventory rests tonight at 804.11 tonnes


Now the SLV Inventory
jan 24/ a withdrawal of 948,000 oz at the SLV/Inventory rests at 337.408 million oz
Jan 23/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz
Jan 20/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz
jan 19/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz
Jan 18/no changes in silver inventory/inventory rests at 338.356 million oz/
Jan 17/no change in silver inventory at the SLV/Inventory rests at 338.356 million oz/
Jan 13/2017/on changes in the SLV inventory/rests tonight at 338.356 million oz/
Jan 12.2017/ no changes in the SLV Inventory/ rests at 338.356 million oz
JAN 10/no changes in inventory at the SLV/Inventory rests at 341.199 million oz
JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/
jan 6/no changes in inventory at the SLV/Inventory rests at 341.199 million oz
Jan 5/no changes in inventory at the SLV/Inventory rests at 341.199 million oz
Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz
Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/
DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/
Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz
Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/
Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz
Jan 24.2017: Inventory 337.408  million oz

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.7 percent to NAV usa funds and Negative 7.8% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.0%
Percentage of fund in silver:38.8%
cash .+0.2%( jan 24/2017) 
2. Sprott silver fund (PSLV): Premium RISES to +.64%!!!! NAV (Jan 24/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.14% to NAV  ( Jan 24/2017)
Note: Sprott silver trust back  into POSITIVE territory at +0.64% /Sprott physical gold trust is back into NEGATIVE territory at -0.14%/Central fund of Canada’s is still in jail.


Major gold/silver trading/commentaries for TUESDAY


Sharia Standard May See Gold Surge

Sharia Standard May See Gold Surge In Value

“The introduction of a Sharia standard for gold will not only be good for investors but also for gold producing countries and even individual mining operations”, according to The National in an article published this morning.

Sharia Standard. Gold bars in a gold shop in Saudi Arabia. Gold has long played a role in Muslim society as a store of wealth. Fahad Shadeed / Reuters

Gold bars in a gold shop in Saudi Arabia. Gold has long played a role in Muslim society as a store of wealth. Fahad Shadeed / Reuters

“The new Sharia gold standard is very important as it allows Islamic investors to access and gain exposure to physical gold in a safer and more efficient manner,” says Mark O’Byrne, the executive director at the bullion trader GoldCore in London.

“It will increase the diversity of available Sharia gold-compliant investment products and spark greater emphasis on the role of physical gold coins and bars.”

GoldCore research shows that if just 1 per cent of Islamic finance goes into gold, demand could increase by up to an enormous 1,000 tonnes a year. Even if demand comes in at half that it means the gold market will undergo a considerable shake-up.

Last month the Sharia Standard was approved as a collaboration between the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the Islamic standard-setting body, and The World Gold Council (WGC) in London.

“We launched the standard to enable greater access to gold for the Islamic investment community,” says Natalie Dempster, the managing director, central banks and public policy at the WGC. Currently, the WGC is talking to Islamic financiers and product developers as well as scholars over how to put the standard into practice.

Much as it is in the rest of the world, gold has long played a role in Muslim society as a store of wealth and as a means to facilitate trade.





Northern Dynasty states that it has Trump administration support to seek approvals to start mining in Alaska.  It will need to seek a major to assist them.  The most logical partner would be Agnico Eagle as they are quite good in mining in cold environments:

(courtesy Pearson/Bloomberg)

Northern Dynasty says it has Trump administration’s support, seeks new partner


By Natalie Obiko Pearson
Bloomberg News
Monday, January 23, 2017

Northern Dynasty Minerals Ltd. expects to resolve a dispute with the U.S. environmental regulator by April to enable it to move ahead with permitting one of the world’s largest undeveloped copper and gold deposits.

U.S. President Donald Trump’s administration has “a desire to permit Pebble,” the company’s project in Alaska, Northern Dynasty Chief Executive Officer Ronald Thiessen said today in Vancouver. “We will come to a resolution within 100 days” with the U.S. Environmental Protection Agency, he said.

In 2014 the EPA moved to impose restrictions on Pebble, blocking it from applying for a permit, citing “potentially destructive impacts” to the world’s largest sockeye salmon fishery. Trump’s pick to head the regulator, Scott Pruitt, is a self-described opponent of the EPA’s “activist agenda” and has called for “regulatory rollback” at the agency.

Thiessen said today the company isn’t expecting special treatment under the Trump administration but a return to a “normalized permitting” process. That process should take about four years and cost $150 million, he said. …

… For the remainder of the report:





Alasdair Macleod outlines how gold will now be used as money in the Muslim world especially as these countries are prone to devalue

(courtesy Alasdair Macleod)


Alasdair Macleod: Using gold as money in the Muslim world


7:20p ET Monday, January 23, 2017

Dear Friend of GATA and Gold:

Muslims have special reason to use gold as money, GoldMoney research director Alasdair Macleod writes today, because the government currencies of Muslim countries have been especially vulnerable to devaluation. Macleod notes that GoldMoney has been designated as a vehicle for purchasing gold in compliance with Muslim law. Macleod’s commentary is headlined “Using Gold as Money” and it’s posted at GoldMoney’s internet site here:


CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.





We brought this story to you yesterday. Bloomberg comments on Mnuchin;s lack of suport for a strong dollar in the near term:

(courtesy Bloomberg)

Trump’s nominee for Treasury backs off support for strong dollar


Inside the Mind of Mnuchin: Too-Strong Dollar May Hurt Economy

By Saleha Mohsin
Bloomberg News
Monday, January 23, 2017

U.S. Treasury Secretary nominee Steven Mnuchin said an “excessively strong dollar” could have a negative short-term effect on the economy.

“The strength of the dollar has historically been tied to the strength of the U.S. economy and the faith that investors have in doing business in America,” Mnuchin said in a written response to a senator’s question about the implications of a hypothetical 25 percent dollar rise. “From time to time, an excessively strong dollar may have negative short-term implications on the economy.”

The dollar slumped to the weakest in more than six weeks after the remarks, obtained by Bloomberg News today. The comments were included in answers from Mnuchin to questions from U.S. senators following his confirmation hearing last week. In that session, he had said a strong dollar is important over the long term, while noting it’s currently “very, very strong.”

President Donald Trump expressed concern about the dollar’s appreciation in an interview with the Wall Street Journal this month, saying the currency was “too strong.” That prompted speculation that his administration might reverse longstanding tradition in the U.S. to support a strong-dollar policy. …

… For the remainder of the report:






Central banks are seeking higher risk equities in the low interest rate environment.  This sets of high financial risks of collapse

(courtesy  Wall Street Journal)

Central banks embrace risk buying stocks and bonds in era of low rates


By Christopher Whittal, Jon Sindreu, and Brian Blackstone
The Wall Street Journal
Monday, January 23, 2017

By keeping interest rates low and in some cases negative, central banks have prompted some of the most conservative investors to join the hunt for higher returns: other central banks.

Central banks from Switzerland to South Africa are investing a bigger share of their growing foreign-exchange reserves in equities, corporate bonds and other riskier assets.

Branching out from the traditional central-bank practice of investing primarily in ultrasafe government bonds such as U.S. Treasurys means taking on more risk. But at a time when global growth, interest rates and potential returns on many assets are low, many central bankers are becoming increasingly focused on maximizing investment returns. …

At the same time, efforts to invest reserve funds more broadly mean that more markets will be subject to what some critics describe as central-bank distortion, as large and often price-insensitive buyers run the risk of driving up prices and reducing prospective returns for other market participants. …

… For the remainder of the report:





Due to sanctions, Russian to sell its huge gold deposit cheap and to Russian interests.

(courtesy Devitt/reuters)

Russia expected to sell gold deposit cheap amid sanctions, sources say


By Polina Devitt
Monday, January 23, 2017

MOSCOW — Russia is expected to sell discounted rights to one of the world’s largest untapped gold deposits this week to a joint venture of miner Polyus and a state conglomerate, industry sources and analysts said, after sanctions and restrictions discouraged other bidders.

The starting price in the Jan. 26 auction of the Sukhoi Log deposit is $145 million, valuing gold there at $2 per ounce, around 10 times cheaper than deposits of a similar size elsewhere in the world, according to one analyst.

The Russian government, after 20 years of promises to sell the deposit, hopes that the start of production will generate much-needed tax revenues and jobs.

Moscow has also come under pressure from a two-year lobbying campaign by shareholders in the joint venture of Polyus and state-run Rostec, according to an industry source, who spoke on condition of anonymity.

Rostec is headed by Sergei Chemezov, a close associate of Russian President Vladimir Putin. …

… For the remainder of the report:



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



2. Nikkei closed DOWN 103.04 POINTS OR 0.55%   /USA: YEN RISES TO 113.33

3. Europe stocks opened ALL IN THE GREEN      ( /USA dollar index RISES TO  100.29/Euro DOWN to 1.0741


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.53  and Brent: 55.27

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.386%/Italian 10 yr bond yield DOWN  to 1.993%    

3j Greek 10 year bond yield RISES to  : 7/02%   

3k Gold at $1213.00/silver $17.14(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 23/100 in  roubles/dollar) 59.32-

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   DEVALUATION DOWNWARD from POBC.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9997 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0738 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.386%


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 2.430% early this morning. Thirty year rate  at 3.014% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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


US Futures, Oil Flat As Greenback Rises Despite Mnuchin’s “Strong Dollar” Warning

US equity futures were flat, European stocks rose and Asia was mixed after the dollar posted a modest rebound overnight despite Mnuchin’s “strong dollar” comments, while oil was flat and gold fell, as investors focused on President Donald Trump’s plans to boost growth. The pound fell after a U.K. court ruled that Parliament must vote on triggering Brexit.

The dollar struggled in Asia on Tuesday as U.S. President Donald Trump’s focus on protectionism ahead of fiscal stimulus fueled suspicions his administration might be content to gain a competitive advantage through a weaker currency. However, early European trading saw modest gains in the USD, which rose to 113.4 in the USDJPY after dropping as low as 112.52, while the EURUSD declined to 1.73 after rising as high as 1.77 in Asian trading.  The talk of trade wars came even as more data pointed to a welcome revival in activity worldwide. A survey of Japanese manufacturing out Tuesday showed the fastest expansion in almost three years as export orders surged. Indeed, sentiment took an early knock when Mnuchin told senators that he would work to combat currency manipulation but would not give a clear answer on whether he views China as manipulating its yuan.

Still, the recent euphoria surrounding the Trumpflation trade now appears largely gone: “It’s interesting that markets did not respond positively to a reaffirmation of lower taxes and looser regulation, reinforcing the impression that all the good news is discounted for now,” wrote analysts at ANZ in a note. “As week one in office gets underway, there is a growing sense of scepticism, not helped by the tone of Friday’s inaugural address and subsequent spat with the media.”

Doubts about exactly how much fiscal stimulus might be forthcoming helped Treasuries rally. Yields on 10-year notes eased to 2.39 percent, having enjoyed the steepest single-day drop since Jan. 5 on Monday.  “The driver of a shift higher will be optimism that President Trump’s policies deliver more growth,” Juckes said. “If he starts tweeting about fiscal policy instead of trade policy maybe the bond bears can come out of hibernation again.” As the chart below shows, the dollar continues to trade in lockstep with 10Y TSY yields.

As traders arrive at their desks in the US, the greenback has managed to advance against most major currencies, reversing declines sparked after Treasury Secretary nominee Steven Mnuchin said on Monday afternoon that a strong U.S. currency could have a negative short-term effect on the economy.  In written answers to a Senate Finance Committee, Mnuchin also reportedly said an excessively strong dollar could be negative in the short term.

The pound extended losses after judges ruled Prime Minister Theresa May must ask Parliament to trigger the two-year countdown to the U.K.’s departure from the European Union, handing lawmakers a chance to soften the plan. Gold fell after touching the highest since November while oil climbed above $53 a barrel.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.4 percent, while Shangahi was flat and the Nikkei slipped 0.4 percent.  European stocks halted a three-day decline, led by Italian shares amid reports that Assicurazioni Generali SpA may get investment from Intesa Sanpaolo SpA and Allianz SE.

S&P500 futures were lower by 1 point at publication.

The yield on the 10-year Treasury rose three basis points to 2.42 percent.

Market Snapshot

  • S&P 500 futures down less than 0.1% to 2261
  • Stoxx 600 up 0.2% to 362
  • FTSE 100 up 0.2% to 7167
  • DAX up 0.2% to 11567
  • German 10Yr yield up 2bps to 0.38%
  • Italian 10Yr yield up 1bp to 2%
  • Spanish 10Yr yield up 3bps to 1.46%
  • S&P GSCI Index up 0.7% to 401.5
  • MSCI Asia Pacific down less than 0.1% to 140
  • Nikkei 225 down 0.5% to 18788
  • Hang Seng up 0.2% to 22950
  • Shanghai Composite up 0.2% to 3143
  • S&P/ASX 200 up 0.7% to 5650
  • US 10-yr yield up 2bps to 2.42%
  • Dollar Index up 0.12% to 100.28
  • WTI Crude futures up 0.9% to $53.22
  • Brent Futures up 0.9% to $55.75
  • Gold spot down 0.4% to $1,213
  • Silver spot down 0.6% to $17.13

Top News

  • Mnuchin Says Excessively Strong Dollar May Hurt U.S. Economy
  • Australia Pushes for TPP Without U.S. After Trump Exits Deal
  • Trump Said to Tell Lawmakers ‘Illegals’ Cost Him Popular Vote
  • Brexit vote
  • Goldman Hails Global Rebound as Currie Sees Commodity Demand
  • Emirates Stokes Ire of U.S. Airlines With Flights Through Greece
  • OPEC Helps Cheap U.S. Oil Find Its Way to Group’s Top Buyers
  • Nike and Ford Caught in Crossfire of Trump’s Trade Overhaul

Asia stocks traded mixed following a subdued lead from Wall St. where US indices finished mostly lower amid investor uncertainty during Trump’s first day in office. ASX 200 (+0.7%) outperformed led by mining names following gains across the metals complex on the back of a weaker USD, while Nikkei 225 (-0.6%) was pressured by recent JPY strength in which USD/JPY declined below 113.00. Shanghai Comp. (+0.2%) and Hang Seng (+0.2%) traded with an indecisive tone following a weaker liquidity operation by the PBoC and as participants look ahead to Lunar New Year. 10yr JGBs were higher and tracked the gains seen in T-notes amid outperformance in the long-end, while participants also digested the latest results of the 40yr auction which resulted in a slightly higher b/c

Top Asian News

  • Australia Pushes for TPP Without U.S. After Trump Exits Deal
  • Trump Withdrawal From Asia Trade Deal Could Boost China Clout
  • BOJ Is Said to Be Wary of Yield Target Hike Even If CPI Hits 1%
  • China Small-Cap Stocks Extend January Slump on Liquidity Squeeze
  • Toshiba to Report Writedown Amount on Feb. 14 With Earnings
  • Top Goldman Forecaster Urges China to Tighten Monetary Policy
  • $12,000 Trips Abroad Replace Chinese New Year Treks to Grandma’s

European equities trade mostly higher with some mild underperformance in the FTSE 100 with BT Group on track for its biggest ever intra-day drop after cutting profit forecast for 2017, 2018 amid Italian accounting scandal. EasyJet fell in the wake of its earnings update, in which they stated that the fall in GBP will likely reduce PBT by over GBP 100mIn. Intesa Sanpaolo falls in the wake of reports that the bank may be considering a share swap offer for Generali. Notable US pre-market earnings today include 3M, Alibaba, Du Pont, Johnson & Johnson, Kimberly Clark, Lockheed Martin, Travelers and Verizon. Gilts slipped after the aforementioned Article 50 Supreme Court ruling in favour of parliament. Eurozone debt sees a marginally pull back from yesterday’s gains with bond yields creeping higher. Slight outperformance in peripheral bonds with focus for Italy on the constitutional court hearing regarding the new electoral reform for the lower, which may increase expectations of an early snap election.

Top European News

  • Supreme Court Rules Brexit Trigger Needs Parliamentary Vote
  • Euro Area Starts 2017 on Strong Note as Price Pressures Build
  • Generali Jumps on Report That Intesa Plans to Mount Takeover Bid; Generali’s Move Defensive, Intesa Unlikely Buyer: Citi
  • BT Plunges After Cutting Outlook, Tripling Writedown in Italy
  • Philips Falls After Disclosing DoJ Talks on Defibrillators
  • EasyJet Drops After Weak Pound, Fuel Costs Hurt 2017 Outlook
  • Busch Seeks Rest of Vacuum Peer in Deal Valued at $1 Billion
  • Etihad CEO Hogan to Go as Carrier Struggles With Investments
  • EU Courting of London Banks May Derail 5-Year Tobin Tax Push

In FX, the UK supreme court ruling was pretty largely as expected, barring a few last minute jitters which saw the latter (devolution) qualification in question. Cable initially rallied towards the Asian highs just ahead of 1.2550, but held off these levels to dip back under 1.2500 figure. Bids seen ahead of 1.2400 to support, but the USD perspective takes over from here. EUR/GBP has seen choppy trade either side of 0.8600, but 0.8500-0.8700 looks safe for now. Elsewhere USD/JPY shows clear signs of basing out in the mid 112.00’s having targeted this level twice now and finding yield-play dip buyers. We are unlikely to get a major push north just yet, but we sense any form of sobriety from president Trump could facilitate a modest push back to 114.00-115.00 for now. However, EUR/USD is pretty unrelenting alongside this, with the corrective moves perhaps not yet exhausted despite some softness in the German PMIs this morning.

In commodities, consolidation prices across the board is the dominant theme, with the wait-and-see approach on president Trump’s agenda going forward puts much of the market on the sidelines for now. Gold is the first point of focus in direction relation to the greenback, but with equity markets fading a little, the risk element is also proving supportive for now. The yellow metal still trades on a USD 1200 handle, but has come off slightly in recent trade. $50.00 remains the comfort zone for Oil prices, with the backdrop of the OPEC agreement maintaining stability for the foreseeable future here. Copper outperforms Iron ore. West Texas Intermediate crude was unchanged, erasing earlier gains as Iraq said it’s close to implementing its share of pledged output curbs agreed with OPEC to trim bloated global inventories and stabilize the market. Oil slid 0.9 percent the previous session after U.S. drillers added the most rigs in more than three years.

In terms of the day ahead, we’ll also get the flash US manufacturing PMI for January while existing home sales and the Richmond Fed manufacturing survey will also be released.The Italian constitutional court is also due to rule on ex-PM Renzi’s electoral law for the Lower House known as Italicum. Central bank wise we’re due to also hear comments from the ECB’s Villeroy and Lautenschlaeger today. Meanwhile on the earnings front we’re due to get results from 21 S&P 500 companies today including Verizon and Johnson & Johnson at or prior to the open.

US Event Calendar

  • 8:55am: Redbook weekly sales
  • 9:45am: Markit US Manufacturing PMI, Jan. P, est. 54.5 (prior 54.3)
  • 10am: Existing Home Sales, Dec., est. 5.51m (prior 5.61m)
  • 10am: Richmond Fed Manufacturing Index, Jan., est. 7 (prior 8)
  • 4:30pm: API weekly oil inventories


  • President Trump meets with CEOs of Fiat Chrysler, GM, Ford
  • 9:30am: Senate Energy and Natural Resources Cmte votes on nomination of Rep. Ryan Zinke for Interior secretary and Rick Perry for Energy secretary
  • 10am: Senate Judiciary Cmte votes on nomination of Sen. Jeff Sessions for attorney general
  • 10am: Senate Banking, Housing and Urban Affairs Cmte votes on nomination of Ben Carson for HUD secretary
  • 10am: Senate Finance Cmte holds hearing on nomination of Rep. Tom Price for HHS secretary
  • 10am: Senate Commerce, Science and Transportation Cmte to vote on nominations of Elaine Chao for Transportation secretary and Wilbur Ross for Commerce secretary
  • 10:30am: House Ways and Means Cmte Chairman Kevin Brady details panel’s 2017 agenda
  • 10:30am: Senate Budget Cmte holds hearing on nomination of Rep. Mick Mulvaney for OMB director
  • 12pm: House considers H.R.7, which would amend Affordable Care Act to bar expenditure of federal money to purchase insurance that covers abortion services

DB’s Jim Reid concludes the overnight wrap

Today sees the UK Supreme Court appeal ruling after the Government lost their case to trigger Article 50 without a parliamentary vote. The decision has lost some of its potential impact as the expected loss is likely to be followed by PM May attempting to pass a narrow bill (with no restrictions on the government’s negotiating position) through both houses. It’s expected that such a bill passes but there are risks that last week’s speech where May admitted that leaving the single market was likely may have upset the moderates in her party and also that the Labour Party somehow manages to successfully unite behind a particular amendment that gets wider support but that the government won’t tolerate. This could lead to early elections if no bill can pass but is it really in the Labour Party’s interest to have one now? Probably not so we would expect a bill to pass. The threat hanging over a rejection in the House of Lords is reform of the chamber that might remove their influence so PM May has got leverage over both the opposition and the House of Lords.

The potential curveball from today is whether the court extends the judgement to the devolved regional assemblies (eg Scottish and Welsh) thus creating a constitutional crisis. An equally big curveball would be the court referring the whole matter to the European Court of Justice which would be heavily ironic. So a lot to look for today albeit with a clear central scenario. We’re expecting the outcome of the case around 9.30am GMT.

From my side, thinking about Brexit and also Mr Trump at a very top level, it’s fascinating to contrast Theresa May’s and Donald Trump’s big speeches last week. Simplistically the UK PM accepted that the UK will leave the EU and the single market but wants Britain to be global and seems prepared to do free trade deals with everyone who would want and allow one. In contrast Mr Trump’s main theme was nationalistic and to put “America first”. The contrast was sharp. The interesting thing though is that most economists are pretty optimistic on US growth and concerned about UK growth going forward and yet if you take both leaders at face value then the UK will be far more open to the global economy than the US. However I suppose this masks the fact that a trade shock to the UK could be bigger than the US due to its larger reliance on trade. Also it’s all very well for the UK to look to be global but it’s another thing actually getting free trade agreements, especially with the EU. Nevertheless it is interesting that at face value the UK’s official line is far more open to the rest of the world than the US at the moment. We’ll see how this evolves over the coming months.

That leads us nicely into what was a very busy and eventful first 24 hours in the new Trump administration. The most significant news yesterday was the announcement that Trump had pulled the US out of the 12-nation Trans-Pacific Partnership, calling the move a “great thing for the American worker”. The withdrawal wasn’t a huge surprise given how vocal Trump had been about the TPP during his campaign but it still evoked a wide range of reactions from various business heads and political leaders. Indeed Republican senator John McCain said that the move was a “serious mistake” and that “it will create an opening for China to rewrite the economic rules of the road at the expense of American workers”. The President also appeared to target Japan as a country which makes it difficult to sell US products there. In any case the speed with which Trump moved may have been a bit of a surprise and it now means that the focus will turn over to a likely renegotiation of NAFTA with Canada and Mexico.

Trump didn’t just stop with the TPP though. Indeed there was plenty of focus on a meeting with various business leaders in which he said that he would impose a “very major border tax” on US companies that move overseas and export back into the US. The President also said that regulations have “gotten out of control” and that he wanted to reduce regulation by at least 75%. According to the WSJ among the CEO’s in attendance at the meeting were those from Ford Motor, Lockheed Martin, Under Armour, Dow Chemical and Whirlpool. The article also suggested that Trump had asked the various leaders to come back  within 30 days with ideas aimed at boosting manufacturing in the US. Away from that Trump also ordered a federal hiring freeze excluding the military while Treasury Secretary Steven Mnuchin reignited the Dollar debate again by saying that “from time to time, an excessively strong dollar may have negative short-term implications on the economy”.

While that comment sent the Greenback down further in later trading in reality it had been a fairly rough day from the get go for the US Dollar with the market clearly jittery in the face of the early protectionist policies being put through by Trump. The Dollar index ended the day down -0.58% with the index closing at the lowest level since December 5th. It’s down another -0.14% this morning. Risk assets got the jitters too although in fairness a late bounce into the close limited the decline for the S&P 500 to only -0.27% compared to -0.64% at the day’s lows. That said it’s clear that equity markets continue to remain  fairly directionless. If you exclude the 0.00% return on January 10th then the index has now bounced between a gain and a loss day-to-day for 12 consecutive sessions. Meanwhile it had been much the same in Europe with the Stoxx 600 ending -0.43% while it was rates which really benefited from the risk off tone with 10y Treasury yields rallying 7.0bps to close below 2.400% again and 10y Bund yields finishing down 6.0bps at 0.358%. Gold (+0.65%) also continued its remarkable start to the year which has seen it rally over +6% already this month.

This morning in Asia we’ve seen bourses get off to yet another mixed start. While the Nikkei (-0.46%) and Kospi (-0.11%) have followed the lead from Wall Street, the Hang Seng (+0.29%), Shanghai Comp (+0.18%) and ASX (+0.37%) have edged higher. Meanwhile most Asian currencies are stronger reflecting the latest leg lower for the Dollar while Oil has largely pared yesterday’s decline. Moving on. There wasn’t much in the way of economic data out yesterday with the sole release being the flash January consumer confidence reading for the Euro area which improved a touch to -4.9 from -5.1. More notable was the latest CSPP holdings data out of the ECB. The data revealed that total holdings now stand at €56.886bn which implies net purchases settled last week of €2.876bn or an average daily run rate of €575m in that week. Not only is that well above the daily run rate since the programme started (at €362m) but it is also the strongest CSPP week since the start of the programme. We would guess though that given December was a softish month for purchases as a result of the holiday season, we may be seeing a bit of catch up in last week’s numbers.

Staying in Europe, in yesterday’s EMR we highlighted the Socialist Primary result in France where Hamon came out on top with a little over 36% of the vote. In addition, our economists noted that the turnout was disappointing on Sunday with between 1.5 and 2 million voters. They go on to say that without a higher turnout next Sunday the Socialist candidate’s campaign in the Presidential race could be called into question and senior centre-left politicians may reconsider their support. They also note that since the beginning of December, Hollande’s execonomy minister Macron has surprised many with the momentum and support he has been gathering as an independent Presidential candidate. As far as the polls are concerned they note that Le Pen is just ahead of Fillon in the first round, with both slightly above 25%.

However, based on the polls, Fillon would defeat Le Pen in the second round of the Presidential election. However, Macron could benefit from wider support of left-wing supporters and beat Le Pen as well as Fillon in the second-round. That is, the potential re-alignment of political forces in the centre and centre-left should be monitored carefully in the next few weeks as it could turn the first-round of the election campaign from a two-person to a three-person race.

In terms of the day ahead, this morning in Europe the focus will be on the January flash PMI’s where we’ll get manufacturing, services and composite readings for the Euro area, Germany and France. The UK will also release December public sector net borrowing data. Over in the US this afternoon we’ll also get the flash manufacturing PMI for January while existing home sales and the Richmond Fed manufacturing survey will also be released. Away from the data the key event today is the aforementioned Supreme Court ruling in the UK concerning the ability of the UK government to trigger article 50 without parliamentary approval. The Italian constitutional court is also due to rule on ex-PM Renzi’s electoral law for the Lower House known as Italicum. Central bank wise we’re due to also hear comments from the ECB’s Villeroy and Lautenschlaeger today. Meanwhile on the earnings front we’re due to get results from 21 S&P 500 companies today including Verizon and Johnson & Johnson at or prior to the open.



i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 5.78 POINTS OR 0.18%/ /Hang Sang closed UP 51.34 OR 0.22%. The Nikkei closed DOWN 103.04 POINTS OR .55% /Australia’s all ordinaires  CLOSED UP 0.68%/Chinese yuan (ONSHORE) closed UP at 6.8588/Oil ROSE to 52.83 dollars per barrel for WTI and 55.27 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.8139 yuan to the dollar vs 6.8588  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE COMPLETELY NARROWS AS POBC ATTEMPTS TO STOP DOLLARS FROM LEAVING CHINA’S SHORES. HOWEVER BOTH CHINESE YUANS RISE WITH THE LOWER DOLLAR 




none today


China states that it has irrefutable sovereignty over the disputed islands in the South China seas.  They tell the USA to act and speak cautiously as Spicer in the press talk threatens China:

(courtesy zero hedge)

China Tells US To “Act And Speak Cautiously” In Response To Spicer “Threat” Over South China Sea



Then China ups the ante by deploying their new nuclear ICBM which is capable of travelling 15,000 kilometers and delivering 10 to 12 nuclear warheads

(courtesy zerohedge)





Theresa May received the news this morning that the UK Supreme Court rules that there must be a vote before a Brexit can begin.  However the opposition will not go against the will of the people. Theresa May will trigger the clause 50 but allow the opposition to agree to a final separation

(courtesy zero hedge)

In Blow To Theresa May, UK Supreme Court Rules Parliament Must Vote Before Brexit Can Start

In a blow to Theresa May’s ambitions to implement a “clean Brexit”, on Tuesday morning UK’s Supreme Court ruled the UK Prime Minister can’t start the Brexit process without approval from Parliament, a decision that could potentially complicate her path toward a clear break from the European Union. Eight justices voted against the government and three voted in favor of it, in a decision that was widely expected.

The case had been brought by a group of British citizens opposed to Brexit with the help of some of the U.K.’s top constitutional lawyers. Spearheading the legal challenge were British businesswoman Gina Miller and hairdresser Deir Dos Santos. Grahame Pigney, a France-based expatriate who used crowdfunding from more than 4,000 people to pay for lawyers, joined the suit as a co-party

The government responded that the ruling wouldn’t affect May’s plans to trigger talks to leave the EU by the end of March and the opposition Labour Party said after the judgment it wouldn’t seek to stop Brexit from happening. But Labour said it would try to amend any bill introduced by Mrs. May to kick off the Brexit process, possibly influencing how the U.K.’s new relationship with the EU will look.

According to the WSJ, while a majority of lawmakers voted to stay in the EU, many have said they won’t seek to block Article 50, which formally starts Britain’s exit from the EU, given the popular vote, in which 52% voted to leave. “The British people voted to leave the EU, and the government will deliver on their verdict—triggering Article 50, as planned, by the end of March,” a U.K. government spokesman said. “Today’s ruling does nothing to change that.”

Lord David Neuberger said any change in the law to put Brexit into effect must be made by an act of Parliament. “To proceed otherwise would be a breach of settled constitutional principles stretching back many centuries,” he said. He said the Supreme Court justices were ruling on the process of legally bringing the result into effect, and that the ruling had nothing to do with whether the U.K. should exit from the EU or the timetable.

While the outcome was not surprising, the case has been one of the most politically charged in decades. After the High Court ruled against the government in November, pro-Brexit activists called the decision an attempt to overturn the will of Britons who chose to break away from the bloc in a June referendum. The Daily Mail newspaper said the three High Court judges who ruled on the case were “enemies of the people.” But the landscape has shifted since then.

As previously reported, in December, Mrs. May won lawmakers’ backing to trigger the start of Brexit by the end of March after promising to give Parliament, the majority of whom backed staying in the EU, an opportunity to scrutinize her plan first.

Mrs. May has outlined a plan for a definitive break from the EU, saying she intends to take the country out of the EU’s single market for goods and services. Leaving the single market will create uncertainties for U.K. businesses that rely on trade with Europe, particularly financial markets, auto makers and aerospace.

Asked in an interview with a German newspaper this month whether the U.K. was seeking to become a tax haven with low levels of corporate tax, U.K. Treasury Chief Philip Hammond said the U.K. could change its economic model if it isn’t granted access to trade in the EU after it leaves the bloc.

Jeremy Corbyn, Labour leader, said in a statement after the ruling that Labour “will not frustrate” the process for trigger the U.K.’s exit.

“However, Labour will seek to amend the Article 50 bill to prevent the Conservatives using Brexit to turn Britain into a bargain basement tax haven off the coast of Europe,” Mr. Corbyn said. “Labour will seek to build in the principles of full, tariff-free access to the single market and maintenance of workers’ rights and social and environmental protections.” He added that the party would demand that the U.K. government lays out a plan for negotiations so parliamentarians could hold it to account.

Kelvin Hopkins, a Labour member of Parliament, urged his party not to seek to complicate the process of leaving.

“My colleagues in the House of Commons need to realize that if we are seen to frustrate the will of the British people, by opposing or delaying Brexit we could find ourselves in a position where we will never see a Labour government again,” Mr. Hopkins said in a statement.

Over four days of hearings before the Supreme Court last month, the government said it had the right to trigger Brexit because of the so-called royal prerogative, in which executive authority is given to ministers so they can govern on the monarch’s behalf.

The market’s reaction has been subdued, with the resulting modest decline in sterling – the opposite of what would be expected from the adverse ruling – suggesting that the court’s decision had been fully priced in by the market. In fact, as HSBC predicted ahead of the decision, “if ruling states that Parliamentary approval will be needed to start the Brexit process it will be “mildly negative” for the pound.” as the government is prepared for this and “should be able to table a short and simple Parliamentary Bill in the coming days” meaning Article 50 could still be triggered before the end of March.

Sure enough, GBPUSD is now modestly lower following the announcement.

And indeed, as Reuters writes, Theresa May’s plans to start the process of Britain leaving the European Union by the end of March are unlikely to be hindered or slowed by Tuesday’s Supreme Court ruling the government must seek parliamentary approval. In the ruling, judges on Britain’s top judicial body upheld an earlier High Court decision that lawmakers had to give their assent before May can invoke Article 50 of the Lisbon Treaty which formally starts two-years of divorce talks.

However, the legal defeat, while an inconvenience and embarrassment for the government, is not expected to delay its Brexit timetable or, as some investors and pro-EU supporters hope, make it possible to stop Britain leaving the bloc. Part of this is because the opposition is divided.

“We will not block Article 50,” Jeremy Corbyn, leader of the main opposition Labour Party which campaigned against Brexit, said last week. “All Labour MPs (members of parliament) will be asked to vote in that direction next week, or whenever the vote comes up.” Not all Corbyn’s colleagues may go along, but May can get the votes she needs for overall passage.

However, what the decision could do is give an opportunity for Labour and other lawmakers who oppose a “hard Brexit” – an agreement with the EU that puts immigration curbs above access to the single market – to have a greater influence on what the final deal should look like.

The greatest potential threat to May comes from parliament’s unelected upper chamber, the House of Lords, where many peers remained strongly opposed to Brexit and do not have voters to worry about. If the Lords were to vote against approving the triggering of Article 50, the Brexit timetable could be severely delayed.

However, the government is confident the bill will pass through the Lords because there would be a constitutional crisis if unelected peers were to thwart the will of the people expressed both through the referendum and from their representatives in the Commons




And here is the timetable:

(courtesy zero hedge)


Brexit: The Full Timetable Of What Happens Next

Despite today’s expected decision by the UK Supreme Court, which ruled that Theresa May has to put the Brexit decision to a vote in parliament – in line with what May recently said she would – the government announced that the decision would not adversely impact its timeline for triggering Article 50 before the end of March, and that it would introduce Article 50 legislation “within days.” The result was little if any reaction from various asset classes, with the pound largely unchanged after some initial volatility.

So what happens next? Here, courtesy of Danske Bank’s Mikael Olai Milhoj, is a quick recap of next steps in the Brexit saga;

Government to introduce Article 50 legislation ‘within days’

  • As expected, the Supreme Court ruled that the parliament and not the government has the power to invoke Article 50, which formally starts the exit negotiations with the EU. Thus the Supreme Court upheld the High Court’s decision in November. Market reaction was limited.
  • Based on stories in UK media, most cabinet ministers expected to lose the appeal case. In PM Theresa May’s Brexit speech, it also seemed that she had already accepted that the parliament needs to be involved in the negotiation process, as she mentioned the final deal will be put to a vote in both Houses of Parliament. For more details on PM May’s Brexit speech where she outlined her 12 Brexit principles please see Brexit Monitor #21, 17 January.
  • However, it was a victory for the government that it does not need to consult the assemblies in Northern Ireland, Scotland and Wales before triggering Article 50.
  • We do not think the Supreme Court’s ruling will delay the triggering of Article 50. Brexit Minister David Davis has said the government will introduce Article 50 legislation ‘within days’ (see Reuters, UK to introduce Article 50 legislation ‘within days’ – Brexit minister, 24 January) and it seems unlikely that either the Conservative Party or Labour will block the legislation in the House of Commons. In a   non-binding vote in December, MPs voted overwhelmingly to support PM Theresa May’s Brexit time table. It could be more problematic to pass the legislation in the pro-EU House of Lords where the Conservatives do not have majority, but it would probably create a constitutional crisis if the House of Lords tries to block or delay Brexit, see Reuters, Brexit plans unlikely to be slowed by Article 50 defeat, 24 January.
  • In the Supreme Court’s judgement, it says in section 122 that ‘What form such legislation should take is entirely a matter for Parliament’, which allows the Government to present a very short bill, which makes it more difficult for the MP’s to make amendments. Both Labour and the Scottish National Party (SNP) have already said that they want to be heavily involved during the negotiation process.
  • In other words, we will have some arm wrestling between the government and the members of parliaments in the coming two months ahead of the triggering of Article 50. However, it is worth noting that the EU is not bound by whatever strings may be attached by the UK government, so we still think we are heading towards a hard Brexit, as the UK cannot stay within the single market and get control over EU immigration at the same time.
  • We still expect EUR/GBP to come under pressure as the triggering of Article 50 moves closer. We target EUR/GBP at 0.88 in 3M but see risks skewed to the upside.

The calendar of next steps in visual format:




Trump will certainly have his smoking gun if he wishes to tear up the Iran deal. Iran has been caught smuggling anti tank missile systems from Ukraine under false manifests.

(courtesy zero hedge)

Iran Caught Smuggling Anti-Tank Missile Systems Through Ukraine Under “False Manifests”

According to new reports just surfacing today, last Thursday, the day before Trump was set to take his oath of office, Iran was caught by the State Border Guard Service of Ukraine attempting to smuggle anti-tank missile systems through Kiev’s Zulyany airport under “false manifests.”  According to the Washington Free Beacon, Ukrainian authorities, upon inspecting the cargo of a plane bound for Iran last week, discovered multiple boxes filled with components for a Fagot anti-tank guided missile system.

Ukrainian authorities have confirmed that they seized a shipment of missile system components bound for Iran, according to official statements that could put the Islamic Republic in violation of international bans on such behavior.

The State Border Guard Service of Ukraine, or DPSU, announced late last week that it had seized at least 17 boxes filled with missile components bound for Iran, according to IHS Jane’s.

“The DPSU said that, during an inspection of the aircraft on 19 January, its personnel had found 17 boxes with no accompanying documents, which the aircraft’s crew said contained an aircraft repair kit,” according to the report. “Three boxes contained components that were believed to be for a Fagot anti-tank guided missile system, the rest contained aircraft parts.”

Days after this finding, the DPSU said that it had confirmed the missile components were destined for Iran’s Fagot system.

Ukrainian authorities released the following pictures of the seized components:


The components were intended for a Fagot anti-tank guided missile system like the one pictured below.


If true, such behavior, in addition to being just one final insult to the Obama administration on their way out of the White House, would be a direct violation of numerous international laws and agreements.

Michael Rubin, a former Pentagon adviser and expert on rogue regimes, said that Iran has been illicitly moving such weapons for quite some time and that only “fools and secretaries of state would trust Iran to uphold its agreements.”

“This isn’t the first time Iran has gotten caught red handed smuggling weapons with false manifests, for example, in 2010 in Nigeria,” Rubin said. “The question is how often does Iran get away with such smuggling and for what purpose? After all, if the weaponry is legal, there’s no reason for lying. If it’s not, Iran is violating international agreements. Either way, only fools and secretaries of state would trust Iran to uphold its agreements.”

of course, the key question is how the Trump administration will respond to Iran’s continued provocations after already describing Obama’s deal with the rogue state as the “highest level of incompetence.”  While John Kerry’s State Department, under direction of Obama’s White House, may have buried this story to save face, we suspect the Trump administration won’t rollover quite so easily.




Most of the pundits thought Turkey would raise its interest rate trying to keep the Lira higher.  However Erdogan certainly has his finger on its central bank as again they kept their benchmark rate unchanged: down goes the Lira again

(courtesy zero hedge)

Turkish Lira Crashes After Central Bank Unexpectedly Keeps Benchmark Repo Rate Unchanged

With Wall Street consensus expecting the Turkish central bank to hike its benchmark repo rate by 50bps (in two cases by as much as 75 bps and five analysts were expecting as much as a 100 bps increase) in hopes of arresting the recent record collapse in the Turkish Lira, this morning the central bank again proved it has become a political appendage of Erdogan, who has repeatedly stated he is against any rate hikes, when the central bank kept its overnight benchmark repo rate unchanged at 8%, even as it raised its less relevant overnight lending rate by the expected 75 basis points.

The latest breakdown of Turkey’s rates:

  • Benchmark repo rate: 8%
  • Overnight lending rate: 9.2%
  • Overnight borrowing rate: 7.25%

The disappointment was particularly acute following a November decision to hike rates by 50 bps, the first such increase in more than two years.

As a result, the lira plunged nearly 2% with USD/TRY surging as much as 1.9% to session high of 3.8284.

In its justification, the central bank said that it can deliver further tightening if needed, noting “inflation expectations, pricing behavior and other factors affecting inflation will be closely monitored and, if needed, further monetary tightening will be delivered.”

“Moreover, necessary liquidity measures will be taken in case of unhealthy pricing behavior in the foreign exchange market that cannot be justified by economic fundamentals.”

“Recent data indicate partial recovery in economic activity, which is “expected to continue at a moderate pace. Yet, excessive fluctuations in exchange rates since the previous meeting have increased the upside risks regarding the inflation outlook”

It concluded that “significant rise in inflation is expected to continue in the short term due to lagged pass-through effects and the volatility in food prices.”

In other words, expect Turkish inflation to soar in the near future as the currency crash accelerates, all the while Erdogan blames some vast foreign conspiracy to overthrow him.



More havoc in Mexico has Mexican protesters have seized control of the USA order crossing in Tijuana,  Drug cartel members are still high jacking much of Mexican gas and selling the gas to needy motorists

(courtesy zero hedge)

Mexican Protesters Seize Control Of U.S. Border Crossing In Tijuana

A couple of weeks ago we highlighted the protests that had engulfed Mexico after the finance ministry announced plans to raise gasoline prices by 20.1% starting January 1st.  While many people have looted gas stations and/or threatened to burn them down altogether, the latest protesting strategy of pissed off Mexican motorists is to seize control of border crossings with the United States and allow for a free flow of motorists into Mexico.  According to the AP, over the weekend roughly 50 protesters were able to take control of the Otay Mesa crossing that connects San Diego to Tijuana as border officials abandoned their posts.

Protesters took control of vehicle lanes at one of the busiest crossings on the U.S. border Sunday to oppose Mexican gasoline price hikes, waving through motorists into Mexico after Mexican authorities abandoned their posts.

Motorists headed to Mexico zipped by about 50 demonstrators at the Otay Mesa port of entry connecting San Diego and Tijuana, many of them honking to show support. The demonstrators waved signs to protest gas hikes and air other grievances against the government of Mexican President Enrique Pena Nieto.

Other protests closed southbound traffic for hours at the San Diego-Tijuana San Ysidro port of entry, the busiest crossing along the 2,000-mile border, and halted southbound traffic at one of two crossings in Nogales, Arizona. U.S. Customs and Border Protection and California Highway Patrol officers closed southbound Interstate 5 to block access to the San Ysidro crossing, diverting traffic several miles east to the Otay Mesa port of entry.


Despite a free flow of motorists into Mexico,  U.S. Customs and Border Protection officials confirmed that inspections were normal for all travelers entering the U.S. from Mexico.

Of course these latest protests follow reports from last week that Mexico’s drug cartels have been looting Pemex oil and gas pipelines in an effort to create their own brand new black market for petroleum products.  With a modest upfront capital investment of $5,000 – $8,000, the cartels have realized they can tap directly into state-owned gas pipelines and withdraw seemingly unlimited supplies of gasoline which they then sell along the highway at a discount to official government prices.  It’s a win-win situation whereby the drug cartels make 100% profit margins and citizens get “cheap” fuel.

The black market is booming. Several states experienced gasoline shortages at the end of last year as more thieves tapped into state-owned Petróleos Mexicanos (Pemex) pipelines. The pilfered fuel was sold to drivers hoping to save money. Pipeline theft in 2015 increased sevenfold, to more than 5,500 taps, from just 710 in 2010. Pemex attributes the company’s 12-year slide in crude production in part to the growth in illegal taps.

The drug cartels have turned to fuel theft as a side business worth hundreds of millions of dollars each year, and crime groups focused solely on gasoline robbery have sprung up, says Alejandro Schtulmann, president of Empra, a political-risk consulting firm in Mexico City. “You only need to invest $5,000 or $8,000 to buy some specific equipment, and the outcome of that is huge earnings.”

Fuel theft creates a vicious cycle: The theft increases costs for Pemex and makes the official gasoline supply more scarce, contributing to higher prices for legal consumers. Theft amounts to about $1 billion a year, says Luis Miguel Labardini, an energy consultant at Marcos y Asociados and senior adviser to Pemex’s chief financial officer in the 1990s. “If Pemex were a public company, they would be in financial trouble just because of the theft of fuel,” he says. “It’s that bad.”

Gas Looting

Of course, the biggest loser in this whole situation continues to be Enrique Peña Nieto who has basically become the least popular President in Mexico since one-party rule ended in 2000.

All this is creating headaches for Enrique Peña Nieto, whose popularity was already the lowest of any president since one-party rule ended in 2000. Peña Nieto is limited to a single term, and polls show potential candidates from his Institutional Revolutionary Party (PRI) trail populist opposition leader Andrés Manuel López Obrador in the race for the mid-2018 presidential election. López Obrador has made the jump in gasoline prices his latest rallying cry against the administration.

“This is definitely going to have consequences for the PRI,” says Jorge Chabat, a political scientist at the Center for Economic Research and Teaching, a university based in Mexico City. “Frankly, I don’t see any way that they can win in 2018.”

If all else fails, we hear that the tequila served in Tijuana is a very good, cheap and highly combustible alternative to gasoline


Goldman Sachs correctly state that there will be an oil price shock with a border tax.  Oil produced in the USA and exported will garner no tax.  Thus USA produced oil will have a higher price than foreign oil.  Foreign oil  will probably not be used initially as its costs cannot be passed through.


This will create huge distortions in the oil market


(courtesy GoldmanSachs)

Goldman Warns Of Oil Price Shock As Border Tax Could Lead To Surge In US Oil Production

While much has been said about the impact on the dollar from the proposed Border Tax Adjustment, which may or may not be implemented depending on what Trump says/tweets on any given day (and as a reminder, there has already been a loud outcry against it by powerful lobby groups, including the Kochs, as a result of the expected decimation of US retailers should BTA be implemented) little has been said about how it could impact US commodity production in general, and oil in particular.

This morning, in a note titled “Destination-based taxation and the oil market”, Goldman’s Damien Courvalin focused on this issue and found that the price gain from shift to destination-based border adjusted corporate tax would prompt US drillers to sharply increase activityas a result of lower US corporate tax rates, which would aggressively incentivize shale drilling, resulting in a global oil price shock, sending domestic prices spiking, as global prices slide.

The border tax would have an inflationary impact on U.S. service costs and reduce U.S. dollar costs of foreign producers. A lower U.S. corporate tax rate “could force a deflationary tax policy response” elsewhere further reducing the marginal cost of oil. In short, “US oil prices would appreciate immediately and sharply vs. global oil prices

Some observations:

If domestic oil prices remained at the same level as imported crude oil prices upon implementation of the BTA,  US refiners would have an incentive to consume only domestically produced crude instead of importing crude as only the cost of domestic crude would be deducted for tax purposes, and (2) US producers would have an incentive only to export crude rather than to sell to domestic refiners as there  would be no taxes on exports. This would lead to a sharp appreciation of the US domestic oil price relative to the global price oil.




Because US oil demand of 19.6 mb/d currently vastly exceeds domestic crude production of 13.5 mb/d, the US market requires imports of crude. As a result, refiners would bid domestic crude up until domestic prices rise enough to leave them indifferent about importing crude for their incremental barrels. Put another way, pricing power would be in the hands of producers upon introduction of this policy and they could charge US refiners up until these prefer to import foreign crude instead. Financial markets would anticipate this new equilibrium, with domestic oil prices reacting immediately to offset the impact of the border adjustment and leave refiners with the same pre-policy incentives to consume domestic or imported crude oil.



The magnitude of this relative price move would be determined by the new US corporate tax rate and, at 20% (the rate currently being proposed by the Republican tax BluePrint), it would imply US prices trading at a 25% premium over global oil prices.


Goldman warns that rising U.S. production would create a “renewed large oil surplus into 2018” and that there would be an “immediate decline in global oil prices” as other producers offset ramp-up in U.S. output. OPEC would probably raise production, supplies would grow and forward curve would move into “steep contango.”

As an example, assuming a 15% dollar gain and 30% pass through to global production costs, Brent would decline to $50/bbl in 2019 from ~$57/bbl now.

In pricing terms, the higher U.S. crude price would pass through to consumers with modest impact on U.S. fuel demand growth. With $5/bbl rise in U.S. crude, demand to rise 70k b/d in 2018, 55k b/d below present forecast. Meanwhile, refiners would be left with excess returns as a result of the border tax.

In the longer term, Goldman predicts that a “new market equilibrium would arise” with U.S. prices returning to pre-policy level. Border tax would reduce imports and boost exports “in theory” causing dollar to appreciate 25% to reverse initial distortion; the USD appreciation has been duly noted. However, the medium-term outcome would likely be “modestly higher U.S. oil prices and sustainably lower global oil prices, with a shift down by U.S. producers and refiners on the global cost curve.”

* * *

Here is the big picture from Goldman:

A switch to Border-Adjusted Tax (BTA) would immediately lead to a 25% appreciation of US crude and product prices vs. global prices (at a 20% corporate tax rate). This appreciation would provide excess returns to domestic producers and incentivize them to sharply increase activity. This improvement in shale’s competitiveness would be exacerbated by the introduction of a lower US corporate tax rate funded by the BTA. While the BTA’s inflationary impact on US service costs and the deflationary impact of USD appreciation on foreign costs should theoretically offset these shifts and push global prices down by 20%, the contracted nature of oil services implies that the BTA will initially leave US producers moving down on the global cost curve and capturing higher returns.


This significant incentive to ramp up US production in a market that is only starting to rebalance would create a renewed large oil surplus in 2018, likely exacerbated by a reversal of the OPEC cuts. This prospect should lead to an immediate sharp decline in global oil prices to try to offset such a potential US ramp-up, either by creating an offsetting foreign production decline or by normalizing US excess returns. Over the longer term, the decline in the US corporate tax rate and shale’s significant growth potential at higher returns could force a deflationary tax policy response abroad, sustainably reducing oil’s marginal cost of production.


Importantly, there would initially be no changes in US crude differentials and crude or product trade flows, with all US refiners benefiting from higher margins because of the lower tax rate. Differentiation between US refiners would only materialize if the supply response of US producers creates logistical constraints and wider domestic crude differentials.


And the executive summary:  see zero hedge



Transcanada Pipelines responds to Trump’s executive order.  They say that Keystone XL will add 3 billion USA to its GDP

(courtesy zero hedge)


Transcanada Responds To Trump Executive Order: Says Keystone XL Will Add $3 Billion To US GDP

In a response filed moments ago by TransCanada, the company said it is currently preparing a follow up application, and will take up President Donald Trump’s invitation to again seek permit for the Keysteon XL pipeline. It further adds that Keystone XL will add more than $3 billion to U.S. GDP and create “thousands” of construction jobs.

Full statement below:

We appreciate the President of the United States inviting us to re-apply for KXL.


We are currently preparing the application and intend to do so. KXL creates thousands of well-paying construction jobs and would generate tens of millions of dollars in annual property taxes to counties along the route as well as more than $3 billion to the U.S. GDP.


With best-in-class technology and construction techniques that protect waterways and other sensitive environmental resources, KXL represents the safest, most environmentally sound way to connect the American economy to an abundant energy resource.

Ironically, as the back and forth was taking place, news emerged that a pipeline in the western Canadian province of Saskatchewan leaked 200,000 liters (52,834 gallons) of oil in an aboriginal community, the provincial government said on Monday according to Reuters. The government was notified late in the afternoon on Friday, and 170,000 liters have since been recovered, said Doug McKnight, assistant deputy minister in the Ministry of the Economy, which regulates pipelines in Saskatchewan.

The spill came seven months after another major incident in Saskatchewan, in which a Husky Energy Inc pipeline leaked 225,000 liters into a major river and cut off the drinking water supply for two cities. It was not immediately clear how the current incident happened or which company owns the underground pipeline that leaked the oil.

McKnight said Tundra Energy Marketing Inc, which has a line adjacent to the spill, is leading cleanup efforts. “There are a number of pipes in the area,” he told reporters in Regina. “Until we excavate it, we won’t know with 100-percent certainty which pipe.”

Tundra, a privately held unit of Canadian grain trading and energy conglomerate James Richardson and Sons Ltd, released a statement saying it is cooperating with all levels of government and will ensure “the affected land is restored appropriately.”

The incident happened in the lands of the Ocean Man First Nation 140 km (87 miles) southeast of the provincial capital of Regina, according to the province.

It is still unclear how environmental groups will react to today’s executive orders by Trump.



none today


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



GBP/USA 1.24547 DOWN .0068 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT)


Early THIS TUESDAY morning in Europe, the Euro FELL by 18 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0741; 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 UP 5.78 or 0.18%     / Hang Sang  CLOSED UP 51.34 POINTS OR 0.22%  /AUSTRALIA  CLOSED UP 0.68%  / EUROPEAN BOURSES ALL IN THE GREEN 

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED DOWN 103.04 OR 0.55% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 51.34 OR 0.22%  Shanghai CLOSED UP 5.78 POINTS OR 0.18%   / Australia BOURSE CLOSED UP 0.68% /Nikkei (Japan)CLOSED DOWN 103.04 OR 0.55%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1213.60


Early TUESDAY morning USA 10 year bond yield: 2.430% !!! UP 4 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.014, UP 3 IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 100.29 UP 36 CENT(S) from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING


And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.86% UP 7  in basis point yield from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.052%DOWN 1/2  in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.507%  UP 7  IN basis point yield from  MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.043  UP 5 POINTS  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 53 points HIGHER than Spain.





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

Euro/USA 1.0760 up .0001 (Euro UP 1 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.56 UP: 0.880(Yen DOWN 88 basis points/ 

Great Britain/USA 1.2532 UP 0.0018( POUND UP 18 basis points)

USA/Canada 1.3120 DOWN 0.0117(Canadian dollar UP 117 basis points AS OIL ROSE TO $53.46


This afternoon, the Euro was UP by 1 basis points to trade at 1.0760


The POUND ROSE 18  basis points, trading at 1.2532/

The Canadian dollar ROSE  by 117 basis points to 1.3120,  WITH WTI OIL RISING TO :  $53.46

The USA/Yuan closed at 6.8554
the 10 yr Japanese bond yield closed at +.052% DOWN 1/2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 5 IN basis points from MONDAY at 2.449% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.036 UP 5  in basis points on the day /

Your closing USA dollar index, 100.03 UP 10 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY: 1:00 PM EST

London:  CLOSED DOWN 0.84 OR 0.01% 
German Dax :CLOSED UP 49.19 POINTS OR 0.43%
Paris Cac  CLOSED UP 8.62 OR 0.18%
Spain IBEX CLOSED UP 82.40 POINTS OR 0.89%
Italian MIB: CLOSED UP 171.13 POINTS OR 0.89%

The Dow closed UP 112.86 OR .57%

NASDAQ WAS closed UP 48.01 POINTS OR .86%  4.00 PM EST
WTI Oil price;  53.46 at 1:00 pm; 

Brent Oil: 55.66  1:00 EST




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

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


BRENT: $55.21


USA 30 YR BOND YIELD: 3.050%

EURO/USA DOLLAR CROSS:  1.0731 up .0028 

USA/JAPANESE YEN:113.80  UP 1.02

USA DOLLAR INDEX: 100.28  UP 35  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2518 : UP 4   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.365%



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


“Trillion Dollar Plan” Sends Stocks To Record Highs As ‘Volatility’ Hits Record Lows


The Dow soared non-stop (along with a VIX crash), seemingly on the heels of Senate Democrats’ $1 trillion infrastructure plan…(NOTE – VIX was crushed into the close and stocks also fell!)

As RBC’s Charlie McElligott notes, some focus in macro community today (with v little interest paid in equities, curiously) on the proposal from Senate Democrats of their own $1T infrastructure plan to President Trump per the NYT this morning.

The reason macros care so much of course is that a coherent and detailed infra policy would be another major boost to their view on higher rates / reflation.

Trump’s purported infra plan has had rough details out for months now via his website @ $1T in its own right, theoretically spread over 5 years but most importantly, with private-funding aspirations.  The Republicans are ironically the issue here for Trump, as historically this sort of “job / works program” stuff is the stuff they have despised as “big government mismanagement / pork barrel “creep.”  So this could be a fascinating test as to whether or not Trump can move across the aisle and ‘coalition build’….IF the plan has enough overlap with his own of course.

From the ‘color me skeptical’ side: this is likely a symbolic gesture with no real intent or expectation to ‘get a deal done,’ where actual hope is to float this plan in ahead of the Jan 27th ‘due date’ on the Obamacare “reconciliation” bill.  If the new administration and Republicans can’t get their stuff together on that front, and the Dems were to ‘beat them to the punch’ on infra too, it would be an embarrassing PR start for Trump’s team.

From a trading perspective, it would likely take further air out of the USD-longs and likely see rates travel lower as “reflation” bets come off.

As the Trumpflation trade came back to life… cyclicals soaring over defensives…


All major indices are now green on the year and post-inauguration…


Today was the biggest short-squeeze since the first day of 2017…


The last month has seen the lowest trading range for The Dow since 1900…


And as realized volatility has collapsed…

As BofA notes, Implied vol remains low on the back of anemic S&P 500 realized volatility.

In fact, through Monday 23-Jan, the S&P 500 is on track to record its 5th lowest volatility for the month of January in 90 years.


Low short-dated vol is contributing to extremely steep implied volatility term structure and the spread between SPX 3m to 1m ATM volatility is near two-year highs.

Nasdaq and S&P hit new record highs…


An ugly 2Y auction spiked rates…


But the entire bond complex was a one-way street higher in yield today… pushing 30Y and 2Y briefly higher on the week…


The Dollar and Yields decoupled today…


The USD Index flip-flopped around all day… having tumbled to the lowest levels since The ECB meeting in December…


Copper was the biggest beneficiary of today’s Trumpflation trade…


Oil clung to gains despite the modest USD strength as $53 appears the new Maginot Line…ahead of tonight’s API data…


Notably, after piling into bets that the benchmark prices for crude oil traded in New York and London would converge by December 2019, traders are now paring those wagers. Doubts have cropped up that a Republican Congress will be able to push through plans for a levy on imports and an exemption for exports, moves that would favor U.S. produced West Texas Intermediate over the global benchmark Brent.


Gold slipped notably lower today (despite only modest moves in the USD) – almost the worst day for gold since the Fed hiked rates…


Ans gold still leads in 2017…

Rubio saves the day by voting for Tillerson in committee which should pave the way for the new Sec of State when the full senate votes:

(courtesy zero hedge)

Rubio Saves Tillerson Confirmation In 11-10 Vote




The next bombshell: we are witnessing huge numbers of leased car returns which is causing the used car pricing to fall which in turn causes less sells in the new car market:

(courtesy zerohedge)

Soaring Lease Returns Set To Wreak Havoc Used Car Pricing and Auto Industry Profits

The Senate Democrats have introduced their own 1 trillion infrastructure plan and by doing so, they will offer Trump their support if he backs it.  The trouble will be tea party Republicans who want fiscal responsibility:

(courtesy zero hedge)

Senate Democrats Introduce $1 Trillion Infrastructure Plan, Offer Trump Support If He Backs It

Senate Democrats are set to unveil a $1 trillion infrastructure plan and offer President Donald Trump their support if he backs it, the NYT reports.

The plan includes $180 billion to rail and bus systems, $65 billion to ports, airports and waterways, $110 billion for water and sewer systems, $100  billion for energy infrastructure, and $20 billion for public and tribal lands.

Cited by the Times, Chuck Schumer said “our urban and rural communities have their own unique set of infrastructure priorities, and this proposal would provide funding to address those needed upgrades that go beyond the traditional road and bridge repair.” The Senate Democrat leader adds that “We’re asking President Trump to work with us to make it a reality/”

As part of his agenda, Trump has promised to unveil an ambitious infrastructure package during the first 100 days of his presidency. “We will build new roads, and highways, and bridges, and airports, and tunnels, and railways all across our wonderful nation,” he vowed in his Inaugural Address.

One of Trump’s top advisers said Monday, however, that the president’s plan may run into roadblocks in the Republican-led Congress.

“He has to come up with a financing plan, and I think there’s going to be a little bit of a tug of war between the conservatives in the Republican party who are concerned about deficits and the president who’s concerned about jobs,” Richard LeFrak said on CNBC’s “Squawk Box.” “I think he will prevail, ultimately, because he wants to put people to work.”

Republicans resisted President Barack Obama’s push for an infrastructure “surge” for eight years, arguing that the federal government couldn’t afford it and that state and local governments should shoulder more responsibility for improvements. However, now that Trump “has taken up the Democratic cause”, they may find it more problematic.

Meanwhile, as the NYT adds, the first major test of Mr. Trump and his sway over congressional Republicans will come Tuesday morning at 10 a.m. That is when the Congressional Budget Office, the nonpartisan Capitol Hill scorekeeper, will update its budget outlook. The office is expected to say that the federal deficit, after years of decline, will start swelling again this year and will pick up steam over the next decade if policies aren’t changed to curb the growth of health care programs and of Social Security in an aging populace.

The annual report could be a major brake on Mr. Trump’s agenda, which includes large increases in spending on infrastructure and defense, as well as deep tax cuts. Those plans could collide with Republican promises to balance the budget — if Republicans care about such niceties in the Trump era.

As we noted previously, according to a Barclays analysis, infrastructure spending in the US will take a long time to ramp up. The bank laid out the top 10 projects currently in planning or construction, and just these along will take as much as 1-2 years before any practical benefits “trickle down” to the long-ignored US steel sector which Trump has vowed to revitalize. This is what Barclays said last week:

Given the unknowns about Trump’s infrastructure plan – lack of clarity on total spend, past ineffectiveness of stimulus efforts, timing of implementation, pushback from Congress – we currently model no additional metals demand from supplemental infrastructure investment during 2017-18 into our baseline forecast. As greater visibility becomes available, we will adjust our consumption forecasts to take into account the latest spending plans. The key issue we think is facing the metals sector is that even if infrastructure spending is approved at the headline level ($1trn over 10 years, or $100bn a year) and implementation is effective, the project schedule does not allow for an immediate effect on metals consumption, particularly over the next two to three years.

A list of the ten largest US infra projects is shown below:

Soft data manufacturing PMI soars to 3 yr high.  However input costs continue to rise and the index is at 28 month highs

(courtesy US mfg PMI/zerohedge)


(courtesy Dave Kranzler/IRD)

That that about does it for tonight

I will see you tomorrow night


Leave a Reply to Harvey Organ’s Daily Gold & Silver Report – 2017.01.24 – Financial Survival Network Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: