Feb 6/Gold and silver extremely strong despite stronger dollar/Yen extremely strong today and this becomes the catalyst for gold to rise/Big news that everyone missed: China is tightening! /Merkel is faltering at the polls/Iran defies Trump and fires more missiles/Another gold and silver manipulation class action suit is to start in the UK/USA judge blocks Trump’s immigration ban/Three American brothers targeted as the likely parties who supplied the Democratic Convention emails to Wikileaks/Final draft

Gold at (1:30 am est) $1230.00 UP    $11.50

silver  at $17.67:  up22  cents

Access market prices:

Gold: $1235.50

Silver: $17.74

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

MONDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 6/17 (10:15 pm est last night): $  1233.11

NY ACCESS PRICE: $1214.45 (AT THE EXACT SAME TIME)/premium $9.23

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1223.23

NY ACCESS PRICE: $1222.82 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  $0.41

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb6/2017: 5:30 am est:  $1221.85   (NY: same time:  $1222.15   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 6.2017: 10 am est:  $1226.75 (NY same time: $1226.50  (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:  156 NOTICE(S) FOR 15600 OZ.  TOTAL NOTICES SO FAR: 5005 FOR 500,500 OZ    (15.567 TONNES)

For silver:

 

For silver: FEBRUARY

0 NOTICES FILED FOR nil OZ/

TOTAL NO OF NOTICES FILED: 145 FOR 725,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest  FELL by 104 contracts DOWN to 190,467 with respect to FRIDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  .956 BILLION TO BE EXACT or 137% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: 0 NOTICES FOR NIL OZ

In gold, the total comex gold ROSE BY 1324 contracts WITH THE RISE IN  THE PRICE GOLD ($1.80 with FRIDAY’S trading ).The total gold OI stands at 401,741 contracts

 

we had 156 notice(s) filed upon for 15,600 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 deposit of 7.43 tonnes

Inventory rests tonight: 818.65 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 334.713 million oz

end

.

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

1. Today, we had the open interest in silver FALL by 104 contracts DOWN to 190,467 DESPITE THE FACT THAT SILVER WAS UP 5 CENTS with YESTERDAY’S trading. The gold open interest ROSE by 1324 contracts UP to 401.741 WITH THE RISE IN THE PRICE OF GOLD OF $1.80  (FRIDAY’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

)

 

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 16.81 POINTS OR .54%/ /Hang Sang CLOSED UP 219.03 POINTS OR .95% . The Nikkei closed UP 58.51 POINTS OR 0.31% /Australia’s all ordinaires  CLOSED DOWN 0.13%/Chinese yuan (ONSHORE) closed UP at 6.8624/Oil ROSE to 54.01 dollars per barrel for WTI and 56.82 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.8070 yuan to the dollar vs 6.8640  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS QUITE A BIT AS POBC ATTEMPTS TO STOP DOLLARS FROM LEAVING CHINA’S SHORES. BOTH YUANS STRONGER COUPLED WITH THE STRONGER DOLLAR

 

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA

b) REPORT ON JAPAN

i)Keven Muir writes that for the first time, you may want to short the Japanese bonds as the central bank of Japan is having trouble containing yields at zero. Today they are .115% despite constant intervention which seems to be failing

( Kevin Muir/MacroTourist)

ii)You will recall the theory that as the yen rises so does the price of gold.  It seems that those short the yen are having their troubles today.  The yen broke 112, trading at 11.72 as I write:

( zero hedge)

c) REPORT ON CHINA

It is now time to start worrying about China.  Most missed the news; they are tightening:

( zero hedge)

4. EUROPEAN AFFAIRS

i)ITALY/SUNDAY

Italy most likely will be heading for early elections and if so, there is a huge chance that the euroskeptic parties will win.  If so their participation in the Euro is in deep jeopardy.

(courtesy zero hedge)

ii)GERMANY/MONDAY

Merkel faltering at the polls as German credit default risks rises:

( zero hedge)

iii)GREECE/MONDAY
In order to save Greece, Varoufakis is urging Tsipras to ditch negotiations, go back to the Drachma or a parallel system and restructure loans.  Restructuring loans means defaulting on those loans and stiffing them
( zerohedge)

iv GREAT BRITAIN/USA/PRESIDENT TRUMP

What is our world coming to: Trump blocked from addressing UK Parliament:

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

IRAN

Iran defies Trump and carries out more missile tests while threatening the USA and others with “roaring missiles”.  And to think that Obama sent billions to these turkeys;

( zero hedge)

6.GLOBAL ISSUES

7. OIL ISSUES

i)According to Art Berman of Oilprice.com, the Keystone XL project needs 85 dollar oil in order to be viable

(courtesy Art Berman/Oil Price.com)

ii)The huge glut on gasoline will cause the oil price to decline

( Nick Cunningham/Oil Price.com)

8. EMERGING MARKETS

9.   PHYSICAL MARKETS

10.USA STORIES

i)Saturday;

USA judge blocks the Trump travel bank.  The White House vows to challenge the order:

( zero hedge)

ii)The DHS suspects all actions on the Trump travel ban as they reverse visa cancellation.  However they vow to fight the ruling:

( zero hedge)

iii)Now meet the 3 Anwan brothers who no doubt are responsible for the democratic convention leak

( zero hedge)

iv)The fun begins;  The Fed has received a letter from a high ranking Republican leader in banking,Patrick McHenry claiming that the Federal reserve is ripping off Americans.  We have no confirmation if the White House agrees with this..

( USAPoliticsnow.com)

v)Monday morning 97 tech companies file a legal brief condemning Trump’s immigreaiton order:

( zero hedge)

vi)Trump is upset that California is a sanctuary state and will not give up illegal aliens.Now Trump is threatening to de-fund the state:( zero hedge)

vii)The real truth on the USA economy:  it is not growing at all as the biggest companies are slashing jobs at the fastest rate since 2010.

( zero hedge)

viii) USA trading: Please note:

1 Yield curve inverts

2. USA swap spreads rise higher and both of these are occurring because of the new debt ceiling looming:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 1324 CONTRACTS UP to an OI level of 401,741 WITH THE RISE IN THE  PRICE OF GOLD ( $1.80 with FRIDAY’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 194 contracts DOWN to 2192.   We had 136 notices served upon yesterday and therefore we LOST 58 contracts or an additional 5800 oz will NOT stand for delivery.   The next non active contract month of March saw it’s OI fall by 367 contracts DOWN to 2307.The next big active month is April and here the OI ROSE by 1412 contracts UP to 274.452.

We had 156 notice(s) filed upon today for 15,600 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI FELL by 104 contracts FROM 190,571 UP TO 190,467 DESPITE THE FACT THAT the price of silver ROSE IN PRICE TO THE TUNE OF 5 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 4 contract(s) DOWN TO  163.  We had 6 notices served upon yesterday so we GAINED 2 CONTRACTS  or an additional 95,000 oz will stand. This is also the very first time in comex history that we witnessed in silver, the amount standing increased on each and every day succeeding first day notice in silver.

The next big active delivery month is March and here the OI decrease by 2548 contracts DOWN to 123,612 contracts. For comparison purposes last year on the same date only 101,229 contracts were standing.

We had 0 notice(s) filed for NIL oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 179,960  contracts which is FAIR.

Yesterday’s confirmed volume was 227,251 contracts  which is very good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY
 Feb 6/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 64.30 OZ
2 kilobars
Manfra
Deposits to the Dealer Inventory in oz 999.97 oz

brinks

Deposits to the Customer Inventory, in oz 
 nil  oz
No of oz served (contracts) today
 
156 notice(s)
15,600 oz
No of oz to be served (notices)
2036 contracts
203,600 oz
Total monthly oz gold served (contracts) so far this month
5005 notices
500500 oz
15.567 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     101,649.0 oz
Today we HAD 1 kilobar transaction(s)/
Today we had 1 deposit(s) into the dealer:
 i) Into Brinks:  999.97 oz
total dealer deposits:  997.97 oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil oz
We had 1 customer withdrawal(s)
i) Out of Brinks: 64.30  (2 kilobars)
total customer withdrawal: 64.30 oz
2 kilobars
We had 1  adjustment(s)
i) Out of Brinks:  12,990.96 oz was adjusted out of the dealer and this landed into the customer account of Brinks
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
For FEBRUARY:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 156 contract(s)  of which 29 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (5005) x 100 oz or 500,500 oz, to which we add the difference between the open interest for the front month of FEBRUARY (2191 contracts) minus the number of notices served upon today (156) x 100 oz per contract equals 704,100 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 (5005) x 100 oz  or ounces + {(2191)OI for the front month  minus the number of  notices served upon today (156) x 100 oz which equals 706,000 oz standing in this non active delivery month of FEBRUARY  (21.900 tonnes)
 we lost 58 contracts or an additional 5800 oz will not 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 15.567 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/ 21.959 tonnes
total for the 14 months;  247.963 tonnes
average 17.711 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 1,416,545.479 or 44.06 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,947,666.820 or 278.309 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.309 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 6. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
34,167.36 0z
Brinks
Scotia
CNT
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 1,258,639.220  OZ
CNT
Scotia
HSBC
No of oz served today (contracts)
0 CONTRACT(S)
(NIL OZ)
No of oz to be served (notices)
163 contracts
(815,000  oz)
Total monthly oz silver served (contracts) 145 contracts (725,000 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   3,651,658.0 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 3 customer withdrawal(s):
i) Out of Delaware: 6999.15 oz
ii) Out of CNT:       25,214.800 oz
iii) Our of Brinks: 1953.400 oz
TOTAL CUSTOMER WITHDRAWALS: 34,167.36 oz
 we had 3 customer deposit(s):
i) Into CNT: 1953.40 oz
ii) Into Scotia: 619,915.740 oz
iii) Into HSBC: 636,770.080 oz
x) Into JPMorgan:  zero  oz**
deposits into JPMorgan have now stopped.
total customer deposits;  1,258,639.220   oz
 
 we had 0  adjustment(s)
The total number of notices filed today for the FEBRUARY. contract month is represented by 0 contract(s) for NIL 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  145 x 5,000 oz  = 725,000 oz to which we add the difference between the open interest for the front month of feb (163) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the FEBRUARY contract month:  145(notices served so far)x 5000 oz  + OI for front month of FEB.( 163 ) -number of notices served upon today (0)x 5000 oz  equals  1,540,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver. 
We gained 2 contracts or an additional 10,000 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 46,046 which is excellent
FRIDAY’S  confirmed volume was 75,150 contracts  which is excellent.
 
Total dealer silver:  30.205 million (close to record low inventory  
Total number of dealer and customer silver:   180.234million 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 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes

FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes

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 6/2017/ Inventory rests tonight at 818.65 tonnes
*IN LAST 83 TRADING DAYS: 131.16 TONNES REMOVED FROM THE GLD
*LAST 30 TRADING DAYS: 5.89 TONNES HAVE LEFT

end

Now the SLV Inventory
Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 tonnes
FEB3/ a tiny withdrawal of 136,000 oz to pay for fees etc/inventory rests at 334.713 million oz
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 6.2017: Inventory 334.713  million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 8.2 percent to NAV usa funds and Negative 8.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.5%
Percentage of fund in silver:39.3%
cash .+0.2%( feb 6/2017) 
.
2. Sprott silver fund (PSLV): Premium RISES to +.05%!!!! NAV (Feb 6/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.40% to NAV  ( feb 6/2017)
Note: Sprott silver trust back  into POSITIVE territory at +0.05% /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 MONDAY

GOLDCORE/BLOG/MARK O’BYRNE

Gold Bullion Banks To “Open Vaults” In Transparency Push?

London Gold Bullion Banks To “Open Vaults” In Transparency Push

London’s gold bullion market, which is centuries old, is said to be seeking transparency with plans to reveal how much gold bullion is held in vaults in and around London city according to gold bullion banks. These include gold bullion bars held and controlled by the Bank of England, as reported by Henry Sanderson in the Financial Times.

The move is being led by the London Bullion Market Association and it is said that it will provide data for the first time on how much gold is traded in the London gold bullion market in the Square Mile.

According to the FT:

Some of the world’s biggest banks are trying to shift trading of the precious metal on to an exchange. By providing greater transparency and data, the LBMA, whose members include HSBC and JPMorgan, hopes to head off the challenge and persuade regulators that banks trading bullion should not have to face more onerous funding requirements.

In London most gold is traded “over-the-counter,” or directly between buyers and sellers, so there is little data on how much changes hands. Estimates from the LBMA suggest that about $26 billion of gold is traded daily in the City but there are no official figures.

The LBMA plans to release the monthly vault data on a three-month lag, according to people involved in the process. It will show gold bars held by the Bank of England, the gold clearing banks, and those operated by the security companies such as Brink’s, which are also members of the LBMA, according to a person involved in setting up the programme.

The LBMA declined to comment.

London’s vaults hold billions of dollars of gold, one of the largest stashes. Vaults owned by HSBC are used to back the largest gold exchange traded fund, the SPDR Gold Shares.

The vaults, in secret locations within the M25 orbital motorway, are normally equipped with extreme security measures such as blast doors and fingerprint sensors that detect the flow of blood to prevent the use of severed digits. Access is rarely granted to members of the public.

An estimated 400,000 large gold bars are stored at the Bank of England’s vaults in the City, worth some $150 billion, according to the LBMA. The Bank of England holds the most gold because it acts as a custodian for the holdings of other central banks.

Last year a gold vault owned by Barclays, which can house $80 billion of bullion, was bought by China’s ICBC Standard Bank.

Since the financial crisis, policymakers have been pushing for financial instruments to be traded on exchanges and cleared through centralised systems. Last year the London Metal Exchange and the World Gold Council announced plans for a gold futures contract backed by a consortium of banks including Goldman Sachs and ICBC.

HSBC and JPMorgan, London’s biggest bullion banks, are backing the initiatives by the LBMA to improve transparency.

END

 

Chris Powell quotation from the above “transparency”

 

“Open vaults”? Hardly. The LBMA will issue reports that no independent auditor will be permitted to check and confirm. Those reports will not account for gold swaps and leases with central banks and other bullion banks that allow gold to be counted multiple times. And the data will be three months old besides. These failings are obvious but, being a mere public-relations agency for the financial industry, the Financial Times can’t bring itself to question them. It’s all pathetic but this at least shows that the gold gangsters are getting nervous.” … Chris Powell

GO GATA!

end

 

 

 

U.K.-based class action planned against worldwide gold and silver rigging

Section:

9:16p ET Saturday, February 4, 2017

Dear Friend of GATA and Gold:

A British law firm, Leon Kaye Solicitors, with offices in London, Portugal, and Spain, is contemplating bringing a class-action lawsuit under the United Kingdom’s Competition Act against financial institutions suspected or already accused of manipulating the gold and silver markets. The firm is seeking contact with investors who believe they may have been harmed by such manipulation.

To the best of GATA’s knowledge, similar lawsuits have been brought so far only in the United States and Canada, and it would be a shame to give crooked gold and silver traders and bullion banks a pass in London, which remains the center of metals trading. It appears that people living outside the United Kingdom can become plaintiffs there.

With luck discovery and deposition in all these lawsuits eventually may expose and incriminate central banks in the market rigging, as they commonly intervene in the markets through intermediary financial houses.

Information about the possible class action in the U.K. is posted at the Leon Kaye Solicitors internet site here:

http://www.leonkaye.co.uk/class-actions/possible-manipulation-gold-silve…

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

 

 

END

 

Strange!! the LBMA is now pushing to open their vaults as the seem frightened about lack of transparency in the gold and silver markets..and they are right.  The fact that we see some gold is not full proof.  We need to see who the rightful owners of that gold and to see if there are a huge number of owners per oz of gold situated over there.

(courtesy GATA/London’s FinancialTimes)

 

(courtesy GATA/Bloomberg)

Deutsche Bank purchases ads to apologize for ‘serious errors’

Section:

By Tino Andresen
Bloomberg News
Sunday, February 5, 2017

Deutsche Bank AG bought full-page ads in all major German newspapers over the weekend to apologize for “serious errors” after two years of losses that cost the lender billions of euros.

Legal cases that date back many years cost the Frankfurt-based company “reputation and trust” in addition to about 5 billion euros ($5.4 billion) since John Cryan took over as chief executive officer in 2015, the ad said, blaming the “misconduct of a few” employees.

Cryan, who signed on behalf to the executive board, expressed “our deep regret” that “the conduct of the bank didn’t follow our standards” in relation to the U.S. mortgage business in 2005 to 2007 and was “unacceptable.” …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-02-05/deutsche-bank-purchas…

 

 

END

Now we have 3 states wishing a gold  vault. First was Texas, the second Utah and now Arizona.

(courtesy Mike Maharrey)

 

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

 
 

1 Chinese yuan vs USA dollar/yuan STRONGER AT  6.8640(SMALL REVALUATION NORTHBOUND   /OFFSHORE YUAN NARROWS   TO 6.8070 / Shanghai bourse UP 16.81 POINTS OR .54%   / HANG SANG CLOSED UP 219.03 POINTS OR .95% 

2. Nikkei closed UP 58.51 POINTS OR 0.31%   /USA: YEN FALLS TO 112.38

3. Europe stocks opened ALL IN THE RED      ( /USA dollar index RISES TO  99.96/Euro DOWN to 1.0741

3b Japan 10 year bond yield: RISES TO    +.106%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.39/ 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::  54.01  and Brent: 56.82

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  +.381%/Italian 10 yr bond yield UP  to 2.338%    

3j Greek 10 year bond yield RISES to  : 7.55%   

3k Gold at $1226.75/silver $17.63(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 26/100 in  roubles/dollar) 58.74-

3m oil into the 54 dollar handle for WTI and 56 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT SMALL   REVALUATION NORTHBOUND   from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.39 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  0.9941 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0678 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  +.381%

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 2.446% early this morning. Thirty year rate  at 3.079% /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

Global Stocks, US Futures Rise Despite Growing Political Tension In Europe

 In a relatively quiet session, which may see US traders sleep in a bit after last night’s Superbowl thriller, European and Asian shares rose ahead of Mario Draghi’s testimony at the European Parliament, while US equity futures were fractionally higher (up 0.1% to 2,293) after stocks jumped the most in a week, as traders assessed the trajectory for interest rates while scrutinizing every new Trump tweet.

As Reuters highlights, there was no overarching theme to Monday’s market moves, highlighting how correlations between financial market assets have broken down in recent months as investors sense the era of ultra-loose monetary policy may be winding up. The European STOXX 600 index rose 0.2%, led higher by basics resources shares and after some positive company results. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, with Taiwan .TWII leading the pack by adding 0.9 percent. Japan’s Nikkei rose 0.2%, with banks rising after U.S. Trump meets Japanese Prime Minister Shinzo Abe on Feb. 10 and 11, with trade and currencies likely to be on the agenda. China’s CSI 300 index rose 0.3%, though investors were cautious after the central bank unexpectedly raised short-term interest rates on Friday.

Despite the modest equity upside, caution has crept through European bonds and currencies after prospective French presidential candidate Marine Le Pen unveiled a manifesto pledge to take her country out of the euro, underscoring political risk in the world’s biggest single market, prompting gold, at $1,223, to what would be the highest close since November. The National Front leader on Sunday fired at globalization and monetary integration, calling for a referendum on European Union membership and a limit on immigration. The divergence between French and German bond yields became more pronounced, with the spread at the widest since 2013. Traders are assigning greater risk premiums to European countries where anti-establishment movements are gaining traction ahead of elections.

The euro was among the biggest losers among major currencies. The dollar inched up 0.1% against a basket of major currencies. Data on Friday showed average hourly earnings rose just 0.1 percent, suggesting any pick-up in inflation would be slight.  This led some analysts to conclude the Fed would be in no hurry to raise interest rates. Currency investors are also awaiting details on expected pro-dollar tax and spending initiatives pledged by Trump. However, later on Friday, San Francisco Fed President John Williams said that the central bank can prepare to raise rates this year without knowing the details of any new U.S. fiscal policies.

Oil prices rose, partly due to the dollar’s relative weakness, but also on concern about any extension of new U.S. sanctions imposed on major oil producer Iran over that country’s missile program. Brent crude traded near the highest since 2015 amid fresh sanctions by the U.S. on Iran after a missile test. “The move by the U.S. to impose new restrictions on Iran … does raise the risk of further tensions disrupting (oil) supply,” ANZ bank said. Haven demand sent gold toward the highest close since November.

The Stoxx Europe 600 Index added 0.2 percent, after rising 0.6 percent on Friday. Miners climbed 0.9 percent, bouncing after a selloff on Friday, with Randgold Resources Ltd. gaining following quarterly results.

The yield on 10-year Treasuries lost one basis point to 2.45 percent. The yield difference between French and German 10-year bonds jumped above 70 basis points for the first time since 2014.  French 10-year government bond yields 1.6 basis points to 1.1 percent. German equivalents, the euro zone benchmark, dipped 2 bps to a two-week low of about 0.4 percent, pushing the gap between the two to its widest in four years. “The likelihood of Le Pen winning is unlikely, but the situation in France is certainly raising fears among investors,” said DZ Bank rates strategist Christian Lenk. “French bonds will continue to underperform even though a lot is priced into the market.”

Among the key events this week we’ll see European banks including Societe Generale SA and UniCredit SpA report this week, and Sanofi and GlaxoSmithKline Plc will be among those delivering health-care earnings. Globally, watch out for numbers from SoftBank Group, the Walt Disney Co., Twitter Inc. and the Coca-Cola Co. The U.K. House of Commons will complete its debate on the Article 50 bill on Monday, the triggering of which will start the process of leaving the European Union. ECB President Mario Draghi can cite accelerating inflation, declining unemployment and 15 quarters of expansion as evidence that his stimulus policies are working when he appears before the European Parliament on Monday. He’ll probably also have to point to weak underlying price growth and a turbulent political environment

Market Snapshot

  • S&P 500 futures up 0.1% to 2293
  • Stoxx 600 up 0.2% to 365
  • FTSE 100 up 0.2% to 7205
  • DAX up less than 0.1% to 11658
  • German 10Yr yield down 1bp to 0.4%
  • Italian 10Yr yield up 4bps to 2.31%
  • Spanish 10Yr yield up 2bps to 1.7%
  • S&P GSCI Index up less than 0.1% to 400.8
  • MSCI Asia Pacific up 0.5% to 143
  • Nikkei 225 up 0.3% to 18977
  • Hang Seng up 0.9% to 23348
  • Shanghai Composite up 0.5% to 3157
  • S&P/ASX 200 down 0.1% to 5616
  • US 10-yr yield down 1bp to 2.45%
  • Dollar Index up 0.13% to 100.0
  • WTI Crude futures unchanged at 53.83
  • Brent Futures down 0.2% to $56.69
  • Gold spot up 0.2% to $1,223
  • Silver spot up 0.3% to $17.57

Global Top News

  • Tiffany Abruptly Drops CEO Just Before First-Ever Super Bowl Ad: Jeweler’s board cites disappointing financial results
  • Trump Says Obamacare Replacement Could Take Until Next Year: President speaks on Fox during Super Bowl pre-game show
  • Trump Immigration Ban Bound for Supreme Court, Now or Later: Appeals court may decide Monday whether ban can be reinstated
  • Apple to Zynga File Legal Brief Against Trump Immigration Order: Brief filed late Sunday in Ninth Circuit Court of Appeals
  • Electrolux to Buy Sous Vide Cooker Maker in U.S. Expansion: Acquisition could value Anova at as much as $250 million
  • China Dealmaker Said to Get GLP CEO’s Backing in Buyout Bid: Private equity firm competing with Blackstone, Warburg Pincus
  • Delek Group to Buy North Sea Explorer Ithaca for $645 Million: Delek already holds 19.7 percent of Ithaca

Asian equity markets traded mostly higher with gains following last Friday’s positive close from Wall. St. where financials outperformed after US President Trump signed an executive order to review Dodd-Frank rules and NFP. This saw financials outperform in the ASX 200 (-0.1%) and Nikkei 225 (+0.3%), although the former failed to hold on to gains after disappointing Retail Sales data. Meanwhile, Hang Seng (+0.6%) and Shanghai Comp. (+0.3%) conformed to the positive tone, despite the PBoC refraining from conducting a liquidity injection, as markets digested the latest China Caixin Services and Composite PMIs which were weaker than the prior month but remained in expansion territory. 10yrs JGBs traded lower amid the positive risk tone in Japan, with an unexpected inclusion of 5yr-10yr government debt in today’s BoJ Rinban operation only providing brief support, while the curves steepened amid outperformance in the short-end. Continuing the recent tightening trend, the PBoC refrained from injecting funds via reverse repos and added that liquidity in the banking system is at a relatively elevated level.

Top Asian News

  • Toyota Braces for U.S. Trade Tension, Raises Profit Forecast: Automaker posts 3Q operating profit that fell 39 percent
  • China’s Auto Ambitions Get a Boost as Takata Picks Bidder: Stakeholders split on whether court-led restructuring needed
  • Apple Is Getting Pushed Around in China by Local Phone Brands: Company saw first annual iPhone shipment drop in China
  • Vodafone-Idea India Merger Seen Handing Rivals Cheap Spectrum: Two carriers said to weigh options for excess spectrum

European bourses kick off the week in the green, with Euro Stoxx trading modestly higher albeit relatively flat for the session with the economic calendar somewhat light this morning, with the notable highlight due out at 1400GMT where ECB’s Draghi is speak at the European Parliament Committee. In terms of stock specific news, firm earnings has seen Rangold Resources outperform in the FTSE 100. Elsewhere, Ryanair shares slipped this morning after announcing that Q4 net profit fell 8% amid the slump in GBP. Across the fixed income space, FRA-GER 10-yr benchmark spread remains at its highest level in 3-yrs as Marine Le Pen launched her Presidential Campaign over the weekend. While previous favourite Fillon will have conduct a press conference at 4:00 PM, whereby it is largely expected that he will step down from the race after recent investigations and alleged misconduct. However, some reports indicate that he may in fact launch a counter-attack.

Top European News

  • Draghi Takes QE Case to Brussels as Politics Keeps Risk High: ECB president will testify at European Parliament on Monday
  • Ryanair Cautious on Outlook as Fare Slump Clips Quarterly Profit: Spain, Italy flooded with capacity, discount giant says
  • Randgold Profit Increases 76% as Bullion Output, Prices Gain: Miner proposed 52% dividend hike on record production
  • Deutsche Bank Purchases Ads to Apologize for ‘Serious Errors’: CEO signs ad, expressing ‘our deep regret’ for conduct
  • U.K. Business Says Brexit Already Having a Negative Effect: 58% of FTSE 500 bosses say Brexit a negative: Ipsos Mori
  • German Factory Orders Surge Most Since 2014 on Investment: Orders rose 5.2% in December vs. estimated pick-up of 0.7%

In currencies, it has been  quiet morning in FX, with the range bound theme set to extend through the week. Fed speakers are unlikely to add much fresh perspective after the US average earnings took the shine off the headline NFP rise on Friday, and with the backdrop of the lesser than expected Q4 growth stats, Trump induced uncertainty adds to the lack of differential based buying seen from the start of the year. USD/JPY continues to flounder in the mid 112.00’s, but as long as the 111.50-112.50 zone remains intact, we cannot rule out another retest on the 115.00-50 zone. In the same vein, EUR/USD sellers will be growing nervous over the lack of downside momentum ahead of 1.0700. To this end, many remain wary of another test through 1.0800 at some stage, but as we have alluded to above, this looks unlikely in the early stages of this week. The Bloomberg Dollar Spot Index rose 0.1 percent as of 10:40 a.m. in London, after earlier dropping 0.1 percent. The gauge on Friday completed a sixth weekly decline for its longest stretch of losses since August 2010. The euro dropped 0.4 percent to $1.0736, while the pound was flat. AUD, NZD and CAD all trading in tight ranges today, and will continue to do so. USD/CAD is pressed in towards 1.3000 with Oil prices ticking higher, but AUD and NZD standing pat as the RBA Tuesday and RBNZ Thursday suggest caution at these extended levels.

In commodities, oil prices back in the limelight with US-Iran tensions on the rise again. The new sanctions on Iran, in response to the ballistic missile testing, do not seem to have had too radical an effect on WTI, but prices modestly higher to reflect some risk premium. Trading a little over USD54.00, WTI remains in comfortable territory, with only a move through USD55.00 likely to raise eyebrows. For base metals, the China return has failed to bring about the renewed demand —outright or from hedging requirements — with Copper back under USD2.70 again, but prices have recovered a little at thestart of the week. Nickel and Zinc gains had also stalled at recent highs last week, but look to be holding up a little better. Gold has pushed back above USD1200.00, as USD softness shows no signs of abating. USD1230.00 the next resistance level of note, but clearly USD performance dictates from here.

Turning to today’s calendar, we’re kicking the week off this morning in Germany where we got December factory orders data which soared 5.2% on expectations of a 0.5% rise, above the -2.5% in November, before we got the Sentix investor confidence reading for the Euro area, which printed in line with the 17.4 expected. It’s the usual post payrolls lull in the US this afternoon with no data due out.

* * *

US Government Docket

  • President Trump visits MacDill Air Force Base in Tampa, Fla., to meet with service members and U.S. Central Command leaders
  • House in session Mon-Tues; Senate in session

DB’s Jim Reid concludes the overnight wrap

One thing seems assured to keep us busy though and that is the various Trump related headlines which continue to dominate much of the weekend press. The latest update is the news that a federal appeals court has rejected the President’s request to reinstate the travel ban, prompting a Twitter attack from the President on the judge’s ruling. In addition to that and in a Fox News interview last night, Mr Trump suggested that a replacement bill for the Affordable Care Act could take until 2018 to come up with, a longer time frame than originally envisaged.

Given the usual post-payrolls lull in US data releases this week Trump might continue to be the biggest influence in markets for now. The most interesting scheduled event this week may be on Friday when Trump is due to welcome Japan PM Abe to the White House. That meeting probably warrants even closer watching now after Trump singled out Japan and China for currency manipulation last week. So it could be interesting. Away from that it’s possible that we also get some follow up to the Dodd-Frank comments on Friday after Trump ordered a review of banking regulation and the easing of some of the Dodd-Frank act. UK politics could also come under the spotlight with the Brexit debate expected to gather some steam in the next few days as lawmakers being a three-day debate over the legislation required to trigger Article 50.

Meanwhile the ongoing political saga in France never seems to be too far from the front pages at the moment. Over the weekend the National Front’s Le Pen unveiled a 144-point programme at a two-day meeting in front of her supporters. Le Pen confirmed that a National Front government would take France out of the eurozone, hold a referendum on EU membership, impose taxes on imports and limit immigration amongst a host of other measures. These comments come as one of her main rivals, Francois Fillon, continues to see his campaign suffer from revelations about his wife and family’s use of public funds in their employment. A BVA poll released on the weekend had Le Pen winning 25% of the first round voting, compared to 21% for Macron, 18% for Fillon and 16% for Hamon. A second round vote between Le Pen and Macron has the latter coming out on top by 66% to 34% and a second round vote between Fillon and Le Pen has Fillon coming out on top at 60% to 40%. The risk now perhaps for markets is the first round vote with the overall margin between Hamon, Fillon and Macron at just 5%. In reality with polling sample errors the difference is even lower and a potential risk is the possibility of a Hamon versus Le Pen second round vote. The spread between 10y Bunds and OAT’s hit 67bps on Friday and is approaching the 3-year wide of 72bps in 2014.

To the latest in Asia now where markets are starting the week on the front foot and largely continuing the positive momentum from the gains on Wall Street on Friday. The Hang Seng (+0.62%), Shanghai Comp (+0.47%), CSI 300 (+0.38%) and Kospi (+0.22%) are all higher while the Nikkei and ASX are unchanged. A close eye is being kept on the JGB market too although it’s been a much calmer session compared to that on Friday. The 10y yield is currently hovering around 0.095%. There’s been some early data out in China too where the Caixin services PMI was reported as falling 0.3pts in January to 53.1. Together with the manufacturing reading last week, the composite level has dropped to 52.2 versus 53.5 in December and to the lowest level since September.

Moving on. For those that missed it, much of the focus on Friday was on the release of the first US employment report of 2017. Headline payrolls printed at 227k in January which, while ahead of the consensus 180k reading, was probably closer to the whisper number following the decent ADP reading earlier in the week. The print was also the highest since September and had the effect of raising the three-month moving average to 183k from 148k. However, while the headline number was strong other elements of the report were a bit more mixed. The unemployment rate increased unexpectedly by one-tenth to 4.8% after the participation rate jumped to 62.9% from 62.7%. Meanwhile, hours worked were steady at 34.4hrs after the December reading was revised up, while the most notable miss was average hourly earnings which were reported as rising a lower than expected +0.1% mom (vs. +0.3% expected) and so having the effect of lowering the YoY rate to +2.5% from +2.8%.

That softer earnings data quickly overshadowed the strong headline payrolls print and sent Treasury yields lower with the 10y touching an intraday low of 2.424% having hovered just shy of 2.500% prior to the release. However that move was then reversed later in the day following some fairly hawkish comments from San Francisco Fed President Williams. Speaking in an interview with Bloomberg TV, Williams said that all meetings, including March, are live and that three rate increases remain a reasonably guess and a reasonable perspective to have as  a base case. Williams also said that “I think there’s a lot of potential that this economy is going to perhaps get more of a boost than the base case”.

That comment likely helped 10y Treasury yields climb back to 2.466% by the close and finish the day more or less unchanged. The US Dollar index also chopped and changed but ultimately finished -0.06%. Meanwhile, President Trump’s comments about the potential unwinding of Dodd-Frank saw risk assets close the week on a high. The broader S&P 500 index closed +0.73% for its third best day of the year, while the financials component alone returned +1.99% and had its best day since November 14th. Unsurprisingly the big banks led the way with the likes of Morgan Stanley (+5.46%), Goldman Sachs (+4.57%), JP Morgan (+3.06%) and Citigroup (+3.18%) all leading the charge. Credit indices also had a strong finish to the week with CDX IG closing 2bps tighter by the closing bell.

The employment report wasn’t the only data released on Friday. The ISM nonmanufacturing for the month of January edged down 0.1pts to 56.5 (vs. 57.0 expected) with the details revealing a 2.1pt fall in the new orders index but also a 2pt rise for the employment component. Meanwhile the services PMI was revised up to 55.6 from 55.1 at the final count which had the effect of raising the composite to 55.8 and the highest since November 2015. The other data in the US on Friday was the December factory orders numbers which rose a better than expected +1.3% mom (vs. +0.5% expected).

The PMI’s were the big focus during the European session on Friday and the data made for an overall fairly positive read-through. Both the services and composite readings for the Euro area were revised up 0.1pts to 53.7 and 54.4 respectively. That reading for the composite is consistent with +0.5% qoq GDP growth which, assuming unchanged for the rest of Q1, presents some upside risks to our economists more moderate growth outlook of +0.3% qoq for both Q1 and Q2. There wasn’t a huge amount of surprise in the country level details although there was a notable fall in the services PMI in the UK (-1.7pts to 54.5; 55.8 expected). Markets in Europe also generally finished on a strong note on Friday. The Stoxx 600 finished +0.59% and so paring the weekly loss to -0.63%.

Turning now to this week’s calendar. We’re kicking the week off this morning in Germany where we’ll get December factory orders data, before we get then get the Sentix investor confidence reading for the Euro area. It’s the usual post payrolls lull in the US this afternoon with no data due out. Tuesday starts in China where we’ll get the remaining Caixin services and composite PMI’s. In Europe we’ve got German industrial production and French trade data while in the US we’ll get the December trade balance, JOLTS job openings and consumer credit readings. China will also release foreign reserves data at some stage. We start Wednesday in Japan where the December trade balance is due. The only data due in Europe is the Bank of France business sentiment reading, while there is nothing of note in the US. Germany gets things going on Thursday when we’ll get the December trade data, while over in the US the data includes initial jobless claims and wholesale inventories and trade sales. Thankfully we’ve got a busier end to the week on Friday. The early focus will be on China where we’ll get the January trade data. During the European session we’ve got industrial production and wages data in France as well as industrial production and trade data in the UK. Over in the US we end the week with the import price index reading for January, monthly budget statement for January and a first estimate of the University of Michigan consumer sentiment reading.

Away from the data the Fedspeak this week consists of Harker this evening, followed by Bullard and Evans on Thursday. ECB President Draghi also speaks today at European Parliament while the ECB’s Smets also speaks this week. The BoJ minutes from the January meeting are due late Tuesday night. Earnings wise we’ve got 86 S&P 500 companies reporting, representing 11% of the index market cap. Those include Coca-Cola, Walt Disney, Time Warner and General Motors. In Europe we’ve got 80 Stoxx 600 companies also reporting including Total, BP and Glaxo. Away from that, the UK Parliament’s lower house is also due to conclude on Wednesday the debate on the bill to trigger Article 50 with a final vote in the evening. The most notable Trump event this week is likely to be his meeting with Japan’s PM Abe on Friday.

end

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 16.81 POINTS OR .54%/ /Hang Sang CLOSED UP 219.03 POINTS OR .95% . The Nikkei closed UP 58.51 POINTS OR 0.31% /Australia’s all ordinaires  CLOSED DOWN 0.13%/Chinese yuan (ONSHORE) closed UP at 6.8624/Oil ROSE to 54.01 dollars per barrel for WTI and 56.82 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.8070 yuan to the dollar vs 6.8640  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS QUITE A BIT AS POBC ATTEMPTS TO STOP DOLLARS FROM LEAVING CHINA’S SHORES. BOTH YUANS STRONGER COUPLED WITH THE STRONGER DOLLAR

3a)THAILAND/SOUTH KOREA/:

END

b) REPORT ON JAPAN

Keven Muir writes that for the first time, you may want to short the Japanese bonds as the central bank of Japan is having trouble containing yields at zero. Today they are .115% despite constant intervention which seems to be failing

(courtesy Kevin Muir/MacroTourist)

Japan – It’s Finally Happening

You will recall the theory that as the yen rises so does the price of gold.  It seems that those short the yen are having their troubles today.  The yen broke 112, trading at 11.72 as I write:

(courtesy zero hedge)

USDJPY Snaps To 2 Month Lows After 112 Stops Taken Out (YEN RISES)

Having toyed with the key 112 support level for the past month, moments ago the Japanese currency spiked as finally the big stops at the 112 barrier were taken out, sending USDJPY sliding lower by as much as 40 pips.

 

For now, ES is ignoring the move, although equity correlation algos have been oddly slow to react to macro moves in recent weeks.

Meanwhile, the Yen jump has sent gold to $1,232, the highest price since November 16, just one week after Trump’s election.

Watch if Japan’s trust banks, which do the BOJ’s bidding in times of tacit intervention, will lift the USDJPY here, or if the currency will continue sliding as global political risks continue to mount.

c) REPORT ON CHINA

It is now time to start worrying about China.  Most missed the news;

they are tightening:

 

(courtesy zero hedge)

 

It’s Time To Start Worrying About China Again

One year ago, S&P futures would tumble the second a flashing red headline noted that things involving China, the Yuan, or the PBOC were not playing out as expected. One year later, the market has forgotten it ever cared about the world’s biggest debt bubble.

However, the time may have come to once again start worrying about China.

With China coming back from its week-long holidays last Friday, a very important event took place under the radar, and was largely missed by the broader investing public masked by the relentless noise out of Washington and the January payrolls report: China has resumed tightening. For those who missed it, here is a recap of what we said first thing on Friday:

“this morning China announced an unexpected tightening of policy when it raised rates on 7, 14 and 28-day reverse repos by 10bps to 2.35%, 2.50% and 2.65% respectively. That’s the first increase in the 28-day contracts since 2015 and since 2013 for the other two tenors. Keep in mind that this is the first working day following the New Year holiday in China, so it seems to be a decent statement of intent by the PBoC.

 

Additionally, the SLF rate was increased to 3.1 percent from 2.75 percent. The implicit tightening sent Chinese stocks lower, with the Shanghai Composite closing down 0.6%, and accelerating the selloff in Chinese 10Y government futures.

While China’s first effective tightening in two years largely slipped between the market’s cracks, the press is starting to pay attention (“China’s central bank raised key interest rates in the money marketFriday, reinforcing a shift toward tightening monetary policy aimed atdeflating asset bubbles and reducing long-term financial risk.” MarketWatch, Feb 3; “China’s surprise increase in interest rates on medium-term loansweighed on bond prices. …Some traders were clearly rattled by China’s first-ever increase in interest rates for its medium-term lending facility (MLF) loans, which was seen as signaling that short-term funding costswill move higher eventually as authorities try to cool an explosive increase in debt.” Reuters, Jan 25).

To be sure, Friday’s explicit tightening followed several similar implicit actions by the government, which has been flashing warnings it would tighten and/or engage in deleveraging to slow down China’s stupendous ascent toward 300% debt/GDP, including a sharp slowdown in government spending which has collapsed from 20% one year ago to only 8% Y/Y at the end of 2016, the first slowdown in home price acceleration in 19 consecutive months following Beijing eagerness to pop China’s housing bubble, the recent hike in auto sales taxes from 5% to 7.5%, and so on.

China’s sudden tightening move, which according to many will end the single biggest catalyst for the global reflation/growth story of 2016, namely China’s dramatic debt-fueled growth impulse which in turn then spilled over to the rest of the world, has already been dubbed as “The Most Important Unnoticed Global Event” by the likes of Cornerstone.

* * *

And since China’s push to tighten financial is really that important, here again courtesy of Goldman, is a full recap of what happened, why it matters, and a breakdown of all the key Chinese acronyms to keep an eye on in the coming days as the PBOC is very likely to continue expanding its tightening bias into other monetary conduits.

PBOC raised interest rates on key monetary operations, further reinforcing tightening bias

On Friday, PBOC increased interest rates on OMOs (open market operations) by 10bp and on SLF (standing lending facility) by 10-35bp–shortly following the rise in interest rates on MLF (medium-term lending facility) less than two weeks ago. We believe that the PBOC will retain its tightening bias in the near term as the underlying financial-leverage and macroeconomic arguments for tightened monetary policy have largely remained.

Main points:

Daily OMOs have been a key PBOC tool to manage interbank liquidity conditions.

The central bank on Friday increased the interest rates on reverse repo OMOs (liquidity injections) of 7/14/28-day tenors by 10bp (to 2.35%/2.50%/2.65%). The last time the PBOC raised OMO rates was more than two years ago in 2014.

The PBOC also increased SLF rates on overnight/7-day/1-month tenors by 35bp/10bp/10bp (to 3.10%/3.35%/3.7%).

SLF is collateralized lending by the PBOC to financial institutions which request funding (see Appendix table for key PBOC toolkit). SLF usage has been relatively small (e.g., in January, the turnover and outstanding balance of SLF were well below RMB 100bn, while those of OMOs were about 20 times larger at roughly RMB 2tn). But given that SLF is likely tapped only when the interbank funding conditions are particularly tight, the SLF rate increase should still matter for the marginal funding cost in the system. The asymmetrically large increase in the overnight SLF rate will likely be an encouragement for financial institutions to lengthen the maturity of their interbank funding (we estimate that small commercial banks’ interbank repo borrowing has an average maturity of only about 2 days).

Media reports also suggest that the PBOC has increased SLF rates further by 100bp for those banks that fail Macro-prudential Assessment (MPA) requirements. This has not been confirmed by the PBOC, however. As background, the PBOC set up MPA at the beginning of 2016 through which the central bank may fine-tune each individual bank’s required reserve ratio (RRR) on a quarterly basis depending on its performance based on several prudential metrics (see here for further official details of MPA).

The underlying financial-leverage and macroeconomic arguments for tightened monetary policy have largely remained. We continue to expect that the PBOC’s tightening bias will remain unless either i) there is a clearer deleveraging in the interbank funding market, and/or ii) economic activity slows materially.

Appendix table: OMOs and SLF play different roles in PBOC’s policy toolkit

PBOC toolkit

4. EUROPEAN AFFAIRS

ITALY/SUNDAY

Italy most likely will be heading for early elections and if so, there is a huge chance that the euroskeptic parties will win.  If so their participation in the Euro is in deep jeopardy.

(courtesy zero hedge)

Italy Increasingly Likely To Abandon The Euro

Submitted by Mike Shedlock via MishTalk.com,

An analysis of the political setup in Italy shows eurosceptics are on the verge of taking control of the country.

The only missing ingredient is an early election. And early elections are now the odds-on favorite.

Let’s back up a bit to fill in the pieces as to how things got to this point.

  1. Former prime minister Matteo Renzi stepped down in December after holding a referendum that failed miserably. See Renzi Resigns Following Crushing Referendum Defeat: Beppe Grillo, Marine le Pen, Matteo Salvina Tweets
  2. Italy’s president, Sergio Mattarella, appointed Paolo Gentiloni as the new prime minister after Renzi resigned. See Meet Paolo Gentiloni, 4th Consecutive Italian Technocrat Appointed Prime Minister: Renzi Not Vanquished Yet
  3. The president said he would not hold new elections until differences between how the lower house of parliament assigned seats.
  4. Point number three has been resolved. Both houses of Parliament are back on a proportional system.

New Elections

  • New elections are possible now but the next scheduled elections are not until 2018.
  • Matteo Renzi wants new elections in June. Even though he resigned, he wants back in. Renzi wants new elections this year because PD may oust him if he waits.
  • Beppe Grillo wants elections as soon as possible because he believes he will win, and also because FI leader Silvio Berlusconi cannot run for prime minister until 2018 because of a tax fraud conviction.
  • Berlusconi does not want early elections, but he is in the minority.

It is up to the president to call new elections, and there is pressure from at least two fronts for him to do so.

Election Polls

italian-polls-2017-02-03

Chart from Opinion polling for the next Italian general election.

The situation for Renzi is actually way worse than it appears. Not only do polls tend to over-play support for PD, the party is about to splinter. Via email, Eurointelligence explains …

Whatever Happens in Italy, Grillo is Winning

Our pessimism about the political outlook for Italy was confirmed once more this morning with reports that the PD is now very likely heading for a split – the trigger being disagreement over the election date. Pier Luigi Bersani, Renzi’s predecessor as general secretary of the party, came out strongly against early election in June saying that the PD would be finished as a party if Renzi were to go ahead.

Renzi could assemble a majority in the Italian parliament in favour of a new electoral law and early elections, so this is technically doable. The question is, at what cost? Beppe Grillo’s Five Star Movement officially supports early elections, but Renzi probably has a point when he says that another year of political chaos in the PD would drive even more voters to Grillo, whose party thrives on the chaos in the country. In other words, Grillo wins both ways, and the likely design of the electoral law will also be favourable to his party. So much for the theories that there would be a technical stitch-up to keep the Five Star Movement out of power. The Italian establishment is not sufficiently united to be able to do this.

Massimo D’Alema, Renzi’s fiercest oponent within the PD, says he has done research on the potential electoral support for a party to the left of the PD which could count on 11-14% of the vote. With a weak centre-right and a fragmented left, the probability of a victory by the Five Star Movement, perhaps in alliance with other radical forces, must now be considered very high.

Wrong Five Ways

The don’t worry, it will never happen crowd said …

  1. Renzi would win the referendum – Wrong
  2. Renzi would not resign if he lost – Wrong
  3. Renzi would gracefully step aside after he resigned – Wrong
  4. PD would not splinter – Wrong
  5. The other parties would pass legislation making it impossible for M5S to gain control – Wrong

That same don’t worry, it will never happen crowd also proposed

  1. An alliance between Grillo and other parties won’t happen
  2. If an alliance does happen, parliament will not approve a referendum on the Euro
  3. If there is a referendum on the Euro, people will vote against leaving
  4. It still requires a constitutional amendment

Point number 6 is in the works right now. And if such an alliance does form and win (both are highly likely in my opinion), then all that is left to stop “Italeave” is fearmongering and points 8 and 9.

 

END

 

GERMANY/MONDAY

Merkel faltering at the polls as German credit default risks rises:

(courtesy zero hedge)

German Default Risk Spikes To Highest Since Brexit As Merkel Lead Plunges To Multi-Year Low

Germany’s Social Democrats narrowed the gap with Chancellor Angela Merkel’s bloc to the closest in more than four years, reinforcing a poll bounce after they chose outsider Martin Schulz to challenge Europe’s longest-serving leader. As Bild reports, the 6-point surge in opposition support was the biggest ever recorded for the party… and may explain why German sovereign risk spiked to its highest since Brexit.

As Bloomberg reports,support for the SPD jumped 8 percentage points to 29% from a month earlier, the highest level since the last election in September 2013, according to the Infratest-Dimap for broadcaster ARD. Merkel’s Christian Democratic-led bloc, known informally as the Union, slid 3 points to 33%. Half of those surveyed would support Schulz if the chancellor were elected directly, compared with 34% for Merkel.

The poll underscores this year’s political risks for Merkel, 62, who has previously focused on the challenge by the anti-immigration Alternative for Germany, or AfD. The unexpected candidacy by Schulz, new to German politics after leaving his post as president of the European Parliament, has opened another front while Merkel seeks a fourth term at the helm of Europe’s biggest economy in the Sept. 24 parliamentary election.

As The Independent notes, the SPD appointed Schulz, a former European Parliament president, as leader last Sunday, replacing Sigmar Gabriel who said he was standing aside to boost the party’s chances.

“Martin Schulz is managing above all to win back former SPD voters and to appeal to them emotionally,” Emnid’s Torsten Schneider-Haase told the newspaper, adding: “Such a strong shift in party preferences within a week is a one-off.”

The move has re-energised the SPD, junior partner in Merkel’s ‘grand coalition’, ahead of September’s federal election. Schulz has vowed to unseat Merkel with a campaign aimed at overcoming “deep divisions” that he says have fuelled populism in Germany in recent years.

As the chancellor grapples with U.S. President Donald Trump’s unpredictability, Europe’s biggest refugee crisis since World War II and a surge in support for anti-establishment forces ahead of elections in France and the Netherlands, the political headwinds at home add to a tumultuous political year in the region.

Which may help to explain why German sovereign risk has spiked to its highest since Brexit this last week…

 END
GREECE/MONDAY
In order to save Greece, Varoufakis is urging Tsipras to ditch negotiations, go back to the Drachma or a parallel system and restructure loans.  Restructuring loans means defaulting on those loans and stiffing them
(courtesy zerohedge)

Grexit 4.0? Varoufakis Urges Tsipras: Ditch Negotiations, Adopt “Parallel System”

Former finance minister Yanis Varoufakis strikes back and, as KeepTalkingGreece reports,urges Prime Minister Alexis Tsipras to turn his back on Greece’s lenders, adopt a parallel payment system  and to unilateral restructure the loans held by the European Central Bank.

In an op-ed in Efimerida ton Syntakton, , Varoufakis calls on Tsipras to prepare for break with creditors in order to avoid rupture.

“This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long term,” Varoufakis wrote.

In his article, Varoufakis suggested that Schaeuble’s strategy is to lead Greeks to the point of exhaustion so they ask to leave the euro themselves.

Noting that the “parallel payment system was already designed in 2014”, Varoufakis stresses that Tsipras had “two delusions” that led the government to the current impasse:

a. that on the night of the referendum, the dilemma was between Schaeuble’s Grexit Plan and the 3rd bailout

b. that the obedience to the 3rd bailout could be political manageable through a parallel, society-friendly program.

Both of these “working assumptions” were based only on autosuggestion, the ex finance minister stresses adding that he tried to explain this to the Prime Minister on the night of the referendum

In reality there was never a basis for hope that the toxic third bailout would be gradually rationalized, in terms that the  European Commission would support Athens so that the austerity and anti-social IMF measures would relax, the IMF would force Berlin to accept debt restructuring and lower primary surpluses, the ECB would include Greece in the bond purchase program (QE),” Varoufakis wrote

He accused leading European negotiators of lying.

“That Moscovici [EU Monetary Affairs Commissioner], Coerer [ECB] and Sapen [French finance minister] might have given such promises was not an excuse.

Since May 2015 we were fully aware that these gentlemen know how to lie and fail to deliver on their promises when they do not lie.”

More on parallel payment system and IOUs hereherehere

Varoufakis full article in Greek EfimeridaTonsyntakton

PS as Tsipras and Varoufakis went apart on the Referendum night in July 2015, I do not think that the Greek Prime Minister will accept the proposals of his former finance minister.

 

END

 

What is our world coming to: Trump blocked from addressing UK Parliament:

(courtesy zero hedge)


GREAT BRITAIN/USA/PRESIDENT TRUMP

Trump Blocked From Addressing UK Parliament For “Racism And Sexism”

In a striking announcement by John Bercow, the speaker of the British House of Commons, Donald Trump is to be barred from giving a historic address in Westminster Hall, the British Parliament’s grandest and most prestigious hall.

Bercow announced he would not give the US President permission to speak in the 11th Century Westminster Hall when he makes a state visit. John Bercow slammed Trump for “racism and sexism”, his undermining of judges and his migrant ban. Bercow’s intervention is unusual because Speakers are expected to remain above Parliament’s partisan fray.

He was cheered by lawmakers when he said that, although Britain values its relationship with the U.S., “our opposition to racism and to sexism, and our support for equality before the law and an independent judiciary, are hugely important considerations.” Trump is due to visit Britain later this year.

As The Mirror reported, Bercow added that although he does not have as much say over a speech in the glittering Royal Gallery in the House of Lords, “I would not wish to issue an invitation”.

Labour leader Jeremy Corbyn tweeted: “Well said John Bercow. We must stand up for our country’s values. Trump’s State Visit should not go ahead.”

It comes after 163 MPs signed an internal petition demanding Trump be refused the honour due to his migrant ban and comments on torture and women.

Westminster Hall is where ex-President Barack Obama addressed both houses of Parliament in 2011 and is a venue previously used by Nelson Mandela.


Barack Obama addressing both Houses of Parliament in Westminster Hall in 2011

Speaker Bercow said he is one of three “keyholders” that would agree to any address in the historic hall. The other two are the Lord Speaker and Lord Great Chamberlain. He told MPs a Westminster Hall address “is not an automatic right – it is an earned honour.”

He added: “Ordinarily we are able to work by consensus that the hall would be able to be used for an address by agreement of the the three key holders. Before the imposition of the migrant ban I would myself have been strongly opposed to an address by President Trump to Westminster Hall. After the imposition of the migrant ban by President Trump I am even more strongly opposed to an address by President Trump to Westminster Hall.”

The Speaker added: “We value our relationship with the United States. If a state visit takes place, that is way beyond and above the pay grade of the Speaker.

“However, as far as this place is concerned I feel very strongly that our opposition to racism and to sexism and our support for equality before the law and an independent judiciary are hugely important considerations in the House of Commons.”

Bercow also outlined his opposition to Mr Trump being invited to address MPs and peers in the Royal Gallery, a room often used for state receptions.

He said: “So far as the Royal Gallery is concerned, and again I operate on advice, I do not perhaps have as strong a say in that matter. It is in a different part of the building although customarily an invitation to a visiting leader to deliver an address there would be issued in the names of the two speakers. I would not wish to issue an invitation to President Trump to speak in the Royal Gallery.”

After his announcement, veteran anti-establishment Labour MP Dennis Skinner bellowed: “Two words – well done”. Labour MP Stephen Doughty, who started the ‘Early Day Motion’ signed by 163 MPs, said after the Speaker’s comments: “Our Parliament stands for liberty, equality and independence from government. We choose who we honour.

As usual, we look forward to Trump’s angry tweet once he learns that he is effectively non-grata in the British Parliament

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

IRAN

Iran defies Trump and carries out more missile tests while threatening the USA and others with “roaring missiles”.  And to think that Obama sent billions to these turkeys;

(courtesy zero hedge)

Iran Defies Trump: Carries Out More Missile Tests, Threatens Enemies With “Roaring Missiles”

Iran does appears to not be taking Trump’s escalating threats too seriously, because just one day after the US imposed restrictions on 25 Iranian individuals and entities in response to a ballistic missile test last week (a move which provoked Tehran to answer by saying it would disclose the names of US individuals and companies involved in “helping and founding” terrorist groups), Iran carried out more missile tests during a military exercise on Saturday.

According to Iran’s semi-official Tasnim agency, which cited Amir Ali Hajizadeh, commander of the Islamic Revolutionary Guards Corps’ aerospace division, Iran successfully tested a range of land-to-land missiles and radar systems during the drills in a 35,000 square-kilometer stretch of desert in the northern Iranian province of Semnan.

“If we see the smallest misstep from the enemies, our roaring missiles will fall on their heads,” the brigadier general was cited as telling reporters on the sidelines of the military trials, without referring to any particular nations. Any threats made by the U.S. against Iran were “nonsensical,” Tasnim cited him as saying. Hajizadeh also said tat Iran would use its missiles if its security is under threat, and added that “we are working day and night to protect Iran’s security,” head of Revolutionary Guards’ aerospace unit, Brigadier General Amir Ali Hajizadeh was quoted as saying by Tasnim news agency.

Iran’s Revolutionary Guards is holding the military exercise in Semnan province on Saturday to test missile and radar systems and to “showcase the power of Iran’s revolution and to dismiss the sanctions,” according to the force’s website.

Dismissing Trump’s comments that “nothing is off the table” in dealing with Tehran, the commander of Iran’s ground forces said on Saturday that the Islamic Republic has been hearing such threats since its 1979 revolution. “The defence capability and the offensive prowess of Iran’s armed forces would make America or any other enemy regretful of any incursion,” Ahmad Reza Pourdastan was quoted as saying by ISNA.

Iranian state news agencies reported that home-made missile systems, radars, command and control centres, and cyber warfare systems would be tested in Saturday’s drill. Iran has one of the Middle East’s largest missile programmes and held a similar exercise in December to showcase its defence systems, including radars, anti-missile defence units, and short and medium-range missiles.

Tehran confirmed on Wednesday that it had test-fired a new ballistic missile, but said the test did not breach the Islamic Republic’s nuclear agreement with world powers or a U.N. Security Council resolution endorsing the pact.

Despite the heated words, Reuters reports that U.S. Defense Secretary Jim Mattis said on Saturday he was not considering raising the number of U.S. forces in the Middle East to address Iran’s “misbehavior”, but warned that the world would not ignore Iranian activities.

Meanwhile, the UN Security Council held an emergency meeting last Tuesday and recommended the missile testing be studied at committee level after the new U.S. ambassador to the United Nations, Nikki Haley, called the test “unacceptable”. The Security Council resolution was adopted to buttress the deal under which Iran curbed its nuclear activities to allay concerns they could be used to develop atomic bombs, in exchange for relief from economic sanctions.

The resolution urged Tehran to refrain from work on ballistic missiles designed to deliver nuclear weapons. Critics say the resolution’s language does not make this obligatory. Tehran says it has not carried out any work on missiles specifically designed to carry nuclear payloads.

As of this morning it appears that Trump has not learned yet about Iran’s latest defiant actions, as he has so far focused on “so-called judges” in his morning battery of tweets and has failed to mention Iran yet during his first weekend retreat to his Mar-a-Lago winter retreat in Palm Beach. Instead moments ago he simply tweeted…

end

6.GLOBAL ISSUES

7. OIL ISSUES

According to Art Berman of Oilprice.com, the Keystone XL project needs 85 dollar oil in order to be viable

(courtesy Art Berman/Oil Price.com)

 

Keystone XL Needs Much Higher Oil Prices To Be Viable

Submitted by Arthur Berman via OilPrice.com,

The Keystone XL Pipeline (KXL) is a bet on much higher oil prices several years from now. It will take at least $85 oil prices to develop the new oil sand projects needed to fill the pipeline.

It is also a bet that U.S. tight oil output will continue to grow and will need heavy oil to blend for refining. Both bets are risky.

A Bet On Higher Oil Prices

KXL would add about 830,000 barrels per day (b/d) to the 1.3 million b/d already moving through the base Keystone Pipeline system completed in 3 phases between 2010 and 2014 (Figure 1) when oil prices were more than $90 per barrel.

(Click to enlarge)

Figure 1. Location map of Keystone XL and Base Keystone pipeline systems. Source: TransCanada and Labyrinth Consulting Services, Inc.

It was not until prices exceeded $70 per barrel in 2005 (December 2016 dollars) that oil sands expansion began to accelerate (Figure 2). Since then, production has almost doubled from 1.3 to 2.4 mmb/d and cumulative production has increased from 5.4 to 10 billion barrels.

(Click to enlarge)

Figure 2. Oil Sands Production Nearly Doubled After Oil Prices Exceeded $70 Per Barrel. Source: Statistics Canada and Labyrinth Consulting Services, Inc.

By comparison, the Bakken and Eagle Ford tight oil plays have each produced 2.4 billion barrels. The Permian horizontal tight oil plays–Spraberry, Wolfcamp and Bone Spring–have produced less than 1 billion barrels.*

Table 1. Comparison of Oil Sands and U.S. tight oil plays. Source: Statistics Canada, EIA, Drilling Info and Labyrinth Consulting Services, Inc.

In 2015, oil prices averaged only $43 per barrel. No new oil sand projects have been sanctioned since oil prices collapsed in 2014 although 3 pilot projects have been approved since prices moved into the $50 per barrel range. Approval is not the same as sanctioning and these 3 projects together would add only 35,000 b/d.

It seems unlikely that new greenfield projects will be sanctioned until oil prices move much higher (Canadian heavy oil (WCS) trades at a 25% discount to WTI). Assuming that prices stabilize in the $50 to $60 range, it is reasonable that pilots may evolve into brownfield expansion projects over the next year or two.

The Canadian Association of Petroleum Producers estimates that annual oil sand production will grow 128,000 b/d until 2021 and then, grow more slowly at 59,000 b/d. If all of that new oil were going to KXL, it would not reach capacity for about 10 years. But other pipelines are already approved for expansion and will probably get much of the oil before KXL is completed.

TransCanada’s bet, therefore, is that oil prices will move much higher and more quickly than most forecasts anticipate and that the volumes will be there by the time that the pipeline is built.

Light Oil and Heavy Oil

U.S. tight oil plays produce ultra-light oil. Almost all of it is too light for refinery specifications. That means that it must be blended with heavy oil in order to be refined and that is why there is demand for Canadian heavy oil.

The Keystone XL Pipeline is, therefore, a bet that tight oil plays will continue for several decades. Related: Oil Prices Up On Prospect Of New Iranian Sanctions

Similarly, Canadian viscous, heavy oil must be diluted with ultra-light oil to move through pipelines. Because of that, Canada is the biggest importer of U.S. light oil.

The U.S. imports almost 3 times more oil from Canada than from Saudi Arabia (Figure 3). Imports from Canada are roughly equal to the amount from Saudi Arabia, Venezuela, Mexico, Colombia and Iraq combined.

(Click to enlarge)

Figure 3. The U.S. imports almost 3 times more oil from Canada than from Saudi Arabia. Source: EIA and Labyrinth Consulting Services, Inc.

The average U.S. refinery is designed for 31° API gravity oil but 80% of domestic crude oil is more than 30° and 70% is more than 35° API gravity so it must be blended with heavier oil before it can be refined (Figure 4). The Keystone Pipeline carries oil that is approximately 22° API so the fit with lighter U.S. oil is perfect.

(Click to enlarge)

Figure 4. 80% of U.S. Crude Oil is greater than 30° API and 70% is greater than 35° API. Source: Drilling Info, EIA, Labyrinth Consulting Services, Inc. and Crude Oil Peak.

The increasing percentage of ultra-light oil (>40° API) after 2011 shown in Figure 4 is because of the growth of tight oil plays. More than 95% of tight oil is greater than 30° API and these plays now account for more than half (52%) of U.S. output.

It is, therefore, no surprise that 98% of the oil imported by the U.S. is heavy that is, less than 35° API gravity (Figure 5). The biggest sources of heavy oil other than Canada are Saudi Arabia, Venezuela and Mexico.

(Click to enlarge)

Figure 5. 98% of U.S. Imports Less Than 35° API Gravity. Source: Drilling Info, Labyrinth Consulting Services, Inc. and Crude Oil Peak.

Production from Venezuela and Mexico is declining (Figure 6). Canada, Iraq and Saudi Arabia have strong production histories and are, therefore, more reliable long-term providers of heavy oil to the U.S. Canada has many advantages over other providers because of geographic proximity, supply security and price.

(Click to enlarge)

Figure 6. Mexico, Venezuela, Nigeria and Angola Have Declining Incremental Production. Source: EIA and Labyrinth Consulting Services, Inc.

Venezuela has enormous reserves of heavy oil and declining production is mostly because of political and social instability. This could change but it is more likely that Venezuela’s problems will continue. Mexico’s production decline is more systemic because the country has not made a significant new discovery since 1980.

A Bet on Tight Oil

So far, so good for the Keystone XL Pipeline but what about the longevity of the tight oil plays?

Production from the Bakken and Eagle Ford plays is in marked decline and Permian tight oil production growth has slowed (Figure 7). This is despite record high numbers of producing wells in all 3 plays.

(Click to enlarge)

Figure 7. Bakken and Eagle Ford production are declining and Permian basin tight oil production growth has slowed. Source: Drilling Info, Labyrinth Consulting Services, Inc. and Crude Oil Peak.

The Bakken and Eagle Ford plays have probably peaked based on remaining core area locations, generally poorer performance from recently drilled wells compared to older wells, and current rig activity. Assuming that oil prices recover to the $70 range in coming years, production should increase as more marginal locations become economically viable–just not to peak levels reached in 2015.

The Permian basin, on the other hand, should continue to grow for several years for all of the reasons that the Bakken and Eagle Ford will not. There are substantial areas in the Permian core that have not been fully developed. Well performance continues to improve and the horizontal rig count has increased 70% since mid-August to 243.

Most forecasts are optimistic about tight oil output. The EIA Annual Energy Outlook 2017 anticipates that tight oil production will decline in 2017 but recover to 2015 peak levels by 2019 (Figure 8). WTI oil prices are expected to be $64 per barrel then and slowly increase to $80 by 2025. Tight oil production will rise to 6 mmb/d by 2026.

(Click to enlarge)

Figure 8. EIA Forecast: Tight Oil Will Not Recover to 2015 Levels Until 2019 and Then Increase to 6 mmb/d by 2026. Source: EIA AEO 2017 and Labyrinth Consulting Services, Inc.

Although the forecast seems reasonable, it assumes that 2016 was the oil-price floor and that prices will continue to increase. It also suggests that prices will not reach the $70 threshold for new oil sand projects for 5 years. Other forecasts like HSBC are more aggressive and anticipate mid-$70 WTI prices as early as 2018.

The Big Long

If the last few years since the oil-price collapse have taught us anything it is that prices are unlikely to move in one direction. Nor are they likely to conform to mainstream analyst views.

Markets have been driven partly by an expectation that prices must inevitably return to levels of at least $70 to $80 per barrel sooner than later. This belief has endured despite a persistent global supply surplus and outsized inventories. The long-anticipated OPEC deus ex machina was lowered onto the stage in late 2016 and markets responded enthusiastically. Yet WTI prices have not crossed $55 per barrel so far.

It is difficult to find supply-demand fundamentals support even for the limited price rally that began with the OPEC announcement. There may already be an expectation premium of $10-12 per barrel built into current prices. Yet markets don’t always follow fundamentals in the short term although they return to them eventually. Related: The Oil War Is Only Just Getting Started

U.S. ultra-light oil production is a central component of the global supply dilemma. Permian basin companies are adding rigs like the boom days of 2011 to 2014 have already returned. When tight oil output is high, some fraction can neither be refined nor exported and simply adds to inventories. This occurs despite the best efforts of Canadian oil sand producers to bring as much heavy oil to the party as they can.

Oil consumption remains relatively weak in the U.S. This is disturbing against the backdrop of surging tight oil rig counts.

Consumption increased with very low oil prices in 2015 and early 2016 but not to the levels before the Financial Collapse of 2007-2008 (Figure 9). Most of the increase was from greater gasoline use and more refined products exports. Modestly increasing prices in 2016 dampened consumption suggesting that demand is highly price-sensitive.

(Click to enlarge)

Figure 9. Consumption fell >2 mmb/d after 2005 but recovered 1 mmb/d with increased refined product exports, lower oil prices & increased gasoline use. Source: EIA and Labyrinth Consulting Services, Inc.

This does not represent peak demand. All credible forecast anticipate oil-demand growth over the next decade or so, albeit at a slower rate. Instead, it reflects an economy weakened by excessive debt and changes in Federal Reserve Bank monetary policy after mid-2014.

These rather gloomy observations may explain TransCanada’s motivation to complete the Keystone XL Pipeline now. I’m talking about a long bet on oil prices.

Future supply constraints will become greater the longer new E&P project investments are deferred. At the same time, the decline of production from developed fields will be more pronounced. Improved production efficiency will further accelerate reserve depletion. Meanwhile, new field discoveries are at the lowest level in decades and the average reserve size of those discoveries has gotten smaller.

Oil prices will increase dramatically at some time in the next several years. That should lead to the next oil boom and the Keystone XL Pipeline will be there to provide heavy oil to U.S. tight oil plays.

There is little doubt that a supply crunch lurks in the future. The risk for the Keystone XL Pipeline is that much higher prices will collapse the global economy before new projects can fill the pipeline and pay out the investment.

 

end

The huge glut on gasoline will cause the oil price to decline

(courtesy Nick Cunningham/Oil Price.com)

Gasoline Glut Could Ruin The Oil Price Party

Submitted by Nick Cunningham via OilPrice.com,

Oil and refined products inventories in the U.S. continue to climb at a worrying pace, raising some red flags for an oil market that was supposed to be on the mend.

Crude oil inventories jumped by a whopping 6.5 million barrels last week, rising to 494.8 million barrels. Oil stocks have now increased every week of 2017, and are now not far off from the 80-year highs reached in 2016.

(Click to enlarge)

It isn’t just crude oil stocks, but gasoline inventories are also rising sharply. Last week gasoline stocks surged by 3.2 million barrels to 257.1 million barrels.

(Click to enlarge)

The sudden and sharp increase in both crude oil and refined product stocks is a warning sign for oil traders that have by and large been betting on a tightening market and rising prices. In fact, the gasoline glut has become so acute on the U.S. eastern seaboard that some tankers destined for American ports have been rerouted to Europe, according to Bloomberg. The surge in inventories “will keep demand for voyages into the East Coast low as the market awaits the impact of spring maintenance,” George Los, senior tanker markets analyst at Charles R. Weber Co., told Bloomberg. PADD 1 inventories, a designation for the East Coast, are at an all-time high. “The concern is the PADD1 market,” said Gary Simmons, senior vice president at Valero Energy Corp., according to Bloomberg.

(Click to enlarge)

Bloomberg says that a few tankers were diverted away from New York and sailed to the Caribbean, where there are more storage locations. But rerouting tankers away from the U.S. does not solve the problem. Rerouted tankers will just lead to higher inventories elsewhere. The problem seems to be ongoing oversupply problems in the market. Related: Has Big Oil Bought Into The Oil Price Recovery?

In fact, gasoline demand has dropped to its lowest level since 2012, dipping to just 8.2 million barrels per day at the end of January.

(Click to enlarge)

Some of these fluctuations are seasonal. Gasoline inventories could be a bit elevated as refineries churn out as much product as possible ahead of maintenance season in the spring. But as refineries go offline in the coming months, which analysts hope will help clear some of the gasoline inventories, a drop off in refining runs could lead to higher crude oil stocks as refiners lower their purchases.

Meanwhile, U.S. oil production continues to rise. The EIA just released monthly oil production figures for November, the latest month for which reliable data is available, and it shows output up at 8.9 million barrels per day, up almost 400,000 bpd from just a few months earlier.

Interestingly, the gains in output in recent months have largely come from some offshore projects and gains in Alaska. That is to say, the revival in U.S. shale has barely begun to show up in the data, suggesting that future gains in output are likely, particularly with the rig count rising quickly. It won’t be long before the U.S. sees production back above 9 million barrels per day, aiming to return to its peak of 9.7 mb/d reached in April 2015.

It was already unlikely that prices would rise too far above today’s levels. “I think 63, 65 (dollars a barrel for Brent) I think you might be a little bit ambitious there because the OPEC producers have got this basic issue, they don’t want the price to go too low clearly, because their economies wouldn’t stand it,” Neil Atkinson, head of the oil industry and markets division, at the IEA told CNBC. “But if the price goes too high then that’s going to attract a lot of investment in other parts of the world, principally the U.S. shale producers.” As such, Atkinson implies, OPEC wouldn’t let prices get that high.

In any case, weak demand could keep a lid on oil prices in the near-term. Higher levels of demand will return in the spring and summer months, but we could be in for a bit of a cool period for demand growth. On top of that, as I have mentioned before, with hedge funds and money managers piling up record levels of bullish bets on crude, downside risk becomes greater by the day. A few more weeks of rising inventories and sentiment could turn bearish.

One caveat to all of this: If the Trump administration escalates its confrontation with Iran, all predictions go out the window. The revival of a standoff that was resolved two years ago is a major uncertainty for the oil market this year.

8. EMERGING MARKETS

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

Euro/USA   1.0741 DOWN .0028/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RISING RATE/EUROPE BOURSES RED 

USA/JAPAN YEN 112.39 DOWN 0.013(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2482 UP .0003 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT)

USA/CAN 1.3030 UP .0009 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS FRIDAY morning in Europe, the Euro FELL by 28 basis points, trading now WELL ABOVE the important 1.08 level FALLING to 1.0741; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 16.81 POINTS OR 0.54%     / Hang Sang  CLOSED UP 219.03 POINTS OR .95%    /AUSTRALIA  CLOSED DOWN 0.13%  / EUROPEAN BOURSES IN THE RED

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

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

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

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

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

The NIKKEI: this MONDAY morning CLOSED UP 58.51 POINTS OR 0.31% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 219.03 POINTS OR .95%       / Australia BOURSE CLOSED DOWN 0.19% /Nikkei (Japan)CLOSED UP 58.51 POINTS OR 0.31%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1236.30

silver:$17.61

Early MONDAY morning USA 10 year bond yield: 2.446% !!! DOWN 2 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.079, DOWN 2 IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 99.96 UP 24 CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

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And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 4.244% UP 7  in basis point yield from FRIDAY 

JAPANESE BOND YIELD: +.106%  UP 1/ 2 (DESPITE INTERVENTION)  in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.782%  UP 10 IN basis point yield from  FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.371  UP 11 POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 56 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.370% DOWN 5 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.0737 DOWN .0033 (Euro DOWN 33 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.19 DOWN: 0.212(Yen UP 21 basis points/ 

Great Britain/USA 1.2455 DOWN 0.0021( POUND DOWN 21 basis points)

USA/Canada 1.3116 UP 0.0096(Canadian dollar DOWN 96 basis points AS OIL FELL TO $53.25

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This afternoon, the Euro was DOWN by 33 basis points to trade at 1.0737

The Yen FELL to 112.19 for a GAIN of 21 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 21  basis points, trading at 1.2455/

The Canadian dollar FELL  by 96 basis points to 1.3116,  WITH WTI OIL FALLING TO :  $53.25

The USA/Yuan closed at 6.8599/
the 10 yr Japanese bond yield closed at +.106% UP 1/ 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 2 IN basis points from FRIDAY at 2.428% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.065 DOWN 1 in basis points on the day /

Your closing USA dollar index, 100.05 UP 33 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED DOWN 16.15 OR 0.22% 
German Dax :CLOSED DOWN 141.65 POINTS OR 1.22%
Paris Cac  CLOSED DOWN 47.34 OR 0.98%
Spain IBEX CLOSED DOWN 105.40 POINTS OR 1.11%
Italian MIB: CLOSED DOWN 422.39 POINTS OR 2.21%

The Dow closed DOWN 19.04 OR 0.09%

NASDAQ WAS closed DOWN 3.21 POINTS OR 0.06%  4.00 PM EST
WTI Oil price;  53.25 at 1:00 pm; 

Brent Oil: 56.09  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.93 ROUBLES/DOLLAR  (UP 6/100 roubles from FRIDAY)

TODAY THE GERMAN YIELD FALLS TO +0.370%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$53.11

BRENT: $55.84

USA 10 YR BOND YIELD: 2.410%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.0491%

EURO/USA DOLLAR CROSS:  1.0748 down .0021 

USA/JAPANESE YEN:111.72  DOWN 0.689 

USA DOLLAR INDEX: 99.88  up 16  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2463 : DOWN 16   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.370%

END

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

TRADING IN GRAPH FORM

Gold Jumps To 3-Month Highs Amid China Tightening, Europe Turmoil, & Trump

OK – so, China tightens (worried about leverage), European sovereign risk spikes (Election uncertainty everywhere), Yen surges (BOJ tested again), gold spikes, Treasury yields tumble.. but US stocks are flat and VIX tumbles…

 

Off the post-Fed-rate-hike dip, Gold is up almost 10%, Dow’s flat, and bonds are up…

 

Chinese stocks sank overnight after re-opening following the Golden Week holiday (and after China quietly raised rates)…

 

European election uncertainty is starting to creak into risk assets…

 

and quietly behind the scenes, debt ceiling concerns are growing…

 

Friday’s short-squeeze was unwound…

 

Stocks gave back some of their Dodd-Frank-is-Dead exuberance today, but held on to some gains… (Trannies and Small Caps were worst performers today) All major indeices closed red today (snapping a 3-day win streak for the S&P

 

The Dow opened at 20,002 and VIX was immediately crushed to ensure 20k was protected – but once Europe closed, things turned lower…

 

As even banks gave some back (but again remain the best performers off the payrolls print)…

 

Treasury yields plunged today – erasing all of Friday’s sell-off…with yields below Friday’s payroll lows…

 

Bonds and stocks decoupled…

 

The USD Index pumped and dumped today to end unchanged (but Yen was the biggest gainer)…

 

Gold (and Silver) surged back towards pre-election levels…

 

And USDJPY finally smashed through its 112.00 support – mirroring the gold move…

 

Crude is the notable laggard post-payrolls… (post-rig count)

 

Gold broke above its 100DMA…

end

 

Other trading notes:

Please note:

1 Yield curve inverts

2. USA swap spreads rise higher and both of these are occurring because of the new debt ceiling looming:

(courtesy zero hedge)

 

Yield Curve Inverts, Swap Spreads Spike Signal Panic As Debt-Ceiling Looms

 

The real truth on the USA economy:  it is not growing at all as the biggest companies are slashing jobs at the fastest rate since 2010:

(courtesy zero hedge)

America’s Biggest Companies Are Slashing Jobs At The Fastest Rate Since The Financial Crisis

Just last week, Americans were reassured (twice) that everything is awesome in the US labor market as ADP and BLS data showed jobs-jobs-jobs everywhere. However, along with wage stagnation (and a rising unemployment rate), there is a bigger problem, as Deutsche Bank warns, aside from soft earnings, hiring at America’s biggest companies is slowing down for the first time since 2010.

Casting some serious doubt on just how strong the hiring environment is, Yahoo’s Myles Udland notes that Deutsche Bank illustrates that employment at big US companies is plunging for the first time since the recession.

Notably, S&P 500 companies account for less than 20% of total US employment, but despite President Trump’s pro-business perspective, policy uncertainty seems to be weighing on big firms…

Even as optimism in small firms surges by the most on record.

Saturday;

USA judge blocks the Trump travel bank.  The White House vows to challenge the order:

(courtesy zero hedge)

Judge Blocks Trump Travel Ban Nationwide; White House Vows To Challenge “Outrageous Order”

 

END

 

The DHS suspects all actions on the Trump travel ban as they reverse visa cancellation.  However they vow to fight the ruling:

(courtesy zero hedge)

 

DHS Suspends “All Actions” On Trump Travel Ban, Reverses Visa Cancelation; Vows To Fight

In what is an almost complete reversal of Trump’s immigration executive order, which temporarily banned the entry of refugees and citizens from seven mostly Muslim nations into the US, moments ago the Department of Homeland Security announced that “in accordance with the judge’s ruling, DHS has suspended any and all actions implementing the affected sections of the Executive Order entitled, “Protecting the Nation from Foreign Terrorist Entry into the United States.” 

“This includes actions to suspend passenger system rules that flag travelers for operational action subject to the Executive Order. DHS personnel will resume inspection of travelers in accordance with standard policy procedure.”

However, keeping the defiant tone, the DHS also said that “at the earliest possible time, the Department of Justice intends to file an emergency stay of this order and defend the President’s Executive Order, which is lawful and appropriate. The Order is intended to protect the homeland and the American people, and the President has no higher dury and responsibility than to do so.”

That may be true, although at this point an “epic court battle”, including a Supreme Court showdown now appears inevitable.

Furthermore, as Reuters adds, the State Department issued a statement in which it said that the DOJ informed it of the Washington state court ruling barring the U.S. government from enforcing certain provisions of Executive Order 13769, and thus “we have reversed the provisional revocation of visas under Executive Order 13769.  Those individuals with visas that were not physically cancelled may now travel if the visa is otherwise valid.”

In other words, any travelers from the seven countries who have active visas, can once again enter the US. The department adds that it is “working closely with the Department of Homeland Security and our legal teams” and will provide “further updates as soon as information is available.”

This means that entry for citizens from the seven formerly banned nations are once again permitted, and thus they can resume boarding U.S.-bound flights, major airlines said on Saturday, after a Seattle judge blocked the executive order. As Reuters adds, the ruling gave hope to some Middle East travelers but left them unclear how long the new travel window might last. Trump denounced the judge on Twitter and said the decision would be quashed.

In the wake of Friday’s ruling, Qatar Airways was the first to say it would allow passengers from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen to resume flying to U.S. cities if they had valid documents.

Fellow Gulf carriers Etihad and Emirates said they would do the same, as did Air France, Spain’s Iberia and Germany’s Lufthansa. Officials in Lebanon and Jordan said they had received no new instructions on the issue.

U.S. Customs and Border Protection told airlines they could board travelers affected within hours of Friday’s ruling, but budget airline Norwegian, which operates transatlantic flights including from London and Oslo, said many uncertainties remained about the legal position. “It’s still very unclear,” spokeswoman Charlotte Holmbergh Jacobsson said. “We advise passengers to contact the U.S. embassy … We have to follow the U.S. rules.”

In Cairo, aviation sources said Egypt Air and other airlines had told their sales offices of Friday’s ruling and would allow people previously affected by the ban to book flights.

As a result, following the Friday ruling, travelers from affected countries are delighted, and rushing to get to the US: “Ibrahim Ghaith, a Syrian barber who fled Damascus in 2013, told Reuters in Jordan: “Today we heard that the measures may have been abolished but we are not sure if this is just talk. If they go back on the decision, people will be overjoyed.” Iraqi refugee Nizar al-Qassab told Reuters in Lebanon: “If it really has been frozen, I thank God, because my wife and children should have been in America by now.” The 52-year-old said his family had been due to travel to the United States for resettlement on Jan. 31. The trip was cancelled two days before that, and he was now waiting for a phone call from U.N. officials overseeing their case. “It’s in God’s hands,” he said.”

Two Sudanese travellers told Reuters they were trying to travel as soon as possible, fearing the ban might be reinstated.

“I’m in a race against time,” said a 31-year-old female academic who declined to be named for fear of any consequences.

“Today I face a real problem in Khartoum because the international airlines are refusing to sell me a ticket to travel for fear of contradicting the President’s decision. Now I am going from one airline company to another to convince them about the court’s decision,” she said.

A 34-year-old Sudanese engineer, who also did not want to be named, said: “After the court’s decision I am now trying to leave as fast as possible before the situation changes once more.”

The State Department said on Friday that almost 60,000 visas were suspended following Trump’s order. It was not clear whether that suspension was automatically revoked or what reception travelers with such visas might get at U.S. airports, although according to today’s State Department clarification it appears that virtually all travelers who previously had an active visa will once again be allowed into the US.

 

end

 

Now meet the 3 Anwan brothers who no doubt are responsible for the democratic convention leak

(courtesy zero hedge)

Meet The Awan Brothers – The (Not-Russian) IT Staff

Who Allegedly Hacked Congress’ Computer Systems

In an ironic twist, it appears it may not have been ‘The Russians’ that hacked America’s political system last year. As The Daily Caller reports,three brothers (Abid, Imran, and Jamal Awan) who managed office IT for members of the House Permanent Select Committee on Intelligence and other lawmakers were abruptly relieved of their duties on suspicion that they accessed congressional computer networks without permission.

Imran Awan seen below with Bill Clinton

As Luke Rosiak repoerts, the brothers were barred from computer networks at the House of Representatives Thursday, The Daily Caller News Foundation Investigative Group has learned.

Three members of the intelligence panel and five members of the House Committee on Foreign Affairs were among the dozens of members who employed the suspects on a shared basis. The two committees deal with many of the nation’s most sensitive issues, information and documents, including those related to the war on terrorism.

The brothers are suspected of serious violations, including accessing members’ computer networks without their knowledge and stealing equipment from Congress.

The three men are “shared employees,” meaning they are hired by multiple offices, which split their salaries and use them as needed for IT services. It is up to each member to fire them from working…

Jamal handled IT for Rep. Joaquin Castro, a Texas Democrat who serves on both the intelligence and foreign affairs panels.

“As of 2/2, his employment with our office has been terminated,” Castro spokeswoman Erin Hatch told TheDCNF Friday.

Jamal also worked for Louisiana Democrat Rep. Cedric Richmond, who is on the Committee on Homeland Security.

Imran worked for Reps. Andre Carson, an Indiana Democrat, and Jackie Speier, a California Democrat. Carson and Speier are members of the intelligence committee. Spokesmen for Carson and Speier did not respond to TheDCNF’s requests for comments. Imran also worked for the House office of Wasserman-Schultz.

Then-Rep. Tammy Duckworth, an Illinois Democrat, employed Abid for IT work in 2016. She was a member of House committees dealing with the armed services, oversight, and Benghazi. Duckworth was elected to the Senate in November, 2016. Abid has a prior criminal record and a bankruptcy.

Abid also worked for Rep. Lois Frankel, a Florida Democrat who is member of the foreign affairs committee.

Also among those whose computer systems may have been compromised is Rep. Debbie Wasserman Schultz, the Florida Democrat who was previously the target of a disastrous email hack when she served as chairman of the Democratic National Committee during the 2016 campaign.

Read more here…

A criminal investigation into five unnamed people began late last year related to serious and potentially illegal violations of House IT policies, Politico reported Thursday. Chiefs of staff for the members were briefed Thursday by the Sergeant-at-Arms.

Buzzfeed reported Friday that one of the affected members claimed:

“they said it was some sort of procurement scam, but now I’m concerned that they may have stolen data from us, emails, who knows.”

While treading carefully here, and not wanting to hurt anyone’s feelings, is it just us or is the irony too perfect that having blamed ‘Russians’ for allegedly hacking their systems and manipulating the election, it was three IT staff they hired (with immigrant-sounding names – yes we said it) that in fact broke into the systems of various politicians and aides.

 

end

The fun begins;  The Fed has received a letter from a high ranking Republican leader in banking,Patrick McHenry claiming that the Federal reserve is ripping off Americans.  We have no confirmation if the White House agrees with this..

(courtesy USAPoliticsnow.com)

Trump: Federal Reserve Must Stop Ripping Off Americans

President Trump has put the Federal Reserve on notice for violating the new administration’s America First policy, claiming the central bank has been operating illegally and ripping off Americans.

A warning letter, written by top Republicans and obtained by the Financial Times, accuses the Federal Reserve of burdening American businesses and workers with bad financial deals made with global central banks without transparency, accountability, or the authority to do so”.

The Federal Reserve’s involvement in secret international banking forums dealing with financial regulation must cease and desist immediately, according to the letter.

This is unacceptable,” the letter states. “Accordingly, the Federal Reserve must cease all attempts to negotiate binding standards burdening American businesses until President Trump has had an opportunity to nominate and appoint officials that prioritize America’s best interests.

FT reports:

Ralph Hamers, chief executive of Dutch bank ING, told the Financial Times that he feared the US could pull back from a global agreement on banking regulation, which has been delayed because of divisions on the Basel Committee on Banking Supervision.

“We don’t know the position of the Americans any more,” Mr Hamers said. “That does mean further uncertainty and uncertainty is never good, it holds back investment and restricts economic growth.”

Mr Hamers was speaking after the emergence of a letter to Janet Yellen, the Fed chair, from Patrick McHenry, one of the top five Republicans in the House of Representatives.

The letter, dated January 31, warned that the US’s “continued participation” in international forums such as Basel, the Financial Stability Board and the International Association of Insurance Supervisors would depend on meeting the Trump administration’s objectives.

Mr McHenry added that such a step would probably involve “a comprehensive review of past agreements that unfairly penalised the American financial system in areas as varied as bank capital, insurance, derivatives, systemic risk and asset management”.

Republicans are also pushing legislation to restrict the Fed’s freedom of manoeuvre. During the election, Donald Trump accused Ms Yellen of keeping rates low at the behest of former president Barack Obama.

“This is a multi-pronged attack on the Fed’s independence,” said Diane Swonk of DS Economics.

In a further marked shift of approach from the Obama administration, Mr Trump is also due on Friday take his first steps towards undoing parts of the Dodd-Frank reforms that reshaped US banking in the aftermath of the financial crisis.

Mr McHenry wrote: “Despite the clear message delivered by President Donald Trump in prioritizing America’s interest in international negotiations, it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands.”

He said the Fed was doing so “without transparency, accountability, or the authority to do so”. He added: “This is unacceptable.”

Mr McHenry has clout because he is vice-chairman of the House financial services committee. But whether the White House agrees with him on the issue is yet to be seen.

Steven Mnuchin, Mr Trump’s designated Treasury secretary, is still awaiting confirmation by the full Senate.

Wayne Abernathy, a senior official at the American Bankers Association, a lobby group, welcomed Mr McHenry’s intervention. “This whole international process is far too opaque and needs more public scrutiny and visibility,” he said.

As examples of problematic Basel regulations, Mr Abernathy cited rules that penalise banks for having heavy exposure to mortgage debt collection businesses, and liquidity rules that do not recognise that Americans tend to see banks as havens in times during crises.

Mr McHenry wrote: “The Federal Reserve must cease all attempts to negotiate binding standards burdening American business until President Trump has an opportunity to nominate and appoint officials that prioritize America’s best interests.”

Ms Yellen has said she plans to serve out the rest of her term, which expires in 2018. The Fed said the central bank had received the letter and planned to respond.

END
Monday morning 97 tech companies file a legal brief condemning Trump’s immigreaiton order:
(courtesy zero hedge)

97 Tech Companies Including Twitter, Netflix File Legal Brief Condemning Trump’s Immigration Order

 

 

end

Trump is upset that California is a sanctuary state and will not give up illegal aliens.Now Trump is threatening to de-fund the state:

(courtesy zero hedge)

Trump Threatens To De-Fund “Out Of Control” California

Well that about does it for tonight

I will see you tomorrow night

Harvey

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