FEB 16/Gold advances by $8.30/silver by 11 cents and surpasses big resistance at 18 dollars/Open interest in silver rises to 199,000 plus contracts/South Korea’s court issues an arrest warrant for CEO Lee/Citizens in Greece removing huge amounts of euros as they are frightened of the stalemate with respect to the negotiations with EU and IMF/Maddog Mattis issues ultimatum to NATO: either spend for the defense of NATO or USA will pull funding/Final draft

Gold at (1:30 am est) $1240.00 UP $8.30

silver was : $18.06:   UP 11 CENTS

Access market prices:

Gold: $1239.40

Silver: $18.10



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:

THURSDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 16/17 (10:15 pm est last night): $  1243.46

NY ACCESS PRICE: $1235.60 (AT THE EXACT SAME TIME)/premium $8.06


Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1244.06


   SPREAD/ 2ND FIX TODAY!!:  10.26

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


London FIRST Fix: Feb 16/2017: 5:30 am est:  $1236.75.75   (NY: same time:  $1237.21   (5:30AM)


London Second fix Feb 16.2017: 10 am est:  $1240.55(NY same time: $1240.50 (10 am)


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

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


For comex gold:



For silver:


For silver: FEBRUARY



Let us have a look at the data for today



In silver, the total open interest ROSE by 3,865 contracts UP to 199,203 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  .996 BILLION TO BE EXACT or 142% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold ROSE BY  5,018 contracts WITH THE RISE IN  THE PRICE GOLD ($7.80 with YESTERDAY’S trading ).The total gold OI stands at 420,146 contracts

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


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


We had no change in tonnes of gold at the GLD:

Inventory rests tonight: 843.54 tonnes



we had no changes in silver into the SLV

THE SLV Inventory rests at: 334.713 million oz



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

1. Today, we had the open interest in silver ROSE by 3,865 contracts UP to 199,203 AS SILVER WAS UP 8 CENTS with YESTERDAY’S trading. The gold open interest ROSE by 5,018 contracts UP to 420,146 WITH THE RISE IN THE PRICE OF GOLD OF $7.80  (YESTERDAY’S TRADING)

(report Harvey


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 16.63 POINTS OR .52%/ /Hang Sang CLOSED UP 112.83 POINTS OR 0.47% . The Nikkei closed DOWN 90.45 POINTS OR 0.47% /Australia’s all ordinaires  CLOSED UP 0.07%/Chinese yuan (ONSHORE) closed UP at 6.85873/Oil ROSE to 53.39 dollars per barrel for WTI and 56.04 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.8451 yuan to the dollar vs 6.85873  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 STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR




South Korea Court has issued an arrest warrant for Samsung’s Lee

(courtesy Bloomberg)



The banks in Japan are having real trouble with profitability due to negative interest rates.  On top of that, they are having a tough time with the B. of J’s communication re their yield curve policy where they are capping the long term rate at 0%.

It seems that the banks in Japan are undergoing Mutiny on the Bounty as they do not trust them one bit.  With a debt to GDP of 250% who could blame them

( zero hedge)


This is not good:  rumours are circulating that USA ships will not be allowed to pass through the China South seas.

( zero hedge)



A terrific commentary from Mish Shedlock today.  He comments on the Chatham House poll which suggests that only 20% of Europe approves of the immigration policy of of the EU. The number one problem in France is the violence/chaos/ created by Muslims.  Shedlock suggests that the polls in the upcoming election may have it wrong and that the real support for Le Pen may be much stronger

(courtesy Mish Shedlock/Mishtalk)



Meet the probable new German Chancellor when the elections will be held in Sept/2017

( Bornsdorf/Saxo Bank)


This should be alarming to the EU.

1.In the last 45 days:2.5 billion euros left the bank

2. from the beginning of the crisis in 2011, 120 billion euros have left the bank system

3. from a report in Nov 2015: in the preceding one yr: 45 billion euros have left the banking system of which 36 billion euros never returned.

Ladies and gentlemen; we have another bank run.  I guess more controls are coming!

( zerohedge)


Tillerson meets Lavrov.  You can bet that Crimea will be discussed and Russia will no doubt state that this is a non starter:

( zero hedge)


none today


none today


none today


i)Craig Hemke reports that the increase in inflation in the uSA is not sudden at all as the dollar has been depreciating for quite some time

( Craig Hemke/TFMetals)

ii)Agnico Eagle will invest in infrastructure to the too of 1.2 billion dollars in the Canadian Artic:


iii)Seeking alpha is got it right concerning Agnico Eagle.  The stock stumbled today despite increasing reserves as well as indicating that they will hit 2.0 million oz of production by 2020

( seeking alpha)

iv)We have been pointing this out to you already this year:  Chinese holdings of USA treasuries dropping like a stone

( Bloomberg News/GATA)

v)Trading in the physical markets today:  copper and oil booth down due to the world finally perceiving that there is no growth:

(zero hedge)

vi)John Brimelow reports that premiums of 10 dollars per oz is quite prevalent in the Indian gold market indicating robust demand.

Over at the SGE a whopping 162 tonnes of gold was received on Monday.  This is just one day’s report and it is the highest on record. Kranzler comments on the last two trading days with respect to gold as the bullion banks supplied huge quantities of paper gold trying to tame the gold price


( Dave Kranzler/IRD)


i)Initial jobless claims raise but still the lowest levels in many years.

( zerohedge)

ii)Housing starts disappoints and this is coupled with a huge rise in building permits (driven by rentals).

( zero hedge)

iii)Another soft data report:  The Philly Fed explodes to a 33 yr high and this is a 10 standard deviation beat:

( zero hedge)

iv)The CEO of insurance giant Aetna claims that Obamacare is in a death spiral because of huge premiums and risk polls are deteriorating.  This is causing insurance companies pulling out of exchanges:

( zero hedge)

v)Maddog Mattis issues his ultimatum to NATO:  Boost military spending  (with contributions coming from NATO countries) or else the USA will cut its support

(courtesy zero hedge)

vi)Maddog rejects any military cooperation with Russia especially in Syria

( zero hedge)

vii)UNBELIEVABLE!!  Wall Street Journal reports that uSA intelligent officials have withheld information from President Trump due to concerns that it could be leaked or compromised.

what on earth is going on in the USA?

( zerohedge)

viii)Trump and Chaffetz are attacking the leakers.  Chaffetz has now requesting a Dept. of Justice probe into the source of the leaks.

( zero hedge)

ix)Your new Labour secretary and the fellow should be an easy confirmation.  However the Donald is still angry on the leaks

( zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 5,018 CONTRACTS UP to an OI level of 420,146 WITH THE RISE IN THE  PRICE OF GOLD ( $7.80 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 110 contracts DOWN to 930.   We had 1 notice(s) served upon yesterday and therefore we LOST 109 contracts or an additional 10,900 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 0 contracts REMAINING AT  2022.The next big active month is April and here the OI ROSE by 3038 contracts UP to 275,116.

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


And now for the wild silver comex results.  Total silver OI ROSE by 3,865 contracts FROM  195,338 UP TO 199,203 AS THE PRICE OF SILVER ROSE TO THE TUNE OF 8 CENTS with respect to YESTERDAY’S trading.  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 FALL by 2 contract(s) DOWN TO  148.  We had 26 notice(s) served YESTERDAY so we GAINED 24 CONTRACTS  or an additional 120,000 oz will stand for delivery.

The next big active delivery month is March and here the OI decrease by 10,389 contracts down to 80,326 contracts. For comparison purposes last year on the same date only 78,261 contracts were standing.

We had 24 notice(s) filed for 120,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 190,451  contracts which is good.

Yesterday’s confirmed volume was 234,771 contracts  which is very good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY
 Feb 16/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
96.453 OZ
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
3215.000 oz
No of oz served (contracts) today
1 notice(s)
100 oz
No of oz to be served (notices)
929 contracts
92,900 oz
Total monthly oz gold served (contracts) so far this month
5125 notices
512,500 oz
15.941 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  207,001.3   oz
Today we HAD 1 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 1  customer deposit(s):
 i) Into JPMorgan 32,150.0000 oz  (1000 kilobars)
total customer deposits; 32,150.000 oz
We had 1 customer withdrawal(s)
 i) Out of Brinks: 96.453 oz
total customer withdrawal: 96.453 oz
We had 0  adjustment(s)

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.

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 (5125) x 100 oz or 512,500 oz, to which we add the difference between the open interest for the front month of FEBRUARY (930 contracts) minus the number of notices served upon today (1) x 100 oz per contract equals 605,400 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 (5125) x 100 oz  or ounces + {(930)OI for the front month  minus the number of  notices served upon today (1) x 100 oz which equals 605400 oz standing in this non active delivery month of FEBRUARY  (18.830 tonnes)
 we lost 109 contracts or an additional 10,900 oz will stand in this active delivery month and these were cash settled which is against comex contract law.
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 15.941 tonnes vs 7.9876 at the end of Feb).
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/ 18.830 tonnes
total for the 14 months;  244.84 tonnes
average 17.488 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr).
Total dealer inventory 1,416,640.129 or 44.06 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,946,247.917 or 278.26 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.26 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
 feb 16. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
241,602.134 0z
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 1046.024 oz
No of oz served today (contracts)
(120,000 OZ)
No of oz to be served (notices)
124 contracts
(620,000  oz)
Total monthly oz silver served (contracts) 410 contracts (2,050,000 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   5,911,824.7 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 3 customer withdrawal(s):
i) Out of Delaware:  1046.024 oz
ii) Out of HSBC: 165,091.93 oz
iii) Out of Scotia: 75,464.180 oz
 we had 1 customer deposit(s):
 i)Into Delaware:  1046.024 oz
***deposits into JPMorgan have now stopped.
total customer deposits;  241,602.134  oz
 we had 1  adjustment(s)
i) Out of CNT:  499,191.140 oz leaves the dealer and enters the customer account of CNT
ii) out of Delaware:  309,695.340 oz leaves the customer and enters the dealer account of Delaware.
The total number of notices filed today for the FEBRUARY. contract month is represented by 24 contract(s) for 120,000 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  410 x 5,000 oz  = 2,050,000 oz to which we add the difference between the open interest for the front month of feb (148) and the number of notices served upon today (24) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the FEBRUARY contract month:  410(notices served so far)x 5000 oz  + OI for front month of FEB.( 148 ) -number of notices served upon today (24)x 5000 oz  equals  2,670,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver. 
We GAINED 24 contracts or an additional 120,000 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.
Volumes: for silver comex
Today the estimated volume was 84,069 which is huge!!!
FRIDAY’S  confirmed volume was 100,877 contracts  which is huge.
To give you an idea of volume yesterday’s confirmed volume::  98,547 contracts equates to 504 million oz or 72% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA
Total dealer silver:  30.081 million (close to record low inventory  
Total number of dealer and customer silver:   183.364 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.


And now the Gold inventory at the GLD

FEB 16/we had no changes in the GLD inventory today/Inventory rests at 843.54 tonnes

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


Feb 16/2017/ Inventory rests tonight at 840.87 tonnes


Now the SLV Inventory
FEB 16/we had no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/
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 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 16.2017: Inventory 334.713  million oz

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 16/2017) 
2. Sprott silver fund (PSLV): Premium rises to -.16%!!!! NAV (Feb 16/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.19% to NAV  ( feb 16/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.16% /Sprott physical gold trust is back into NEGATIVE territory at -0.19%/Central fund of Canada’s is still in jail.


Major gold/silver trading/commentaries for THURSDAY


Gold Is Undervalued – Leading Money Managers

  • Gold is undervalued according to a record number of fund managers
  • Last time gold was considered undervalued, the price surged
  • BAML surveyed 175 money managers with $543 billion in assets under management
  • 34% of investors believe protectionism is the biggest threat to markets
  • Gold viewed as the best protectionist investment by a third of investors

gold-undervalued-2017Gold in USD – 10 Years (GoldCore)

For the third time in a decade fund managers surveyed by Bank of America Merrill Lynch (BAML) believe that gold is undervalued. After the last two occasions the price of gold shot up.

The Bank of America Merrill Lynch Fund Managers survey spoke to 175 money managers with $543 billion in assets under management. It provides key indicators each month of those who run and manage the world’s investments. The news that they are buying gold and believe it is undervalued, is worth paying attention to.

As we often mention the status quo amongst money managers is for them to be bearish about gold, regardless of the price and state of the global economy. But this month, a majority of those surveyed (by a net margin of 15%) believe that gold is a buy, something that hasn’t been seen since January 2009 and January 2015.

As Brett Arends writes on Marketwatch, this is significant:

“The latest survey opinion is of more than passing interest. These guys typically do not hold gold in their portfolios. Indeed, to buy some, most of them will have to go through investment committees, which takes weeks or months. But if they are interested, and they stay interested, that will presumably drive more demand for gold as an investment in the months ahead.”

But why are they only interested now, what has them running for gold and what does this mean for gold investors?

Inflation, stagflation and protectionism

The interest in gold comes from two parts.

Firstly the clear risks on the horizon. Namely stagflation, inflation and protectionism. As well as rising interest rates and potential conflict (trade and otherwise) around the world. The second part is our increasingly familiar friend, uncertainty.

This may come as a surprise given the boost to economic projections thanks to Trump’s win. But even an initial enthusiast of Trump’s policies Ray Dalio, head of the world’s biggest hedge fund, Bridgewater Associates, has since changed his mind. In a recent letter to clients he explained:

“Nationalism, protectionism and militarism increase global tensions and the risks of conflict. For these reasons, while we remain open-minded, we are increasingly concerned about the emerging policies of the Trump administration.”

In the BAML survey, fund managers are optimistic about the macro outlook, with 23% saying they expect a “boom” compared to 1% one year ago but when it comes to the fundamentals things don’t look so good, with 43% saying they expect “secular stagnation”.

36% said European elections raising disintegration risk were the biggest tail risk closely followed by a trade war (3%) and a crash in global bond markets (13%).

The most likely bear market catalyst according to 34% of respondents was protectionism, followed by higher rates (28%) and a financial event (18%).

So whilst things might be looking rosy at the moment, the future is making investors’ nervous. It is the uncertainty surrounding these potential events, not knowing what specifically they will be, what they will impact and when they might happen that adds to list of unknown uknowns that we were talking about earlier this week.

Trump trade could take you too close to the Sun

Staying too positive about Trump’s impact on the US and wider economy has lead some to issue warnings. Michael Hartnett the chief investment strategist at BAML and his team wrote of the Icarus trade, earlier this year.

“Our tactical view: after a Jan/Feb wobble, we believe stocks & commodities will have one last 10% melt-up in H1. Call it the ‘Icarus trade.’ The current melt up, which started back in Feb 2016, will be followed by a meltdown later in ‘17,” they wrote.

For those who need reminding Icarus was the son of Daedalus. When his father made him some wings held together by wax he was warned not to fly too close the sun, but Icarus ignored his father’s warnings and did just that. His wings melted and he plunged back to earth.

The decision by fund managers to go long gold is a reflection of this Icarus trade. These investors are buying gold as a form of insurance. In the same way that we should have insurance for our homes or cars but we just cannot predict the future, investors are now appreciating gold will do well when financial and political upheaval unexpectedly take a turn for the worst. However, this is a short-term perspective and many are saying that these fund managers are not looking at gold in the long-term, playing a crucial role in their portfolios.

Big money gets into gold

The news that fund managers are getting into gold should really come as no surprise, we have brought you multiple stories of wealthy investors, fund managers and family offices diversifying into gold.

In June 2016, gold accounted for 8% of the £2.8 billion portfolio managed by Rothschild’s investment house RIT Capital Partners.

Reasons for the portfolio allocation were given as

‘”The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30 per cent of global government debt at negative yields, combined with quantitative easing on a massive scale. In times like these, preservation of capital in real terms continues to be as important an objective as any in the management of your company’s assets.”

More recently we reported on Stanley Druckenmiller buying gold in late December and January, having sold on the night of the election claiming that “all the reasons I owned it for the last couple of years seem to be ending”.

However since then Druckenmiller has bought gold back seemingly because he too believes it is currently undervalued,  he “wanted to own some currency and no country wants its currency to strengthen…Gold was down a lot, so I bought it.”

And just this week we brought an interview with Jim Rogers to you in which he warned investors to “Get prepared” as “we’re going ‘to have the worst economic problems we’ve had in your lifetime or my lifetime’. With this in mind he is holding onto gold and silver and is accumulating bullion on dips, looking to ‘own more’.

Conclusion: unconventional appeal of gold as insurance

Despite the apparent support of some investment managers this is seen as very much short-term and gold is still not seen as a conventional investment.

Coverage of this most recent BAML survey has picked up on this rekindled love for gold and generally writes that the metal is being bought as an insurance policy, as opposed to a key investment ‘mainstay’.

This idea suggests that there are times when it isn’t necessary to have gold in your portfolio.

The approach of the fund managers seems a funny way to look at things when you consider the long-term appeal and strength of the gold price. In the short-term the price does well during periods of declining confidence, as we are seeing now but in the long-term having an allocation to gold to gold in your portfolio has been shown to benefit the long-term performance, as we have written about in our investment guides.

These money managers who are now investing in gold as a sort-of short term insurance are certainty looking at things from a narrow focused perspective. This is something that Doug Kass drew our attention to earlier this year.

Kass quoted Howard Marks who wrote:

“First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in: ‘The outlook for the company is favorable, meaning the stock will go up.’

However, Kass writes that to be good investors we need to engage in ‘second-level thinking’ which is ‘deep, complex and convoluted…The second-level thinker takes many things into account:’

Few assets seem to generate as much controversy as gold when it comes to mainstream investors and the media. Many like to point to Warren Buffet who argues that we just dig it out of the ground in order to store it in another hole in the ground. Critics like to argue that it offers no yield, no dividend, and is difficult to value according to modern financial theory.

Yet, interest in what is happening with the gold price and who is buying gold will always be covered by the mainstream. There is in an innate fascination with gold, but the majority only turn to it when it seems there is an obvious reason for it to climb.

The reason gold has survived so many years and performed so well is because there is no such thing as an intrinsic value calculation – too many elements feed into the gold price, and most of them are unknown until they occur. Hence why it performs so well during times of uncertainty.

Gold is money. It is a borderless currency that cannot be inflated, devalued or controlled by central bankers and politicians. Contrast that to the likes of the US dollar (and indeed the euro or sterling) which can fall victim to all of those things, and given Trump’s comments on the strong dollar, perhaps more than we have ever seen before.

Gold is undervalued at present and will no doubt benefit from the bullishness of these money managers. However it is not just undervalued and worth buying because people fail to appreciate the impact of protectionism, stagflation and inflation.

It is undervalued for many reasons, the main one is the lack of understanding of gold as a proven safe haven asset and of how well it performs during times of uncertainty.





Craig Hemke reports that the increase in inflation in the uSA is not sudden at all as the dollar has been depreciating for quite some time

(courtesy Craig Hemke/TFMetals)



TF Metals Report: Inflation’s ‘sudden’ onset isn’t sudden at all


3:40p ET Wednesday, February 15, 2017

Dear Friend of GATA and Gold:

Inflation is not suddenly surging, as the financial establishment wants people to believe, but has been rising steadily all along as the U.S. dollar has been depreciating. That’s today’s commentary from the TF Metals report, headlined “The Sudden Onset of Inflation,” posted here:


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




Agnico Eagle will invest in infrastructure to the too of 1.2 billion dollars in the Canadian artic:




Agnico plans to invest $1.2 billion in gold projects in Canada’s north


By Danielle Bochove
Bloomberg News
Wednesday, February 15, 2017

Agnico Eagle Mines Ltd. plans to invest more than $1.2 billion in Canada’s subarctic in the next three years as it builds one new mine and expands another.

North America’s fourth-largest gold miner by market value is moving ahead with plans to develop its Meliadine project and a deposit near its Meadowbank mine in Nunavut, the company said today in its fourth-quarter earnings statement. The decision will boost Agnico’s gold production to 2 million ounces a year by 2020, about 20 percent more than last year’s output of 1.66 million ounces.

“This is very much low-risk, high-quality growth because it’s an extension of what we’ve been doing for the last many, many years,” Chief Executive Officer Sean Boyd said in an interview at the company’s Toronto offices. …

… For the remainder of the report:





Seeking alpha is got it right concerning Agnico Eagle.  The stock stumbled today despite increasing reserves as well as indicating that they will hit 2.0 million oz of production by 2020


(courtesy seeking alpha)

Agnico Eagle: The Future Is Bright

Gold Mining Bull
Long only, gold & precious metals, oil & gas, contrarian


Agnico Eagle recently reported its Q4 2016 and full-year 2016 financial results.

I didn’t think it was the best quarter, as Agnico’s cash flow fell compared to last year.

However, Agnico is forecasting strong production growth to 2020, with an expected reduction in cash costs. Net debt was also reduced quite a bit in 2016.

I think Agnico is a solid gold miner, but are shares a buy here?

Agnico Eagle Mines: Mixed Q4 Results, But the Future is Bright

AEM Chart

AEM data by YCharts

Agnico Eagle Mines (NYSE:AEM) reported its fourth-quarter and full-year 2016 financial results Wednesday evening, and overall, I thought it was a mixed quarter. Still, there is a lot to be excited about as Agnico is forecasting pretty strong production growth and falling cash costs based on its four-year guidance. Here, I break down Agnico’s earnings report and give my updated thoughts on the stock.

Previously, I covered Agnico following the company’s Q2 2016 financial results. At the time, I praised Agnico’s strong earnings and its net debt reduction, as well as the 25% bump in the dividend. However, I felt shares were a little overvalued at the time, and shares were trading near 2012 prices of $55 per share. So I recommended holding off on buying shares and waiting for a pullback.

That turned out to be the right call. Since that article on July 28, 2016, Agnico has declined to the current stock price of $48.22, a 12.59% decline (the right time to buy would have been in early December, when shares traded at a low of $37).

Well, Agnico just released its quarterly earnings for Q4 2016, and it was a mixed quarter in my opinion. According to Seeking Alpha, Agnico earned $.02 EPS, which missed estimates by $.06; revenue of $499.21 million was a 3.4% improvement from last year, but missed estimates by $13.83 million.

Production in Q4 was 426,433 ounces of gold, in-line with Q4 2015 production of 422,328 ounces. Total cash costs were essentially unchanged at $552 per ounce. Net cash provided by operating activities was $120.6 million in Q4, compared to $140.7 million last year, which was disappointing in my view.

For the full-year 2016, however, things look a bit better.

For the fifth consecutive year, Agnico says its annual gold production has exceed its annual guidance. The company’s production for the full year 2016 was 1,662,888 ounces of gold, compared to guidance of 1.6 million ounces. Total cash costs per ounce for the full year 2016 were $573, which was below guidance of between $580 and $620; AISC for 2016 was $824 per ounce, below guidance of between $840 and $880.

Finally, Agnico ended the year with a solid balance sheet, with its net debt reduced by $346 million to $666 million in 2016. That’s one of the lowest net debt balances among the major gold producers. Agnico has $548 million in cash, cash equivalents, and short-term investments, and has $1.2 billion available in an undrawn credit line.

When you look at Agnico’s four-year production and cash cost guidance, things look even better. By 2020, Agnico expects to produce 2 million ounces of gold, a 30%+ increase from current levels. Meanwhile, Agnico expects lower capital expenditures and lower AISC by 2020 as the Meliadine and Amaruq project have been approved for construction; Amaruq is expected to start up in Q3 2019, while production at Meliadine is forecast to begin a year earlier than previously expected, in Q3 2019. The company is guiding for 2020 AISC to fall below the low-end of 2017 guidance of $850 per ounce.

In conclusion, this certainly wasn’t a great quarter by any means, as Agnico produced lower cash flow and missed revenue and earnings estimates. However, for the full-year 2016, Agnico hit its targets and had a pretty strong year. Looking forward to 2020, Agnico has a strong internal growth plan with its two new projects just approved, and a solid balance sheet to support this growth.

While Agnico didn’t crack my top 10 gold stocks to own in 2017, I think it is still one of the best managed companies among the senior miners, and should outperform peers in the future. Shares are down in after-hours trading by 2.4% due to the earnings miss. I think this could be a decent buying opportunity for long-term investors. I’d prefer to buy shares under $45 personally. So I think investors should exercise some patience and wait for a better buying opportunity, or perhaps initiate a small position here and then dollar-cost average on any dips.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


We have been pointing this out to you already this year:  Chinese holdings of USA treasuries dropping like a stone

(courtesy Bloomberg News/GATA)

China’s holdings of Treasuries dropped in 2016 by most on record


By Sarah McGregor and Andrea Wong
Bloomberg News
Wednesday, February 15, 2017

China’s holdings of U.S. Treasuries declined by the most on record last year, as the world’s second-largest economy dipped into its foreign-exchange reserves to buttress the yuan. Japan, America’s largest foreign creditor, trimmed its holdings for a second straight year.

A monthly Treasury Department report released in Washington today showed China held $1.06 trillion in U.S. government bonds, notes, and bills in December, up $9.1 billion from November but down $188 billion from a year earlier. It was the first monthly increase since May.

The People’s Bank of China, owner of the world’s biggest foreign-exchange reserves, has burned through a quarter of its war chest since 2014 in an effort to underpin the yuan and deter capital from fleeing the country. Chinese sales have made borrowing more costly for the U.S. government: 10-year yields rose to 2.6 percent last year, from as low as 1.3 percent. …

… For the remainder of the report:





John Brimelow reports that premiums of 10 dollars per oz is quite prevalent in the Indian gold market indicating robust demand.

Over at the SGE a whopping 162 tonnes of gold was received on Monday.  This is just one day’s report and it is the highest on record. Kranzler comments on the last two trading days with respect to gold as the bullion banks supplied huge quantities of paper gold trying to tame the gold price

(courtesy Dave Kranzler/IRD)

U.S. Political Crisis Foments While China & India Devour Gold

The demand for gold in India and China so far this year has soared, a fact which is completely ignored by the western financial media. The ex-duty Indian gold import premiums (approximately $10 earlier this week) are quite remarkable, “as the need to import kilo bars only arises if Indian demand is not satisfied by Dore imports (which had a duty advantage of $15.52/oz this afternoon) and smuggled gold. Reports of apprehensions at Indian airports are continuing to appear, indicating that smuggling has in fact revived” – John Brimelow’s Gold Jottings, brimelowgoldjottings@gmail.com).

Brimelow also reported that 162 tonnes of gold were delivered into into Shanghai Gold Exchange on Monday this week, preceded by 79 tonnes on Friday. The Friday delivery is the largest by far that I’ve observed in watching this statistic over the last several years.

While the eastern hemisphere is busy converting fiat currency into physically delivered gold, the United States political system is becoming increasingly unstable and unpredictable, as the Trump White House, in an effort to repair the frayed relations with Russia, is under systematic attack from the Deep State.  Trump’s erratic leadership combined with the Deep State’s political terrorism will likely spark political and social chaos in the U.S.

The relentless buying strength of physical gold in the east along with the incipient instability of the U.S. are fundamental catalysts to drive the price of gold and silver a lot higher.  Furthermore, the emergence of accelerating price inflation thrown into the mix has the potential to create the “perfect storm” for higher precious metals prices.

In an earlier post I explain why now is the time to use the manipulated paper gold price take-downs as buying opportunities.  This viewpoint was vindicated during the two-day Fed Chairman staged Congressional propaganda event, which historically is a period  in which the banks slam the gold market with tonnes of paper gold in order to prevent the price of gold from signaling a message that conflicts with the economic and financial fairytale artfully spun by the Fed-head (or not so artfully, as it were, in Yellen’s case).

Gold was slammed nearly $20 just prior to and during Yellen’s hot air exhalation sessions on Capitol Hill on Tuesday and Wednesday.  The catalyst was a series of paper gold volume surges on the Comex in which the NY Fed and its agent bullion banks drop a payload of gold futures on both the Comex floor and into the CME Globex trading system, targeting the stop-losses set by hedge funds that are long gold contracts.  This detonates an avalanche of selling by momentum-chasing hedge fund algos.

Subsequent Yellen’s freak show on Capitol Hill, gold promptly defied the paper market deviance and shot up $21 to a new year-to-date high.  If the deteriorating economic fundamentals manage to chew through the safety-net that has been placed beneath the stock market, a real rush into gold – physical and derivative – will be triggered.   In the meantime, the nature of the precious metals trading has shifted from shorting rallies and covering those shorts on sell-offs to buying dips and selling rallies.   Eventually the hedge fund algos will be programmed to buy dips and aggressively buy rallies.  That’s when the real fun begins, especially in the junior mining stocks…




Trading in the physical markets today:  copper and oil booth down due to the world finaly perceiving that there is no growth:

(zero hedge)

Growthiness Hope Fades: Copper, Crude Clubbed To One-Week Lows

If everything is so awesome in the world, why are Copper (who appears only to be an Economics PhD when it is rising in price) and Oil prices tumbling (despite a lower dollar)?

It seems yesterday’s algo panic bid after record inventory data has been erased…

As Bloomberg also points out, Spreads still show glut:

The shortest-term oil prices show that an oversupply endures. The nearest Brent and West Texas Intermediate contracts remain in a structure known as contango, which typically occurs when there is too much supply, depressing short-term prices. While the market remains in contango, it is costly for traders to hold on to oil contracts from one month to the next, diminishing the profits of those speculatively betting on rallies. JBC sees no global reduction so far in inventories, although it’s still just six weeks since OPEC and its allies started to implement their cuts.

And don’t forget, spec positioning is all one way…

And all that China hype, supply anxiety, has collapsed in copper…


Maybe Copper and Crude have lost their economic vision?


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


1 Chinese yuan vs USA dollar/yuan STRONGER AT  6.8573(SMALL REVALUATION NORTHBOUND   /OFFSHORE YUAN NARROWS   TO 6.8451 / Shanghai bourse UP 16.63 POINTS OR .52%   / HANG SANG CLOSED UP 112.83 POINTS OR 0.47% 

2. Nikkei closed DOWN 90.45 POINTS OR 0.47%   /USA: YEN FALLS TO 113.58

3. Europe stocks opened ALL IN THE RED      ( /USA dollar index FALLS TO  100.69/Euro UP to 1.0644


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  53.39  and Brent: 56.04

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.365%/Italian 10 yr bond yield DOWN  to 2.201%    

3j Greek 10 year bond yield RISES to  : 7.78%   

3k Gold at $1236.90/silver $18.04(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 2/100 in  roubles/dollar) 57.19-

3m oil into the 53 dollar handle for WTI and 56 handle for Brent/

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0002 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0648 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


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


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 3.071% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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


Futures, European Shares Stumble After Massively Overbought World Stocks Hit Record High

Whether it is due to overnight news that much of the recent rally may have been due to one specific fund’s “gamma trap” and rapid cover of a synthetic “short SPY” trade, or just because algo traders have gotten a case of overbought robotic vertigo, S&P futures dropped 0.2% in early Thursday trading as risk appetite fizzled and European shares dropped on concern the longest rally since July 2015 went too far, while the yen, bonds and gold advanced as the dollar fell.

Europe’s Stoxx 600 declined, snapping a seven-day rally with Nestle SA dropping by the most this year after saying it will target lower growth. The dollar depreciated against G10 peers even as traders increased bets for higher U.S. interest rates following faster-than-expected U.S. inflation.

Despite the early weakness in US futures, world stocks hit an all time high on Thursday on renewed growth expectations and hopes that major economies like the United States will soon be serving up large helpings of fiscal stimulus: in this regard China has already done its share injecting a record $540 billion in credit last month. MSCI’s All Country World index, which spans 46 countries, notched the milestone as Wall Street hit its latest record and Asia and Europe consolidated the roughly 10 percent gains both have made since mid-December.

As showed on Valentine’s Day, global stocks have jumped in value to more than $70 trillion after Trump’s November victory. As further discussed, the 30-day relative strength index for the MSCI broadest measure of global equities crossed a level that indicates to some traders its due for a correction. The odds for a U.S. rate hike in March jumped to 42 percent from 30 percent two days ago.

“Following the sharp rally we’ve seen in cyclical shares since early November, investors are now getting reluctant to just buy whole sectors such as mining and banks, and are starting to pick the best stocks within the sectors,” Stephane Ekolo, chief European strategist at Market Securities, in London. “These stocks will prove more resilient when the selloff comes.” This despite strong economic data reports which showed surges in exports from Indonesia and Taiwan, falls in unemployment in Europe from Sweden to the Netherlands while stronger U.S. retail sales and inflation data on Wednesday came as Donald Trump again promised mass tax cuts.

Another reason for the upbeat mood has been that, unlike in recent years, the prospect of U.S. interest rate rises does not seem to be spooking markets. While monetary policy has taken a back seat to Trump’s fiscal promises, overnight Fed’s Dudley (Voter, Dove) stated the Fed would end bond reinvestments and reduce Fed portfolio when they are confident the economy can withstand it and added reducing the balance sheet could stretch out the rate hike path. Dudley also commented the economy is growing slightly above trend and that he expects Fed to raise rates gradually a little further in the months ahead if forecasts pans out.

The dollar is still down for the year despite a strong run over the last couple of weeks, while Treasury yields, have barely risen, which has helped propel emerging market bonds, stocks and many currencies higher. As Reuters notes, the dollar hit the brakes again on Thursday as the glow of the previous day’s upbeat data faded. U.S. government bond yields eased too, taking German Bunds and Europe’s other benchmarks with them. Upcoming elections in the Netherlands, France, Germany and possibly Italy, have kept investors interested in “safe” government bonds particularly with anti-euro and anti-EU sentiment on the increase throughout the continent.

Overnight oil prices recovered from a knock from data showing record high U.S. crude and gasoline inventories. Brent and U.S. crude both inched up 0.3 percent to $55.92 and $53.28 a barrel respectively, while gold prices also rose as the dollar drifted down. Industrial bellwether copper, which has surged 30 percent since late October, eased however to $6,028 a tonne after China’s overseas investment weakened. China is the world’s top copper user, but prices were supported by the prospect of supply disruptions in Chile and Indonesia.

The mildly weaker metals prices meant European shares couldn’t quite hold their ground either despite the sentiment boost from the new record high in global stocks. The STOXX 600 index was 0.3% lower by 1000 GMT – the first decline since Feb. 6, with only technology, healthcare and telecommunications shares eking out gains –  but this year’s rally has been underpinned by the fact European company earnings are expected to grow 14% this year, according to Thomson Reuters I/B/E/S data.

Asia had no such problems overnight. MSCI’s main Asia index rose 0.2 percent to its highest since July 2015 after Wall Street had again pushed relentlessly into record-high territory. Chinese shares traded in Hong Kong continued a rally and the Hang Seng climbed to the highest since August 2015.  The MSCI Asia Pacific Index added 0.5%, though more stocks fell than rose.

* * *

Overnight Bulletin Summary from RanSquawk

  • European equities trade modestly lower this morning with energy the notable laggard, while defensive sectors such as healthcare outperform
  • Further losses suffered in the major USD pairings, with reports of China selling 1yr CNH setting the flow  theme for the day
  • Highlights include: US Jobless Claims, Philadelphia Fed Manufacturing Index, ECB Meeting Minutes and comments from ECB’s Coeure

Market Snapshot

  • S&P 500 futures down 0.2% to 2,347.00
  • STOXX Europe 600 down 0.3% to 370.26
  • German 10Y yield unchanged at 0.372%
  • Euro up 0.3% to 1.0635 per US$
  • Brent Futures up 0.3% to $55.92/bbl
  • Italian 10Y yield rose 0.9 bps to 2.242%
  • Spanish 10Y yield fell 1.2 bps to 1.671%
  • MXAP up 0.5% to 145.19
  • MXAPJ up 0.4% to 467.88
  • Nikkei down 0.5% to 19,347.53
  • Topix down 0.2% to 1,551.07
  • Hang Seng Index up 0.5% to 24,107.70
  • Shanghai Composite up 0.5% to 3,229.62
  • Sensex up 0.5% to 28,307.33
  • Australia S&P/ASX 200 up 0.1% to 5,816.31
  • Kospi down 0.1% to 2,081.84
  • Brent Futures up 0.3% to $55.92/bbl
  • Gold spot up 0.3% to $1,237.83
  • U.S. Dollar Index down 0.4% to 100.73

Top Global Headlines

  • China Said Mulling Coal Mining Curbs Again as Winter Ends
  • German Steel Lobby Group Warns Against Further U.S. Measures
  • GM, PSA Lose Europe Market Share as Carmakers Mull Regional Deal; German Economy Minister to Discuss Opel With French Counterpart
  • Cisco Says Improved U.S. Economy Bolstering Corporate Demand
  • Nestle Braces for Slowdown as New CEO Plans Restructuring
  • Snap Said to Set IPO Valuation at as Much as $22.2 Billion
  • Trump’s F-35 Calls Came With a Surprise: Rival CEO Was Listening
  • Trump Tax Cuts Could Boost Profit $12 Billion at Big U.S. Banks
  • Dakota Access Approval Seals $2 Billion Deal for Energy Transfer
  • CBS Sales Dragged Down by Fewer Games; Profit Tops Estimates

Asian stocks traded mostly positive following another record day on Wall St. where all three US majors printed fresh all-time highs once again following strong US data and President Trump reiterating that his tax plans would involve reducing taxes for businesses. ASX 200 (+0.1%) closed relatively flat as upside was capped by the telecoms sector after a lacklustre H1 profit report from Telstra, while Nikkei 225 (-0.5%) underperformed after USD/JPY pulled back from recent gains to a sub-114.00 level. Elsewhere, Shanghai Comp (+0.5%) and Hang Seng (+0.5%) outperformed their regional peers after the PBoC more than doubled its liquidity injection today. Finally, 10yr JGBs saw mild losses despite a negative risk tone in Japan with underperformance in the super-long end following an enhanced liquidity auction for 20yr, 30yr and 40yr JGBs which showed an increase in allotment at the highest accepted spread.PBoC injected CNY 80bIn 7-day reverse repos, CNY 80bIn in 14-day reverse repos and CNY 90bIn in 28-day reverse repos.

European markets trade modestly lower this morning with energy the notable laggard, while defensive sectors such as healthcare outperform. Elsewhere, airlines are flying high this morning, with the likes of IAG and Lufthansa the best performers in their respective indices, in sympathy with Air France after a strong earnings report. Fixed income markets were initially subdued with participants waiting on the sidelines ahead of supply from both France and Spain. Spanish paper moved higher in the wake of the solid auction once the supply had been absorbed whilst their French counterpart was somewhat unfazed by this morning’s auction. Of note, with French elections very much in focus, Presidential candidate Fillon will continue to be investigated according to prosecutors, although little reaction was seen to this in the GE/FR 10Y spread.

In currencies, the dollar dropped with losses suffered in the major USD pairings, with reports of China selling 1yr CNH setting the flow theme for the day. Moves have been exacerbated by the aggressive USD buying off the back of a hawkish Fed chair testimony, backed up by strong US inflation and retail sales date out Wednesday. The reversal was pretty rapid, and although continuing this morning, may run out of steam as UST yields hold their ground. Fed rhetoric suggests the FOMC is moving towards 3 rather than 2 rate hikes this year, USD dip buyers will be happy to accommodate these latest moves. USD/JPY has dropped back into the mid 113.00’s as EUR/USD tests the mid 1.0600’s. If the latter can hold above 1.0615-20 tonight, the USD correction may have more to go. Cable has also benefited from this latest USD fall, with the spot rate taking out 1.2500, but upside set to be limited as the latest jobs report suggests a greater negative impact from rising inflation. This will pale into insignificance at the mere mention of triggering Article 50, and sellers will pounce on GBP rallies into end Q1, though the EUR/GBP picture is muddied by the political tensions across Europe.

In commodities, in light of the recent comments from OPEC that production cuts have followed last year’s agreement to a larger degree (over 90% at last measure), as well as the inexplicable buying algos which appears 15 minutes after the DOE report, the rise in inventories is having minimal impact on Oil prices of late, with hopes that these will be addressed on the pass through effects further down the line. As such, WTI remains well camped inside the USD50-55 range, and unless we break out of these limits, Oil prices will stay out of the limelight. Notable gains in Gold prices as the yellow metal pulls back to USD1240.00 — this as a pure impact of the USD sell off which has had a marginally positive impact on Oil but perhaps less so on base metals. Copper prices have balanced out a little, with marginal losses on the day in the likes of Zinc and Lead, but base metals set to stay on a firm footing as China demand is forecast to continue.

Looking at the day ahead in the US we’ll get January housing starts and building permits data (expected to print at 0.0% mom and +0.2% mom respectively), initial jobless claims and the Philly Fed manufacturing survey for February. Away from the data we’re due to hear from both the EU’s Juncker and Moscovici at various stages, while the ECB’s Coeure speaks this afternoon and Fed’s Fischer and Williams also.

* * *

US Event Calendar

  • 8:30am: Housing Starts, est. 1.23m, prior 1.23m; MoM, est. 0.0%, prior 11.3%
  • 8:30am: Building Permits, est. 1.23m, prior 1.21m; MoM, est. 0.16%, prior -0.2%
  • 8:30am: Initial Jobless Claims, est. 245,000, prior 234,000; Continuing Claims, est. 2.05m, prior 2.08m
  • 8:30am: Philadelphia Fed Business Outlook, est. 18, prior 23.6
  • 9:45am: Bloomberg Consumer Comfort, prior 47.2; Bloomberg Economic Expectations, prior 56

DB’s Jim Reid concludes the overnight wrap

Treasuries have been playing snakes and ladders over the last few weeks as as soon as we’ve got to the top of the recent yield range we’ve rallied hard. Well yesterday the stronger US data (especially CPI – see below) saw USTs back up near to the top of their 2017 range only a week after being near the bottom of it. Indeed the 10y closed up another 2.3bps yesterday at 2.493% having touched 2.324% just over a week ago. That’s feeding through into Fed pricing too and it’s hard to ignore the recent jump in the probability of a March hike now which, based on Bloomberg’s calculator, is up to 44% from just 28% last Friday (and a 25%-35% range for much of this year). There’s been a lot of chatter from Fed officials recently and also Yellen’s testimony where she kept the possibility of a March move open. Our US economists still peg the June FOMC meeting as the most likely timing. Still, it’s been a fairly significant shift this week.

Meanwhile the incredible surge for equity markets also continues to hog the spotlight. Yesterday was another day of record highs for the big 4 US indices with the S&P 500 (+0.50%), Dow (+0.52%), Nasdaq (+0.64%) and Russell 2000 (+0.54%) all up as US Banks surged to a +1.23% return. Just on the S&P, yesterday’s move was the 7th day in a row that the index has finished up which is the longest run since September 2013 when the index also closed up 7 times on the trot. You have to go back to July 2013 to find the last time the index was up 8 days in a row. The other remarkable stat is the last time the index closed with a move up or down by more than 1%. That run now stands at 47 consecutive sessions (the last time was December 7th). April to July 2014 was the last time we had a longer run – at 62 days in a row – so there is still some way to go to match that. In fact yesterday also saw global equities (based on the MSCI all-country world index) rally +0.57% and in turn record a new fresh record high after overtaking the previous highs from May 2015. We’ve run a chart of that index going back a couple of decades which you can find in the PDF. Also of note, yesterday there was a rare recent double digit surge for the VIX (+11.45%) which is only the second double-digit rise since November last year. That said it doesn’t take away from the fact that the index is still stuck in the midst of what is just a 4.7pt range (based on intraday values) in 2017. Finally it’s worth noting that the Greenback (-0.07%) finally snapped what had been a run of 10 consecutive daily gains.

Coming back now to that CPI data in the US yesterday which followed some higher prints in Europe earlier this week. Headline CPI came in at a higher than expected +0.6% mom (vs. +0.3% expected) which had the effect of increasing the YoY rate to +2.5% from +2.1% and to the highest since March 2012. The core reading also came in a bit above market at +0.3% mom (vs. +0.2% expected), helped by rising goods prices, which pushed the YoY rate up one-tenth to +2.3% and so matching the post financial crisis high. So fairly impressive all round. As we refresh our screens the momentum for equities seems to have faded a bit in Asia this morning. While Chinese bourses have risen (Shanghai Comp +0.19%, CSI 300 +0.36%) along with the Hang Seng (+0.36%), Japanese equities are struggling for traction (Nikkei -0.57%) – not helped by the Yen (+0.28%) being the best performing currency this morning – while the Kospi (-0.10%) and ASX (-0.08%) are also both down, albeit modestly. Elsewhere the Dollar (-0.21%) and Treasury yields (10y yield -1.3bps) are a both a bit lower despite NY Fed President Dudley saying overnight that he expects the Fed to “snug up interest rates a little further in the months ahead”.

Moving on and there wasn’t a huge amount to report from President Trump’s meeting with a number of big US retail CEO’s yesterday. According to Reuters there was plenty of discussion about potential tax code revisions as well as infrastructure improvements, while a few CEO’s were said to have urged the President to oppose a proposal for a new border tax on imported goods. That meeting actually came after some bumper retail sales numbers in the US yesterday. During the month of January headline retail sales rose +0.4% mom (vs. +0.1% expected) while there was also a sizeable four-tenths of a percent upward revision to the December data. The ex-auto and gas reading also beat (+0.7% mom vs. +0.3% expected) as did the control group component (+0.4% mom vs. +0.3% expected).

It wasn’t all good news on the US data front yesterday though with industrial production reported as surprisingly falling in January (-0.3% mom vs. 0.0% expected) and capacity utilization edging down three-tenths to 75.3%. Manufacturing production did however nudge up +0.2% mom as expected while the NY Fed’s empire manufacturing index came in at 18.7 for this month which is up from 6.5 in January. Interestingly the Atlanta Fed cut their Q1 GDP forecast yesterday to 2.2% from 2.7% despite the positive retail sales surprise. That cut puts their forecast close to the 2% predicted by our US economists.

Over in Europe there wasn’t a huge amount to report data wise. In the UK the ILO unemployment rate printed at 4.8% in the three months to December which was unchanged while growth in average weekly earnings excluding bonuses slowed to +2.6% from +2.7%. In Sweden the Riksbank left policy unchanged as expected but was fairly (and surprisingly) dovish in their overall outlook.

In terms of markets in Europe yesterday we saw a similar weakness in sovereign bond markets with 10y Bunds edging up another 0.8bps to 0.370% and yields in the periphery also up between 1bp and 5bps. There was a similar positive performance for equity markets with the Stoxx 600 closing up +0.34% too. On that note, in his report “What to do when everyone is bullish?”, DB’s European equity strategist Sebastian Raedler argues that a combination of factors points to a period of consolidation ahead for European equities. He highlights that the equity market has rallied in line with rising global macro surprises, but that these are already in the top 5% of their historical range and have tended to fade back to zero when they were at current levels in the past (which would be consistent with a 5% pull-back in equities). Secondly, the fair-value P/E on his model has dropped to an 18-month low on the back of wider peripheral spreads, also pointing to 5% downside from current levels. Thirdly, a number of sentiment  indicators have risen to peak levels, with the US bull / bear ratio, for instance, hitting a 30-year high last week. On the positive side, European earnings continue to recover (they are up 9% from their mid-2016 trough).

Staying in Europe and specifically in Greece, yesterday EU Commissioner Pierre Moscovici confirmed that the “will to get to solution is there” between Greece and its creditors and that talks have made progress but ultimately more steps are still needed. The Commissioner did however say that his goal was for an agreement at the February 20th Eurogroup meeting to conclude the parameters for a deal.

Before we wrap up, yesterday DB’s Marco Stringa also published a note that highlighted the details of ex-PM Renzi’s call for a leadership contest and noted its implications for the broader political and economic situation in Italy. He notes that in accelerating the leadership contest Renzi aims to regain control of a party divided into many factions, while leaving the door open to an early election in September. The probability of a June election has plummeted to about 15%, while the most likely dates now seem to be September 2017 (45% probability) followed by February 2018 (40%). However, while a PD leadership contest in the spring has changed the likely timing of the election, it does not affect the issue of the electoral law under which Italy will head into the next election. The two main options are (i) a new proportional system with a small majority premium for both Houses, or (ii) no compromise reached on amending the current electoral laws or (similarly) the current Lower House electoral law is extended to the Upper House but applied at a regional level. However, both alternatives would mean no significant structural reforms and a continuation of Italy’s sluggish economic growth. Given the present situation, the key events to monitor in the near term are the electoral law parliamentary debate which should start again on 27 February; a break-up of the PD (Probability of 33%) that would further increase political fragmentation; and the NPL systemic issue which has not yet been resolved. We should also highlight that a Dow Jones report said last night that Renzi doesn’t expect elections in June and that a September election is most likely – in line with Marco’s view.

Looking at the day ahead the only data due in Europe this morning comes from France where the Q4 employment data is out. The ECB minutes from last month’s Governing Council meeting are also due. In the US this afternoon we’ll get January housing starts and building permits data (expected to print at 0.0% mom and +0.2% mom respectively), initial jobless claims and the Philly Fed manufacturing survey for February. Away from the data we’re due to hear from both the EU’s Juncker and Moscovici at various stages, while the ECB’s Coeure speaks this afternoon and Fed’s Fischer (11.30am GMT) and Williams  (8.10pm GMT) also.


i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 16.63 POINTS OR .52%/ /Hang Sang CLOSED UP 112.83 POINTS OR 0.47% . The Nikkei closed DOWN 90.45 POINTS OR 0.47% /Australia’s all ordinaires  CLOSED UP 0.07%/Chinese yuan (ONSHORE) closed UP at 6.85873/Oil ROSE to 53.39 dollars per barrel for WTI and 56.04 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.8451 yuan to the dollar vs 6.85873  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 STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR


South Korea Court has issued an arrest warrant for Samsung’s Lee

(courtesy Bloomberg)

South Korea Court Issues Arrest Warrant for Samsung’s Jay Y. Lee

February 16, 2017, 3:48 PM EST

Seoul Central District Court issued an arrest warrant for Samsung Electronics Vice Chairman Jay Y. Lee, according to an official, Bloomberg News reports.




The banks in Japan are having real trouble with profitability due to negative interest rates.  On top of that, they are having a tough time with the B. of J’s communication re their yield curve policy where they are capping the long term rate at 0%.

It seems that the banks in Japan are undergoing Mutiny on the Bounty as they do not trust them one bit.  With a debt to GDP of 250% who could blame them

(courtesy zero hedge)



“Market Players No Longer Trust The BOJ”: Why Kuroda Is Suddenly Facing Market Mutiny

While we doubt anyone will laugh, we find it amusing that none other than arguably the “last holdout” of ZIRP and then NIRP, BOJ governor Haruhiko Kuroda, finally joined the chorus of people warning that low interest rates will “sow the seeds of the next financial crisis.” Echoing concerns voiced by Deutsche Bank and virtually every other bank over the past year, Kuroda said that “a new challenge has emerged in the form of low profitability at financial institutions,” adding that rapid growth in shadow banking and new financial technology were bringing big changes to the global banking environment.

“These developments suggest that a different kind of financial crisis could happen in the future,” he told an international conference on deposit insurers on Thursday, without elaborating. As Reuters writes overnight, “the remarks contrast with Kuroda’s previous comments emphasizing that the benefits of massive stimulus on the economy make up for potential negatives such as the hit to banks.”

Hoping to spread the blame, Kuroda said the problem of low interest rates hurting bank profitability was a global one, pointing to bad loans piling up at some European banks and headwinds plaguing Japanese banks from sluggish lending driven by an aging population.“For the financial system to ensure future stability, it is becoming more and more important in the long term to think about possible responses to low profitability at financial institutions,” he said.

In other words, Kuroda must have gotten an earful in his last meeting with bank execs.

And yet, we said this statement is amusing? Why? Because one look at the BOJ’s balance sheet explains precisely why Japan is currently grappling with trillions in negative yielding bonds.

That, and of course the BOJ’s impulsive decision, taken as a result of “peer pressure” suffered during last year’s Davos meeting, to unleash negative rates in Japan for the first time in history.

And now that it is no longer “fake news” to criticize central banks’ failing policies, Reuters takes Kuroda to task:

Four years of aggressive money printing by the BOJ have failed to pull Japan sustainably out of stagnation, forcing the central bank to revamp its policy framework to one better suited for a long-term battle with deflation.


But the attempts to revive Japan’s anemic consumer spending through unconventional monetary policy have created new problems for the central bank in its dealings with markets and financial institutions.

It’s not just Reuters who unloaded on the cartoonish central banker.

In a separate report looking at the confusion sowed by the BOJ’s decision to launch “Yield Curve Control” or YCC last September, Reuters also reports that the sometimes contradictory market operations directives are sowing confusion over the BOJ’s intentions, creating tensions between the central bank and the market and underscoring the challenges of its unprecedented policy.”

“What’s clear is that market players don’t hold trust in the BOJ,” said Mari Iwashita, chief market economist at SMBC Friend Securities. “If there was trust, things wouldn’t be this messy.”

It sounds like a rising tide of mutinous discontent is rising against the BOJ’s monetary policy by Japan’s bond market, some of it even internally sourced: “It’s true, controlling long-term rates is an unprecedented policy,” BOJ Deputy Governor Hiroshi Nakaso told reporters last week, acknowledging that the bank was still learning how best to communicate its intentions to markets. However, he believes the BOJ has the necessary “skill and tools” to control yields.

Market players aren’t convinced, complaining about the lack of clarity on how the BOJ wants to guide long-term rates. “So many things are unclear, such as at what level the BOJ will step in to curb yield rises,” said a money market trader in Tokyo. A domestic bond market investor said “a lot of market players got burnt” from the volatility caused by the BOJ, which could discourage investors and dealers from trading actively.

The BOJ has put the job of controlling yields in the hands of a small group of relatively junior bureaucrats, who have no say on monetary policy but execute the board’s orders through daily transactions in the interest rate markets. Their actions have resulted in some substantial intraday swings in both the Yen and JGB yields, as reported recently. Under the YCC framework, the BOJ seeks to control the yield curve by targeting short-term rates at minus 0.1 percent and the 10-year yield around zero. The task of capping long-term rates, a feat never tested by a major central bank, is entrusted to a team of around 40 staff running the BOJ’s market operations.

As Reuters adds, a “handful of junior-ranking bureaucrats in the team, mostly in their 40s, decides when, how and to what degree the BOJ offers to buy bonds. Guidance from the board is vague and kept at a minimum to allow the team to respond flexibly to daily market moves.”

However, market participants say this ambiguity causes confusion as the bureaucrats, mandated to meet the board’s orders, do not focus much on the impact of their moves on the broader economy. The BOJ’s task is also made difficult by the conflicting goals embedded in the new framework. While targeting rates, the BOJ maintains a loose pledge to buy bonds at a set pace to appease advocates of aggressive asset purchases in the board.

The BOJ has caught markets off-guard several times. Yields spiked when it skipped a much-anticipated auction in January, stoking fears it may soon taper asset purchases. It then offered to buy unlimited amounts of bonds on Feb. 3, when the 10-year yield spiked to 0.15 percent.


BOJ officials say they have no plan to offer more specific guidance on their market operations, and stress their dominance in the market gives them enough power to suppress yields.


“Communication is important. But that doesn’t mean the BOJ should meet each and every request from the market,” said a source familiar with the central bank’s thinking.

And where this whole narrative comes together is that on one hand Kuroda suddenly wants higher rates, on the other he has some 40 junior bureaucrats in charge of making sure it does not happen, thanks to YCC. Adding pressure on Kuroda is that he suddenly finds himself alone in a world in which all other central banks have launched curve steepening experiments – whose outcome remains unclear – and as a result analysts doubt whether the BOJ could keep battling market forces if global yields continue to rise, particularly with its massive bond purchases seen as unsustainable.

Brightening prospects for Japan’s economy, usually good news for policymakers, could also heighten the BOJ’s challenges in capping bond yields. Japan’s economy expanded for four straight quarters in 2016 thanks to a rebound in global demand while analysts expect inflation to accelerate to near 1 percent later this year, which could push up Japanese yields.

Former BOJ central banker, Sayuri Shirai, who served on the BOJ’s board from 2011 to 2016, said the central bank’s YCC policy in its current form is confusing and causes big market distortions. “To make the framework more sustainable, it’s better to raise the yield target and gradually reduce bond purchases,” Shirai told Reuters in an interview on Wednesday.

That however will not happen. What however will happen is that Kuroda will be right: a financial crisis is likely headed for Japan, however not for the reason he believes; instead it will manifest itself once the market, which is already rising in mutiny against the BOJ’s policies, hits a tipping point, and the selling in the country with the 250% debt/GDP, and where the central bank owns 40% of all outstanding debt, begins.



This is not good:  rumours are circulating that USA ships will not be allowed to pass through the China South seas.

(courtesy zero hedge)


China May Bar US Ships From Passing Through Its Waters

In a preemptive move to limit foreign naval presence in proximity to China and especially the disputed South and East China Sea islands, China’s People’s Daily reports the Beijing is set to revise its 1984 Maritime Traffic Safety Law, which would allow the relevant authorities to “bar some foreign” (read U.S.) ships from passing through Chinese territorial waters. The Legislative Affairs Office of the State Council announced Tuesday it is soliciting public opinions on the revisions. Think of it as an Air Defense Identification Zone, only in the water.

According to the Chinese press, the draft would empower maritime authorities to prevent foreign ships from entering Chinese waters if it is decided that the ships may harm traffic safety and order.  The draft revisions would grant authorities the right to designate specific areas and temporarily bar foreign ships from passing through those areas according to their own assessment of maritime traffic safety. The revisions are based on the UN Convention on the Law of the Sea and Chinese laws on the sea, adjacent areas and exclusive economic zones, the office said.

It was not clear how China would implement and enforce this bar, or what the punishment for transgressors would be.

Wang Xiaopeng, a maritime border expert at the Chinese Academy of Social Sciences, told the Global Times on Wednesday that the revisions will provide legal support for China to safeguard its maritime rights.

As a sovereign State and the biggest coastal State in, for example, the South China Sea, China is entitled to adjust its maritime laws as needed, which will also promote peace and stable development in the waters.” 

Quoted by the Daily, Yang Cuibai, a professor with the School of Law at Sichuan University, agreed, saying that “the revisions will strengthen China’s management over territorial waters in a new era when the country’s communication and trade with foreign countries in the waters have sharply increased.” Yang added that China should take the lead to establish the legal order in the Yellow Sea, the East China Sea and the South China Sea.

Additionally, the draft said that foreign submarines would travel on the surface, display national flags and report to Chinese maritime management administrations when they pass China’s water areas. They should also get approval from the relevant administrations to enter China’s internal waters and ports.

Foreign military ships that are approved to enter China’s waters should apply for pilotage. Foreign ships that enter Chinese waters without approval will be fined 300,000-500,000 yuan ($43,706-72,844) and those violating Chinese laws would be expelled, it said.

“China’s waters are open to foreign ships as long as they do not damage the waters’ safety, order, or China’s sovereignty,” Yang said.


The draft also states that people in distress at sea have the right to be rescued without charge, adding that human lives should come before the environment and assets.

The State Council and local governments should set up maritime search and rescue centers, if needed, to organize, coordinate and command rescue operations, the draft says. Civilian groups are also encouraged by the revised regulations to set up rescue teams and participate in such operations.

Aside from the contested islands, the waterway in question is one of the biggest focal points of global naval trade: should China implement a mandatory check of each and every naval vessel, it may have a chilling effect on global seaborne trade, which would come at a time when worldwide commerce is already declining and could be further impacted in coming months should Trump implement his protectionist trade agenda.




A terrific commentary from Mish Shedlock today.  He comments on the Chatham House poll which suggests that only 20% of Europe approves of the immigration policy of of the EU. The number one problem in France is the violence/chaos/ created by Muslims.  Shedlock suggests that the polls in the upcoming election may have it wrong and that the real support for Le Pen may be much stronger

(courtesy Mish Shedlock/Mishtalk)



Only 20% Of Europeans Want Muslim Immigration To Continue, ‘Massive’ Poll Finds

Submitted by Mike Shedlock via MishTalk.com,

Nigel Farage made a brief speech in European Parliament on Monday in which he stated:  

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.”

Here is the Chatham House poll referenced by Farage: What Do Europeans Think About Muslim Immigration?

Chatham House Poll


In our survey, carried out before President Trump’s executive order was announced, respondents were given the following statement: ‘All further migration from mainly Muslim countries should be stopped’. They were then asked to what extent did they agree or disagree with this statement. Overall, across all 10 of the European countries an average of 55% agreed that all further migration from mainly Muslim countries should be stopped, 25% neither agreed nor disagreed and 20% disagreed.

Majorities in all but two of the ten states agreed, ranging from 71% in Poland, 65% in Austria, 53% in Germany and 51% in Italy to 47% in the United Kingdom and 41% in Spain. In no country did the percentage that disagreed surpass 32%.

To state things more precisely, 55% are against further immigration, 20% disagree, and 25% appear to have some reservations with the statement, most likely in reference to the word “all”.

Had Chatham worded the question slightly differently, it’s possible nearly all of those in the “neither” category may have agreed, and some of those in the “disagree” category may have switched.

Interestingly, Poland is most against migration. Once again, had the question been worded just a bit differently, I suspect Poland would have topped the 90% mark easily.

Socio-Demographic Difference


Degree Holders and Millennials 

Those with degrees and the millennials aged 18-29 stood apart from the rest.

Is this a case of the liberal elite plus the naive youth against everyone else? If so, isn’t that precisely what happened in Brexit?

Also take a good look France in the first chart. 61% want to stop all further immigration and only 16% disagree.

Let that sink in.

As I have stated before, mainstream media, the polls, and the liberal elite are seriously underestimating eurosceptic candidate Marine le Pen’s chances of winning the next French election.






Meet the probable new German Chancellor when the elections will be held in Sept

(courtesy Bornsdorf/Saxo Bank)

The German ‘Anti-Trump’ That Could Beat Merkel

Submitted by Saxo Bank’s Clemens Bomsdorf via TradingFloor.com,

  • Martin Schulz has announced his intention to challenge Angela Merkel
  • The race for heading Germany’s government is open again
  • Schulz’s Social Democrats have gained tremendously in polls
  • Merkel’s party only ranks second in recent poll
  • Schulz is as pro-European as Merkel and might want to govern with the left parties
  • Germany continues on its growth path with GDP up 1.9% in 2016

Martin Schulz

Social Democrat Martin Schulz aims at making his party Germany’s biggest again and at becoming Merkel’s successor.

German politics = boring politics – in recent decades this equation has generally held true. At least that’s how many observers would put it.

Fortunately, governments in Germany – Europe’s largest economy – have been much more stable than those in, for example, Italy. Even after the new right-wing party AfD entered the stage a few years ago, it seemed that Angela Merkel and her grand coalition with the Social Democrats was here to stay. German politics therefore remained reassuringly boring.

And yet, with the new Europe we face, that perhaps is no longer the best thing for them to be. Suddenly politics in Germany has become very interesting and the race for the chancellorship looks open again.

While the rest of the world appears to be pivoting to the right, Merkel’s challenger has come from the left. He presents a liberal alternative to the narrative that’s propelled the Donald Trumps of this world, that change can only be achieved from a protectionist and isolationist platform.

Martin Schulz, who was nominated on January 29 in a surprise move as the Social Democrats’ main candidate, has a realistic chance of winning against Merkel and her Christian Democratic Union of Germany and bringing an unprecedented coalition into office.

His nomination has boosted his Social Democratic Party considerably. The week prior to Schulz’s nomination, SPD was the preferred party of 21% of the electorate, according to polls by Bild. Now it’s polling at 31%, meaning it gained almost 50% (or 10 percentage points) and is doing better in the polls than Merkel’s CDU.

The latter dropped from 32.5% to 30% over the same period. At the same time, Germany is continuing on its moderate growth path as the latest data from the statistical office shows. Its unemployment rate is at 6.3%.

Election data

In contrast to the Netherlands, France or of course the US, in Germany, the politician on the rise does not want to disintegrate his country and is not issuing scathing critiques of globalisation and internationalisation while at the same time claiming to be the only legitimate representative of the people. Instead, like his competitor Merkel, Schulz is an advocate of cooperation, particularly within the European Union.

He also makes the case that doing politics means finding compromises.


Obama is history as US president. Unlike him, Merkel can run again as head of government – also to counterweight successor Donald Trump.

Unlike the current chancellor though, he calls for change – to create a fairer and more just Germany. No wonder his supporters compare him to Barack Obama. They have even created a picture similar to the iconic Obama Hope poster, but showing Schulz and stating “MEGA”.

The four-letter word stands npt only for Schulz’s fans belief in him as a fantastic candidate, but also as an abbreviation for “Make Europe Great Again”. The play on Trump’s slogan makes an ironic reference to the US president’s promise. At the same time, it probably also appeals to those that are fascinated by Trump’s approach and dislike the so-called establishment.

This fits into the emerging reality that the far right Alternative fur Deutschland, or AfD, lost support since Schulz announced his intention to run. The aforementioned Bild poll sees AfD now (week 6 – see chart above) polling at 12%, down from 14.5%. Additionally, Schulz also manages – at least in the polls – to summon support from those that otherwise would not have wanted to vote, according to another Bild survey.

Schulz Reddit

Fan page for Schulz on Reddit.

In an interview with Der Spiegel, however, he declared that while he “want[s] to win them [AfD voters] back,” he would never “run such a campaign [as Trump’s] under any circumstances.” he added that the US president “is gambling with the safety of the Western world. Donald Trump must be taken seriously. He is fulfilling his dangerous campaign.”

While he is very clear on that, the policies Schulz wants to implement remain vague. His values, however, are not. As does Merkel, he believes in Europe as “a region of freedom and peace, of security, law, democracy, tolerance and mutual respect,” as he put it in the interview.

Schulz had been a member of the European Parliament since 1994 and its president since 2012; he left both positions earlier this year. Taking into account the criticism the EU is currently facing, this might be seen as a position of weakness. However, it turns out that it seems far more important that he was not part of the coalition with Merkel in Berlin – and that his rhetorical powers clearly top hers.

Schulz also told the magazine that Germany, “as the largest European Union member state, found the correct response in an historic situation” by accepting large numbers of refugees in 2015 – an act Merkel since has been heavily criticized for, including by her fellow politicians.

As mentioned above, fairness will be a major focus for him when running for chancellor. This will also affect business, as it includes more controls to ensure companies comply with minimum wage legislation as well as tax increases: “People who work hard for their money cannot be placed in a worse position than those who allow their money to work for them,” as he told Der Spiegel.

Trump campaigning

Trump in campaign-mode. Now he is the US president and wants to “make America great again”.

Speaking of money, Greece also deserves a mention. Merkel’s fellow party member and serving finance minister Wolfgang Schäuble has always taken a hard stance on the Mediterranean nation, incurring the ire of many Greeks against himself and the German chancellor. Schulz, on the other hand, told Die Welt that a Grexit is not what he wants.

“Anyone flirting with the idea of Grexit risks breaking Europe apart. This may be in the interest of Donald Trump or [French National Front leader] Marine Le Pen, but it is certainly not in the interest of Germany and Europe. It is extremely dangerous,” reads the Guardian’s translation.

A concrete programme is still due and what Schulz and his party will be able to realise is highly dependent on what coalitions end up getting formed.

If the strengthening of the Social Democrats continues, a coalition with the left party Die Linke and the Greens could become an option. That constellation has never been seen before in Germany on a national level. Neither has an alliance between Merkel’s CDU and the liberal FDP – which has been the preferred partner – and the Greens. While the former would clearly mean a shift to the left, the latter could strengthen liberal positions.

One thing remains clear: the only coalition that would definitely have a strong majority also after September 2017 is the current one of Merkel’s CDU and Schulz’ SPD. Going down that path again, however, would be both sides’ worst case scenarios, one reason being that a coalition of the two biggest parties in parliament could see the extremists getting more support.


Cologne, one of the largest German city’s, is only one-hour drive from Würselen, where Martin Schulz began his political career as a mayor






This should be alarming to the EU.


1.In the last 45 days:2.5 billion euros left the bank

2. from the beginning of the crisis in 2011, 120 billion euros have left the bank system

3. from a report in Nov 2015: in the preceding one yr: 45 billion euros have left the banking system of which 36 billion euros never returned.

Ladies and gentlemen; we have another bank run.  I guess more controls are coming!

(courtesy zerohedge)


Greek Bank Run Re-accelerates: Massive Deposit Withdrawals Despite Capital Controls

Delays in the talks between Greece and its lenders have brought back the ghost of Grexit.

The grave disagreement between the International Monetary Fund and the European lenders, Grexit bombshells flying around and Greece’s reluctance to accept additional austerity measures have increased uncertainty among citizens – for one more time.

And so, as KeepTalkingGreece.com notes, what do citizens do when they feel political and economical insecurity? The run to banks and withdraw deposits.

2.5 billion euros left Greek banks in the last 45 days.


And this despite the capital controls that allow Greeks to withdraw a maximum of just 1,800 euro per month.

However, in better situation are those who brought back cash to the banks. Cash that was largely withdrawn before the capital controls were imposed in July 2015 as a result of a major bank run from November 2014 until end of June 2015. Those who pulled the cash from under the mattress and brought it to bank are allowed to withdraw money above the 1800-euro cap.

According to newspaper Eidiseis, the cash withdrawal in the last 45 days has set bankers in alert.

In addition to cash withdrawals, business loans and mortgage, amounting a total of 500 million euros, turned red. A sign that the delay in the conclusion of the second review has increased uncertainty among the Greeks, as the daily notes.

Speaking to the daily, sources from the Union of Greek Banks said that “time is not working in our favor.”

They stressed that the government and the lenders should reach a compromise.

Beginning of February, Greek websites for economic news had reported that more than one billion euros was withdrawn in January 2017.

According to a report of November 2015, more than 120 billion euros left the Greek banks during the years of the crisis. 45 billion euro left the banks during November 2014 – 2015.Eighty percent of this amount, that is some €36 billion are been kept in homes, company safes or in bank lockers.

* * *

Time to increase capital controls once again!!??


Tillerson meets Lavrov.  You can bet that Crimea will be discussed and Russia will no doubt state that this is a non starter:

(courtesy zero hedge)

Russia’s Lavrov To Tillerson: “We Do Not Interfere In The Domestic Matters Of Other Countries”

Secretary of State Rex Tillerson met his Russian counterparty, Foreign Minister Sergey Lavrov, at a G20 summit in Germany in the pair’s first meeting since Tillerson became secretary of state, and comes as a possible Russia-US rapprochement is in the spotlight. Moscow and Washington have much to discuss, Lavrov told Tillerson at their first meeting in Bonn, Germany, on Thursday.

“Mostly, it includes issues addressed by the two presidents during their phone conversation. I think that we could identify parameters of our future cooperation on each of those topics,” he stated.

More importantly, Lavrov once again focused on current developments in Washington in which Trump administration links to Russia are under the spotlight, and said that these are US domestic affairs, in which Moscow has no interest in meddling.

You should know we do not interfere in the domestic matters of other countries,” Lavrov told reporters when asked if “turbulence” in the American capital has ramifications for US-Russia relations.

Lavrov meets with US Secretary of State Tillerson in Germany http://on.rt.com/83b2 

He spoke days after U.S. President Donald Trump asked for the resignation of his key national security adviser Michael Flynn amid questions about his conversations with Russian officials. He added the two countries had “plenty of issues” to discuss.”

Earlier comments from the Russian Foreign Ministry suggested that Syria and sensitive bilateral issues would be discussed at the meeting, RT reported.

The US State Department told reporters the upcoming conversation with Lavrov “obviously will be a very important one,” adding that Tillerson is likely to use the occasion to seek “ways for pragmatic and constructive cooperation in areas where our interests overlap.” Areas of mutual interest might include “counter-ISIS [Islamic State] and counterterrorism” efforts, State Department officials said at a special briefing.

The officials also said that Tillerson would not soften Washington’s stance on Ukraine, a crisis which remains largely unresolved. The secretary of state would “push for full implementation of the parties’, including Russia’s, commitments under the Minsk agreement for the Donbass.”


Ukraine and the issue of economic sanctions look like becoming a stumbling block for future dialogue between Moscow and Washington. President Donald Trump has claimed that Crimea – a region that was reunited with mainland Russia following a 2014 referendum – was “taken” by Moscow, prompting a measured but swift response from the Russian Foreign Ministry.


“Crimea is part of the Russian Federation,” Zakharova told reporters on Wednesday.

It will be the first time Lavrov has met the newly-appointed Tillerson. It comes as US-Russia relations are under particular scrutiny following the election of President Trump, who has repeatedly pledged to mend ties with Moscow.


none today



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



GBP/USA 1.2506 PU .0041 (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)


Early THIS THURSDAY morning in Europe, the Euro ROSE by 41 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0644; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 16.63 POINTS OR 0.52%     / Hang Sang  CLOSED UP 112.83 POINTS OR 0.47%    /AUSTRALIA  CLOSED UP 0.07%  / EUROPEAN BOURSES ALL IN THE RED 

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 90.45 POINTS OR 0.47% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 112.83 POINTS OR 0.47%       / SHANGHAI CLOSED UP 16.63   OR 0.52%/Australia BOURSE CLOSED UP 0.07% /Nikkei (Japan)CLOSED DOWN 90.45 POINTS OR 0.47%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1237.00


Early THURSDAY morning USA 10 year bond yield: 2.477% !!! UP 0 IN POINTS from WEDNESDAY 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  3.071, UP 0 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 100.69 DOWN 40 CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING


And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.98% DOWN 11  in basis point yield from WEDNESDAY 

JAPANESE BOND YIELD: +.099%  UP 8/10  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.601%  DOWN 8 IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.156 DOWN 9 POINTS  in basis point yield from WEDNESDAY 

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





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

Euro/USA 1.0654 UP .0051 (Euro UP 51 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.42 DOWN: 0.706(Yen UP 71 basis points/ 

Great Britain/USA 1.2462 DOWN 0.0003( POUND DOWN 3 basis points)

USA/Canada 1.3053 DOWN 0.0013(Canadian dollar UP 15 basis points AS OIL FELL TO $53.01


This afternoon, the Euro was UP by 51 basis points to trade at 1.0654


The POUND FELL 3  basis points, trading at 1.2462/

The Canadian dollar ROSE  by 15 basis points to 1.3053,  WITH WTI OIL RISING TO :  $53.07

The USA/Yuan closed at 6.8516/
the 10 yr Japanese bond yield closed at +.099% UP 8/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 5 IN basis points from WEDNESDAY at 2.2456% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.044  DOWN 5 in basis points on the day /

Your closing USA dollar index, 100.63 DOWN 46 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 THURSDAY: 1:00 PM EST

London:  CLOSED DOWN 24.49 OR 0.34% 
German Dax :CLOSED DOWN 36.69 POINTS OR 0.31%
Paris Cac  CLOSED DOWN 25.40 OR 0.52%
Italian MIB: CLOSED UP 31.38 POINTS OR 0.16%

The Dow closed UP 7.91 OR 0.04%

NASDAQ WAS closed DOWN 4.54 POINTS OR 0.08%  4.00 PM EST
WTI Oil price;  53.01 at 1:00 pm; 

Brent Oil: 55.62  1:00 EST




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

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


BRENT: $55.73


USA 30 YR BOND YIELD: 3.049%

EURO/USA DOLLAR CROSS:  1.0673 up .0071 

USA/JAPANESE YEN:113.24   down 0.880

USA DOLLAR INDEX: 100.48  down 61  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2488 : up 22   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.349%


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


Stock Dip Kills Longest Win Streak In 4 Years As Catalyst-Crusher Comes To An End

Once again all eyes were on “soft” data (Philly Fed) as “hard” data (housing starts miss) disappointed and the forced buy-in pressure lifted…


7 days up in a row for the S&P 500 (longest streak since March 2013) was the limit it seems as Catalyst’s statement that it had completed its forced buy-in to cover and Trump’s comments about how awesome stocks are capped it…

The Dow managed to creep green (record high) as VIX was crushed…


Just how much of the last 150 S&P points are due to the liquidation of ‘Catalyst’ (and strategies like it)?


Catalyst’s footprints are clear in options volumes… As Bloomberg notes, Options Data Show Footprints of Furious Buyer as S&P 500 Jumped

Above-average volume in S&P futures options earlier this week helped drive demand for stocks amid reports of volatility funds buying back deep in the money calls. February contracts alone represented ~$19B of notional value. The most active contracts according to the CME Group website include:

February 15

  • 5.9k SPU Jun. $2325 calls
  • 8.9k SPU Feb. $2270 calls

February 14

  • 10.9k SPU Feb. $2280 calls

February 13

  • 6.8k SPU Feb. $2270 calls
  • 7.1k SPU Feb. $2275 calls
  • 6.8k SPU Apr. $2315 calls
  • 7.1k SPU May. $2330 calls

One wonders if Catalyst CEO comments were 100% truthful about being out?


VIX was very chaotic…crushed back below 12 to ensure Dow green close..


But the decoupling remains…


“Most Shorted” stocks were actually allowed to fall today – the biggest drop since November…


Energy stocks are the week’s laggard and banks remain the leaders…


Bonds decoupled from stocks yesterday and stocks started to catch down…


And Real yields are entirely decoupled…


Treasuries extended their gains from post-data yesterday but remain higher in yield on the week…


The USD Index fell for the 2nd day in a row – biggest drop since January…


Shifting the USD into the red for the week…


The Dollar seems to following 2016’s analog very well still…


Dollar weakness sent PMs higher…


Note the spike bounce higher in crude prices (just like after DOE data yesterday) which entirely decoupled from Energy stocks…



Initial jobless claims raise but still the lowest levels in many years.

(courtesy zerohedge)

Initial Jobless Claims Divergence Of The Week

Initial jobless claims rose modestly on the week but remain at the lowest levels since Watergate…


As it appears the labor market entirely ignores the demise of actual “hard” data since the election…

Housing starts disappoints and this is coupled with a huge rise in building permits (driven by rentals).

(courtesy zero hedge)


Housing Starts Disappoint As Building Permits Surge, Driven By Rentals

While having been gradually relegated to B-grade economic data status, today’s housing starts and building permits report from the Commerce Department, painted a mixed picture, with January starts declining 2.6%, from 1.279million to 1.246 million, below expectations of a 0.1% increase, however due to the upward prior revision, today’s absolute print beat expectations of 1.222 million units started (forecast range 1168k – 1320k from 77 economists). Looking inside the data, single family starts rose to 823k, while multifamily starts fell to 423k in Jan.

But while January housing starts were lukewarm, building permits jumped by far more impressive 4.6%, rising from 1.228MM to 1.285MM, driven entirely by multi-family, aka rental, units which soared by 23.5%, as single-family unit permits declined by 2.7% to 808K.

Finally, while little tracked, housing completions fell to 1047k in Jan., from 1109k the prior month, as single-family completions rose to 800k; multifamily completions fell to 247k in Jan.

Overall, s table housing report, although as the charts below show, both starts and permits remain locked in a multi-year range, well below the pre-crisis highs, as builders are looking for a signal to take take a major push forward in new home construction.

Housing Starts:

Building Permits:





Another soft data report:  The Philly Fed explodes to a 33 yr high and this is a 10 standard deviation beat:

(courtesy zero hedge)

Philly Fed Explodes To 33-Year Highs – A 10-Standard-Deviation Beat

Against expectations of a 18.0 print, February’s Philly Fed exploded higher to 43.3 – the highest since January 1984. This is a 10-standard-deviation beat, led by a surge in new orders and the workweek, despite a decline in ‘hope’ and the number of employees.

Everything is Awesome America… especially in Philapdelphia?

The index for current manufacturing activity in the region increased from a reading of 23.6 in January to 43.3 this month and has remained positive for seven consecutive months.

The share of firms reporting growth continues to increase: More than 48 percent of the firms reported increases in activity this month compared with 40 percent last month. The index for current new orders increased 12 points this month (with 44 percent of the firms reporting increases and just 6 percent reporting decreases).


For context, that is a 10-sigma event…


But ‘hope’ declined…


And as the full breakdown shows, the number of employees declined, as did inventories and prices received.

Unfilled Orders, Delivery Times, Priced Paid were all largely unchanged.

Is this as good as it gets?


The CEO of insurance giant Aetna claims that Obamacare is in a death spiral because of huge premiums and risk polls are deteriorating.  This is causing insurance companies pulling out of exchanges:

(courtesy zero hedge)

Aetna CEO Says Obamacare In “Death Spiral” And “It’s Getting Worse”

Back in the summer of 2016, as Obamacare rates were being set for the 2017 plan year, we repeatedly argued that the entire system was on the “verge of collapse” as premiums were soaring, risk pools were deteriorating and insurers were pulling out of exchanges all around the country leaving many Americans with just a single ‘option’ for health insurance (see “Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017“).

And while Democrats may be all too willing to quickly dismiss our analysis, they may want to listen to the warnings of the CEO of one of the country’s largest health insurers who says that Obamacare is in a “death spiral.”  In speaking with the Wall Street Journal, Aetna CEO Mark Bertolini said, among other things, that therisk pools are deteriorating in the ACA” to a point that it would inevitably result in more withdrawals this year.   Per The Hill:

“It’s not going to get any better; it’s getting worse.”

“That logic shows just how much the risk pools are deteriorating in the ACA,” Bertolini said.

He added: “I think you will see a lot more withdrawals this year. … There isn’t enough money in the ACA as structured, even with the fees and taxes, to support the population that needs to be served.”

“It is in a death spiral,” he said, but did not say whether Aetna would participate in the exchanges in 2018.


And, while his commentary was mostly doom and gloom, if there was one silver lining from Bertolini’s interview, it was his acknowledgement that at least “mathematics education in the United States is working” since consumers seem to be able to run the simple math required to figure out that paying ~$12,000 per year in premiums for a family of 4, plus $6,000 in deductibles, all for a service they never use, is a bad deal.

“You know that mathematics education in the United States is working when someone says, let me see, i’m going to pay this much premium, i’ve got a $6,000 deductible, and when I go to the doctor i’m going to pay cash…so premium, plus deductible, plus paying cash…why do I do this?  I’ll just pay the penalty and move on.”

“And so that risk keeps leaving and risk inside the pool keeps getting worse…the rates continue to chase it…and the participants start to leave, either at the bottom of the risk pool or the plans themselves.”

Of course, Bertolini’s comments today followed yesterday’s announcement from Humana that, due to an “unbalanced risk pool” (i.e. not enough healthy, young people paying massive premiums to balance out the risk of older, sicker customers), they would be pulling out of all Obamacare exchanges nationwide in 2018.  Per Humana’s press release:

Regarding the company’s individual commercial medical coverage (Individual Commercial), substantially all of which is offered on-exchange through the federal Marketplaces, Humana has worked over the past several years to address market and programmatic challenges in order to keep coverage options available wherever it could offer a viable product. This has included pursuing business changes, such as modifying networks, restructuring product offerings, reducing the company’s geographic footprint and increasing premiums.

All of these actions were taken with the expectation that the company’s Individual Commercial business would stabilize to the point where the company could continue to participate in the program. However, based on its initial analysis of data associated with the company’s healthcare exchange membership following the 2017 open enrollment period, Humana is seeing further signs of an unbalanced risk pool. Therefore, the company has decided that it cannot continue to offer this coverage for 2018. Through the remainder of 2017, Humana remains committed to serving its current members across 11 states where it offers Individual Commercial products. And, as it has done in the past, Humana will work closely with its state partners as it navigates this process.

Meanwhile, Trump seized on the announcement saying that as “Obamacare continues to fail” his administration would “repeal, replace & save healthcare for ALL Americans.”

Obamacare continues to fail. Humana to pull out in 2018. Will repeal, replace & save healthcare for ALL Americans. https://origin-nyi.thehill.com/policy/healthcare/319538-humana-to-drop-out-of-obamacare-marketplace-at-end-of-2017 

Photo published for Humana to drop out of ObamaCare at end of 2017

Humana to drop out of ObamaCare at end of 2017

The insurer said the market has not stabilized enough to participate next year.


Frankly, we’re shocked at all of this!  Turns out that whole “adverse selection bias” was a real thing…who could have known





Your new Labour secretary and the fellow should be an easy confirmation.  However the Donald is still angry on the leaks

(courtesy zerohedge)


President Trump Announces New Labor Secretary Pick – Live Feed

President Trump just surprised The White House press corps by announcing he will hold a press conference at 1230ET today to announce his labor secretary pick. For now we do not know if he will answer any questions, but given the tweets in th elast 24 hours, he certainly has lots to say…

He is expected to announce his new labor secretary, following Andy Puzder’s withdrawal… Alexander Acosta is a former member of the National Labor Relations Board and is currently the dean of Florida International University’s law school.

WH new pick for labor secty Alexander Acosta should be easy confirmation – fmr NLRB member – deputy AG in Civil Rights Division

Given the tweetstorms of the last 24 hours, we suspect he will rage against “leakers” – promising they will “pay a big price”


Trump: “We’re going to find the leakers. They’ll pay a big price for leaking.”

Wewould be surprised if the topic of his election victory and the establishment’s disappointment doesn’t come up…

The Democrats had to come up with a story as to why they lost the election, and so badly (306), so they made up a story – RUSSIA. Fake news!


“People are trying to cover up for a terrible loss that the Democrats had under Hillary Clinton”

We are sure the topic of Mike Flynn will come up – which President Trump will likely note – much to Nancy Pelosi’s disappointment – that The FBI is pursuing no charges against him.

Trump will undoubtedly mention the record high stock prices, having already pointed out the lack of media attention to it. But as BofA notes…

Our Make America Great Again indicator off to a good start in recent months; we regard housing in particular as absolutely key to bond markets. Path of least resistance for yields is higher until rates rise to a level that hurts housing.


And finally, the topic of an Intelligence Community coup (or withholding intel) will likely come up.

So grab your popcorn, take cover if you’re a CNN or NYTimes reporter, and enjoy… (due at 1230ET)…

We also wonder if any TIME magazine reporter will be called out…




Maddog Mattis issues his ultimatum to NATO:  Boost military spending  (with contributions coming from NATO countries) or else the USA will cut its support

(courtesy zero hedge)

Pentagon Chief’s Ultimatum To NATO: “Boost Military Spending Or The U.S. Will Cut Its Support”

Ahead of Jim Mattis’ first official trip to Brussels as the new head of the Pentagon, NATO members were on edge to see if America’s new Defense Secretary would push the same agenda which Trump had vocalized during his presidential campaign, namely that he would withdraw US support of NATO unless its member states boosted their spending in support of the international military organization.

To their disappointment, he did and in an ultimatum to America’s allies, Mattis told fellow NATO members Wednesday to increase military spending by year’s end or risk seeing the U.S. curtail its defense support, a move which AP dubbed was “a stark threat given Europe’s deep unease already over U.S.-Russian relations.”

“Americans cannot care more for your children’s future security than you do,” Mr. Mattis said in his first speech to NATO allies since becoming defense secretary. “I owe it to you to give you clarity on the political reality in the United States and to state the fair demand from my country’s people in concrete terms.” Mattis went further than his predecessors in apparently linking American contributions to the alliance to what other countries spend.

“If your nations do not want to see America moderate its commitment to this alliance, each of your capitals needs to show support for our common defense,” he said.

Echoing Trump’s demands for NATO countries to assume greater self-defense responsibility, Mattis said Washington will “moderate its commitment” to the alliance if countries fail to fall in line. He didn’t offer details, but the pressure is sure to be felt, particularly by governments in Europe’s eastern reaches that feel threatened by Russian expansionism.

Defense Secretary Jim Mattis, left, and the secretary general of NATO,
Jens Stoltenberg, in Brussels on Wednesday.

The reason for Mattis’ – and Trump’s – and displeasure is shown in the chart below. According to the NATO charter, member countries must allocate at least 2% of their GDP toward the organization (among other reasons, so that each country can defend itself without relying too much on other members). However, of 28 NATO members, only five meet this requirement.

Which is why, as the AP reports, the entire alliance seemed to hang on Mattis’ every word Wednesday. Officials crowded around televisions at the NATO meeting in Brussels to watch the retired general’s initial appearance with Secretary-General Jens Stoltenberg. Defense ministers clustered around Mattis as he entered the meeting room.

Citing danger from Russia, Mattis told the closed meeting of ministers they must adopt a plan this year that sets dates for governments to meet a military funding goal of 2 percent of gross domestic product. He called the funding increase a “fair demand” based on the “political reality” in Washington, an apparent reference to Trump’s past criticism of NATO as “obsolete” and his much-touted “‘America First” mantra.

Mattis did not say how the United States might back away from its obligations to NATO members, though there are several steps the Trump administration could take short of refusing to come to the aid of an ally under attack. That would be an abrogation of its treaty responsibilities, but the United States could reduce the number of American troops stationed in certain European countries or raise the bar for what it considers a military attack.

Noting the threat posed by the Islamic State group in Iraq and Syria, Mattis said: “Some in this alliance have looked away in denial of what is happening.” “We have failed to fill gaps in our NATO response force or to adapt,” he added.

In recent months, Trump has challenged the alliance to take on a greater share of military costs, even rattling European nations by suggesting the U.S. might not defend allies unwilling to fulfill their financial obligations as NATO members. Mattis didn’t go that far, and Wednesday’s focus appeared to be on simply increasing military funding if not fully reaching the target. Still, just that demand may prove to be very controversial as many European governments face hostility to more military spending, especially as their slow economic recoveries force belt-tightening elsewhere.

The United States is by far NATO’s most powerful member, spending more on defense than all the others combined. It devoted 3.61 percent of American GDP last year to military spending, according to NATO estimates — a level that has somewhat tapered off in recent years. Germany, by contrast, spent 1.19% of its overall budget on defense. Ten countries commit even less, and seven — including Canada, Italy and Spain — would have to virtually double military spending to reach the target. Luxembourg would require a fourfold increase to get close. None of these spending expansions are realistic, absent a substantial increase in these countries’ budget deficits, which could result in political instability at a very sensitive time, especially for Italy.

Along with the U.S., the other countries that do reach NATO’s benchmark for military spending are Britain, Estonia, Poland and, inexplicably, debt-ridden Greece.

British’s defense chief, Michael Fallon, said Mattis appeared to welcome a British proposal to create a road map for increased spending. “An annual increase that we’re asking them to commit to would at least demonstrate good faith,” he said.

One NATO official characterized the mood in the heavily fortified compound as tense and said allies were waiting to see if the message Mattis presented on Wednesday differed in tone from what Mr. Trump has said. In one important way, the defense secretary amplified the president’s previous statements. Though Mattis acknowledged “concern in European capitals about America’s commitment to NATO and the security of Europe,” he said allies must do more to reach their commitments to spend 2 percent of their G.D.P. on their militaries.

No longer can the American taxpayer carry a disproportionate share of the defense of western values,” he said.

Asked about Mattis’ ultimatum, NATO chief Stoltenberg said allies need time to develop plans. Many are already talking about increasing commitments, he said. “This is not the U.S. telling Europe to increase defense spending,” Stoltenberg said, noting that allies committed three years ago already to increase spending over the next decade. He said: “I welcome all pressure, all support, to make sure that happens.”

ACtually, this is the US telling Europe to increase its defense spending, at least until such time as the consequences of such a spending boost catch up with NATO, and Washington, and Trump relents on his demands.

Meanwhile, despite the sharpness of his demand, Mattis appeared to recognize Europe’s worries and its leaders’ desire for clarity on America’s commitment to NATO. In a brief public statement, made while standing alongside Stoltenberg, Mattis called the alliance “a fundamental bedrock for the United States and for all the trans-Atlantic community.”




Maddog rejects any military cooperation with Russia especially in Syria

(courtesy zero hedge)

Pentagon Chief Rejects Military Cooperation With Russia

One day after Defense Secretary Jim Mattis told US NATO allies they will have to pay up and meet their mandatory quota of 2% of GDP (which only 5 nations currently satisfy, among them the US and Greece), on Thursday the Pentagon’s new chief also had some bad news for Russia when he rejected any kind of military collaboration with Russia, despite previous calls by Putin for the West to work with his country on Syria and other issues.

Quoted by the WSJ, Mattis said at NATO’s Brussels headquarters that “We are not in a position right now to collaborate on a military level” adding that  “our political leaders will engage and try to find common ground or a way forward where Russia, living up to its commitments, will return to a partnership of sorts, here with NATO.” Prior to the meeting, Russian Defense Minister Sergei Shoigu expressed hope for cooperation but warned that “attempts to build a dialogue from a position of strength with regard to Russia are hopeless.”

Mattis’s remarks came after Mr. Putin made a plea for the alliance and other nations to cooperate with Russia. “It’s in everyone’s interest to resume dialogue between the intelligence agencies of the United States and other members of NATO,” said Mr. Putin, addressing Russia’s Federal Security Service (FSB) on Thursday.

The sudden chill in US-Russian relations is understandable: the Trump administration remains in turmoil over questions about the extent of Trump administration contacts with Russia, and tensions have been rising.

Elsewhere, as reported previously, the top US general, Joseph Dunford, chairman of the Joint Chiefs of Staff, is scheduled to meet his Russian counterpart, Gen. Valery Gerasimov, in Baku, Azerbaijan. The meeting will mark the highest-level military contact between Washington and Moscow since 2014. Shoigu added that the Russians “await clarification of the position of the Pentagon” at the Baku meeting.

Of particular interest will be any discussion between the US and Russia on the topic of NATO expansion.

NATO has been pursuing a multinational force on its eastern flank as a deterrent over Moscow’s aggression in the region. Secretary-General Jens Stoltenberg said the allies didn’t want to isolate Russia but still wanted “a firm predictable approach, including credible deterrence.”


He announced that alliance defense ministers had approved a plan to bolster its naval forces in the Black Sea, which is bordered by Russia, Ukraine, Turkey and other countries, and would improve military intelligence in the area.


Mr. Stoltenberg said the alliance’s standing maritime fleets would make more frequent visits to the Black Sea and step up military exercises. “It will be measured, it will be defensive and it will be no way aim at provoking a conflict or escalating tensions,” Mr. Stoltenberg said.

Understandably, Russia has taken frequent issue with operations in the Black Sea by naval vessels from nations that don’t border it.

Also of note, Russia’s military intervention in Syria on behalf of President Bashar al-Assad in late 2015 also caused friction between the U.S. and Russia, although both sides agreed to establish military communication to reduce the risk of incidents in the skies over Syria. As the WSJ further adds, “The meeting in Baku is expected to focus on a proposal pushed by senior uniformed officers at the Pentagon to improve that system. Gen. Dunford has pushed the plan, which would elevate the military contacts to a the three-star general level. Currently, the two militaries communicate by phone at the colonels’ level to share information about where each is operating.

The plan has been floated for months, but went nowhere under Defense Secretary Ash Carter, who was wary of higher level coordination with the Russian military. The proposal wouldn’t likely mean the U.S. and Russian militaries would coordinate with each other or share intelligence. The system is thought to have worked well, but has had some problems. The U.S. mistakenly hit Syrian forces in Deir Ezzour rather than Islamic State targets after a Russian colonel couldn’t immediately locate his American counterpart on the phone.

With US-Russian relations about to be scrutinized in the US, keep a close eye on the diplomatic exchanges between the two countries for hints on whether another chill is about to fall between D.C. and Moscow.




UNBELIEVABLE!!  Wall Street Journal reports that uSA intelligent officials have withheld information from President Trump due to concerns that it could be leaked or compromised.


what on earth is going on in the USA?

(courtesy zerohedge)

On The Verge Of Treason: US Spies Withhold Intelligence From Trump

Following President Trump’s exclamations today with regard “un-American” leaks of classified intel, it appears he has a bigger, more serious problem on his hands. WSJ reports that US intel officials have withheld information from President Trump due to concerns it could be leaked or compromised.

The Wall Street Journal, citing unidentified current and former officials familiar with the matter, reports that officials’ decision to keep information from Mr. Trump underscores the deep mistrust that has developed between the intelligence community and the president over his team’s contacts with the Russian government, as well as the enmity he has shown toward U.S. spy agencies. On Wednesday, Mr. Trump accused the agencies of leaking information to undermine him.

In some of these cases of withheld information, officials have decided not to show Mr. Trump the sources and methods that the intelligence agencies use to collect information, the current and former officials said. Those sources and methods could include, for instance, the means that an agency uses to spy on a foreign government.

In some ways Trump may not care: according to the WSK, “Trump doesn’t immerse himself in intelligence information, and it isn’t clear that he has expressed a desire to know sources and methods. The intelligence agencies have been told to dramatically pare down the president’s daily intelligence briefing, both the number of topics and how much information is described under each topic, an official said. Compared with his immediate predecessors, Mr. Trump so far has chosen to rely less on the daily briefing than they did.”

However, now that the WSJ brought up this topic, one can be absolutely sure the first demand Trump will make during his next intel briefing: “show me all the information.” That’s when things could get rough.

The officials quoted by the WSJ emphasized they know of no instance in which crucial information about security threats or potential plotting has been omitted, although if indeed “some” information is withheld, it is the functional equivalent of Trump making decisions blind.

While a White House official said: “There is nothing that leads us to believe that this is an accurate account of what is actually happening”, Rep. Adam Schiff (D., Calif.), the ranking member of the House Intelligence Committee, said he has heard concerns from officials about sharing especially sensitive information with Mr. Trump.

“I’ve talked with people in the intelligence community that do have concerns about the White House, about the president, and I think those concerns take a number of forms,” Mr. Schiff said, without confirming any specific incidents.

“What the intelligence community considers their most sacred obligation is to protect the very best intelligence and to protect the people that are producing it.”

So, why are they worried?

The current and former officials said the decision to avoid revealing sources and methods with Mr. Trump stems in large part from the president’s repeated expressions of admiration for Russian President Vladimir Putin and his call, during the presidential campaign for Russia to continue hacking the emails of his Democratic rival, Hillary Clinton.

As the long-running tensions between the pro-Hillary intelligence community and President Trump rise, it is becoming increasingly clear that this escalating distrust between the top US spies on one hand and the White House on the other, will lead to a vicious circle of less information-sharing and implicitly more distrust until Trump moves from tweet-castigation to treason charges, or alternatively the spooks dig deep into the NSA server’s bag of goodies, and unleash full out mutiny (see John Schindler’s narrative for big details how this may play out).



Trump and Chaffetz are attacking the leakers.  Chaffetz has now requesting a Dept. of Justice probe into the source of the leaks.

(courtesy zero hedge)



  1. Hey Harvey, could you please remove the word “wild” from your Comex silver results narrative? If it’s always “wild”, it’s never wild.


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