Feb 2/Work in progress/Gold soars up $11.10 but silver loses 2 cents/Deutsche bank disappoints again with poor earnings and more potential fines to pay out/Theresa may of UK brings out “white paper” on how England will separate from the EU/Markets did not like it as the pound is “pounded”/Trump puts Iran on notice/Iran vacates the USA dollar/Trump initiates more sanctions against Iran/University of California at Berkeley mess/Final draft

Gold at (1:30 am est) $1216.70 UP    $11.10

silver  at $17.40:  down 2 cents

Access market prices:

Gold: $1216.00

Silver: $17.40

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

WEDNESDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 2/17 (10:15 pm est last night): $  holiday

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

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

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

   SPREAD/ 2ND FIX TODAY!!:  $xxx

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb2/2017: 5:30 am est:  $1224.05   (NY: same time:  $1223.00   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 2.2017: 10 am est:  $1221.55 (NY same time: $1221.50  (10 AM)

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

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

end

For comex gold:

FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  263 NOTICE(S) FOR 263 OZ.  TOTAL NOTICES SO FAR: 4713 FOR 471,300 OZ    (14.659 TONNES)

For silver:

 

For silver: FEBRUARY

1 NOTICES FILED FOR 5,000 OZ/

TOTAL NO OF NOTICES FILED: 139 FOR 695,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest  ROSE by 1,358 contracts UP to 188,197 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .941 BILLION TO BE EXACT or 134% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: 1 NOTICES FOR 5,000

In gold, the total comex gold FELL BY 3,473 contracts DESPITE THE FALL IN  THE PRICE GOLD ($3.00 with YESTERDAY’S trading ).The total gold OI stands at 394,960 contracts

we had 263 notice(s) filed upon for 26,300 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had a huge  change in tonnes of gold at the GLD/a massive “deposit” of 1.48  tonnes

Inventory rests tonight: 811.22 tonnes

.

SLV

we had nochanges in silver into the SLV

THE SLV Inventory rests at: 334.849 million oz

FEDERAL RESERVE BANK OF NY: GOLD MOVEMENT REPORT FOR DECEMBER EXPORTS

JANUARY REPORT

The FRBNY reported that we have 7,841 million dollars worth of gold in inventory valued at $42.22 for December.

The previous month we had 7,841 million dollars worth of gold inventory valued at $42.22 for December.

We thus had 0 gold oz moved out of inventory

end

.

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

1. Today, we had the open interest in silver RISE by 5,656 contracts UP to 186,839 AS SILVER WAS DOWN 9 CENTS with YESTERDAY’S trading. The gold open interest ROSE by 6,984 contracts UP to 398,433 WITH THE FALL IN THE PRICE OF GOLD OF $3.00  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) COT report

(Harvey)

3c FEDERAL RESERVE BANK OF NY/GOLD INVENTORY MOVEMENT

(HARVEY)

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed HOLIDAY/ /Hang Sang closed . The Nikkei closed DOWN 233.50 POINTS OR 1.22% /Australia’s all ordinaires  CLOSED DOWN 0.13%/Chinese yuan (ONSHORE) closed HOLIDAY at 6.8840/Oil ROSE to 54.19 dollars per barrel for WTI and 57.12 for Brent. Stocks in Europe ALL MIXED. Offshore yuan trades  6.8123 yuan to the dollar vs 6.8840  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS QUITE A BIT AS POBC ATTEMPTS TO STOP DOLLARS FROM LEAVING CHINA’S SHORES.

 

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

b) REPORT ON JAPAN

The world is extremely worried concerning Trump’s isolationist policies coupled with a devaluing USA dollar.  Japan is extremely worried that they will be targeted as a currency manipulating.  Their plan (get this!!!):  that their big pension Investment fund; GPIF wants to invest (fund) Trump’s huge infrastructure spending.  So let me get this straight:  Japan wishes to fund the Infrastructure program to create hundreds of thousands of USA jobs.

I cannot believe what I am seeing!!

( zero hedge)

c) REPORT ON CHINA

none today

4. EUROPEAN AFFAIRS

i)GERMANY/DEUTSCHE BANK

Deutsche bank’s woes continue as it lost 2.12 billion euros in the 4th quarter, much higher than expected. It’s shares tumbled as the street realizes it still have quite a few criminal cases that it must resolve of which one if our precious metals case.

( zero hedge)

ii)ENGLAND/THE POUND

 

The pound fell after the BOE kept rates unchanged.  The central bank warned of inflation and that it must act if their tolerance is breached.  The street was not happy and thus down goes the pound

( zero hedge)

iii)Theresa May presents her “White Paper” on how England will undergo its BREXIT. Here are the highlights;

( zero hedge)

iv  Cable  (Pound/USA dollar cross)plummets as Governor Carney cannot quell Brexit concerns.  Investors are nuts: England will be way ahead by leaving the doomed EU\

 

v)GREECE

It is deja vu again in Greece as these guys must pay their creditors on July 20. The “trinity” have different views as to what should happen. It looks to me like they want Greece to exit.

(courtesy zero hedge)

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)IRAN/USA

Trump formally puts Iran on notice for firing that ballistic missile. The firing of that ballistic missile was no doubt to test Trump’s will:

( zero hedge)

 

ii)Iran will official ditch the dollar by march 21.

(courtesy Salles/AntiMedia.org)

iii)The war of words escalate to the highest degree. Iran slams Trump and claims he is an “inexperienced person”.

(courtesy zero hedge)

 

iiib)Late in the day: the USA is planning additional sanctions on Iran and supposedly this would not violate the nuclear deal

(courtesy zero hedge)

iv)UKRAINE

another powder keg this morning as both sides accuse the other of starting the fighting in the eastern side of Ukraine:

(courtesy zero hedge)

v)USA/RUSSIA

As expected,  Trump eases sanctions against Russia:

( zero hedge)

vi)

Then Trump backtracks:

( zero hedge)

6.GLOBAL ISSUES

i)MEXICO

Trump is on a roll!! In his phone call to Mexico’s President Nieto, he threatened to send in USA troops to stop the “bad hombres”

( zero hedge)

ii)AUSTRALIA/USA

(courtesy zerohedge)

7. OIL ISSUES

8. EMERGING MARKETS

Brazil’s unemployment rate climbs to 12% as Rio’s murder rate soars.  This is one city you should not visit

( zerohedge)

9.   PHYSICAL MARKETS

i)Where are Russia’s vast gold reserves?  Two thirds in Moscow’s central bank and the other 1/3 in St Petersburg)

( zero hedge)

ii)The fear around the globe is the fact that Trump wants to devalue the USA currency and send the world into a global currency war.

( London’s Financial Times/Donnan)

iii)Bitcoin reacts positively to world events and the dollar tumbling;Bitcoin tops 1000.00 and coming close to gold/oz

( zerohedge)

10.USA STORIES

i)Trading last night:

the dollar falls the most in 30 yrs as it is having the worst start to a year in decades:

( zerohedge)

ii)LAST NIGHT/UNIVERSITY OF CALIFORNIA AT BERKELEY

wow! this is a biggy. Many cities and counties are giving sanctuary to illegal immigrants and are disobeying the Fed’s who want them to point out  who they are.Actually Trump wants only those illegals that are in prison and he wants to send them back to their respective country of origin. Last night a sanctuary city, Berkeley California and home to the big University of California at Berkeley cancelled Breitbart’s editor Yiannopoulos speech last night. Free speech rights started in Berkeley in the 1960’s and now they threaten the important first amendment. Trump is very angry and he is threatening to pull funds heading to the University.

 

iii)USA productivity is an extremely important data point. The Fed must be very perplexed as growth in productivity has never been this low:

(courtesy zero hedge)

iv)A must read:  David Stockman gives us a preview as to what to expect in the coming months with respect to the financial scene in the uSA.  It is not pretty!!

( David Stockman/ContraCorner)

v)The next executive order:  attacking H-iB’s and it is extremely clever:

Trump’s plan is to allow the highly skilled foreign personnel holding H-1B’s and not allow the lower paid HIB like the call centers from Indian citizens imported from India

( zerohedge)

vi)The author gives us a great commentary on the huge problems facing the USA with this 1.3 trillion albatross around their necks; student loans. Believe it or not but student loans represents 45% of USA assets:

(courtesy Shaun Bradley.AntiMedia.org)

vii)CHALLENGER/GRAY JOB CUTS REPORT:

Job cuts surge in January

(challenger/grey)

viii)OH OH!! the Fed is not going to like this!! Central bankers are only interested in our banks/bankers:thus their interest will be for the well being of bankers over the health of USA or its citizens:Congressman slams Yellen and company for prioritizing foreign banks over America.

 it does not good look for Janet and Stan when they will eventually meet the Donald:

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY 3,473 CONTRACTS DOWN to an OI level of 394,960 WITH THE FALL IN THE  PRICE OF GOLD ( $3.00 with YESTERDAY’S trading).  We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a LOSS of 971 contracts DOWN to 2497.   We had 1159 notices served upon yesterday and therefore we gained 188 contracts or an additional 18,800 oz will stand for delivery.  This is the first time in over 3 years that we have gained in oz standing on both the second day notice and today, third day notice.  Somebody again is in urgent need of physical gold. The next non active contract month of March saw it’s OI fall by 42 contracts DOWN to 2864.The next big active month is April and here the OI FELL by 2,932 contracts DOWN to 268,204.

We had 263 notice(s) filed upon today for 26,300 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI ROSE by 1,358 contracts FROM 186,197 up to 188,197 AS the price of silver FALL IN PRICE TO THE TUNE OF 9 CENTS with respect to 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).

The  active month of February saw the OI FALL by 36 contract(s) DOWN TO  149.  We had 50 notices served upon yesterday so we GAINED 14 CONTRACTS  or an additional 70,000 oz will stand.  I cannot  ever recall seeing both precious metals, gold and silver,  show an increase in amount of oz standing for delivery on the second day notice AND TODAY’S THIRD DAY NOTICE.

The next big active delivery month is March and here the OI decrease by 3331 contracts DOWN to 130,163 contracts. For comparison purposes last year on the same date only 104,561 contracts were standing.

We had 1 notice(s) filed for 250,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 223,810  contracts which is good.

Yesterday’s confirmed volume was 229,463 contracts  which is good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY
 Feb 2/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 76,356.25 OZ
 Scotia
2375 kilobars
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 32,150.000  oz
1000 kilobars
No of oz served (contracts) today
 
263 notice(s)
26,300 oz
No of oz to be served (notices)
2234 contracts
223,400 oz
Total monthly oz gold served (contracts) so far this month
4713 notices
471300 oz
14.659 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz
Total accumulative withdrawal of gold from the Customer inventory this month     98,273.1 oz
Today we HAD 2 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 1  customer deposit(s):
i) Into JPMorgan: 32150.000 oz  (1000 kilobars)
dubious!
total customer deposits; 3215.000 oz
We had 1 customer withdrawal(s)
i) Out of Scotia:  76,356.25 oz  (2375 kilobars)
dubious!
total customer withdrawal: 76,356.25 oz
We had 0  adjustment(s)
i
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
For FEBRUARY:

Today, 0 notice(s) were issued from JPMorgan dealer account and 70 notices were issued from their client or customer account. The total of all issuance by all participants equates to 263 contract(s)  of which 51 notices were stopped (received) by jPMorgan dealer and 5 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (4713) x 100 oz or 471,300 oz, to which we add the difference between the open interest for the front month of FEBRUARY (2497 contracts) minus the number of notices served upon today (263) x 100 oz per contract equals 675,900 oz, the number of ounces standing in this  active month of FEBRUARY.
 
Thus the INITIAL standings for gold for the FEBRUARY contract month:
No of notices served so far (4713) x 100 oz  or ounces + {(2497)OI for the front month  minus the number of  notices served upon today (263) x 100 oz which equals 694,700 oz standing in this non active delivery month of FEBRUARY  (21.608 tonnes)
 we gained 188 contracts or an additional 18,800 oz will stand in this active delivery month.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On first day notice for FEB 2016, we had 20.124 tonnes of gold standing. At the conclusion of the month we had only 7.9876 tonnes standing. The data suggests that we had almost identical amounts standing in Feb ’16 and Feb 2017; however today’s totals already surpassed the final amt which eventually stood  in 2016.(already 14.659 tonnes vs 7.9876 at the end of Feb).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for all of 2016 and the first month of January 2017
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 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/     3.9004 tonnes
FEB/ 21.608 tonnes
total for the 14 months;  247.681 tonnes
average 17.691 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventory 1,428,632.919 or 44.436 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,928,158.283 or 277.703 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.703 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 6 MONTHS  76 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE JANUARY DELIVERY MONTH
FEBRUARY INITIAL standings
 feb 2. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
1,344,590.220 0z
CNT
Scotia
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
nil  OZ
No of oz served today (contracts)
1 CONTRACT(S)
(5,000 OZ)
No of oz to be served (notices)
148 contracts
(740,000  oz)
Total monthly oz silver served (contracts) 139 contracts (695,000 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   3,113,769.1 oz
 END
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of CNT: 30,134.190 oz
ii) Out of Scotia: 1,314,456.03 oz
TOTAL CUSTOMER WITHDRAWALS: 1,344,590.220 oz
 we had 0 customer deposit(s):
i) Into JPMorgan:  zero  oz**
deposits into JPMorgan have now stopped.
total customer deposits;  nil   oz
 
 we had 0  adjustment(s)
The total number of notices filed today for the FEBRUARY. contract month is represented by 1 contract(s) for 5,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at  139 x 5,000 oz  = 695,000 oz to which we add the difference between the open interest for the front month of feb (149) and the number of notices served upon today (1) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the FEBRUARY contract month:  139(notices served so far)x 5000 oz  + OI for front month of FEB.( 119 ) -number of notices served upon today (1)x 5000 oz  equals  1,435,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver. 
We gained 14 contracts or an additional 70,000 oz will stand.
At first day notice for the FEB/2016 silver contract month we initially had 515,000 oz standing for delivery.  By the conclusion of the delivery month we had 835,000 oz stand as some of the bankers required immediate silver inventory.
END
Volumes: for silver comex
Today the estimated volume was 70,948 which is excellent
YESTERDAY’S  confirmed volume was 77,290 contracts  which is excellent.
 
Total dealer silver:  30.205 million (close to record low inventory  
Total number of dealer and customer silver:   178.292 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes

Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes.  this should stop GLD from sending gold to Shanghai.

JAN 31/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

jan 30/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

Jan 27/no changes at the GLD/Inventory rests at 799.07 tonnes

Jan 26/no changes at the GLD/Inventory rests at 799.07 tonnes/

jan 25/another exactly the same withdrawal as yesterday: 50.4 tonnes and again this was used in the whacking of gold today/inventory rests at 799.07 tonnes

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 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM 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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Feb 2/2017/ Inventory rests tonight at 811.22 tonnes
*IN LAST 81 TRADING DAYS: 138.59 TONNES REMOVED FROM THE GLD
*LAST 28 TRADING DAYS: 13.32 TONNES HAVE LEFT

end

Now the SLV Inventory
Feb 2/no changes in silver inventory at the SLV/Inventory rests at 334.849 million oz
Feb 1/a withdrawal of 948,000 oz from the SLV/Inventory rests at 334.849 million oz
Jan 31.no change in inventory at the SLV/Inventory rests at 335.797 million oz
jan 30/no change in inventory at the SLV/Inventory rests at 335.797 million oz
Jan 27/we had a deposit of 758,000 oz into the SLV/Inventory rests at  335.797 million oz
Jan 26./ a huge withdrawal of 2.369 million oz from the SLV/Inventory rests at 335.039 million oz
Jan 25./another changes at the SLV/Inventory rests at 337.408 million oz
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 11/ A HUGE WITHDRAWAL F 2.843 MILLION OZ/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/
.
Feb 2.2017: Inventory 334.849  million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 8.6 percent to NAV usa funds and Negative 8.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.3%
Percentage of fund in silver:39.5%
cash .+0.2%( feb 2/2017) 
.
2. Sprott silver fund (PSLV): Premium FALLS to -.15%!!!! NAV (Feb 2/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.40% to NAV  ( feb 2/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.15% /Sprott physical gold trust is back into NEGATIVE territory at -0.40%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRN

Buy Gold Because of Uncertainty not Doomsday

  • Doomsday Clock moves closer to midnight
  • World not been as close to self-destruction since 1953
  • Threat of nuclear powers, climate change and technology all considered heightened risks
  • First time the Bulletin of Atomic Scientists have singled out an individual – President Trump
  • Doom-mongering is arguably distracting and uncertainties should be more considered
  • Gold and silver perform well during times of uncertainty and provide a safe-haven
  • Wall Street’s largest fund managers have bet on gold in face of growing uncertainty

clock

Buy gold because of uncertainty not Doomsday

It is two and a half minutes to midnight, the Clock is ticking, global danger looms. Wise public officials should act immediately, guiding humanity away from the brink. If they do not, wise citizens must step forward and lead the way. Bulletin of the Atomic Scientists, January 2017.

We hope you remembered to reset your clocks last week, not the timekeeping kind but the doomsday kind. And hopefully you’ve made a start on those bucket lists as apparently nuclear power, climate change, nationalist politics and technology have brought us one step closer to The End.

The Doomsday Clock, as kept and set by the Bulletin of Atomic Scientists, was moved forward last week by 30 seconds to two-and-a-half minutes to midnight. This is the closest the clock has comedoomsday-clockto 12am since 1953 when the Soviet Union tested its first hydrogen bomb, nine months after the US first tested their own version.

“The Clock has become a universally recognized indicator of the world’s vulnerability to catastrophe from nuclear weapons, climate change, and new technologies emerging in other domains.” Bulletin of Atomic Scientists

The movement of the clock by half a minute comes as the group of scientists believe that in 2016, “the global security landscape darkened as the international community failed to come effectively to grips with humanity’s most pressing existential threats, nuclear weapons and climate change.”

The statement acknowledges that the outlook for climate change has not changed in the last year, but is concerned with the lack of action. It is also concerned about technology and ‘the knotty problems’ in some fields of technological innovation that may or may not present a threat to humanity. Back in 1947, they say “there was one technology with the potential to destroy the planet, and that was nuclear power” but now there are multiple threats.

However it is the US Presidential election and comments from President Trump that appear to have really forced the issue of moving the clock forward. The Bulletin points to the rise in ‘strident nationalism’ that brought about the US election result and Trump’s comments on nuclear weapons and climate change.

Whilst nuclear codes access and climate change haven’t concerned the President too much, this is not the first time apocalyptic language has been used since he came to power. Trump himself has enjoyed painting a picture of the ‘American carnage’ he sees across the United States today – he did so in his own inauguration speech.

Scientists v. Trump

The Bulletin makes clear that it would normally focus on long-term trends (ie not the behaviour of a democratic leader who could be in power for just four years) but:

“…the statements of a single person—particularly one not yet in office—have not historically influenced the board’s decision on the setting of the Doomsday Clock.

But wavering public confidence in the democratic institutions required to deal with major world threats do affect the board’s decisions. And this year, events surrounding the US presidential campaign—including cyber offensives and deception campaigns apparently directed by the Russian government and aimed at disrupting the US election—have brought American democracy and Russian intentions into question and thereby made the world more dangerous than was the case a year ago.

This move by the Bulletin of the Atomic Scientists is very much a statement, Lawrence Krauss, chairman of the group’s board of sponsors, told Bloomberg, “It’s only six days into the new administration and actions do speak louder than words, and we wanted to send a message that things are not going in the right direction.”

Absence of facts and Moral narcissism

Yesterday we talked about the alternative facts of government. The Bulletin of Scientists are also worried about such hyperbole affecting the decisions regarding existential threats:

Wise men and women have said that public policy is never made in the absence of politics. But in this unusual political year, we offer a corollary: Good policy takes account of politics but is

never made in the absence of expertise. Facts are indeed stubborn things, and they must be taken into account if the future of humanity is to be preserved, long term. Nuclear weapons and climate change are precisely the sort of complex existential threats that cannot be properly managed without access to and reliance on expert knowledge.

There is arguably an element of moral narcissism here, on both sides of the coin – Trump and the scientists. Both believe that they know better than the other and that they should influence policy and the thinking of others.

Nassim Taleb writes about this phenomenon in a blog, Intellectuals but Idiots “that class of paternalistic semi-intellectual experts with some Ivy league, Oxford-Cambridge, or similar label-driven education who are telling the rest of us 1) what to do, 2) what to eat, 3) how to speak, 4) how to think… and 5) who to vote for.”

As ever, Taleb’s words might be bit too harsh, but it speaks to how this kind of authoritarian groupthink from the likes of the scientists that has lead to the rise in nationalist politics, and put Trump in power.

But we are also seeing this on Trump’s side as well. He is reinforced by those he has positioned around him. People are unlikely to feel that those influencing policy are looking out for them and what really matters day-to-day.

Roger Simon writes in I Know Best “It is a narcissism of groupthink that makes you assume you are better than you are because you have the same received and conventional ideas as your peers, a mutual reward system.”

This is about uncertainty, not scientific or political doom-mongers

It can be argued believe that the scientists’ warnings and groupthink, along with the same brand moral narcissism of Trump’s calls to work ‘for the people’ are counterproductive. Will Boisvert writes;

“Apocalypticism can systematically distort our understanding of risk, mesmerizing us with sensational scenarios that distract us from mundane risks that are objectively larger. Worse, it can block rather than galvanize efforts to solve global problems. By treating risks as infinite, doom-saying makes it harder to take their measure — to prioritize them, balance them against benefits, or countenance smaller ones to mitigate larger ones. The result can be paralysis.”

In many ways we couldn’t agree more. The latest tick-tock on the Doomsday clock has gathered a lot of media attention, but to what end? What does this information really tell people other than the group of scientists doesn’t like Trump? It provides no useful information for the man or woman on the street.

Anders Sandberg a Research Fellow at Future of Humanity Institute & Oxford Martin School, University of Oxford writes about the distortions in trying to place a probability on man-made dangers and how this can skew our perception of risk. “The chance of at least one of them being wrong is high. It may be better to explicitly acknowledge the uncertainty”.

Sandberg is right, we are far better to acknowledge both the existent of uncertainty at any given moment as well as the known risks. We only really know things are risks, after the fact and even then we are not always able to find the true cause or catalyst to whatever disastrous event the supposed risk lead to.

What we do know, is that nothing is certain and at the moment it feels we have more uncertainties than ever before. What we also know is that gold and silver both perform well during times of heightened uncertainty and we expect it to push higher as both Trump’s presidency and the shifting of economic plates is felt around the globe.

Feeling uncertain? Buy gold.

Earlier this week we brought you a brief synopsis of “Reassessing the Role of Precious Metals As Safe Havens – What Colour Is Your Haven and Why?” by Dr Brian Lucey and Sile Li, of Trinity College Dublin and Trinity Business School. The paper examines the “safe haven properties versus equities and bonds of four precious metals (gold, silver, platinum and palladium) across eleven countries.”

money

We outlined that the authors, Dr Brian Lucey and Sile Li had attempted to “identify robust economic and political determinants of precious metals’ safe haven properties.”  Lucey and Sile’s work finds that ‘Economic Policy Uncertainty’ is found to be a “positive and robust determinant of a precious metal being a safe haven” and that this “holds across countries”.

The Bulletin of Atomic Scientists have failed to address the financial system in their latest statement, but in the same way they point to the rise in nationalist politics forming the backdrop to nuclear way, climate change and cyber issues, we would argue that economic risks should also be seriously considered.

We’re not the only ones who think so, Reuters recently reported that gold has become a favourite safe-haven of some of Wall Street’s biggest fund managers:

Some of Wall Street’s largest fund managers have taken a contrarian bet on gold, wagering that U.S. President Donald Trump’s governing style and upcoming elections in Europe will combine to create more stock-market volatility and boost the prices of a metal long seen as a safe haven.

Fund managers from IVA, Ridgeworth and Fidelity are among those who are bullish on gold at a time when the VIX, Wall Street’s main measure of volatility, is near two-year lows amid a stock market rally that has pushed the S&P 500 up 6.5 per cent since election day in November.

Conclusion – heightened uncertainty is certainly good for gold

In the concluding paragraphs of the Bulletin of Atomic Scientists, the group say that “This year’s Clock deliberations felt more urgent than usual. On the big topics that concern the board, world leaders made too little progress in the face of continuing turbulence.”

We would argue the same in the case for the financial system and the systemic, global disaster it has become in the last decade. As we wrote about in the days following Trump’s inauguration, we expect some serious uncertainty and volatility in the months and years to come. Despite us getting a feel for how Trump will run his government, there is a lot that remains unknown both in the US and around the world.

Investors should ignore the moral narcissism of the elites, the politicians and the scientists, and instead prepare for uncertain times by diversifying and owning gold and silver. In recent years and throughout the ages, both precious metals have protected investors and savers from uncertainty, both economic and political.

 

http://www.goldcore.com/us/gold-blog/buy-gold-uncertainty-not-doomsday/

 

end

 

Where are Russia’s vast gold reserves?  Two thirds in Moscow’s central bank and the other 1/3 in St Petersburg)

(courtesy zero hedge)

Where are Russia’s vast gold reserves hidden?

Section:

By Alexander Bratersky
Russia Beyond the Headlines
(Rossiyskaya Gazeta, Moscow)
Wednesday, February 1, 2017

The topic of gold reserves is increasingly discussed in the international media. Donald Trump, for example, suggested an audit of America’s gold reserves to ascertain just how much the country truly has. The question of Germany’s gold reserves, kept in the United States for decades, has begun to worry the German public, which begins to think it’s necessary to return those reserves home. So it’s no surprise that many Russians also wonder what’s up with their country’s gold reserves and where they’re hidden.

Russia ranks sixth in the world in gold reserves, and the Russian Central Bank said they total 1,614.27 tons, which is 15 percent more than last year.

The Russian Central Bank is one of the world’s leading gold buyers, and in February 2016 it purchased more than 10 tons of gold.

“When prices are low, governments increase gold reserves, and this often owes to traditions and historical reasons,” said Anton Tabakh, an economist and professor at the Higher School of Economics. “In the reliability-liquidity-profitability triad, gold is marketable but prices greatly vary.” …

… For the remainder of the report:

http://rbth.com/politics_and_society/2017/02/01/where-are-russias-vast-g.

 

 

END

 

The fear around the globe is the fact that Trump wants to devalue the USA currency and send the world into a global currency war.

(courtesy London’s Financial Times/Donnan)

Trump devaluation claims raise fears of global currency war

Section:

By Shawn Donnan, Robin Harding, and Katie Martin
Financial Times, London
Wednesday, February 1, 2017

The Trump administration’s willingness to break with tradition and comment about currency valuations has raised fears that the US might lead the world into a new round of currency wars, angering and unnerving allies.

Shinzo Abe, Japan’s prime minister, complained on Wednesday after Mr Trump attacked China and Japan for “play[ing] the devaluation market.”

In response, Mr Abe told the Japanese parliament: “The kind of criticism they are making of yen manipulation is incorrect.”

The previous day Angela Merkel, Germany’s chancellor, denied that Berlin was seeking to influence the valuation of the euro — after a top Trump adviser in an interview with the Financial Times accused Berlin of exploiting a “grossly undervalued” euro.

The administration’s comments were the latest sign of a dramatic departure from past practice that began during last year’s campaign when Mr. Trump complained that a strong dollar was hurting U.S. companies. …

… For the remainder of the report:

https://www.ft.com/content/27cc7c80-e89d-11e6-893c-082c54a7f539

 

 

END

Bitcoin reacts positively to world events and the dollar tumbling;Bitcoin tops 1000.00 and coming close to gold/oz

(courtesy zerohedge)

Bitcoin Extends China Golden Week Gains – Tops $1000, One-Month Highs

As the dollar continues to tumble (and amid China’s quite period during Golden Week), Bitcoin has gently begun to shake off China ‘probe’ weakness and extend its gains once again. For the first time since January 5th, Bitcoin is trading above $1000

 

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

 
 

1 Chinese yuan vs USA dollar/yuan REMAINS AT  6.8840(ZERO DEVALUATION   /CHINA / CHINA ON HOLIDAY/OFFSHORE YUAN NARROWS   TO 6.8123 / Shanghai bourse CLOSED   / HANG SANG CLOSED 

2. Nikkei closed DOWN 233.50 POINTS OR 1.22%   /USA: YEN FALLS TO 112.35

3. Europe stocks opened ALL MIXED      ( /USA dollar index FALLS TO  99.38/Euro UP to 1.0811

3b Japan 10 year bond yield: RISES TO    +.116%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.35/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  54.19  and Brent: 57.12

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.447%/Italian 10 yr bond yield DOWN  to 2.266%    

3j Greek 10 year bond yield FALLS to  : 7.59%   

3k Gold at $1220.35/silver $17.66(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 43/100 in  roubles/dollar) 59.71-

3m oil into the 54 dollar handle for WTI and 57 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 ZERO   DEVALUATION  from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.35 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9880 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0683 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.446%

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

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

4. USA 10 year treasury bond at 2.463% early this morning. Thirty year rate  at 3.07% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

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

Dollar Slide Accelerates After Fed Fails To Boost Confidence, Pressures US Futures

European shares and S&P futures fell amid mixed earnings from corporate heavyweights, while Asian stocks were fractionally higher. The dollar slump continued against all its major peers after the Federal Reserve gave dollar bulls little to be optimistic about.  The U.S. currency dropped toward the lowest close since November after the Fed reiterated its intention on Wednesday to lift rates only gradually.

Dollar bulls had hoped that Yellen would provide a stronger signal about the pace of interest-rate increases this year after comments by the new Trump administration overshadowed data showing economic growth is picking up steam, prompting some skeptics to ask “what does the Fed know that we don’t.” With all the political uncertainties about, the big central banks appear to be lying low – or at least trying not to add to the volatility. It sent the dollar to its lowest level since mid-November against a six-strong group of other top world currencies, to add to January’s worst start to a year in three decades.

As DB’s Jim Reid put it, “the message from the Fed overnight was a fairly steady one which acknowledged improvements in the outlook but didn’t really further the debate on when the next rate rise will occur. There was a mention of improving “measures of consumer and business sentiment” although interestingly there was a notable omission of the recent improvement in business fixed investment which they continue to say “remained soft”. We also got the usual “some further strengthening” in the labour market while on the inflation front the Fed noted that “inflation increased in recent quarters but is still below the committee’s 2% longer-run objective”. There was nothing new to take from the language concerning the rates path or balance sheet policy – the latter having been a fairly topical discussion amongst Fed officials recently. One thing that is worth noting though is the change in the composition of the voting members this year. Both George and Mester have dropped off and both were previously seen as having a strong hawkish leaning and so implying a more dovish Fed overall.”

Others were more cheerful: “this is a confirmation of the strength of the U.S. economy and an affirmation rate increases will be gradual,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “It’s a silver lining for Asia and the rest of the world against the dark clouds brought by the lack of clarification in the policies and direction of” U.S. President Donald Trump.

Investors will now be keeping one eye on Friday’s jobs report and
another on the narrative from the White House for signs of pro-growth
policies.

“The dollar and other currencies are in a push-pull situation,” said Andrew Milligan, head of global strategy at Standard Life Investments Ltd. in Edinburgh. “On the one hand economic fundamentals imply the dollar should rise, but on the other hand there is political risk. If the political risk premium rises too much, then it’s contrary to what the fundamentals are actually saying.”

Back in the currency market, sterling also pounced on the weakened dollar to hit a 12-week high as construction sector data showed builders, like manufacturers the day before, are seeing a sharp rise in their costs. It set the stage nicely for the Bank of England’s first meeting and economic forecasts of the year. With Brexit looming it may take a leaf out of the Fed’s book and choose to play a straight bat, although it may implicitly send a less dovish signal than normal as it’s likely to be forced to upgrade growth and inflation forecasts.

In markets, European stocks dropped with S&P 500 futures. The Stoxx Europe 600 Index dropped 0.2 percent at 10:39 a.m. in London as investors assessed disappointing corporate outlooks with health-care shares falling the most. Deutsche Bank tumbled 5.4 percent after its quarterly trading revenue missed analysts’ estimates. Reckitt Benckiser Group Plc added 2.9 percent after saying it’s in advanced talks to acquire baby-food maker Mead Johnson Nutrition Co. Futures on the S&P 500 lost 0.3 percent, after the underlying gauge rose less than one point to close at 2,279.42 on Wednesday.

That was also despite Asian shares ex-Japan hitting their highest since mid-October as Korea’s markets climbed to their best level since July 2015.

In commodities, oil began to edge higher again after news of a sharp rise in U.S. crude and gasoline stockpiles triggered a pause overnight. Brent crude futures nudged up 8 cents to $57.02 a barrel threatening its highest level of the year, while key industrial metals like copper and nickel, but also safe-haven gold, moved higher too.

Earnings are coming thick and fast, with mixed results clouding the picture on the state of the global economy. While Facebook Inc.’s sales topped forecasts, Sony Corp. and Mazda Motor Corp. cut their profit outlooks. In Europe, Deutsche Bank AG and Royal Dutch Shell Plc missed estimates. “There was a clear impact from the negative news flow around Deutsche Bank in the fall, especially on the global markets unit,” said Daniel Regli, an analyst with MainFirst whose recommendation on the stock is under review. “It remains to be seen whether this effect will be reversed in 2017.”

The Stoxx Europe 600 Index dropped 0.2 percent at 10:39 a.m. in London as investors assessed disappointing corporate outlooks with health-care shares falling the most. Deutsche Bank tumbled 5.4 percent after its quarterly trading revenue missed analysts’ estimates. Reckitt Benckiser Group Plc added 2.9 percent after saying it’s in advanced talks to acquire baby-food maker Mead Johnson Nutrition Co. Futures on the S&P 500 lost 0.3 percent, after the underlying gauge rose less than one point to close at 2,279.42 on Wednesday.

Rattled euro zone bond market drew some comfort from the Fed’s apparent lack of urgency to push up rates. Yields, which move inverse to price, drifted down across the board with those on benchmark Bunds down to 0.48 percent. France’s bonds went with the flow but the gap over German peers was near its widest level in three years on nerves about far-right Marine Le Pen polling strongly ahead of elections in April and May. The yield on Spanish 10-year bond added two basis points to 1.7 percent, the highest level in almost a year. German bunds gained, with the yield on the benchmark note due in a decade dropping two basis points to 0.45 percent. The yield on the 10-year U.S. Treasury note was little changed at 2.46 percent, after adding two basis points on Wednesday.

* * *

Overnight bulletin summary

  • Earnings dictate play in Europe this morning, with Deutsche Bank the notable underperformer after their report, with Daimler and Shell also among the large caps to have announced their results
  • FX markets have continued to see USD softness, with participants looking ahead to BoE rate decision and QIR
  • Looking ahead, as well as the BoE QIR, today also sees weekly US jobless data and possible comments from ECB’s Draghi as well as earnings from Amazon and Visa

Market Snapshot

  • S&P 500 futures down 0.3% to 2267
  • Stoxx 600 down 0.2% to 363
  • FTSE 100 down less than 0.1% to 7104
  • DAX down 0.3% to 11623
  • German 10Yr yield down 1bp to 0.46%
  • Italian 10Yr yield up 1bp to 2.33%
  • Spanish 10Yr yield up 4bps to 1.72%
  • S&P GSCI Index up 0.2% to 402.7
  • MSCI Asia Pacific up 0.1% to 142
  • Nikkei 225 down 1.2% to 18915
  • Hang Seng down 0.6% to 23185
  • S&P/ASX 200 down 0.1% to 5645
  • US 10-yr yield down 1bp to 2.46%
  • Dollar Index down 0.37% to 99.27
  • WTI Crude futures up 0.2% to $53.98
  • Brent Futures up 0.4% to $57.03
  • Gold spot up 0.6% to $1,218
  • Silver spot up 0.8% to $17.68

Top Global News

  • Fed Waiting to See Economic Results From Flurry of Trump Actions: Economic impact of executive orders still hard to gauge
  • Reckitt Targets Mead Johnson With Surprise $16.7 Billion Bid: $90-a-share offer represents 29% premium for shares
  • Facebook Invests for Future After Posting Another Revenue Beat: Mobile ad revenue made up 84% of company’s total ad sales
  • MetLife Pins Hopes on Trump as Kandarian Reshapes Insurer: Operating profit of $1.28 a share misses analysts’ estimates
  • NXP’s Revenue Rises Ahead of Qualcomm’s $47 Billion Purchase: Fourth-quarter revenue rose 52 percent to $2.44 billion
  • Deutsche Bank Misses Estimates as Client Jitters Hit Trading: CEO Cryan is cutting assets, jobs, bonuses to shore up capital
  • AstraZeneca Sees 2017 Profit Drop, With Elusive Sales Growth: Revenue in 2016 fell as sales of Crestor blockbuster plunged
  • Rio Said to Get Approaches on Last $1.5b of Coal Assets: Company weighs options including sale for Hail Creek, Kestrel
  • Hexagon to Buy California’s MSC Software for $834 Million: Private equity including CVC, Veritas said to have been outbid
  • BC Partners, Bain Said to Weigh Offers for Nature’s Bounty: Entire company could fetch a value of as much as $6 billion

Asian markets were subdued amid a lack of drivers, despite the upbeat close on Wall St where the S&P 500 snapped a 4-day losing streak and tech outperformed following strong Apple results, while the FOMC meeting was also perceived as somewhat dovish. ASX 200 (-0.1%) traded indecisively, although gold and resource names stemmed losses in the index, while Nikkei 225 (-1.1%) suffered from a firmer JPY. The Taiwanese Taiex (-0.2%) was lower on return from its week-long closure but still the Apple supply chain mildly supported in reaction to the tech giant’s encouraging Q1 results, while the Hang Seng (-0.6%) was dampened amid underperformance in property stocks and a lack of drivers with mainland Chinese participants still away before reopening tomorrow. 10yr JGBs were initially higher alongside weakness in riskier Japanese assets, although gains were later wiped out following a weak 10yr auction in which average and lowest accepted prices slumped from last month and the tail in price also widened.

Top Asian News

  • Singapore Sees Little Growth in Investment This Year: Investment in 2016 was lowest since at least 2007
  • China Oil Trader’s Mideast Spree Shakes Up World Crude Flows: Chinaoil buys Mideast crude as part of Platts pricing process
  • Sony Cuts Outlook on Film Unit Writedown, Profit Decline: Struggling movie division weighs on full-year profit outlook

European Indices trade mixed this morning (DAX -0.4%) as earnings dictate play, Deutsche Bank (-5%) after poor earnings although revenues did slightly improve. Shell also underperformed against analyst expectations, however shares are trading higher this morning by 1.7% as the market was buoyed by comments from the CEO who stated with higher oil prices the companies fate may turn. In terms of sectors, IT outperform after Facebook posted a stellar set of results. Core fixed income markets gapped lower at the open but have subsequently pared those losses now up over 40 ticks and above the 162 level. Heading in to the auction, Spanish paper was weighed on with the GE/SP 10Y spread widening around 3.2bps.

Top European News

  • Shell’s Falling Debt Burden Shows Worst of Oil Slump May Be Over: Investors look beyond earnings miss, shares rise
  • Novo Nordisk Trims Outlook, Expects Lower Prices in U.S.: Environment is ‘increasingly volatile,’ new CEO says
  • Delta Lloyd Boards Recommend NN’s $2.7 Billion Takeover Offer: Extraordinary general meeting to be held on March 29
  • Vodafone Falls as Indian Competition Crimps Profit Forecast: Full-year Ebitda will be at lower end of 3%-6% growth range
  • Daimler Gives Cautious 2017 Profit Outlook Amid Spending Push: 4Q profit rose 3% as trucks slump hurt results
  • UniCredit Sets Discount for $14 Billion Rights Offer at 38%: Bank selling shares at 8.09 euros each and offers 13 for 5
  • Swatch Profitability Falls to Lowest in 20 Years on Glut: CEO Hayek sees growth in 2017 after recent improvement
  • Nokia Quarterly Earnings Beat Estimates as Decline Slows: CEO Rajeev Suri sees stabilization after sharp decline in 2016

In currencies, the Bloomberg Dollar Spot Index lost 0.5 percent as of 11:02 a.m. in London, extending its decline this year to 2.9 percent. The euro added 0.4 percent to $1.0810 and the pound reversed earlier gains. The follow through from last night’s FOMC reaction continued in early London, with USD losses seen across the board after the statement highlighted low inflation and gave a slightly ‘less hawkish’ (rather than dovish), view of the rate profile ahead. The pendulum edges back to 2 rather than 3 hikes through 2017 as a result, and this has pushed EUR/USD back above 1.0800, while USD/JPY is back testing yesterday’s lows ahead of 112.00. USD/CHF remains below 0.9900. The risk ahead if for the GBP as we wait for the BoE announcement and QIR. Many anticipate revisions (higher) to both growth and inflation, and a significant chunk of this may be priced in as Cable has tipped 1.2700 but faces heavy resistance through here. The Brexit White Paper brings another layer of risk into the equation, so caution at the highs looks to be in play as EUR/GBP also pulls away from 0.8500 — partially in the wake of the higher than expect EU PPI numbers — topical due to the (re)focusing on inflation levels. UK construction PMIs came in south of consensus, but discounted due to seasonal factors, while input prices also rose.

In commodities, nickel led industrial metals higher, advancing 2.2 percent to $10,480 a metric ton after the Philippines announced mine closures and suspensions. Coppers prices are also buoyant, in anticipation of China’s return, pushing better levels but struggling ahead of USD6000p/t.  Gold rose 1 percent to $1,222.42 an ounce, the fourth gain in five sessions. Silver also added 1 percent. Oil rose as the biggest expansion of U.S. stockpiles in three months countered output cuts by Russia, the largest non-OPEC member that’s joined the group in trimming supply. West Texas Intermediate climbed 0.7 percent to $54.26 a barrel. The weaker dollar has also played a role.

Looking at the day ahead, we’ll get the BoE meeting outcome at 12pm GMT where we’ll also get the release of the inflation report and also the post meeting press conference with BoE Governor Carney. In a quick preview, the BoE is at or close to the limits of its tolerance of above-target inflation. Recent strength in activity indicators could tip the MPC in favour of a tightening bias. A case can be made for waiting though. The Brexit forecast error may be about to resolve itself as evidence of the real income shock and business relocations begin to appear; the cost of a policy mistake is asymmetric; the role of easy financial conditions in buffering the economy from uncertainty should not be underestimated; and with the latest QE tranche wrapping up this month, the BOE has all the more reason to proceed slowly as the post-referendum monetary stimulus unwinds. Elsewhere in the US the only data of note is the Q4 nonfarm productivity and unit labour cost readings, as well as the latest initial jobless claims print. Earnings wise we’ve also got 36 S&P 500 companies set to report including Amazon (after the close) and Merck (prior to the open).

DB’s Jim Reid concludes the overnight wrap

The message from the Fed overnight was a fairly steady one which acknowledged improvements in the outlook but didn’t really further the debate on when the next rate rise will occur. There was a mention of improving “measures of consumer and business sentiment” although interestingly there was a notable omission of the recent improvement in business fixed investment which they continue to say “remained soft”. We also got the usual “some further strengthening” in the labour market while on the inflation front the Fed noted that “inflation increased in recent quarters but is still below the committee’s 2% longer-run objective”. There was nothing new to take from the language concerning the rates path or balance sheet policy – the latter having been a fairly topical discussion amongst Fed officials recently. One thing that is worth noting though is the change in the composition of the voting members this year. Both George and Mester have dropped off and both were previously seen as having a strong hawkish leaning and so implying a more dovish Fed overall.

The lack of anything materially new coming out of the Fed last night meant that the Greenback, which had been staging a decent rebound, pared most of the pre- FOMC gains. The Dollar index had been trading as high as +0.53% in the minutes prior but actually wiped out all of that move in the 30 minutes or so following the meeting, before rebounding modestly into the close to finish +0.13%. There was a similar move for Treasuries with the 10y yield peaking at 2.516% intraday before then closing at 2.476%. Equity markets were a bit more subdued with the S&P 500 (+0.03%) generally passing between gains and losses, although it did end up snapping a four-day losing streak. That was largely as a result of a decent rally for tech names with Apple (+6.19%) leading the charge following those better than expected revenue and earnings numbers the evening before. The Nasdaq finished the day up +0.50%. Prior to that in Europe the Stoxx 600 had finished +0.86%.

Meanwhile, in comparison to the last few days, yesterday was actually a fairly Trump newsflow free day aside from some headlines suggesting that Trump had “humiliated” Mexico President Nieto last week with more chatter about Trump supposedly forcing Mexico to pay for the wall with a tax on Mexican exports. That aside, the market was instead able to turn some of the focus over to what was a broadly decent day for data. In the US the most notable was the ADP employment change reading which came in at 246k in January (vs. 168k expected). That’s actually the biggest gain since June last year and should point to some upside risk in tomorrow’s payrolls. Meanwhile the manufacturing data was also positive. The final manufacturing PMI revision for January was set at a solid 55.0 (from 55.1 in the initial flash) while the ISM manufacturing reading rose 1.5pts to 56.0 (vs. 55.0) with both new orders (+0.1pts to 60.4) and employment (+3.3pts to 56.1) components higher. Elsewhere total vehicle sales in January were pretty much bang on the money at 17.5m annualised but construction spending weakened unexpectedly (-0.2% mom vs. +0.2% expected). The Atlanta Fed shifted their Q1 GDP forecast up fairly significantly post the ISM data to 3.4% from 2.3%.

Over in Europe we also got the final January manufacturing numbers and a first look at the data for the periphery. The Euro area reading was nudged up marginally to 55.2 while a slightly softer reading for Italy (-0.2pts to 53.0) was offset by a similar gain for Spain (+0.3pts to 55.6). The UK printed at 55.9, a fall of -0.2pts.

So with it being ISM and PMI manufacturing day we thought we’d update our numbers looking at the manufacturing print through history versus the YoY change in equity markets for the US, Germany, France, the UK and Italy. The numbers do a good job of showing why equity markets remain resilient in the face of rising political risk. On this crude measure equities are just 1% over priced in the US relative to activity, 3% cheap in both France and Germany, 5% too expensive in the U.K. (obviously this can’t adjust for the big fx moves over the last 12 months), and 5% cheap for Italy (likely due to elevated political  risk). We try to not to be overly country specific when looking at this analysis and prefer to use it as a broader starting point as to whether equities are cheap or expensive. Very simplistically it appears like they are broadly in line with where they should be given the data but perhaps being a touch cheap in Europe at the moment.

Elsewhere, the other notable news to report yesterday was the announcement that UK PM Theresa May’s Brexit law had been approved in the House of Commons by 498 votes to 114. That allows May to commence divorce talks with the EU although as the FT pointed out, dozens of pro-EU MP’s were said to refuse to back the bill suggesting a tense road ahead still. May is set to release a “substantial” white paper today detailing her negotiating objectives, so we will be keeping a close eye on that.

This morning in Asia it has for the most part been a fairly weak session with bourses largely edging lower. The Nikkei (-0.72%), Hang Seng (-0.62%), Kospi (-0.47%) and ASX (-0.25%) are all in the red. The Dollar has continued its move lower post the FOMC with the Dollar index down -0.14% while commodities are mixed (Gold +0.46% and WTI Oil -0.58%).

Moving on. As discussed at the top, overnight we have published our latest HY monthly where we highlight that despite rising government bond yields in Europe the measures of financial market volatility that we follow have generally fallen in the past month or so. We don’t think such a low vol environment will last. A potential risk to our view is that it remains stubbornly low even in the face of some fairly aggressive moves in rates. We show how HY credit spreads have outpaced these moves lower in volatility with BB and B spreads now 35bps and 55bps tighter than the volatility implied levels. IG credit spreads have actually underperformed the same volatility implied measures and the spread ratio between HY and IG is at its lowest level in more than a decade with our analysis suggesting that relative returns in the coming months are likely to favour IG credit over HY. Although absolute returns for both asset classes might be negative in 2017. We also show that there are limited attractive yield opportunities within the higher rated part of the HY spectrum although yields do rise with duration. For lower rated HY (B, CCC) there is no evidence that extending duration provides more attractive yield opportunities. In fact short-dated single-Bs still provide upside vs. longer-dated BBs. So we would argue that investors are still presented with the dilemma of whether they prefer increased credit risk or increased duration risk. For now with a still benign default outlook and the potential for higher government bond yields it might continue to benefit shorterdated / lower rated credit.

Before we look at today’s calendar, the saga in France’s presidential race continued yesterday with the spotlight still firmly placed on Francois Fillon. Reuters suggested that his party may consider substitute candidates in the wake of the revelations about his wife’s employment. In the mean time another poll was released yesterday (Elabe poll for Les Echos and Radio Classique). It showed that that Le Pen would lead the first round of voting at 27% versus 20% for Fillon and 23% for Macron. The second round voting shows that Macron would defeat Le Pen by 65% to 35% while Fillon versus Le Pen comes out at 59% to 41% in favour of Fillon (Pollster). French bonds underperformed again yesterday with the 10y yield edging up 4.9bps to 1.080% (versus 3.2bps for Bunds). France’s 10y bond yields are now 40bps above where they started the year and at the highest since September 2015. The spread between France and German 10y bonds (at 62bps) has also now reached a 3-year high.

Looking at the day ahead, this morning in Europe it’s fairly quiet data wise with just the Euro area PPI reading in December due. That clears the path for the BoE meeting outcome at 12pm GMT however where we’ll also get the release of the inflation report and also the post meeting press conference with BoE Governor Carney. In a quick preview, DB’s Mark Wall believes that the BoE is at or close to the limits of its tolerance of above-target inflation. Recent strength in activity indicators could tip the MPC in favour of a tightening bias. Mark also thinks that a case can be made for waiting though. The Brexit forecast error may be about to resolve itself as evidence of the real income shock and business relocations begin to appear; the cost of a policy mistake is asymmetric; the role of easy financial conditions in buffering the economy from uncertainty should not be underestimated; and with the latest QE tranche wrapping up this month, the BOE has all the more reason to proceed slowly as the post-referendum monetary stimulus unwinds. Elsewhere this afternoon in the US the only data of note is the Q4 nonfarm productivity and unit labour cost readings, as well as the latest initial jobless claims print. Earnings wise we’ve also got 36 S&P 500 companies set to report including Amazon (after the close) and Merck (prior to the open). Royal Dutch Shell headlines the reporters in Europe.

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed HOLIDAY/ /Hang Sang closed . The Nikkei closed DOWN 233.50 POINTS OR 1.22% /Australia’s all ordinaires  CLOSED DOWN 0.13%/Chinese yuan (ONSHORE) closed HOLIDAY at 6.8840/Oil ROSE to 54.19 dollars per barrel for WTI and 57.12 for Brent. Stocks in Europe ALL MIXED. Offshore yuan trades  6.8123 yuan to the dollar vs 6.8840  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS QUITE A BIT AS POBC ATTEMPTS TO STOP DOLLARS FROM LEAVING CHINA’S SHORES.

3a)THAILAND/SOUTH KOREA/:

END

b) REPORT ON JAPAN

The world is extremely worried concerning Trump’s isolationist policies coupled with a devaluing USA dollar.  Japan is extremely worried that they will be targeted as a currency manipulating.  Their plan (get this!!!):  that their big pension Investment fund; GPIF wants to invest (fund) Trump’s huge infrastructure spending.  So let me get this straight:  Japan wishes to fund the Infrastructure program to create hundreds of thousands of USA jobs.

I cannot believe what I am seeing!!

(courtesy zero hedge)

Japan Will Invest Its Pensions In US Infrastructure To Create “Hundreds Of Thousands Of US Jobs”

Having decided to actively increase its risk exposure over the past few years, including venturing into high beta stocks and junk bonds – a gamble that has lead to a big jump in quarterly volatility not to mention significant downside risk should global markets suffer a crash – Japan’s Government Pension Investment Fund, or GPIF, the world’s largest pension fund, has decided to invest in US infrastructure projects next.

According to Japan’s Nikkei, infrastructure investments in the U.S. by Japan’s GPIF will feature heavily in the economic cooperation package to be discussed at next week’s summit in Washington between the two countries’ leaders. The stated goal is to create “hundreds of thousands of American jobs, in keeping with U.S. President Donald Trump’s agenda, and deepen ties between the two countries. The unstated goal is to avoid Trump lashing out at Japan as a currency manipulator, and putting in peril Japan’s QQE “with curve control” experiment, which is the bedrock of all Abenomics (as further expained in the following Nikkei piece).

Japan has grown nervous that after Mexico, China and Germany, it may be next nation to find itself in Trump’s spotlight, something Trump hinted at yesterday during his meeting with pharma CEOs when he said that “other countries take advantage of America by devaluation,” and then directly named China and Japan as “planning money markets,” presumably implying manipulation.

As such, Japan’s prime minister may be simply offering up billions in pension fund capital as a source of capital for the upcoming Trump infrastructure projects to placate the president and avoid a far more dire outcome, should Trump launch currency or trade war with Japan. Whatever the logic behind Abe’s thinking, new cabinet-level talks discussing trade policies and economic cooperation agreements are also on the table.

Japan’s contingent headed to the US would likely include Finance Minister Taro Aso, Economic Minister Hiroshige Seko, and Foreign Minister Fumio Kishida, the Nikkei reported. The U.S. is expected to send incoming Commerce Secretary Wilbur Ross and incoming U.S. Trade Representative Robert Lighthizer to that meeting. Japanese Prime Minister Shinzo Abe and Trump will aim for agreement on that framework during their Feb. 10 meeting.

“I wish to discuss [Japanese] contributions toward improved productivity and competitiveness in the entire U.S. industrial sector, or a large framework that includes aid for infrastructure development,” Abe told members of the lower house Wednesday. His government has started to lay out a comprehensive initiative addressing job growth.

The draft proposal will feature infrastructure investments in the U.S. by Japan, joint robotics and artificial intelligence research by the two sides, and countermeasures against cyberattacks.

How will the Japanese megafund alllocate pension capital? According to the Nikkei, the GPIF will purchase debt – using the funds of retired Japanese citizens – issued by American corporations to finance infrastructure projects. Up to 5% of the roughly 130 trillion yen ($1.14 trillion) in assets controlled by the megafund can go toward overseas infrastructure projects. Currently, only tens of billions of yen are invested in that asset class, leaving room for expansion. Additionally, long-term financing for high-speed rail projects in Texas and California would be provided through such avenues as the Japan Bank for International Cooperation.

While we doubt Japanese pensioners are aware that the returns on public infrastrcuture are some of the lowest in the world, if not outright negative, we are confident they will learn soon enough, although since the full IRR will become evident only over a period of years, they may have bigger concerns should the Nikkei and/or global stock markets, where the GPIF is now heavily invested, crash first.

end

c) REPORT ON CHINA

4.EUROPEAN AFFAIRS

GERMANY/DEUTSCHE BANK

Deutsche bank’s woes continue as it lost 2.12 billion euros in the 4th quarter, much higher than expected. It’s shares tumbled as the street realizes it still have quite a few criminal cases that it must resolve of which one if our precious metals case.

(courtesy zero hedge)

Deutsche Bank Tumbles On “Very Weak” Q4 Results, Surging Client Redemptions

After staging a remarkable recovery in its stock price since last summer’s record lows, nearly doubling from its September price, Deutsche Bank shares tumbled this morning after the bank reported a net loss of €1.89 billion for the fourth quarter, which while better than the €2.12 billion loss one year ago, was a big miss to the consensus expected shortfall of €1.32 billion.

For the full year, the bank reported a net loss of €1.4 billion, which while also better than last year, disappointed shareholders who sent the stock lower by more than 5% as of this moment, although as the FT chart below shows, shares are still up about 75% from a record low on Sept. 26, when news of the Justice Department’s initial request broke.

The miss also hit the top line with revenue from debt trading rising 11% from a year earlier to 1.38 billion euros but falling short of the 1.68 billion-euro average estimate. Equity trading revenue fell 23% to 428 million euros, Deutsche Bank said Thursday, while analysts had expected revenue to be flat.

Goldman was quick to slam the company’s results, saying its Q4 operations were “very weak” even as there were “strong liquidity metrics,” and there is evidence of franchise damage. It added that the 4Q loss of €1.9b is more than expected; underlying divisional pretax missed “across the board.” Underlying divisional pretax came in at loss of €320m vs consensus for profit of €210m, while Goldman had expected a profit of €450MM. It also noted that IB revenue was weak, rose just 6% vs U.S. peers up 18%, and notes the bank’s market share loss in FICC and Equities; FICC revenue increased 10% vs U.S. peers up 43%; Equities down 23% vs U.S. peers’ up 3%.

Embattled CEO John Cryan has been shrinking the bank’s trading operations, built by his predecessor, and raising capital levels eroded by misconduct costs BBG added. While the bank has settled some of its biggest legal cases in the past two months, an initial request that it pay $14 billion to settle a U.S. Justice Department investigation of mortgage-backed bonds spooked some investors in the quarter.

Deutsche Bank took €1.59 billion of litigation charges in the fourth quarter, more than the €1.28 billion analysts surveyed by Bloomberg News had expected on average. While 2015 and 2016 were “peak years for litigation,” this year will continue to be “burdened by resolving legacy matters,” Deutsche Bank said in slides on its website.

The silver lining in the poor report is that Deutsche Bank’s common equity Tier 1 ratio rose modestly to 11.9% at the end of December from 11.1% three months earlier as it shrunk risk-weighted assets. That’s higher than the 11.3 percent analysts in the Bloomberg News survey had expected. Cryan has said he’s willing to sacrifice some revenue as he improves the firm’s internal controls and scales back debt-trading operations that require increasing amounts of capital.

The bank reiterated a plan to raise the ratio to at least 12.5 percent by the end of 2018. Assets weighted by risk will probably rise in the first quarter “to support business growth,” the bank said.

“We welcome the improvement in the capital position, but wonder if this has come at a cost to the profitability of the core franchise,” Citigroup Inc. analysts including Andrew Coombs said in a report. They have a sell recommendation on the stock.

Also, in a statement, Cryan said Deutsche Bank has experienced a “promising start to this year.” Revenue will rise this year and the company had a “strong” January across almost all its businesses, according to a presentation the bank published on its website.

“There was a clear impact from the negative news flow around Deutsche Bank in the fall, especially on the global markets unit,” said Daniel Regli, an analyst with MainFirst whose recommendation on the stock is under review. “It remains to be seen whether this effect will be reversed in 2017.”

A criminal investigation of the trades by the Justice Department is ongoing, Bloomberg notes. The bank also hasn’t resolved investigations into whether it manipulated foreign-currency rates and precious metals prices. To help shoulder those costs, the company said last month that it will scrap the bonuses of its top executives for a second straight year and slashed variable compensation for other senior employees to shore up capital. Deutsche Bank is also considering raising capital through the sale of a stake in its asset management unit in an initial public offering, according to people familiar with the matter. That division generated a 753-million pretax loss after writing down the value of the Abbey Life unit it agreed to sell to Phoenix Group Holdings in September. Asset management generated a 173 million-euro pretax profit in the year earlier quarter. The business saw 13 billion euros of net outflows in the quarter, the highest since redemptions started in the third quarter of 2015.

Cryan said in a speech in Berlin that he’s seeing signs of better times ahead and will continue to focus on resolving the bank’s “legacy issues.” Shareholders have yet to be convinced

 

 

END

ENGLAND/THE POUND

 

The pound fell after the BOE kept rates unchanged.  The central bank warned of inflation and that it must act if their tolerance is breached.  The street was not happy and thus down goes the pound

(courtesy zero hedge)

 

Pound Slides After BOE Keeps Rates Unchanged, Warns “Little Closer” To Limits Of Inflation Tolerance

The Bank of England kept its key interest rate at 0.25%, gilt purchase program at GBP435BN, and corporate-bond plan at GBP10b, voting 9-0 on all 3 decisions. The BOE also raises growth forecasts, while keeping its inflation forecasts broadly unchanged, and said the current policy stance “depended on the trade-off between above-target inflation and slack in the economy.” The central banks also reiterated that “monetary policy could respond, in either direction, to changes in the economic outlook as they unfolded”

From the BOE statement:

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment.  At its meeting ending on 1 February 2017, the Committee voted unanimously to maintain Bank Rate at 0.25%.  The Committee voted unanimously to continue with the programme of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, totalling up to £10 billion.  The Committee also voted unanimously to maintain the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.

As the MPC had observed at the time of the UK’s referendum on membership of the EU, the appropriate path for monetary policy depends on the evolution of demand, potential supply, the exchange rate, and therefore inflation.  The Committee’s latest economic projections are contained in the February Inflation Report.  The MPC has increased its central expectation for growth in 2017 to 2.0% and expects growth of 1.6% in 2018 and 1.7% in 2019.  The upgraded outlook over the forecast period reflects the fiscal stimulus announced in the Chancellor’s Autumn Statement, firmer momentum in global activity, higher global equity prices and more supportive credit conditions, particularly for households.  Domestic demand has been stronger than expected over the past few months, and there have been relatively few signs of the slowdown in consumer spending that the Committee had anticipated following the referendum.  Nevertheless, continued moderation in pay growth and higher import prices following sterling’s depreciation are likely to mean materially weaker household real income growth over the coming few years.  As a consequence, real consumer spending is likely to slow.

However, while cable initially spiked on the modestly hawkish announcement, it subsequently tumbled after the BOE warned that it has limited tolerance to above-target CPI, and some Monetary Policy Committee members had moved closer to those limits, explicitly noting that there are “limits to the extent above-target inflation can be tolerated.”

As the Committee has previously noted, however, there are limits to the extent that above-target inflation can be tolerated.  The continuing suitability of the current policy stance depends on the trade-off between above-target inflation and slack in the economy. The projections described in the Inflation Report depend in good part on three main judgements:  that the lower level of sterling continues to boost consumer prices broadly as expected, and without adverse consequences for expectations of inflation further ahead;  that regular pay growth does indeed remain modest, consistent with the Committee’s updated assessment of the remaining degree of slack in the labour market;  and that the hitherto resilient rates of household spending growth slow as real income gains weaken. In judging the appropriate policy stance, the Committee will be monitoring closely the incoming evidence regarding these and other factors.  For instance, if spending growth slows more abruptly than expected, there is scope for monetary policy to be loosened. If, on the other hand, pay growth picks up by more than anticipated, monetary policy may need to be tightened to a greater degree than the gently rising path implied by market yields.  Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.

Additionally, in its inflation report published concurrently, the BOE noted that household saving in the UK is set to fall to its lowest level since at least the early 1960s, according to new forecasts, boosting economic growth and taking some members of the Monetary Policy Committee closer to the limits of their tolerance for above target inflation. But, for now, the committee has voted unanimously to keep policy on hold.

As the FT adds, the bank’s new forecast, published on Thursday, is for growth of 2 per cent this year, well above the 1.4 per cent forecast they made in November. Consumers are expected to save less to support higher spending than the bank had expected. Over the next few years, the additional government spending that was announced at the end of November, stronger growth in the US and the Euro area and a further easing of credit conditions are expected to provide a further boost.

The bank’s forecast now implies the economy will be 1.5 per cent smaller in three years’ time than they expected before the UK voted for Brexit in June. This is significantly smaller than 2.5 per cent reduction they projected in November.

For now, the pound is taking the announcement as less hawkish, and after USDGBP spiked at high as 1.27, it has since tumbled to session lows just above 1.26.

 

 

end

 

Theresa May presents her “White Paper” on how England will undergo its BREXIT. Here are the highlights;

(courtesy zero hedge)

 

British Government Publishes 77-Page Brexit “White Paper”: Main Highlights

The British government published its long-awaited White Paper on Brexit, which formally lays out its strategy for the U.K.’s exit from the European Union. The 77-page document was presented in the House of Commons on Thursday by David Davis, the minister in charge of Brexit, and was also published online. The publication comes after pressure from MPs across the House of Commons, and was released just one day after British House of Commons lawmakers voted in favor of a bill, which if passed fully through parliament, would allow Theresa May to begin the Brexit.

The White Paper lays out the government’s 12 “principles” including migration control and “taking control of our own laws”. Brexit Secretary David Davis said the UK’s “best days are still to come”, outside the EU. Alternatively, Sir Keir Starmer, Labour’s shadow Brexit secretary, told the Commons there was “nothing” in the white paper to resolve the position of UK nationals living in other EU countries. And he said the paper failed to guarantee MPs a “meaningful” vote on the deal eventually obtained by Mrs May, rather than a simple choice to take it or leave it.

In the paper, the government delineates its goals for its negotiations with the EU, as announced by Prime Minister Theresa May last month. These include withdrawing from the EU single market and customs union and negotiating a new free trade agreement.

It also says reaching an early deal on the rights of EU nationals in the UK and British expats in Europe has “not proven possible”, saying the government wants to secure an agreement with European countries “at the earliest opportunity” during the formal talks. And it says the government will “keep our positions closely held and will need at times to be careful about the commentary we make public”, with MPs offered a vote on the final deal.

Some highlights from the paper courtesy of The Telegraph:

On Immigration

We are considering very carefully the options that are open to us to gain control of the numbers of people coming to the UK from the EU. Implementing any new immigration arrangements for EU nationals and the support they receive will be complex and Parliament will have an important role in considering these matters further.

 

There may be a phased process of implementation to prepare for the new arrangements. This would give businesses and individuals enough time to plan and prepare for those new arrangements.

European Court of Justice

The CJEU is amongst the most powerful of supranational courts due to the principles of primacy and direct effect in EU law.

 

We will bring an end to the jurisdiction of the CJEU in the UK. We will of course continue to honour our international commitments and follow international law.

Repatriated laws

As the powers to make these rules are repatriated to the UK from the EU, we have an opportunity to determine the level best placed to make new laws and policies on these issues, ensuring power sits closer to the people of the UK than ever before.

 

We have already committed that no decisions currently taken by the devolved administrations will be removed from them and we will use the opportunity of bringing decision making back to the UK to ensure that more decisions are devolved.

EU nationals in Britain

The Government would have liked to resolve this issue ahead of the formal negotiations. And although many EU Member States favour such an agreement, this has not proven possible. The UK remains ready to give people the certainty they want and reach a reciprocal deal with our European partners at the earliest opportunity. It is the right and fair thing to do.

Irish Border

We recognise that for the people of Northern Ireland and Ireland, the ability to move freely across the border is an essential part of daily life. When the UK leaves the EU we aim to have as seamless and frictionless a border as possible between Northern Ireland and Ireland, so that we can continue to see the trade and everyday movements we have seen up to now.

Single Market

We do not seek to adopt a model already enjoyed by other countries. The UK already has zero tariffs on goods and a common regulatory framework with the EU Single Market. This position is unprecedented in previous trade negotiations. Unlike other trade negotiations, this is not about bringing two divergent systems together.

 

It is about finding the best way for the benefit of the common systems and frameworks, that currently enable UK and EU businesses to trade with and operate in each others’ markets, to continue when we leave the EU through a new comprehensive, bold and ambitious free trade agreement.

 

That agreement may take in elements of current Single Market arrangements in certain areas as it makes no sense to start again from scratch when the UK and the remaining Member States have adhered to the same rules for so many years. Such an arrangement would be on a fully reciprocal basis and in our mutual interests.

Customs Union

It is in the interests of both the UK and the EU to have a mutually beneficial customs arrangement to ensure goods trade between the UK and EU can continue as much as possible as it does now. This will form a key part of our ambition for a new strategic partnership with the EU.

EU Budget

Once we have left the EU, decisions on how taxpayers’ money will be spent will be made in the UK. As we will no longer be members of the Single Market, we will not be required to make vast contributions to the EU budget. There may be European programmes in which we might want to participate. If so, it is reasonable that we should make an appropriate contribution. But this will be a decision for the UK as we negotiate the new arrangements.

Labour has called calling for a “meaningful vote” that could send the prime minister back to the negotiating table if the deal is deemed unsatisfactory by MPs.

Formal negotiations can begin once the UK has given notice of Brexit under Article 50 of the Lisbon Treaty, which Mrs May has promised to do by the end of March. On Wednesday evening MPs voted to allow the PM to do this as they backed the European Union Bill by 498 votes to 114.

As BBC adds, MPs will discuss the bill in more detail next week when it reaches the committee stage in the Commons, and Labour has vowed to force through amendments. Hundreds of amendments have already been tabled for debate between Monday and Wednesday, with objectives set out in the government’s strategy expected to attract more. A total of 47 Labour rebels voted against the bill.

Shadow cabinet members Rachael Maskell and Dawn Butler quit the party’s front bench shortly before Wednesday evening’s vote, and in total, 13 Labour frontbenchers voted against their own party position which was to support the bill. Speaking on BBC Radio 4’s Today programme, shadow chancellor John McDonnell said other parties had also been divided on the issue, with two of the Liberal Democrats’ nine MPs abstaining despite orders to oppose the bill.

Mr McDonnell said a decision on whether frontbench rebels could remain in their jobs would be taken “in due course”, and that the atmosphere in his party was “one of mutual respect”, with determination to oppose a “reckless Brexit”.

He said Labour “may look divided” but would unite after the government triggers official negotiations under Article 50 of the Lisbon Treaty while “the Tory Party will split apart”.

* * *

The Brexit bill was published last week, after the Supreme Court decided MPs and peers must have a say before Article 50 could be triggered. It rejected the government’s argument that Mrs May had sufficient powers to trigger Brexit without consulting Parliament. Iain Watson, BBC political correspondent, said a “sizeable” Labour rebellion could grow further if amendments were not passed.

The SNP, Plaid Cymru and the Liberal Democrats all opposed the government’s bill, alongside Tory Ken Clarke. The SNP’s foreign affairs spokesman at Westminster, Alex Salmond, said there would be “detailed questions” about the bill during its next stage. He said “the calibre of the government will be judged by how they respond to the amendments”. Mr Clarke, the only Conservative MP to defy his party by voting against the bill, said the result was “historic”, but the “mood could change” when the “real action” of negotiations with the EU starts.

Exit talks with the EU are expected to last up to two years, with the UK predicted to leave the 28-member organization in 2019.

Full White Paper below (link)

 

end

 

iv)  Cable  (Pound/USA dollar cross)plummets as Governor Carney cannot quell Brexit concerns.  Investors are nuts: England will be way ahead by leaving the doomed EU\

 

(courtesy zerohedge)

Cable Collapse Continues As Carney Unable To Quell Brexit Concerns

The reaction to The House of Commons vote on Article 50 yesterday was overwhelmed by Fed-driven dollar-flows but, despite a relatively hawkish Bank of England this morning, Cable finally caught up to the implications of the vote and that Brits are one step closer to Brexit…

end

v)GREECE

It is deja vu again in Greece as these guys must pay their creditors on July 20. The “trinity” have different views as to what should happen. It looks to me like they want Greece to exit.

(courtesy zero hedge)

 

 

With The Greek Crisis Back, There Are Five Possible Scenarios From Here

As discussed last Friday, Greece is back in the public spotlight and – hardly surprising – it is once again on the verge of collapse. Greek yields surged in the past week as the country didn’t secure a positive review at the Eurogroup on 26 January. Additional noise came from indications that the IMF still views the Greek debt as unsustainable without further measures from the Greek government (the term was “explosive”), as well as  additional debt relief clarifications from European creditors.

So is a rerun of the summer of 2015 inevitable? According to Credit Suisse’s Giovanni Zanni, the most likely outcome – for now-  is an amicable, and quick, resolution. However the longer nothing substantive changes, the more likely it is that the 4, far less pleasant scenarios, kick in.

While it is difficult  to attribute a specific probability to each of those, they are ranked them below by the most to the least likely. These scenarios should also provide a roadmap for investors in the process of assessing when risks could increase and when they could die down: as a rule of thumb, we would expect a sell-off to be ongoing until the next “node”, unless the tension is released by some form of  agreement, which we still believe will come at some point in the coming months. In the absence of any deal, market stress is likely to steadily increase ahead of large Greek bond redemptions, in particular those in late July, with a calendar pretty similar to that of 2015. But while we expected at the time that a solution would have come very late in the game (in July, precisely), this time the base case scenario is for a quicker resolution.

Here are the five possible scenarios from the Swiss bank:

  • Scenario 1:Quick resolution (in the coming days) (Harvey: if this happens the Euro will plummet because of Greek bonds in the ECB portfolio)

The Greek government is reportedly trying to find an agreement, providing a series of measures that should be largely compliant with the creditors’ requests and are crafted in a way that should be sufficient to convince the IMF to agree to continued participation in the programme. There is a key IMF meeting on 6 February: if the measures are accepted then it should open the way for a successful completion of the review on 20 February by the Eurogroup. This, in our view, would also set in motion a clarification of the medium-term relief measures (after 2018) to be granted, conditionally, to Greece. And from there the Debt Sustainability Analysis of both the IMF and the ECB should reinforce Greece’s position and allow the European Central Bank to include GGBs in its QE program.

That is clearly the positive scenario – and the most optimistic in the timing (e.g., it might still happen as above, broadly speaking, but delayed by a few days or weeks, clearly) – but we still think it can happen, with a decent probability. This would lead in all likelihood to a prompt reversal of the spread widening seen in recent weeks, and to further convergence ahead – especially if and when the participation of GGBs in ECB’s QE is announced.

The other four (less positive to outright negative) scenarios are discussed overleaf.

  • Scenario 2: “We need more time” (March-April)

There is a fundamental “irreconcilable trinity” between the views of the IMF, that of European creditors and those of the Greek government: at the cost of oversimplifying, Greeks want less reform, more debt relief, and would prefer a lower primary surplus target; the IMF would like more structural reforms, more debt relief from European creditors, and lower primary surpluses – expecting Greece to deliver primary surpluses at 3.5% of GDP for the foreseeable future is seen as unrealistic; finally, European creditors are relatively agnostic on reforms, want ideally as little debt relief as possible, and prefer higher primary surpluses to fill the debt sustainability gap. It is not clear that these differences can be resolved, effortlessly, in a short period of time – it might still require a further layer of negotiations and developments. Still, there is some kind of “political imperative”, we believe, with indeed the preference by all to close the negotiations ahead of at least the French elections, in order not to poison further the European political debate. As such, a decision might eventually be pushed through next month or in April, at the latest, if disagreements are not too extreme.

  • Scenario 3: brinkmanship (July)

This scenario would mimic the events of 2015, when the confrontation was pushed to the limit of default from the Greek side, in the hope of getting the best possible deal. In our view, that strategy didn’t work for Greece and created uncertainty and another recession in that year. As such, we struggle to see this strategy as intentional this time – but it could end up being the default option in the absence of an agreement under scenarios 1 and 2 and in the context of elections and events in the rest of Europe diverting the focus on Greek matters.

  • Scenario 4: Early elections (before the summer)

Early elections cannot be discarded, if a satisfactory agreement is not found in the coming two to three months. It is likely that most MPs dislike this option, as early elections would likely see several in the majority losing their seats: current polls suggest a very strong preference for the center-right opposition (New Democracy), as we show in Figure 6. However, it would be a way to preserve an “anti-system”  role to the ruling party, Syriza, with the aim and hope to return in government at a (not too) later stage, in a new election round. From a market perspective, early elections would clearly be a negative, short term, but we also stress that the likely victory of the centre-right would be probably seen as a positive medium-term outcome.

  • Scenario 5: Grexit? Oh pleeease!

SYRIZA parliamentary spokesman Nikos Xydakis said earlier this week that a debate about Greece’s membership of the euro should not be taboo, seemingly reopening the discussion on Greece’s EU membership. We have debated this issue at length in the past, and believe it wouldn’t make sense for Greece to leave – and actually it is already damaging for the country to even discuss it. The opposition was quick in criticising Mr Xydakis and there is clearly no support in the parliament for it and even less so in the country (Figure 7).

* * *

Finally, here is a timeline of next events:

Below, we provide a timeline of key relevant dates and events in the coming months. There is an immediate set of events (in February) that could resolve the issues and make the programme progress swiftly. If not in February, there are several intermediate dates that could still deliver an agreement, although at a later stage, most likely around the scheduled Eurogroup meetings – although an extraordinary gathering to approve the bailout happened in the past and cannot be discarded. July 17 – or 20 – would be the “hard” deadline, as Greece would be, same as in July 2015, unable to repay those amounts without additional support under the EU/IMF programme. There are earlier relatively large redemptions, notably in late February and in April – but we believe there is probably room in Greece’s public finances  to fulfill those commitments.

END

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

IRAN/USA

 

Trump formally puts Iran on notice for firing that ballistic missile. The firing of that ballistic missile was no doubt to test Trump’s will:

(courtesy zero hedge)

Trump Doubles Down: “Iran Has Been Formally Put On Notice”

Echoing comments made yesterday by his national security advisor Michael Flynn, Trump started his Thursday morning on Twitter by first threatening to pull UC Berkeley’s funding and congratulating Rex Tillerson, and then stating that Iran is now formally “on notice” for firing a ballistic missile.

“Iran has been formally PUT ON NOTICE for firing a ballistic missile.Should have been thankful for the terrible deal the U.S. made with them!” he tweeted, without providing any other details.

Iran has been formally PUT ON NOTICE for firing a ballistic missile.Should have been thankful for the terrible deal the U.S. made with them!

Trump then added that “Iran was on its last legs and ready to collapse until the U.S. came along and gave it a life-line in the form of the Iran Deal: $150 billion.”

Iran was on its last legs and ready to collapse until the U.S. came along and gave it a life-line in the form of the Iran Deal: $150 billion

During a surprise appearance in the White House briefing room on Wednesday, Michael Flynn vowed a forceful U.S. response to Iran’s “destabilizing behavior across the Middle East.” Flynn said Iran “continues to threaten U.S. friends and allies in the region,” with a ballistic missile test launch over the weekend and other actions. Flynn also accused Barack Obama for allowing Iran to become “emboldened.”

“As of today, we are officially putting Iran on notice,” he said, without elaborating what that meant.

Subsequently, the White House provided little clarity about the practical impact of Flynn’s comments. “There are a large number of options available to the administration. We are going to take appropriate action and I will not provide any further information today relative to that question,” a senior administration official told reporters.

“The important thing here is we are communicating that Iranian behavior needs to be rethought by Tehran.”

Trump has in the past criticized the international agreement to curb Iran’s nuclear program, and vowed to abandon the agreement if elected. The agreement to offer relief from international financial sanctions in exchange for new limits on Iran’s nuclear program isn’t a treaty and therefore isn’t binding from one administration to the next.

In November, nuclear policy experts and lobbyists said President Obama’s signature nuclear deal with Iran could be put in peril when Trump assumes office. On Wednesday night, the president tweeted that Iran is dominating “more and more of Iraq,” despite U.S. efforts to secure the country.

Iran is rapidly taking over more and more of Iraq even after the U.S. has squandered three trillion dollars there. Obvious long ago!

Yesterday, in a move meant to gauge the US willingness to escalate, Iran confirmed it had test fired a new ICBM rocket.

 

 

end

 

Iran will official ditch the dollar by march 21.

(courtesy Salles/AntiMedia.org)

 

 

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