FEB 15/Another huge 2.67 “tonnes” of gold added into the GLD/again no change in silver inventory at the SLV/gold and silver advance by $7.80 and 8 cents respectively/USA consumer prices raging higher/Retail sales in the USA higher/ uSA mortgage delinquencies rise the most in 7 years/Final draft

Gold at (1:30 am est) $1231.70 UP $7.80

silver was : $17.95:   UP 8 CENTS

Access market prices:

Gold: $1233.50

Silver: $17.98

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

WEDNESDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 15/17 (10:15 pm est last night): $  1242.67

NY ACCESS PRICE: $1226.50 (AT THE EXACT SAME TIME)/premium $16.17

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1241.83

NY ACCESS PRICE: $1224.70 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  17.13

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb 15/2017: 5:30 am est:  $1225.15   (NY: same time:  $1225.50   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 15.2017: 10 am est:  $1224.40 (NY same time: $1224.80 (10 am)

 

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

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

end

For comex gold:

FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  1 NOTICE(S) FOR 100 OZ.  TOTAL NOTICES SO FAR: 5124 FOR 512,400 OZ    (15.937 TONNES)

For silver:

 

For silver: FEBRUARY

26 NOTICES FILED FOR 130,000 OZ/

TOTAL NO OF NOTICES FILED: 386 FOR 1,930,000 OZ

Let us have a look at the data for today

.

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In silver, the total open interest FELL by A  slight 752 contracts DOWN to 195,338 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  .977 BILLION TO BE EXACT or 140% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 26 NOTICE(S) FOR 130,000 OZ

In gold, the total comex gold ROSE BY A WHOPPING 7,277 contracts DESPITE THE FALL IN  THE PRICE GOLD ($0.50 with YESTERDAY’S trading ).The total gold OI stands at 415,128 contracts

we had 1 notice(s) filed upon for 100 oz of gold.

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

GLD:

We had another huge change in tonnes of gold at the GLD: a deposit of 2.67 tonnes despite the attempted whacking of gold today.

Inventory rests tonight: 843.54 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 752 contracts DOWN to 195,338 AS SILVER WAS UP 7 CENTS with YESTERDAY’S trading…probably some short covering! The gold open interest ROSE by 7,277 contracts UP to 415,128 WITH THE FALL IN THE PRICE OF GOLD OF $0.50  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 4.94 POINTS OR .15%/ /Hang Sang CLOSED UP 291.86 POINTS OR 1.23% . The Nikkei closed UP 199.00 POINTS OR 1.03% /Australia’s all ordinaires  CLOSED UP 0.84%/Chinese yuan (ONSHORE) closed DOWN at 6.8717/Oil FELL to 52.85 dollars per barrel for WTI and 55.62 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.8717 yuan to the dollar vs 6.8553  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

 

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA/NORTH KOREA

More of the poisoning assassination of Kim Jong Un’s brother:

(courtesy zero hedge)

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

none today

4. EUROPEAN AFFAIRS

i)Beware:  there is a new type of debt issuance from Europe and this will be very dangerous to holders of this debt: “senior non-preferred bonds”.  

These bonds are bailable bonds:  in other words they can be used for a bail in if the bank is insolvent.  Judging from the actions of French banks, all of our ailing European banks want to issue these as fast as possible.

( Don Quijones)

ii)Nigel Farage warns the European Parliament on the immigration issue and on the upcoming French election:

( Mish Shedlock/Mishtalk(

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i) Russia/Crimea

This is a non starter: Trump expects Putin to return Crimea to Ukraine!!

not a chance!!!

( zero hedge)

ii)ISRAEL/PALESTINE/USA

The big meeting is today and uSA policy is set to drop the two state solution. However they want peace between these two factions.

( zerohedge)

6.GLOBAL ISSUES

none today

7. OIL ISSUES

i)Yesterday we had API report much higher inventories of crude.  Today it was DOE’s turn and they also report a huge increase in crude along with large gasoline builds. Down goes crude prices.

( zerohedge)

ii)Our very reliable Nick Cunningham states that there is going to be a bloodbath in the oil market as USA production increases and the cuts in OPEC production is minimal

( Nick Cunningham/Oil Price.com)

iii)I wish that the crooks would manipulate gold and silver like they do oil! For no reason, WTI rises in price again despite the higher inventories!

( zerohedge)

 

8. EMERGING MARKETS

9.   PHYSICAL MARKETS

i)Canadian Mike Ballanger talks about the work of GATA and Hunter Thompson

(courtesy Mike Ballanger/GATA)

ii)James Cook talks about Ted Butler’s latest thesis that we have a new type of hedge fund buyer in silver;  these guys are long term players and are buying silver at the lower end of banker initiated raids and they accumulate.  He strongly believes that these guys have 400 million oz of paper silver long contracts to their name and they are in the waiting game..ready to pounce when silver is higher.

Remember also that he believes that JPMorgan owns 550 million oz of physical to their name.

I ask the question:  if these investors know full well the silver crime and they know that huge quantities of physical silver is not present, why are they waiting especially if they know that they may not get their required physical silver?

I have been writing that yes, the longs are in strong hands.  The only difference between Ted and myself is that the longs are a sovereign and that sovereign is China

( Cook/SilverSeek/Ted Butler/GATA)

iii)James Turk and Alasdair Macleod talk about gold and what we must be cognizant of in the New Year

( GoldMoney.com/GATA)

iv)Lawrie Williams comments on the great work of Koos Jansen who is without a doubt the authority on gold demand in China

( Lawrie Williams/Sharp’s Pixley)

v)The SPDR gold trust gets certification that it is sharia compliant.  That should boost demand

( Reuters)

vi Agnico eagle results

(agnico eagle)

10.USA STORIES

i)Not good; consumer price rage higher in the fastest pace in 5 years.  This is coupled with real wages tumbling.  This is not what Janet wants

( zero hedge)

ii)Retail sales jump .4% probably on the excitement of a Trump Presidency.  This is coupled with the red hot CPI rise of 2.3% year/year

( zerohedge)

iii)This is not good: mortgage delinquencies rise the most in 7 years as mortgage rates rise. And Janet wants to raise rates more?

( zero hedge)

( zero hedge)

v)We have been reporting on a huge increase in production from the shale oil and gas sector these past several weeks.  This however has been coupled with a n downturn in the rest of the industrial sector

( zero hedge)

vi)Trump slams fake news media again and he is right.

( zero hedge)

vii)Another hedge fund in trouble with huge redemptions;  Daniel Och’s Och Ziff hedge fund:

(courtesy zero hedge)

viii)Meet your new National Security Advisor:  Robert Harward

( zero hedge)

 

Let us head over to the comex:

The total gold comex open interest ROSE BY A WHOPPING 7,277 CONTRACTS UP to an OI level of 415,128 DESPITE THE FALL IN THE  PRICE OF GOLD ( $0.50 with YESTERDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a LOSS of 37 contracts DOWN to 1040.   We had 1 notice(s) served upon yesterday and therefore we LOST 36 contracts or an additional 3600 oz will not stand for delivery and NO DOUBT THEY WERE CASH SETTLED.   The next non active contract month of March saw it’s OI RISE by 56 contracts UP to 2022.The next big active month is April and here the OI ROSE by 2,987 contracts UP to 272,078.

 

We had 1 notice(s) filed upon today for 100 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI FELL by 752 contracts FROM  196,090 DOWN TO 195,338 DESPITE THE FACT THAT THE PRICE OF SILVER ROSE TO THE TUNE OF 7 CENTS with respect to YESTERDAY’S trading. We must have had some short covering by the banks. We are moving CLOSER TO 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 RISE by 26 contract(s) UP TO  150.  We had 0 notice(s) served YESTERDAY so we GAINED 26 CONTRACTS  or an additional 130,000 oz will stand for delivery.

The next big active delivery month is March and here the OI decrease by 6784 contracts down to 90,715 contracts. For comparison purposes last year on the same date only 78,261 contracts were standing.

We had 26 notice(s) filed for 130,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 217,662  contracts which is good.

Yesterday’s confirmed volume was 247,856 contracts  which is very good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY
 Feb 15/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
nil OZ
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
nil oz
No of oz served (contracts) today
 
1 notice(s)
100 oz
No of oz to be served (notices)
1039 contracts
103,900 oz
Total monthly oz gold served (contracts) so far this month
5124 notices
512,400 oz
15.937 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  206,905.4   oz
Today we HAD 0 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil oz
We had 0  adjustment(s)
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 1 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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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 (5124) x 100 oz or 512,400 oz, to which we add the difference between the open interest for the front month of FEBRUARY (1040 contracts) minus the number of notices served upon today (1) x 100 oz per contract equals 616,300 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 (5124) x 100 oz  or ounces + {(1040)OI for the front month  minus the number of  notices served upon today (1) x 100 oz which equals 616300 oz standing in this non active delivery month of FEBRUARY  (19.169 tonnes)
 
 we lost 36 contracts or an additional 3600 oz will stand in this active delivery month and these were cash settled which is against comex contract law.
 
 
 
 
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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 15.937 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/ 19.169 tonnes
total for the 14 months;  245.173 tonnes
average 17.512 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 1,416,640.129 or 44.06 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,914,194.37 or 277.26 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.26 tonnes for a  loss of 26  tonnes over that period.  Since August 8/2016 we have lost 74 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  74 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE JANUARY DELIVERY MONTH
FEBRUARY INITIAL standings
 feb 15. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
32,204.63 0z
Brinks
CNT
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 569,182.200 oz
JPMorgan resumes hoarding of silver
No of oz served today (contracts)
26 CONTRACT(S)
(130,000 OZ)
No of oz to be served (notices)
124 contracts
(620,000  oz)
Total monthly oz silver served (contracts) 386 contracts (1,930,000 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   5,670,222.6 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of Brinks;  5,135.410 oz
ii) Out of CNT: 27,069.220 oz
TOTAL CUSTOMER WITHDRAWALS: 32,204.63 oz
 we had 1 customer deposit(s):
 i)Into JPMorgan:  569,182.200 oz
***deposits into JPMorgan have now resumed.
total customer deposits;  569,182.200  oz
 
 we had 1  adjustment(s)
i) Out of CNT:  129,803.45 oz leaves the customer and enters the dealer account of CNT
The total number of notices filed today for the FEBRUARY. contract month is represented by 26 contract(s) for 130,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at  386 x 5,000 oz  = 1,930,000 oz to which we add the difference between the open interest for the front month of feb (150) and the number of notices served upon today (26) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the FEBRUARY contract month:  386(notices served so far)x 5000 oz  + OI for front month of FEB.( 150 ) -number of notices served upon today (26)x 5000 oz  equals  2,550,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver. 
We GAINED 26 contracts or an additional 130,000 oz will stand for delivery.
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 93,545 which is huge!!!
FRIDAY’S  confirmed volume was 98,547 contracts  which is huge.
To give you an idea of volume yesterday’s confirmed volume::  98,547 contracts equates to 492 million oz or 70% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA
 
Total dealer silver:  140 million (close to record low inventory  
Total number of dealer and customer silver:   183.064million 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 15./another deposit of 2.67 tonnes of gold into the GLD inventory despite another attempted whacking of gold/inventory rests at 843.54 tonnes

FEB 14/another deposit of 4.14 tonnes of gold into the GLD inventory/rests at  840.87 tonnes

FEB 13/another deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 836.73 tonnes

Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes

feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes

Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes

Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes

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: 5.04 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

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Feb 15/2017/ Inventory rests tonight at 840.87 tonnes
*IN LAST 90 TRADING DAYS: 106.27 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 37 TRADING DAYS: A NET  18.94 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1:    44.47 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory
Feb 15./no changes in silver inventory at the SLV/inventory rests at 334.713 million oz
FEB 14/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz
FEB 13/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz
Feb 10/no change in silver inventory at the SLV/Inventory rests at 334.713 million oz
Feb 9/no changes in silver Inventory rests at 334.713 million oz
feb 8/No changes in inventory at the SLV/Inventory rests at 334.713 million oz
Feb 7/no change in inventory at the SLV/Inventory rests at 334.713 million oz
Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 million oz
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/
.
Feb 15.2017: Inventory 334.713  million oz
 end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.9 percent to NAV usa funds and Negative 7.9% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.1%
Percentage of fund in silver:39.7%
cash .+0.2%( feb 15/2017) 
.
2. Sprott silver fund (PSLV): Premium FALLS to -.45%!!!! NAV (Feb 15/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.35% to NAV  ( feb 15/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.45% /Sprott physical gold trust is back into NEGATIVE territory at -0.35%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver trading/commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE

Silver Price To Surge As “Investors and Users Fighting Over Available Physical Supplies”

Silver Price To Surge As “Investors and Users Fighting Over Available Physical Supplies”

One of the world’s foremost silver analysts Theodore Butler has elaborated on another “powerful” bullish factor which “screams at us to buy silver”.

Mr. Butler is one of the leading experts on the silver market and he elaborates on his very positive outlook for silver prices in an article entitled ‘Another Unique Blow-Off Factor’ published on Silver Seek yesterday:

 The reason that this knowledge is so important is because the COMEX is the primary place where silver prices are set.

Forget about China, the dollar, the economy or whatever reason the media reports. Billion dollar banks, hedge funds and computerized trading monolith’s set the price on the COMEX.

What Mr. Butler’s brilliant analysis has uncovered is extremely complex, so I’ve had to simplify it so I could understand it myself. Over the years, he has pointed to the technical hedge funds as the big buyers and sellers who move prices up and down. The big banks such as JPMorgan take the other side of these trades. These technical funds usually go long as prices rise and short as prices fall. They trade in and out of their positions based on price movements.

Over the past three years, a new type of hedge fund buyer has emerged. Mr. Butler calls them the core non-technical funds. They don’t trade, they buy and hold. From late 2013 to the summer of 2015 their long position grew to 40,000 futures contracts and more recently to 60,000 contracts. That’s 300 million ounces of silver in this core long position. These are longs who are holding and waiting for higher prices. They use futures as their silver investment vehicle because of the leverage available.

According to Mr. Butler, there are two other types of silver buyers, small traders and the other large reporting traders. Together, he estimates their total long position to be 20,000 contracts. That makes a total of 400 million ounces held on a long term basis when adding up all categories of permanent longs.

Mr. Butler writes, “The 400 million ounces of paper silver held by long term investors on the COMEX must be viewed in the context of how much actual metal exists in the world and how much could be secured from new production. The problem is that the numbers don’t match up. We have a distinct mismatch between what is held by traders thinking they ‘own’ silver and the amount that exists or could possibly be considered available.

“In silver, the COMEX core long position of 400 million ounces is more than 25% of all the silver bullion in the world and nearly 50% of the visible portion of that total. And with no more than 100 million ounces of new silver available from mine production each year (after total fabrication demand is accounted for), how the heck could you draw 400 million ounces from that? I know how futures markets are supposed to work and the numbers in silver say it can’t possibly work. Not enough actual silver exists to satisfy and back up the core long position in COMEX silver futures. It’s not even close.

“So, if there doesn’t exist the amounts of silver in the world to back the contracts held by the core long holders in COMEX futures, then what exactly is backing those contracts? The answer is 8 large short traders on the COMEX. That’s because CFTC data show in the last COT report that 8 large traders held 93,283 net contracts short, the equivalent of just over 465 million ounces. Not one of these 8 short traders is a mining company, although one of the short traders, JPMorgan, is protected against the loss of rising prices by virtue of its 550 million ounces actual silver holding. Without JPM, only 7 large traders, holding around 70,000 contracts short are backing up the core long position.

“It’s easy to see why there would be a large core long position in COMEX silver, given the low price and the lure of leverage and giant potential profits. But flip the equation around and try to come up with a legitimate reason for why anyone would want to hold a short position in silver at the same low price and with all the obvious risk factors attached? The only answer is that they think they can manipulate the price lower. However, they may well have trapped themselves. Bear in mind that when all participants in the futures markets are added up, the total short position is 750 million to 800 million ounces. No other commodity has the stark configuration of silver.

“I’m still inclined to think that a great rush for actual delivery on COMEX silver contracts is likely to come from industrial users once a physical shortage becomes apparent, but the important point is that some combination of a delivery rush or a short squeeze is certain to come. The seven big traders on the short side (ex-JPM) lose $3.5 billion for every ten dollars higher in silver.

When silver prices begin to rise strongly these few large shorts will quickly lose control and start to buy back their short positions and will contribute mightily to the price blow-off caused by investors and users fighting over available physical supplies.”

Full Article on Silver Seek Here

We share Butler’s very positive outlook for silver, believe it will outperform gold and we advise all subscribers and clients to have an allocation to physical silver coins and bars:

Why Silver Bullion Is Set To Soar – Video Interview

 

end

 

Canadian Mike Ballanger talks about the work of GATA and Hunter Thompson

(courtesy Mike Ballanger/GATA)

Mike Ballanger: Remembering the genius of Hunter Thompson (and GATA)

Section:

2:17p ET Tuesday, February 14, 2017

Dear Friend of GATA and Gold:

Toronto-based market analyst Michael Ballanger, in commentary posted today at Streetwise Reports, praises GATA and GATA Chairman Bill Murphy’s LeMetropoleCafe.com. Ballanger’s commentary is headlined “Remembering the Genius of Hunter S. Thompson” and it’s posted here:

https://www.streetwisereports.com/pub/na/remembering-the-genius-of-hunte…

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

 

 

end

 

James Cook talks about Ted Butler’s latest thesis that we have a new type of hedge fund buyer in silver;  these guys are long term players and are buying silver at the lower end of banker initiated raids and they accumulate.  He strongly believes that these guys have 400 million oz of paper silver long contracts to their name and they are in the waiting game..ready to pounce when silver is higher.

Remember also that he believes that JPMorgan owns 550 million oz of physical to their name.

I ask the question:  if these investors know full well the silver crime and they know that huge quantities of physical silver is not present, why are they waiting especially if they know that they may not get their required physical silver?

I have been writing that yes, the longs are in strong hands.  The only difference between Ted and myself is that the longs are a sovereign and that sovereign is China

(courtesy Cook/SilverSeek/Ted Butler/GATA)

Another Unique Blow-Off Factor

James Cook

 

Tuesday, February 14th

The world’s foremost silver analyst Theodore Butler has done it again. He has elaborated another bullish factor so powerful it screams at us to buy silver. As you know, Mr. Butler is the supreme expert on futures trading in silver. The reason that this knowledge is so important is because the COMEX is the primary place where silver prices are set. Forget about China, the dollar, the economy or whatever reason the media reports. Billion dollar banks, hedge funds and computerized trading monolith’s set the price on the COMEX.

What Mr. Butler’s brilliant analysis has uncovered is extremely complex, so I’ve had to simplify it so I could understand it myself. Over the years, he has pointed to the technical hedge funds as the big buyers and sellers who move prices up and down. The big banks such as JPMorgan take the other side of these trades. These technical funds usually go long as prices rise and short as prices fall. They trade in and out of their positions based on price movements.

Over the past three years, a new type of hedge fund buyer has emerged. Mr. Butler calls them the core non-technical funds. They don’t trade, they buy and hold. From late 2013 to the summer of 2015 their long position grew to 40,000 futures contracts and more recently to 60,000 contracts. That’s 300 million ounces of silver in this core long position. These are longs who are holding and waiting for higher prices. They use futures as their silver investment vehicle because of the leverage available.

According to Mr. Butler, there are two other types of silver buyers, small traders and the other large reporting traders. Together, he estimates their total long position to be 20,000 contracts. That makes a total of 400 million ounces held on a long term basis when adding up all categories of permanent longs.

Mr. Butler writes, “The 400 million ounces of paper silver held by long term investors on the COMEX must be viewed in the context of how much actual metal exists in the world and how much could be secured from new production. The problem is that the numbers don’t match up. We have a distinct mismatch between what is held by traders thinking they ‘own’ silver and the amount that exists or could possibly be considered available.

“In silver, the COMEX core long position of 400 million ounces is more than 25% of all the silver bullion in the world and nearly 50% of the visible portion of that total. And with no more than 100 million ounces of new silver available from mine production each year (after total fabrication demand is accounted for), how the heck could you draw 400 million ounces from that? I know how futures markets are supposed to work and the numbers in silver say it can’t possibly work. Not enough actual silver exists to satisfy and back up the core long position in COMEX silver futures. It’s not even close.

“So, if there doesn’t exist the amounts of silver in the world to back the contracts held by the core long holders in COMEX futures, then what exactly is backing those contracts? The answer is 8 large short traders on the COMEX. That’s because CFTC data show in the last COT report that 8 large traders held 93,283 net contracts short, the equivalent of just over 465 million ounces. Not one of these 8 short traders is a mining company, although one of the short traders, JPMorgan, is protected against the loss of rising prices by virtue of its 550 million ounces actual silver holding. Without JPM, only 7 large traders, holding around 70,000 contracts short are backing up the core long position.

“It’s easy to see why there would be a large core long position in COMEX silver, given the low price and the lure of leverage and giant potential profits. But flip the equation around and try to come up with a legitimate reason for why anyone would want to hold a short position in silver at the same low price and with all the obvious risk factors attached? The only answer is that they think they can manipulate the price lower. However, they may well have trapped themselves. Bear in mind that when all participants in the futures markets are added up, the total short position is 750 million to 800 million ounces. No other commodity has the stark configuration of silver.

“I’m still inclined to think that a great rush for actual delivery on COMEX silver contracts is likely to come from industrial users once a physical shortage becomes apparent, but the important point is that some combination of a delivery rush or a short squeeze is certain to come. The seven big traders on the short side (ex-JPM) lose $3.5 billion for every ten dollars higher in silver. When silver prices begin to rise strongly these few large shorts will quickly lose control and start to buy back their short positions and will contribute mightily to the price blow-off caused by investors and users fighting over available physical supplies.”

SilverSeek.com

 

end

 

James Turk and Alasdair Macleod talk about gold and what we must be cognizant of in the New Year

(courtesy GoldMoney.com/GATA)

GoldMoney’s brain trust discusses the new year’s market outlook

Section:

9:08p ET Tuesday, February 14, 2017

Dear Friend of GATA and Gold:

In a conversation posted at You Tube, GoldMoney’s brain trust — founder James Turk, CEO Roy Sebag, research chief Alasdair Macleod, and Vice President John Butler — discuss the market possibilities for the new year and how gold may figure in them. They seem to agree that big changes are in the air. The conversation is 90 minutes long and can be viewed here:

https://www.youtube.com/watch?v=OqmzB0PHOcE

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

 

end

 

Lawrie Williams comments on the great work of Koos Jansen who is without a doubt the authority on gold demand in China

(courtesy Lawrie Williams/Sharp’s Pixley)

LAWRIE WILLIAMS: China gold demand much greater than major analysts tell us

FEB
15

Once again we are indebted to Koos Jansen for crunching the numbers on China’s gold imports in 2016. He has added together direct imports to mainland China from the following nations/areas which publish detailed export statistics – namely Hong Kong (771 tonnes), Switzerland (442 tonnes), Australia (53 tonnes up until September – October to December figures not yet available) and the UK (only 15 tonnes, although most UK gold exports to China now seem to be being routed via Switzerland where the refiners take good delivery gold bars from the UK and re-refine them to the sizes and purities demanded in the East). Jansen sees little more going directly into mainland China from other sources and allowing for around 20 tonnes going in from Australia for the final quarter of the year comes up with a grand total of Chinese gold imports at approximately 1,300 tonnes. (See:CHINA Net Imported 1,300t Of Gold In 2016)

In addition – the USA will have exported around 4.5 tonnes direct to the Chinese mainland, and Jansen also comments that South Africa doesn’t break down its gold export figures so he may well suspect that some is going in from there too – but the amounts will be relatively small so we can stick to 1,300 tonnes as a nice round figure.

Add to that China’s own gold output, estimated at 453 tonnes and there will also have been a scrap gold element to be taken into account. This suggests that China ‘consumed’ around 2,000 tonnes of gold in 2016, which equates quite closely to the Shanghai Gold Exchange (SGE) gold withdrawals figure for the year of 1,970 tonnes – (See: 2016 SGE gold withdrawals lowest for four years). This would seem to confirm Jansen’s oft-made assertion that SGE gold withdrawals are equivalent to total Chinese gold demand – a premise largely dismissed (perhaps without adequate reason) by the major gold consultancies which virtually all put Chinese demand at less than 1,000 tonnes.

In part, this discrepancy relates to what the major consultancies label as ‘demand’. They tend to ignore what Jansen labels as institutional demand which he puts at at least 778 tonnes plus, depending on the amount of supply from scrap sources.

In terms of Chinese gold flows though, all the above figures ignore Chinese central bank demand. While this, at least in terms of reported additions to its gold reserves, appears to have slipped in 2016, it still came to a little over 80 tonnes – so overall gold flows into China last year look to have been in excess of 2,000 tonnes – or around 60% of the total of global new mined gold in 2016.

One other point from the latest statistics is the continuing reduction of gold flows into the Chinese mainland via Hong Kong. Too often we still see media headlines suggesting Chinese gold demand has risen, or fallen, purely based on the stats coming out of Hong Kong. Based on the gold import figures alone, Hong Kong now accounts for less than 60% of the gold going into mainland China. Thus the Hong Kong figures can no longer be considered a proxy for total Chinese gold imports. As Jansen points out in his article:

“Most likely Hong Kong’s position as the largest gold exporter to China will slowly fade in the coming years, as the State Council is stimulating gold freight to go directly to Chinese cities (hoping the Shanghai International Gold Exchange will eventually overtake Hong Kong’s role as the primary gold hub in the region). Consequently, gold exports to China are increasingly bypassing Hong Kong. In December 2016 we got a preview of what is about to come: Switzerland net exported an astonishing 158 tonnes directly to China, up 418 % from November 2016, up 168 % from December 2015, and 106 tonnes more than what Hong Kong did.”

See our own take on the Swiss December figures: China 154, Hong Kong 39. Swiss Dec gold exports show remarkable gold flows. We have long been pointing out the decline in importance of exports from Hong Kong to the mainland in the overall Chinese gold import figures. Perhaps our message will eventually get through to much of the mainstream media – and some ‘expert’ commentators and analysts – who continue to ignore this point!

 

end

 

The SPDR gold trust gets certification that it is sharia compliant.  That should boost demand

(courtesy Reuters)

Top gold ETF gets Islamic finance certification to tap new markets

Feb 15

Reuters

The world’s largest physically-backed gold fund said on Wednesday it has been certified as sharia compliant, the latest effort aimed at spurring demand for bullion from investors across majority-Muslim countries.

Gold had traditionally been classified as a currency in Islamic finance, confining its use to spot transactions, but new guidance issued in December is making room for a wider range of investment products.

The SPDR Gold Trust, an exchange-traded fund which holds 836.7 tonnes of bullion worth $33 billion, now falls in line with rules from the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

World Gold Trust Services, a subsidiary of the World Gold Council (WGC), said in a statement to Reuters that the ETF had received the certification from Malaysia-based Islamic advisory firm Amanie Advisors.

“This announcement marks an important step in addressing the demand for gold in the $2 trillion Islamic finance market,” said Joseph Cavatoni, Principal Executive Officer at World Gold Trust Services.

Bahrain-based AAOIFI developed the rules alongside the WGC, an industry lobby group, to address uncertainty over the religious permissibility of gold-based products.

This could further open the safe-haven asset to Islamic investors from countries where demand for gold has remained low.

Analysts cautioned it was too soon to determine if Islamic investors would add a significant new source of demand.

“Middle Eastern buyers have been transacting in gold long before the SPDR ever came into existence. As a result, I don’t think this will necessarily pave a new avenue for untapped demand,” said INTL FCStone analyst Edward Meir.

Considering other growth engines for gold, such as China, Islamic finance might take a back seat in the short to medium term but it could have some benefits in the longer term, said ANZ analyst Daniel Hynes.

“It opens up another source of investor demand, which should at least allow those sources to be more diversified.”

Last year, investment demand for gold increased by 70 percent and gold-backed ETFs saw an increase of 532 tonnes, the second highest annual inflow on record, according to a WGC report.

In the Middle East, however, demand for gold bars and coins dropped 71 percent in 2016, with jewellery down by 15.6 percent and consumer demand down by 28.4 percent, WGC data showed.

-END-

 

To those of you who are shareholders of Agnico eagle:  very strong results with the three important developments:

  1. gold production will grow to 2.0 million oz per year by 2020
  2.  Meliadine project approved for development
  3. and most important: Amaruq project approved.

these guys are doing just fine despite the continued whacking of gold and silver.

Here is their report:

Agnico Eagle Reports Fourth Quarter and Full Year 2016 Results – Meliadine and Amaruq Projects Approved for Development; Annual Gold Production Expected to Grow to 2.0 Million Ounces in 2020

February 15, 2017

Stock Symbol: AEM (NYSE and TSX)
(All amounts expressed in U.S. dollars (“$” or “US$”) unless otherwise noted)

TORONTO, Feb. 15, 2017 /PRNewswire/ – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $62.7 million, or net income of $0.28 per share for the fourth quarter of 2016.  This result includes impairment reversals of the Meadowbank mine and Meliadine project, net of tax, of $81.2 million ($0.36 per share), a non-cash foreign currency translation loss on deferred tax liabilities of $12.9 million ($0.06 per share), various mark-to-market adjustment losses of $9.4 million ($0.04 per share), non-recurring losses of $2.4 million ($0.01 per share) and non-cash foreign currency translation gains of $1.7 million ($0.01 per share).  Excluding these items would result in adjusted net income1 of $4.5 million ($0.02 per share) for the fourth quarter of 2016.  In the fourth quarter of 2015, the Company reported a net loss of $15.5 million or $0.07 per share.

Not included in the fourth quarter of 2016 adjusted net income above are lower sales volume relative to total ounces produced, net of tax (approximately 30,620 ounces fewer), representing $13.1 million ($0.06 per share), lower realized gold and silver prices compared to average spot prices both 2% lower than the quarterly average, $5.7 million ($0.03 per share) and non-cash stock option expense of $4.2 million ($0.02 per share).

Fourth quarter 2016 cash provided by operating activities was $120.6 million ($120.3 million before changes in non-cash components of working capital).  This compares to cash provided by operating activities of $140.7 million in the fourth quarter of 2015 ($112.6 million before changes in non-cash components of working capital).  The increase in cash provided by operating activities before changes in non-cash components of working capital during the current period was largely due a tax adjustment in the fourth quarter of 2015.

____________________________
1 Adjusted net income is a Non-GAAP measure. For a discussion regarding the Company’s use of non-GAAP measures, please see “Note Regarding Certain Measures of Performance”.

“Continued strong operating results in the fourth quarter of 2016 allowed us to exceed our production forecast and beat our cost guidance for the fifth consecutive year and positions us to complete the development of our growth projects over the next two years”, said Sean Boyd, Agnico Eagle’s Chief Executive Officer.  “Our primary focus will be on developing and expanding our business in Nunavut as we complete the construction of a new mine at Meliadine and develop the Amaruq satellite deposit at Meadowbank.  These new operations, along with optimizations at existing mines, are expected to result in production growth from current levels to approximately 2.0 million ounces in 2020, along with a decline in unit costs”, added Mr. Boyd.

Fourth quarter and full year 2016 highlights include:

  • Continued Strong operational performance – Payable production2 in 2016 was 1,662,888 ounces of gold on production costs per ounce of gold of $621, with total cash costs per ounce3 of $573, compared to guidance of 1,600,000 ounces at total cash costs per ounce of $600. All-in sustaining costs per ounce4 (“AISC”) for 2016 were $824, compared to guidance of $860 per ounce
  • 2016 gold reserves increased by 5.0% to 19.9 million ounces (268.4 million tonnes grading 2.31 grams per tonne (“g/t”) gold) – Measured and indicated mineral resources increased by 9%, while inferred mineral resources decreased by 4% (largely due to conversion to higher confidence categories). The average gold reserve grade in 2016 was essentially unchanged from the previous year
  • Amaruq and Meliadine approved for development – Given favourable project economics and the expected potential for extensions to the currently forecasted mine plans, the Amaruq satellite deposit at Meadowbank and the Meliadine project have been approved by the Company’s Board of Directors. Both operations are expected to start production in third quarter of 2019; As such, production at Meliadine is now forecast to begin approximately one year earlier than previously anticipated
  • New four year guidance; gold production expected to increase from current levels to 2.0 million ounces in 2020 with unit costs expected to decline – The production forecasts for 2017 and 2018 are unchanged from previous guidance of approximately 1.55 and 1.50 million ounces, respectively. Production in 2019 is forecast to be approximately 1.60 million ounces, while production in 2020 is expected to be approximately 2.0 million ounces. The Company is evaluating additional opportunities to increase production in 2018 and beyond
  • Cost guidance for 2017 essentially unchanged from prior year’s guidance – In 2017, total cash costs per ounce are forecast to be between $595 and $625 and AISC for 2017 are forecast to be between $850 and $900 per ounce. Total cash costs per ounce and AISC are expected to decline as production grows through 2020
  • Exploration Continues to Add Value
    • Conversion drilling on the western portion of LaRonde 3 (the portion of the LaRonde mine at a depth below 3.1 kilometres) has encountered higher-grade mineralization – Recent intersections include 28.1 g/t gold over 9.3 metres and 13.8 g/t gold over 8.1 metres. These new high-grade intersections are now interpreted as being a distinct lens of massive sulphide mineralization from the main LaRonde 3 horizon. In 2016, the first mineral reserves were declared in the eastern portion of LaRonde 3, and additional inferred mineral resources were declared in the western portion of LaRonde 3. Studies are ongoing to evaluate the potential to mine below the currently planned 3.1 kilometre depth at LaRonde
    • Initial inferred mineral resources declared at Odyssey and Barsele – At the Odyssey property (50% owned), which adjoins the Canadian Malartic mine, inferred mineral resources are estimated to be 0.7 million ounces (10.3 million tonnes grading 2.15 g/t gold), while at the Barsele project in Sweden (55% owned), inferred mineral resources are estimated to be 0.7 million ounces (11.9 million tonnes grading 1.72 g/t gold). Both deposits appear to have bulk tonnage and underground potential, similar to Goldex and are being evaluated as potential future production opportunities. Further mineral resource growth is expected in 2017
  • Improved financial flexibility – In 2016, net debt5was reduced by $346 million, further strengthening the Company’s investment grade balance sheet in preparation for the next phase of growth. At year-end 2016, Agnico Eagle had strong liquidity with $548 million in cash and cash equivalents and short term investments and $1.2 billion in undrawn credit lines
  • A quarterly dividend of $0.10 per share declared

end

Your early WEDNESDAY 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 WEAKER AT  6.8717(SMALL DEVALUATION SOUTHBOUND   /OFFSHORE YUAN NARROWS   TO 6.8553 / Shanghai bourse DOWN 4.94 POINTS OR .15%   / HANG SANG CLOSED UP 291.86 POINTS OR 1.23% 

2. Nikkei closed UP 199.00 POINTS OR 1.03%   /USA: YEN RISES TO 114.35

3. Europe stocks opened ALL IN THE GREEN      ( /USA dollar index RISES TO  101.42/Euro DOWN to 1.0558

3b Japan 10 year bond yield: FALLS TO    +.091%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.35/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.85  and Brent: 55.62

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.372%/Italian 10 yr bond yield UP  to 2.211%    

3j Greek 10 year bond yield RISES to  : 7.76%   

3k Gold at $1226.50/silver $17.89(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 55/100 in  roubles/dollar) 57.61-

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

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 114.35 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0086 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0651 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/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.371%

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 2.477% early this morning. Thirty year rate  at 3.061% /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 Hit 21 Month Highs, Futures Point To New Record Ahead Of Inflation Data

The global “risk on” melt-up continues.

After a modestly hawkish Yellen warned that every meeting is live, and refused to take March off the table, sending the dollar and yield higher and the S&P to fresh record highs, world stocks rose hitting a 21-month high on Wednesday with the dollar rising for the 11th straight day, the longest positive streak since July 2015.

Yellen’s comments renewed expectations in some quarters for the Fed to raise rates three times in 2017 rather than twice. The futures market did not share this view amid doubts about the U.S. economy’s ability to sustain three hikes.

Yellen left the possibility of a March move open but at the same time that wasn’t particularly surprising and in any case there was no great guidance on timing of the next hike. As DB’s Jim Reid summarizes In terms of the specifics, Yellen repeated that “waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession”. Yellen also said that “incoming data suggest that labor market conditions continue to strengthen and inflation is moving up to 2%, consistent with the Committee’s expectations”. She added that “at our upcoming meetings, the Committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate”. When quizzed on the Fed’s balance sheet strategy Yellen said that the Fed will provide further guidance “in coming months” but that any shrinkage would be “an orderly process”. The Chair also confirmed that it still too early to know what fiscal policies will be put in place under the new Trump administration and that “we are not basing our judgements about interest rates on speculation” about fiscal policy.

“At the margin, you could say that Yellen’s comments were probably tilted slightly toward to the hawkish side given her upbeat comments around the economic outlook,” said Jim Reid, markets strategist at Deutsche Bank.

Propelled by record highs on Wall Street, MSCI’s benchmark global equity index rose 0.25% to 442.4 points, its highest since May 2015 and two points off its record high. It has not fallen for six sessions, its longest such run since last July.

“A lot of big investors had doubts about this Trump rally, and are now scrambling to unwind negative positions and turn bullish,” Stephane Barbier de la Serre, a strategist at Makor Capital Markets in Geneva told Bloomberg. “It’s risk-on again, thanks to Yellen.” Before Yellen’s testimony, traders expected an increase in U.S. borrowing costs in June. Now they see one as early as May, according to futures data compiled by Bloomberg, further boosted by soaring inflation “exports” coming out of China.

Yellen’s remarks helped push Wall Street by boosting U.S. bank stocks. Goldman Sachs hit a record high, and is up 37% since the U.S. presidential election. Banks elsewhere also led gains in global stocks as traders awaited U.S. inflation data at 8:30am that looks poised to further strengthen the Federal Reserve’s resolve to raise interest rates. Treasuries fell for a fifth day and the dollar extended its advance, nothing its longest winning streak in almost five years after Yellen said on Tuesday the Fed would probably need to raise rates at an upcoming meeting and that delaying could leave the central bank’s policymaking committee behind the curve.

European banking shares advanced the most three weeks, tracking peers in the U.S., as the prospect for tighter monetary policy boosted the profit outlook for lenders who’ve been contending with near-zero rates for years. The yield on 10-year Treasuries held at a two-week high. Copper climbed amid stoppages at the biggest mines. Financials also led the way in Europe, with Credit Agricole up more than 3 percent after France’s biggest retail bank beat forecasts with a smaller than expected earnings drop in the fourth quarter.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7 percent, rising to its highest since July 2015. Japan’s Nikkei added more than 1 percent, buoyed by a weaker yen.

The dollar index against a basket of major currencies chalked up its longest winning streak since May 2015. It was up 0.2 percent at 101.220 near a four-week high of 101.380 scaled overnight. According to CME Group’s FedWatch data, U.S. interest rate futures implied a higher than 30% chance of at least three increases this year, little changed from the previous day – though the chance rose above 40% immediately after Yellen’s comments. “That kind of rate re-think is dollar-friendly, but too timid to derail the risk rally that starts in U.S. equities and spreads into emerging market currencies,” said Kit Juckes, head of FX strategy at Societe Generale in London.

The dollar was supported as U.S. Treasury yields rose on Yellen’s comments, with the benchmark 10-year yield climbing four basis points to an 11-day high of 2.50 percent the previous day. They were last at 2.475%.

Meanwhile, the stronger dollar weighed on crude oil prices. WTI was down 0.5% at $52.91 a barrel and Brent shed 0.4% to $55.75 a barrel. Crude was already under pressure the previous day after API reported a nearly 10 million rise in inventories.  In other commodities, spot gold was off 0.15 percent at $1,225.91 an ounce. Copper on the London Metal Exchange CMCU3 rose to $6,068 a tonne but relinquished much of that rally to stand slightly higher on the day at $6,036. The metal has enjoyed support recently following a strike at the world’s biggest copper mine in Chile that took it to a 1-1/2-year high above $6,200 a tonne on Monday.

It’s a packed calendar in the US, with most of the focus will be on the January CPI report while last month’s retail sales numbers will also be closely watched. The market expects headline retail sales to have increased +0.1% mom but core ex-auto sales to have increased +0.4% mom. Also due out in the US will be industrial and manufacturing production, empire manufacturing, NAHB housing market index and business inventories. Away from the data Fed Chair Yellen will deliver a likely repeat of her testimony to the House Financial Services Committee. Fed officials Harker (1pm ) and Rosengren (1:10pm) are also scheduled to speak today. On the politics front Israel PM Netanyahu is due to meet with President Trump today, while Trump is also expected to meet with the heads of large US retailers which could be interesting.

Bulletin Headline Summary from RanSquawk

  • European equities enter the North American crossover modestly higher with financials leading the way
  • USD remains on the front foot against the JPY and EUR, and although struggling to garner any fresh momentum
  • Highlights include U.S CPI’s, DoE Crude Oil Inventory and comments from Fed Chair Yellen, Fed’s Rosegren and Harker

Market Snapshot

  • S&P 500 futures little changed at 2,336.50
  • STOXX Europe 600 up 0.4% to 371.54
  • German 10Y yield rose 0.6 bps to 0.372%
  • Euro down 0.2% to 1.0554 per US$
  • Brent Futures down 0.5% to $55.67/bbl
  • Italian 10Y yield rose 0.8 bps to 2.233%
  • Spanish 10Y yield fell 1.0 bps to 1.657%
  • MXAP up 0.8% to 144.51
  • MXAPJ up 0.7% to 465.81
  • Nikkei up 1% to 19,437.98
  • Topix up 1% to 1,553.69
  • Hang Seng Index up 1.2% to 23,994.87
  • Shanghai Composite down 0.2% to 3,212.99
  • Sensex down 0.6% to 28,166.37
  • Australia S&P/ASX 200 up 0.9% to 5,809.07
  • Kospi up 0.5% to 2,083.86
  • Brent Futures down 0.5% to $55.67/bbl
  • Gold spot down 0.1% to $1,226.63
  • U.S. Dollar Index up 0.2% to 101.43

Top Global News via BBG

  • Fortress Exits Decade in Public Spotlight With SoftBank Buyout
  • Trian Targets Procter & Gamble, Discloses New $540 Million Stake
  • Buffett Cashes In $1.8 Billion Deere Stake as Shares Surge
  • Elliott Adds New Stakes in Arconic, Adient, Platform Specialty
  • Jana Partners Adds Stakes in Salesforce, Aetna, Sells Twitter
  • Apple Said to Weigh Chinese Supplier for Next-Gen iPhone Screens
  • Boeing’s Fortunes Brighten as Trump Warms to Value of Ex-Im Bank
  • U.K. Unemployment Falls as Labor Market Edges Nearer ‘Full Capacity’
  • Dollar’s Advance Versus Yen on Yellen Runs Into Exporter Offers
  • Twitter CEO Jack Dorsey Buys Shares After Post-Earnings Slump
  • Aetna to Pay Humana $1b Fee After Judge Blocked $37b Merger

Asia equities traded higher on continuation of the heightened risk sentiment from Wall Street where stocks edged fresh all-time highs once again as financials outperformed amid a hawkish testimonial from Fed Chair Yellen. ASX 200 (+0.9%) was also led by the financial sector after Australia’s largest bank CBA reported a record high H1 profit, while Nikkei 225 (+1.1%) surged on JPY weakness after USD/JPY breached the 114.00 level to the upside. Meanwhile, Shanghai Comp. (+0.4%) and Hang Seng (+1.4%) were also higher as participants digested the latest lending data in which Aggregate Financing surpassed estimates and New CNY Loans rose to the 2nd highest on record, while the PBoC also injected funds via reverse repos and its medium-term lending facility. Finally, 10yr JGBs were uneventful overnight and saw minor gains despite the increased risk sentiment as the BoJ’s presence in the market kept 10yr JGBs afloat, while the curve was mixed with outperformance in the short-end. PBoC injected CNY 50bIn 7-day reverse repos, CNY 20bIn in 14-day reverse repos and CNY 50bIn in 28-day reverse repos, while the PBoC were also reported to be injecting funds via its Medium-term Lending Facility.

Europe stocks rose after strong earnings from the likes of Credit Agricole and Heineken helped push EU bourses higher this morning. Financials are outperforming with the latest hawkish comments from Fed chair Yellen coupled with the earnings from Credit Agricole helping financials to be the best performing sector. In fixed income markets Bund futures have been trending lower as yields reach weekly highs in the German benchmark. The German/Greek 10Y spread has also widened today after holding around 710bps, the 10Y Greek outright is currently trading at 7.60% with the next real resistance at 8%.

Top European News

  • Credit Agricole Shares Rise as Consumer-Banking Profit Climbs
  • Danone Plans Cost Clampdown as Profit Growth Set to Slow (1)
  • Natixis Charged in France Over Subprime Statements in 2007
  • Warburg Said in Advanced Talks to Buy Tata Technologies Stake
  • Italy Euro Exit is Unlikely, Might Lead to Default: Moody’s
  • Credit Suisse May Not Need Capital Raise or Swiss IPO, UBS Says

In currencies, the Bloomberg Dollar Spot Index climbed 0.2 percent, climbing a fifth day for the longest run of gains since May. The USD remains on the front foot against the JPY and EUR, and although struggling to garner any fresh momentum, continues to grind higher as UST yields stay strong. In the 10yr, there is some resistance developing at 250bps, coinciding with 200bps in the 5yr and this is translating into resistance strengthening ahead of 115.00 in USD/JPY. Add market nervousness over protectionist policy, and one can see the reluctance in fresh demand coming through at current levels.
As such, EUR/USD is proving a more viable USD route given the election risk in both Holland and France, but here we are now looking to support levels ahead of 1.0500 — 1.0530 and 1.0510 stand out. The pound extended Tuesday’s decline with a 0.3 percent drop to $1.2433 after the latest jobs report saw average earnings growth dipping, and this will have implications on disposable income amid the inflationary impact of a weaker currency rate. The claimant count fell significantly, but the ONS reported heightened volatility in the experimental series from the roll out of the universal credit system.  South Africa’s rand was the biggest gainer in a basket of 17 major currencies, climbing 0.5 percent against the dollar.

In commodities, oil dropped below $53 a barrel as U.S. industry data showed crude stockpiles expanded, signaling a worsening inventory overhang. WTI futures fell 0.5 percent to $52.94. Gold slipped 0.2 percent to $1,225.67 an ounce. Copper rose 0.2 percent in London to $6,036 a ton as UBS Group AG said the rally has “more to go” amid mine supply disruptions and rising Chinese demand. After some fresh gains in base metals, some moderation coming in on the back of the modest USD push higher, which has impacted on commodities across the board. Looking at Gold, we continue to see a range developing inside USD1200-1250, with USD direction hampered by the uncertainty over Trump trade (and foreign) policy measures ahead. Gains in Copper have seen prices return through USD2.70, bolstered by the prospect of drawn out wage negotiations at Chile’s BHP Billiton Escondida mine. Nickel also firm as the Philippine president supported his environment minister’s decision to cancel contracts for undeveloped mines. WTI prices still contained inside well worn ranges with the surge in API inventories last night causing a move back under $53.

Looking at the today’s calendar, it’s a packed calendar in the US. Most of the focus will be on the January CPI report while last month’s retail sales numbers will also be closely watched. The market expects headline retail sales to have increased +0.1% mom but core ex-auto sales to have increased +0.4% mom. Also due out in the US will be industrial and manufacturing production, empire manufacturing, NAHB housing market index and business inventories. Away from the data Fed Chair Yellen will deliver a likely repeat of her testimony to the House Financial Services Committee. Fed officials Harker (1pm ) and Rosengren (1:10pm) are also scheduled to speak today. On the politics front Israel PM Netanyahu is due to meet with President Trump today, while Trump is also expected to meet with the heads of large US retailers which could be interesting.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 2.3%
  • 8:30am: Empire Manufacturing, est. 7, prior 6.5
  • 8:30am: US CPI MoM, est. 0.3%, prior 0.3%
    • US CPI Ex Food and Energy MoM, est. 0.2%, prior 0.2%
    • US CPI YoY, est. 2.4%, prior 2.1%
    • US CPI Ex Food and Energy YoY, est. 2.1%, prior 2.2%
    • US CPI Core Index SA, prior 249.9
    • US CPI Index NSA, est. 242.5, prior 241.4
    • Real Avg Weekly Earnings YoY, prior 0.23%
    • Real Avg Hourly Earning YoY, prior 0.8%
  • 8:30am: Retail Sales Advance MoM, est. 0.1%, prior 0.6%
    • Retail Sales Ex Auto MoM, est. 0.4%, prior 0.2%
    • Retail Sales Ex Auto and Gas, est. 0.3%, prior 0.0%
    • Retail Sales Control Group, est. 0.3%, prior 0.2%
  • 9:15am: Industrial Production MoM, est. 0.0%, prior 0.8%; Capacity Utilization, est. 75.4%, prior 75.5%; Manufacturing (SIC) Production, est. 0.2%, prior 0.2%
  • 10am: NAHB Housing Market Index, est. 67, prior 67
  • 10am: Business Inventories, est. 0.4%, prior 0.7%
  • 4pm: Net Long-term TIC Flows, prior $30.8b; Total Net TIC Flows, prior $23.7b

Central Banks

  • 10am: Fed Chair Yellen Delivers Semi-Annual Testimony to House Panel
  • 1pm: Fed’s Harker Speaks in Philadelphia
  • 1:10pm: Fed’s Rosengren to Address NY Assoc for Business Economics
  • 7:15pm: Fed’s Dudley Speaks in New York

DB’s Jim Reid concludes the overnight wrap

No Valentine’s Day heartbreaks from the Fed then after Janet Yellen pretty much stuck to her well versed script at yesterday’s Congressional testimony in front of the Senate. At the margin you could say that her comments were probably tilted slightly towards to the hawkish side given her upbeat comments around the economic outlook. 2y and 10y Treasury yields edged up 3.3bps and 3.4bps respectively with the former closing at the highest yield (1.236%) in three weeks. The US Dollar (+0.29%) firmed for the tenth day in a row while the implied March rate hike probability crept up to 34% from 30% using Bloomberg’s calculator.

Indeed the possibility of a March move was left open but at the same time that wasn’t particularly surprising and in any case there was no great guidance on timing of the next hike. In terms of the specifics, Yellen repeated that “waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession”. Yellen also said that “incoming data suggest that labour market conditions continue to strengthen and inflation is moving up to 2%, consistent with the Committee’s expectations”. She added that “at our upcoming meetings, the Committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate”. When quizzed on the Fed’s balance sheet strategy Yellen said that the Fed will provide further guidance “in coming months” but that any shrinkage would be “an orderly process”. The Chair also confirmed that it still too early to know what fiscal policies will be put in place under the new Trump administration and that “we are not basing our judgements about interest rates on speculation” about fiscal policy.

So all-in-all a fairly straight bat approach. Risk assets had generally been trading with a soft tone leading into the testimony but reversed with gains for financials as Yellen spoke. In the end the S&P 500 (+0.40%), Dow (+0.45%), Nasdaq (+0.32%) and Russell 2000 (+0.31%) indices all notched up another day of simultaneous record highs. The S&P 500 Financials index also rallied +1.24% while it was widely noted that shares in Goldman Sachs closed above the pre-financial crisis high and at the highest closing price ever. Credit indices in the US also reversed course with CDX IG closing 0.5bps tighter by the closing bell after initially being a similar amount wider. The VIX fell another -3% to close at 10.74 which is only a smidgen above the low mark of last month (10.58). It was a similar story in Europe too with the Euro Stoxx vol index falling just over 1% to 14.64 and back to within a whisker of the two and a half year low set last month of 14.60. That’s after the Stoxx 600 closed +0.02% yesterday.

Away from the Fed, another theme in markets over the past 24 hours has been the steady stream of inflation data released around the globe. One which caught our eye was the data out of Switzerland where we saw the first positive YoY print (+0.3% for January) since August 2014, or 29 months. It’s not quite the 54 months of producer prices deflation that China experienced (which ended 5 months ago and hit +6.9% yoy in January) but it is an interesting development all the same. Other inflation data out yesterday included the UK where we saw the YoY headline rate hit +1.8% which was a little less than the +1.9% expected, but the highest since June 2014 (although the core did stay flat at +1.6%, albeit at the joint highest since August 2014) while the January reading in Germany was confirmed at +1.9% yoy and the highest since July 2013.

Today the mantle passes to the US where we’ll also get the January inflation numbers, amongst a deluge of other data which we highlight at the end. Market consensus for the headline is a +0.3% mom increase in consumer prices which would have the effect of lifting the YoY rate from +2.1% to +2.4%. The consensus for the core is +0.2% mom and +2.1% yoy (from +2.2%). Our US economists expect both the headline and core readings to come in at +0.2% mom. That data is out at 1.30pm GMT.

This morning we’ve seen the rally for financials continue in Asia which in turn is helping to drive bourses higher. The Nikkei (+1.15%), Hang Seng (+1.19%), Shanghai Comp (+0.31%), Kospi (+0.47%) and ASX (+0.91%) have all posted decent gains while US equity futures are a touch higher. Sovereign bond markets are generally weaker with the exception of JGB’s where 10y yields are 1bp lower at 0.079%.

Staying in Asia, shortly after we went to print yesterday the latest bumper credit numbers were released in China. The data revealed that total social financing set a new monthly record at RMB3.74tn, breaking the previous high in January last year. The data also showed that RMB loans went up by RMB2.0tn in January (on 19 working days). While that is smaller than the record RMB2.5tn in January last year it is still a very fast expansion by historical standards. Our Chief Economist for China concludes that this data suggests that the PBoC as yet might not have a firm handle on shadow banking activities and financial leverage risk. In the short-term it implies upside risk to his forecast of GDP growth of 0.6% qoq in Q1, but this credit growth is likely to trigger “mini hikes” on lending facility and reverse repo rates, and potentially loan quotas to contain credit growth. He thinks that the PBoC is still unlikely to hike the benchmark lending and deposit rates, as this might be viewed as too strong a signal (in his view the  probability of a hike would rise if CPI inflation was to surpass 3.0% yoy, but he sees this risk as more likely in H2 than in the near term).

Wrapping up the remaining data yesterday, in the US headline PPI came in a little above market in January at +0.6% mom (vs. +0.3% expected) largely driven by surging energy prices. The ex-food, trade and energy reading rose +0.2% mom as expected. Meanwhile the NFIB small business optimism reading last month was up a modest 0.1pts to 105.9 and so extending the 12 and a bit year high. In Europe we also had some important GDP data to digest alongside all the inflation reports. GDP growth in Germany was confirmed at +0.4% qoq in Q4 which was a little softer than expected (+0.5% expected). That means that annual growth has held at +1.7% yoy. That was also the case for aggregate Euro area GDP which also came in at +0.4% qoq for Q4 and a tenth below expectations. Meanwhile, industrial production for the Euro area was particularly soft in December with production down a sharp -1.6% mom (vs. -1.5% expected). The final data was the German ZEW survey which came in at 76.4 for the headline in February, downfrom 77.3 in January.

Staying in Europe, another poll released in France yesterday (Ifop poll) showed a slight tightening in the gap between Macron and Fillon in the first round. The poll showed Macron’s support was stable at 19.5% but support for Fillon edged up to 18.5% from 18%. Socialist candidate Hamon’s support also remained stable at 14.5% while Le Pen’s share fell slightly to 25.5% from 26%. It’s worth noting that the fifth potential candidate, Jean-Luc Melenchon, is holding a rally today in Strasbourg.

The only other notable news from yesterday concerns Italy where various press reports suggest that Italy is in talks with European authorities about a possible €5bn bailout of two Veneto-based regional lenders. The banks concerned are Veneto Banca and Banca Popolare di Vicenza with the FT reporting that the country is supposedly already in talks with Brussels about using the same mechanism as that used for the rescue of Monte.

Looking at the today’s calendar, this morning in Europe the most notable data will come from the UK where we’ll get the December and January employment numbers. The latest trade balance reading for the Euro area is the other data out this morning, while we’ll also get the latest monetary policy outcome from the Riksbank (no change expected). It’s a packed calendar in the US this afternoon. Most of the focus will be on the aforementioned January CPI report while last month’s retail sales numbers will also be closely watched. The market expects headline retail sales to have increased +0.1% mom but core ex-auto sales to have increased +0.4% mom. Also due out in the US will be industrial and manufacturing production, empire manufacturing, NAHB housing market index and business inventories. Away from the data Fed Chair Yellen will deliver a likely repeat of her testimony to the House Financial Services Committee. Fed officials Harker (6pm GMT) and Rosengren (6.10pm GMT) are also scheduled to speak today. On the politics front Israel PM Netanyahu is due to meet with President Trump today, while Trump is also expected to meet with the heads of large US retailers which could be interesting

3. ASIAN AFFAIRS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 4.94 POINTS OR .15%/ /Hang Sang CLOSED UP 291.86 POINTS OR 1.23% . The Nikkei closed UP 199.00 POINTS OR 1.03% /Australia’s all ordinaires  CLOSED UP 0.84%/Chinese yuan (ONSHORE) closed DOWN at 6.8717/Oil FELL to 52.85 dollars per barrel for WTI and 55.62 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.8717 yuan to the dollar vs 6.8553  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

More of the poisoning assassination of Kim Jong Un’s brother:

(courtesy zero hedge)

Poison Assassination Of Kim Jong Un’s Brother “Lasted About 15 Seconds”

Following yesterday’s shocking news that the half-brother of North Korean dictator Kim Jong Un was assassinated, Malaysian authorities said on Wednesday that they detained a suspect in the apparent murder and are looking for a “few” other foreign suspects, as they zeroed in on the two women who police said fatally attacked him.

The detained woman was carrying a passport from Vietnam and was alone at the time of the arrest at the Kuala Lumpur International Airport, the local police said as they pieced together a timelime of the assault. “We believe she has a strong connection with the murder,” said Malaysia Deputy Inspector General of Police, Noor Rashid Ibrahim. “We are still looking for a few suspects, they are all still in Malaysia.”

Lawmakers in South Korea had earlier cited their spy agency as saying it suspected two female North Korean agents had murdered Kim Jong Nam, and U.S. government sources also told Reuters they believed North Korean assassins were responsible.

According to the WSJ, Kim Jong Nam, the brother, arrived early for a 10:50 a.m. AirAsia flight to Macau on Monday after more than a week in Malaysia, police said. He was in a well-lit, spacious departures hall lined with cafes like Starbucks, near a popular photo spot of a Chinese New Year exhibit featuring a giant, yellow chick. There, Mr. Kim was approached from opposite sides by two fair-skinned women who didn’t appear to be Malaysian, said police who viewed CCTV footage. One of the women touched Mr. Kim’s face with a cloth that contained an unidentified liquid before both departed in separate directions, police said.

“It lasted about 15 seconds,” one official said, adding that the CCTV nearest to the incident wasn’t working, leaving police to use footage from one further away.

Another CCTV that might’ve shown how the women departed the hall was also out of order, he said. One officer said no foul play was suspected in the nonworking cameras. Kim was then transported to a nearby hospital but was pronounced dead en route, police said. An autopsy is under way. Local reports said authorities also arrested the taxi driver who ferried the women away from the airport. Police declined to comment on that.

The woman detained at Kuala Lumpur airport was identified from CCTV footage at the airport and was alone when she was apprehended, police said in a statement.Media had earlier published a grainy CCTV-captured image of a young woman wearing a white shirt with the letters “LOL” on the front. Documents she carried were in the name of Doan Thi Huong, showed a birth date of May 1998 and birthplace of Nam Dinh, Vietnam, police said.

The portly and gregarious Kim Jong Nam, the eldest son of late North Korean leader Kim Jong Il, was assaulted on Monday morning in the departure hall of Kuala Lumpur International Airport and died on the way to hospital, Malaysian police said.

As the WSJ adds, Kim’s body was moved Wednesday to the larger Hospital Kuala Lumpur, which has more extensive facilities and equipment, for a detailed examination of what killed him. At least three North Korean Embassy vehicles were seen at the hospital compound.

About 10 Malaysian police were detailed as security outside.  Security was tighter than usual at Kuala Lumpur’s modern international airport departures hall Wedesday morning, with several tarmac security staff diverted to near the spot where Mr. Kim had been assaulted. An inconspicuous smattering of police moved intermittently through the hall.
Many staff said police had instructed them to say nothing about Monday’s incident, and most of the those who had been working Monday had been rotated to other posts in the airport, they said. Others said they had only learned of the killing on Wednesday morning.

No areas were cordoned off, and other activity continued as normal, with several hundred travelers spread throughout the hall and cafes at any given moment. A half dozen hotel and tour operators at an exhibit just steps from where Mr. Kim was assaulted said they were stunned to find out an international incident had taken place just before they’d opened Monday. “Now it’s a global event,” one said, showing updates of the story on his phone.

In front of the exhibit, approximately where police say Mr. Kim was assaulted, traditional dancers performed in the afternoon.

South Korean intelligence believes Kim Jong Nam was poisoned, the lawmakers in South Korea’s capital, Seoul, said. The spy agency told them that the young and unpredictable North Korean leader had issued a “standing order” for his half-brother’s assassination, and that there had been a failed attempt in 2012.  “The cause of death is strongly suspected to be a poisoning attack,” said South Korean lawmaker Kim Byung-kee, who was briefed by the spy agency.

Reuters adds that according to South Korea’s spy agency, Kim Jong Nam had been living, under Beijing’s protection, with his second wife in the Chinese territory of Macau, the lawmakers said. One of them said Kim Jong Nam also had a wife and son in Beijing. Kim had spoken out publicly against his family’s dynastic control of the isolated state.

“If the murder of Kim Jong Nam was confirmed to be committed by the North Korean regime, that would clearly depict the brutality and inhumanity of the Kim Jong Un regime,” South Korean Prime Minister Hwang Kyo-ahn, who is also acting president, told a security meeting. The meeting was called in response to Kim Jong Nam’s death, news of which first emerged late on Tuesday.

Yoji Gomi, a Japanese journalist who wrote a 2012 book on Kim Jong Nam, said Kim’s media appearances, which increased around the time South Korean intelligence said he was targeted for assassination, may have been an attempt to protect himself. “I now have the impression that even he may have had a sense of danger, so he began exposing himself in the media and stating his opinions to protect himself and counter North Korea,” Gomi told a talk show on Japan’s NTV.

There was no mention of Kim Jong Nam’s death in North Korean media

END

b) REPORT ON JAPAN

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

Beware:  there is a new type of debt issuance from Europe and this will be very dangerous to holders of this debt: “senior non-preferred bonds”.  

These bonds are bailable bonds:  in other words they can be used for a bail in if the bank is insolvent.  Judging from the actions of French banks, all of our ailing European banks want to issue these as fast as possible.

(courtesy Don Quijones)

 

Biggest EU Banks Embark On The Mother Of All Debt Binges

Submitted by Don Quijones via WolfStreet.com,

Spain’s three biggest banks, Banco Santander, BBVA and Caixa Bank, have got off to a flying start this year having issued €8.6 billion in new debt, seven times the amount they sold during the same period of last year. The last time they rolled out so much debt so quickly was in 2007, the year that Spain’s spectacular real estate bubble reached its climactic peak.

Santander accounts for well over half of the new debt issued, with €5.12 billion of senior bonds, subordinate bonds, and a newfangled class of bail-in-able debt with the name of “senior non-preferred bonds” (A.K.A. senior junior, senior subordinated or Tier 3) that we covered in some detail just before Christmas.

Investors beware…

This newfangled class of bail-in-able debt was cooked up last year by French-based financial engineers in order to help France’s four global systemically important banks (BNP Paribas, Crédit Agricole, Groupe BPCE and Société Générale) out of a serious quandary: how to satisfy pending European and global regulations demanding much larger capital and debt buffers without having to pay investors costly returns on the billions of euros of funds they lend them to do so.

That’s what makes senior non-preferred debt so ingenious: it pretends to be simultaneously one thing (senior), in order to keep the yield (and the cost for the bank) down, and another (junior) in order to qualify as bail-in-able. What it amounts to is a perfect scam for big banks to bamboozle bondholders – usually institutional investors like our beaten-down pension funds – into buying something with other people’s money that doesn’t yield nearly enough to compensate them for the risks they’re taking.

Put simply, if a bank is resolved, holders of these instruments could lose much or all of their money, similar to stock holders.According to Olivier Irisson, executive chief financial officer at Groupe BPCE, France’s second largest bank, it’s a “very good compromise for investors and banks.”

Judging by how they’re selling, yield-starved investors seem to agree. After the new bonds were rubber stamped by the Banque de France in mid-December, investors gobbled up €1.5 billion of Credit Agricole’s senior non-preferred 10-year bonds despite only receiving about 45 basis points more than they would get on traditional senior debt and about 65 basis points less than on subordinated.

Voracious Appetite

Société Générale quickly followed CA’s lead, issuing €3.5 billion of 5-year dollar-denominated notes. Investors lapped it up. During the same week BNP Paribas sold €1 billion of bail-in-able debt, a mere drop in the ocean compared to the €30 billion of senior non-preferred debt it hopes to raise by 2019. BPCE issued its first non-preferred deal in the second week of the year, a €1 billion six-year trade that attracted $2.4 billion of orders. It then launched an even riskier samurai (yen denominated) non-preferred trade, and most investors were not put off by the A- rating.

“2017 will be the year of senior non-preferred,said Vincent Hoarau, head of financial institutions syndicate at Crédit Agricole. Europe’s biggest banks certainly have a voracious appetite for new funds. The European Banking Authority recently estimated a €310 billion gap in all the region’s banks meeting their total loss absorbing capital requirements before the 2019 deadline. And much of that gap is expected to be filled by senior non-preferred bonds.

The European Commission has already endorsed the financial instrument, rating agencies have also lent their approval and the ECB can’t wait to come up with “a common framework at Union level“. However, the legislation permitting its issuance is currently only in place in France and is not expected to be passed elsewhere in Europe before the second half of 2017, at the earliest.

But certain banks have already jumped the gun, including Holland’s ING and Spain’s Santander, both of which have begun issuing senior non-preferred bonds despite the fact their issuance has not been officially sanctioned by each bank’s respective national regulator. Even more ominous, Italy’s fragile superbank, Unicredit, has also expressed an interest, though it will probably have to wait for Italy’s banking crisis, of which it has a major part, to blow over (assuming it can) before joining the party.

A Staggering Volume of Debt

Even by today’s inflated standards, the volume of debt the G-SIBs hope to issue in the next two years is staggering. Santander alone intends to issue between €43 billion and €57 billion, in order to meet the capital requirements that are scheduled to come into effect for the world’s 30 biggest banks on Jan 1, 2019. That’s between 60% and 75% of Santander’s entire market cap. And if everything goes according to plan, most of that debt — between €28 billion and €35.5 billion worth — will be issued in the form of senior non-preferred bonds.

For the moment there’s little concern over investor appetite, says Demetrio Salorio, global head of debt capital markets at Société Générale Corporate & Investment Banking. “The investor base is keen,” he says. “They are far more at ease with the instrument than they were 18 months ago.” Spreads could even tighten, he reckons.

All of which is testament to just how desperately starved of yield institutional investors have become in the NIRP environment as they’re trying to get their hands on financial instruments that offer virtually no security in exchange for the slimmest of additional returns.

But the investor pain, when it’s time for it, should relieve taxpayers and the public. When the bank collapses and is being resolved or recapitalized, these bondholders are supposed to get bailed in and lose some or all of their investment. This would protect taxpayers at least to some extent from getting shanghaied into doing that job. And if institutional investors who take that risk don’t get paid enough for taking that risk, so be it. It’s just pension funds and retirement nest eggs under their management that will take the hit.

Unless, of course, the government, under political pressure, decides to bail out those bondholders anyway with taxpayer money, as they’re doing in Italy’s banking crisis at the moment, on the pretext that these bondholders were naive retail investors who were missold a similar version of bail-in-able junior bonds. And so it would be back to square one.

In Italy, the insider blame game has begun. Read…  Italy’s Banking Crisis Is Even Worse Than We Thought

 

 

end

 

Nigel Farage warns the European Parliament on the immigration issue and on the upcoming French election:

(courtesy Mish Shedlock/Mishtalk(

 

Nigel Farage Warns European Parliament: “You’re In For A Bigger Shock In 2017”

Submitted by Mike Shedlock via MishTalk.com,

The always entertaining Nigel Farage was on fire again today in European Parliament. Farage correctly warned EP members about their desire for “more Europe” when citizens of nearly every country are fed up with the policy.

Partial Farage Transcript

I feel like I am attending a meeting of a religious sect here this morning. It’s as if the global revolution of 2016, Brexit, Trump, the Italian rejection of the referendum, has completely bypassed you.

 

You can’t face up to the fact that this bandwagon is going to roll across Europe in these elections in 2017. A lot of citizens now recognize this form of centralized government simply doesn’t work. … At the heart of it is a fundamental point: Mr. [name not recognized] this morning said, the people want more Europe.

 

They don’t. The people want less Europe. We see this again and again when people have referendums and they reject aspects of EU membership. But something more fundamental is going on out there. …. No doubt, many of you here will probably despise your own voters for what I am about to say because just last week, Chatham House, the reputable group, published a massive survey from 10 European states, and only 20% of people want immigration from Muslim countries to continue. Just 20%. … Which means your voters have a harder line position on this than Donald Trump, or myself, or frankly any party sitting in this Parliament. I simply cannot believe you are blind to the fact that even Mrs. Merkel has now made a u-turn and wants to send people back. Even Mr. Schulz thinks it is a good idea.

 

And the fact is, the Europen Union has no future at all in its current form. And I suspect you are in for as big a shock in 2017 as you were in 2016.

Analyzing Le Pen’s Chances Once Again

Le Pen supporters are from the same socioeconomic class as Trump supporters and Brexit supporters. Eurointelligence offers this view of the situation.

Elites vs underdogs – French edition

If you look at the voters of Emmanuel Macron, you might wonder what his chances are to win against Marine Le Pen. If you looked at the profile of those who intend to vote for him. One of the striking statistics was that Macron only gets 14% from workers, the same as Jean-Luc Mélenchon! In this class, Marine Le Pen reigns with 37% support, while Benoit Hamon does slightly better than the others with 18%. The most telling feature, in our view, is that the more educated people are more likely to vote for Macron and the less educated go for Marine Le Pen.

 

Education has been one of the dividing lines also in the Brexit vote and the American elections, and we all know what happened there. Add to this that Macron is the urban favorite, but not in the outskirts, the infamous banlieues, and you end with a candidate of the elites against a candidate of the underdogs. And it is not that immigrants living in those banlieus are against Le Pen, as one might expect. Many of them have been there for some time now and the last thing they want is more immigration.

 

So if Marine Le Pen and Emmanuel Macron end up in the second round, will we see another stand-off between the elite candidate and the underdog star? They effectively stand for two different world views. Le Pen divides the world into globalists and patriots, Macron into progressives and conservatives, notes Journal du Dimanche. In the US, Chris Arnade saw Trump’s victory as a result of the social isolation of the uneducated whites. Could this also happen in France?

People are fed up. This is precisely why the odds of a Marine le Pen victory in France are widely underestimated.

 

 

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

RUSSIA/CRIMEA/USA

This is a non starter: Trump expects Putin to return Crimea to Ukraine!!

not a chance

(courtesy zero hedge)

Trump Expects Putin To “Return” Crimea To Ukraine

With every passing day, it appears that many of the anticipated foreign policy changes under the new administration may end up being nothing but smoke and mirrors. First, it was the middle east, where despite campaign promises of pulling back US troops, Trump is instead considering adding to US deployments to reinforce what he plans to be Syrian “safe zones.”

Then, during today’s Sean Spicer press conference, the White House spokesman had that President Trump has been “tough” on Russia and expects Moscow to “return” the Crimea peninsula to Ukraine, the White House spokesman told reporters. Addressing the resignation of National Security Adviser Michael Flynn – hounded by the media over his contacts with Russian diplomats prior to Trump’s inauguration – Spicer pointed out that Russia “seized” Crimea under the Obama administration and that the Trump-appointed ambassador to the UN Nikki Haley has “strongly denounced the Russian occupation.”

President Trump has made it very clear that he expects the Russian government to de-escalate violence in the Ukraine and return Crimea,” Spicer said at a daily news briefing. “At the same time, he fully expects to and wants to get along with Russia.”

That may be problematic if indeed Trump plans to perpetuate the policies of his predecessor. On February, the Nikki Haley said at the UN Security Council that “Crimea is a part of Ukraine. Our Crimea-related sanctions will remain in place until Russia returns control of the peninsula to Ukraine.”

Russian envoy Vitaly Churkin responded by citing the US Constitution and pointing out that Crimeans overwhelmingly voted to join Russia, after the US-backed coup in February 2014 overthrew the elected government in Kiev.

It is in the national and economic interest of the US to have a good relationship with Russia, Spicer explained, but said that Haley “speaks for the president” on the matter of Crimea.

Flynn’s resignation on Monday followed several weeks of media furor over his telephone conversation with the Russian ambassador to the US in December, after the outgoing Obama administration expelled 35 Russian diplomats and seized two properties. Moscow chose not to respond in kind. “There is nothing that General Flynn did that was a violation of any sort,” Spicer said, explaining that the adviser was asked to resign because of Trump’s “eroding trust” after Flynn’s accounts of the conversation to administration officials did not square with what was leaked to the media.

However, with Democrats smelling blood in the water over the sensitive topic of the Trump administration’s alleged proximity to Russia, and even Republicans now calling for an exhaustive probe into Trump-Russia relations, recent events may have well set back any potential thaw in Russia-US relations indefinitely.

 

 

END

 

ISRAEL/PALESTINE/USA

The big meeting is today and uSA policy is set to drop the two state solution. However they want peace between these two factions.

(courtesy zerohedge)

 

In “Dramatic Break” From US Policy, Trump Set To Drop “Two State Solution” In Netanyahu Meeting

With Trump facing assaults on all sides over his administration’s alleged links to Russia, he will be happy to be distracted by another meeting with a foreign leader, even if it is the controversial Israeli Prime Minister. Trump prepared to host Benjamin Netanyahu at noon on Wednesday for talks that could shape America’s Middle East policy, as Palestinians warned the White House not to abandon their goal of an independent state.

Ahead of the talks, the WSJ reported that in what may be the latest major US foreign policy U-turn under Trump, the White House said that finding a solution to the conflict between Israelis and Palestinians doesn’t have to include an agreement to establish two separate states, marking a dramatic break from decades of U.S. policy. For decades, the idea of creating a Palestine living peacefully alongside Israel has been a bedrock U.S. position, though the last negotiations broke down in 2014. But now the White House position appears to be that peace did not necessarily have to entail Palestinian statehood, and Trump would not try to “dictate” a solution Reuters added.

Netanyahu committed, with conditions, to the two-state goal in a speech in 2009 and has broadly reiterated the aim since. But he has also spoken of a “state minus” option, suggesting he could offer the Palestinians deep-seated autonomy and the trappings of statehood without full sovereignty. Quoting a senior administration official, the WSJ said the Israelis and Palestinians have to agree on what form peace between their countries will take—and that didn’t necessarily include two states.

“A two-state solution that doesn’t bring peace is not a goal that anybody wants to achieve,” the official said. “Peace is the goal, whether it comes in the form of a two-state solution if that’s what the parties want or something else, if that’s what the parties want, we’re going to help them.”

Just like “One China” has been a mainstray of US foreign policy for nearly four decades, “two states for two peoples”, Israelis and Palestinians, has been the official U.S. policy of Democratic and Republican administrations for decades, and was the tenet guiding historic talks at Oslo and Camp David. Most governments and world bodies back that principle as well and it had been embraced by the Israeli government and the Palestinian Authority.

The U.S. historically has said it supports direct negotiations between the two sides that would end in a two-state solution. Toward that end, Washington has opposed Israeli construction of settlements in the Palestinian territories.

 

A spokesman for Israel’s Foreign Ministry declined to comment on the White House message, noting that Israel would wait for the meeting between Messrs. Trump and Netanyahu later Wednesday for more clarity on the U.S.’s approach to the conflict.

Meanwhile, as Trump and Netanyahu prepare to meet, a senior Palestinian official disclosed that on Tuesday, CIA director Mike Pompeo held talks with Palestinian President Mahmoud Abbas in Ramallah, the seat of the Palestinian government in the occupied West Bank. “(It was) the first official meeting with a high-profile member of the American administration since Trump took office,” said the official, who spoke on condition of anonymity and declined to disclose details of the discussion.

Palestinians reacted with alarm to the possibility that Washington might ditch its support for an independent Palestinian nation. “If the Trump Administration rejects this policy it would be destroying the chances for peace and undermining American interests, standing and credibility abroad,” Hanan Ashrawi, a senior member of the Palestine Liberation Organization, said in response to the U.S. official’s remarks.

“Accommodating the most extreme and irresponsible elements in Israel and in the White House is no way to make responsible foreign policy,” she said in a statement. Husam Zomlot, strategic adviser to Abbas, said the Palestinians had not received any official indication of a change in the U.S. stance.

Away from the Palestinian Solution, for Netanyahu today’s meeting with Trump will be an opportunity to reset ties after a frequently combative relationship with Democrat Barack Obama.

 

The prime minister, under investigation at home over allegations of abuse of office, spent much of Tuesday huddled with advisers in Washington preparing for the talks. Officials said they wanted no gaps to emerge between U.S. and Israeli thinking during the scheduled two-hour Oval Office meeting.

 

Trump, who has been in office less than four weeks and has already been immersed in problems including the forced resignation of his national security adviser, brings with him an unpredictability that Netanyahu’s staff hope will not impinge on the discussions.

Trump had been relentlessly pro-Israel in his campaign rhetoric, promising to move the U.S. embassy from Tel Aviv to Jerusalem, backing David Friedman, an ardent supporter of Jewish settlements, as his Israeli envoy and saying that he would not put pressure on Israel to negotiate with the Palestinians.

However, as Reuters points out, “that tune, which was has been music to Netanyahu’s ears and to the increasingly restive right-wing within his coalition, has since changed, making Wednesday’s talks critical for clarity.”

Trump appears to have put the embassy move on the backburner, at least for now, after warnings about the potential for regional unrest, including from Jordan’s King Abdullah. And rather than giving Israel free rein on settlements, the White House has said building new ones or expanding existing ones beyond their current borders would not be helpful to peace.

On the issue contentuous topic of settlements, the White House has said building new ones or expanding existing ones beyond their current borders would not be helpful to peace.

That would appear to leave Israel room to build within existing settlements without drawing U.S. condemnation, in what is the sort of gray area the talks are expected to touch on.

Meanwhile, for the Palestinians, and much of the rest of the world, settlements built on occupied land are illegal under international law. Israel disputes that, but faces increasing criticism over the policy from allies, especially after Netanyahu’s announcement in the past three weeks of plans to build 6,000 new settler homes in the West Bank and East Jerusalem.

Expect many of the open questions to be addressed later today, even if hope of some resolution of the Israeli-Palestinian conflict remains very much elusive.

 

and now the highlights of the meeting:

 

Trump, Netanyahu Highlights: “Hold Back On Settlements”, Both One Or Two-State Deals Are Acceptable

The much anticipated meeting between President Trump and Benjamin Netanyahu did not provide significant insight into the new administration’s policies vis-a-vis Israel and the middle east. While Trump expressed optimism in a “great peace deal”, he urged his Israeli colleague to “hold back on the settlements a little bit”, and while reiterating his support for a move of the US embassy to Jerusalem, he was non-committal: “we’ll see what happens.”

Trump called on the Israeli Prime Minister to make compromises in order to reach a peace deal with the Palestinians, including holding off on the construction of new settlements. “The United States will encourage a peace and really a great peace deal” between Israel and the Palestinians, but they have to negotiate it themselves, Trump said. “Both sides will have to make compromises.”

Asked whether he preferred a one-state or a two-state solution, Trump said, “I’m happy with the one they like the best,” referring to Israelis and the Palestinians. Israel had two prerequisites for any peace settlement, Netanyahu said. “First, the Palestinians must recognize the Jewish state, they must stop calling for Israel’s destruction… Second, Israel must retain security control over all of the area west of the Jordan River.”

Unless those conditions are met, Palestine will become “another failed state, another Islamist dictatorship that will not work for peace, but work to destroy us,” Netanyahu said.

Tump said “I want the Israeli people to know that the US stands with Israel in the struggle against terrorism” and added “Israel has no better ally than the US,” Netanyahu said, “and the US has no better ally than Israel.” The Israeli PM praised Trump’s commitment to resist “slander and boycotts” of his country in international bodies. The Prime Minister said that both Israel and the US are under attack “by one malevolent force – radical Islamic terrorism.”

When asked about the peace process with the Palestinians, Trump told Netanyahu “I’d like to see you hold off on settlements for a little bit.”

Predicably, Trump dodged the question about the implications the resignation of National Security Adviser Michael Flynn might have for reviewing the Iran nuclear deal, calling Flynn a “wonderful man… treated very unfairly by the media.”

Asked what compromises the two sides might have to make, Trump said the Israelis “will have to show some flexibility” and signal they want to make a deal, while “Palestinians have to give up some of the hate they’ve been taught from a very young age.”

Iranian ballistic missiles are inscribed with “Israel must be destroyed” in Hebrew, Netanyahu said, adding he welcomed the Trump administration’s determination to make Iran pay for “fomenting terrorism” in the Middle East. He accused Iran of wanting to have a nuclear arsenal, “a hundred bombs,” and intercontinental missiles that could reach the US.

Trump also said he will do whatever he can “to prevent Iran from ever — and I mean ever — developing nuclear weapons.”

Asked about the reported uptick in anti-Semitism and xenophobia following his election, Trump said he would do everything in his power to unify the country, and that the next 3-4 or 8 years would see “a lot of love.”

“There is no greater supporter of the Jewish people and the Jewish state than President Donald Trump,” Netanyahu said, concluding the press conference.

Some in the media pointed out that Trump only took questions from “friendly” outlets, like Townhall and the Christian Broadcasting Network while avoided reporters like CNN’s Jim Acosta who shouted questions about his campaign’s contact with Russia as he left the room.

END

6.GLOBAL ISSUES

7. OIL ISSUES

Yesterday we had API report much higher inventories of crude.  Today it was DOE’s turn and they also report a huge increase in crude along with large gasoline builds. Down goes crude prices.

(courtesy zerohedge)

WTI/RBOB Tumble As US Crude Inventory Reaches New Record High

After API’s bigger than expected crude build, DOE confirmed the data with a much-bigger-than-expected 9.5mm build pushing total US crude inventories to a new record high. Along with a large gasoline build, WTI/RBIB prices are tumbling on the print.

 

API

  • Crude +9.94mm (+3.5mm exp)
  • Cushing -1.27mm (+500k exp)
  • Gasoline+720k
  • Distillates +1.5mm

DOE

  • Crude +9.527mm (+3.5mm exp)
  • Cushing -702k (+400k exp)
  • Gasoline +2.846mm (+500k exp)
  • Distillates -689k (-1mm exp)

DOE confirmed API’s major build – the 6th weekly build in a row. Gasoline inventories surged again.

 

Sebnding US crude inventories to a new record high…

 

US crude production continues to rise in trend along with lagged rig counts…

 

 

Bear in mind that the last 3 weeks have seen a fundamentally correct reaction lower in WTI/RBOB prices only to be algo panic bid after…

 

For now crude is bouncing as RBOB crashes….

 

(courtesy Nick Cunningham/Oil Price.com)

A Bloodbath Looms Over Oil Markets

Submitted by Nick Cunningham via OilPrice.com,

Oil prices have traded reliably in the $50s per barrel since OPEC agreed to cut production last November, but having failed to break through a ceiling in the upper-$50s, crude prices are in danger of falling back again.

The oil market had wind in its sails on expectations of substantial drawdowns in inventories following the pending cut of a combined 1.8 million barrels per day (1.2 mb/d from OPEC plus nearly 0.6 mb/d from non-OPEC countries). Indeed, the IEA reports that oil inventories in OECD countries have declined for five consecutive months, although they still stand above the running five-year average. Meanwhile, in the U.S. oil inventories have actually increased significantly so far in 2017.

The shockingly high compliance rate that OPEC has thus far achieved this year, one would think, should have pushed oil prices up much higher. But crude prices have barely budged since several key market watchers, including S&P Global Platts, the IEA and OPEC, put out similar numbers that show OPEC countries have achieved a roughly 80 to 90 percent compliance rate, much higher than analysts thought would be possible from the contentious group. If OPEC took 1 mb/d off the market in January, why are prices struggling to move from the low- to mid-$50s?

Of course, rising U.S. production is part of the story. The latest weekly EIA data puts U.S. output at 8.978 mb/d, a touch below 9 mb/d, which is up more than 400,000 bpd from a few months ago. In addition, the EIA’s Drilling Productivity Report estimates that production from the major shale basins will rise in March by nearly 80,000 bpd, the largest increase in five months. Nearly all of that increase is expected to come from the Permian Basin.  

(Click to enlarge)

But on top of rising U.S. output, OPEC’s cuts are less impressive than they might seem. Output from Libya is up more than 100,000 bpd from November and up nearly 0.5 mb/d from its lowest point last year, with more gains to come. Nigeria also threatens to sabotage the OPEC deal if it restores around 0.5 mb/d of disrupted supply.

Moreover, Saudi Arabia ramped up output just ahead of the deal, blunting the impact of its cuts – it cut from a historically high levels. Also, Iran was allowed to increase production slightly, and Iraq, the other major producer in OPEC, is falling short of its pledged cuts. As for non-OPEC countries, Russia has only lowered output by 100,000 bpd compared to its promise of a 300,000 bpd reduction. At any rate, Russia cut from post-Soviet record highs as well.

In short, OPEC has indeed achieved a very high level of compliance, but the underlying math is not all it seems to be. OPEC succeeded in sparking a highly bullish mood in the oil market, but oil traders and investors are starting to catch on to the fact that there are still supply overhang problems in the market.

That creates a downside risk to prices in the very near future. Hedge funds and money managers have amassed the most bullish combined position in years, with everyone going long on oil, betting that $60 was around the corner. With prices now being met with resistance, the danger is that more traders start to bail out of those long bets, sparking a sudden correction in prices on the downside. “There’s starting to be fatigue about the range we’ve been trading in,” John Kilduff, a partner at Again Capital LLC, said in a Bloomberg interview. “It won’t be summer until we break out to the upside.”

Looking forward, everyone will watch how the same dynamics will continue to play out – bulls will watch for steady OPEC compliance and inventory declines while pessimists will keep an eye out for rising U.S. output and questionable demand from China and India. The market continues its slow and painful adjustment process, which should see more price gains at some point in the future, but the short-term looks more shaky.

“There’s a lot of complacency out there. If these bets start to unwind, it will be a bloodbath,” Doug King, chief investment officer at RCMA Asset Management, told the Wall Street Journal in an interview.

 

end

8. EMERGING MARKETS

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

Euro/USA   1.0558 DOWN .0020/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 ALL IN THE GREEN  

USA/JAPAN YEN 114.35 DOWN 0.088(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 1.2414 DOWN .0054 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT/LOWER HOUSE PASSES BILL TO BEGIN THE BREXIT PROCESS)

USA/CAN 1.3075 DOWN .0005 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 20 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0558; 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 DOWN 4.94 POINTS OR 0.15%     / Hang Sang  CLOSED UP 291.86 POINTS OR 1.23%    /AUSTRALIA  CLOSED UP 0.84%  / EUROPEAN BOURSES ALL IN THE GREEN 

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED UP 199.00 POINTS OR 1.03% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 291.86 POINTS OR 1.23%       / SHANGHAI CLOSED DOWN 4.94   OR 0.15%/Australia BOURSE CLOSED UP 0.84% /Nikkei (Japan)CLOSED UP 199.00 POINTS OR 1.03%  /  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1226.90

silver:$17.89

Early WEDNESDAY morning USA 10 year bond yield: 2.477% !!! UP 1 IN POINTS from TUESDAY 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  3.069, UP 1 IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 101.42 UP 19 CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 4.09% UP 5  in basis point yield from TUESDAY 

JAPANESE BOND YIELD: +.091%  DOWN 7/10  in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.681%  UP  2 IN basis point yield from  TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.242 UP 2 POINTS  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 66 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.373% UP 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.0569 DOWN .0029 (Euro DOWN 29 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 114.41 UP: 0.726(Yen DOWN 73 basis points/ 

Great Britain/USA 1.2465 DOWN 0.0065( POUND DOWN 65 basis points)

USA/Canada 1.3083 UP 0.0013(Canadian dollar DOWN 13 basis points AS OIL ROSE TO $53.20

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This afternoon, the Euro was UP by 16 basis points to trade at 1.0594

The Yen ROSE to 114.11 for a GAIN of 16 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 25  basis points, trading at 1.2445/

The Canadian dollar FELL  by 2 basis points to 1.3078,  WITH WTI OIL RISING TO :  $53.07

The USA/Yuan closed at 6.8684/
the 10 yr Japanese bond yield closed at +.091% DOWN 7/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 2 IN basis points from TUESDAY at 2.504% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.092  UP 1 in basis points on the day /

Your closing USA dollar index, 101.15 DOWN 8 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 WEDNESDAY: 1:00 PM EST

London:  CLOSED UP 33.85 OR 0.47% 
German Dax :CLOSED UP 22.12 POINTS OR 0.19%
Paris Cac  CLOSED UP 29.04 OR 0.59%
Spain IBEX CLOSED UP 73.90 POINTS OR 0.78%
Italian MIB: CLOSED DOWN 131.51 POINTS OR 0.69%

The Dow closed UP 107.45 OR 0.52%

NASDAQ WAS closed UP 36.87 POINTS OR 0.64%  4.00 PM EST
WTI Oil price;  53.07 at 1:00 pm; 

Brent Oil: 55.85  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  57.32 DOWN 26/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD RISES TO +0.371%  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:$53.00

BRENT: $55.64

USA 10 YR BOND YIELD: 2.495%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.079%

EURO/USA DOLLAR CROSS:  1.0598 up .0021 

USA/JAPANESE YEN:114.14   down 0.140

USA DOLLAR INDEX: 101.08  down 15  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2458 : down 8   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.373%

END

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

TRADING IN GRAPH FORM

Trump Utters The Magic Word (Again) And The Dow Surges Above 20,600 (Despite VIX Spike)

Apologies for earlier error in title.

Surging inflation, plunging real wages, jumping mortgage delinquencies, and record crude and gasoline inventories… then Trump drops the ‘t’ word and the market melts up…

 

Intraday, March rate-hike odds hit 46%, seemingly surging off “off the table” levels before the week began…

Record all-time highs across everything…

 

It’s all banks all the time…

 

The Dow topped 20,600 – even as VIX spiked above 12…

 

The S&P 500 is up 7 days in a row – the longest streak since Sept 2013…

 

The VIX-S&P decoupling is growing wider…

Chatter of a major liquidation of S&P call spreads – which fits with the collapse of the VIX term structure – VIX jumping as VXV tumbles)

 

S&P 500 Price to Book is now well over 3.00x – well above the 2007 peak valuation….

 

Bonds were battered again on data then rallied back…

 

As it seems 3.10% is a cap for now on 30Y…

 

The Dollar Index began the day rising for the 11th straight day – the longest winning streak since 2012 – but after spiking higher on surging inflation, the USD tumbled all day (weak IP, weak mortgage?)

 

AUD and Yuan strength were the biggest weights on the dollar…

 

RBOB and WTI dumped (correctly) on record inventories, then algos panic-bid them before they plunged again…

 

Silver and Gold rallied back to unch on the week (as the dollar faded) but crude and copper faded…

end

This is not good: mortgage delinquencies rise the most in 7 years as mortgage rates rise. And Janet wants to raise rates more?

( zero hedge)

(courtesy zero hedge)

Consumer Prices Surge At Fastest Pace In 5 Years As Real Wages Tumble

Stagflationary trouble looms.

As prognosticators ohh and aah over the soaring consumer price index (up 2.5% YoY – the most since March 2012), driven by a 14.2% YoY spike in gasoline prices, it appears they missed the fact that real average weekly earnings  plunged by 0.6% YoY – the biggest wage collapse since November 2011.

After Germany and China’s inflation-a-palooza, US consumer prices are soaring too.

Some details from the report:

  • The food index rose 0.1 percent in January, its first increase since April 2016. The index for food away from home rose 0.4 percent, its largest increase since September 2015. The food at home index was unchanged in January after declining in recent months. The index for meats, poultry, fish, and eggs, which had declined for 16 consecutive months, rose 0.7 percent in January as the index for eggs rose 14.3 percent. The index for other food at home also rose in January, increasing 0.2 percent.
  • The energy index rose 4.0 percent in January, its fifth straight increase. The gasoline index continued to rise, increasing 7.8 percent.  The index for natural gas also increased, rising 1.5 percent in January. The index for energy increased 10.8 percent over the past year, with all of its major components rising. The gasoline index rose 20.3 percent, and the index for natural gas increased 10.1 percent.
  • The shelter index rose 0.2 percent in January after increasing 0.3 percent in both November and December. The rent index rose 0.3 percent, and the index for owners’ equivalent rent increased 0.2 percent. The apparel index rose in January, increasing 1.4 percent.
  • The index for new vehicles rose 0.9 percent, its largest increase since November 2009.  The index for motor vehicle insurance continued to rise, increasing 0.8 percent in January, and the index for airline fares rose 2.0 percent.  The used cars and trucks index was one of the few to decline in January, falling 0.4 percent after increasing late in 2016.
  • The medical care index also rose in January, increasing 0.2 percent. The indexes for prescription drugs and for hospital services both increased 0.3 percent. The recreation index increased 0.4 percent, the largest advance since January 2012. The index for household furnishings and operations rose 0.3 percent over the month. The alcoholic beverages index increased 0.2 percent, and the indexes for tobacco and for personal care both rose 0.1 percent.

The 0.6% MoM rise is the most since Feb 2013 and 2.5% YoY rise is the highest since March 2012.

 

Driven by a spike in gasoline prices…

And of course rents and shelter costs, which are now rising at a pace not seen since the last bubble:

This is the biggest MoM spike in Energy prices since June 2009…

 

But more impoortantly, real wages are collapsing…

 

Get back to work Mr. Trump.

 

end

 

Retail sales jump .4% probably on the excitement of a Trump Presidency.  This is coupled with the red hot CPI rise of 2.3% year/year

(courtesy zerohedge)

 

January Spending Spree Has US Retail Sales Rising Most In Nearly Five Years

Confirming that the US economy is indeed heating up considerably and the Fed is rapidly falling behind the curve, not only did today’s blistering CPI  come in well ahead of expectations, printing at the fastest pace since 2013, with the core CPI coming in at a dangerously “overheated” 2.3%, above both expectations of a 2.1% print, and well above the Fed’s target of 2.0%, but moments ago the Census Dept. released January retail sales data which showed that after a tepid holiday spending season, US consumers started off 2017 with a bang driven perhaps by optimism over Trump’s new administration, as headline retail sales jumped 0.4% in the month, better than the 0.1% expected, after rising an adjusted 1.0% in December (up from 0.6%). Sales have now grown in every month since August last year.

Retail sales excluding autos rose by a blistering 0.8%, double the expected 0.4%, and also double the upward revised 0.4% in December, while the Control Group also rose 0.4%, more than the 0.3% expected, and in line with last month’s 0.4% (the retail sales ‘control group’ excludes food services, automobile dealers, building materials and gasoline stations).

On an Y/Y basis, retail sales surged 5.6%, the biggest annual increase in nearly 5 years, since early 2012.

The figures indicate that the US consumer has been busy spending since Trump’s election in November, despite recent weakness in wages, which on a real basis have tumbled, prompting some to wonder how much longer can this spending spurt continue, especially in light of the surge in inflation, which rose 2.5% in january, the fastest rise in nearly 5 years.

A breakdown of key spending categories shows that virtually every retail spending subsector showed growth except for Motor Vehicles, which dipped 1.4% on the month, and miscellaneous store retailers, which were down 0.2% in January. Furniture and home furnishing stores, as well as Internet retailers were both unchanged on the month.

(courtesy zero hedge)

 

 

Empire Fed Survey Soars To 30-Month Highs (Despite Slump In ‘Hope’)

Extending the trend of strong soft survey data, Empire Fed Manufacturing surged to its highest since September 2014 in February as Prices Paid led a surge across every sub-component. However, after spiking to its highest since 2011, ‘hope’ tumbled in February – its biggest drop in over a year.

Soft survey data is soaring…

 

But hope faded in Feb… by the most since Jan 2016

 

Notably, as @Not_Jim_Cramer details, this print – the first of February – implies a very strong ISM print of 54…

 end

 

We have been reporting on a huge increase in production from the shale oil and gas sector these past several weeks.  This however has been coupled with a n downturn in the rest of the industrial sector

(courtesy zero hedge)

Industrial Production Tumbles Most In 10 Months

Despite a surge in oil and gas drilling (up 8.5% MoM), US Industrial Production tumbled 0.3% MoM – the biggest MoM drop since March 2016. Worse still, after a hope-filled bounce to a positive year-over-year in December, Industrial Production slumped to unchanged from a year ago in January.

After December’s exuberant bounce, January Industrial Production has fallen back to reality…

 

This occurred despite a huge spike in oil and gas drilling…

 

And year-over-year, IP is now unchanged… (so only one positive print in the last 17 months – this is the worst non-recessionary streak in US history)

Once again “hard” data post Trump disappoints the exuberance in ‘soft’ data.

Trump slams fake news media again and he is right.

 

 

end

 

Another hedge fund in trouble;  Daniel Och’s Och Ziff hedge fund:

(courtesy zero hedge)

 

Och Ziff In Trouble: AUM Plunges After A Record $4.8 Billion In January Redemptions

One of the world’s largest, public hedge funds, Och Ziff, gave active managers around the globle more reasons for concern this morning, when it reported results today which showed distributable earnings of $7.5 million, or one cent a share, in the quarter compared to a loss of $36.1 million, or 7 cents, a year earlier. For the full year, the company reported a loss of $121.3 million from a profit of $251.9 million in 2015. Revenue tumbled from $342.8mm to $281.3mm. However, the flashing red headline is just how much AUM the recent underperformance and legal problems by Daniel Och’s investment vehicle have cost him.

As Bloomberg reports, Och Ziff suffered withdrawals of about $13 billion over the last 13 months as the company settled a five-year bribery probe and saw its founder Dan Och singled out by regulators for ignoring red flags and corruption risks.

Clients redeemed $8 billion in 2016 with an additional, and very concerning, $4.8 billion in the month of January. The outflows were concentrated in the multistrategy funds, the company said Wednesday in a statement. Some of the asset declines were offset with performance gains, including a 3.8% return for its biggest multistrategy fund last year. Assets under management for the firm decreased to $33.6 billion as of Feb. 1 from $43.7 billion a year earlier. The hedge fund had peaked at the end of 2014 with nearly $50 billion in AUM.

That said, last November, OZ did want that it expected fourth-quarter redemptions to be higher than usual because of the settlement “and the general exodus of institutional investors from hedge funds.” Pensions for Rhode Island, New Jersey and Goldman Sachs are among those that trimmed or exited their investments in Och-Ziff last year. However, the unexpected, record surge in January redemptions prompted some market watchers to wonder if the accelerating withdrawals may not prove terminal for the once iconic hedge fund.

Adding insult to inury, Och Ziff also saw its bond rating cut to junk on the back of the withdrawals and a reduction in management fees for clients to an average of 1.01% from 1.23%.

All this has slammed the stock: the publicly-traded firm lost almost half its value in the stock market in each of the last two years. The shares closed at $3.63 on Feb. 14.

Keep a close eye on ongoing OZ redemptions: as Bloomberg concludes, the combination of lower assets and revenue led to an unexpectedly high leverage ratio for Och-Ziff, which “could see another ratings downgrade this year if outflows continue and its debt ratio edges higher, S&P Global Ratings said Jan. 5.”

 

end

 

Trump slams fake news media again and he is right.

 

(courtesy zero hedge)

Trump Slams Russia Connection “Non-Sense”; Accuses “Fake News Media” Of Creating “Conspiracy Theories”

With the news cycle once again squarely focused on Mike Flynn in particular, and the Trump Administration’s ties to Russia in general following a volley of news last night from NYT, WaPo and CNN that Trump advisors allegedly communicated with members of Russian intellgience in the year preceding the election, it was expected that Trump’s first comment of the day would be focused on the story du jour, and sure enough in his first tweet on Wednesday, President Trump blasted the “fake news media,” saying it is “going crazy with conspiracy theories and blind hatred.”

Trump also slammed MSNBC and CNN, but said Fox News’s “Fox & Friends” is “great!”

“The fake news media is going crazy with their conspiracy theories and blind hatred. @MSNBC & @CNN are unwatchable. @foxandfriends is great!” he tweeted.

The fake news media is going crazy with their conspiracy theories and blind hatred. @MSNBC & @CNN are unwatchable. @foxandfriends is great!

In a follow up tweet, Trump also said “this Russian connection non-sense is merely an attempt to cover-up the many mistakes made in Hillary Clinton’s losing campaign.”

This Russian connection non-sense is merely an attempt to cover-up the many mistakes made in Hillary Clinton’s losing campaign.

Trump also blasted the continued “illegal leaks”, saying it was “just like Russia”:

“Information is being illegally given to the failing @nytimes & @washingtonpost by the intelligence community (NSA and FBI?).Just like Russia”

Information is being illegally given to the failing @nytimes & @washingtonpost by the intelligence community (NSA and FBI?).Just like Russia

As reported overnight, the president’s tweets follow reports in The New York Times and CNN that Trump campaign aides were in “constant” contact with Russian officials.

The officials cited in the Times report said they have not discovered collaboration between the Trump campaign staff and Russian officials related to the hacking of Democratic organizations.
The Intelligence Community in a report released last month concluded that Russian President Vladimir Putin called for an influence campaign in an effort to help Trump win the White House. That report noted that it did not assess the impact of Russia’s actions on the 2016 election.

Trump’s tweets also come after a shake-up in the White House following the resignation of his national security, Michael Flynn, late Monday. Flynn resigned after reports that he misled White House officials, including Vice President Mike Pence, on conversations he had with Russia’s ambassador to the United States before Trump’s inauguration. Flynn originally said he did not discuss sanctions with the ambassador, Sergey Kislyak. The Washington Post later reported that the two did discuss sanctions prior to Trump taking office.

 

end

 

Meet your new National Security Advisor:  Robert Harward

(courtesy zero hedge)

Trump Offers National Security Advisor Job To Lockheed Executive Robert Harward

As previewed yesterday, of the three men mentioned as Michael Flynn’s national security advisor replacements, one stood out: the former deputy commander of the US Central Command and current CEO for Lockheed Martin in the UAE, Robard Harward. Moments ago, Reuters confirmed that as expected, Trump has offered the National Security Advisor job to Robert Harward.

  • TRUMP HAS OFFERED NATIONAL SECURITY ADVISER JOB TO VICE ADMIRAL ROBERT HARWARD -SOURCES

As Reuters adds, the Trump administration has offered the job of White House national security adviser, vacated by former U.S. intelligence official Michael Flynn, to Vice Admiral Robert Harward, said two U.S. officials familiar with the matter on Wednesday. It was not immediately clear if Harward, a former deputy commander of U.S. Central Command who has Navy SEAL combat experience, had accepted the offer, according to sources.

* * *

Who is Harward? For those who missed it, here is our profile of the new NSC head from yesterday.

Meet The Man Most Likely To Replace Mike Flynn

The person who has emerged as the leading candidate to replace Michael Flynn, according to both Reuters and WaPo, is a senior naval officer who served under President Donald Trump’s Defense Secretary James Mattis: Vice Admiral Robert Harward, who was deputy commander of U.S. Central Command under Mattis, will likely replace Flynn, officials quoted by Reuters said.


Vice Adm. Robert S. Harward, commanding officer of Combined Joint Interagency Task Force 435

Harward served under Mattis while he was at U.S. Central Command and remains an ally and friend of the defense secretary. He is a Rhode Island native who went to school in Tehran before the shah was toppled in 1979. He went on to the U.S. Naval Academy and a long career in the Navy, where he worked on SEAL teams and was a commander in Afghanistan and Iraq. Harward did a tour on the National Security Council under Republican President George W. Bush working on counterterrorism.

“If the president goes in his direction, there would be very little opposition,” said the official. “He’s very highly regarded, and doesn’t have the baggage that Petraeus has.”

That said, since Harward is the Chief Executive Officer for Lockheed Martin in the UAE – in which this role “he is responsible for all aspects of the company’s business interests in the UAE, including strategy, operations, growth and execution of Lockheed Martin programs” -the Vice Admiral may be “incentivized” to perpetuate, if not accelerate, the various proxy wars in the region.

In any case, as the WaPo adds, on Monday night, Tommy Vietor, a former spokesman for President Barack Obama’s National Security Council, wrote on Twitter that Harward is a “very impressive (and nice) guy.”

When asked if Harward was certain to be picked, the officials offered caution and said the discussions were ongoing. But they acknowledged that a consensus for Harward was evident, with Keith Kellogg, a decorated retired Army lieutenant general, and David H. Petraeus, a former CIA director and retired general, still on the list. Kellogg was named acting national security adviser on Monday after Trump accepted Flynn’s resignation letter.

Below is Vice Admiral Harward’s bio from the Navy website:

Born in Newport, Rhode Island, Vice Adm. Robert Harward grew up in a Navy family and graduated from the Tehran American High School in Iran. After enlisting in the Navy, he was awarded a fleet appointment to the United States Naval Academy where he received his bachelor’s degree in 1979. Harward attended the College of Naval Command and Staff, the Naval Staff College and the Armed Forces Staff College. He holds a master’s degree in international relations and strategic security affairs, served as a federal executive fellow at RAND and is a graduate of the Massachusetts Institute of Technology Center for International Studies, Foreign Policy Program Seminar XXI.

 

Harward qualified as a surface warfare officer aboard the destroyer USS Scott (DDG 995) and then transferred to the Naval Special Warfare community. He was the “Honor Man” of Basic Underwater Demolition (BUD)/Sea, Air, Land (SEAL) class 128 and has served in both East and West coast SEAL teams.

 

Tours in the Naval Special Warfare community include: commander, SEAL Team 3; Assault Team leader and operations officer at Naval Special Warfare Development Group; SEAL plans officer for Commander, Amphibious Force U.S. 7th Fleet; executive officer, Naval Special Warfare Unit 1; aide-de-camp to Commander, U.S. Special Operations Command; Combined Joint Special Operations Task Force (CJSOTF) deputy commander in Bosnia; deputy commander Special Operations Command, Pacific; commander, Naval Special Warfare Group 1; and, deputy commanding general, Joint Special Operations Command.

 

Assignments outside of his community include a tour in the executive office of the president at the White House where he served on the National Security Council as the director of Strategy and Policy for the office of Combating Terrorism. His first flag assignment was chairman of the Joint Chiefs of Staff representative to the National Counterterrorism Center (NCTC), as a member of the Senior Interagency Strategy Team. Additionally, he served as deputy commander, U.S. Joint Forces Command and most recently he served as commander of Combined Joint Interagency Task Force (CJIATF) 435 from 2009 to 2011 in Afghanistan. Harward has commanded troops in Afghanistan and Iraq over six years since Sept. 11, 2001.

 

Harward served as deputy commander, U.S. Central Command (USCENTCOM), located in Tampa, Florida.

Well that is all for today

I will see you tomorrow night

Harvey

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