Feb 17/GLD loses 2.37 tonnes of gold inventory/SLV inventory remains constant again/Gold lowers by $2.40 and silver by 4 cents/Bubble bursts in USA AUTO LOANS/Robert Harward rejects Trump’s offer for National Security Advisor/Chaffetz seeks charges against former Clinton aid/Final draft.

Gold at (1:30 am est) $1237.60 down $2.40

silver was : $18.02:   down 4 CENTS

Access market prices:

Gold: $1235.50

Silver: $18.01

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

FRIDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 17/17 (10:15 pm est last night): $  1248.41

NY ACCESS PRICE: $1238.25 (AT THE EXACT SAME TIME)/premium $10.16

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1248.41

NY ACCESS PRICE: $1238.20 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  10.28

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb 17/2017: 5:30 am est:  $1241.40   (NY: same time:  $1241.20   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 17.2017: 10 am est:  $1241.95(NY same time: $1241.90 (10 am)

 

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

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

end

For comex gold:

FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  20 NOTICE(S) FOR 2000 OZ.  TOTAL NOTICES SO FAR: 5145 FOR 514,500 OZ    (16.003 TONNES)

For silver:

 

For silver: FEBRUARY

0 NOTICES FILED FOR nil OZ/

TOTAL NO OF NOTICES FILED: 406 FOR 2,030,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 5,314 contracts UP to 204,517 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  1.028 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 0 NOTICE(S) FOR nil OZ

In gold, the total comex gold ROSE BY A WHOPPING 9,001 contracts WITH THE RISE IN  THE PRICE GOLD ($8.30 with YESTERDAY’S trading ).The total gold OI stands at 429,147 contracts

we had 20 notice(s) filed upon for 2000 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had another change in tonnes of gold at the GLD: this time a withdrawal of 2.37 tonnes of gold.

Inventory rests tonight: 841.17 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 334.713 million oz

end

.

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

1. Today, we had the open interest in silver ROSE by 5314 contracts UP to 204,517 AS SILVER WAS UP 11 CENTS with YESTERDAY’S trading. The gold open interest ROSE by 11,944 contracts UP to 429,147 WITH THE RISE IN THE PRICE OF GOLD OF $8.30  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c)  COT report

(Harvey)

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 27.54 POINTS OR .85%/ /Hang Sang CLOSED DOWN 73.96 POINTS OR 0.58% . The Nikkei closed DOWN 112.91 POINTS OR 0.58% /Australia’s all ordinaires  CLOSED DOWN 0.21%/Chinese yuan (ONSHORE) closed DOWN at 6.8678/Oil FELL to 53.13 dollars per barrel for WTI and 55.28 for Brent. Stocks in Europe ALL IN THE RED EXCEPT LONDON. Offshore yuan trades  6.8478 yuan to the dollar vs 6.8678  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS WIDENS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

 

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA

3a)THAILAND/SOUTH KOREA/NORTH KOREA

South Korea’s largest company Samsung has its Chief Executive Officer arrested for bribery perjury and embezzlement

( zero hedge)

b) REPORT ON JAPAN

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

This should be interesting:  the two left wing candidates are to meet and decide on one candidate in the upcoming April elections.  The combined vote may be enough for them to come in second place and thus  remove the centrist candidates

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6.GLOBAL ISSUES

none today

7. OIL ISSUES

i)A great in depth analysis of the global oil market and why Berman believes that WTI is likely to be below 50 dollars than at 70 dollars

( Art Berman/Oil Price.com)

ii)Oil rigs continue to be utilized in the Permian basin which is causing a record amount of WTI oil glut

( zero hedge)

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

( Bloomberg/GATA)

ii)John Ing states that due to the world financial and political situation gold is the only vehicle that makes sense

( Ing/Kingworldnews)

iii)Lawrie Williams/ of Sharp’s Pixley gives his take on gold and silver.  Both are rising despite some negative news:

( Lawrie Williams/Sharp’s Pixley

10.USA STORIES

i)All is not well in the auto loan department.  The bubble seems to have burst in this 1.1 trillion USA market as subprime delinquencies  (greater than 60 days) skyrocket. There are over 1 million auto loans borrowers that are behind greater than 60 days.

( zero hedge)

ii)This is a little troubling:  Robert Harward has rejected Trump’s offer to becomes the next National Security Advisor.  I guess it is David Patraeus or Keith Kellogg and nobody else can fill the roll:

( zero hedge)

iii)Trump tweets that General Keith Kellogg is in play for the NSA job

( zero hedge)

iv)This is interesting:  farm incomes and equipment purchases are tanking while John Deere’s stock soars due to hedge fund purchases

( zerohedge)

v)Bellwether stock (global sales) records it’s 50th consecutive month of declining global sales

( zero hedge)

vi)Two important commentaries discuss how Michael Flynn was removed by the “Deep State” or intelligence community.

a must read..

(courtesy Michael Snyder/Pepe Escobar)

vii)Pam and Russ Martens discuss how Mary Jo White totally misled the USA senate when she became  SEC chair:

(courtesy Pam Martens.Russ Martens/Wall Street on Parade)

viii)It starts;  Chaffetz seeks charges against Hillary aid, Pagliano who decided not to show up to Congress once he was subpoenaed. He claims the 5th amendment but the FBI already had granted immunity to him so there was no reason for him not to testify.

 

( zerohedge)

ix)Pay attention to David Stockman as he outlines correctly what will happen in the next few months with respect to the USA economy:

( DailyReckoning/David Stockman)

x)The lawsuit has been going on for at least 5 years.  The unsealing of the documents came last night as finally the government sues the largest USA Health Insurer on fraudulent overbilling

( zero hedge)

xi)The Senate confirmed Pruitt.  He has been an very outspoken critic on global warming etc.

( zero hedge)

xii) This week’s wrap courtesy of Greg Hunter.

(Greg Hunter/USAWatchdog)

Let us head over to the comex:

The total gold comex open interest ROSE BY 9,001 CONTRACTS UP to an OI level of 429,147 WITH THE RISE IN THE  PRICE OF GOLD ( $8.30 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 27 contracts DOWN to 903.   We had 1 notice(s) served upon yesterday and therefore we LOST 26 contracts or an additional 2600 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 FALL by 62 contracts DOWN TO  1960.The next big active month is April and here the OI ROSE by 6656 contracts UP to 281,772.

We had 20 notice(s) filed upon today for 2000 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI ROSE by 5,314 contracts FROM  199,203 UP TO 204,517 AS THE PRICE OF SILVER ROSE TO THE TUNE OF 11 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 8 contract(s) DOWN TO  140.  We had 24 notice(s) served YESTERDAY so we GAINED 16 CONTRACTS  or an additional 80,000 oz will stand for delivery.

The next big active delivery month is March and here the OI decrease by 4,939 contracts down to 75,387 contracts. For comparison purposes last year on the same date only 74,409 contracts were standing.

We had 0 notice(s) filed for 120,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 159,278  contracts which is poor to fair.

Yesterday’s confirmed volume was 210,537 contracts  which is good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY
 Feb 17/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
nil OZ
Deposits to the Dealer Inventory in oz 1999.900 oz

Brinks

Deposits to the Customer Inventory, in oz 
nil oz
No of oz served (contracts) today
 
20 notice(s)
2000 oz
No of oz to be served (notices)
883 contracts
88,300 oz
Total monthly oz gold served (contracts) so far this month
5145 notices
514,500 oz
16.003 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 0 kilobar transaction(s)/
Today we had 1 deposit(s) into the dealer:
 i) Into Brinks: 1999.90 oz
total dealer deposits:  1999.90 oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil oz
We had 0  adjustment(s)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
For FEBRUARY:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 20 contract(s)  of which 8 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (5145) x 100 oz or 514,500 oz, to which we add the difference between the open interest for the front month of FEBRUARY (903 contracts) minus the number of notices served upon today (20) x 100 oz per contract equals 602,800 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 (5145) x 100 oz  or ounces + {(903)OI for the front month  minus the number of  notices served upon today (20) x 100 oz which equals 605400 oz standing in this non active delivery month of FEBRUARY  (18.830 tonnes)
 
 we lost 26 contracts or an additional 2600 oz will stand in this active delivery month and these were cash settled which is against comex contract law.
 
 
 
 
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On first day notice for FEB 2016, we had 20.124 tonnes of gold standing. At the conclusion of the month we had only 7.9876 tonnes standing. The data suggests that we had almost identical amounts standing in Feb ’16 and Feb 2017; however today’s totals already surpassed the final amt which eventually stood  in 2016.(already 16.003 tonnes vs 7.9876 at the end of Feb).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for all of 2016 and the first month of January 2017
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.3950 tonnes.
DEC.   29.931 tonnes
JAN/     3.9004 tonnes
FEB/ 18.749 tonnes
total for the 14 months;  244.753 tonnes
average 17.482 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventory 1,418,640.029 or 44.125 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,948,247.817 or 278.328 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.328 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 6 MONTHS  76 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE JANUARY DELIVERY MONTH
FEBRUARY INITIAL standings
 feb 17. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
2837.100 0z
Brinks
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 873,830.260 oz
Brinks
CNT
No of oz served today (contracts)
0 CONTRACT(S)
(nil OZ)
No of oz to be served (notices)
140 contracts
(700,000  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   5,914,661.8 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 1 customer withdrawal(s):
i) Out of Brinks:  2837.100 oz
TOTAL CUSTOMER WITHDRAWALS: 2837.100 oz
 we had 2 customer deposit(s):
 i)IntoBrinks: 273,532.850 oz
ii) Into CNT: 600,297.410 oz
***deposits into JPMorgan have now stopped.
total customer deposits;  873,830.260  oz
 
 we had 0  adjustment(s)
The total number of notices filed today for the FEBRUARY. contract month is represented by 0 contract(s) for nil oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at  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 (140) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the FEBRUARY contract month:  410(notices served so far)x 5000 oz  + OI for front month of FEB.( 140 ) -number of notices served upon today (0)x 5000 oz  equals  2,750,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver. 
We GAINED 16 contracts or an additional 80,000 oz will stand for delivery.
At first day notice for the FEB/2016 silver contract month we initially had 515,000 oz standing for delivery.  By the conclusion of the delivery month we had 835,000 oz stand as some of the bankers required immediate silver inventory.
END
Volumes: for silver comex
Today the estimated volume was 65,767 which is excellent!!!
FRIDAY’S  confirmed volume was 95,791 contracts  which is huge.
To give you an idea of volume yesterday’s confirmed volume::  98,547 contracts equates to 479 million oz or 68% 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:   184.231 million oz
The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

feb 17/a withdrawal of 2.37 tonnes of gold from the GLD/Inventory rests at 841.17 tonnes

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

JAN 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 805.00 TONNES

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Feb 16/2017/ Inventory rests tonight at 841.17 tonnes
*IN LAST 92 TRADING DAYS: 108.64 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 39 TRADING DAYS: A NET  16.57 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017:    42.10 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory
feb 17/2017/again no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/
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 11/ A HUGE WITHDRAWAL F 2.843 MILLION OZ/INVENTORY RESTS AT 338.356 MILLION OZ/
JAN 10/no changes in inventory at the SLV/Inventory rests at 341.199 million oz
JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/
.
Feb 17.2017: Inventory 334.713  million oz
 end
At 3;30 pm we receive the COT report.  Let us see how the commercials fared this week: Steve Mnuchin already had 1 day on the job as Sec Treasure when this report was based on.
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
212,259 102,507 57,432 105,674 233,462 375,365 393,401
Change from Prior Reporting Period
-4,149 3,248 5,685 -350 -6,708 1,186 2,225
Traders
169 106 78 46 50 250 200
 
  Small Speculators      
  Long Short Open Interest    
  39,763 21,727 415,128    
  -1,601 -2,640 -415    
  non reportable positions Change from the previous reporting period  
COT Gold Report – Positions as of Tuesday, February 14, 2017

Our Large Specs:

Those large specs that have been long in gold pitched 4149 contracts just as gold was about to rise??

those specs that have been short in gold added 3248 contracts to their short side??

 

Our commercials:

those commercials that have been long in gold pitched 350 contracts from their long side.

those commercials that have been short in gold covered in a hurry : 6708 contracts.

 

Our small specs:

those small specs that have been long in gold pitched 1601 contracts from their long side.

those small specs that have been short in gold covered 2640 contracts.

 

Conclusions:

strange COT: the commercials go net long by 6356 which is bullish.

 

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
104,765 19,953 16,346 48,659 147,686
6,205 -330 -3,040 -1,413 4,902
Traders
100 37 49 34 35
Small Speculators Open Interest Total
Long Short 195,338 Long Short
25,568 11,353 169,770 183,985
-350 -130 1,402 1,752 1,532
non reportable positions Positions as of: 159 106
  Tuesday, February 14, 2017   © SilverSeek.com

Wow!! what a strange COT especially silver

 

Our large specs:

those large specs that have been long in silver added a whopping 6205 contracts to their long side and that is what we should have expected with a rising silver price.

 

those large specs who have been short in silver covered a tiny 330 contracts and they are certainly brave little souls.

Our commercials:

those commercials that have been long in silver pitched 1413 contracts from their long side.

those commercials that have been short in silver added a whopping 4902 contracts to their short side.

 

Our small specs;

those small specs that have been long in silver added 5995 contracts to their long side.

those small specs that have been short in silver covered a tiny 696 contracts.

 

Conclusions:

the commercials go net short by a rather large 6313 contracts with an advancing silver price.

Note the huge difference between silver and gold. Somebody is taking on the crooked banks in silver and in gold.  In silver they are supplying the paper.  In gold they are covering.

 

 

 

 

 

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 8.5 percent to NAV usa funds and Negative 8.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.3%
Percentage of fund in silver:39.5%
cash .+0.2%( feb 17/2017) 
.
2. Sprott silver fund (PSLV): Premium FALLS to -.31%!!!! NAV (Feb 17/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.25% to NAV  ( feb 17/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.31% /Sprott physical gold trust is back into NEGATIVE territory at -0.25%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver trading/commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE

Every Citizen Should Own 3.5 Ounces of Gold Bullion – Central Bank

  • Central bank governor has “dream” for every citizen to own at least 100 grams of gold bullion
  • Governor of Central Bank of Kyrgyzstan said the central bank had sold around 140 kilos of gold bullion to the domestic population already
  • Central Asian country’s central bank continues to diversify into gold bullion
  • “Gold can be stored for a long time … doesn’t lose its value for the population as a means of savings”
  • “I’ll try to turn the dream into reality faster…”

The Governor of the Central bank of Kyrgyzstan has told Bloomberg News in an interview that it is his “dream” for every citizen in his country to own at least 100 grams (3.5 ounces) of gold as a way to protect their savings.

Diversifying one’s savings so that they are not solely held in fiat paper or electronic currencies in frequently vulnerable banks in a vulnerable banking and financial system is prudent advice in these uncertain times.

Indeed, there is a strong case to be made that the policies of most central banks in recent years have led to a massive debt bubble and the risk of another financial crisis, currency wars and currency debasement on a grand scale.

Hence, it was very refreshing to hear the actual governor of a central bank passionately advocate and proactively helping his fellow citizens to protect their savings by diversifying and having an allocation to physical gold.

From Bloomberg:

One of the first post-Soviet republics to adopt a new currency and let it trade freely, Kyrgyzstan’s central bank wants every citizen to diversify into gold. Governor Tolkunbek Abdygulov says his “dream” is for every one of the 6 million citizens to own at least 100 grams (3.5 ounces) of the precious metal, the Central Asian country’s biggest export.

“Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings,” he said in an interview. “I’ll try to turn the dream into reality faster.”

In the two years that the central bank has offered bars directly to the population, about 140 kilograms of bullion have been sold, Abdygulov, 40, said by phone from the capital, Bishkek.

“We are hopeful that our country’s population will learn to diversify its savings into assets that are more liquid and — more importantly — capable of retaining their value,” he said. In rural areas, cattle is still the asset of choice for investors and savers, according to Abdygulov.

Kyrgyzstan has bucked a trend among central banks, the biggest owners of bullion, by stepping up buying even as its counterparts cut purchases in 2016 to a six-year low. Global combined bar and coin demand fell, according to the World Gold Council.

Across the emerging world, gold — often seen as the ultimate haven at times of upheaval — hardly needs any extra promotion. India, the world’s largest consumer after China, is in fact taking steps to curb imports of the precious metal by encouraging its citizens to deposit private gold holdings in banks.

In Turkey, where banks can use bullion as part of their reserve assets, President Recep Tayyip Erdogan last year called on people to convert their foreign-currency savings into liras and gold.

What makes Kyrgyzstan unique is the central bank’s effort to win converts by providing infrastructure for safe-keeping and investment. The central bank produces bars of different sizes, varying in weight from 1 to 100 grams.

The central bank governor believes his plan is realistic, even though it means the population would own about 600 tons of gold, equivalent to 30 times the nation’s current annual output. Abdygulov declined to specify the timeframe for when his goal of 100 grams per person can be met.

The options available for storage include safe deposit boxes at commercial lenders or with the central bank, he said. Some people opt to keep gold at home or possibly even bury it in the ground, according to Abdygulov.

With Kyrgyzstan enduring upheaval from economic crises in the early 1990s to bank failures during the last decade, gold is seen as a far safer bet than securities, he said.

“For Kyrgyzstan, gold is an alternative instrument of investment,” Abdygulov said. “The National Bank has ensured liquidity for gold — we aren’t only selling, but also buying back gold bars that we produced and sold.”

As Abdygulov took the reins of the central bank in 2014, Kyrgyz policy makers decided to raise gold’s share in its own reserves, now keeping about 10 percent of its $2 billion holdings in bullion. After years of capping the amount at 2.6 tons, the stockpile surged by more than 70 percent since 2012 to 4.5 tons at the end of the third quarter in 2016, according to the latest data compiled by the London-based World Gold Council.

With Kyrgyzstan’s output at about 20 tons a year, the central bank uses the national currency, the som, to buy gold mined locally, which can then be sold abroad if needed, according to Abdygulov. The governor said he’s counting on higher output in the future.

Abdygulov, who has masters degrees from Nagoya University in Japan and the University of North Texas, may be a gold enthusiast, but he’s no advocate for dislodging the dollar completely. His advice is based on the “rule of three” — splitting up savings between the som, foreign currency and gold.

As for the metal’s prospects, he’s upbeat, even after it surged the most in five years in 2016 and continued to post gains in 2017. Bullion has rallied more than 7 percent this year as concerns that Donald Trump’s policies on trade and immigration could derail U.S. growth boosted speculation that the Federal Reserve would be slow to raise borrowing costs.
End>


“Common sense is not so common” as Voltaire said. Financial and monetary common sense regarding gold and the importance of diversifying ones savings and investments is even more uncommon.

As one of the larger gold bullion delivery and storage specialists in the world and a vested commercial interest, GoldCore would obviously greatly welcome the central bank governors of Ireland, UK, U.S. and all western nations to urge their citizens to diversify their savings and own a small amount of gold.

As a specialist in the logistics of delivery and storage of physical gold, we can of course work with them and help them in this regard and we look forward to hearing from them.

We have long been passionate advocates of owning physical gold and have spent a lot of time educating about gold’s safe haven characteristics. This has been seen clearly in history and during the recent global financial crisis and indeed in the large body of new academic and independent research on gold in recent years.

The Governor clearly understands gold’s value and is acting accordingly in the interests of his fellow citizens.

Bravo Governor and Happy Friday folks !

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

 
 

1 Chinese yuan vs USA dollar/yuan WEAKER AT  6.8678(SMALL DEVALUATION SOUTHBOUND   /OFFSHORE YUAN WIDENS   TO 6.8478 / Shanghai bourse DOWN 27.54 POINTS OR .85%   / HANG SANG CLOSED DOWN 73.96 POINTS OR 0.31% 

2. Nikkei closed DOWN 112.91 POINTS OR 0.58%   /USA: YEN FALLS TO 112.83

3. Europe stocks opened ALL IN THE RED EXCEPT LONDON      ( /USA dollar index RISES TO  100.61/Euro UP to 1.0654

3b Japan 10 year bond yield: FALLS TO    +.094%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.83/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  53.13  and Brent: 55.28

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  +.306%/Italian 10 yr bond yield DOWN  to 2.178%    

3j Greek 10 year bond yield RISES to  : 7.85%   

3k Gold at $1241.80/silver $18.03(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 52/100 in  roubles/dollar) 58.14-

3m oil into the 53 dollar handle for WTI and 55 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.83 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9985 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0638 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

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

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

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

4. USA 10 year treasury bond at 2.420% early this morning. Thirty year rate  at 3.021% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

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

S&P Futures, Global Stocks Slide As European Political Fears Return; Gold Jumps

S&P equity futures followed Asian and European stocks lower, driven by weakness in French and Italian markets, as French political concerns returned; the pound tumbled after UK monthly retail sales unexpectedly dropped pushing the dollar higher and Euro lower.

About an hour after the European open, major indices experienced softness despite no fundamental catalyst to see Euro Stoxx 50 lower by 0.5%.  The euro weakened and French bonds declined after the French Socialist Party’s presidential candidate, Benoit Hamon, said he’s in talks with far-left candidate Jean-Luc Melenchon about a single candidacy that would increase the likelihood of a stand -off with far-right front runner Marine le Pen, sending 10y OAT yields up 5bps and 6bps wider against Germany. Gold rebounded 0.2% as a quiet push into safe assets continued.

Global equity markets are set to end the week on a softer footing on Friday, after setting record highs in the previous two sessions, as investors looked for clarity on U.S. President Donald Trump’s policies on tax and trade. Confusion over US fiscal and monetary policy has grown as traders have gone back and forth assessing the prospects for President Donald Trump’s economics plans and the timing of U.S. interest-rate increases. Financial conditions have continued to tighten as March rate hike odds jumped after Yellen’s congressional testimony: the renewed uptick in 3M OIS and LIbor have yet to impact broader asset classes.

Trump’s plans last week to unveil a “phenomenal” tax policy spurred a rally in stocks, the dollar and emerging-market assets. In Congressional testimony this week, Yellen warned against waiting too long to tighten policy and said a healthier economy may warrant higher interest rates.

Speaking to Bloomberg, Naeem Aslam, chief market analyst at Think Markets said “many do believe that the market is getting ahead of itself and there is just too much optimism about how far Trump can go with his fiscal and tax plans as he still needs full approval from congress,” said “The chances of that are not that great and this is what makes some investors a little pessimistic.”

Much of the action was again in currencies, with the USDJPY sliding most of the overnight session, dragging global risk sentiment lower. Although the dollar was 0.3 percent firmer on the day, it was hovering near a one-week low against a basket of currencies .DXY and headed for its sixth week of losses in the last eight, as investors awaited substantive market-friendly news from President Donald Trump on tax reform. The greenback hit a one-month high on Wednesday after U.S. Federal Reserve Chair Janet Yellen supported a near-term rate hike due to signs of robust economic growth. Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo said the dollar’s recent bounce lacked conviction.

“This shows that the market is still trying to work out the implication of President Trump’s policies, of which his approach to trade may not be supportive for the dollar,” he said.

The pound fell half a percent to $1.2427 after data showing retail sales in Britain fell shaprly 0.3% month-on-month last month, on expectations for a 0.9% rise.

The MSCI All-Country World index was headed for its fourth straight week of gains after hitting a record high on Thursday, but Asian and European markets eased as investors cashed in recent gains.

The MSCI’s index of Asia-Pacific shares outside Japan pulled back 0.2%, Tokyo stocks closed down 0.6 percent and the pan-European STOXX 600 index was 0.5 percent lower, although it remained near its highest level in 13 months.

Equities in Europe fell, paring a second weekly advance, led by commodity producers as prices of industrial metals were dragged down by further signs of tightening liquidity in China.

“It’s too soon to tell what divergent monetary policy will do to equity markets, but higher rates in the U.S. may help financials do better,” said Ramakrishnan.

In commodities, gold was set for its third week of gains as political uncertainty spurred demand for the safe haven precious metal. Spot gold was up 0.2% on the day. Brent crude futures were down 0.8%, paring back earlier gains. OPEC sources told Reuters the producers’ club could extend its output cut in order to rein in global oversupply. Copper was set to end the week lower as profit-taking pared back the price of the three-month copper contract, though concerns over supply from Chilean and Indonesian mines remained.

Bond yields slipped pretty much across the board. Yields on 10Y Treasuries hovered at 2.43% having crept higher during the week on U.S. rate hike speculation, while yields on Europe’s benchmark, German Bunds, were down 3 basis points at 0.32%. There has been a noticeable divide this week, with safe-haven Bunds and other core countries like France and Austria have seeing yields rise, while Spain and Italy have seen theirs fall for the first week in five, helped by some soothing noises from the European Central Bank. The ECB’s minutes on Thursday indicated little appetite for curbing stimulus, setting the scene for a divergence in central bank policy between the U.S. and Europe.

Market Snapshot

  • S&P 500 futures down 0.3% to 2,339.00
  • STOXX Europe 600 down 0.5% to 368.27
  • German 10Y yield fell 3.0 bps to 0.319%
  • Euro down 0.2% to 1.0650 per US$
  • Brent Futures down 0.1% to $55.57/bbl
  • Italian 10Y yield fell 8.6 bps to 2.156%
  • Spanish 10Y yield rose 0.7 bps to 1.61%
  • MXAP down 0.2% to 144.97
  • MXAPJ down 0.3% to 466.19
  • Nikkei down 0.6% to 19,234.62
  • Topix down 0.4% to 1,544.54
  • Hang Seng Index down 0.3% to 24,033.74
  • Shanghai Composite down 0.9% to 3,202.08
  • Sensex up 0.6% to 28,470.70
  • Australia S&P/ASX 200 down 0.2% to 5,805.82
  • Kospi down 0.06% to 2,080.58
  • Brent Futures down 0.1% to $55.57/bbl
  • Gold spot up 0.2% to $1,241.35
  • U.S. Dollar Index up 0.2% to 100.67

Top Overnight News from BBG

  • Mnuchin Warned by Japan, Germany as G-20 Sees New Economic Order
  • Sage CEO Says Biotech Firm Has Received Takeover Interest
  • U.S. House Steps Up Effort to Derail Exxon Climate Probe
  • UnitedHealth Accused of Overcharging Medicare by Billions
  • Trump’s Second Pick for Labor Differs More in Style Than Policy
  • Boeing, SpaceX Safety Risks May Delay U.S. Astronaut Travel
  • Macau Casino Stocks Flash Warnings That Preceded 2014 Crash
  • U.K. Retail Sales Unexpectedly Decline as Inflation Bites
  • Calpers, Others to Push Banks on Dakota Access Pipeline: FT

* * *

Asia equity markets traded negative following the subdued lead from the US, where the Nasdaq and S&P 500 ended their string of records, although the DJIA still edged a fresh all-time closing high with minimal gains of 0.04%. ASX 200 (-0.2%) was lower amid a lack of drivers with the index weighed down by the healthcare sector, whilst Nikkei 225 (-0.6%) was the laggard as exporters suffered from the recent JPY strength. China markets were also weak with the Shanghai Comp. (-0.9%) and Hang Seng (-0.4%) dampened after the PBoC’s liquidity operations amounted to a consecutive net weekly drain. 10yr JGBs were higher following advances in T-notes and amid the risk averse sentiment in Japan, while the curve was mixed with mild outperformance in the long-end. PBoC injected CNY 50bIn 7-day reverse repos, CNY 50bIn in 14-day reverse repos and CNY 50bIn in 28-day reverse repos for a net weekly drain of CNY 150bIn vs. Prev. CNY 625bn drain last week.

Top Asian News

  • UOB Profit Declines as Bank Boosts Energy Loan Provisions
  • Singapore’s Economy Expands at Fastest Pace in More Than 5 Years
  • PBOC’s Cash Moves Act to Lower Banks’ Reserve Ratios, Data Show
  • Coal-Loving Indonesian Investor Doubles Down After 39% Gain
  • China’s H Shares Pare Weekly Advance as Banking Rally Stumbles
  • Singapore, Hong Kong Restart Dual-Class Push to Snag IPOs
  • China Futures Volume Surges as Brokers Climb on Looser Curbs

European stocks are also lower, with the Stoxx 600 down 0.5%, as this morning has seen a typically quiet Friday in terms of newsflow, however with price action garnering some attention. Around an hour into equity trade, major indices experiences softness amid no new fundamental catalyst to see Euro Stoxx 50 lower by 0.5%. In terms of a sector specific basis, energy is among the worst performers, while healthcare outperforms after Shire’s earnings yesterday and with AstraZeneca’s Lynparza met its primary endpoint. Elsewhere, the most notable earnings from the past 24 hours has come from Allianz, with an impressive beat and a share buyback program seeing Co. shares soar. In tandem with the downside seen in equities by mid-morning, fixed income markets pushed higher as Bunds retake the 164 level and retrace all the softness seen throughout the week. The US 10Y yield is also approaching pre-Yellen levels at around 2.64.

Top European News

  • ECB Shows Readiness to Flex Rules If Inflation Goal’s at Stake
  • Allianz Plans $3.2 Billion Share Buyback as Profit Climbs (3)
  • U.K.’s Clark Meets PSA Chiefs to Make Case for Vauxhall
  • Sprint by Turkish Stocks Leaves Fund Managers in Starting Blocks
  • Swedish Muzak Startup Ditches Spotify in World Expansion Bid

In currencies, UK retail sales data was the only top tier release for the day, and came in far weaker than expected despite some correction expected due to the drop seen in the previous month. The Jan data missed on all counts, with headline M/M falling 0.3% vs a +0.9% rise expected. GBP was falling ahead of the release, with Cable trade above 1.2500 all too brief and followed up by a move through the 1.2400’s to retest the lows around 1.2385 seen earlier in the week. EUR/GBP raced up towards 0.8600 after a temporary dip towards 0.8500, but it looks as though heavy GBP/JPY sales provided just as much of the impetus as pre 142.00 trade earlier in the day led to an eventual drop below 140.00. The flow may well have been encouraged by the weakness in USD/JPY, which has now dropped below 113.00 putting the support from 112.50 back under threat as UST yields continue to struggle despite this week’s events/data.

In commodities, the Bloomberg Commodity Index fell 0.4 percent, heading for its fourth weekly drop in five. Oil declined 0.2 percent to $53.28 a barrel. Crude is heading for its first weekly decline in five weeks as expanding U.S. crude stockpiles countered output cuts from OPEC and other producing nations. Gold nudged 0.2 percent higher to $1,241.56 an ounce and is and is set for its seventh weekly gain in eight weeks. Front and centre at present is the rise in Gold, and despite the obvious negative correlation with the USD, the risk tone has turned a little to cause some wobbles on Wall Street. The Dow may have eked out some fresh record highs, but not after a confused start exacerbated by the rise in Treasuries. Base metals across the board have eased back off better levels on the week due to risk sentiment also, but minor outperformance seen in Platinum. USD weakness will also underpin Oil prices, but with the growth in inventories dismissed due to the future impact of the OPEC agreed productions, support in WTI looks well established and comfortably ahead of USD50.00, though little to prompt a move on USD55.00+ for now. Support in Brent comes in ahead of USD55.00.

Looking at the day ahead it looks set to be a fairly quiet end to the week. In Europe this morning the only data came from the UK where the January retail sales figures disappointed (-0.3%, Exp. 0.9%, last -1.9%) while in the US this we’ve got the Conference Board’s leading indicator for January. Earnings wise Allianz headlines a small list.

US Event Calendar

  •     10am: Leading Index, est. 0.5%, prior 0.5%
  • * * *

DB’s Jim Reid concludes the overnight wrap

On a relatively dull day markets wise the ECB minutes brought a little excitement to European bonds at least. The minutes said that implementing the planned QE programme would “inevitably” require “limited and temporary deviations” from the ECB’s capital key. Although ‘limited’ and ‘temporary’ don’t indicate anything substantial this was still enough to help peripherals rally strongly. Indeed 10y yields in Italy, Spain and Portugal finished -10.3bps, -8.9bps and -10.4bps lower respectively and so tightening their spreads to Bunds which ended -2.5bps on the day. 10y Treasury yields (-4.8bps to 2.445%) also finished lower for the first time since February 8th. Not even a bumper Philly Fed manufacturing index reading which saw the index surge nearly 20pts to 43.3 in February and the highest since 1984 could halt the reversal. The jump in the data was in fact the single biggest in a month since 2009 and came hot on the heels of a decent NY Fed manufacturing survey on Wednesday.

For the most part the reversal for bonds was also the case for risk assets. Despite staging a typical late bounce-back into the close the S&P 500 (-0.09%) finally snapped a run of 7 consecutive daily gains and finished lower for the first time since February 6th. The Dow (+0.04%) did manage to just eke out a small gain and extend the record high for another day although the runs did come to an end for the Nasdaq (-0.08%) and Russell 2000 (-0.36%) indices too. The overall tone in Europe had been relatively soft too (Stoxx 600 -0.37%) with Banks and Energy sectors under pressure. Oil was particularly volatile in the afternoon as we saw WTI touch as high at $53.59/bbl, before tumbling to $52.68/bbl, and then reverse again into the close to actually finish up +0.60% at around $53.36/bbl. A combination of growing US inventories following the latest EIA data and a Reuters report suggesting that OPEC could look to extend the six-month production cut both seemed to play their part.

Elsewhere there was a bit of excitement in the spike up in the VIX (+7.40%) to 12.86 in the early evening which saw it reach a new high for the month, only for the index to completely retrace into the close and end more or less flat. Currencies were a bit more one-way however with the Dollar index (-0.73%) down for the second day in a row following ten successive daily gains. The Yen (+0.81%) was a big beneficiary against that and we’re seeing that weigh on Japanese equities this morning with the Nikkei currently -0.55%. The Hang Seng (-0.15%), ASX (-0.14%) and Kospi (-0.17%) are also down while bourses in China were initially up helped by the news of the China futures exchange relaxing curbs on stock index futures trading, but are now down a similar amount.

Moving on. While there was some focus on the President Trump press conference yesterday, more so for its typical entertainment than any material updates for markets, House Speaker Ryan did emphasise separately that a tax reform “has to happen” and that following the President’s Day break on Monday, the House intends to “introduce legislation and repeal and replace Obamacare”. Ryan also said that a much anticipated border adjustment tax is needed to spur US manufacturing and that currency adjustment would occur with tax law harmonization.

Closer to home, time is ticking down now to the Eurogroup meeting on Monday and it seems that there is growing scepticism out there that a Greek deal will be struck in time. Germany parliamentary members stressed the need to have IMF participation yesterday which they also said is precisely the position taken by euro area finance ministers. The FT also ran an article downplaying hope of an agreement by next week, suggesting instead that a deal may be months away now. While Greece is likely able to stand on its own two feet until July (when heavy bond maturities are due) its looking like any progress will go on the backburner until the Dutch and first round of French elections are out of the way over the next couple of months.

Before we wrap up, the only other data yesterday in the US came in the housing sector where housing starts revealed a suspiring -2.6% mom decline in January (vs. 0.0% expected) but permits jumped a better than expected +4.6% mom (vs. +0.2% expected). Initial jobless claims rose 5k last week to 239k but remain at low levels still. Elsewhere, Fed Vice-Chair Fischer also spoke but didn’t give much away in terms of timing for the next rate hike while also declining to say whether or not he expects two or three moves this year.

While we’re on the Fed, it’s worth drawing your attention to our economists’ latest Global Economic Perspectives piece where they have taken a look at the looming leadership shake-up. They note that President Trump will have considerable scope to reshape the Fed. By April, there will now be at least three vacancies on the seven-seat Board of Governors (following Governor Tarullo’s resignation), whilst Fed Chair Janet Yellen’s term as Chair will end in January next year. They note that at this point there is substantial uncertainty about who could replace Chair Yellen – there has been little indication from the Trump administration about possible candidates. Our team discuss several of the candidates that have been mentioned (these include current Governor Jerome Powell, past Governor Kevin Warsh, and academic John Taylor). Based on Trump’s past comments, the makeup of his economic advisors and appointments, and the political leanings of Congressional Republicans, they argue that it would seem that Trump may prefer a candidate that: (1) has significant experience in markets and/or business (i.e., a market practitioner rather than an academic economist), (2) does not have strong hawkish leanings that would work against Trump’s growth agenda, and (3) does not forcefully reject greater Congressional oversight of the Fed. They write that who occupies the Chair’s seat would be critical for markets in any environment. But Yellen’s replacement could be even more important, as he or she may well preside over an economy that is near full employment and that is given a large dose of fiscal stimulus. This raises the risk that the Fed could fall behind the curve.

Looking at the day ahead it looks set to be a fairly quiet end to the week. In Europe this morning the only data comes from the UK where we’ll get the January retail sales figures (where a rebound is expected) while in the US this afternoon we’ve got the Conference Board’s leading indicator for January. Earnings wise Allianz headlines a small list

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 27.54 POINTS OR .85%/ /Hang Sang CLOSED DOWN 73.96 POINTS OR 0.58% . The Nikkei closed DOWN 112.91 POINTS OR 0.58% /Australia’s all ordinaires  CLOSED DOWN 0.21%/Chinese yuan (ONSHORE) closed DOWN at 6.8678/Oil FELL to 53.13 dollars per barrel for WTI and 55.28 for Brent. Stocks in Europe ALL IN THE RED EXCEPT LONDON. Offshore yuan trades  6.8478 yuan to the dollar vs 6.8678  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS WIDENS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

South Korea’s largest company Samsung has its Chief Executive Officer arrested for bribery perjury and embezzlement

(courtesy zero hedge)

 

Samsung Chief Arrested For Bribery, Perjury And Embezzlement

Exactly one month ago, South Korea’s political crisis – recall that the country’s president Park Geun-hye was impeached last December – spilled over into the corporate sector when the country’s special prosecutor unexpectedly sought a warrant to arrest the head of Samsung, the country’s largest conglomerate, accusing him of paying multi-million dollar bribes to a friend of impeached President Park Geun-hye. On the night of January 16, investigators had grilled the head of Samsung, the world’s largest maker of smartphones, flat-screen TVs and memory chips, Jay Y. Lee for 22 straight hours last week as a suspect in a massive corruption scandal, which last month led to parliament impeaching president Park.

As a quick tangent, putting Samsung’s size and importance in context, the company generates $230 billion in annual revenue, equivalent to about 17% of South Korea’s export-oriented economy, the fourth largest in Asia.

The special prosecutor’s office had accused Lee of paying bribes total 43 billion won ($38 million) to organizations linked to Choi Soon-sil, a friend of the president who is at the center of the scandal, in order to secure the 2015 merger of two affiliates and cement his control of the family business. The 48-year-old Lee, who became the de facto head of the Samsung Group after his father, Lee Kun-hee, was incapacitated by a heart attack in 2014, was also accused of embezzlement and perjury.  Prosecutors allege that Lee, 48, funded Park’s associates as he tried to consolidate control over the sprawling conglomerate founded by his grandfather.

But whereas on January 19 the court rejected a request from prosecutors to arrest Lee, one month later it changed its mind. Fast forward to today, when in denial of some cynics who suggested it would could not happen, Samsung chief Jay Y. Lee was formally arrested on allegations of bribery, perjury and embezzlement, “an extraordinary step that jeopardizes the executive’s ascent to the top role at the world’s biggest smartphone maker and the nation’s most powerful company.”


Samsung chief, Jay Y. Lee, leaves for the Seoul Central District Court,
February 16, 2017. Reuters

The Seoul Central District Court issued the warrant for Lee’s arrest early Friday and the 48-year-old Lee was taken into custody at the Seoul Detention Centre, where he had awaited the court’s decision following a day-long, closed-door hearing that ended on Thursday evening. According to Reuters, the judge’s decision was announced at about 5:30 a.m. (2030 GMT) on Friday, more than 10 hours after Lee, the sprawling conglomerate’s third-generation leader, had left the court. There’s a chance the suspect could destroy evidence or flee, so arresting him is appropriate, a court spokesperson said.

On Tuesday, the special prosecutor’s office had requested a warrant to arrest him and another executive, Samsung Electronics president Park Sang-jin, on bribery and other charges.  The court rejected the request to arrest Park, who also heads the Korea Equestrian Federation, saying it was not needed given his “position, the boundary of his authority and his actual role”.

The court reversed its opinion because, as Reuters reports, the prosecution said it had secured additional evidence and brought more charges against Lee in the latest warrant request. “We acknowledge the cause and necessity of the arrest,” a judge said in his ruling, citing the extra charges and evidence.

When he testified at a parliamentary hearing in December, Lee said he never ordered donations to be made in return for preferential measures and rejected allegations he received wrongful government support to push through a merger of two Samsung affiliates in 2015. Still, Lee, who has been put under a travel ban, confirmed he had private meetings with Park and that Samsung had provided a horse worth 1 billion won that was used for equestrian lessons by Choi’s daughter.

That said, according to Bloomberg, when Including procedural steps and appeals, it may take as long as 18 months for a trial and verdict.

Meanwhile, a Samsung spokeswoman said no decision had been made about whether Lee’s arrest would be contested or whether bail would be sought.

Samsung and Lee have denied wrongdoing in the case. “We will do our best to ensure that the truth is revealed in future court proceedings,” the Samsung Group said in a brief statement after Lee’s arrest.

While Lee’s arrest is not expected to hamper day-to-day operation of Samsung Group companies, which are run by professional managers, experts have said it could affect strategic decision-making by South Korea’s biggest conglomerate.  “There are more than 100,000 of us (in Samsung Electronics). It wouldn’t make sense for a company of that size to not function properly just because the owner is away. It’s business as usual for us,” said an engineer at Samsung Electronics, who declined to be identified.

Of course, when the boss of one of the world’s biggest companies is arrested for bribery, perjury and embezzlement, it is hardly ever a good thing.

To be sure, Lee’s arrest would have an impact on longer-term investment decisions, said Kim, now a professor at Sungkyunkwan University. “Samsung presidents are evaluated on an annual basis, so they cannot make bold bets about the future. They need a chairman when making long-term investment decisions,” he said.

Ultimately, Lee may be just a pawn, albeit very powerful, in the ongoing legal crusade against President Park and her close friend Choi Soon-sil, who is in detention and faces charges of abuse of power and attempted fraud. As reported last month, prosecutors focused their investigations on Samsung’s relationship with Park, 65, who was impeached by parliament in December and has been stripped of her powers while the Constitutional Court decides whether to uphold her impeachment.

They accused Samsung of paying bribes totaling 43 billion won ($37.74 million) to organizations linked to Choi to secure the government’s backing for a merger of two Samsung units. That funding includes Samsung’s sponsorship of the equestrian career of Choi’s daughter, who is in detention in Denmark, having been on a South Korean wanted list.

If parliament’s impeachment is upheld by the Constitutional Court, Park will become South Korea’s first democratically elected leader to be forced from office early. Park remains in office but stripped of her powers while she awaits the Constitutional Court’s decision.

“This is a painful event for Vice Chairman Lee,” said Kim Sang-jo, a shareholder activist and economics professor at Hansung University who was questioned by the special prosecutor as a witness in the probe. “But this will be an important opportunity for Samsung Group to sever ties with the past,” he said, referring to links between the government and the country’s conglomerates, also known as chaebol.

What happens to the company’s stock? It is unlikely that the market will be too excited about this rather unexpected outcome.

“In the short term, it could have an impact on the stock, only because of sentiment, and also because the stock has risen a lot recently,” Jung Sang-jin, a fund manager at Korea Investment Management, told Bloomberg. “In the long-term, there won’t be much impact on the stock, given previous times when other chaebol heads were arrested with few problems for their companies to keep running the business.”

Perhaps he is being too optimistic: keep an eye on the Kospi where trading may be more volatile than usual after today’s news. On the other hand, we are confident the fund manager is right: in the long run, it will most likely be business as usual.

END

b) REPORT ON JAPAN

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

This should be interesting:  the two left wing candidates are to meet and decide on one candidate in the upcoming April elections.  The combined vote may be enough for them to come in second place and thus  remove the centrist candidates

(courtesy zero hedge)

French Bonds Tumble As Left-Wing Coalition Sparks More Le Pen Anxiety

The French presidential election campaign just proved that ‘two wrongs do not make a right’.

French bonds tumbled relative to Bunds as Bloomberg reports, Socialist Party presidential candidate Benoit Hamon said he’s holding further talks with far-left candidate Jean-Luc Melenchon about a potential single candidacy.

A merger could bring about a showdown with Marine Le Pen’s anti-euro National Front, with the latest polls showing the combined vote share of the two candidates would see them qualify for the second round of voting in May.

France, Opinion Way poll:

Le Pen (FN-ENF): 26%
Macron (EM-NI) 20% ↓
Fillon (LR-EPP): 20%
Hamon (PS-S&D) 16%
Mélenchon (FG-LEFT): 13% ↑

And Le Pen’s odds are rising on the news of the potential merger…

 

And the reaction is clear… French bond risk is resurging…

“This is clearly not a positive for French bonds,” said Kim Liu, a strategist at ABN Amro Bank.

It increases the odds of a Le Pen victory, with French bonds already being very vulnerable to political risks. It’s too early to call if this is a game changer as we do not know how serious the merger talks are, but certainly this is not something the market is waiting for.

 

end

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6.GLOBAL ISSUES

none today

7. OIL ISSUES

A great in depth analysis of the global oil market and why Berman believes that WTI is likely to be below 50 dollars than at 70 dollars

(courtesy Art Berman/Oil Price.com)

Why Sub $50 Oil Is More Likely Than $70 Oil

Submitted by Arthur Berman via OilPrice.com,

It is more likely that oil prices will fall below $50 per barrel than that they will continue to rise toward $70. Prices have increased beyond supply and demand fundamentals because of premature expectations about the effects of an OPEC production cut on oil inventories.

Last week’s 13.8 million barrel addition to U.S. storage was the second largest in history. It moved U.S. crude oil inventories to new record high levels.

Meanwhile, 130 horizontal rigs have been added to tight oil drilling since the OPEC cut was first announced in September. That means that U.S. output will surge and will continue to be a drag on higher prices.

Comparative inventory analysis suggests that the current ~$53 per barrel WTI oil price is at least $6 per barrel too high. Don’t hold your breath for $70 oil prices.

Inventory Is The Key

Most analysts believe prices will increase steadily now that OPEC has decided to cut production. Their logic is that over-production caused lower oil prices and lower output should bring markets into production-consumption balance.

The problem is that production is not the same as supply and consumption is not the same as demand. Inventories lie in-between and modulate the flows from both sides of the production-consumption equation.

Inventory is clearly part of supply but is also a component of demand. Excess production goes into inventory when demand is less than supply. When consumption exceeds production, oil is withdrawn from inventory reflecting increased demand.

The International Energy Agency (IEA) reported last week that global liquids markets would move to a supply deficit by the first quarter of 2017 if OPEC production cuts take place as announced (Figure 1).

Figure 1. IEA Demand/Supply Balance until 2Q17. Source: IEA February 2017 Oil Market Report.

Yet the OECD inventories on which IEA’s forecast is based have increased and are now more than 400 million barrels above the 5-year average (Figure 2). In order for a supply deficit to develop in the first quarter of 2017, those stocks would have to be drastically reduced over the next 6 weeks. Comparative inventory analysis provides some context for the necessary magnitude of that reduction.

(Click to enlarge)

Figure 2. OECD Incremental Inventories Are At Record High Levels Although Absolute Inventories Have Flattened in Recent Months. Source: EIA and Labyrinth Consulting Services, Inc.

Comparative inventories index current storage levels against a moving average of values for the same calendar date over the previous 5 years. This provides the most reliable way of understanding oil-price trends by normalizing stock changes for seasonal variations and comparing them with 5-year average values.

Figure 3 shows that current OECD comparative inventories (C.I.) are at an all-time high level of more than 300 million barrels (absolute inventories are 3.1 billion barrels).

C.I. values around zero (+/- about 50 mmb) correspond to periods of high oil prices (>$80 per barrel) over the past decade. That suggests that comparative inventories need to fall approximately 200 to 300 million barrels to support $70 to $80 per barrel oil prices.

(Click to enlarge)

Figure 3. OECD Comparative Inventories Are At An All-Time High & Need to Fall 200-300 mmb To Support $70-$80 Per Barrel Oil Prices. Source: EIA STEO and Labyrinth Consulting Services, Inc.

What the IEA is apparently showing in Figure 1 as a “demand/supply balance” is really a demand/production balance. If OPEC cuts move forward as announced, consumption will exceed production in the first two quarters of 2017 and withdrawals from storage will occur. That is a legitimate demand increase.

The billions of barrels of working capacity remaining in inventory are not considered supply in this calculation of balance. That distorts the supply-demand relationship.* At the very least, it does not treat the ~550 million barrels of incremental inventory that has accumulated since December 2013 in Figure 2 as supply.

Inventory is like a savings account for oil. It may be in a separate account from checking but it is part of total available supply. This sort of confusion over definitions of supply and demand is easily avoided by considering comparative inventories. Related: Is $60 Oil Within Reach?

Figure 4 is a cross-plot of OECD comparative inventories and Brent prices. It shows that current prices of ~$55 per barrel are approximately $10 per barrel over-valued compared to the trend line. It further shows that comparative inventory levels must fall ~200 million barrels to support ~$70 per barrel oil prices.

(Click to enlarge)

Figure 4. OECD Comparative Inventories At Record Highs–Comparative Inventory Suggests That Current Prices Are ~$10/Barrel Over-Valued. Source: EIA and Labyrinth Consulting Services, Inc.

Movement toward market balance cannot help but accelerate as a result of OPEC production cuts. Still, the massive stock reductions necessary to support higher oil prices will only occur over a much longer period.

It will take at least a year to reduce OECD inventories 400 mmb down to the 5-year average. This assumes that all OPEC cuts take place as announced and continue beyond the 6-month term of those agreements. It also assumes that non-OPEC production declines or at least remains static.

U.S. Production Will Not Remain Static

It is worth recalling that over-production by the U.S. and Canada was the trigger for the global oil-price collapse in 2014 (Figure 5). These two countries accounted for almost half (44 percent) of the incremental increase in crude oil and lease condensate production in the world as of March 2015 peak production levels.

(Click to enlarge)

Figure 5. U.S. + Canada Incremental Ouput: The Major Contributor to Low Oil Prices. Source: EIA and Labyrinth Consulting Services, Inc.

U.S. production fell more than 1 million barrels per day (mmb/d) from April 2015 through September 2016 but is now recovering because of higher oil prices (Figure 6). EIA forecasts that field production will increase to 9.28 mmb/d by the end of 2017 and will reach almost 10 mmb/d by December 2018.

(Click to enlarge)

Figure 6. U.S. Crude Oil Production Has Increased 290 kb/d in The Last 4 Months After Falling 1.06 mmb/d From Apr 2015 to Sept 2016. Source: EIA February 2017 STEO and Labyrinth Consulting Services, Inc.Related: Energy Storage Set To Boom In 2017

EIA does not predict that WTI oil prices will exceed $60 per barrel throughout this 2-year period. It is interesting to note that EIA shows prices falling below $50 per barrel in February 2017 and remaining at that level through mid-year.

After OPEC announced that a production cut agreement was evolving in September 2016, the U.S. horizontal tight oil rig count accelerated. Since then, 130 rigs have been added and 67 percent have been in the Permian basin tight oil play (Figure 7). In recent weeks, the Eagle Ford play rig count has made impressive gains and the Bakken rig count has steadily increased also.

(Click to enlarge)

Figure 7. 130 Tight Oil Rigs Added Since Mid-Sept 2016: 67 percent Are In The Permian Basin. Source: Baker Hughes, EIA, Bloomberg and Labyrinth Consulting Services, Inc.

This reflects a massive flow of capital into these plays that will certainly result in production increases. Approximately $10 billion was spent in 2016 on Permian basin drilling and completion costs for horizontal tight oil wells. An additional $28 billion was spent on Permian land acquisitions.

Don’t Hold Your Breath for $70 Oil Prices

Traders, analysts and the press have consistently looked for every possible reason to anticipate higher prices since the collapse in 2014. Expectation of an OPEC production cut or freeze has provided an artificial lift to oil prices for at least a year and now, probably accounts for at least $6 per barrel of current $53 per barrel NYMEX futures prices.

A recent Wall Street Journal article noted a new record in long crude oil futures positions during the last week in January. It went on to speculate that this meant a possible end to the over-supply of oil and that prices should increase.

That observation is not supported by history. In fact, record long positions are commonly followed by a drop in oil prices. Notable examples shown in Figure 8 include price declines around the 2008 Financial Collapse, the 2014 world oil-price collapse, and the brief rally to $60 prices in the Spring of 2015.

(Click to enlarge)

Figure 8. Record Long Positions on Crude Oil Futures Suggests That Prices Will Fall. Source: CFTC, EIA and Labyrinth Consulting Services, Inc.

Inventory data provides compelling evidence that present oil prices are over-valued. Last week, 13.8 million barrels (mmb) were added to U.S. crude oil storage. That’s the second highest weekly addition ever–the highest was 14.2 mmb on October 28, 2016 when WTI prices were about $5 per barrel lower.

(Click to enlarge)

Figure 9. Crude Oil Inventories Are At Record Levels 140 mmb Above the 5-Year Average. Source: EIA and Labyrinth Consulting Services, Inc.

Comparative inventories are also near record highs (Figure 10). When C.I. was at this level in March 2016, WTI prices were around $39 per barrel. When C.I. was slightly lower in August 2016, prices were about $47 per barrel. The trend line in Figure 10 shows that oil prices are probably about $6 or $7 per barrel over-valued.

(Click to enlarge)

Figure 10. Comparative Inventories Near Record High Levels–Comparative Inventories Suggest Current Prices Are ~$7 Per Barrel Over-Valued. Source: EIA and Labyrinth Consulting Services, Inc.

Oil prices do not always reflect underlying fundamentals but markets eventually adjust because of them. Comparative inventory analysis suggests that current oil prices are over-valued. It is possible that markets have already priced in anticipated uplift from OPEC production cuts. If so, prices may not increase much beyond present levels and expectations of $70 prices any time soon are improbable.

OPEC cuts have almost certainly put a floor under oil prices but volatility will continue to characterize markets as it has for the past 2 years. U.S. production is a wild card that will almost certainly be a drag on upward price movement. My guess is that WTI prices are likely to move below $50 per barrel until effects of OPEC production cuts are reflected in falling global inventories.

*To its credit, IEA shows 2016 inventory declines reaching the maximum levels of the 2011-2015 average. That doesn’t change the fact that current stock levels are 400 mmb above the 2012-2016 5-year average. That’s why comparative inventories are essential.

 

end

 

Oil rigs continue to be utilized in the Permian basin which is causing a record amount of WTI oil glut

(courtesy zero hedge)

 

Permian Panic Continues As Rig Counts Rise Amid Record Glut In Crude

With a record glut of crude and gasoline, US crude production pushed to new cycle highs this week and continues to track lagged rig counts.

US crude inventories are at a new record high…

 

And so are Gasoline inventories…

 

And the rig ccount keeps rising with lagged oil prices…

  • *U.S. OIL RIG COUNT UP 6 TO 597 , BAKER HUGHES SAYS      :BHI US

Highest since October 2015

 

Production keeps rising, and has a long way to go to catch up to the lagged rig count…

 

And the oil algo idiocy from DOE data has been erased with RBOB back below $1.50…

 

The surge in rigs has been driven almost 100% in the Permian, but as OilPrice.com’s Nick Cunningham asks, how much longer that the Permian craze continue?

The two great dueling forces in the world oil market, OPEC and American production, have created an atmosphere of uncertainty, as prices hover above $50. Last week the EIA reported another record inventory and an increasing rig count, while analysts point to a possible crisis as a market held aloft by buoyant predictions of OPEC cuts slowly faces up to insufficient demand.

Crucial to this situation is the state of the U.S. patch, particularly the Permian Basin, which since late last year has been the focus of recovering production. The EIA data for the field is good, with new well production rising sharply and overall production of oil and gas rising sharply in 2017. While some speculate the bubble may burst, prospects for companies already invested in the Permian look positive, even if production costs are rising.

The Permian has seen the highest increase in rig count of any U.S. basin. Six of the twelve rigs added last week went up in the Permian, and its total now stands at 301 rigs, up from 172 a year ago, out of a total U.S. count of 741. In total the count is up 83 percent from May 2016, though it has yet to reach the booming numbers of 2013, when over two thousand rigs were in operation. Even 2015, as the U.S. sector was being squeezed by low prices, saw the total count hovering near two-thousand, according to Baker Hughes.

The increase is coming hot on the heels of the OPEC production deal, and seems to be in direct correlation with the OPEC announcement of nearly 900,000 bpd in cut production this month. For now, markets are happy, but underlying fundamentals remain as they were: cut production in Saudi Arabia and elsewhere will be made up by a resurgent American sector.

Last month, ExxonMobil paid $6.6 billion in order to double its exposure in the Permian, the single largest domestic U.S. oil deal since the price collapse in 2014, according to Forbes. Noble Energy announced in January 2017 it was acquiring Clayton Williams Energy for $2.7 billion, adding seventy-one thousand acres to its holdings in the Permian, specifically in the Southern Delaware Basin.

Austin-based Parsley Energy has been acquiring more acreage, amounting to $2.8 billion, and looks set to be a major Permian player, though its acquisitions came in at a steep $37,000/undeveloped acre.

That looks better when compared to other recent Permian purchases, where land is going for as much as $60,000/undeveloped acre, according to Bloomberg. Those prices are ten-times what drillers pay in the Bakken field in North Dakota, where oil production has fallen off, according to EIA data, and the rig count has fallen. Parsley got a better deal than Concho Resources Inc.’s acquisition last year from Reliance Energy, where the price averaged $45,000/undeveloped acre.

Bloomberg is predicting the steep prices in the Permian will drive away some investors and trigger a backlash. Companies without a foothold will look elsewhere. This thinking explains why Exxon and Parsley made such big grabs, before prices really got out of control.

But for those with the wherewithal, the Permian pays off better than any other field. Occidental Petroleum Corp., which thinks of the Permian as its “growth engine,” has indicated its keeping its primary focus on its 2.5 million acres there, where production costs are so low a price threshold below $40/barrel still assures profitability. The Permian’s so rich, one Occidental exec noted to Natural Gas Intel, “It is pretty hard to drill a dry hole there.” With that in mind, however, Occidental has looked to cut its costs in the Permian by as much as twenty-five percent, in order to make up for steep losses in 2016 Q4.

Other companies that are focused entirely on the Permian, like Diamondback Energy Inc., are not backing out. The company announced its production climbed thirty-eight percent, with Q4 production rising sixteen percent. The late-year boost, the result of the rise in prices on the back of the OPEC deal, helped out other Permian producers. But costs are rising, as running a well per-day rose from $13,900 to $16,000 in the space of a few months last year, according to CNBC.

The high price of getting into the Permian may be offset by the relatively low costs of producing there, as well as the abundance of oil and natural gas that await almost any driller who sinks a well. But if the land rush is in fact over, and attention swings elsewhere, the surge in Permian activity may slacken. That, of course, may be affected if the current bullish swing in prices comes to an end, and if analysts’ predictions of a sharp reduction in prices come to pass.

Some storm clouds related to the high cost of land may inhibit Permian growth, but with production costs low and opportunities bountiful, for those companies already invested the Permian will likely continue to pay off for at least the next year.

8. EMERGING MARKETS

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

Euro/USA   1.0654 DOWN .0017/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING INTEREST RATE/EUROPE BOURSES ALL IN THE RED  

USA/JAPAN YEN 112.83 DOWN 0.489(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2423 DOWN .0061 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT/LOWER HOUSE PASSES BILL TO BEGIN THE BREXIT PROCESS)

USA/CAN 1.3081 UP .0006 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS FRIDAY morning in Europe, the Euro FELL by 17 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0654; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 27.54 POINTS OR 0.85%     / Hang Sang  CLOSED DOWN 73.96 POINTS OR 0.31%    /AUSTRALIA  CLOSED DOWN 0.21%  / EUROPEAN BOURSES ALL IN THE RED EXCEPT LONDON AND INDIA 

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 FRIDAY morning CLOSED DOWN 112.91 POINTS OR 0.58% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 73.96 POINTS OR 0.31%       / SHANGHAI CLOSED DOWN 27.54   OR 0.85%/Australia BOURSE CLOSED DOWN 0.21% /Nikkei (Japan)CLOSED DOWN 112.91 POINTS OR 0.58%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1242.30

silver:$18.03

Early FRIDAY morning USA 10 year bond yield: 2.420% !!! DOWN 3 IN POINTS from THURSDAY 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  3.021, DOWN 2 IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 100.61 UP 11 CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

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And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 4.028% UP 4  in basis point yield from THURSDAY 

JAPANESE BOND YIELD: +.094%  DOWN 5/10  in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.636%  UP 3 IN basis point yield from  THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.190 UP 4 POINTS  in basis point yield from THURSDAY 

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

GERMAN 10 YR BOND YIELD: +.302% DOWN 5 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.0617 DOWN .0053 (Euro DOWN 53 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.79 DOWN: 0.510(Yen UP 51 basis points/ 

Great Britain/USA 1.2431 DOWN 0.0054( POUND DOWN 54 basis points)

USA/Canada 1.3109 UP 0.0034(Canadian dollar DOWN 34 basis points AS OIL ROSE TO $53.09

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This afternoon, the Euro was DOWN by 53 basis points to trade at 1.0617

The Yen ROSE to 112.31 for a GAIN of 54 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 54  basis points, trading at 1.2431/

The Canadian dollar FELL  by 34 basis points to 1.3109,  WITH WTI OIL RISING TO :  $53.09

The USA/Yuan closed at 6.8665/
the 10 yr Japanese bond yield closed at +.094% DOWN 5/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 2 IN basis points from THURSDAY at 2.42% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.023  DOWN 2 in basis points on the day /

Your closing USA dollar index, 100.88 UP 38 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 FRIDAY: 1:00 PM EST

London:  CLOSED UP 22.04 OR 0.30% 
German Dax :CLOSED UP 0.22 POINTS OR 0.00%
Paris Cac  CLOSED DOWN 31.88 OR 0.65%
Spain IBEX CLOSED DOWN 54.40 POINTS OR 0.57%
Italian MIB: CLOSED DOWN 81.08 POINTS OR 0.42%

The Dow closed UP 4.28 OR 0.02%

NASDAQ WAS closed up 23.68 POINTS OR 0.41%  4.00 PM EST
WTI Oil price;  53.01 at 1:00 pm; 

Brent Oil: 55.62  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  57.52 DOWN 30/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD FALLS TO +0.302%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$53.42

BRENT: $55.73

USA 10 YR BOND YIELD: 2.448%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

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: +.302%

 

END

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

TRADING IN GRAPH FORM

Dow, VIX, Gold All Up As Yet Another Ratio Screams “Record High”

This market reminds us of this…“none shall fall”

 

Gold remains 2017’s biggest gainer, oil is down, bonds flat and the panic bid this week dragged The Dow higher…

 

After 6 straight intraday ramps in the S&P 500, the last two days – since Catalyst stopped its forced covering – have seen the character of the market shift notably…

 

On the week, Nasdaq was the big winner, followed by The Dow (as GS, JPM offset UNH)…NOTE the panic buying into the close…

 

The S&P Tech sector is up 13 days in a row – every day in Feb -the longest streak in its 28 year history

 

Just look at the panic in VIX crushing to spike The Dow green…

 

This is easy…

Financials were the week’s best performer (best week for banks in over 2 months) and Energy the biggest loser (worst week in over 3 months)…

 

VIX was up and stocks were up…

 

This was the largest divergence week between VIX and S&P in years… (S&P +1.3%, VIX +6.5%)

 

Notable decoupling between stocks and bonds this week…

 

Bonds end the week marginally higher in yield (2Y unch)… 4 days in a row of strong buying pressure during the US day session

 

The USD limped higher to end the week green led by Cable weakness…

 

Crude broke a 4-week winning streak and closed red (as the dollar rose for the second week), but PMs managed to eke out a gain…

 

Stocks don;t care about oil anymore…

 

NOTE: Hedge funds boost bullish WTI crude bets by 30,951 net longs to 390,338, new record high

Finally, as Bloomberg’s Cameron ‘macroman’ Crise notes, if you’re looking for another reason to get bearish US equities, try this: the ratio of equity to bond returns is approaching all-time highs in data going back 29 years.

 

 

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All is not well in the auto loan department.  The bubble seems to have burst in this 1.1 trillion USA market as subprime delinquencies  (greater than 60 days) skyrocket. There are over 1 million auto loans borrowers that are behind greater than 60 days.

 

(courtesy zero hedge)

Auto Bubble Burst Begins As Subprime Delinquencies Soar To 2009 Levels

For months we’ve argued that record auto sales have been propped up by low interest rates, a perpetual loosening of auto lending standards with terms being stretched to the max and a wave of leases, all of which have allowed the American consumer to trade up to more expensive vehicles while maintaining low monthly payments.

That said, with rates recently on the rise and a flood of lease returns driving down used cars prices (see “Record High Lease Returns Set To Wreak Havoc On Used Car Prices“), the tailwinds that have propelling auto sales to record highs over the past several months look set to change course.

Certainly, a quick look at the 61+ day delinquencies in General Motors’ subprime securitization book would seem to support our rather negative thesis on future auto sales with January 2017 delinquency rates soaring to the highest levels since late 2009 / early 2010.

Autos

Meanwhile, looking at GM’s subprime data going back to 2001 implies that historical spikes in 2-month delinquency rates is a fairly decent indicator that all is not well.

autos

Moreover, as the Financial Times pointed out today, it’s not just subprime borrowers that are having problems making their monthly auto payments.  According to data pulled from Transunion, more than 1 million U.S. auto borrowers, subprime and otherwise, were behind on their payments as of Q4 2016 as overall delinquency rates also soared to 2009 levels.

More than a million US consumers have fallen at least two months behind on car loan repayments as the delinquency rate reaches its highest level since 2009, in the latest sign of stress in the $1.1tn market.

The proportion of soured car loans showed a 13 per cent increase to 1.44 per cent in 2016, according to data published on Thursday by TransUnion, the US credit bureau with an anonymised database of 220m consumers.

The rise in bad loans comes despite persistently low borrowing costs and unemployment levels — suggesting lenders may be letting consumers take on bigger debt burdens than they can handle. Lending to consumers with weak credit scores has been one of the fastest growing parts of the industry.

Auto

Though warning signs have been evident for some time now, at least to us anyway, lenders are just now starting to dial back their subprime exposures.

Nancy Bush, an analyst at NAB Research, said: “Auto lending was so hot for a while. It’s almost inevitable the credit quality would be stretched.

“Investors have tended to worry less than they should about banks going out on a limb with credit quality, just because we haven’t seen the evidence up until the last few quarters.”

Across the industry, subprime car loan originations fell 3 per cent in the third quarter from a year ago. In contrast, so-called prime plus and super prime originations rose.

“This is at a period where we, as an industry, should stay disciplined,” Dean Athanasia, co-head of consumer banking at Bank of America, told an investor conference last week.

“You got to watch credit. You got to make sure we’re not diving too deep into the lower end,” he added.

And while underwriters of auto loans will undoubtedly reassure investors that subprime auto securitizations performed relatively well, even at the height of the 2009 ‘great recession’, we would note that borrowers have never been so underwater of their cars as they are right now.

Auto

Losses are never possible on those highly-engineered, complex wall street structures…until they are.

 

end

 

It starts;  Chaffetz seeks charges against Hillary aid, Pagliano who decided not to show up to Congress once he was subpoenaed. He claims the 5th amendment but the FBI already had granted immunity to him so there was no reason for him not to testify.

should be interesting..

(courtesy zerohedge)

 

Chaffetz Seeks Charges Against Former Hillary IT Aide Bryan Pagliano

Back in September, at the height of the Hillary emailgate investigation, Clinton’s IT aid who helped setup her private email server, Bryan Pagliano, apparently decided that Congressional subpoenas, like federal record retention laws, were merely optional suggestions that did not require compliance.  As such, Pagliano elected to skip not one, but two, Congressional hearings in front of Jason Chaffetz’ (R-Utah) House Oversight Committee despite his direct involvement in setting up he private servers.

The move did not sit well with Chaffetz, Chair of the House Oversight Committee, who blasted Pagliano’s move saying that “subpoenas are not optional” and subsequently voted to hold Pagliano in contempt of Congress.

As it turns out, after all these months, Chaffetz is still not over Pagliano’s aloof response to his committee’s subpoena and has sent a letter to Trump’s new Attorney General Jeff Sessions asking him to convene a grand jury or bring charges against Pagliano for his failure to appear before Congress.  According to Fox News, Chaffetz said in a statement that allowing Pagliano’s conduct “to go unaddressed would gravely harm Congress’ ability to conduct oversight.”

Pagliano

 

To our complete shock, Representative Elijah Cummings of Maryland, the ranking Democrat on the committee, blasted Chaffetz’ call for charges saying that pursuing charges against Pagliano would be a waste of time and money.

“Apparently, Chairman Chaffetz and President Trump are the only two people in Washington today who think we should still be investigating Secretary Clinton,” Cumming said in a statement. He added: “The Oversight Committee can’t afford to be distracted by political vendettas against Hillary Clinton while our constituents are begging us to conduct responsible oversight of President Trump.”

Of course, Pagliano’s attorneys defended his actions back in September saying that he had already “asserted his Fifth Amendment rights” and refused to answer any questions.  Therefore, they argued that additional appearances before Congress served no “valid legislative purpose.”

“You and the committee have been told from the beginning that Mr. Pagliano will continue to assert his Fifth Amendment rights and will decline to answer any questions put to him by your committee,” according to the letter.

 

A subpoena issued by a Congressional committee is required by law to serve a valid legislative purpose and there is none here,” reads the letter, which refers to the committee’s efforts to force Pagliano to testify as a “naked political agenda” with “no valid legislative aim.”

Of course, as our readers are already aware, Pagliano, like Paul Combetta (the infamous “Oh Shit” guy) and a host of other Clinton aides, was granted an immunity deal by the Department of Justice in return for his FBI testimony regarding the Clinton private email servers.  Unfortunately, that immunity deal won’t help him with these new charges.

Finally, we’ll end with the same warning that we offered Pagliano back in September:

“We would caution Pagliano that, as suggested by the pic above, he would probably be well served to tread lightly…not many people share the Clintons’ particular talent for escaping scandal after scandal without repercussions.”

 

 

 

end

 

This is a little troubling:  Robert Harward has rejected Trump’s offer to becomes the next National Security Advisor.  I guess it is David Patraeus or Keith Kellogg and nobody else can fill the roll:

(courtesy zero hedge)

Robert Harward Rejects Trump’s Offer To Become Next National Security Advisor

It has been a day of turmoil for President Trump, who after finding himself on the defensive following Monday’s resignation by Mike Flynn (which may or may not lead to legal charges) and allegedly getting snubbed by Vladimir Putin, now has another potential crisis on his hands: according to both the FT and CBS, Trump’s pick for National Security Advisor, Robert Harward – Lockheed Martin’s CEO for the UAE – has turned down the President’s offer, citing “obvious dysfunctionality” in the administration.

According to the FT, it is not yet a complete rejection as “Trump is trying to convince his preferred candidate to succeed Michael Flynn as national security adviser to change his mind after the retired admiral tapped for the role told the US president that he could not accept the White House position.”

Mr Trump asked Robert Harward, a retired navy special forces officer to succeed Mr Flynn, who was fired as national security adviser on Monday. At a press conference on Thursday, he said his decision to replace Mr Flynn had been made easier because he had an “outstanding” candidate to serve as a replacement.

But Mr Harward is said to have turned Mr Trump down. “Harward is conflicted between the call of duty and the obvious dysfunctionality,” said one person with first hand knowledge of the discussions between Mr Trump and Mr Harward. The second person said Mr Trump had asked Mr Harward to return to the White House for another meeting to try to change his mind.

As the FT adds, “one of the people familiar with Mr Harward’s decision said he was concerned about whether the top advisers around Mr Trump would allow him to install his own staff on the NSC — particularly after suggestions that KT McFarland, Mr Flynn’s deputy, had been asked to remain. When he was offered the position, Mr Harward had told Mr Trump that he wanted some time to think over the idea.”

A separate report by CBS gives the courting process more closure, stating that “Robert Harward turns down Trump’s offer to be new national security adviser.”

Vice Admiral Robert Harward has rejected President Trump’s offer to be the new national security adviser, CBS News’ Major Garrett reports.

Sources close to the situation told Garrett Harward and the administration had a dispute over over staffing the security council.

Two sources close to the situation confirm Harward  Harward demanded his own team, and the White House resisted. Specifically, Mr. Trump told Deputy National Security Adviser K. T. McFarland that she could retain her post, even after the ouster of National Security Adviser Michael Flynn. Harward refused to keep McFarland as his deputy, and after a day of negotiations over this and other staffing matters, Harward declined to serve as Flynn’s replacement.

Should Harward’s position remain unchanged, it would mean that Trump may have no choice but to turn to David Petraeus:

One of the other contenders for the job was David Petraeus, a retired general who was widely respected, but fell from grace during his time as head of the Central Intelligence Agency for passing secret information to his mistress. The final candidate was Keith Kellogg, a retired army general who had served as chief of staff to Mr Flynn on the NSC and who is serving as the interim head of the inter-agency body.

While it remains to be seen if Harward is indeed out, it is troubling if suddenly Trump can not even find willing and qualified candidates to fill the gaping holes among his top security advisors.

 

 

end

 

Trump tweets that General Keith Kellogg is in play for the NSA job

(courtesy zero hedge)

Snubbed By Harward, Trump Tweets “General Keith Kellogg Is Very Much In Play For NSA”

Hours after news broke that Lockheed senior executive Robart Harward had rejected Trump’s offer to become the next National Security Advisor as he was Harward is “conflicted between the call of duty and the obvious dysfunctionality”, moments ago Trump tweeted that General Keith Kellogg – the acting national security advisor –  “who I have known for a long time, is very much in play for NSA – as are three others.”

General Keith Kellogg, who I have known for a long time, is very much in play for NSA – as are three others.

So as attention refocuses on Kellogg, here is a brief profile of the retired general, courtesy of the Guardian:

Retired General Keith Kellogg in the lobby of Trump Tower

Kellogg, 72, was born in Ohio and served 36 years in the military: in the army in Vietnam, as a special forces officer in Cambodia, and during the first Iraq war as chief of staff for the 82nd Airborne Division. Kellogg rose to command the airborne division from 1997 to 1998 and later came to national prominence when he served as chief operating officer for Baghdad’s provisional government through 2004 – a year of mistakes by the transitional administration that haunted Iraq through the next decade of war.

After his retirement, Kellogg joined a series of contracting firms including tech giant Oracle – the company gave him a leave of absence to help the Bush administration in Iraq. “I was given the opportunity to establish a homeland security business unit at Oracle,” he told the Washington Post in 2005, “based on the skills I developed in the military and on the value that information technology can bring to homeland security.”

Kellogg later joined another tech contractor, CACI, in 2005, and then left for a defense contractor, Cubic Defense, in 2009, where he was responsible for the firm’s “ground combat training business”. In March, after Kellogg joined Trump’s campaign as an adviser, the New York Times reported that the last defense contractor to employ the retired general “had no information on his whereabouts”.

The retired general has kept a low profile in the White House compared with his predecessor. He was granted a formal role in Trump’s transition team and later named chief of staff and executive secretary of the National Security Council, making him one military counterweight to an unusually prominent civilian on the council, Trump’s chief strategist, Steve Bannon.

Although Trump may yet formalize Kellogg as his permanent adviser, rumors quickly began to spread on Monday night that another candidate was en route to the White House: retired general David Petraeus, the former CIA director who resigned in disgrace having admitted to giving classified information to his lover.

 

end

This is interesting:  farm incomes and equipment purchases are tanking while John Deere’s stock soars due to hedge fund purchases

(courtesy zerohedge)

The Ag Paradox: Farm Incomes And Equipment Purchases Tank While John Deere’s Stock Soars

Last week we wrote about the U.S Department of Agriculture’s latest biannual report of farm incomes which painted a very bleak picture for the American farmer.  In its first forecast for 2017, the USDA saw real farm cash receipts down 14% versus 2015 and 36% from the previous high set in 2012 as farm debt continued to soar and leverage surged to all-time highs.

Below is a summary of some of the key takeaways:

Real farm incomes in 2017 are expected to sink below 2010 levels which represents a 36% decline from the recent peak and a 14% decline since 2015.

Farms

Meanwhile farm debt continues to rise at an astonishing rate…

Farms

While farmer leverage has spiked to the highest level since at least 1960.

Farms

And of course, lower incomes means less money to spend on shiny new John Deere tractors with equipment capex expected to decline 35% compared to 2015.

Farms

And finally, farmer returns have crashed to the lowest levels ever.  We’re not sure about you but a 2.1% ROIC seems a “little low” even in our current rigged interest rate environment. 

Farms

In summary, farmers are making no money but are managing to barely stay afloat by adding a massive amount of debt and slashing capital expenditures.

Moreover, the summary above was seemingly confirmed recently when ISI released their latest data on North American sales volumes for tractors and combines.  Not surprisingly, January volumes were down anywhere from 20% to nearly 50% YoY, as they were for most of 2015 and 2016.

Tractors 1

Tractors 1

Which leads us to our final point, which is, what exactly are John Deere investors seeing that we’re not?

DE

While we certainly understand the concept of investing in cyclical stocks at the bottom of their earnings cycle, we’re somewhat less familiar with the strategy of completely pricing in a recovery multiple years in advance while continuing to buy those same cyclical stocks at all-time highs and peak multiples.

JD

That said, we’re sure those multiples have room to get even “peak-ier” tomorrow when John Deere reports earnings…we can’t wait to see efficient markets at work.

 

 

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Bellwether stock (global sales) records it’s 50th consecutive month of declining global sales

(courtesy zero hedge)

 

Caterpillar Records 50 Consecutive Months Of Declining Global Sales

As Caterpillar’s stock hits multi year highs, its operations continue to sink.

With sellside firms suggesting that CAT should be valued on 2018, and in some case 2019 results, Caterpillar shareholders have been happy to comply with the recent euphoria, sending the stock soaring 18% since the Trump presidential victory, and back to multi-year highs on hopes a Trump’s infrastructure push would make excavators great again, coupled with expectations that an infrastructure push out of China will result in a rebound in the company’s profits. For now, however, operational woes at the heavy industrial manufacturer continue, with yet another month of declining global sales.

To be sure, there was a glimmer of hope for CAT out of Asia, where retail sales continued the rebound after posting positive gains in the prior five month, surging 26% in January, the biggest annual gain since July 2012. This however was offset by continuing declines in North America, the EAME and Latin America regions, which declined by 8%, 13%, and 29%, although all regions posted a modest rebound from December Y/Y numbers.

However, as has been the case for the past 4 years, it was on a global blended basis, where the headwinds facing CAT refuse to go away, and after the latest, January, decline in retail sales of -8%, we find that the company has not reported a single monthly uptick in sales for record 50 consecutive months, starting in December 2012, a period which is now 2.5x longer than the far more acute 19 month drop observed during the post-financial crisis period.

Source: Caterpillar

 

 

end

 

Two important commentaries discuss how Michael Flynn was removed by the “Deep State” or intelligence community.

a must read..

(courtesy Michael Snyder/Pepe Escobar)

 

A Civil War For Control Of The US Government Has Erupted Between “The Deep State” And Donald Trump

Submitted by Michael Snyder via The End of The American Dream,

The ruthless political assassination of Michael Flynn was just one battle of a major civil war that has erupted for control of the U.S. government. Donald Trump and his new administration are now under relentless assault by “the deep state”, and at this point it is not clear who will emerge as the victor. There are many that use the term “deep state” as a synonym for the intelligence community, but the truth is that it is much broader than that. In reality, the deep state encompasses thousands upon thousands of unelected, unaccountable bureaucrats that never seem to change no matter which party wins an election. Certainly the intelligence community is at the heart of this system, but there are countless others that are embedded within key government agencies and the Pentagon that deeply resent Donald Trump and the kind of change that he is attempting to bring to Washington.

There is a vast and exceedingly complex tapestry of laws, rules and regulations that govern the behavior of government officials. In past administrations, those laws, rules and regulations have been very selectively enforced, but now the “deep state” intends to use them as weapons against the Trump administration.

In essence, Donald Trump and his team are walking through a minefield, and his enemies are watching like a hawk for even the smallest slip up.

Theoretically, everyone working for the federal government is now working for Donald Trump. But in reality that is not the case. I wrote about the sabotage that is being done by Obama loyalists a few days ago, and it isn’t going to stop until Donald Trump does a complete housecleaning.

Michael Flynn was taken out because he was an easy target. But now that he is gone, the saboteurs are immediately going to proceed to their next targets.

For example, just today we learned that Trump’s choice for labor secretary, Andrew Puzder, was forced to withdraw.

Trump’s political enemies are going go after whoever they can. Trump’s family, friends and business associates are all fair game. Politics in America has become an exceedingly dirty game, and many believe that this is an indication that our republic is in the process of failing. I really like how Damon Linker described this in an article for The Week

The whole episode is evidence of the precipitous and ongoing collapse of America’s democratic institutions — not a sign of their resiliency. Flynn’s ouster was a soft coup (or political assassination) engineered by anonymous intelligence community bureaucrats. The results might be salutary, but this isn’t the way a liberal democracy is supposed to function.

Unelected intelligence analysts work for the president, not the other way around. Far too many Trump critics appear not to care that these intelligence agents leaked highly sensitive information to the press — mostly because Trump critics are pleased with the result. “Finally,” they say, “someone took a stand to expose collusion between the Russians and a senior aide to the president!” It is indeed important that someone took such a stand. But it matters greatly who that someone is and how they take their stand. Members of the unelected, unaccountable intelligence community are not the right someone, especially when they target a senior aide to the president by leaking anonymously to newspapers the content of classified phone intercepts, where the unverified, unsubstantiated information can inflict politically fatal damage almost instantaneously.

For many years, I have written about how the U.S. government has been transformed into a police state. And ultimately it is not the politicians that have been spying on all of us – it is the deep state that has been doing it.

According to USA Today, the deep state has been intercepting communications from Trump and his team for “months”, and so this “investigation” was actually going on all the way back during the election. And now the deep state is disclosing the “dirt” that they have collected in order to destroy political reputations. As Bloomberg has pointed out, this “is what police states do”…

Normally intercepts of U.S. officials and citizens are some of the most tightly held government secrets. This is for good reason. Selectively disclosing details of private conversations monitored by the FBI or NSA gives the permanent state the power to destroy reputations from the cloak of anonymity. This is what police states do.

This entire episode makes me deeply ashamed of my country.

In the end, it doesn’t even matter that much if Michael Flynn would have done a good job in his position or not.

What matters is that we have an intelligence community that has gone rogue and that is completely out of control.

And now that this “civil war” has begun, it is being reported that there are some within the intelligence community that are absolutely determined to destroy Donald Trump. In fact, one former NSA analyst says that he got a message from a friend still inside the intelligence community that stated that Trump “will die in jail” once this civil war is over…

According to former NSA analyst John Schindler, elements of the intelligence community have gone “nuclear” against President Donald Trump and are now vowing “he will die in jail”.

Schindler, a former professor at the Naval War College, is known to be provocative with his tweets, but what he revealed earlier today is still raising eyebrows.

Schindler was asked by another Twitter user, “What do you think is going on inside NatSec right now after Trump’s “intelligence” tweet this morning?”

That was a reference to Trump tweeting that information was being illegally leaked by members of the CIA and NSA to the Washington Post and the New York Times.

Schindler responded, “Now we go nuclear. IC war going to new levels. Just got an EM fm senior IC friend, it began: “He will die in jail.”

Can you see why I am describing this conflict as a “civil war”? To me, this is definitely treason…

Now we go nuclear. IC war going to new levels. Just got an EM fm senior IC friend, it began: “He will die in jail.”https://twitter.com/JWal077/status/831871381570781184 

For now, this civil war is a “cold war”, but we aren’t too far away from it potentially becoming a “hot war”.

I have previously written about how the U.S. is on the verge of major civil unrest, and it is also a major theme in my novel. The anger and frustration that have been building up in this country for a very long time could explode at any moment. All it is going to take is some sort of trigger event.

And there are many that very much agree with me. For example, just today I saw an article by Charlie Daniels in which he warned that we could soon see “blood on the streets”

I see young people interviewed on television who can’t even articulate the reason they are protesting. Others bent on destruction who probably espouse no cause but chaos.

I’ve seen hysterical protestors screaming about First Amendment rights which they seem to think only protect them and those who think like them and that the opposition has no First Amendment protection and should be shouted down at all costs.

The rhetoric is becoming hotter and more nonsensical, the radical element more apparent, the violence and destruction of property more common place.

The pot is boiling and it’s only a matter of time before there will be blood on the streets.

If I was Donald Trump, I would make a major housecleaning of every government agency and the Pentagon my top priority.

Because if he allows thousands of saboteurs to remain embedded in key positions within the government, his administration will fail.

So let us hope that we see the biggest wave of firings and resignations in modern American history in the weeks and months ahead, because that is what is going to be necessary for Donald Trump to win this struggle for control of the government.

 

end

The Swamp Strikes Back

Authored by Pepe Escobar, originally posted at SputnikNews.com,

The tawdry Michael Flynn soap opera boils down to the CIA hemorrhaging leaks to the company town newspaper, leading to the desired endgame: a resounding victory for hardcore neocon/neoliberalcon US Deep State factions in one particular battle. But the war is not over; in fact it’s just beginning.

Even before Flynn’s fall, Russian analysts had been avidly discussing whether President Trump is the new Victor Yanukovich – who failed to stop a color revolution at his doorstep. The Made in USA color revolution by the axis of Deep State neocons, Democratic neoliberalcons and corporate media will be pursued, relentlessly, 24/7. But more than Yanukovich, Trump might actually be remixing Little Helmsman Deng Xiaoping: “crossing the river while feeling the stones”. Rather, crossing the swamp while feeling the crocs.

Flynn out may be interpreted as a Trump tactical retreat. After all Flynn may be back – in the shade, much as Roger Stone. If current deputy national security advisor K T McFarland gets the top job – which is what powerful Trump backers are aiming at – the shadowplay Kissinger balance of power, in its 21st century remix, is even strengthened; after all McFarland is a Kissinger asset.

This call won’t self-destruct in five seconds

Flynn worked with Special Forces; was head of the Defense Intelligence Agency (DIA); handled highly classified top secret information 24/7. He obviously knew all his conversations on an open, unsecure line were monitored. So he had to have morphed into a compound incarnation of the Three Stooges had he positioned himself to be blackmailed by Moscow.

What Flynn and Russian ambassador Sergey Kislyak certainly discussed was cooperation in the fight against ISIS/ISIL/Daesh, and what Moscow might expect in return: the lifting of sanctions. US corporate media didn’t even flinch when US intel admitted they have a transcript of the multiple phone calls between Flynn and Kislyak. So why not release them? Imagine the inter-galactic scandal if these calls were about Russian intel monitoring the US ambassador in Moscow.

No one paid attention to the two key passages conveniently buried in the middle of this US corporate media story.1) “The intelligence official said there had been no finding inside the government that Flynn did anything illegal.” 2) “…the situation became unsustainable – not because of any issue of being compromised by Russia – but because he [Flynn] has lied to the president and the vice president.”

Recap: nothing illegal; and Flynn not compromised by Russia. The “crime” – according to Deep State factions: talking to a Russian diplomat.

Vice-President Mike Pence is a key piece in the puzzle; after all his major role is as insider guarantor – at the heart of the Trump administration – of neocon Deep State interests. The CIA did leak. The CIA most certainly has been spying on all Trump operatives. Flynn though fell on his own sword. Classic hubris; his fatal mistake was to strategize by himself – even before he became national security advisor. “Mad Dog” Mattis, T. Rex Tillerson – both, by the way, very close to Kissinger – and most of all Pence did not like it one bit once they were informed.

A “man of very limited abilities”

Flynn was already compromised by his embarrassingly misinformed book co-written with neocon Michael Ledeen, as well as his juvenile Iranophobia. At the same time, Flynn was the point man to what would have been a real game-changer; to place the CIA and the Joint Chiefs of Staff under White House control.

A highly informed US source I previously called “X”, who detailed to Sputnik how the Trump presidency will play out, is adamant “this decision makes Trump look independent. It is all going according to script.”

“X” stresses how “the NSA can penetrate any telephone system in the world that is not secure. Flynn was a man of very limited abilities who talked too much. You never hear from the real powers in intelligence nor do you know their names. You can see that in Flynn’s approach to Iran. He was disrupting a peace deal in the Middle East relating to Russia, Iran and Turkey in Syria. So he had to go.”

“X” adds, “the Russians are not stupid to talk among themselves on unsecured lines, they assumed that Flynn controlled his own lines. Flynn was removed not because of his Russian calls but for other reasons, some of which have to do with Iran and the Middle East. He was a loose cannon even from the intelligence perspective. This is a case of misdirection away from the true cause.”

In direct opposition to “X”, an analytical strand now rules there’s blood on the tracks; the hyenas are circling; a vulnerable Trump has lost his mojo; and he also lost his foreign policy. Not yet.

In the Grand Chessboard, what Flynn’s fall spells out is just a pawn out of the game because the King would not protect him. We will only know for sure “draining the swamp” – the foreign policy section – is doomed if neocons and neoliberalcons continue to run riot; if neoliberalcons are not fully exposed in their complicity in the rise of ISIS/ISIL/Daesh; and if the much vaunted possibility of a détente with Russia flounders for good.

What’s certain is that the fratricide war between the Trump administration and the most powerful Deep State factions will be beyond vicious. Team Trump only stands a chance if they are able to weaponize allies from within the Deep State. As it stands, concerning the Kissinger grand design of trying to break the Eurasian “threat” to the unipolar moment, Iran is momentarily relieved; Russia harbors no illusions; and China knows for sure that the China-Russia strategic partnership will become even stronger. Advantage swamp.

 

end

 

Pay attention to David Stockman as he outlines correctly what will happen in the next few months with respect to the USA economy:

 

 

(courtesy DailyReckoning/David Stockman)

David Stockman: This is Game Over

[Ed. Note: To see exactly what this former Reagan insider has to say about Trump and specifically what he believes must be done, David Stockman is sending out a copy of his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back out to any American willing to listen. To learn how to get your free copy CLICK HERE.]

David Stockman joined Yahoo Finance show The Final Round to discuss what’s unfolding in the U.S capitol and what to expect from the markets and the economy going forward. As Yahoo Finance host, Jen Rogers introduced the bestselling author she remarked that the current markets are living in a “fantasy land” and that Stockman believes this environment both in government and in the markets is “complete insanity.”

David Stockman is the former Office of Management and Budget Director under President Ronald Reagan, which is the office specifically responsible for producing the President’s Budget. In this role he was the point person for measuring the quality and efficiency of agency programs and various policies within government. Stockman also served as a two-term Congressman followed by a tenure of Wall Street where he worked at various firms. He is now a bestselling author and has recently released his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back (learn how to score your FREE copy of this insiders look at what Trump must do in office – CLICK HERE).

To set the tone, the Yahoo Finance host Jen Rogers began by asking Stockman his take on President Trump’s much discussed press conference on Thursday, February 16. Stockman remarked, “Maybe he is shooting to be the Fidel Castro of American politics – the “dear leader” who never stops talking. The problem is, this whole rally is based on talk – opium. I think it is going to be over within days, and certainly by March 15. Because that is when the Federal Reserve is going to raise interest rates, finally. They have been dithering for 96 months at the zero bound. By their Keynesian lights they are at full employment and have no choice.”

David Stockman on Donald Trump

“Second, this debt ceiling which has been in suspension for the last year goes back into effect. Suddenly people will realize that there is $200 billion of cash in the U.S Treasury and it is running out very quickly.”

“There will be a crisis this summer and by March 15th it will be evident.”

When Rogers pressed that during the Trump press conference to expect tax reform to be on the way Stockman responded, “There is no tax cut coming. Its phenomenal, it’s massive, it’s a great hope, probably in some alternative world it would be a good thing to do – but he is not going to get it through Congress.”

“They were going to repeal Obamacare the first week. They’re not going to get that done this year – if ever. They’re going to be totally bogged down in these battles that Trump has created over the travel ban and deportations. This whole fight over the intelligence agencies and whether or not people in his campaign were communicating with the Russians.”

“This is the deep state getting even… They’re not distractions, they’re the heart of the problem!”

“We are sitting on $20 trillion of debt and there is $10 trillion more built in under current policy over the next decade. They can only pass a tax bill if it is roughly deemed “revenue neutral.” That means they’ll need big revenue sources to pay for the corporate tax rate cuts – and that says nothing of what he promised yesterday about “cuts for all” and that “every bracket and every taxpayer.” Now that’s four of five trillion dollars. Where is he going to get it? The only way to get it is the border adjustment tax, the VAT, and he was meeting with the retailers who were sitting around the table saying we are here to kill this thing dead because “brick and mortar America” can’t stand a 20% increase in their cost of goods.”

“It is delusional to think they can get a revenue neutral tax bill through the Congress this year. Without reconciliation they are going to have a filibuster and sixty votes. To get reconciliation you need a ten year budget resolution and they can’t pass it.”

Donald Trump Press Conference

When asked about the comparisons of Reagan’s administration and his economy to Trump and what the secular bull market that is expected to take off means, Stockman shook his head in contrarian style. “This is not the second coming of Ronald Reagan. When Reagan came in, the national debt was only $1 trillion dollars and 30% of GDP. It is now $20 trillion in national debt and 106% of GDP. Even then we had stock market crash, bond market disorder, 18% interest rates for two years. The bull market did not come until 1983-1984 but there was a horrendous downside before. I think we are in the same scenario today.”

“There is going to be a huge correction when the market figures out no Fed, no tax stimulus, their home alone and they’ve got the market trading at twenty six times trailing earnings and an economy that is running out of gas with headwinds coming from all over the world. It is only a matter of days before this whole thing tips over because it is basically the machines raging on headlines.”

The Yahoo Finance host noted provocatively that the market is currently at all-time highs stirring Stockman to respond, “I remember well that we were at all-time highs in March 2000 before we went down 60%. We were at all-time highs in October 2007, it was an artificial market before we crashed and had a crisis. The market is assuming a massive recovery in the economy with a huge increase in earnings – those are not going to happen. Once that becomes clear there will be a huge adjustment.”

When asked what sectors in the economy he liked and felt were secure given the current environment according to his forecasts he said emphatically, “Gold. Because what is going to happen is that central banks around the world are in the process of being discredited. Fiscal policy around the world is out of control. Debt everywhere in the developed world is bogging down governments into dysfunctional crisis.”

“Once the market really figures that out and that there is no stimulus left, there’s nothing more that can be done either fiscally or by the money printers at the central banks – then I think it is game over.”

“It is only a matter of when we reach the inflection point, where it becomes obvious to everybody that this is artificial and there is no more stimulus. This is what they were saying in December and February of 1999, there had been an 8 year rally, it ended in a thundering crash. This is what they said in most of late 2007 and most of 2008, then suddenly – within the matter of 40 days the Russell 2000 dropped by an equivalent of 60%. The way this bubble finance works, along with central bank policy, it takes nearly 7 years on an escalator to work its way up and it takes about 7 weeks on an elevator down.”

To catch Stockman’s full interview covering the economy and more on Yahoo Finance click here (starts at minute 12:49). To get your FREE copy of his latest bestseller, TRUMPED! click here to learn more.

Regards,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

end

 

Pam and Russ Martens discuss how Mary Jo White totally misled the USA senate when she became  SEC chair:

(courtesy Pam Martens.Russ Martens/Wall Street on Parade)

Mary Jo White Seriously Misled The US Senate When She Became SEC Chair

Submitted by Pam Martens and Russ Martens via WallStreetOnParade.com,

Less than two weeks after Mary Jo White was nominated to become Chair of the Securities and Exchange Commission by President Barack Obama on January 24, 2013, White filed an ethics disclosure letter advising that she would “retire” from her position representing Wall Street banks at the law firm Debevoise & Plimpton. White wrote on this subject in great detail, stating:

“Upon confirmation, I will retire from the partnership of Debevoise & Plimpton, LLP. Following my retirement, the law firm will not owe me an outstanding partnership share for either 2012 or any part of 2013. As a retired partner, I will be entitled to the use of secretarial services, office space and a blackberry at the firm’s expense. For the duration of my appointment, I will forgo these three benefits, though I may pay for some secretarial services at my own expense. Pursuant to the Debevoise & Plimpton, LLP Partners Retirement Program, I will receive monthly lifetime retirement payments from the firm commencing the month after my retirement. However, within 60 days of my appointment, the firm will make a lump sum payment, in lieu of making monthly retirement payments for the next four years. Within 60 days of my appointment, I also will receive payouts of my interest in the Debevoise & Plimpton LLP Cash Balance Retirement plan and my capital account.”

Yesterday it was widely reported in the business press that Mary Jo White is returning to her former law firm as a partner representing clients who face government investigations. She will also fill the newly created position of Senior Chair of the law firm.

This news is highly significant because it would appear that the U.S. Senate was seriously misled by White’s ethics letter in its deliberations to confirm her as the top cop of Wall Street.

The news is also highly significant because it will mark the fourth time in four decades that Mary Jo White has spun through the revolving doors of Debevoise & Plimpton (where she represented serial law violators) to government service (prosecuting serial law violators). The timeline is as follows:

2002 to 2013: White is a Debevoise & Plimpton partner, representing some of Wall Street’s serially charged banks: JPMorgan Chase, UBS, Bank of America, Morgan Stanley;

1993 to 2002: White is U.S. Attorney for the Southern District of New York (where Wall Street is located);

1990 to 1993: White serves as First Assistant United States Attorney and Acting United States Attorney in the Eastern District of New York;

1983 to 1990: White is litigation partner at Debevoise & Plimpton, where she focuses on white collar defense work, SEC enforcement matters and other corporate work;

1978 to 1981: White works as Assistant United States Attorney in the Southern District of New York, where she became Chief Appellate Attorney of the Criminal Division;

1976 to 1978: White is Associate at Debevoise & Plimpton.

White’s representation in 2013 that she was retiring proved very financially beneficial to her. Her Partners Retirement Program entitled her to receive $42,500 per month or $510,000 per year. But as White writes in her ethics letter, (ostensibly as a gesture toward removing the conflict of receiving ongoing monies from her old law firm), Debevoise was going to give her a “lump sum” for four years of payments, or more than $2 million. The Partner’s plan was unfunded, meaning the law firm had to stay in business to make those payments. Getting a cool $2 million out of harm’s way is a smart financial move. On top of that, White indicated in her ethics letter that she was cashing out of the “Debevoise & Plimpton LLP Cash Balance Retirement plan and my capital account.”

Not only was Mary Jo White a deeply conflicted candidate for SEC Chair but her husband, John White, also represented the big Wall Street banks as a partner at Cravath, Swaine & Moore LLP. Under Federal ethics rules, the conflicts of the spouse become the conflicts of the government employee. None of this persuaded members of the U.S. Senate Banking Committee (many of whom are richly financed in their political campaigns by Wall Street) to reject Mary Jo White’s nomination. The lone dissenter in the Committee’s 21-1 vote was Senator Sherrod Brown, who stated:

“At a time when our Attorney General says that the biggest Wall Street banks are in many ways above the law and the SEC is blocking shareholders’ efforts to break up the banks that they own, we need regulators who will fight every day for taxpayers, Main Street investors, and retirees. But too often we have seen public servants who settle for the status quo, instead of demanding accountability.

“I don’t question Mary Jo White’s integrity or skill as an attorney. But I do question Washington’s long-held bias towards Wall Street and its inability to find watchdogs outside of the very industry that they are meant to police. Mary Jo White will have plenty of opportunities to prove me wrong. I hope she will.”

Mary Jo White did not prove Senator Brown wrong. During her tenure, the long-awaited Consolidated Audit Trail (CAT) failed to get up and running – allowing all of those high frequency traders and Dark Pools on Wall Street to continue to loot the investing public with impunity. White also allowed the big banks to continue their jaded practice of engaging in capital relief trades as her former law firm gushed that the deals could be “effective use of balance sheet capital as banking organizations adjust to the post-crisis regulatory paradigm.”

During White’s tenure, a 25-year veteran trial lawyer at the SEC, James Kidney, retired in March 2014. At his retirement party, he delivered a scathing critique of SEC management. Kidney said that “On the rare occasions when Enforcement does go to the penthouse, good manners are paramount. Tough enforcement – risky enforcement – is subject to extensive negotiation and weakening.” White brought along her Enforcement Chief at the SEC, Andrew Ceresney, from Debevoise & Plimpton. He also returned to the law firm.

By June of 2015, White’s management of the SEC was so problematic that Senator Elizabeth Warren sent her a harsh 13-page critique of her performance. Warren called out White’s failure to finalize rules requiring disclosure of the ratio of CEO pay to the median worker; her continuing use of waivers for companies that violate securities law; the SEC’s continued practice of settling the vast majority of cases without requiring meaningful admissions of guilt; and White’s repeated recusals from investigations because of her prior employment and her husband’s current employment at law firms representing Wall Street.

In February 2015, the New York Times reported that the conflicts of White and her husband had resulted in her recusing herself “from more than four dozen enforcement investigations.” Instead of an SEC Chair, that sounds like a part-time worker.

Given this demoralizing experience with the gold-plated Washington-Wall Street revolving door, one would have expected that President Trump, the man promising to drain the swamp in Washington, to have come up with a better plan for stewardship of the SEC. Instead, Trump’s doubling down. His nominee for SEC Chair is Jay Clayton, a law partner at Sullivan & Cromwell, which has represented Goldman Sachs since the late 1800s. On top of that, Clayton’s wife is a Vice President of (wait for it) Goldman Sachs.

Until there is meaningful legislative reform of political campaign financing and revolving door appointments, Americans will continue to be relegated to the status of dumb tourist in their own country.

 

end

 

The lawsuit has been going on for at least 5 years.  The unsealing of the documents came last night as finally the government sues the largest USA Health Insurer on fraudulent overbilling

(courtesy zero hedge)

Dow Dragged Lower By UnitedHealth After Government Sues Largest US Health Insurer

The Dow Jones “Industrial” Average is suffering one of its worst intraday declines in weeks as a result of a 3.6% drop in UnitedHealth shares, which are sinking on news that the DOJ joined a whistleblower lawsuit against the insurer filed by a former executive claiming the country’s largest health insurer overcharged Medicare hundreds of millions of dollars.

The company denied the allegations, with UnitedHealth spokesman Matthew Burns saying in a statement that “we reject these more than five-year-old claims and will contest them vigorously.”

Alleging insurance fraud, the lawsuit which was filed in 2011 and unsealed on Thursday, claims UnitedHealth Group overcharged Medicare by claiming the federal health insurance program’s members nationwide were sicker than they were, according to the law firm Constantine Cannon LLP. Overnight, the DOJ also joined in allegations against WellMed Medical Management Inc, a Texas-based healthcare company UnitedHealth bought in 2011.

The lawsuit by whistleblower Benjamin Poehling, a former UnitedHealth executive, has been kept under seal in federal court in Los Angeles while the Justice Department investigated the claims for the past five years. Constantine Cannon posted the lawsuit online when it was unsealed on Thursday.  No total damages were specified in the lawsuit.

UNH’s drop is the biggest contributor to the DJIA’s intraday slide, accounting for nearly 80% of the total point loss in the index.

Despite the lawsuit, Wall Street’s sellside analysts – most of whom are bullish on the company – have quickly come to its defense, via Bloomberg

Oppenheimer (Michael Wiederhorn)

  • DOJ claims center on UNH’s efforts to improve coding, date back to 2011
  • While headlines aren’t positive, these processes take a long time and “typically result in manageable settlements”
  • Expects UNH will get past this overhang, sees weakness as buying opportunity
  • Rates UNH outperform, PT $186

Leerink (Ana Gupte)

  • Risk is overblown; recommends buying UNH, Humana, WellCare and other Medicare Advantage (MA) stocks on weakness today
  • Expects Trump administration will favor private MA plans with deregulation and more industry-friendly policies
  • Rates UNH outperform, PT $195

Credit Suisse (Scott Fidel)

  • DOJ joining whistleblower case is negative headline, especially since market has been bullish for prospects for MA under Republican leadership
  • Even so, regulatory scrutiny isn’t new issue and Centers for Medicare & Medicaid Services has said MA revenue should benefit from more accurate risk coding
  • Rates UNH outperform, PT $180

Evercore ISI (Michael Newshel)

  • While DOJ joining case adds to risk, complaint doesn’t have “any particularly damning new evidence”
  • Believes many of coding optimization practices described are common to industry
  • Rates UNH buy, PT $185

 

The unsealed lawsuit is below: (see zero hedge)

 

 

end

 

The Senate confirmed Pruitt.  He has been an very outspoken critic on global warming etc.

(courtesy zero hedge)

EPA Foe Pruitt Confirmed To Lead Agency

The Senate voted to confirm Scott Pruitt, an outspoken critic of Obama-era climate rules, to lead the Environmental Protection Agency – the very agency he has clashed with in the past – ushering in what are likely to be dramatic changes to the agency.

In a 52-46 vote that passed largely along party lines, the Republican-controlled Senate on Friday cleared Pruitt’s nomination to be EPA chief over objections of Democrats who argued he would undermine the agency’s core mission of safeguarding the air and water. All Republicans except Sen. Susan Collins (R-Maine) voted for Pruitt, while all Democrats except Sens. Joe Manchin (D-W.Va.) and Heidi Heitkamp (D-N.D.) voted against him.

The confirmation vote passed despite pleas from Democrats to delay the vote due to ongoing litigation regarding emails that a liberal group had requested from the office of Pruitt, who is currently Oklahoma’s attorney general until he is sworn in as the EPA administrator.

Pruitt is expected to quickly begin work to fulfill President Donald Trump’s vow to eliminate a water pollution rule and the Clean Power Plan that forces states to slash greenhouse gas emissions from electricity generation. Trump is poised to sign directives setting those changes in motion soon after Pruitt is confirmed.

As Bloomberg reports, Pruitt built his political career fighting federal regulations he said stripped power away from states, often confronting the very agency he will now head. As Oklahoma’s attorney general, Pruitt led or joined more than a dozen lawsuits challenging EPA rules governing power plant pollution, carbon dioxide emissions and wetlands.

Pruitt promised senators last month that his “cooperative federalism” approach would not mean an end to nationwide environmental regulation, but rather “meaningful collaboration between the EPA and the states to achieve important environmental objectives.”

 

“The states are not mere vessels of federal will; they don’t exist simply to carry out federal dictates from Washington,” Pruitt said at his confirmation hearing.

Pruitt joined more than two dozen other states in challenging the Clean Power Plan, saying the Obama administration overstepped its authority by establishing statewide goals and giving regulators a variety of ways to meet them. Under a plan he set out in 2014, the regulation would be limited to imposing carbon-cutting mandates on individual power plants, resulting in relatively negligible reductions. Some conservatives want Pruitt to go further and undo the legal underpinning for that regulation: the EPA’s 2009 conclusion that greenhouse gas emissions endanger public health and welfare.

According to the Hill, Republicans said Pruitt will bring much-needed change to an agency that exemplifies eight years of executive overreach by the administration of former President Obama.  “The nominee before us … thinks it’s time for the EPA to get back to the clean air and clean water business instead, and to do so with an appreciation for the complexity of our modern world,” Senate Majority Leader Mitch McConnell (R-Ky.) said on the Senate floor.

Democrats said Pruitt’s record of animosity toward Obama’s EPA — including filing more than a dozen lawsuits to block regulations — shows that he opposes the EPA’s most important functions, and that he is too friendly to the fossil fuel industry. “This Trump administration has nominated as administrator at the EPA a tool of the fossil fuel industry, a man who demonstrably will not take his government responsibilities seriously because he never has,” said Sen. Sheldon Whitehouse (D-R.I.) “He has never taken EPA’s responsibility seriously. He has done nothing but sue them.”

Senate Democrats said Pruitt didn’t provide substantive answers to their questions and rebuffed requests for an assortment of documents – including e-mails and other records of his interaction with agricultural and oil companies – by recommending senators use public records requests to get the material from Oklahoma officials.

As Bloomberg adds, Pruitt joined more than two dozen other states in challenging the Clean Power Plan, saying the Obama administration overstepped its authority by establishing statewide goals and giving regulators a variety of ways to meet them. Under a plan he set out in 2014, the regulation would be limited to imposing carbon-cutting mandates on individual power plants, resulting in relatively negligible reductions. Some conservatives want Pruitt to go further and undo the legal underpinning for that regulation: the EPA’s 2009 conclusion that greenhouse gas emissions endanger public health and welfare.

But the biggest challenge to Pruitt’s changes may come from internal opposition from an agency that had made combating climate change its top priority over the past few years. EPA employees have organized to try to block Pruitt, with current staffers protesting at a rally in Chicago, nearly 800 former employees signing a letter arguing against his confirmation and the union representing agency employees launching an online campaign to “Save the EPA.

“Pruitt’s record and public statements strongly suggest that he does not share the vision or agree with the underlying principles of our environmental laws,” the former employees said in their letter.

Democrats warned that Republicans could pay a political price for backing Pruitt. “Those who vote for this man will own this vote,” said Senator Sheldon Whitehouse, a Democrat from Rhode Island. “This isn’t the end of the story. This is the beginning of the story.”

For now, however, Pruitt has full control. He is set to be sworn in at 5 p.m.

 

end

Trump Destroys Very Fake News, NSA Leaks on Trump the Real Story, Fed Scared to Death

By Greg Hunter On February 17, 2017 In Weekly News Wrap-Ups

The mainstream media (MSM) is in an absolute frenzy over the resignation of Michael Flynn, who was the top national security advisor for the Trump Administration. President Trump says Flynn was forced out because of illegal leaks. In a press conference, Trump told the national media that it was “dishonest” and that CNN’s new name is now “very fake news” instead of simply “fake news.” Trump also said the MSM is “full of hatred” and is biased against him and his administration. Former U.N. Ambassador Michael Bolton says the left is “engaging in collective hysteria because it cannot make substantive arguments” against Trump and his new policies.

Wiki Leaks is charging that Trumps National Security advisor resigned after a “destabilizing campaign by U.S. spies, Democrats and the press.” Trump said the “real story is illegal leaks.” Former Democrat Congressman Dennis Kucinich issued a warning about the leaks and the power of the so-called “deep state,” or secret government. Larry Klayman, founder of Freedom Watch, echoed those concerns. Klayman got an injunction in federal court against the NSA for illegal data collection. Now, Klayman says the leaks within the Trump Administration by the intelligence services are an “outrage beyond imagination and must be stopped.” He also says the “intel agencies are more powerful than the President,” and illegally collected data and phone calls can be used to “blackmail people.”

Gregory Mannarino of TradersChoice.net says the Fed is “scared out of its mind” that people will crash the bond market with a massive selloff. Fed Head Janet Yellen says “economic growth is . . . weak and disappointing,” and yet she is still pushing the ideal of a needed rate hike. Meanwhile, St. Louis Fed President James Bullard recently said there is no need to raise rates, at least through 2017. There are record highs on all stock indexes, and the Fed is not celebrating. Is the Fed keeping a lid on interest rates to prop up the bond market while letting the stock market explode? Mannarino says yes, and it will all end badly. We just don’t know exactly when it will end.

Join Greg Hunter as he looks at these stories and more in the Weekly News Wrap-Up.

(There is much more in the video newscast.)

Video Link

http://usawatchdog.com/weekly-news-wrap-up-2-17-17-greg- hunter/

There is much more in the video newscast.)

(There is much more in the video newscast.)

 

After the Wrap-Up: 

Dane Wigington of GeoEngineeringWatch.org will be the guest interview on the “Early Sunday Release

Well that should do it for this week

I will see you Tuesday night

Monday is a holiday.

H

 

 

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