March 6/Andre Maguire states that the LBMA is having severe trouble locating gold to fulfill contracts/Gold down $1.00 and silver up 2 cents bit down from Friday’s access pricing/This is a big story: The CME and Reuters abandon the silver fix..something is up!! /Avery Goodman..a must read!!China announces that its growth rate next year will be 6.5%/China’s total assets now surpass 33 trillion/Major restructuring at Deutsche bank again!Target 2 imbalances at the EU intensifies as funds leave Spain, Italy and France and land in Germany and Luxembourg/Trump Tower supposedly wiretapped: Get your popcorn ready/Senator Grassley opens a probe on the FBI / FINAL DRAFT

Gold at (1:30 am est) $1224.50 down $1.00

silver was : $17.72:  UP 2 CENTS (unchanged)

Access market prices:

Gold: $1226.30

Silver: $17.78

For comex gold:

MARCH/ 

NOTICES FILINGS TODAY FOR MARCH CONTRACT MONTH:  1 NOTICE(S) FOR 100 OZ.  TOTAL NOTICES SO FAR: 45 FOR 4500 OZ    (0.1399 TONNES)

For silver:

 

For silver: MARCH

343 NOTICES FILED TODAY FOR 1,715,000 OZ/

Total number of notices filed so far this month: 1763 for 8,815,000 

 Late FRIDAY night after receiving the preliminary data for Monday,  I wanted to think about the data overnight as well as to see if this fits with Ted Butler’s assertion of basically collusion with some of the Hedge Funds  (managed money)

If you have not read Ted Butler yet, I urge you to read it (in last night’s commentary) and then study today’s OI data.
One could see that the original plan of the bankers was to raid gold and silver with the object to get the gold down to an OI level of 390,000 contracts and silver down to the 165,000 area.  They have done this quite a few occasions starting  in 2011 and continuing to this year.
I now believe Butler’s assertion is correct in that the hedge funds are no longer playing the game especially in silver. He correctly portrays the hedge funds as as the Washington Generals losing every time with the Harlem Globetrotters the victors all the time.
Now everything makes sense:
the “salary” for each “Washington General”  hedge fund was paid in cash settlements.  That is how these hedge funds would continually lose for 5 years and still play in the game.
It also explains, a huge obliteration of open interest on an active contract as we head into first day notice.
the boys were being paid for their work and they then reload with fiat bonus and play again.
It also explains how the amount standing of each month lowers as the month proceeds.  Each of the collusive players are waiting to be paid.
However, somehow, the hedge funds (Washington Generals) did not want to play anymore with the bankers (Harlem Globetrotters) .The hedge funds decided not to sell on any huge whack.  This is why Thursday’s OI reading on silver hardly moved despite a 74 cent drop in price.  The huge follow through yesterday orchestrated by the bankers (Harlem) also ended in failure.  That is why at 1:00 o’clock they could see that the OI hardly budged so they raced as fast as they could to cover.  The price of silver instead of being down by 8 cents, it rallied to unchanged at comex closing time and then up 19 cents upon access closing time.
We are not seeing the same game yet in gold but it may be in its infancy. However in silver, something is scaring our Washington Generals to not play the silver fraud any more.(lack of silver maybe?)

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by ONLY 3,484 contracts DOWN to 193,848 with respect to FRIDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  0.969 BILLION TO BE EXACT or 138% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MARCH MONTH: THEY FILED: 343 NOTICE(S) FOR 1,715,000 OZ OF SILVER

In gold, the total comex gold FELL BY 6,937  contracts with ANOTHER FALL IN  THE PRICE GOLD ($6.40 with FRIDAY’S trading ).The total gold OI stands at 437,220 contracts.

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

:

We had a huge change in tonnes of gold at the GLD: a withdrawal of 2.96 tonnes

Inventory rests tonight: 840.58 tonnes

.

SLV

We had no changes in inventory at the SLV

 

THE SLV Inventory rests at: 332.788 million oz

end

.

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

1. Today, we had the open interest in silver FELL by ONLY 3,484 contracts DOWN to 193,848 AS SILVER WAS UNCHANGED with FRIDAY’S trading. (probably some short covering). The gold open interest FELL BY 6,937 contracts DOWN to 437,220 WITH ANOTHER FALL IN THE PRICE OF GOLD OF $6.40  (FRIDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

 

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 15.55 POINTS OR .58%/ /Hang Sang CLOSED UP 43.56 POINTS OR 0.18% . The Nikkei closed DOWN  90.03 POINTS OR 0.46% /Australia’s all ordinaires  CLOSED UP 0.23%/Chinese yuan (ONSHORE) closed UP at 6.8967/Oil FELL to 52.95 dollars per barrel for WTI and 55.52 for Brent. Stocks in Europe ALL MIXED ..Offshore yuan trades  6.9035 yuan to the dollar vs 6.8967  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS CONSIDERABLY/ ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR. CHINA SENDS A MESSAGE TO THE USA NOT TO RAISE RATES

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)Not good:  North Korea fires 4 missiles and 3 of them land in Japan’s exclusinve economic zone and it could be an intercontinental ballistic missile.

( zero hedge)

ii)Normally, I am not bothered as to what comes out of Kim’s mouth.  But he is a madman and the must be cognizant of his actions

( zero hedge)

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

For the first time China cuts in economic growth forecast:

( zero hedge)

4. EUROPEAN AFFAIRS

i)A massive restructuring for Deutsche bank as they continue to suffer losses:

( zero hedge)

ii)Deutsche bank is down 7% this morning after its massive equity offering. This bank has some serious issues something that we have been reporting to you over these years.

they are in a mess..

( zero hedge)

 

iii)The former French Prime Minister Juppe announces that he will not run.  Also Fillon despite being charged is still in the race..

( zerohedge)

iv)Euroflight capital intensifies as Target 2 imbalances widen again. Note that Germany received 41.3 billion euros from weak nations: Italy,  and Spain. Italy is on life support:

( zero hedge)

v)For the first time, the BIS recognizes the risks in Target 2 imbalances as well as admit that it reality Germany is loaning euros to the periphery..in other words a stealth bailout

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Syria/Turkey

A Syrian jet is shot down over Southern Turkey and the pilot ejects

Trump may have his first international crisis:

( zero hedge)

ii)Turkey/Germany

Germany cancels Turkish rallies and that sets off a diplomatic row after Erdogan accuses Germany of “fascist actions”

( zero hedge)

6.GLOBAL ISSUES

i)Even though Mexico’s debt to GDP is only 49%, it has major problems due to the fact that a major part of its debt is denominated in foreign currency coupled with foreign owners. Mexico’s problem started with their crisis in 1994 where they needed to the bailed out.  The debt created then is still around except it has basically tripled due to interest. Mexico may be facing liquidity problems in that they will have difficulty in sourcing foreign currency to pay off its debt

( Don Quijones/WolfStreet)

ii)This is not good:  South Africa’s President Zuma calls for the confiscation of White land exactly what Zimbabwe did to its White citizens years earlier:

( zero hedge)

7. OIL ISSUES

Did they expect anything less:  OIL pundits are now concerned over Russia’s failure to cut production

( zero hedge)

8. EMERGING MARKETS

9.   PHYSICAL MARKETS

i)Tice tells CNBC that gold will rise despite rising interest rates due to the “paper vs physical dilemma.  In other words there is a huge amount of paper obligations out there vs physical.

( Tice/CNBC)

ii)Mining entrepreneur, Frank Giustra concedes gold price suppression

( zero hedge)

iii)Mike Kosares comments that the bank’s excess reserves are now finding their way into the economy thorough lending. Is this what is fueling inflation now?

( Kosares/USAgold/GATA))

iv)my goodness: I wonder why the CME and Reuters will stop providing LMMA silver fix benchmarks:

( Jan Harvey/Reuters/GATA)

v)An extremely important commentary this morning from Avery Goodman. Maguire has been pounding the table on the huge paper obligations in London outstanding versus physical gold.  He now is stating that the LBMA members are scrambling for metal and the race is on turning many paper obligations to real metal.  He claims  (and he believe he is correct) that the LBMA will default as well as the comex.

 

( Avery Goodman/GATA/ Andrew Maguire/Goldseek//three commentaries)

10.USA STORIES

i)Early trading this morning from NY:

(zerohedge)

ii)Core Factory orders growth has slowed down to a 6th month low
(courtesy zero hedge)

iii)I was totally unaware that USA passed a law that they had to keep their cash balances low. They were not allowed to pad their balances:  they could borrow all the want and on March 15, whatever the borrowings become, that will be the new debt ceiling.  They are burning cash at an alarming rate.  When Trump took office  43 days ago, the cash balances was around $382 billion, whereas today it is down to only 109 billion, a loss of 273 billion..a monstrous burn rate.  The problem will be that they will run out by Mid April.

( Washington Examiner)

iv)Saturday morning:

A bombshell:  Trump accuses Obama of wiretapping the Trump tower:

( zero hedge)

v)Sunday morning:

Obama slams the “false” Trump accusation:

( zero hedge)

vi)Sunday afternoon

James Clapper denies the wiretapping. Nobody believes him:

( zero hedge)

vii)Sunday afternoon:The White House demands a Congressional probe whether Obama or anybody on his administration ordered the wiretapp of Trump Tower

( zero hedge)

viii)Sunday evening:

From Gateway, the FBI is said to have sought a FISA warrant and then they discover no evidence of any Russian involvement:

( The GatewayPundit.com/

ix)Why does Comey need to ask the Dept of Justice to publicly reject Trump’s claims.  Why can’t the FBI publicly do it themselves!!

( zero hedge)
x) Judicial Watch sues the CIA, the Dept of Justice for Intelligence leak records. They state that “President Trump is on to something!”( JudicialWatch/zero hedge)

xi)Mark Levin issues an open letter to CNN’s Brian Stetler and then gives the time line of what we will now call Obamagate:

( zero hedge)
xii)David Stockman appears on CNBC again and states that the debt ceiling is the next crisis and this is going to happen before any tax breaks etc.They cash position of the government on on Feb 24.2017 was down to 200 billion. On March 3:  109 billion USA.

xiii)Trump to sign a new executive order.  This time, Iraq will be excluded due to their extreme vetting process.  Also Green card holders will also be excluded:

( zero hedge)
xiv) This is what happens when you administer a tax poorly:  Pepsi lays off 20% of its Philadelphia workers due to the Soda tax we outlined to you on several occasions( zero hedge)

xv)If you have finished your popcorn on the wiretapping issue with Trump, go get another batch:  Senator Grassley has just launched a probe into the FBI ties with the British Spy (the one who gave the dossier on Trump to the FBI).  He wants to know if the FBI relied on this information to see a FISA court warrant to wiretap Trump

( zerohedge)

 

Let us head over to the comex:

The total gold comex open interest FELL BY 6,937 CONTRACTS DOWN to an OI level of 437,220 with THE  FALL IN THE  PRICE OF GOLD ( $6.40 with FRIDAY’S trading). We are now in the contract month of MARCH and it is one of the poorer delivery months  of the year. In this MARCH delivery month  we had a GAIN of 1 contract(s) UP to 46. We had 5 contact(s) served upon yesterday, so we GAINED 6 CONTRACTS or  AN ADDITIONAL 600  ounces will  stand for delivery.  The next  active contract month is April and here we saw it’s OI FALL by 7854 contracts DOWN TO 259,178 contracts.

For comparison purposes, the April 2016 contract at this time had an OI of 313,947 contracts. At the end of April/2016 only 12.3917 tonnes stood for physical delivery, although 21.306 tonnes stood initially at the beginning of April 2016.

The non active May contract month added 69 contracts and thus its OI is 268 contracts. The next big active month is June and here the OI ROSE by 1154 contracts up to 97,316.

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
 And now for the wild silver comex results.  Total silver OI FELL BY ONLY 3,484 contracts FROM  197,332 DOWN TO 193,848 WITH FRIDAY’S  ATTEMPTED DRIVE BY SHOOTING OF SILVER AS EVENTUALLY SILVER ENDED AT ZERO LOSS ON THE DAY . We are moving CLOSER TO the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540). The closing price of silver that day: $20.44

We are in the active delivery month is March and here the OI decreased by 318 contracts down to 2654 contracts. We had 302 notices served upon yesterday so we lost 16 contracts or an additional 80,000 oz  will not stand for delivery. This is totally unbelievable.  How could so many be late in rolling?

For historical reference: on the first day notice for the March/2016 silver contract:  19,020,000 oz stood for deliveryHowever the final amount standing at the end of March 2016:  6,755,000 oz as the banker boys were busy convincing holders of many silver contracts to cash settle just like they did today.

 

The April/2017 contract month LOST 21 contracts to 957 contracts. The next active contract month is May and here the open interest LOST 3194 contracts DOWN to 152,797 contracts.

FOR COMPARISON

Initially for the April 2016 contract, 1,180,000 oz stood for delivery.  At the end of April 2016: 6,775,000 oz as bankers needed much silver to fill major holes elsewhere.

We had 343 notice(s) filed for 1,715,0000 oz for the MARCH 2017 contract.

VOLUMES: for the gold comex

Today the estimated volume was 154,150  contracts which is poor.

Yesterday’s confirmed volume was 301,179 contracts  which is excellent

volumes on gold are getting higher!

INITIAL standings for MARCH
 March 6/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
nil OZ
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
 
1 notice(s)
100 oz
No of oz to be served (notices)
45 contracts
4500 oz
Total monthly oz gold served (contracts) so far this month
45 notices
4500 oz
0.1399 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     16,107.15 oz
 This is very strange:  now for many days, nothing of substance enters the comex vaults.  They must have problems locating physical just like the LBMA>
Today we HAD 0 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil oz
We had 0  adjustment(s)
For MARCH:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 1 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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To calculate the initial total number of gold ounces standing for the MARCH. contract month, we take the total number of notices filed so far for the month (45) x 100 oz or 4500 oz, to which we add the difference between the open interest for the front month of MARCH (46 contracts) minus the number of notices served upon today (1) x 100 oz per contract equals 9,000 oz, the number of ounces standing in this NON  active month of MARCH.
 
Thus the INITIAL standings for gold for the MARCH contract month:
No of notices served so far (45) x 100 oz  or ounces + {(46)OI for the front month  minus the number of  notices served upon today (1) x 100 oz which equals 9000 oz standing in this non active delivery month of MARCH  (.2799 tonnes)
 
 
 
 
 
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On first day notice for MARCH 2016, we had 2.146 tonnes of gold standing. At the conclusion of the month we had 2.311 tonnes standing. 
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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/ 18.734 tonnes
March: 0.2799 tonnes
total for the 15 months;  244.54 tonnes
average 16.302 tonnes per month vs last yr  61.82 tonnes total for 15 months or 4.12 tonnes average per month (last yr).
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventory 1,419,840.049 or 44.162 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,928,936.348 or 277.720 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.720 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 MARCH DELIVERY MONTH
MARCH INITIAL standings
 March 6. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
nil 0z
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 nil oz
No of oz served today (contracts)
343 CONTRACT(S)
(1,715,000 OZ)
No of oz to be served (notices)
2291 contracts
(11,455,000  oz)
Total monthly oz silver served (contracts) 1763 contracts (8,815,000 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  889,864.6 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 0 customer withdrawal(s):
 i) Out of Delaware: 10,406.886
ii) Out of jPMorgan: 931.300 oz’
iii) Out of Scotia: 100,915.500 oz
TOTAL CUSTOMER WITHDRAWALS: nil oz
 we had 0 customer deposit(s):
***deposits into JPMorgan have now resumed.
total customer deposits;  nil  oz
 
 we had 0  adjustment(s)
The total number of notices filed today for the MARCH. contract month is represented by 343 contract(s) for 1,715,000 oz. To calculate the number of silver ounces that will stand for delivery in MARCH., we take the total number of notices filed for the month so far at 1763 x 5,000 oz  = 8,815,000 oz to which we add the difference between the open interest for the front month of MAR (2634) and the number of notices served upon today (343) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the March contract month:  1763(notices served so far)x 5000 oz  + OI for front month of Mar.( 2634 ) -number of notices served upon today (343)x 5000 oz  equals  20,270,000 oz  of silver standing for the Mar contract month. This is  now average for an active delivery month in silver.  We lost 16 contracts or an additional 80,000 oz will not stand.  
 
END
Volumes: for silver comex
Today the estimated volume was 48,235 which is good!!!
FRIDAY’S  confirmed volume was 86,418 contracts  which is huge.
To give you an idea of volume FRIDAY’S confirmed volume::  86,418 contracts equates to 432 million oz or 62% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA.
 
Total dealer silver:  34.863 million (close to record low inventory  
Total number of dealer and customer silver:   188.331 million oz
The total open interest on silver is now further 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

March 6/No change in gold inventory at the GLD/Inventory rests at 840.58 tonnes

March 3/ a huge withdrawal of 2.96 tonnes of gold from the GLD/Inventory rests at 840.58 tonnes

March 2/a deposit of 2.37 tonnes of gold into the GLD/Inventory rests tat 843.54 tonnes

March 1/no change in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 28/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

feb 27/no change in gold inventory at the GLD/Inventory rests at 841.17 tonnes

Feb 24/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 23/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 22/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 21/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

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.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
March 6 /2017/ Inventory rests tonight at 840.58 tonnes
*IN LAST 103 TRADING DAYS: 109.23 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 49 TRADING DAYS: A NET  15.98 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: a net    41.41 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory
March 6/no change in inventory at the SLV/Inventory rests at 332.788 million oz/
March 3: two transactions:
i)March 3/ a small change, a withdrawal of 125,000 oz and this would be to pay for fees like insurance, storage etc/inventory now stands at 335.156 million oz.
ii) a huge withdrawal of 2.368 million oz/inventory rests this weekend at 332.788 million oz
March 2/no changes in silver inventory (despite the raid) at the SLV/Inventory rests at 335.281 million oz
March 1/no changes in inventory at the SLV/Inventory rests at 335.281 million oz/
FEB 28/no changes in inventor at the SLV/inventory rests at 335.281 million oz/
FEB 27/no change in inventory at the SLV/Inventory rests at 335.281 million oz/
FEB 24/no changes in inventory at the SLV/Inventory rests at 335.281 million oz.
FEB 23/no changes in inventory at the SLV/Inventory rests at 335.281 million oz
FEB 22/no changes in inventory at SLV/inventory rests at 335.281 million oz
FEB 21/a deposit of 568,000 oz into the SLV/Inventory rests at 335.281 million oz
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
.
March 6.2017: Inventory 332.788  million oz
 end

NPV for Sprott and Central Fund of Canada

will update later tonight the central fund of Canada figures

1. Central Fund of Canada: traded at Negative 8.4 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%( Mar 6/2017) 
will update later tonight the Sprott figures.
.
2. Sprott silver fund (PSLV): Premium RISES  to -.28%!!!! NAV (Mar 6/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES to  – 0.14% to NAV  ( Mar 6/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.28% /Sprott physical gold trust is back into NEGATIVE territory at -0.14%/Central fund of Canada’s is still in jail.
 

end

Major gold/silver trading/commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE

“Think About and Prepare For” Euro Catastrophe

“Think About and Prepare For” End Of Euro – TV3 Agenda Interview

David McWilliams interviewed Lara Marlowe and Cormac Lucey about the elections in France (April 23 and May 7) for TV3’s Agenda and the short interview about the French elections, Le Pen and the risks posed to the euro is a must watch.

gold-prices-lepen
Key points covered
– “Could the French say ‘au revoir’ to the euro?”
– Brexit vote and Trump election given a “lot of cold chills”
– Le Pen has “promised to take France out of euro”
– Her election would be “catastrophic for Europe and the euro”
–  “If people break out from the lunatic asylum … Ireland should leave the euro…”
– ‘Going bankrupt slowly and then suddenly’ as per Hemingway’s warning
– “Money moves when it is panicked …”
– This is now not a “fringe” concern – deep insiders are warning
– Lack of rational debate about risks – blindly dismiss concerns
–  “Seeing a slow motion bank run…”
– “Think about and prepare for…”

Interview can be watched on TV3 here (Begins 15.43)

Gold and Silver Bullion – News and Commentary

Debt deadline in the U.S. is something that is being largely ignored (MarketWatch.com)

Gold steadies after fall on Fed rate hike expectations (Reuters.com)

Yen Gains, Topix Falls on Korean Missile Report (Bloomberg.com)

Deutsche Bank seeks to raise $8.5B in capital (MarketWatch.com)

CME and Reuters to stop providing LBMA silver price benchmark (Reuters.com)

This is NOT like the dot-com bubble… it’s much worse (MarketWatch.com)

Bitcoin Unlike Gold – Not Proven Long Term Store of Value (MarketWatch.com)

Visualizing The US Debt Ceiling (In $100 Bills) (ZeroHedge.com)

Gold and Silver Outlook 2017 (Popescugold.com)

‘Paper vs. physical dilemma’ can power gold – Tice (CNBC.com)

Tice tells CNBC that gold will rise despite rising interest rates due to the “paper vs physical dilemma.  In other words there is a huge amount of paper obligations out there vs physical.

 

(courtesy Tice/CNBC)

‘Paper vs. physical dilemma’ can power gold, Tice tells CNBC

Section:

9:40a ET Saturday, March 4, 2017

Dear Friend of GATA and Gold:

Fund manager David Tice, interviewed Friday on CNBC’s “Closing Bell” program, argued that gold can rise despite rising interest rates, in part because of the “paper vs. physical dilemma.” The interview is 3 minutes long and can be viewed at CNBC here:

http://www.cnbc.com/2017/03/03/gold-and-silver-are-a-gift-right-now-stra…

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

 

END

 

Mining entrepreneur, Frank Giustra concedes gold price suppression

(courtesy zero hedge)

Mining entrepreneur, Clinton confidant Giustra concedes gold price suppression

Section:

11:11a ET Saturday, March 4, 2017

Dear Friend of GATA and Gold:

The price of gold has been heavily suppressed by the U.S. government, Wall Street financial houses, and the banking system, according to billionaire Canadian mining and movie entrepreneur Frank Giustra, a confidant and philanthropy associate of former President Bill Clinton.

Giustra’s remarks were made in late January at the Vancouver Resource Investment Conference during an interview with Marin Katusa of Katusa Research and were publicized today by GATA Board of Directors member Ed Steer’s Gold & Silver Daily newsletter (http://www.edsteergoldandsilver.com).

Video of the interview, posted by Katusa Research, shows Giustra identifying gold as the asset with the most potential for appreciation and describing the financial and political turmoil in the world. Then Katusa asks Giustra why the gold price hasn’t reached $5,000 per ounce.

Giustra replies: “I’m not into conspiracy theories but I think gold is managed, and I think the West — specifically the United States — goes out of its way to downplay the value of gold from a historical perspective, and I think that they’ve done a very good job — Wall Street, the banking system, the government. Every government wants to own gold. They don’t want their citizens to own gold because that undermines the confidence in the real economy, and in a situation where you have such fragility in the system, the worst thing that any government would want to see is a spike in the price of gold.”

To which GATA may reply ruefully: Better late than never. For nine years ago a mutual friend introduced GATA to Giustra in the belief that he could be immensely helpful to the cause of liberating the monetary metals markets. Your secretary/treasurer sent him a summary of GATA’s documentation of the purposes and mechanisms of the gold price suppression scheme, a summary whose most recent edition is posted here:

http://www.gata.org/node/14839

Weeks passed and eventually Giustra was prodded into resentfully acknowledging receipt of the summary while adding that he had not yet had time to review it — and that was the end of it.

Of course GATA does not expect people of great wealth to pursue the public interest or a social good when this involves challenging governmental and financial power far greater than their own. That kind of philanthropy could put their wealth, businesses, reputations, and even their lives at risk. But such people always could help indirectly and through intermediaries or groups. (Imagine what might be done by the World Gold Council, an organization of gold mining companies, if it ever wanted to function as a world gold council and not just as a facilitator of the fractional-reserve gold banking system.)

Now that Giustra admits knowledge of the Western gold price suppression scheme, will he do anything about it except passively wait for it to disintegrate, vindicate the value of his investments, and liberate not just the monetary metals markets but the world’s markets generally? Is putting himself at risk in pursuit of justice that cosmic still out of the question?

Belated as it would be, GATA still could use and would be grateful for his help, which can be arranged here:

http://www.gata.org/node/16

Giustra’s interview with Katusa is posted at the Vimeo video site here —

https://vimeo.com/202302922

— and his remarks about gold price suppression begin at the 1:30 mark.

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

END

Mike Kosares comments that the bank’s excess reserves are now finding their way into the economy thorough lending. Is this what is fueling inflation now?

(courtesy Kosares/USAgold)

 

Mike Kosares: Will banks’ excess reserves fuel a monetary crisis?

Section:

2p ET Saturday, March 4, 2017

Dear Friend of GATA and Gold:

In USAGold’s March newsletter, proprietor Michael Kosares reviews indications that the banking system’s “excess reserves” parked at the Federal Reserve are finding their way back into the economy through lending, pushing up prices and inflation, with positive implications for gold. Kosares’ commentary is headlined “Will Banks’ Excess Reserves Fuel a New Monetary Crisis?” and it’s posted at USAGold here:

http://www.usagold.com/publications/NewsViewsMarch2017.html

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

 

END

 

my goodness: I wonder why the CME and Reuters will stop providing LMMA silver fix benchmarks:

(courtesy Jan Harvey/Reuters)

CME and Reuters to stop providing LBMA silver price benchmark

Section:

By Jan Harvey
Reuters
Friday, March 3, 2017

CME Group and Thomson Reuters are to step down from providing the LBMA silver price benchmark auction, the London Bullion Market Association said today, less than three years after they successfully bid to provide the process.

“In consultation with the LBMA, CME Group and Thomson Reuters have decided to step down from their respective roles in relation to the LBMA Silver Price auction,” the LBMA said in a members update seen by Reuters.

The two will continue to operate and administer the silver auction until a new provider is appointed, the LBMA said. It will launch a new tender to appoint an alternative provider to operate the process “shortly,” it said. …

… For the remainder of the report:

http://www.reuters.com/article/us-silver-price-lbma-idUSKBN16A20G

 

end

 

An extremely important commentary this morning from Avery Goodman. Maguire has been pounding the table on the huge paper obligations in London outstanding versus physical gold.  He now is stating that the LBMA members are scrambling for metal and the race is on turning many paper obligations to real metal.  He claims  (and he believe he is correct) that the LBMA will default as well as the comex.

hang onto your hats

(courtesy Avery Goodman/GATA/ Andrew Maguire/Goldseek//three commentaries)

Avery Goodman: Explosion in Comex gold offtake hints at LBMA defaults

Section:

10:35a ET Sunday, March 5, 2017

Dear Friend of GATA and Gold:

Securities lawyer and market analyst Avery Goodman writes this weekend that the recent explosion in offtake of gold bars from the New York Commodities Exchange is signalling something, and he thinks it may constitute short-covering in preparation for the default of members of the London Bullion Market Association and even the Comex itself. Goodman’s analysis is headlined ‘President Trump, “Making America Great Again,’ the Gold Standard, and a 230% Increase in Physical Gold Bar Deliveries — All Connected?” and it’s posted at his internet site here:

http://averybgoodman.com/myblog/2017/03/04/president-trump-making-americ…

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

 

And here is the article by Goodman:

PRESIDENT TRUMP, “MAKING AMERICA GREAT AGAIN”, THE GOLD STANDARD AND A 230% INCREASE IN PHYSICAL GOLD BAR DELIVERIES – ALL CONNECTED?

February was an extraordinary month…

President Trump was busy issuing executive orders and reversing those issued by his predecessor. Gold prices have been steadily climbing. The secret Obama executive order, which must have opened the US gold reserve to the banksters, does not appear to have been reversed quite yet. When it does happen, it should spark some mild price fireworks, as the manipulators dump remaining short positions. In the meantime, in all likelihood, the manipulators are loading up on as many physical gold bars as they can, at the lowest possible prices. It is, I believe, an indirect courtesy of the US government, thanks to the actions of the previous President.

It would appear that America’s treasure continues to be drained away at a fantastic rate, although as we will discuss later, there is a hesitancy to commit to future orders that is growing fast in London. In spite of the delay in reversing Obama’s executive order, gold’s price and timing continue to follow the pattern I described in an article in November. Probably, that’s because although it isn’t closed yet, the US Gold Reserve could be closed at any moment.

The price attacks will continue but are temporary and opportunistic. They will be geared more toward the collection of a few quick bucks and/or the collection of some discounted physical gold bars than trying to make a long-term impact on gold prices. Most likely, that’s because the recent updraft in gold prices is driven by physical demand. Physical buyers are thrifty people who stop buying when prices go up too fast. Their resistance doesn’t last forever, but they do need to get used to significant price hikes.

We know that physical buyers were ready to pay much more for gold just a few years ago. Based on the gold market of 2012, the point at which physical supply and demand balances in the longer term, was somewhere within the $1,500 – $1,600 range. Since nominal earnings are universally higher now than they were 4 years ago, it shouldn’t take too long for people to get used to the higher prices. The willingness to pay a much higher price has already been demonstrated. Downward biased manipulation can only be partially effective without government subsidies and support.

The recent price attacks can safely be viewed for the transient events that they are. It appears that the banksters are simply attacking highly leveraged get-rich-quick schemers for the short-term benefit of doing so. Such speculators are fools, who face bankruptcy from small price movements, and must run at the slightest negative price pressure. If they think gold will go down, they quickly take the opposite side from their usual bullish view, and try to get rich quick that way. The problem for them is that they are being tricked. The manipulators want to buy physical gold bars at rock bottom prices and transient price attacks in paper-based futures markets helps them do it.

The manipulators are being careful not to push gold prices below the hard physical buying orders. Manipulators piled on last Thursday, for example, with staggeringly large waves of short selling designed to torpedo prices. Gold and silver tend to follow the similar patterns of manipulative activity, and the exact numbers have actually been already documented in the silver market. Approximately 151 million troy ounces of paper silver were “sold” in a space of 45 minutes from 11:25 am to 12:10 pm, almost four times the amount of silver produced by the top mining company in an entire year! The net effect was a steep price decline and a great deal of cash to fill the pockets of manipulators. We can presume that the same thing happened with gold. Then, on Friday, the very next day, prices went right back up.

In In spite of the effort being put in, Thursday’s manipulation event has no legs. By April, the folks who did it will have slowly bought back all the short positions they took on to do it. In contrast with the way they torpedoed prices, they will buy back the shorts in a slow and orderly manner that affects prices as little as possible. They will then likely stand for delivery of gold they purchased at rock-bottom prices from a shell-shocked market filled with hapless non-connected hedge fund managers. The hedge fund managers and their clearing brokers will scramble around searching for physical gold to meet  delivery obligations. Overall, the process will help keep prices moving steadily upward over time.

If the manipulators play their game right, even as hard physical buyers raise their bids, the artificial price of gold will be kept just a little bit above the physical bids. The risk they face is only from miscalculation. For example, some unanticipated event could happen that creates a sudden and unexpected willingness, by physical buyers, to raise their bids. Thus, there is always an element of uncertainty.

Recent dramatic events at COMEX futures exchange, however, increase my level of confidence in my current forecast. As I reported last month, we saw a 729% increase in the demand for delivery of physical gold at COMEX during off-month of January 2017, year over year. This month (February) was a major delivery month, and there was another 230% increase in the delivery of physical gold bars. The huge increase in gross demand for actual physical gold bars is impressive. However, it is not the amount that was purchased but, rather, who was doing the buying that is the most important factor.

The biggest banks in the western world continued to be the biggest physical gold bar buyers during February. In many cases, their own customers are being called upon to deliver the bars to them. In total, about 18.66 metric tons worth of physical gold bars were delivered on COMEX in February. That compares to 7.99 tons delivered in February 2016. The net increase totals out to be 233% year over year, which is enormous.

HSBC, in particular, was the biggest single buyer this month. HSBC bought just over 10.62 tons worth of physical gold bars. Neither it nor its customers delivered much gold to speak of. As was the case when it made massive purchases in 2015 and 2016, these gold bars are now an asset of the bank.

J.P. Morgan was also one of the huge buyers this month. It didn’t buy quite as many gold bars as it did, last month, but it purchased about 2.4 additional tons. In contrast, J.P. Morgan’s customers were called upon to deliver about 10.95 tons, perhaps part of which went into the bank’s own asset base. As the customers scrounged around to find gold to deliver to the banks, they probably propelled gold prices upward in February.

As was the case last month, Scotia Bank was also a big net buyer. It bought about 1 ton of physical gold. Last month, it purchased 3.82 tons.

Oddly, CME, Inc. was also a significant buyer. It has consistently been a significant gold bar purchaser throughout 2016. Like Goldman Sachs, HSBC, J.P. Morgan, Scotia and others, it has been stocking up. The exchange operator didn’t buy many gold bars as a “too-big-to-fail” megabank, but its purchases were enormous, and way out of line from a historical perspective. Remember, the futures exchange operator is not a bank, a hedge fund or an independent investor. It has no obvious reason to buy physical gold bars — except one which we will discuss in a moment.

CME, Inc. bought about 1/3rd of a metric ton in 2016. This past month, it purchased another 62 kilograms. In comparison, it bought only 5 gold bars in all of 2015. The exchange is contractually liable on any default in delivery by clearing members. There hasn’t been any default yet. However, the fact that the company is now buying so many gold bars implies that it is preparing for that  to happen. It seems to be planning on weathering a major supply disruption.

If some of the COMEX clearing members end up defaulting on delivery, the exchange is on the hook to supply either gold or the cash value of that gold at the time of default. It is perfectly legal for the exchange to pay customers cash, instead of the gold they contracted for, BUT if the company does that, COMEX will be discredited as a forum for price discovery. It usefulness for market manipulation purposes will end forever. All of which brings us to the celebrated London-based metals market whistle-blower Andrew McGuire…

Mr. McGuire has a history of accuracy in his description of what is going on behind the scenes at the London precious metals market. In a recent public interview, he stated that a huge crisis is in the offing. London gold dealers don’t have enough gold to meet demand. Most of the “gold” controlled by LBMA banks is actually not theirs. It is all “stored” under “non-allocated” storage contracts,. These contracts give banks the right to use the gold in any way they want, including selling or leasing it.

Apparently, they’ve been selling and leasing the gold they don’t own for many years. All of it is spoken for, and there isn’t any left. With no stockpiles of their own, and facing the prospect of being cut off from the US Gold Reserve, they seem ready to default on metal delivery obligations. McGuire says that the banks are on the verge of declaring a cash settlement of all gold obligations. Because of the clever lawyers who wrote the contracts, however, this will not equal a legal default.

All the non-allocated storage contracts have a clause that allows for the “substitution” of cash in settlement of gold obligations. If McGuire is right about an oncoming crisis in London, and a cash based “reset” is about to happen, what CME, Inc. is doing makes perfect sense. Most smaller COMEX dealers refuse to tie up cash on vaulted gold, and simply wait until the last minute to buy gold to make deliveries. But, after the defacto default in London, physical gold will be unavailable at any price. These firms will be unable fulfill COMEX delivery obligations.

An educated guess would be that CME, Inc.’s motive, in buying so much physical gold, is to prevent collateral damage to the COMEX exchange’s reputation. Meanwhile, the big banks’ motivation may also revolve around an expected London default. Most of the same players operate in both NYC and London, but COMEX is the more critical market for price manipulators because it is there that world prices are set. The same people who now manipulate gold prices downward, will probably turn to upside biased manipulation once the government’s subsidy ends. To profit from price manipulation, they must be able to control prices.

Continuing the credibility of the COMEX futures market, in spite of a massive London default, will enhance its dominance in price discovery. COMEX has always been the key to controlling the price of gold, in spite of the fact that the London gold market is five times larger. The London price and the world price of gold is primarily set by banks and hedge funds fighting with one another at the futures exchange. If the futures exchange allows a large scale default, it will end up as discredited as the LBMA in London.

Here is the bottom line. When the appropriate time comes, LBMA obligations can be cashed out, and the organization can be closed down. But, if COMEX is discredited, the primary profit making vehicle will be lost forever. In contrast, by preserving COMEX in spite of the collapse of the London market, attention can be quickly shifted toward upwardly biased manipulation activities, and profit can be preserved. Meanwhile, in the shorter run, there is the prospect of selling gold bars to the hedge funds and smaller COMEX clearing members around the time of the London default. Thus, buying gold bars now, for later sale, is going to be an extraordinarily profitable gambit.

In the face of the oncoming massive upward “reset” in the price of gold, I am reminded of a recent article in Forbes magazine. The author urged President Trump to bring back the gold standard in order “to make America great again.” According to the article, there are only three choices open to President Trump.

First, muddle along under the current “dollar standard,” a position supported by resigned foreigners and some nostalgic Americans—among them Bryan Riley and William Wilson at the Heritage Foundation, and James Pethokoukis at the American Enterprise Institute.

Second, turn the International Monetary Fund into a world central bank issuing paper (e.g., special drawing rights) reserves—as proposed in 1943 by Keynes, since the 1960s by Robert A. Mundell, and in 2009 by Zhou Xiaochuan, governor of the People’s Bank of China. Drawbacks: This kind of standard is highly political and the allocation of special drawing rights essentially arbitrary, since the IMF produces no goods.

Third, adopt a modernized international gold standard, as proposed in the 1960s by Rueff and in 1984 by his protégé Lewis E. Lehrman …and then-Rep. Jack Kemp.

Of course, to bring back the gold standard, the price of gold versus the US dollar must be reset much higher. If Mr. McGuire is right, however, the implosion of the London gold market will do just that. It will also bring the role of gold as money back into the world’s consciousness. A massive one-off price reset will happen, dramatically devaluing cash currencies including the US dollar. Going back to the gold standard might end up being enough to offset the enormous debts built up under decades of incompetent economic management.

 

end

 

Gold price suppression is breaking the paper gold market, Maguire tells GoldSeek Radio

Section:

2:05p ET Sunday, March 5, 2017

Dear Friend of GATA and Gold:

Interviewed by GoldSeek Radio’s Chris Waltzek, London metals trader Andrew Maguire says the longstanding gold price suppression scheme is breaking the paper gold market, the physical gold market is starting to challenge it, and bullion bank shorts cannot rely on another bailout by central banks. The interview can be heard at GoldSeek Radio here:

http://radio.goldseek.com/

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

end

 

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

 
 

1 Chinese yuan vs USA dollar/yuan MUCH STRONGER AT  6.8967(TINY REVALUATION NORTHBOUND   /OFFSHORE YUAN NARROWS   TO 6.8935/ Shanghai bourse UP 15.55 POINTS OR .48%   / HANG SANG CLOSED UP 43.56 POINTS OR 0.18% 

2. Nikkei closed DOWN 90.03 POINTS OR 0.46%   /USA: YEN FALLS TO 113.82

3. Europe stocks opened ALL IN THE RED EXCEPT SPAIN     ( /USA dollar index RISES TO  101.64/Euro DOWN to 1.0579

3b Japan 10 year bond yield: FALLS TO    +.074%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.82/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.70  and Brent: 55.26

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  +.327%/Italian 10 yr bond yield DOWN  to 2.117%    

3j Greek 10 year bond yield RISES to  : 7.08%   

3k Gold at $1232.00/silver $17.85(8:15 am est)   SILVER MOVES CLOSER TO RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 11/100 in  roubles/dollar) 58.13-

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

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.82 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0102 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0688 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 FALLS to  +.327%

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 2.473% early this morning. Thirty year rate  at 3.061% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE

S&P Futures, Global Stocks, Euro Dragged Lower By Deutsche, Geopolitics, French Election Worries

European shares and S&P futures are modestly lower this morning, dragged down by fresh geopolitical concerns out of North Korea which last night fired 4 ballistic missiles, by renewed political jitters ouf of France where Alain Juppe announced he would not run in the presidential election, from Deutsche Bank whose aggressive equity offering has weighed on local stocks, and from China’s announcement over the weekend in which it modestly cut its economic outlook. Risks were magnified following concerns of political stability in the US after President Trump’s accusation that his predecessor Barack Obama wiretapped him overshadowed a flurry of M&A activity in Europe.

As a result, caution has rippled through equity markets while metals slumped on Chinese growth prospects and the French presidential race continued to roil the euro.

The Stoxx Europe 600 index was down 0.4% dragged by miners and banks as Deutsche Bank announced it was reversing course with an overhaul to raise capital. Deutsche Bank shares slumped 6% after Germany’s  biggest lender said it needs to issue more shares to raise 8 billion euros of capital. “The question is whether this will be the last capital hike or whether the bank will need more yet again in a few years,” said Stefan de Schutter, a trader at Frankfurt-based Alpha, referring to Deutsche. “Until now, none of the restructuring measures have borne fruit.”

Deutshce pressured European banking stocks and weighed on broader indices, offsetting a rise in shares of asset management firms after Aberdeen and Standard Life set the terms of their 11 billion pound tie-up. Both stocks rose more than 6 percent.

The FTSEuroFirst index of 300 leading shares and Germany’s DAX fell as much as 0.7 percent, both hit by the slide in Deutsche Bank. The European banking index was down 1 percent.

MSCI’s benchmark global stock index was flat on the day. U.S. stock futures pointed to a fall of around 0.5 percent at the open on Wall Street which would take some of the shine off last week’s rally to fresh record highs, particularly the Dow’s leap above 21,000 points. Japan’s Nikkei lost 0.5 percent, but that was the outlier in Asia. MSCI’s broadest dollar-denominated index of Asia-Pacific shares outside Japan rose 0.4 percent, recovering from Friday’s 1 percent fall, its biggest this year.

The euro erased earlier gains and German bonds rose after former prime minister Alain Juppe said he won’t step in to replace Francois Fillon on the Republican ticket in France’s frenetic presidential election. As a result, European markets unwound Friday’s Juppe-motivated risk-on, with Bund futures rallying, core curves bull flattening and peripherals dropping with French bonds. Local press reported over the weekend Juppe would decline to replace Fillon, prompting early risk-off moves; bund futures rose to session highs as Juppe confirmed he won’t run just after 10:30am CET.  France-German 10y spread wider by around 5bps; credit spreads widen and European stocks slid. Elsewhere, the German 10Y yield declined -3bps at 0.33%; March bund futures were +40 ticks at 164.38; Italy +3bps at 2.12%, France +2bps at 0.96%, Spain +3bps at 1.70% in a parallel risk on/risk off move.

The bigger picture is that markets appear to be rolling over recent all time highs, as investors anticipate in a near-certain March U.S. rate rate next week. Chinese Premier Li Keqiang warned of larger challenges ahead during his work report to the annual National People’s Congress gathering in Beijing. In Europe, the agenda is being set by politics, according to Pictet Asset Management. “The ‘pothole’ is a political one with far right parties gaining ground in opinion polls ahead of both a Dutch and French ballots in spring,” Luca Paolini, chief strategist at Geneva-based Pictet, said in a research note. “We are scaling back exposure to European stocks, albeit retaining our overweight stance.”

Risk appetite also took a hit on rising geopolitical tensions in East Asia. North Korea fired four ballistic missiles early in the day, while a spat between China and South Korea over missile defense deepened. Trump’s accusation that his presidential predecessor Barack Obama wiretapped him during the late stages of the 2016 election campaign also cast a shadow over U.S. stocks. Some investors view Trump’s confrontational style as distracting the president from his economic agenda.

And then there is the Fed: investors opened the trading week almost certain that the Federal Reserve will raise U.S. interest rates next week. Fed Chair Janet Yellen on Friday all but confirmed market expectations, barring any sharp deterioration in economic conditions. U.S. money market futures are pricing in about a 90% chance the Fed will raise interest rates by 0.25 percentage point at its meeting on March 14-15, with another rate hike fully priced in by September. But much of the market’s move towards this level of certainty was made early last week, meaning it was already largely in the price of the dollar and U.S. bond yields.

Attention will now shift to the U.S. employment report for February on Friday, while investors are also awaiting more detail on Trump’s fiscal plans.

“The rally (on Wall Street) has been mainly driven by promises made by President Trump to lower taxes, increase spending on infrastructure and the military,” Rabobank analysts wrote in a note on Monday. “The importance of such pledges has increased as the Fed intends to raise rates further. What could possibly go wrong?”

Both the dollar and Treasury yields slipped on Monday, as investors took some profit from last week’s moves and squared positions ahead of the expected rate hike. The Bloomberg Dollar Spot Index added 0.1 percent, after slipping 0.7 percent on Friday to halt a five-day rally. The euro edged up to $1.0640 having dipped below $1.05 last week, and the dollar fell a third of one percent against the yen to 113.60 yen. China’s yuan was little moved, fetching 6.8920 yuan per dollar in offshore trade after China cut its growth target for this year to 6.5 percent, compared to its 2016 goal of 6.5-7 percent. Growth in 2016 was 6.7 percent.

In rates, the yield on the benchmark 10-year Treasury note declined one basis points to 2.47 percent. German bonds were Europe’s best performers, as 10-year yields dropped three basis points to 0.33 percent. French benchmarks declined, pushing the yield of debt due in a decade up two basis points to 0.96 percent.

Oil prices fell on concern over Russia’s compliance with a global deal to cut oil output and China’s lower growth target. International benchmark Brent futures fell 0.8 percent to $55.45 per barrel. Figures released last week showed Russia’s February oil output was unchanged from January, casting doubt on Russia’s moves to rein in output as part of a pact with oil producers last year

Key events in the coming week include the ECB’s meeting on Thursday in which Mario Draghi is expected to keep things unchanged even though headline inflation reached its 2% target in February. He’s expected to keep QE going until the end of the year with underlying price pressures muted. Other economic highlights of the week are industrial output for Germany, France and the U.K., and German factory orders. The biggest economic event in the US will be the February jobs data on tap for Friday. Employers probably added around 190,000 workers to payrolls, in line with the average over the past six months and a sign of steady job growth, economists forecast. A big negative surprise may derail the Fed’s plans for a rate hike.

Bulletin Headline Summary from RanSquawk

  • European equities begin the week on shaky ground, trading lower this morning by around 0.5% in major indices as sentiment is weighed on by concerns regarding Deustche Bank
  • Limited outright movement in the USD this side of the weekend, with mixed flow suggesting focus on its major counter-parts
  • Looking ahead, highlights include US Factory Orders, Durable Goods and Fed’s Kashkari (not set so speak about monetary policy)

Top Overnight News from RanSquawk

  • Standard Life Agrees to Buy Aberdeen in $4.7 Billion Stock Deal
  • Peugeot Maker Agrees to Buy GM’s Opel in $2.3 Billion Deal
  • Juppe Says He Won’t Be a Stand-In Candidate in French Race
  • Deutsche Bank Reunites Traders With Bankers in Cost-Cut Mission
  • CSX Said Near Deal to Name Harrison CEO as Soon as Next Week
  • Japan Goes to Highest Alert Level After North Korea Missiles
  • Wells Fargo Executives May Face Criminal Charges, Reuters Says
  • Russian Hackers Said to Seek Hush Money From Liberal U.S. Groups
  • Trump’s Travel Ban Threatens to Deter Foreign Tourists From U.S.
  • U.S. Oil Industry Becomes Refiner to the World as Exports Boom
  • Bird Flu Found in Tennessee, Near Top U.S. Chicken States (1)
  • ‘X-Men’ Sequel ‘Logan’ Tops Box Office With Biggest 2017 Debut
  • Banks Set to Win Derivatives Relief in New EU Trading Rules
  • Exelixis Granted FDA Orphan Drug Status for Cabozantinib

Market Snapshot

  • S&P 500 futures down 0.2% to 2,375
  • STOXX Europe 600 down 0.5% to 373.29
  • MXAP up 0.5% to 144.51
  • MXAPJ up 0.5% to 463.97
  • Nikkei down 0.5% to 19,379.14
  • Topix down 0.2% to 1,554.90
  • Hang Seng Index up 0.2% to 23,596.28
  • Shanghai Composite up 0.5% to 3,233.87
  • Sensex up 0.8% to 29,062.68
  • Australia S&P/ASX 200 up 0.3% to 5,746.51
  • Kospi up 0.1% to 2,081.36
  • German 10Y yield fell 3.7 bps to 0.319%
  • Euro down 0.3% to 1.0595 per US$
  • Brent Futures down 0.5% to $55.60/bbl
  • Italian 10Y yield fell 3.9 bps to 2.1%
  • Spanish 10Y yield rose 1.5 bps to 1.693%
  • Brent Futures down 0.5% to $55.60/bbl
  • Gold spot down 0.2% to $1,231.81
  • U.S. Dollar Index little changed at 101.58

Asia stock markets saw a mixed session after having shrugged off the early cautious tone triggered by events over the weekend in which China lowered its GDP growth target and North Korea launched 4 missiles into the East Sea. This pressured ASX 200 (+0.1%), and Nikkei 225 (-0.5%) in early trade, although Australian stocks recovered led by commodity names amid prospects of further Chinese capacity reductions in the steel and coal sectors. Shanghai Comp (-0.5%) and Hang Seng (+0.2%) saw mixed performance with choppy price action amid the weaker Chinese growth target, as hopes for future stimulus measures increased while there were also several positive profit alerts by several firms ahead of the upcoming blue chip earnings. 10yr JGBs were flat despite the weakness in Japanese stocks with demand dampened amid the absence of BoJ in the market, while the curve flattened amid outperformance in the super-long end.

Top Asian News

  • China AVIC Helicopter Said to Mull Stake Sale in Civil Unit
  • Rich Gen-Y Asian Kids Pool Family Fortunes to Build Venture Fund
  • China’s Li Walks Knife Edge on Growth as ‘Graver’ Risks Loom
  • Papua New Guinea Grasps at Its Own Gas as LNG Exports Surge
  • China Beats Stability Drum as Fed Outlook Risks Yuan Decline
  • Sway of Geopolitics Lurks Under Cover of South Korea’s Markets
  • Most-Traded Indian Sovereign Bonds Drop as ‘Repo Squeeze’ Eases
  • Lone Star Bids for Astro Japan’s Real Estate Worth $736 Million

In European bourses, equities begin the week on shaky ground, trading lower this morning by around 0.5% in major indices as sentiment is weighed on by concerns regarding Deustche Bank. Friday saw the initial reports of an EUR 8bIn capital increase from the Co., and as further details have emerged over the weekend Co. shares now trade lower by 5.8%. Elsewhere, the UK has seen the notable M&A news of the day, with Standard Life and Aberdeen Asset Management agreeing a GBP 11 bIn tie up, to see both Co.’s share price higher this morning by 6% and 5% respectively. Amid the risk off sentiment, Bunds trade higher by 50 ticks with periphery spreads wider against the core due to safe haven flow. Reports that Juppe reiterated that he will not run in the French Presidential election saw FR/GE 10Y spread also widen, with Fillon appearing to many as having little chance at a notable presidential challenge.

Top European News

  • Juppe Says He Won’t Be a Stand-In Candidate in French Race
  • Deutsche Bank Reunites Traders With Bankers in Cost-Cut Mission
  • BT Pays $1.5 Billion to Keep Champions League Soccer in U.K.
  • Prime London Office Values May Fall 20% This Year on Brexit
  • OMV Buys Uniper’s Russia Field Stake to Cement Gazprom Ties
  • Hungarian Central Bank Reduces VP Nagy’s Responsibilities

In currencies, limited outright movement in the USD this side of the weekend, with mixed flow suggesting focus on its major counter-parts. EUR has been a beneficiary of latest developments in the French elections, with reports that the Republican are set to meet to address some of the damage suffered in recent weeks. EUR/USD has rallied to 1.0600+ levels, but with the prospect of a March Fed rate hike on the table, USD demand kicked in ahead of 1.0650. This has yet not materialised in USD/JPY, which continues to struggle below the 114.00 mark, but a large expiry at the figure level may be influential near term. Upside EUR pressure has pushed the GBP cross rate into the heavy selling zone from 0.8650-00, but progress here very slow, but GBP weakness looks to have been transferred since into Cable. The spot rate is now testing sub 1.2250 levels again, but we saw good demand ahead of 1.2200 last week.

In commodities, focus has been dominated by the performance of the Chinese economy, and to that end, the modest downgrade to growth forecasts may have prompted some weakness in base metals. Losses across the board are somewhat mixed, with Zinc the under-performer today, falling over 2%. Against this, Nickel has proved a little more resilient, though still down on the day, but finding some support from the Philippines considering a ban on exports of raw materials. Precious metals still moving in tight correlation to the USD/Treasuries, with a modest up-tick seen in the yellow metal, as there has been in Silver. WTI still trading comfortably inside, the USD50-55 range, with last week’s focus on non OPEC compliance taking the shine off Oil prices. China’s lowering of growth targets also seen to have had a modest impact this side of the weekend.

It looks set to be a quiet start to the week with factory orders and final durable and capital goods revisions in the US this afternoon.

US Event Calendar

  • 10am: Factory Orders, est. 1.0%, prior 1.3%; Factory Orders Ex Trans, prior 2.1%
  • 10am: Durable Goods Orders, est. 1.0%, prior 1.8%;  Durables Ex Transportation, est. 0.1%, prior -0.2%
  • 10am: Cap Goods Orders Nondef Ex Air, prior -0.4%; Cap Goods Ship Nondef Ex Air, prior -0.6%

DB’s Jim Reid concludes the overnight wrap

A little over a week out from the start of the two-day FOMC meeting and it now feels like a rate hike is a done deal. What a difference a week makes. Indeed Fed Chair Yellen effectively ratified a hike on Friday following her comments in Chicago. The most significant part of her speech was the one in which she said that “at our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate”. The Fed Chair also added that “given how close we are to meeting our statutory goals, and in the absence of new developments that might materially worsen the economic outlook, the process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016”.

The end result was another slight tick up in the probability of a rate hike next week to 94%, as per Bloomberg’s calculator (which slightly overstates), from 90% a day prior. It was last late on Tuesday when we saw pricing really start to swing to reflect a much higher probability of a tightening after Dudley and Williams set the wheels in motion. Indeed we’ve seen the probabilities steadily rise each day last week from 52% on Tuesday, to 80% on Wednesday and then 90% on Thursday before rising further on Friday. In terms of the actual moves on Friday, 2y Treasury yields peaked as high as 1.341% just as Yellen spoke (about +3bps on the day) which is the highest this year and the highest since June 2009. However bonds actually strengthened a bit into the close and finished unchanged on the day at 1.305% reflecting perhaps the fact that a move is already pretty much priced in or further reconfirmation from Yellen that further tightening is still likely to be “gradual” in pace even if at a quicker pace than 2015/16. 10y Treasury yields peaked at 2.520% as Yellen spoke before also retracing that entire move into the close to finish at 2.478%. It’s worth highlighting that 2y yields ended up rising 16.2bps last week which is the biggest weekly move since February 2015. Interestingly after all the chatter about Bund yields hitting record lows, 2y Bunds also near enough kept up with the moves for Treasuries and finished last week up 14.1bps at -0.814%.

With all that said, this week’s main event data wise is almost certainly the February employment report in the US this Friday. Normally payrolls would be a focal point when the Fed is close to considering an imminent hike but given everything last week one would imagine that it would have to be an extraordinarily weak number to change the Committee’s minds now. The market consensus is for a 190k print and our US economists have pegged a 200k print so we’re not expecting any big negative surprises.

Before we get to the rest of the week ahead, over the weekend the most notable macro news has been in China following the start of the National People’s Congress. The headlines are dominated by the news that the government is now targeting “GDP growth of around 6.5%, or higher if possible in practice”. While that compares to last year’s growth target of 6.5% to 7.0%, our economists in China think that it is still the same indication from the government that they do not want real GDP growth to fall below 6.5%. The government is also targeting a deficit-to-GDP ratio of 3% (the same as last year), a lower M2 growth target but not one that suggests meaningful tightening, a focus on containing and reducing financial risks, reduction in steel and coal production capacity and further liberalisation of the RMB exchange rate. Our economists also highlighted that another surprising part of the work plan is that discussions on the property market were still brought up in the context of “cut excess urban real estate inventory” which doesn’t seem to suggest much further policy tightening for the property market.

Markets in China have generally started the week on the front foot with the Shanghai Comp (+0.37%) and CSI 300 (+0.46%) both higher. The Hang Seng (+0.30%) is also up as is the ASX (+0.23%). However the Kospi is little changed and the Nikkei (-0.38%) lower following the news that North Korea has fired four missiles into the Sea of Japan including three which fell into Japan’s exclusive economic zone according to the Japanese government. The Yen (+0.20%) has reversed earlier losses following the report. Bond markets are generally little changed this morning.

Moving on. French politics is never far from the focus of markets and over the weekend there has been further confirmation from Fillon that he has no intention of standing down in the presidential election race following a rally in Paris. Much of the chatter on Friday was of Alain Juppe possibly replacing Fillon as the conservative candidate. Juppe is supposed to be making a statement this morning but has previously said that he will refuse to stand unless Fillon chooses to withdraw. In fact the newspaper L’Obs reported late last night that Juppe will announce that he is to decline running for president even if Fillon steps down, just to complicate matters further. We have actually had a couple of polls in last few days including Juppe in the running. The latest was a Kantar Sofres Poll (from March 2nd-4th) which showed that in the first round as things stand Le Pen would come out on top with 26% versus 25% for Macron and 17% for Fillon. Replacing Fillon with Juppe however showed that Juppe would take 24.5% versus 20% for Macron and 27% for Le Pen. Another poll released on Friday (Odoxa covering 1st-2ndMarch) revealed that Juppe would come out on top in the first round with 26.5% versus 25% for Macron and 24% for Le Pen. Notably then this poll shows Le Pen as not reaching the second round with Juppe replacing Fillon. It’s worth keeping an eye on Juppe this morning to see if that press report is confirmed as being true.

Quickly wrapping up Friday’s session. As we noted at the top the dominant story was that speech by Yellen which effectively ratified a rate hike this month bar a big surprise in this week’s employment report. Vice-Chair Fischer also spoke but it was pretty much a non-event while Lacker (a non-voter) said that the Fed should hike to thwart a sudden and uncontrollable acceleration in inflation. We’ve noted the moves in rates while in equities the S&P 500 managed to recover from some early modest losses to finish just about onside with a +0.05% gain. It means that the index also closed up +0.67% for the week and so capping the sixth week in a row that the index has closed up. Markets in Europe were a bit more mixed. The Stoxx 600 ended -0.10% and the DAX -0.27% but the CAC (+0.63%) was buoyed by that poll (Odoxa) which suggested that support for a potential Juppe presidency diminished Le Pen’s chances, while the Italian FTSE MIB (+1.15%) also had a strong session. Away from that it was interesting to see the Dollar index (-0.65%) suffer its worst day in nearly 2 weeks despite Yellen’s comments, although perhaps more reflective of the strength in the Euro given those French election developments.

Away from the obvious focus on the Fedspeak there was also some economic data to take note of on Friday. Across the pond the US ISM non-manufacturing came in at 57.6 for February which was 1.1pts up on January’s reading and also well ahead of expectations for no change. It was also the best reading since October 2015 while the details revealed that the new orders index rose 2.6pts to 61.2 and the best since August 2015 while the employment component rose to 55.2 and back to last year’s November level. Away from that the Markit services PMI was revised down at the final count by 0.1pts to 53.8 which left the composite at 54.1 for the month of February.

Over in Europe there were no great surprises in the final PMI revisions either. The composite print for the Euro area was confirmed at 56.0 – unchanged versus the flash – after the services reading was revised down 0.1pts to 55.5. Regionally there was some strong numbers in the composites for Italy and Spain, driven by the services sector. The composite for Italy was confirmed at 54.8 and up 2pts from January while the composite for Spain rose 2.3pts to 57.0. Contrast that to the UK where the composite was revealed as falling from 55.4 to 53.8 in February. That is the lowest reading since August and so painting a sudden slightly divergent picture of growth between the Euro area and UK.

Moving now to the week ahead. It looks set to be a quiet start to the week with just the Sentix investor confidence reading for the Euro area due this morning followed by January factory orders and final durable and capital goods revisions in the US this afternoon. Tuesday kicks off in Germany with the January factory orders data, before we then get the Q4 GDP report for the Euro area. Over in the US tomorrow data includes the January trade balance and consumer credit prints. Wednesday starts in Japan where the final Q4 GDP revisions are due before we then get February trade numbers in China. During the European session we will get Germany industrial production and France trade data. In the US the focus will likely be on the February ADP employment change print, while Q4 nonfarm productivity and unit labour costs along with wholesale inventories and trade sales data is also due. Kicking off Thursday is China where the February CPI and PPI prints are due. In Europe we’ll then get business sentiment data in France before all eyes turn to the ECB meeting just after midday followed by Draghi’s press conference. Over in the US the data includes the import price index and initial jobless claims. We end the week on Friday in Europe with trade data in Germany and industrial production data in France and the UK, along with trade data in the latter. Over in the US we’ve then got the February employment report including the all important payrolls print.

Fedspeak this week is light with just Kashkari due to speak today. Away from that BoE Governor Hogg speaks today while Germany’s Schaeuble speaks on Thursday. Other important events to keep an eye on this week include the House of Lords completing its scrutiny of the Brexit bill on Tuesday and UK Budget on Wednesday. An EU summit of country leaders also starts on Thursday.

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 15.55 POINTS OR .58%/ /Hang Sang CLOSED UP 43.56 POINTS OR 0.18% . The Nikkei closed DOWN  90.03 POINTS OR 0.46% /Australia’s all ordinaires  CLOSED UP 0.23%/Chinese yuan (ONSHORE) closed UP at 6.8967/Oil FELL to 52.95 dollars per barrel for WTI and 55.52 for Brent. Stocks in Europe ALL MIXED ..Offshore yuan trades  6.9035 yuan to the dollar vs 6.8967  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS CONSIDERABLY/ ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR. CHINA SENDS A MESSAGE TO THE USA NOT TO RAISE RATES

3a)THAILAND/SOUTH KOREA/NORTH KOREA

Not good:  North Korea fires 4 missiles and 3 of them land in Japan’s exclusinve economic zone and it could be an intercontinental ballistic missile.

(courtesy zero hedge)

North Korea Fires Four Missiles; Three Land Inside Japan’s Exclusive Economic Zone

Update from Reuters:

  • Japan Chief Cabinet Secretary Suga: three ballistic missiles seem to have fallen into Japan’s exclusive economic zone
  • Suga: North Korea’s missile launch is grave threat to Japan’s security
  • Suga: cannot tolerate North Korea’s provocative actions
  • Japan PM Abe: lodged strong protest to North Korea
  • Japan PM Abe: missile launches are evidence of growing threat from North Korea

* * *

Yesterday, when we discussed the NYT’s report that the Obama administration had been waging a cyberwar against North Korea’s missiles for at least three years, leading to frequent “unexplained” crashes just on or following launch, we concluded with a cautionary question “whether Kim Jong-Un, already facing a potential mutiny at home (to which he has so far responded by demonstratively executing official with anti-aircraft guns) will take this confirmation of what many would call an act of war by the US, and retaliate.”

While we don’t know the answer just yet, moments ago South Korea’s Yonhap News reported in an urgent news bulletin that North  Korea has fired an unidentified projectile into East Sea.

As Yonhap adds, North Korea on Monday fired an unidentified projectile into the East Sea in an apparent protest against the ongoing joint military drills between South Korea and the United States, Seoul’s Joint Chiefs of Staff said.

As VOA’s Steve Herman adds, the North Korean missile launch comes on morning of 6th day of US-#ROK Foal Eagle annual drill.

The projectile was launched from an area near the North’s Dongchang-ri long-range missile site at 7:36 a.m. and flew across the country before splashing into the East Sea, Seoul’s Joint Chiefs of Staff (JCS) said in a text message.

It could be an intercontinental ballistic missile capable of reaching the U.S. mainland, a military official at the defense ministry said.

North Korea has staged a series of missile tests with increasing range, with the aim of eventually building long-range nuclear missiles capable of striking the U.S. mainland.

 

 

END

 

Normally, I am not bothered as to what comes out of Kim’s mouth.  But he is a madman and the must be cognizant of his actions

(courtesy zero hedge)

North Korea Warns US-South Korea “Maneuvers” Are “Driving [World] Towards Nuclear Disaster”

Update: North Korea warned Monday that U.S.-South Korean military exercises, which it called “the most undisguised nuclear war maneuvers,” are driving the Korean Peninsula and northeast Asia toward “nuclear disaster.” The North Korean ambassador to the United Nations, Ja Song Nam, said in a letter to the U.N. Security Council that the U.S. is using nuclear-propelled aircraft carriers, nuclear submarines, nuclear strategic bombers and stealth fighters in the joint exercises that began Wednesday. “It may go over to an actual war,” Ja warned of the military drills, “and, consequently, the situation on the Korean Peninsula is again inching to the brink of a nuclear war.”

“Involved in the drill were Hwasong artillery units of the KPA Strategic Force tasked to strike the bases of the U.S. imperialist aggressor forces in Japan in contingency,” the North’s official KCNA news agency said.

 

“In the hearts of artillerymen … there was burning desire to mercilessly retaliate against the warmongers going ahead with their joint war exercises,” KCNA said.

 

“He (Kim) ordered the KPA Strategic Force to keep highly alert as required by the grim situation in which an actual war may break out any time, and get fully ready to promptly move, take positions and strike so that it can open fire to annihilate the enemies.”

The letter was sent a few hours after North Korea fired four banned ballistic missiles. Ja said the main reason North Korea is equipping itself “with nuclear attack capabilities” and strengthening its nuclear deterrent forces is in self-defense against what he called the U.S. “extreme anti-DPRK hostile policy and nuclear threats and blackmails as well as maneuvers to enforce its nuclear weapons.”

*  *  *

As we detailed earlier, breaking its silence following the launch of four missiles into the Sea of Japan, three of which landed in Japanese territorial waters, official North Korean media has claimed that the mysterious nation held the missile launch as an exercise for strikes against US bases in Japan.

The drill was conducted by Hwasong artillery units of its Strategic Force, “tasked to strike the bases of the U.S. imperialist aggression forces in Japan,” the Korean Central News Agency (KNCA) said.

AFP clarifies the intent of the test: North Korea says yesterday’s missile launch was training exercise for strike on US bases in Japan

The drill was carried out by units of the KPA Strategic Force, state-controlled media outlet KCNA reported. The report didn’t indicate if any of the rockets were ICBMs.

Reuters additionally reports that North Korean leader Kim Jong Un supervised the ballistic missile launch personally (though scientists and technicians in the nuclear weapons and rocket research fields were among those attending the launch).

The test launches comes just days after an internal White House strategy review on North Korean options reportedly included the possibility of both military force and regime change to counter the country’s nuclear-weapons threat, the WSJ reports, a prospect that has some U.S. allies in the region on edge.

As AP reports, North Korea’s latest volley of missile tests has added to pressure on a preoccupied Trump administration to identify how it will counter leader Kim Jong Un’s weapons development. North Korea’s march toward having a nuclear-tipped missile that could reach the U.S. mainland is among the pressing national security priorities President Donald Trump faces. He has vowed it “won’t happen” but has yet to articulate a strategy to stop it. A wide array of options are on the table, but aggressive behavior by Pyongyang in response to U.S.-South Korean military drills that began last week could further shrink chances for diplomatic engagement. Upheaval in the administration has added to uncertainty in foreign capitals about how a new president lacking experience in government would handle a security crisis should one unfold.

The United States and Japan have requested a United Nations Security Council meeting on the launches, according to Reuters, which will likely be scheduled for Wednesday, diplomats said. The U.S. military on Monday left open the possibility of additional launch attempts.

“There were four that landed. There may be a higher number of launches that we’re not commenting on. But four landed and splashed in the Sea of Japan,” Navy Captain Jeff Davis, a Pentagon spokesman, told a news briefing.

Condemning the launches as further “provocative behavior,” White House spokesman Sean Spicer told reporters the United States was taking steps to enhance defense against ballistic missiles, including deployment of a Terminal High Altitude Area Defense (THAAD) battery in South Korea. South Korea’s acting President Hwang Kyo-ahn said Seoul would swiftly deploy the anti-missile system despite angry objections from China. A U.S. official said the system could be installed far earlier than an original fall target date.

*  *  *

So far no tweets from Trump on this as the sabre-rattling is getting very loud.

As a reminder, it was less than a month ago that scientists moved the world’s doomsday clock to its closest to midnight in 64 years…

b) REPORT ON JAPAN

c) REPORT ON CHINA

For the first time China cuts in economic growth forecast:

(courtesy zero hedge)

China Cuts Economic Growth Forecast In Annual Report: Here Are The Key Changes

As part of the previously previewed “Two Sessions” which started on Sunday, Chinese Premier Li Keqiang on Sunday delivered the annual report on the work of the government in Beijing, summarizing the country’s achievements in the past year, and setting goals for this year. In his policy speech, lasting 97 minutes and 18,600 Chinese characters, Li signaled a course adjustment for the world’s second-largest economy and some important changes in tone.

A 90-second summary of the key highlights from Li’s Two Sessions address is shown in the clip below:

While the full breakdown of proposed economic and policy changes is below, here is a rundown of the 5 top takeaways from China’s economic realignment, per Dow Jones:

  • #1: Politics Is in Command

Though Mr. Li took center stage, President Xi Jinping is clearly in charge. Mr. Li’s policy address contained eight mentions of Mr. Xi, some including his new title as “the core” of the Communist Party leadership. Not since Mao Zedong more than 40 years ago has a serving leader gotten so many shoutouts in the policy address. It shows Mr. Xi’s strong hand going into a Communist Party Congress later this year to chart the course for his second five-year term.

  • #2: Growth Matters

Keeping the economy humming at a fairly high rate is still a priority. Mr. Li set this year’s growth target at “around 6.5%,” a shade slower than the last year’s range of 6.5% to 7% and actual reported growth of 6.7%, the weakest pace in a quarter century. Still, Mr. Li added that growth should be “higher if possible.” The faster tempo is needed, he says, to create jobs and raise living standards.

  • #3: Restructuring Matters Too

The emphasis on growth means that putting the economy under the much-needed restructuring the government has stressed for years is taking second place. Mr. Li recommitted to efforts to reduce excess capacity in the steel and coal sectors, pare down corporate debt and make housing affordable for first-time buyers. The going is likely to be slow: “Stability is of overriding importance.”

  • #4: Signaling Changes

The government looks to domestic demand, and consumer spending in particular, as a new engine of growth. While government outlays for health care, education and pensions are getting a minor boost, policies to promote domestic demand are more geared to businesses than households. Tax cuts and exemptions are being doled out to smaller firms and startups. An exception: no more mobile roaming and long-distance fees on domestic calls.

  • #5: A Trump Effect

U.S. President Donald Trump didn’t merit a mention but his shadow loomed. Mr. Li cited the challenge posed by deglobalization, protectionism and “uncertainties” about the direction of other major economies. Beijing’s recipe, he says, is to push ahead with regional trade agreements. Infrastructure at home features prominently, with $377 billion earmarked for railways, highways and waterways this year. Mr. Trump has yet to make good on his campaign pledge for a $1 trillion infrastructure binge.

* * *

The key announcement was that, as reported previously by Reuters, China has cut its growth target this year to “around 6.5% or higher if possible in practice” as the world’s second-largest economy continues to push through painful reforms to address a rapid build-up in debt, while erecting a “firewall” against financial risks. The new GDP target, the lowest in decades, was “realistic and would help steer and steady expectations”, said Li. Last year China set a target of 6.5%-7% last year, ultimately achieving 6.7% growth, supported by a record surge in bank loans, a speculative housing boom and billions in government investment.

Cited by Reuters, Huang Shouhong, director of the State Council Research Office, who helped craft the premier’s work report said growth of around 6.5 percent is sufficient to safeguard employment. China added 13.14 million new urban jobs in 2016, with the number of college graduates finding employment or starting businesses reaching another record, according to Li’s report. “As for whether there is a bottom line on growth, as long as there are no problems in employment, growth slightly higher or lower is acceptable,” Huang said.

Despite the modest decline in growth forecasts, some were still stunned by the proposed bogey. Michael Tien, a Hong Kong delegate to China’s parliament and founder of clothing chain G2000, said he was surprised by the 6.5% figure. “I think it’s very high,” he told Reuters. “In the past few years, whatever number they come up with, they will always meet it, and they will always exceed it a little bit. So with this economy, 6.5 (percent) is mind-boggling.”

As part of its growth, China hopes to keep CPI growth in the “golden range” of 2-3%, a target which may prove difficult to attain in light of the recent commodity-price driven surge in wholesale inflation which is now spilling over into consumer prices. The goal may be problematic after the PBOC said it will not pursue an overly tight monetary policy.

In an attempt to cool inflation, the government is moving to cool the housing market, slow new credit and tighten its purse strings. As a result, China – as it has attempted on various previous years – will have to depend more on domestic consumption and private investment for growth. As in the previous year, China did not set a target for exports, underlining the uncertain global outlook. “The developments both in and outside of China require that we are ready to face more complicated and graver situations,” Li said, adding that world growth remained sluggish, while deglobalisation and protectionism were gathering pace.  Li also said that China will continue its aggressive investment, planning to allocated 800 billion yuan to railway construction, and 1.8 trilion yuan in highway and waterway projects.

To be sure, a core challenge facing China will be the trade off between debt expansion – which according to the IIF is already at 300% of GDP with conventional estimates holding slighly lower numbers – and growth. According to economists is will be a delicate balancing act to support growth and maintain liquidity while pursuing reforms and taming unruly financial forces.

Just like GDP, the 2017 target for broad money supply growth was also cut slightly to around 12% from about 13% for 2016. The government’s budget deficit target was kept unchanged at 3 percent of GDP.

Li said China would continue to implement a proactive fiscal policy, adding that government aimed to cut companies’ tax burden by about 350 billion yuan ($51 billion) this year. China will also maintain a prudent and neutral monetary policy, he said.

Financial Firewall

In yet another attempt to deleverage, something China has engaged in on various occasions in the past several years and failed, Beijing has flagged in recent months a gradual shift away from a loose monetary stance to discourage speculative investments. Since February, the central bank has raised by tiny increments the interest rates on some lending facilities. Jia Kang, former director at the finance ministry’s Institute of Fiscal Science, told Reuters he did not expect the PBOC to hike policy rates, at least in the near term. “It seems unlikely, since stability comes first in the short term,” Jia said.

At present, systemic risks are under control, but China must be fully alert and build a “firewall” against financial risks, Li said. Chinese banks extended a record 12.65 trillion yuan of loans in 2016, and recent data shows that new yuan loans hit 2.03 trillion yuan in January, the second-highest ever. “We will apply a full range of monetary policy instruments, maintain basic stability in liquidity, see that market interest rates remain at an appropriate level, and improve the transmission mechanism of monetary policy,” Li said. China will also press on with asset securitisation and debt-to-equity swaps this year.

Jobs and Overcapacity

China aims to create more than 11 million new urban jobs this year, while keeping the registered urban unemployment rate at 4.5% or below, even as employment pressure grows. China also plans to reduce the number of rural residents living in poverty by over 10 million, including 3.4 million to be relocated from inhospitable areas.

As Reuters further adds, China will push forward with reform of state-owned firms and assets this year according to Li said. Ownership reforms at more than 100 central government-run enterprises will be completed by year-end as part of efforts to use private capital to revive its lumbering state sector, state media reported last month. China is also looking to shutter more ‘zombie’ enterprises, a term loosely used to describe inefficient firms with surplus capacity. The National Development and Reform Commission (NDRC) said in a work report released on Sunday that it would shut or stop construction of coal-fired power plants with capacity of more than 50 million kilowatts.

China will also cut steel capacity and coal output this year, the economic planner said. Li said that China plans to reduce steel production capacity by 50 million metric tons while shutting down at least 150 million metric tons of coal production facilities. As a result, fixed-asset investment – traditionally the biggest source of China’s growth – is expected to rise about 9 percent in 2017, down from last year’s target of 10.5 percent. “As overcapacity is cut, we must provide assistance to laid-off workers,” Li said.

* * *

How successful China will be in its ongoing transformation to a consumer-driven economy remains to be seen: in previous years, China has fallen short of its goal, traditionally falling back on debt expansion to plug the gaps. This time will likely not be any different.

 

END

4. EUROPEAN AFFAIRS

A massive restructuring for Deutsche bank as they continue to suffer losses:

(courtesy zero hedge)

Deutsche Bank To Sell $8.5 Billion In Stocks, Announces Major Restructuring

Confirming last week’s report of an imminent share sale, on Sunday the biggest German lender announced it would raise €8 billion ($8.5 billion) in new capital through a rights offering sale of 687.5 million new shares, and sell parts of its asset management business in its latest attempt to shore capital following €8 billion in losses in the past two years after a major operational and balance sheet restructuring was launched by CEO John Cryan in 2015, settling misconduct investigations and scaling back capital-intensive debt-trading businesses. The bank also announced that CFO Marcus Schenck, 51, and Christian Sewing, who oversees wealth management and consumer banking, would become co-deputy CEOs. The company will find a new CFO “in due course.”

“A strong capital base is essential if we’re to succeed in charting this strategy,” Cryan wrote in a letter to employees. The share sale will “remove a major source of uncertainty. That should make us significantly more attractive for our clients.”

The timing of the share sale takes advantage of the recent resurgence in Deutsche Bank’s share price, which has almost doubled from multiyear lows near €10 in September. The shares closed Friday at €19.14 in European trading. Last year, corporate clients and hedge funds pulled balances and other business from Deutsche Bank over concerns about its legal costs and weak capital position. Deutsche Bank on Friday night confirmed investor expectations that it needs a capital injection, saying it was doing “preparatory work” for a share sale and considering other strategic moves.

The announcement marks the bank’s third time to tap capital markets since early 2013. Since taking over in mid-2015, Mr. Cryan said he wanted to avoid selling shares, which will hurt existing shareholders, however it was concerns over the bank’s capitalization, and at time liquidty, that prompted a vicious selloff in August and September of 2016, sending DB’s shares to all time lows on concerns the bank’s RMBS settlement with the DOJ would drain the company’s funding to dangerously low levels.

According to the bank, the share sale would boost its common equity Tier 1 ratio to 14.1% and set a new target of “comfortably above” 13%. The measure stood at 11.9% at the end of 2016, shy of the then-target of 12.5% for the end of 2018. In an amusing twist, during a media call, DB CEO said the Bank hopes to return to attractive dividend ratio from 2018, suggesting that while the bank is raising capital now, it hopes to return it back to shareholders next year.

As part of the restructuring, the firm plans to cut more than €2 billion of costs from the €24.1 billion in adjusted expenses it had last year. The bank will cut another 1 billion euros by 2021. It expects €2 billion of severance and restructuring costs, most of which will come over the next two years. Deutsche Bank also said it would reconfigure its business structure, combining its global markets and its corporate and investment bank, reversing a separation of the investment bank a year and a half ago. The bank said it will keep its Postbank consumer division and still aims to reduce total costs to €22 billion by 2018.

The megabank also said it will sell a minority stake in its asset management unit through an initial public offering in the next two years. That, along with asset disposals at the investment bank, will help raise another 2 billion euros of capital. The bank will propose a dividend in May of 0.19 euros per share.

As the WSJ notes, Cryan has tried to preserve capital by cutting costs, axing employee bonuses and canceling annual shareholder dividend payouts. But those steps haven’t done enough. Cryan’s hopes were overwhelmed by multibillion-dollar legal bills, toughening capital regulations and sagging profits in key businesses ranging from German retail banking to deal-advising and trading. The bank said it expects around €2 billion in restructuring and severance costs in connection with its plans.

On Sunday afternoon, after a meeting of the supervisory board, Deutsche Bank also said as expected that it plans to sell a minority piece of its asset-management business via a public sale of shares. The plan is part of a bid to stabilize that business after it has suffered a long spate of asset declines.

Selling a stake would dent the advantage Deutsche Bank gains from the asset-management division’s profits, which are predictable compared with more-volatile investment-banking and trading profits. A stake sale would allow the lender to hold on to a business that Deutsche Bank officials including Mr. Cryan have praised as an important part of the bank. A partial float could help the bank once again expand the division while boosting its capital incrementally, some investors say.

Deutsche Bank also said Sunday it plans to fold its German retail-banking unit, Postbank, back into its ongoing operations. That is a reversal of costly plans announced in 2015 to separate the business in preparation for a spinoff. The bank was unable to find buyers willing to pay an attractive price for the unit in a crowded market where low interest rates have hurt retail-banking profits.

As part of Sunday’s announcement, DB said that Jeff Urwin, who led the investment banking division, will retire from the management board after a transition period, according to Bloomberg. Cryan will take direct oversight for the U.S. operations, and the firm is recombining its investment banking and trading units after splitting the two in 2015. Schenck will run the combined unit with Garth Ritchie, who currently leads the trading division.

While the stock has largely priced in the recent share offering, made possible by the recent near double in the stock price, among the other winners of today’s announcement are holders of the bank’s Contingent Converts, which has soared from a low of 70 during the selling panic in September to just shy of par.

The bank also announced the following new financial targets:

  • 2018 Adjusted Costs of approximately EUR 22 billion and a further reduction to approximately EUR 21 billion by 2021, both include Postbank’s Adjusted Costs
  • Post-tax RoTE of approximately 10% in a normalized operating environment
  • Targeting a competitive dividend payout ratio for fiscal year 2018 and thereafter
  • Fully loaded CET1 ratio to be comfortably above 13%
  • Leverage ratio of 4.5%

In addition to the capital raise, operational restructuring and fine-tuned projections, Deutsche Bank also provided an update on current trading activity. The bank said it “has made a positive start in the first two trading months of 2017.” Among the highlights:

  • Global Markets has performed strongly against a weaker comparable period in 2016 with Debt Sales & Trading revenues up over 30% while Equities Sales & Trading was flat year on year.
  • Corporate Finance year to date performance was strong with revenues up over 15% year on year reflecting positive momentum in primary markets that drove significant increases in debt and equity issuance.
  • Global Transaction Banking saw resilience in its client franchise, but single digit lower revenue performance in a macro environment that remains challenging and from the consequences of intentional reductions in client perimeter during 2016.
  • In Private Wealth & Commercial Clients (PW&CC), revenues were flat versus the comparable period in 2016 as the impact of low interest rates was mainly offset by positive developments in investment products supported by asset and deposit inflows.
  • In Postbank, operating performance was flat, but reported revenues were slightly down given the absence of one-off gains in the prior year and weaker hedging results.
  • Deutsche Asset Management had a modest improvement in revenues as well as the reversal of negative asset flows seen in 2016.

DB announced an analyst event will take place tomorrow, March 6, at 14:00 GMT in London to detail these actions and updated targets.

 

END

 

Deutsche bank is down 7% this morning after its massive equity offering. This bank has some serious issues something that we have been reporting to you over these years.

they are in a mess..

(courtesy zero hedge)

Why Deutsche Bank Is Sliding After Its Massive Equity Offering: Wall Street Analysts Chime In

Despite its widely telegraphed $8.5 billion public offering with another $2 billion expected to be raised from asset sales, Germany’s biggest lender is down sharply this morning as much as 6.9% (currently 6.1% lower) as Wall Street analysts dig through the details of the bank’s latest massive restructuring, which as reported yesterday seeks to undo many of the changes implemented by CEO John Cryan over the past two years (and which will lead to an 80% reduction in the bank’s 2016 bonus pool). The key concern, as some analysts most notably Citi have noted, is that DB’s attempt to shore up capital may not be enough with the bank potentially needing another €2 billion to a grand total of €12.8 billion, while some have pointed out that DB may have opened a Pandora’s Box for other, similarly undercapitalized European banks.

Here are some of the early reactions this morning from a wide selection of sellside analysts:

Citigroup (sell/high risk)

  • In a worst -case scenario Deutsche Bank may need EU12.8b in additional capital instead of EU10b that’s currently planned
  • Leverage ratio is the key capital constraint, saw 2018 leverage ratio at 4.0% before announcement of latest capital increase, says that’s a shortfall of ~EU5.8b to leverage ratio target of 4.5%
  • Says that estimate included EU1.8b from successful sale of 70% stake in Postbank
  • Also Deutsche has announced additional revamp costs of EU2b
  • New cost target for 2018 adj. costs is still EU22b, but now includes reintegration of Postbank that will cost about EU3b; target for 2021 costs is EU21b
  • Plan to keep all of Postbank and IPO 25% stake in asset management will boost analysts’ estimates for EPS by 2%
  • Says rights issue will push CET1 ratio to 14.1% which is above the company’s target of more than 13% and above SREP requirement of 12.25%

Goldman Sachs (neutral)

  • Says the management actions as necessary and sufficient to decisively conclude the capital debate and thus have an overall positive impact on the financial stability of the group. That said, expect the market to scrutinize implied dilution and ongoing profitability challenges.
  • Need for capital: known and necessary. The fact that DBK needed to improve its capital position was widely understood – we had estimated DBK’s capital shortfall at €6.7 bn (most recently in our January 27 report: “Deutsche Bank: Franchise damage, capital gap and need to detail recap path”). Therefore, the announced recap action, in itself, will not come as a surprise.
  • Quantum of cap hike: high, but puts an end to capital debate. The total targeted increase in capital is ~€10 bn, consisting of an €8 bn rights issue and >€2 bn from planned asset disposals. In our view, the quantum of capital targeted is sufficient for this (long running) capital debate to conclude.
  • Strategic and profitability debates will continue. DBK has been faced with two basic challenges: (1) its capital position, which has now been addressed; and (2) lack of a high-ROE platform, which continues. In this context, we view the 10% “normalized” ROTE target as ambitious.

Morgan Stanley

  • Details of the strategic plan will be key from here
  • New cost target looks tough at first glance, is 5% better than MS’s estimate for EU23.1b that it considered optimistic and 11% better than consensus
  • Dividend plan is signal of confidence in rehabilitation of business, capital position
  • Reversal of negative flows in Asset Management in past 2 months is encouraging
  • Litigation is not over yet with long list of smaller cases outstanding
  • Management needs to address “credible integration of Postbank,” provide clarity on revamp of Investment Banking and new CIB portfolio, stabilize outflows and restore confidence in Wealth and asset management businesses

Equinet (buy)

  • Capital increase is unexpected, should end investor debate about low capitalization
  • Holding on to Postbank makes sense strategically, also given low valuation in current market
  • Partial IPO of Deutsche Asset Management is negative as it means bank is giving up some of its stable business with low capital consumption
  • New financial targets look achievable, unchanged ROTE target of at least 10% is more ambitious given higher capital base
  • Higher capital ratios, low cost base should be well received by investors

JPMorgan (neutral)

  • Sees economic earnings dilution of 23% from capital increase of EU8b, or ~687.5m shares
  • Sees that partly compensated by ~17% earnings benefit from lower costs
  • Assumed minority stake in IPO in Asset Management is ~4% earnings dilutive
  • All-in-all sees 2018 earnings dilution at 11%
  • Sees 2018 fully-loaded CET1 ratio at 14.1%, if additional EU40b in Basel 4
  • Risk Weighted Assets are included, pro-forma 2018 CET1 seen at 12.8%
  • New cost targets are a “material improvement” on old targets
  • Cost details matter, including divisional breakdown, how much hinges on agreement of works council, what impact they’ll have on revenue

Kepler Cheuvreux (not rated)

  • Sees new market price of EU16.7%/share given EU8b rights issue at likely discount of 39% vs Friday’s close for price of EU11.65/share with issuance of 637.5m new shares
  • CET1 ratio of 14.1% post capital increase plus EU2b in capital accretion over 2 years “seems solid”
  • All-in-all new financial targets see profitability target of ~10% post-tax ROTE vs former target of >1 0% post-tax ROTE
  • Says revenues and/or increased restructuring costs seem damp financial results
  • Notes positive developments in terms of adj. costs of less than EU21b including Postbank

Finally, as WSJ writes, in an interesting sales desk note to clients over the weekend, Bernstein Research, which does not officially cover Deutsche Bank, said candidly that Deutsche has opened the Pandora’s Box and European banks are more than an ocean apart from their American counterparts, which are much healthier. Bernstein wrote:

IS DBK DOING THE RIGHT THING?

Of course it is. But the right thing in banks doesn’t mean you’re a “buy”. Cost control (esp at bonus time) was the right thing for shareholders. Interesting, and if you recall, they also didn’t clean up in FICC in 4Q – something the world and its wife had expected them to do. Remember cleaning up in FICC is like going to the casino: even if the odds are heavily in your favour (which they were in 4Q) you still need to bet big, and this consumes RWAs and capital – which they don’t have. DBK’s in retrenchment mode and if these headlines are correct, it cements a core view amongst many that DBK’s capital bridge really can not be met by organic earnings alone. More importantly, European bank tailwinds in the past 9 months are being met with capital raises where needed. All at a time when JPM is close to paying 100% of its earnings. We’re world’s apart.

The biggest bank in Germany, the country that’s the biggest subsidiser of the European project, the home of the European regulator, is raising equity. For everyone else, what’s their get-out-of-jail free card now? Until now, the counter-argument will always have been that DBK was short – so pick on your own country’s banks before you pick on mine! Well that doesn’t work anymore. Whilst it’s easy to be sensationalist here, it’s definitely worth thinking about what responses the more levered plays (French/CBK/Weaker Southern Europeans) will have now. On balance, I don’t think we quite head in such an extreme direction so quickly – but the divergence between US and European Financials becomes even greater. Tailwinds in Europe are much more likely to be met with raises…

Source: Bloomberg, primary sources

 

end

 

The former French Prime Minister Juppe announces that he will not run.  Also Fillon despite being charged is still in the race..

(courtesy zerohedge)

Juppe Announces “Once And For All” He Will Not Run In The French Election

Former French prime minister Alain Juppe, who has seen a recent surge in the polls as his conservative peer Francois Fillon has been tumbling, said on Monday that he had decided “once and for all” not to stand in France’s presidential election, ending the hopes of many in his conservative party who had seen him as a logical replacement to Fillon. Juppe pulled no punches, and called the scandal-ridden Francois Fillon obstinate in his determination to continue in the face of opinion polls that show him knocked out of the race in the first round of voting, however offered no alternative plan.


Francois Fillon (R), former French prime minister, and Alain Juppe

“I confirm once and for all that I will not be candidate to the presidency of the Republic,” Juppe said, adding that it was because it had become harder than ever to unite his conservative The Republicans party and because voters wanted fresh faces.

“Our country is sick,” Juppe told a news conference in Bordeaux, the western coastal city where he is mayor.  Earlier on Monday, former French President Nicolas Sarkozy called for Fillon and Juppe to meet with him in a bid to hammer out a solution to the crisis, Reuters reported.  Sarkozy said on his Twitter feed that the aim of the meeting was to ensure a “dignified and credible way out from a situation which cannot last any longer and which is the source of deep concerns among French people.”

Juppe did not mention Sarkozy’s plan but had some harsh words for Fillon. “What a waste!,” Juppe said of the Fillon campaign, adding that Fillon had put himself in a “dead-end” with his response to the scandal.

Juppe’s announcement was good news for his competitor, centrist and career banker Emmanuel Macron, who would have been knocked out of the second round with Juppe and Le Pen sailing through according to recent polls. Instead, Fillon’s poor showing will likely leave Macron to fight out the second round on May 7 against National Front leader Marine Le Pen.

Juppe had been touted as a potential replacement for Fillon, but sources within The Republicans say supporters of Sarkozy had baulked at such a swap. As discussed previously, Fillon has so far stood firm and refused to give up his candidacy despite calls to do so from several senior members of the party, and even though opinion polls show him losing an election that is less than 50 days away.

Once the frontrunner, he is mired in a scandal over hundreds of thousands of euros of public money he paid his wife to be his parliamentary assistant. Fillon denies allegations she did little work for the money, but suffered a serious blow last week when he learned he could be placed under formal investigation for misuse of public funds.

A meeting of senior party officials was scheduled for Monday evening, Reuters adds.

 

 

 

end

 

Euroflight capital intensifies as Target 2 imbalances widen again. Note that Germany received 41.3 billion euros from weak nations: Italy,  and Spain. Italy is on life support:

(courtesy zero hedge)

Eurozone Capital Flight Intensifies: Target2 Imbalances Widen Again

Via Michael Shedlock of MishTalk.com,

A quick perusal of Target2 Balances for January shows capital flight from Italy and Spain to Germany intensified again.

German target2 imbalances exceed levels hit in the Eurozone crises in 2012. Things improved considerably after ECB president Mario Draghi made his famous statement “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough”.

The ECB claims this action is due to its bond-buying program. I strongly disagree.

For further discussion including my email exchange with the ECB regarding target2, please see Fuse is Lit! Target2 Imbalances Hit Crisis Levels: An Email Exchange With the ECB Over Target2.

Also consider:

  1. Germany’s Finance Minister Blames ECB For German Trade Surplus; Why the Eurozone Will Destruct
  2. Michael Pettis Calls Surplus Trade Statements by German Finance Minister “Utter Lunacy”

Finally, note that Italy is on ECB life support. Should Draghi halt QE asset purchases, demand for Italian bonds will plunge. For discussion, please see Draghi’s Dilemma: Eurozone Inflation Hits 2% with Italy on Bond Life Support.

 

 

END

 

For the first time, the BIS recognizes the risks in Target 2 imbalances as well as admit that it reality Germany is loaning euros to the periphery..in other words a stealth bailout

(courtesy zero hedge)

BIS Admits TARGET2 Is A Stealth Bailout Of Europe’s Periphery

While debates over the significance of the Eurosystem’s TARGET2 imbalances may have faded into the background now that sovereign yields in the Eurozone remains broadly backstopped by the ECB’s debt monetization generosity, and fears about an imminent European breakdown fall along the lines of populist votes more than concerns about lack of funding, the BIS has finally chimed in with the truth about what the TARGET2 number really showed.

As a reminder, in mid 2012, financial pundits “discovered” the gaping imbalances building up within the Eurozone, as a result of a huge increase in TARGET2 claims at the Bundesbank, offset by a matched surge in liabilities across the European periphery, most notably Italy and Spain.

At the time, most conventional economists and analysts, especially those based in Europe, and certainly the ECB, said to ignore the divergence as it was irrelevant. Others, such as Hans Werner Sinn, and this site, warned that TARGET2 is a “less than thinly veiled bailout for Europe’s periphery” as the stealth fund flow amounted to a financing of peripheral obligations, illegal under European rules.

Then, at the end of January, it was none other than Mario Draghi who, almost 5 years later, made the first tacit admission that the skeptics were right when he explained to Italian lawmakers that a country could leave the euro zone but only first it would need to settle its debts with the bloc’s TARGET2 (T2) payments system.

If a country were to leave the Eurosystem, its national central bank’s claims on or liabilities to the ECB would need to be settled in full,” Draghi said in the letter. He did not specify in what currency the “settlement” would have to take place.  Draghi then suggested that Italeave is possible, but only if the peripheral European state were to first pay down its roughly €357billion in obligations.

In other words, the ECB for the first time admitted what we had said earlier, namely that TARGET2 liabilities, far from some synthetic construct as T2’s advocates suggested, were indeed a fungible means to fund the outflows at various peripheral European nations, i.e., a bailout mechanism which however needs to be repaid if a given country had decided that it would no longer need a bailout, tacit or otherwise in the future.

Now, in its latest quarterly report, the BIS analysts Raphael Auer and Bilyana Bogdanova confirm precisely what we speculated, and what Draghi implicitly confirmed in January: that TARGET2 was merely the latest covert means in Europe’s disposal to fund sovereigns without breaching the Eurozone’s anti-state funding clause, to wit:

In the period leading up to mid-2012, T2 balances grew strongly (Graph A, left-hand panel) due to intra-euro area capital flight. At the time, sovereign market strains spiked and redenomination risk came to the fore in parts of the euro area. Private capital fled from Ireland, Italy, Greece, Portugal and Spain into markets perceived to be safer, such as Germany, Luxembourg and the Netherlands.

 

 

 

Indeed, during that period, the rise in T2 balances seemed related to concerns about sovereign risk. The blue dots in the centre panel of Graph A show the close relationship between the sovereign credit default swap (CDS) spreads of Italy, Portugal and Spain and the evolution of their combined T2 balance from January 2008 to September 2014. Whenever the CDS spreads of those economies rose, the associated private capital outflows increased their T2 deficit. When the CDS spreads decreased after confidence in the euro area was restored in mid-2012, the capital outflows partly reversed, and T2 deficits dwindled.

This is the BIS’ effective admission that absent the T2 system, which provided back door funding as “private capital fled” through the front door, the Eurozone would have collapsed, leading to the end of the Euro, the ECB and imminent currency redenomination or as we explained in 2012, a bailout – whether temporary or not – from Germany – which has the most to lose from a Eurozone failure, in the form of a loan, which as Draghi has since explained, must be repaid should a member state contemplate exiting the common currency.

However, where things get amusing is that while the BIS admits that in 2012 T2 balances were effectively stealth loans, this time around, record imbalances are something far more “benign” according to the Basel-based organization:

TARGET2 (T2) balances are again on the rise. Since early 2015, the T2 balances of euro area national central banks (NCBs) have risen steadily, in some cases exceeding the levels seen during the sovereign debt crisis (Graph A, left-hand panel). However, unlike then, record T2 balances should be viewed as a benign by-product of the decentralised implementation of the asset purchase programme (APP) rather than as a sign of renewed capital flight.

Oh ok, so unlike last time around, the massive IOU funded by Germany – again – is nothing to be worried about because it is simply a byproduct of the ECB’s QE, which of course, is another stealth way of preventing the Eurozone from imploding by keeping interest rates artificially low. At least back in 2012, Europe did not have Mario Draghi suppressing rates by purchasing €80/60billion or so per month, with the ECB’s balance sheet now holding 11% of all corporate bonds in the Euro area. The result was at least a somewhat accurate representation of sovereign risks through record high bond yields. Alas, since then the European bond market has lost all informational relevance as the only trade is whether or not to frontrun the ECB.

The BIS then adds that “the current rise seems unrelated to concerns about the sustainability of public debt in the euro area. The red dots in the centre panel of Graph A show that, between October 2014 and December 2016, there was no relationship between the sovereign CDS spreads of Italy, Portugal and Spain and the evolution of their combined T2 balance.”

As the European interbank market is still fragmented, the liquidity does not circulate in the euro area and T2 imbalances grow as the total holdings under the APP accumulate. Indeed, the overall increase in T2 imbalances can be linked closely to the total purchases under the APP (Graph A, right-hand panel). A recent study, which takes into account the precise geography of the correspondent banks of each and every APP security purchase, shows that APP transactions can almost fully account for the re-emergence of T2 imbalances

Well, actually, they are related to concerns of sustainability, however as a result of massive ECB-driven distortions, neither bonds nor CDS are an accurate indicator of sovereign risk. As to whether Europe’s fragmented liquidity system and monetary piping – the reason why according to the BIS T2 balances are currently building up – are sufficient to deem the latest build up as benign…

 

… we will reserve judgment until the ECB is forced to halt its asset purchase program and perhaps raise rates, leading to the same surge in sovereign bonds yields, not to mention CDS surge, that was the hallmark of the summer of 2012 when T2 imbalances hit their previous all time high. After all, what is the ECB’s QE other than merely the latest means to keep the Eurozone together by keeping rates of peripheral bonds ridiculously low.

We look forward to a similar report by BIS in the year 2022 when it will, once again, admit that conventional wisdom on Target2 was once again wrong.

END

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Syria/Turkey

A Syrian jet is shot down over Southern Turkey and the pilot ejects

Trump may have his first international crisis:

(courtesy zero hedge)

Syrian Jet Shot Down Over Southern Turkey By Turkey-Backed Rebel Group

A Syrian Mig-21 fighter jet has reportedly crashed in Turkey’s southern Hatay province after being shot down by the Turkey-backed Syrian rebel group Ahrar al-Sham, which is part of the Euphrates Shield operation, according to reports by Turkey’s Anadolu news agency and Daily Sabah.

View image on TwitterView image on Twitter

: Ahrar al-Sham claims it downed a Syrian MIG/fighter jet by the Turkish border. reports, pictures emerged

View image on TwitterView image on TwitterView image on Twitter

UPDATE — Several pieces of debris from crashed Syrian jet found in Turkish village near border http://sabahdai.ly/0ArgL6 

The governor of Hatay province Erdal Ata said he had received reports claiming a plane crash near the village of Yaylacik in central Antakya.

“We think the plane belongs to Syria,” Ata said, confirming no Turkish Armed Forces nor civil aviation flight was scheduled in the area. The governor also said the plane may have crashed on Syrian land.

The Syrian opposition has told Anadolu Agency that they shot down a plane belonging to the regime.  The regime plane was allegedly bombing Idlib province in northern Syria when it was shot down by the opposition forces, said group spokesman of Ahrar al-Sham Ahmed Karaali.

Ahrar al-Sham was among the seven armed groups that Russia declared as “moderate opposition”, which were part of the ceasefire announced on December 30, 2016. However, Ahrar al-Sham opted not to participate in the recent Syrian peace talks in Astana, while the FSA, Jaish al-Islam and other armed opposition groups sent a delegation.

Prime Minister Binali Yildirim also confirmed that a crash was reported.

“Reportedly, a Syrian regime plane crashed around Hatay’s Samandag Yaylacik region,” he said Yildirim said it was not clear yet whether the plane crashed on Turkish or Syrian soil.

According to a senior Turkish military official, there was only one pilot on board and he is thought to be ejected from the plane while on Syrian land.

If the Syrian jet was indeed shot down by the Turkey-backed Ahrar al-Sham group, some speculate that the jet downing may be Trump’s first international crisis.

If reports accurate, and Syrian jet is downed by Turkey backed Ahrar al Sham (part of Euphrates Shield), Trump may have 1st int. crisis https://twitter.com/WasHatti/status/838062956151701504 

end

 

Turkey/Germany

Germany cancels Turkish rallies and that sets off a diplomatic row after Erdogan accuses Germany of “fascist actions”

(courtesy zero hedge)

Fresh Diplomatic Scandal After Erdogan Accuses Germany Of “Fascist Actions”

Turkish President Tayyip Erdogan accused Germany of “fascist actions” reminiscent of “Nazi practices” in a growing diplomatic rift over the cancellation of political rallies aimed at propping support for him among the 1.5 million Turks living in Germany. Erdogan’s latest outburst on Sunday took place days after German authorities withdrew permission for two rallies by Turkish citizens in German cities, at which Turkish ministers were to urge a “Yes” vote in a referendum next month on granting Erdogan sweeping new presidential, almost dictatorial according to some, powers.

Speaking in Istanbul, the Turkish president fanned the flames with a stinging verbal attack.

“In Germany, they are not allowing our friends to speak. Let them do so. Do you think that by not allowing them to speak the votes in Germany will come out ‘no’ instead of ‘yes?'” Erdogan said. “Germany, you don’t have anything to do with democracy. These current practices of yours are no different than the Nazi practices of the past.” the Turkish president said at a rally in Istanbul.

“When we say that, they get disturbed. Why are you disturbed?”

“We will talk about Germany’s actions in the international arena and we will put them to shame in the eyes of the world,” Erdogan said and added “We don’t want to see their fascist actions. We thought that era was in the past, but apparently it isn’t.”

On Thursday, Turkey’s justice minister canceled a meeting with his German counterpart after local authorities in southwest Germany withdrew permission for him to use a venue to hold a rally near the French border that was part of a campaign to get Turks in Germany to vote “yes” in the referendum, AP reports. Berlin says the meetings were canceled by local authorities on security grounds. Turkey’s economy minister, Nihat Zeybekci, was due to speak at two events in western Germany in Leverkusen and Cologne on Sunday. There are about 1.4 million people in Germany who are eligible to vote in the Turkish referendum.

While Erdogan’s remarks – like other populist leaders, he is a man “admired by many for his rhetorical flourishes” as Reuters puts it – could win support among many of those who see Turkey threatened by militant attacks and abandoned by putative allies. But they may damage economic ties at a time when Turkey faces rising unemployment and inflation. 10% of Turkish exports go to Germany. Germany accounts for about 11% of Turkish imports.

Still, Erdogan’s harsh words bring to the foreign political arena the heated climate in Turkey since a failed army attempt to topple the president in July. Mass arrests and dismissals in professions from the military to academia, journalism to science, have been heavily criticized in the West.

The latest row has dragged relations between the two NATO partners to a new low. At the same time, public outrage is mounting in Germany over Ankara’s arrest of a Turkish-German journalist.

German Chancellor Angela Merkel’s office had no immediate comment on the remarks but the deputy leader of her Christian Democratic Union party said the Turkish president was “reacting like a stubborn child that cannot have his way”.  Julia Kloeckner, a deputy leader of Merkel’s Christian Democratic Union, told the German daily Bild that “the Nazi comparison is a new high point of intemperance.”

The latest confrontation was fanning anger across the European Union which Turkey, now with little real conviction, aspires to join.

Austrian Chancellor Christian Kern, in an interview with the German newspaper Welt am Sonntag, repeated his recurring opinion to sever ties with Turkey and said it’s time to pull the plug on long-stalled moves to bring Turkey into the 28-nation EU.

“We shouldn’t just temporarily suspend the accession talks with Turkey but end them,” Kern said. “We can’t continue to negotiate about membership with a country that has been steadily distancing itself for years, during ongoing access talks, from democratic standards and principles of the rule of law.”

* * *

A similar situation is developing in the Netherlands where the Dutch government is investigating whether it can halt a rally being planned for later in the week at which Turkish Foreign Minister Mevlut Cavusoglu is reportedly due to speak. Prime Minister Mark Rutte told Dutch broadcaster NOS on Saturday that his government “is looking at all legal avenues to prevent such a visit.” Rutte said the proposed constitutional changes take Turkey, an aspirant European Union member state, “in a less democratic direction.”

“We believe that Dutch public space is not the place for political campaigns of other countries,” Rutte wrote earlier on his Facebook page. Kern urged “a concerted approach by the EU to prevent such campaign appearances,” saying then specific countries like Germany would not come under pressure from Turkey.

Meanwhile, at an election campaign event in Amsterdam, Dutch populist challenger in the upcoming March 15 elections, Geert Wilders also resorted to extreme-right comparisons, calling Erdogan an “Islamo-fascist leader.” Wilders, whose Party for Freedom is lagging only slightly behind Rutte’s VVD party in polls before the Dutch March 15 election for parliament’s lower house, said that “I think that coming here to advocate a change of the Turkish constitution that will only strengthen the Islamo-fascist leader Erdogan of Turkey more than Parliament, Turkish parliament, is the worst thing that could happen to us,” Wilders told reporters at a campaign event.

Just like in the US, it now appears that in Europe too when one needs to make a really “bold” political statement, the logical recourse is to just call one’s adversary fascist, or simply “Nazi.”

Wilders added that if he were the Dutch prime minister, “”I would call the whole cabinet of Turkey ‘persona non grata’ for a month or two, not allowing them to come here.”

Kern, however, pointed out that totally cutting ties with Ankara wouldn’t be in EU interests. An EU migrant deal with Turkey, which also is a NATO member, has significantly cut down the number of migrants crossing into Europe. “We should realign the relationship, without the illusion of EU membership,” Kern said. “Turkey is an important partner in security matters, on migration and on economic cooperation. Turkey has stuck to all of its commitments resulting from the refugee deal, in any case. We should build upon that.”

For now, Erdogan realizes this, and he also grasps that Turkey maintains the leverage in relations with Europe, not least of all because Turkey withholds some 2 million Syrian refugees that could potentially flood Europe should a total breakdown in relations between Turkey and Europe take place. How much longer his outbursts will be tolerated by an increasingly displeased German population, for whom Nazi comparisons may be the stick that breaks the proverbial camel’s back, remains to be seen.

 

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6.GLOBAL ISSUES

Even though Mexico’s debt to GDP is only 49%, it has major problems due to the fact that a major part of its debt is denominated in foreign currency coupled with foreign owners. Mexico’s problem started with their crisis in 1994 where they needed to the bailed out.  The debt created then is still around except it has basically tripled due to interest. Mexico may be facing liquidity problems in that they will have difficulty in sourcing foreign currency to pay off its debt

(courtesy Don Quijones/WolfStreet)

Is Mexico Facing “Liquidity Problems?”

When it comes to debt, everything is relative, especially if you don’t have a reserve-currency-denominated printing press.

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

At 49% of GDP, Mexico’s public debt may seem pretty low by today’s inflated standards. It’s a mere fraction of the debt loads amassed by bigger, richer economies such as Japan (229% of GDP), Italy (133%) and the United States (104%). But when it comes to debt, everything is relative, especially if you don’t enjoy the benefits that come from having a reserve-currency-denominated printing press.

In Mexico’s case it’s not so much the size of the debt that matters; it’s the rate of its growth. In the year 2000 the country had a perfectly manageable debt load of roughly 20% of GDP. Today, it is two and a half times that size.

Last year alone the Mexican state issued a grand total of $20.31 billion in new debt, the largest amount since 1995, the year immediately after the Tequila Crisis when the country needed an international bailout to rescue its entire banking system from collapse. The money it received also helped repay a number of giant Wall Street investment banks that had gone all in on Mexican assets.

There are plenty of reasons behind Mexico’s current debt issues. Top of the list is the dramatic reversal of fortunes of the country’s shrinking oil giant Petróleos Mexicanos, A.K.A. Pemex, which until a few years ago provided as much as one-third of the Mexican government’s national budget. After decades of “bad management, lack of vision, negligence, abuse and in many cases, corruption,” in the words of Mexico’s Business Coordinating Council, Pemex is now bleeding losses and buckling under €100 billion of debt.

If Pemex is unable to service its debts, Mexico’s government will have to step in, again. The problem here is that Mexico’s government is also struggling to rein in its own debt addiction, with some states already on the verge of bankruptcy. One state governor, Javier Duarte of Veracruz, did so much fiduciary damage during his mandate that he’s now on the run after allegedly misappropriating vast sums of public funds.

 

Another reason why Mexico’s debt keeps growing stems from its 1994 rescue of its banking sector (and international bondholders). The debt the government took on was supposed to have been liquidated within 20 years but it continues to grow. Thanks to the wonders of compound interest, the debt is now worth 878 billion pesos ($44 billion), 35% higher than it was in 2000, despite the fact that Mexico has already paid tens of billions of dollars to banks and international financial institutions.

Mexico’s top auditor, the Federal Audit Office (ASF), just came out with a bombshell report showing that a staggering 72.9% of the new debt Mexico’s government issues today is used to repay the principal on its maturing old debt while 13.9% goes toward servicing the interest payments. That leaves just 13.2% for investment projects or productive activities, part of which is no doubt skimmed off by corrupt officials and businessmen.

The debt continues to grow at a much faster rate than Mexico’s economy, whose growth is forecast to slow this year to 1.5%, compared to last year’s 2.4%. To make matters worse, much of Mexico’s new debt is in foreign-denominated currencies. Between 2015 and 2016 alone, the total amount of euro and dollar-denominated debt it issued rose by 46.2%.

Mexico is not the only emerging market that has developed an unhealthy appetite for foreign-currency-denominated debt. In the first two months of 2017, emerging markets issued over $100 billion in USD and EUR bonds, beating a previous record set for the same period in 2014. The main reason for the latest spike is the lower cost of issuing debt in the wake of the US elections, with yields on EM bonds falling by an average of 50 basis points. But that is not likely to last, especially with the Federal Reserve expected to raise rates in the coming months.

However, the prospect of rising rates, much like last orders at the bar, has merely intensified the thirst for dollar-denominated debt. “The yields are attractive and the outlook for rates and bear market risk are pushing issuers to evaluate funding early this year,” said Samad Sirohey, the director of debt capital markets for Central and Eastern Europe, the Middle East and Africa for Citigroup, the bank that’s organized most of the bond sales for the region this year.

Yield-starved investors, after years of central bank-imposed financial repression, can’t resist the higher yields of riskier markets, for now. Offering almost double the 2.5% of the 10-year Treasury yield and many multiples of the 0.335% of Germany’s 10-year yield, EM debt funds have reported $7.4 billion of inflows so far this year, surpassing the combined flows into U.S. junk bonds and loans during the same period.

But if EM currencies fall against the dollar and the euro, the cost of servicing dollar- and euro-denominated debt is going to rise. And that’s when the strains will begin to show.

In Mexico foreign investors hold around $100 billion of the country’s local-currency government debt, the most for any emerging market economy. That’s almost 20 times what it was 20 years ago. They also hold billions of euros worth of corporate bonds, which are also showing signs of strain, prompting some Mexican business leaders to call for “new programs” to be implemented before the situation causes “a large-scale crisis” among Mexican companies.

The most ominous sign yet came last week when Bloomberg reported sources saying that the Bank of Mexico (or Banxico, as it is referred to) had sought a swap line from the Federal Reserve in case of “liquidity problems,” which immediately triggered furious denials from Banxico. “I can say clearly and unequivocally that we are not in the process of asking for any credit line from any authority,” said the central bank’s governor, Agustin Carstens, who has postponed by six months his departure from the bank, initially scheduled for May.

If the allegations are true, they imply that Mexico’s government and/or corporations are beginning to feel the early pangs of a dollar shortage. One thing is resoundingly clear: the Mexican government needs to get a handle on its debt situation. By Don Quijones.

This time, the ECB is already doing “whatever it takes.” And still. Read…  Euro Breakup Rattles Investors Once Again

 

 

end

 

This is not good:  South Africa’s President Zuma calls for the confiscation of White land exactly what Zimbabwe did to its White citizens years earlier:

(courtesy zero hedge)

“It’s A Declaration Of War”: South Africa’s President Calls For Confiscation Of White Land

After South Africa’s embattled president Jacob Zuma pledged, in a surprising address to parliament one month ago, to break up white ownership of business and land to reduce inequality (in a State of the Nation address which was disrupted by a fistfight), it now appears that Zuma’s intentions to convert what was until recently Africa’s most prosperous economy into a new Zimbabwe were all too real, and as the Telegraph reports, the South African president officially called on parliament to change South Africa’s constitution to allow the expropriation of white owned land without compensation.

Zuma, 74, who made the remarks in a speech on Friday morning, said he wanted to establish a “pre-colonial land audit of land use and occupation patterns” before changing the law.

We need to accept the reality that those who are in parliament where laws are made, particularly the black parties, should unite because we need a two-thirds majority to effect changes in the constitution,” he said.

In recent months, Zuma, who has lurched from one scandal to another since being elected to office in 2009, has adopted a more populist tone since his ruling African National Congress (ANC) party suffered its worst election result last August since the end of apartheid in 1994. The party lost the economic hub of Johannesburg, the capital Pretoria and the coastal city of Port Elizabeth to the moderate Democratic Alliance party, which already held the city of Cape Town.

The ANC is also under pressure from the radical Economic Freedom Fighters, led by Julius Malema. Malema has been travelling the country urging black South Africans to take back land from white invaders and “Dutch thugs”. He told parliament this week that his party wanted to “unite black people in South Africa” to expropriate land without compensation.

“People of South Africa, where you see a beautiful land, take it, it belongs to you,” he said. Although progress has been made in transferring property to black South Africans, land ownership is believed to be skewed in favour of whites more than 20 years after the end of apartheid. The Institute of Race Relations, an independent research body, said that providing a racial breakdown of South Africa’s rural landowners was “almost impossible.”

“In the first place the state owns some 22 per cent of the land in the country, including land in the former homelands, most of which is occupied by black subsistence farmers who have no title and seem unlikely to get it any time soon,” the group said. “This leaves around 78 per cent of land in private hands, but the race of these private owners is not known.”

As the Telegraph adds, Zuma’s comments caused outrage among groups representing Afrikaans speaking farmers on Friday.

The Boer Afrikaner Volksraad, which claims to have 40,000 members, said its members would take land expropriation without compensation as “a declaration of war”.

“We are ready to fight back,” said Andries Breytenbach, the group’s chairman. “We need urgent mediation between us and the government. “If this starts, it will turn into a racial war which we want to prevent.” As noted above, Zuma first mentioned the expropriation of land in his opening of Parliament speech last month, but Friday was the first time he called for a change in the law.

In his February speech, he controversially called in the military to maintain “law and order” on the streets of Cape Town ahead of expected protests calling for him to step down.

It was the first time in South Africa’s history, including the heavily militarised apartheid era, that the president has ordered the military to provide security at parliament.

Meanwhile, the populist wave is spreading and as discussed at the end of February, the local police had to fire rubber bullets into a crowd after anti-immigrant protests turned violent in the capital Pretoria.

President Zuma’s aggressive move toward redistribution comes as his African National Congress party prepares to elect a new leader to succeed him in December and as he finds himself under growing pressure over corruption allegations. It is disturbing that in order to deflect from his own failings as president, Zuma is willing to risk an economic fate reminiscent that of its neighbor to the north, Zimbabwe, where shortly after a similar confiscation of what land, the economy disintegrated into a hyperinflationary supernova.

It took Zimbabwe 15 years to admit its mistakes, and invite white farmers back. It now appears that South Africa will have to learn from the mistakes of its northern neighbor in due course.

7. OIL ISSUES

Did they expect anything less:  OIL pundits are now concerned over Russia’s failure to cut production

(courtesy zero hedge)

Oil Bulls Concerned By Russia’s Failure To Cut Production

If record US crude and gasoline inventories (and soaring US production) were not big enough concerns, oil bulls are starting to lose faith (hedge fund shorts at 12-week highs) after lower growth targets in China and concerns over Russia’s compliance with a global deal to cut oil output sparked renewed worries over a crude oil supply glut.

Reuters notes that China on Monday lowered its growth target for the year to 6.5 percent, compared with 6.7 percent last year, and also tightened regulatory controls in an effort to tackle pollution. Investors are watching the moves carefully for signs they could dampen demand for oil.

Meanwhile, figures from Russia’s energy ministry released last week showed February oil output was unchanged from January at 11.11 million barrels per day (bpd), casting doubt on its moves to rein in output as part of a pact with oil producers last year. Commerzank noted that Russia’s production would need to fall by a further 100,000 bpd in March in order to comply with the agreement.

And it appears hedgies are starting to lose faith…

 

And while prices are rebounding modestly today (as the machines buy the dip again), the recent trend is clear. The China demand, Russia supply concerns outweighed news of escalating violence in North Africa that sparked questions about oil exports from the region and prompted a small price rebound on Friday.

“It’s a market where there are no signs of extreme tightness,” said Olivier Jakob, managing director of PetroMatrix. “It makes it hard to get a sustained rally.”

8. EMERGING MARKETS

end

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

Euro/USA   1.0579 DOWN .0041/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 EXCEPT SPAIN  

USA/JAPAN YEN 113.82 DOWN 0.155(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 1.2261 DOWN .0029 (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/AND NOW A NEW SCOTLAND REFERENDUM IS ON THE TABLE)

USA/CAN 1.3399 UP .0033 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS MONDAY morning in Europe, the Euro FELL by 41 basis points, trading now WELL BELOW the important 1.08 level FALLNG to 1.0579; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 115.55 POINTS OR 0.48%     / Hang Sang  CLOSED UP 43.56 POINTS OR 0.18%    /AUSTRALIA  CLOSED UP 0.23%  / EUROPEAN BOURSES MOSTLY IN THE RED

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

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

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

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

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

The NIKKEI: this MONDAY morning CLOSED DOWN 90.03 POINTS OR 0.18% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 43.56 POINTS OR 0.18%       / SHANGHAI CLOSED UP 15.55  OR 0 .48%/Australia BOURSE CLOSED UP 0.23/Nikkei (Japan)CLOSED DOWN 90.03 POINTS OR 0.46%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1231.80

silver:$17.84

Early MONDAY morning USA 10 year bond yield: 2.473% !!! DOWN 2 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.061, DOWN 1 IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 101.64 UP 26 CENT(S) from THURSDAY’s close.

This ends early morning numbers MONDAY MORNING

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And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 3.96% UP 1  in basis point yield from FRIDAY 

JAPANESE BOND YIELD: +.074%  DOWN 2/5  in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.728%  UP 4 IN basis point yield from  FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.165 UP 7 POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 40 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.342% DOWN 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.0586 DOWN .0034 (Euro DOWN 34 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.97 DOWN: 0.007(Yen DOWN 7 basis points/ 

Great Britain/USA 1.2233 DOWN 0.0056( POUND DOWN 56 basis points)

USA/Canada 1.3414 UP 0.0048(Canadian dollar DOWN 48 basis points AS OIL ROSE TO $53.12

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This afternoon, the Euro was DOWN by 34 basis points to trade at 1.0586

The Yen ROSE to 113.97 for a GAIN of 7 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 70  basis points, trading at 1.2233/

The Canadian dollar FELL  by 48 basis points to 1.3414,  WITH WTI OIL RISING TO :  $53.12

The USA/Yuan closed at 6.8954/
the 10 yr Japanese bond yield closed at +.074% DOWN 2/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1 IN basis points from FRIDAY at 2.502% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.107 UP 1  in basis points on the day /

Your closing USA dollar index, 101.67 UP 29  CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED DOWN 24.14 OR 0.33% 
German Dax :CLOSED DOWN 68.96 POINTS OR 0.57%
Paris Cac  CLOSED DOWN 22.94 OR 0.46%
Spain IBEX CLOSED UP 5.60 POINTS OR 0.06%
Italian MIB: CLOSED DOWN 214.60 POINTS OR 1.09%

The Dow closed DOWN 51.37 OR 0.24%

NASDAQ WAS closed DOWN 21.58 POINTS OR 0.37%  4.00 PM EST
WTI Oil price;  53.12 at 1:00 pm; 

Brent Oil: 55.86  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.32 DOWN 8/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD FALLS TO +0.342%  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:$53.18

BRENT: $55.90

USA 10 YR BOND YIELD: 2.494%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.101%

EURO/USA DOLLAR CROSS:  1.0579 up .0041

USA/JAPANESE YEN:113.94   down 0.042

USA DOLLAR INDEX: 101.68  up 30  cents ( HUGE resistance at 101.80 maintained)

The British pound at 5 pm: Great Britain Pound/USA: 1.2235 : down 51 BASIS POINTS.

German 10 yr bond yield at 5 pm: +.342%

END

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

TRADING IN GRAPH FORM

Snap, Crackle, & Drop: “Hottest IPO” Crashes As Bull Market Celebrates 8th Birthday

Judging by today’s VIX crush and USDJPY ramp, this was the sound coming from The Eccles Building…

 

8 years ago today, the S&P 500 bottomed at 666…S&P earnings are up 78% since then.. and the S&P is up 247%

 

The Dow bottomed on 03/09/09 at 6547 – 30Y yields were at 3.57%; The Dow is now at 21,000 and 30Y yields at 3.10%… (and the 2s30s yield curve has collapsed from 260bps to 175bps)

 

Something very different today: Bonds and stocks were sold together (same as happened on Thursday but much more pronounced)

 

And Risk Parity funds had their worst 2-day drop since mid-December…

 

On the day, Trannies and Small Caps were worst…

 

Despite desperate efforts to ramp USDJPY and crash VIX, stocks could not get green…

 

Notably, Small Caps slipped back into the ‘old range’…

 

Financials (red) had their worst 3-day drop in 7 weeks… almost filling the gap from last week’s meltup…

 

Snap crackled…then dropped and has erased all of its post-IPO gains…

 

And Camera-on-a-Stick crashed to new record lows (on the heels of a Goldman downgrade)

 

Bonds sold off into and through the US open but once Europe closed a bid reappeared…2Y ended unch

 

The Dollar rose on the day led by notably cable weakness…

 

Crude clung to unchanged (despite USD strength), Copper plunged on China lower growth, PMs drifted lower…

 

Finally – a quick question – who does The Fed work for? Main Street or Wall Street?

Real earnings are up 2.5% off the 2009 lows, The Dow is up 210%

 

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Early trading this morning from NY:

Risk Parity Panic? Stocks, Bonds Dumped At Open

Is this the risk parity fund blow that many have been worried about?

Dow drops below 21k, 30Y Yields nearing 3.10%… Something’s breaking.

 

As a reminder, here is what Jim Bianco said over the weekend

To be clear, the stock bond relationship hasn’t changed yet. But you will know it’s happening when you see turmoil in the financial markets, especially when risk parity funds start to blow up. Risk parity funds, an investment concept pioneered by Bridgewater Associates, are basically an artifact of the deflationary mindset. They trade the stock-bond relationship based on how it’s been for the last twenty years. So if this relationship changes you could either look at all of these correlation charts, or you could just open up The Wall Street Journal or watch CNBC, and you’ll hear stories about risk parity funds blowing up because their models aren’t working anymore. Basically, the same thing that happened with Long-Term Capital Management could happen with risk parity funds in the next regime change.

Probably nothing…

 

end

 

Core Factory orders growth has slowed down to a 6th month low
(courtesy zero hedge)

 

Core Factory Orders Growth Slows To Six-Month Lows

Despite a positive headline print (+1.2% vs +1.05 expectations), January’s Factory Orders ex-transports rose just 0.3% month-over-month – the weakest growth since July 2016.

The spike in new factory orders in December – on the heels of the Trump election victory and perhaps inventory stockpiling on hopes that everything will be awesome – did not last long and January saw growth tumble to just 0.3%…

 

Transportation equipment new orders rose 6.2% MoM – bouncing back from a 4.3% plunge in December and a 14.7% collapse in November.

Notice the trend? Yeah exactly – there is none! Two months down, then one month up – don’t hold your breath for Feb/March.

 

 

end

 

I was totally unaware that USA passed a law that they had to keep their cash balances low. They were not allowed to pad their balances:  they could borrow all the want and on March 15, whatever the borrowings become, that will be the new debt ceiling.  They are burning cash at an alarming rate.  When Trump took office  43 days ago, the cash balances was around $382 billion, whereas today it is down to only 109 billion, a loss of 273 billion..a monstrous burn rate.  The problem will be that they will run out by Mid April.

(courtesy Washington Examiner)

Treasury Department burning through cash as debt ceiling approaches

The Treasury Department has been rapidly spending its large cash reserves ever since President Trump took office, a move that complies with federal law, but could also make it harder for the government to stay under the debt ceiling once the limit kicks in again later this month.

On Jan. 20, the day Trump took office, the federal government had $382 billion in cash on hand. As of Thursday, that was down to about $109 billion.

Spending all that cash has helped keep the total national debt under $20 trillion. The total debt has hovered around $19.9 trillion since Trump took office, and would easily exceed $20 trillion by now if the government borrowed money to fund government spending instead of using available cash.

But staying under the dubious milestone is probably not why all that cash is going out the door. Tyler Evilsizer of the Committee for a Responsible Federal Budget told the Washington Examiner there’s another reason: keeping a low cash balance is required under a law that was passed in 2015.

“The last debt ceiling legislation prohibited Treasury from increasing the cash balance above normal operating balances right before the debt ceiling returns,” he said.

Specifically, Congress passed legislation in late 2015 that suspended the debt ceiling through March 15, 2017. Until that date, the government can borrow whatever it needs to keep funding itself at levels approved by Congress.

Starting March 16, the debt ceiling will be in effect again, and it will be whatever level of debt the government has racked up.

In past years when this has happened, the Obama administration was able to keep the government at current funding levels for several months, in part by limiting borrowing, and in part by using any cash it had to keep things running.

But in the 2015 law, Congress expressly prohibited the government from building up a huge arsenal of cash in order to survive when the debt ceiling was reached.

“The Secretary of the Treasury shall not issue obligations during the period specified in section 901(a) for the purpose of increasing the cash balance above normal operating balances in anticipation of the expiration of such period,” the law said.

Evilsizer said the nearly $400 billion Treasury had at the start of the Trump administration was relatively high. But he said the recent decline actually puts in back in the range of cash levels normally seen.

David Stockman appears on CNBC again and states that the debt ceiling is the next crisis and this is going to happen before any tax breaks etc.They cash position of the government on on Feb 24.2017 was down to 200 billion. On March 3:  109 billion USA.

Stockman: Wall St is Misreading Trump – Fiscal Crisis Ahead

[Ed. Note: To see exactly what this former Reagan insider has to say about Trump and the fiscal threats of the debt ceiling, David Stockman is sending out a copy of his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back to any American willing to listen – before it is too late. To learn how to get your free copy CLICK HERE.]

David Stockman joined CNBC to offer a stark warning for investors that continue to follow Wall Street on a path of misreading Trump’s policies while Washington is headed toward a fiscal bloodbath.

Stockman started out his fiscal warning saying, “I think that Wall Street is totally misreading Washington. It is pricing in a fantasy about a Trump stimulus that simply is not going to happen. There will be no big tax cut, there will be no $15 or $20 a share reduction in the corporate rate. Infrastructure stimulus [isn’t going to happen].”

The host then prompted how Stockman knew this to which he pushed, “we are heading into a debt ceiling trap that will grind the whole system to a halt by June or July. People are forgetting that we’ve been on a debt ceiling holiday. That holiday ends on March 15.”

Stockman Fiscal Bloodbath on Wall Street

David Stockman is the former Budget Director under President Ronald Reagan. He also served in Congress where he was a two-term Congressman representing Michigan. Following his service in the U.S government, Stockman went on to work on Wall Street. Currently he is the bestselling author of Trumped! A Nation on the Brink… And How to Bring It Back – learn how to get your FREE copy – CLICK HERE.

The CNBC host then posed that this was not a new scenario to Donald Trump. David Stockman then took the point to task noting that, “This is totally new to Donald Trump. He tweeted last weekend that he had reduced the national debt by $12 billion. It is actually up $187 billion in the first 35 days that he has been in office. The cash on the Treasury’s balance sheet, and this is the key point, was $382 billion the day he was sworn in – as of last Friday it hit $178 billion and has bled $200 billion in cash.”

“That’s one fifth of a trillion while he didn’t even have his economic team in place. When they get to March 15 and the debt ceiling freezes at $20 trillion, they’ll have maybe $200 billion of cash. That is being run out at a rate of $3-5 billion a day. By June it will be gone. There is no pathway to a majority in the House or Senate to pass a debt ceiling increase in the trillions in order to make any of this stuff possible.”

The Art of the Deal – Myth vs Fiscal Reality

When asked about whether Trump’s negotiation tactic, The Art of the Deal, is presenting a different way of running the system than before Stockman did not hold back. He pushed, “[Trump might be doing that] But that makes it even more dangerous and reckless. This isn’t an Atlantic City Casino and the junk bond market’s of 1991. This is the big time – this is $20 trillion of debt. This is an environment with a House, Republican majority that doesn’t exist. That’s a delusion. This is an environment of a gang of factions. They’re already beginning to splinter and fracture as a result of the Obamacare plan of “repeal and replace.”

“They won’t even get to tax reform before the debt crisis hits. We will have a government shutdown. It is totally unexpected, unpriced in, as they say by Wall Street. It will spook everybody. Trump is so reckless that this could go on for days, weeks or months in a way that we’ve never seen before. The 2011 with Obama will be a Sunday school picnic compared to what is likely coming down the pike.”

A bombshell:  Trump accuses Obama of wiretapping the Trump tower:

(courtesy zero hedge)

“This Is Watergate”: Trump Accuses Obama Of Wiretapping The Trump Tower

President Trump on Saturday morning alleged that his predecessor Barack Obama had “wired tapped” the Trump Tower before Election Day, tweeting the accusation without however providing evidence so far.

“Terrible! Just found out that Obama had my ‘wires tapped’ in Trump Tower just before the victory. Nothing found. This is McCarthyism!” he wrote.

“Is it legal for a sitting President to be “wire tapping” a race for president prior to an election? Turned down by court earlier. A NEW LOW!” he added in subsequent tweets. “I’d bet a good lawyer could make a great case out of the fact that President Obama was tapping my phones in October, just prior to Election!”

Trump compared Obama’s alleged activity to Nixon’s bugging of the Watergate hotel. “How low has President Obama gone to tapp my phones during the very sacred election process. This is Nixon/Watergate. Bad (or sick) guy!”

Terrible! Just found out that Obama had my “wires tapped” in Trump Tower just before the victory. Nothing found. This is McCarthyism!

Is it legal for a sitting President to be “wire tapping” a race for president prior to an election? Turned down by court earlier. A NEW LOW!

I’d bet a good lawyer could make a great case out of the fact that President Obama was tapping my phones in October, just prior to Election!

How low has President Obama gone to tapp my phones during the very sacred election process. This is Nixon/Watergate. Bad (or sick) guy!

It was not immediately clear what evidence or report Trump was referencing. On Friday night, Breitbart News reported on conservative radio host Mark Levin’s claim that Obama executed a “silent coup” of Trump via “police state” tactics.

Since Trump has a tendency to tweet about things he has just seen on TV or read in the press, and since there has been no definitive report on that topic, Trump may be referencing an internal report. And since the allegations in his tweets are material, and will surely provoke a response by Barack Obama (at least his twitter account), this may escalate significantly.

Also on Saturday, prior to the wiretapping tweet, Trump had also linked Obama to Attorney General Jeff Sessions’s meetings last year with Russia’s U.S. ambassador.

“The first meeting Jeff Sessions had with the Russian Amb was set up by the Obama Administration under education program for 100 Ambs,” he tweeted.

The first meeting Jeff Sessions had with the Russian Amb was set up by the Obama Administration under education program for 100 Ambs……

Trump on Saturday also blasted Obama for meeting with Kislyak 22 times while president, as the Daily Caller reported first on Friday, tweeting: “Just out: The same Russian Ambassador that met Jeff Sessions visited the Obama White House 22 times, and 4 times last year alone.”

Just out: The same Russian Ambassador that met Jeff Sessions visited the Obama White House 22 times, and 4 times last year alone.

The Trump administration has sought to push back on accusations of being cozy with Moscow, by pointing out instances of Democrats meeting with Kislyak. Critics have responded that the issue isn’t that Sessions met with the ambassador, but that he falsely told Congress he hadn’t while under oath. So far, according to some media outlets, Trump has failed to “fend off” the Russia questions, which continue to reemerge virtually every night in some new front page story on the WaPo, NYT, in a recurring pattern as described in the following blog post.

* * *

To be sure, Trump didn’t dwell much on the alleged wiretapping and by 8:19 a.m., the president had turned his sights to Arnold Schwarzenegger who succeeded Trump as host of “The Apprentice,” and who has sparred with Mr. Trump over the president’s policies on immigration.

“Arnold Schwarzenegger isn’t voluntarily leaving the Apprentice, he was fired by his bad (pathetic) ratings, not by me. Sad end to great show” Trump tweeted. “Sad end to great show,” he concluded.

 

end

 

Sunday morning:

Obama slams the “false” Trump accusation:

(courtesy zero hedge)

Obama Slams “False” Trump Accusation, Says “Never Ordered” Wiretapping

Moments ago, Barack Obama through his spokesman Kevin Lewis denied Trump’s accusation that he had ordered the Trump Tower wiretapped, saying neither he nor any member of the Obama White House, “ever ordered surveillance on any U.S. citizen. Any suggestion otherwise is simply false.”

Follows the statement from Kevin Lewis, spokesman to former president Barack Obama

“A cardinal rule of the Obama Administration was that no White House official ever interfered with any independent investigation led by the Department of Justice. As part of that practice, neither President Obama nor any White House official ever ordered surveillance on any U.S. citizen. Any suggestion otherwise is simply false.”

MORE: Spokesperson for former Pres. Obama responds to Trump wiretap allegation, calls it “simply false.” http://abcn.ws/2lI8k6y 

Yet while the carefully-worded statement, an exercise in semantics, claims Obama did not himself, or through members of his White House team, order a potential wiretapping, it does not deny an actual wiretapping of Trump (or Trump Tower), which as some have speculated in the past, did in fact take place after a FISA Court granted surveillance of Trump over accusations of Russian interference. It also does not preclude the FBI – which is the entity that would most likely have implemented such a wiretap – from having given the order.

As a reminder, here is what the Guardian reported in early January:

The Guardian has learned that the FBI applied for a warrant from the foreign intelligence surveillance (Fisa) court over the summer in order to monitor four members of the Trump team suspected of irregular contacts with Russian officials. The Fisa court turned down the application asking FBI counter-intelligence investigators to narrow its focus. According to one report, the FBI was finally granted a warrant in October, but that has not been confirmed, and it is not clear whether any warrant led to a full investigation.

For the definitive answer, we suggest Trump ask Comey whether or not his building was being tapped in the days prior to the election.

 

end

Sunday afternoon

James Clapper denies the wiretapping. Nobody believes him:

(courtesy zero hedge)

James Clapper Denies Obama Wiretapped Trump

The former Director of National Intelligence under the Obama administration, James Clapper, denied there was a secret court order for surveillance at Trump Tower. Speaking on NBC’s Meet The Press, Clapper said that in the national intelligence activity he oversaw, “there was no such wiretap activity mounted against the president, the president-elect at the time, as a candidate or against his campaign.”

James Clapper: “There was no such wire tap activity amounted against” Donald Trump.

Clapper was asked if he would be aware if something like that had happened. “I would certainly hope so … Obviously I can’t speak officially anymore,” “But I will say that for the part of the national security apparatus that I oversaw as DNI, there was no such wiretap activity.” Clapper said that as intelligence director he would have known about a “FISA court order on something like this. Absolutely, I can deny it.”

Clapper also said he would know if a Foreign Intelligence Surveillance Act (FISA) court order existed for “something like this.”

“And at this point you can’t confirm or deny whether that exists?” host Chuck Todd asked.

“I can deny it,” Clapper said in response. “There is no FISA court order,” Todd asked. “Not to my knowledge,” Clapper responded.

Clapper left the White House on January 20 when Trump took office.

Clapper’s comments come after President Trump accused former President Barack Obama of wiretapping Trump Tower in the last stages of the 2016 presidential campaign, and at the same time as the White House announced it would request a Congressional probe into whether Obama abused “executive branch investigative powers.”

Some have pointed out the irony of relying on Clapper’s word to deny Trump’s – so far unsourced – allegations.

In addition to his political role in firing Michael Flynn from the directorship of the Defense Intelligence Agency in 2014, Flynn is perhaps best known for his March 2013 appearance in Seante, months before Snowden provided extensive NSA data documenting sweeping domestic and international communications dragnets, in which Clapper engaged in a back and forth with Senator Ron Wyden, an Oregon Democrat on the intelligence committee.

Wyden asked Clapper: “Does the NSA collect any type of data at all on millions, or hundreds of millions, of Americans?”

Clapper replied, untruthfully: “No sir,” rubbing his head. “Not wittingly.”

After Snowden’s documents confirmed Clapper lied, the former intelligence director offered a shifting series of explanations for his publicly uttered falsehood. He first said it was the “least untruthful” answer he could provide in an unclassified hearing. Later he said he misunderstood which particular communications collection program Wyden was asking about – despite Wyden’s staff alerting Clapper’s before the hearing as to the question – and apologized to the committee.

Later, Clapper’s lawyer, Robert Litt, would deny that Clapper lied and said the director simply forgot. Litt would also say that Clapper finds open intelligence-committee hearings, a requirement of congressional oversight, as annoying as folding fitted sheets, citing a distinctive turn of phrase used by his boss.

In November 2016, some lawmakers renewed their calls for perjury charges to face perjury charges. As USNews reported last year, “to his critics, Clapper lied under oath, a crime that threatens effective oversight of the executive branch. In an apology letter to lawmakers, however, Clapper said he gave the “clearly erroneous” answer because he “simply didn’t think of” the call-record collection. Clapper later told MSNBC he considered the question akin to asking, “When did you stop beating your wife?” and so gave the “least untruthful” answer.”

No charges were filed against Clapper, but his critics say the incoming administration of President-elect Donald Trump could change that. Trump frequently railed against a “rigged system” on the campaign trail, alleging powerful people such as Hillary Clinton, his Democratic rival, avoid criminal charges thanks to a corrupt legal system.

“No one is above the law. Officials who commit perjury or lie to Congress should be held accountable,” Texas Republican Rep. Blake Farenthold tells U.S. News by email.

“Given the implications, a cursory examination of the facts to date under a less biased DOJ is in order,” says Arizona Republican Rep. Trent Franks. “I will withhold my judgment contingent on those findings.”

Then-outgoing Rep. Alan Grayson, a Florida Democrat, said that Clapper could have sidestepped Wyden’s question but chose not to do so and further faults him for not issuing a prompt correction.  “This lie was particularly egregious because the answer actually affected the lives of every American,” Grayson says. “Clapper’s subsequent attempts at rationalization are no different from what Richard Nixon said: ‘When the President does it, that means that it is not illegal.’ If we want to call ourselves a nation of laws, then it is important that Clapper be prosecuted, and convicted.”

* * *

For the time being, it’s Clapper words versus that of Trump. Should Trump persist with his demand for a Congressional probe into Obama’s alleged wiretapping, it is almost certain that Clapper will once again be called in to testify. It is unknown if he will again commit perjury and lie to Congress.

 

end

Sunday afternoon:

The White House demands a Congressional probe whether Obama or anybody on his administration ordered the wiretapp of Trump Tower

(courtesy zero hedge)

White House Demands Congressional Probe Whether Obama Ordered Wiretaps

With Trump so far providing no follow up comments to his dramatic accusation from Saturday morning that Obama bugged the Trump Tower in October 2016, spending Saturday night at Mar-A-Lago where he had dinner with AG Jeff Sessions, he resumed the attack on Sunday morning when he went after the Democratic National Committee and President Obama in a series of early morning tweets.

In his first tweet, the president questioned rhetorically whether the DNC refused to let the FBI have access to its servers (as FBI director Comey confirmed previously, the DNC did in fact do that) after it learned it had been hacked: “Is it true the DNC would not allow the FBI access to check server or other equipment after learning it was hacked?” Trump asked.  “Can that be possible?”

Is it true the DNC would not allow the FBI access to check server or other equipment after learning it was hacked? Can that be possible?

He followed up with questions about President Barack Obama’s own ties with Russia, referencing the infamous March 2012 “hot mic” video in which Obama told former Russian President Dmitri Medvedev he would have more “flexibility” after his re-election: “who was it that secretly said to Russian President, ‘Tell Vladimir that after the election I’ll have more flexibility?'” he tweeted.

Who was it that secretly said to Russian President, “Tell Vladimir that after the election I’ll have more flexibility?” @foxandfriends

However, the first concrete sign that Trump intends to keep the pressure on Obama, came on Sunday morning from Sean Spicer, when the White House press secretary tweeted just before 9am Eastern that as part of investigations into Russian attempts to influence the election, the White House is requesting that the congressional intelligence committees probe whether “executive branch investigative powers were abused in 2016″, a strong hint that Congress should look into Obama bugged Trump.

“Reports concerning potentially politically motivated investigations immediately ahead of the 2016 election are very troubling,” Spicer tweeted.

(1/4) Reports concerning potentially politically motivated investigations immediately ahead of the 2016 election are very troubling.

The White House spokesman then said that Trump is requesting that congressional committees determine whether “executive branch investigative powers were abused in 2016.”

(2/4) President Trump is requesting that as part of their investigation into Russian activity, the congressional intelligence committees

(3/4) exercise their oversight authority to determine whether executive branch investigative powers were abused in 2016.

And, hinting that a voluntary gag order will be implemented, Spicer said that “neither the White House nor the President will comment further until such oversight is conducted,” Spicer added.

(4/4) Neither the White House nor the President will comment further until such oversight is conducted.

To be sure, there was immediate pushback from the punditry:

With voter fraud and now wiretapping, there’s a pattern going on:

1. Make unsubstantiated claim

2. Announce investigation to prove it

In any case, while Democrats have accused Trump of fabricating his accusation that Obama bugged the president’s phones to deflect from the media’s full court press to suggest that Trump’s aides had ties to Russia, it now appears that Trump is pushing back with demands of a similar probe, focusing on alleged “executive power violations” by Obama. While it is unclear how far either probe will go, the stakes have suddenly soared, escalating to the very top with either the current or the former president finding themselves with much to lose, if the other side’s accusations are confirmed.

 

end

Sunday evening:

From Gateway, the FBI is said to have sought a FISA warrant and then they discover no evidence of any Russian involvement:

(courtesy The GatewayPundit.com/

REPORT: FBI Said to Have ‘Granted FISA Warrant’ To Wiretap TRUMP Tower… MSM Claims Trump “Provided No Evidence”

Earlier this morning, Trump took to Twitter to express his outrage over wiretapping at Trump Tower during Obama’s Presidency. Back in November, the media did confirm that wiretapping did allegedly take place, via Heat Street:

Contrary to earlier reporting in the New York Times, which cited FBI sources as saying that the agency did not believe that the private server in Donald Trump’s Trump Tower which was connected to a Russian bank had any nefarious purpose, the FBI’s counter-intelligence arm, sources say, re-drew an earlier FISA court request […].

The original FISA request which specifically named and broadly targeted Donald Trump was denied, a second request was redrafted months later which narrowed down on equipment in Trump Tower. The second request is said to have been granted, despite the fact that FBI sources did not believe these servers to be of actual national security or possess any illegal ties to Russia. The notion that this second FISA warrant was granted is highly significant as they exist to investigate cases when Foreign Intelligence is suspected of operations in the US.

The implication is that Trump or one of his employees was secretly functioning as a Russian-sanctioned spy (which is obviously absurd). However illegitimate the request was, the granting of said FISA request allows the government major access:

Pursuant to FISA, the Court entertains applications submitted by the United States Government for approval of electronic surveillance, physical search, and other investigative actions for foreign intelligence purposes.  Most of the Court’s work is conducted ex parte as required by statute, and due to the need to protect classified national security information.

Contrary to a lack of any evidence by the Obama Administration or FBI, the possibility of the second FISA request being granted would indeed monitor activity within Trump Tower. Again, this FISA request was issued with no definitive proof/evidence that Trump had any nefarious ties to Russia – instead, it bears the hallmarks of a political witch hunt.

If proven, there is a good chance the issuing judge and corresponding FBI personnel will soon face serious jail time. Liberal media is ignoring this, and instead seems to have coordinated a large online campaign with headlines that almost consistently read “Provides No Evidence”. So let’s get this straight: The GOP is accused of colluding with Russians in which MSM publishes as a front-page story fact, and then Trump accuses Obama of wiretapping and… “PROVIDES NO EVIDENCE!”

end

 

Why does Comey need to ask the Dept of Justice to publiclly reject Trump’s claims.  Why can’t the FBI publicly do it themselves!!
(courtesy zero hedge)

FBI Director Asked DOJ To Publicly Reject Trump Wiretapping Claims

In the latest dramatic plot twist to emerge from Trump’s accusation that Obama wiretapped the Trump Tower prior to the election, the NYT reports that FBI director James Comey asked the Justice Department this weekend to publicly reject President Trump’s allegation that Obama eavesdropped on the soon-to-be president. According to the NYT, which cites ‘senior American officials’ Comey has argued that the “highly charged claim” is false and must be corrected as there is no evidence to back them up, but the DOJ has not yet released any such statement.

In other words, just a few months after Democrats savaged Comey for supposedly attacking Clinton, and even being responsible for the failure of her presidential campaign according to John Podesta, now it is the Republicans’ turn to accuse him of turning on Trump.

Comey, who made the request on Saturday after Mr. Trump leveled his allegation on Twitter, has been working to get the Justice Department to knock down the claim because it falsely insinuates that the F.B.I. broke the law, the officials said. What is strange is that the FBI is requesting the DOJ to publicly deny Trump’s claim when it is the FBI that has the jurisdiction to request a FISA warrant. It is therefore perplexing why Comey, if he wants to put the matter to rest, does not make the public denial himself instead of asking the DOJ to do it on the FBI’s behalf.

To be sure, as the NYT adds, a statement by the DOJ or by Comey refuting Mr. Trump’s allegations “would be a remarkable rebuke of a sitting president, putting the nation’s top law enforcement officials in the position of questioning the truthfulness of the government’s top leader” and adds that the situation “underscores the high stakes of what the president and his aides have unleashed by accusing the former president of a conspiracy to undermine Mr. Trump’s young administration.”

Furthermore, it is unclear who at the DOJ would issue such as statement, “even if it wanted to one”, as Trump’s close ally, AG Jeff Sessions has recused himself from any Trump-Russia investigation. As the NYT points out, “there are few senior politically appointed officials at the Justice Department who can make the decision to release a statement, the officials said. Attorney General Jeff Sessions recused himself on Thursday from all matters related to the federal investigation into connections between Mr. Trump, his associates and Russia.”

Furthermore, such a public statement would further position the nation’s top law enforcement agencies against the Executive Branch.

Along with concerns about potential attacks on the bureau’s credibility, senior F.B.I. officials are said to be worried that the notion of a court-approved wiretap will raise the public’s expectations that the federal authorities have significant evidence implicating the Trump campaign in colluding with Russia’s efforts to disrupt the presidential election.

That, or raise even greater “worries” about allegations that the Obama administration was seeking to potentially sabotage a presidential candidate with a wiretap over Trump’s Russian connections that, as Clapper admitted earlier, has found nothing.

In an additional ironic twist, Comey’s behind-the-scenes maneuvering is certain to invite contrasts to his actions last year, when he spoke publicly about the Hillary Clinton email case and disregarded Justice Department entreaties not to.

Meanwhile as reported earlier, the White House showed no indication that it would back down from Trump’s claims. On Sunday, White House spokesman Sean Spicer said that the White House has demanded a congressional inquiry into whether Obama had “abused the power” of federal law enforcement agencies prior the 2016 presidential election. In the statement, Trump called “reports” about the wiretapping “very troubling” and said that Congress should examine them as part of its investigations into Russia’s meddling in the election.

As reported earlier, according to Newsmax CEO Christopher Ruddy, Trump was “pissed” about the wiretap story, and said that “when I mentioned Obama “denials” about the wiretaps, he shot back: “This will be investigated, it will all come out. I will be proven right.”

It is unclear if the Comey statement would be found evidentiary, and would put the matter to rest or if, as Trump has demanded, a full blown probe into the alleged wiretapping will proceed regardless, especially since as in the case of former DNI director Clapper earlier today, it would be the DOJ’s word against that of the president.

end
Trump does not accept Comey’s Wiretap denial
(courtesy zer ohedge)

Trump Does Not Accept Comey’s Wiretap Denial: White House

Having thrown the Justice Department under the bus yesterday, it appears the FBI Director has not managed to pass the hot potato of blame/responsibility for Trump’s wiretap accusations. As The Hill reports, a White House spokeswoman on Monday said she “doesn’t think” Trump accepts Comey’s denial of the president’s claims.

As a reminder, a New York Times report Sunday said  Comey asked the Justice Department to publicly reject the president’s claims. Senior U.S. officials told the Times that Comey has said the president’s wiretapping allegations are false and asked the Justice Department on Saturday to publicly correct the record. The FBI and DOJ declined to comment to the newspaper.

But, as The Hill reports, it appears President Trump is not buying Comey’s denial that former President Obama wiretapped Trump Tower during the campaign.

“No, I don’t think he does,” Sarah Huckabee Sanders said Monday on ABC’s “Good Morning America.”

“No I don’t think he does, George.” – @SarahHuckabee on if President Trump accepts Director Comey’s denial on Pres. Obama and wiretapping

She said the president “wants the truth to come out to the American people and he is asking that it be done through the House Intelligence Committee and that that be the process that we go through.”

Additionally, The Hill reports that Trump aide Kellyanne Conway also called for Comey to share any information he might have on Trump’s allegations.

“If Mr. Comey has something he’d like to say I’m sure we’re all willing to hear it,” Conway said on Fox News. “All I saw was a published news report. I didn’t see a statement from him. I don’t know what Mr. Comey knows.

 

“If he knows, of course he can issue a statement,” Conway said. “We know he’s not shy.”

In the meantime the pushback against Trump’s accusation continues to grow with increasingly more republicans now rejecting the president’s claims, and moments ago House Oversight Committee Chairman Jason Chaffetz told CBS that he has seen nothing that backs Trump’s wiretap claims.

 

end

 

Judicial Watch sues the CIA, the Dept of Justice for Intelligence leak records. They state that “President Trump is on to something!”

(courtesy JudicialWatch/zero hedge)

Judicial Watch Sues CIA, DOJ For Intel Leak Records: “President Trump Is On To Something”

Tyler Durden's picture

Given that the Obama White House was (self-described as) “the most transparent administration ever,” we hope that Judicial Watch’s demands of the Trump administration will be met positively.

Judicial Watch announced today that it filed a Freedom of Information Act (FOIA) lawsuit against the Central Intelligence Agency (CIA), the United States Department of Justice and the Department of the Treasury regarding records related to the investigation of retired United States Army Lieutenant General Michel Flynn’s communications with Russian Ambassador Sergey Kislyak (Judicial Watch v. Central Intelligence Agency et al. (No.1:17-cv-00397)).  (The National Security Agency refused to confirm or deny the existence of intelligence records about communications between Gen. Flynn and Amb Kislyak.)

Judicial Watch filed the lawsuit after the agencies failed to respond to a January 25, 2017, FOIA request seeking:

Any and all records regarding, concerning, or related to the investigation of retired Gen. Michael Flynn’s communications with Russian Ambassador to the United States Sergey Kislyak between October 1, 2016 and the present.

 

This request includes, but is not limited to, any and all related warrants, affidavits, declarations, or similar records regarding the aforementioned investigation.

 

For purposes of clarification, please find enclosed a CNN report regarding the investigation, which cites information that was provided to CNN by members of the Intelligence Community.

In its complaint Judicial Watch asks the court to order the agencies to search for all records responsive to its FOIA requests and demonstrate that they employed reasonable search methods; order the agencies to produce by a specific date all non-exempt records and a Vaughn index of all withheld records; and instruct the agencies to cease withholding all non-exempt records.

On January 23, 2017, the establishment shot itself in the foot as CNN reported that the government was investigating Flynn, former national security adviser to President Trump:

The calls were captured by routine US eavesdropping targeting the Russian diplomats, according to the intelligence and law enforcement officials. But the officials said some of the content of the conversation raised enough potential concerns that investigators are still looking into the discussions, amid a broader concern about Russian intelligence-gathering activities in the United States.

 

The officials all stressed that so far there has been no determination of any wrongdoing.

 

FBI and intelligence officials briefed members of the Obama White House team before President Barack Obama left office about the Flynn calls to the Russian ambassador, sources said.

“President Trump is on to something. The Obama-connected wiretapping and illegal leaks of classified material concerning President Trump and General Flynn are a scandal,” said Judicial Watch President Tom Fitton. “Judicial Watch aims to get to the truth about these crimes and we hope the Trump administration stands with us in the fight for transparency.”

 end
Mark Levin issues an open letter to CNN’s Brian Stetler and then gives the time line of what we will now call Obamagate:
(courtesy zero hedge)
 end
If you have finished your popcorn on the wiretapping issue with Trump, go get another batch:  Senator Grassley has just launched a probe into the FBI ties with the British Spy (the one who gave the dossier on Trump to the FBI).  He wants to know if the FBI relied on this information to see a FISA court warrant to wiretap Trump
(courtesy zerohedge)

Senator Grassley Launches Probe Into FBI Ties With British Spy Behind “Trump Dossier”

Tyler Durden's picture
Trump to sign a new executive order.  This time, Iraq will be excluded due to their extreme vetting process.  Also Green card holders will also be excluded:
(courtesy zero hedge)

Trump To Sign New Executive Order On Travel Bans Today: Will Exclude Iraq, Green Card Holders

Moments ago, Kellyanne Conway confirmed that President Donald Trump will sign a new executive order on immigration Monday, which as Reuters reported earlier, will remove Iraq from the list of countries targeted in the travel ban. The revised order comes over a month after his controversial first attempt was blocked in the courts.  According to a Reuters source, the new executive order would keep a 90-day ban on travel to the United States by citizens of six Muslim-majority nations – Iran, Libya, Syria, Somalia, Sudan and Yemen. Iraq has been removed from the list of countries in the original Jan 27 order because the Iraqi government had imposed new vetting procedures, such as heightened visa screening and data sharing, and because of its work with the United States in countering Islamic State militants. In other words, Iraq complained the most vocally and Trump’s advisors conceded that there is more to be lost than gained by keeping Iraq off the list.

In another important change, the new order is expected to apply only to future visa applicants from the targeted countries, with current visa holders and legal permanent residents, or green-card holders, unaffected. That is a significant rollback from the original, which impacted nearly 60,000 existing visa holders from seven nations, according to the State Department. The original order was unclear about the treatment of green-card holders.

More than two dozen lawsuits were filed in U.S. courts against the original travel ban, and the state of Washington succeeded in having it suspended by the 9th Circuit court of Appeals by arguing that it violated constitutional protections against religious discrimination. Trump publicly criticized judges who ruled against him and vowed to fight the case in the Supreme Court, but then decided to draw up a new order with changes aimed at making it easier to defend in the courts.

Furthermore, while the first order imposed restrictions immediately, the new directive would have an undefined implementation phase-in delay to limit the disruptions that created havoc for some travelers. Refugees who are “in transit” and have already been approved would be able to travel to the United States. Trump’s original order barred travelers from the seven nations from entering for 90 days and all refugees for 120 days. Refugees from Syria were to be banned indefinitely, but under the new order they are not given separate treatment.

The revised order is expected to again temporarily suspend the admission of refugees to the U.S., but unlike the original, it is likely to treat Syrian refugees the same way as those from other countries, the WSJ adds. The original executive order suspended the entire refugee program for four months and indefinitely suspended admission of Syrian refugees.

“This executive order has scrapped that division and the indefinite suspension, and has collapsed them into a single category of a 120-day suspension,” the Reuters source said.

During the presidential election campaign last year, Trump called for a temporary ban on all Muslims entering the United States. He said his initial executive order issued just a week after he took office was needed to head off attacks by Islamist militants. However, the White House official said the new order was based on national security considerations and had nothing to do with religion.

“It is substantially different from the first order yet it will do the same thing in this important way: It will protect the country and keep us safe,” the official said. The administration would also reset the clock on the 90-day travel ban.

U.S. government agencies would determine whether Syria or other nations had made sufficient security improvements to be taken back into the refugee admissions program.

The new order launches a 90-day period for the Department of Homeland Security (DHS) to define a new series of requirements for countries to have full participation in U.S. entry programs. For countries that do not comply, the U.S. State Department, the DHS and intelligence agencies can make recommendations on what, if any, restrictions should be imposed: “It’s not an all-or-nothing scenario.”

The new order spells out detailed categories of people eligible to enter the United States, such as for business or medical travel, or people with family connections or who support the United States. “There are a lot of explicit carve-outs for waivers and given on a case-by-case basis.”

Many of Trump’s supporters approved of the initial ban but critics said it was unjustified and discriminatory.

U.S. technology firms who had employees affected by the executive order also complained, and some members of Trump’s Cabinet urged him to remove Iraqis and green card holders from the list of those affected. The White House was widely criticized for not working with the State Department, the Department of Justice, the Department of Homeland Security and allies in Congress in drawing up the initial ban.

It remains to be seen if the new order will be as vigorously challenged in court as the original.

According to the WSJ, Trump had planned to issue the new order last Wednesday, but the White House decided to push it back. Several people said the delay was political, with officials seeking to capitalize on positive coverage of Mr. Trump’s address to Congress on Tuesday evening, although in light of the latest escalation involving Trump’s allegations of wiretapping by Obama, all the “conciliatory” goodwill Trump earned with his Congressional address now seems to have evaporated.

 

end

 

This is what happens when you administer a tax poorly:  Pepsi lays off 20% of its Philadelphia workers due to the Soda tax we outlined to you on several occasions

(courtesy zero hedge)

Pepsi Lays Off 20% Of Its Philadelphia Workers, Blames Soda Tax

Two weeks ago, we pointed out that when Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, one month ago, after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since  PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.

What happened next? Precisely what most expected would happen: full blown sticker shock, and a collapse in purchases. Just two months into the city’s sweetened-beverage tax, supermarkets and distributors are reporting a 30% to 50% drop in beverage sales and – adding insult to injury – had started planning for layoffs.

Fast forward just a few days later, when these warnings are becoming reality. According to the Philadelphia Inquirer, with sales slumping as much as 40% because of the new Philadelphia sweetened beverage tax, Pepsi said last week that it will lay off 80 to 100 workers at three distribution plants that serve the city. And since Pepsi employs 423 people in the city, it means that as much as 20% of its employees will be out of job due to a disastrous ordnance that was meant to provide additional municipal funding and instead will now lead to an increase in unemployment, coupled with a general decline in consumption, not to mention tax revenues for the city of Philadelphia.

The bottling giant sent out notices last Wednesday and said the layoffs would be spread over the next few months. “The layoffs come in response to the  beverage tax, which has cut sales by 40 percent in the city, PepsiCo Inc.” spokesman Dave DeCecco said. “Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles,” DeCecco said.

The layoffs will occur at plants in North Philadelphia, South Philadelphia, and Wilmington. The plants are run as independent businesses required to report profits and losses to the company.

City hall was, predictably, livid: mayor Jim Kenney’s administration lambasted the news, pointing to Pepsi’s overall profits and the benefits of the expanded pre-K program that the 1.5-cent-per-ounce tax funds. Kenney said the tax, which was aimed at paying for nearly 2,000 pre-kindergarten slots and other programs, raised $5.7 million in January, more than double what city officials had projected.  As of this week, the program also has created 251 jobs in the city, mostly full-time pre-K teaching positions, the city said. There is just one problem with that math: the offset to the newly created jobs is 100 jobs lost at just one company, which means that the job losses from the soda tax will eclipse any pre-K job creation by the time the full impact of the soda tax ripples through the city’s retailers.

So with math clearly not the city’s strong suit, it promptly reverted to what it is far stronger at: pandering.

“The soda industry sunk to a new low today,” city spokeswoman Lauren Hitt said. “They are literally holding hostage the jobs of hard-working people in their battle to overturn the tax. Pepsi reported nearly $35 billion in gross income and $6 billion in profit last year…. The idea that they can afford to do that but ‘must lay off workers’ should make every Philadelphian very skeptical of whether these layoffs are actually due to the tax.”

Hitt also said the company and the rest of the beverage industry had spent hundreds of thousands of dollars lobbying against the tax. “The idea that they can afford to do that but ‘must lay off workers’ should make every Philadelphian very skeptical of whether these layoffs are actually due to the tax,” she said.

Actually, yes they are, but what has become apparent is that was the city’s hope that Pepsi would ignore losses at the regional level, and use profits from other geographic operations to subsidize Philadelphia’s losses. Alas, that’s not how capitalism works, and Philadelphia is starting to realize this and it is not happy.

Neither, for that matter, are Pepsi’s employees. Outside of the North Philadelphia plant Wednesday, Ed Langdon, a 40-year employee  who shuttles products between warehouses, said the cuts are the most drastic he’s seen in his time at Pepsi according to Philly.com. Langdon, whose job is safe, said workers have been told the plant will decrease production of jugs of iced tea and canned soda.

“It’s managers, it’s drivers, it’s people who go out and put the soda on the shelf. It’s all across the board. It’s everybody. I was sick last night when I heard,” Langdon said. He also noted that the layoffs were seen coming from afar: some colleagues who are paid on commission were seeing drastic cuts in weekly pay. “The trucks are going out and they’re coming back with the soda on it,” he said. “No one’s buying it. It’s just not happening.”

Desperate to save face with an increasingly angry population which has seen its soda prices soar due to mandatory local government intervention, just minutes after news of layoffs broke the city sent out a release announcing that its pre-K program has created 191 teaching positions and 60 support-staff jobs. The average pay for the positions, more than half of which are full time, is $14.72 an hour.

However, as we reported in late February, the Pepsi layoffs are just the tip of the iceberg. Recall that there were already numerous reports from bottlers and supermarkets of steep beverage sale declines since the tax went into effect in January. Last month, Canada Dry Delaware Valley said it would lay off 35 people due to declining sales. Jeff Brown, who owns six ShopRite stores in the city, said he’s had to slash employee hours and believes as many as 300 jobs could be cut. In other words, 250 jobs created and roughly double that already on the chopping block.

Meanwhile, Pepsi has explained to city hall what it can do to stem, and even reverse, the job losses: undo the tax.

DeCecco said the Pepsi jobs would be restored if the tax — currently under appeal and awaiting an April hearing — is struck down in court.

 

The city has pointed to higher-than-expected revenue numbers in the first month of collection, and restaurants who report being largely unaffected by the tax, to argue the industry could be exaggerating sales declines in an attempt to prevent the enactment of similar taxes in other cities or to gain a favorable outcome in court.

The Pepsi spokesman said there was nothing political about the layoff announcement, and in this particular case he is right: it is all about the bottom line.

“This isn’t something we take lightly or want to do, and we are committed to working with our employees and the union to treat impacted individuals with the care and dignity they deserve,” he said.

Pepsi may end up winning as the tide of public opinion is starting to turn against the mayor. Anthony Campisi, a spokesman for a coalition of retailers, bottlers, and unions opposed to the tax, said it was unfair for the city to blame the companies for the job loss.

“It’s the mayor who’s to blame for the economic and human impact of the tax,” Campisi said. “And its offensive to blame the impact on Philadelphia businesses that are no longer sustainable because of it.”

But the straw that just might break the municipal camel’s back in the deeply democratic city would be if the Teamsters – the backbone of any democratic administration – cry bloody murder, which they are starting to do.

Danny Grace, secretary-treasurer for Teamsters Local 830, which represents many of the employees affected, said in a statement: “Our worst fears have been realized today. … This terrible news, although not surprising, is particularly disastrous for the members of Teamsters Local 830, who rely on a strong soda industry for their livelihoods.”

Will Philly’s soda tax be the latest attempt by an intrusive local government, demanding an ever greater share of the pie, seeing its efforts blow up in its face, and will City hall have no choice but to reverse course handing the local retailers a quick victory? For now the stalemate remains, but a few thousands more layoffs, and Philly’s soda tax experiment will promptly end up on the garbage pile of “brilliant” bureaucrat ideas gone badly wrong.

end

Well that about does it for tonight

I will see you tomorrow night

H

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