March 9/Gold and silver whacked again/Comex gold OI falls by 6,000 contracts but silver OI lowers by only 900 contracts/GLD loses 2.67 tonnes from Inventory/SLV loses 1.137 million oz/China in chaos overnight as yuan levels fall coupled with higher interest rates as liquidity disappears/Draghi sees no urgent need to continue QE once program ends/USA sends troops to Syria and in all likelihood a new offensive on RAQQA/Crude oil collapses to 48 dollars per barrel, along with other commodities/Emerging markets collapse/Fox news confirm two wiretaps on Trump’s server: one being a Fisa order/Final draft.

Gold: $1202.40  down $6.10

Silver: $16.99  down 27 cents

 

Closing access prices:

 

Gold $1201.00

silver: $16.97

For comex gold:

MARCH/ 

NOTICES FILINGS TODAY FOR MARCH CONTRACT MONTH:  10 NOTICE(S) FOR 1000 OZ.  TOTAL NOTICES SO FAR: 57 FOR 5700 OZ    (0.1772 TONNES)

For silver:

 

For silver: MARCH

708 NOTICES FILED TODAY FOR 3,540,000 OZ/

Total number of notices filed so far this month: 2613 for 13,065,000 

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by ONLY 976 contracts DOWN to 191,422 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  0.957 BILLION TO BE EXACT or 137% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MARCH MONTH: THEY FILED: 708 NOTICE(S) FOR 3,540,000 OZ OF SILVER

In gold, the total comex gold FELL BY A CONSIDERABLE 6.774  contracts WITH ANOTHER FALL IN THE PRICE GOLD ($9.00 with YESTERDAY’S trading ).The total gold OI stands at 427,627 contracts.

we had 10 notice(s) filed upon for 1000 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

:

We had a big change in tonnes of gold at the GLD: a withdrawal of 2.67 tonnes

Inventory rests tonight: 834.10 tonnes

.

SLV

We had a big change in inventory at the SLV/a withdrawal of 1.137 million oz from the SLV

THE SLV Inventory rests at: 330.136 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 976 contracts DOWN to 191,422 AS SILVER WAS DOWN A HEALTHY 23 CENTS with YESTERDAY’S trading. The gold open interest FELL BY 6774 contracts DOWN to 427,627 WITH ANOTHER FALL IN THE PRICE OF GOLD OF $6.60  (YESTERDAY’S TRADING).  It sure looks like Ted Butler is correct in that hedge funds are now longer playing the game.  They refuse to liquidate their longs on continual raids orchestrated by the bankers

(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

3a)THAILAND/SOUTH KOREA/NORTH KOREA

 i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 23.91 POINTS OR .74%/ /Hang Sang CLOSED DOWN 280.71 POINTS OR 1.16% . The Nikkei closed UP  64.55 POINTS OR 0.34% /Australia’s all ordinaires  CLOSED DOWN 0.33%/Chinese yuan (ONSHORE) closed DOWN at 6.9100/Oil FELL to 49.43 dollars per barrel for WTI and 52.14 for Brent. Stocks in Europe ALL MOSTLY MIXED ..Offshore yuan trades  6.9042 yuan to the dollar vs 6.9100  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS CONSIDERABLY/ ONSHORE YUAN WEAKER AS IS THE OFFSHORE YUAN  COUPLED WITH THE STRONGER DOLLAR. CHINA SENDS A MESSAGE TO THE USA NOT TO RAISE RATES

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

i)This is not good for China.  The massive increase in paper supply as filtered down to producer prices as they rose a staggering 7.8% year over year.  As producer prices rise you can bet the farm that consumer prices will rise very shortly.

( zero hedge)

ii)A little thunder last night from China as the onshore yuan tumbles as well as the offshore yuan. POBC through the night tried to stabilize both yuans. However the big story is the lack of liquidity as interest rates skyrocket

we now have seen the following:

i) commodities like oil and copper plummet

ii) liquidity in China disappear as rates rise with the falling yuan

iii)interest rates throughout the globe rise

iv) higher USA dollar sends emerging markets tumbling..

v) high yield bonds crashing..

is this the signal that the all the bubbles created by the Fed et al are bursting..

( zero hedge)

 

iii)I pointed this out to you yesterday.  China recorded its first trade deficit in 3 years as exports tumbled to negative.

This is scary for the reflationists and global growth…..

( WANG/CAIXIN.COM) AND SPECIAL THANKS TO ROBERT H FOR SENDING THIS TO US:

iv)China has a massive amount of inventory of steel, iron ore etc. Johnson is of the view that China will destock much of these commodities and thus one should short them.

( Johnson)

 

4. EUROPEAN AFFAIRS

i)The ECB keeps rates on hold but this time keeps a very dovish “low rates for an extended period of time” in their forward guidance

( zero hedge)

ii)The Euro rises, German bund yields rise as Draghi sees no longer urgency in taking further actions.  In other words, they are coming close to ending their QE

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)RUSSIA/USA

This is surprising: Trump offers the Russian ambassadorship to Putin critic Jon Huntsman

( zero hedge)

ii)SYRIA/USA/RAQQA

A new offensive as the uSA sends in hundred of marines, 20 miles from Raqqa.  These troops will start firing on the ISIS capital and now doubt that this will be part of Trump’s promise to annihilate ISIS

( zerohedge)

iii)IRAN

A defiant Iran conducts more ballistic missile tests but this time from a navy vessel.  That should be good for a 10 dollar knockdown in the price of gold

( zero hedge)

6.GLOBAL ISSUES

7. OIL ISSUES

One of the big stories of the day:  Crude collapses which sends bond prices tumbling (yields rising) as energy risk escalates:

( zero hedge)

8. EMERGING MARKETS

9.   PHYSICAL MARKETS

 

i)Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

ii)Ron Paul urges Arizona lawmakers to end the capital gains tax on gold coins.  He correctly states that gold really stays constant, it is paper money that is devaluing and that he claims that paper money is really “fraudulent money”

( Chris Powell./Ron Paul/GATA/Tucson news/Fisher)

iii)The Arizona Senate passes the bill so as to treat gold as money and remove capital gains tax on it

( Boldin/TenthAmendment Center)

iv)Bloomberg reports that Indian gold imports for the wedding season as tripled

( Bloomberg/GATA)

10.USA STORIES

i)The low Canadian dollar is causing prices in Canada to rise.  This has causes USA import prices to soar to 5 yr highs.  Inflation is coming to all the globe

( zerohedge)

ii)We highlighted the huge problems in the real estate market in the USA yesterday. Today the mega bears smell blood on the table as REIT are tumbling as bricks and mortar operations are faltering terribly.

( zero hedge)

iii)Trump is championing the Ryan plan for health care in the House. However it looks like he is going to fall short as some Republicans are against some of the features in the plan. Also the centrist Republicans in the senate are also against some of the features.

(courtesy zerohedge)

iv)Albert Edwards believes that right after Yellen raises rates, that event will unleash a bond market bloodbath similar to what happened in 1994

a must read..

(courtesy Albert Edwards/zero hedge)

v)Exactly what we said would happen:  No tax reform until fiscal 2018:

( zero hedge)

vi) Bankers were not happy campers when they heard that Trump is committed to restoring Glass Steagal.

(courtesy zero hedge)

vii)Mnuchin warns Congress that they are approaching their debt ceiling and they will use extraordinary measures to avoid the debt ceiling.  Generally they borrow from Trust funds.  They have only 87 billion in cash left.  They probably have enough “cash” to last until June

The yield curve inverts immediately upon the letter> the fun will begin next week

(courtesy zero hedge)

 

viii)Fox News confirms Obama Court Order and a Fisa court order in the wiretapping of  Trump Tower

( Fox News/and special thanks to Robert H for sending this t

Let us head over to the comex:

The total gold comex open interest FELL BY 6774 CONTRACTS DOWN to an OI level of 427,627 WITH THE  FALL IN THE  PRICE OF GOLD ( $6.60 with YESTERDAY’S trading).  We are probably only 34,000 contracts away from rock bottom  (393,000). 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 LOSS of 2 contract(s) DOWN to 70. We had 1 contact(s) served upon yesterday, so we LOST 1 CONTRACTS or  AN ADDITIONAL 100  ounces will NOT  stand for delivery.  The next active contract month is April and here we saw it’s OI FALL by 13,947 contracts DOWN TO 229,299 contracts.

For comparison purposes, the April 2016 contract at this time had an OI of 294,908 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 gained 7 contract(s) and thus its OI is 420 contracts. The next big active month is June and here the OI ROSE by 5684 contracts up to 115,048.

We had 10 notice(s) filed upon today for 1000 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
 And now for the wild silver comex results.  Total silver OI FELL BY ONLY 976 contracts FROM 192,398 CONTRACTS DOWN TO 191,422 CONTRACTS WITH YESTERDAY’S TRADING . It sure seems that the hedge funds are now longer playing the game as they refuse to liquidate their silver longs.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 253 contracts down to 1997 contracts. We had 131 notices served upon yesterday so we lost 122 contract(s) or an additional 610,000 oz  will not stand for delivery.

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 GAINED 53 contracts to 978 contracts. The next active contract month is May and here the open interest LOST 1074 contracts DOWN to 150,535 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 708 notice(s) filed for 3,540,0000 oz for the MARCH 2017 contract.

VOLUMES: for the gold comex

Today the estimated volume was 125,324  contracts which is poor.

Yesterday’s confirmed volume was 235,982 contracts  which is good

volumes on gold are getting higher!

INITIAL standings for MARCH
 March 9/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
835.926 OZ
 brinks
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
 
10 notice(s)
1000 oz
No of oz to be served (notices)
60 contracts
6,000 oz
Total monthly oz gold served (contracts) so far this month
57 notices
5700 oz
0.1772 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     51,279.4 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 1 customer withdrawal(s)
 i) Out of Brinks:835.926 oz
total customer withdrawal: 835.926 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 10 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
To calculate the initial total number of gold ounces standing for the MARCH. contract month, we take the total number of notices filed so far for the month (57) x 100 oz or 5700 oz, to which we add the difference between the open interest for the front month of MARCH (70 contracts) minus the number of notices served upon today (10) x 100 oz per contract equals 11,700 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 (57) x 100 oz  or ounces + {(70)OI for the front month  minus the number of  notices served upon today (10) x 100 oz which equals 11,700 oz standing in this non active delivery month of MARCH  (.3639 tonnes)
 
 
 
 
 
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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. 
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
I have now gone over all of the final deliveries for this year and it is startling.
First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month.
Here are the final deliveries for all of 2016 and the first month of January 2017
Jan 2016:  .5349 tonnes  (Jan is a non delivery month)
Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 2.311 tonnes (March is a non delivery month)
April:  12.3917 tonnes (April is a delivery month/levels on the low side
And then something happens and from May forward deliveries boom!
May; 6.889 tonnes (May is a non delivery month)
June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge)
July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!)
August: 44.358 tonnes (August is a good delivery month and it came to fruition)
Sept:  8.4167 tonnes (Sept is a non delivery month)
Oct; 30.407 tonnes complete.
Nov.    8.3950 tonnes.
DEC.   29.931 tonnes
JAN/     3.9004 tonnes
FEB/ 18.734 tonnes
March: 0.3639 tonnes
total for the 15 months;  244.623 tonnes
average 16.308 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) = 8,893,764.222 or 276.633 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 276.633 tonnes for a  loss of 26  tonnes over that period.  Since August 8/2016 we have lost 77 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  77 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE MARCH DELIVERY MONTH
MARCH INITIAL standings
 March 9. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
619,168.310 oz
Scotia
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 nil oz
No of oz served today (contracts)
708 CONTRACT(S)
(3,540,000 OZ)
No of oz to be served (notices)
1289 contracts
(6,445,000  oz)
Total monthly oz silver served (contracts) 2613 contracts (13,065,000 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  2,688,152.4 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 1 customer withdrawal(s):
i) Out of Scotia: 619,168.310 oz
TOTAL CUSTOMER WITHDRAWALS: 619,168.310 oz
 we had 0 customer deposit(s):
***deposits into JPMorgan have now stopped.
total customer deposits;  nil  oz
 
 we had 1  adjustment(s)
i)Out of Scotia:
870,451.700 oz was adjusted out of the customer and this landed into the dealer account of Scotia
The total number of notices filed today for the MARCH. contract month is represented by 708 contract(s) for 3,540,000 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 2613 x 5,000 oz  = 13,065,000 oz to which we add the difference between the open interest for the front month of MAR (1997) and the number of notices served upon today (708) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the March contract month:  2613(notices served so far)x 5000 oz  + OI for front month of Mar.( 1997 ) -number of notices served upon today (708)x 5000 oz  equals  19,510,000 oz  of silver standing for the Mar contract month. This is  now average for an active delivery month in silver.  We lost 122 contracts or an additional 610,000 oz will not stand.  
 
END
Volumes: for silver comex
Today the estimated volume was 32,057 which is fair!!!
Yesterday’s  confirmed volume was 65,118 contracts  which is very good.
 
Total dealer silver:  36.983 million (close to record low inventory  
Total number of dealer and customer silver:   187.333 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 9/a withdrawal of 2.67 tonnes from the GLD/Inventory rests at 834.10

March 8/no change in gold inventory at the GLD/inventory rests at 836.77 tones

march 7/a huge withdrawal of 3.81 tonnes from the GLD inventory/inventory rests at 836.77 tonnes

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 8 /2017/ Inventory rests tonight at 834.10 tonnes
*IN LAST 105 TRADING DAYS: 115.71 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 51 TRADING DAYS: A NET  9.5 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: a net    34.93 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory
March 9/another big withdrawal of 1.137 million oz from the SLV/Inventory rests at 330.136 million oz/
March 8/a big change; a withdrawal  of 1.515 million oz from the SLV/Inventory rests at 331.273 million oz/
march 7/no change in inventory at the SLV/Inventory rest at 332.788 million oz/
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 9.2017: Inventory 330.136  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 5.6 percent to NAV usa funds and Negative 5.9% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.8%
Percentage of fund in silver:39.0%
cash .+0.2%( Mar 9/2017) 
2. Sprott silver fund (PSLV): Premium falls  to -.29%!!!! NAV (Mar 9/2017) 
3. Sprott gold fund (PHYS): premium to NAV falls to  – 0.36% to NAV  ( Mar 9/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.29% /Sprott physical gold trust is back into NEGATIVE territory at -0.36%/Central fund of Canada’s is still in jail  but being rescued by Sprott.
 

end

end

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

Section:

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

 

end

 

The actual press release:

Press Release:  SPROTT FILES A HOSTILE TAKEOVER OF CENTRAL FUND OF CANADA

Sprott Files Court Application Proposing a Plan of Arrangement involving Central Fund of Canada

  • Proposed arrangement would, effectively, involve the exchange of Central Fund of Canada Limited’s Class A shares for trust units of a newly-formed Sprott Physical Gold and Silver Trust
  • Sprott Physical Gold and Silver Trust would be substantially similar to the existing Sprott Physical Gold Trust and Sprott Physical Silver Trust
  • CFCL’s Class A shares were trading at a 9% discount to NAV as of March 7, 2017
  • Based on the relative trading value to NAV of CFCL’s Class A shares, the proposed arrangement is anticipated to unlock US$304 million in shareholder value1
  • The aggregate value of the proposed arrangement is approximately US$3.1 billion and the resulting Sprott Physical Gold and Silver Trust would be a highly-liquid, best-in-class bullion vehicle managed by a firm with a globally-recognized precious metals franchise
  • Sprott Physical Gold and Silver Trust would include Sprott’s industry-leading physical bullion redemption feature
  • Substantially similar transaction in 2016 at CFCL’s sister fund, Central GoldTrust, was supported by more than 96% of all votes cast

All figures are in United States dollars unless otherwise stated.

TORONTO, March 08, 2017 (GLOBE NEWSWIRE) — Sprott Asset Management LP (“Sprott”), a wholly owned subsidiary of Sprott Inc. (TSX:SII), today announced that it has filed an application (the “Application”) with the Court of Queen’s Bench of Alberta (the “Court”) to formally commence proceedings which, if successful, would result in the Class A shareholders of Central Fund of Canada Limited (“CFCL”) (NYSEMKT:CEF) (TSX:CEF.A), effectively, exchanging their Class A shares for trust units of a newly-formed Sprott Physical Gold and Silver Trust (the “New Sprott Trust”) on a net asset value (“NAV”) for NAV basis pursuant to a plan of arrangement (the “Arrangement”). The aggregate value of the proposed Arrangement is approximately US$3.1 billion and stands to unlock $304 million1 in shareholder value as a result of CFCL’s persistent discount to NAV.

The New Sprott Trust would be managed by Sprott and be substantially similar to the existing Sprott Physical Gold Trust (NYSE Arca:PHYS)(TSX:PHY.U) and Sprott Physical Silver Trust (NYSE Arca:PSLV)(TSX:PHS.U) and would include Sprott’s best-in-class physical bullion redemption feature.

John Ciampaglia, Sprott Asset Management’s Executive Vice President and Head of ETFs, said, “CFCL continues to significantly underperform the precious metals markets and is currently trading at a 9.0% discount to NAV. This underperformance has been consistent with CFCL failing to trade at or above NAV at any point over the past three years. During 2016, CFCL failed to eliminate its discount to NAV despite gold and silver prices rising by 8% and 15%, respectively, during the year. CFCL has had numerous opportunities to effect change for the benefit of all shareholders, particularly in considering the overwhelming success of the Central GoldTrust merger with Sprott Physical Gold Trust. However, the Spicer family seems to be comfortable with the numerous conflicts of interest that exist within their operations and is unwilling or unable to solve the persistent discount to NAV.”

Added Ciampaglia, “Many large investors have expressed to us, a fellow CFCL shareholder, that there is a real need for change and that they support the effort we are initiating today. Shareholders deserve an opportunity to choose how their assets are held and managed. They should not be impeded from that choice by an antiquated and punitive dual class share structure where all voting power is concentrated in the hands of those owning a very small percentage of CFCL’s equity.”

Concluded Ciampaglia, “By supporting Sprott’s proposed Arrangement and moving their assets into a Sprott managed vehicle, we believe CFCL shareholders will see a meaningful reduction in the persistent NAV discounts that have negatively impacted their investments. CFCL shareholders will also benefit from ownership of a product with best-in-class physical redemption features, high-visibility in the marketplace, and a team dedicated to ensuring that their investment accurately reflects the value of the gold and silver that underlies it.”

The Application seeks an interim order of the Court providing for the calling and holding of a special meeting of CFCL shareholders to consider and vote upon a statutory plan of arrangement under the Business Corporations Act (Alberta), i.e. the Arrangement, pursuant to which all or substantially all of the assets and liabilities of CFCL (other than its administration agreement with the Spicer family-controlled administrator, The Central Group Alberta Ltd. (the “Administrator”)) would be transferred to the New Sprott Trust and CFCL’s Class A shareholders would receive units of the New Sprott Trust in exchange for their Class A shares on a one-for-one basis. CFCL’s common shareholders would also have the ability to participate in the Arrangement on a substantially similar basis. The Application was filed without the consent of CFCL.

1 Based on the published NAV ($13.40) and closing price on the NYSE MKT ($12.20) for CFCL’s Class A Shares on March 7, 2017, the last trading day prior to the date of this press release, and an indicative discount to NAV of 9.0%, being based on the published NAV ($9.99) and closing price on the NYSE Arca ($9.96) for the units of Sprott Physical Gold Trust on March 7, 2017.

The Potential to Unlock Value at CFCL

Based on the closing price of the Class A shares on the NYSE MKT on March 7, 2017 CFCL’s Class A shares were trading at a 9% discount to NAV. This significant discount has been relatively consistent over a prolonged period of time. Over the last three years, the Class A Shares have traded at as much as a 13% discount to NAV (and have never traded at a premium to NAV). Over the same period, Sprott’s physical bullion vehicles Sprott Physical Gold Trust and Sprott Physical Silver Trust have traded near or above NAV, including periods during 2016 where they traded at premiums to NAV of over 2% and 6%, respectively.

Sprott’s Impact on Central GoldTrust

Sprott is an experienced manager of physical bullion and has been involved in transactions similar to the proposed Arrangement. In 2015 and early 2016, an affiliate of Sprott, Sprott Asset Management Gold Bid LP, and Sprott Physical Gold Trust, an industry leading physical gold bullion vehicle managed by Sprott, effected an unsolicited exchange offer and merger with Central GoldTrust, a vehicle that, at the time, was administered by an entity that is controlled by the Spicer family (the “Central GoldTrust Transaction”).

Central GoldTrust unitholders, when, as part of the Central GoldTrust Transaction, provided with an opportunity to express their preference between physical bullion vehicles managed by Sprott or by entities controlled by the Spicer family, overwhelmingly (in excess of 96% of the units voted in person or by proxy) chose to exchange their Central GoldTrust units for units of Sprott Physical Gold Trust.

Following the completion of the Central GoldTrust Transaction, gold and silver prices fluctuated, including a bull market for gold and silver during the middle of 2016. During this bull market, gold and silver reached prices of US$1,366/oz and US$20.62/oz, respectively and Sprott Physical Gold Trust (which had merged with Central GoldTrust resulting in the formerly captive unitholders of Central GoldTrust benefiting from Sprott management) and Sprott Physical Silver Trust generally traded at a premium to NAV. Also during this time period, the Spicer family administered CFCL consistently traded at a discount to NAV (and never traded at or a premium to NAV).

Central GoldTrust unitholders greatly benefited from joining the Sprott platform, and Sprott would like to offer CFCL shareholders the same opportunity.

A Unique Opportunity to Exit CFCL, an Underperforming and Conflicted Vehicle

As was publicly revealed by Sprott in connection with its CFCL meeting requisition in 2015 and the successful Central GoldTrust transaction, the current and former directors and officers of CFCL and its Spicer family-controlled Administrator have significant conflicts of interest that appear to have resulted in significant underperformance by CFCL, gross mismanagement at the Administrator and questionable side payments to various current and former directors and officers of CFCL and other friends of the Spicer family. Various current and former directors and officers of CFCL are interconnected with the Spicer family, which has been the architect of a system of vague and/or undisclosed consulting contracts, payments and fees to these very same directors and officers that are supposed to act in the best interest of CFCL Shareholders and free from conflict.

Through the Arrangement, CFCL shareholders would have a unique opportunity to exit underperforming securities that consistently fail to track the value of the underlying bullion investors have purchased. CFCL shareholders should consider the following:

  • CFCL’s expenses are grossly disproportionate to the work of the Administrator and the CFCL Board. In fact, the Administrator does not reinvest fees in the promotion or management of CFCL, and has no responsibilities related to the redemption of physical bullion. Simply put, the Administrator, i.e., the Spicer family, appears to have retained all the fees paid by CFCL shareholders and done absolutely nothing effective to support the investment of CFCL shareholders.
  • Despite their persistent underperformance, the Spicer family (in connection with the Central GoldTrust transaction) engaged in wrongful conduct adjudged to be “defensive tactics” by the Ontario Superior Court, including forcing securityholders of Central GoldTrust to pay millions in costs incurred through wasteful litigation initiated by the Spicer family and various current members of the CFCL Board in a transparent attempt to protect Spicer family profits.
  • Sprott, on the other hand, reinvests fees collected from Sprott Physical Gold Trust and Sprott Physical Silver Trust into marketing those funds, creating buying demand that supports the price of Sprott Physical Gold Trust and Sprott Physical Silver Trust units, enhances liquidity, and leads to asset growth. Sprott will similarly manage the proposed Trust.
  • The Spicer family made payments worth millions of dollars in the aggregate to “independent” CFCL Board members and awarded consulting contracts to their families, the details and extent of which had never been publicly disclosed.
  • CFCL Board members do not possess the expertise or infrastructure to address the persistent discount to NAV at CFCL and seem content to assist the Spicer family collect fees, whatever the cost to CFCL Shareholders.
  • The New Sprott Trust is offering CFCL shareholders an ability to exchange their CFCL shares with the assurance of management by a regulated entity that is committed to their best interests.

Sprott is a globally recognized leader in precious metals industry

 

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNEet.

Silver Very Undervalued from Historical Perpective of Ancient Greece

By Mark O’Byrne March 9, 2017

– What wages in ancient Athens can tell us about the silver price today
– Wages paid in silver in ancient Athens compared to wages today
– Silver massively undervalued compared to the past few thousand years

The cost of building the Parthenon was 469 silver talents, or about £5.6m.

by Dominic Frisby

Today we look at the wages paid to oarsmen on warships in ancient Athens in 450BC.

I bet you’ve never read a Money Morning that began like that before.

Why on earth would I want to do such a thing?

Because it tells us a great deal about the silver price today…

How wages in ancient Athens compare to today

In The Economy of Ancient Greece, historian Darel Engen describes how the Athenian unit of money – the talent (about 26kg of silver) – could purchase nine years of a skilled man’s labour. If we assume 250 working days in a year, that works out at about 11.5g of silver per day – a little under 0.3 of a troy ounce.

A kilo of silver today is about £460, so nine years’ skilled labour would amount to about £12,000 in today’s money. That makes a year’s skilled labour about £1,333, and a day’s £5.29.

Fast forward to today. The average wage in the UK construction industry, which I’ll use as an equivalent, is about £30,000 per annum, or £120 per day. It seems that today’s British labourer is earning considerably more than his ancient Athenian counterpart.

We must, however, factor taxation into our calculations in order to appreciate what the worker actually took home with him. Enlightened souls that they were, there was no direct taxation on income in ancient Greece. The large part of the expenses of the city were shouldered by the rich, who made their donations voluntarily – sort of – through the system of liturgy.

In the UK today, on the other hand, somewhere between 40% and 55% of the average worker’s income is taken, one way or the other, to pay for the state, depending on whose figures you use (and that’s before you factor in inflation taxes).

For the sake of simplicity, let’s use a 40% figure and go with an after-tax income of £72 per day – or £18,000 per annum. So even after taxes, the modern labourer would seem to be earning considerably more than the ancient – over ten times as much.

As Greece was the most advanced civilisation in 450BC, perhaps we should only be comparing it to the developed world. But even if we factor in less developed nations, the modern worker appears to be earning more than the ancient.

Globally, according to the United Nations International Labour Organisation (ILO), the average salary is $18,000 – say £14,000, or £56 per day. That would be £34 after 40% taxes.

An Athenian warship, the trireme, cost about a talent to build (£12,000). A trireme’s unskilled oarsman would be paid 4.3g of silver each per day (£2). The cost of building the Parthenon was 469 talents, according to Professor Thomas Sakoulas. That works out, according to my maths (469 x 26 x 460) at about £5.6m. The cost of building the Shard, by way of comparison, seems to have been around £435m.

Silver is dirt cheap compared to the past few thousand years

To compare modern and ancient prices might seem like a ridiculous and redundant exercise – the two worlds are so different – but there is a point to all this. Measured in silver, salaries actually remained fairly constant until the 20th century.

The Babylonian worker might have been looking at 2g of silver (92p). The Roman unskilled worker, like the Greek, might have been on around 4.2gs of silver, at least until Romans started chipping their coins.

The wages of the medieval English worker seemed to have fallen back towards Babylonian levels by 1300. He got 2.8g, while a skilled city craftsman might have expected 5.6g – about half what an Athenian was paid.

That would grow, however, over the next 500 years, until by the 19thcentury the skilled labourer might be looking at around 24g of silver per day, according to author David Zucherman, and an unskilled between a third and half that. The labourer in the 19th century was getting around double the pay of his 450BC Athenian counterpart. It’s more, but it’s not that much more.

Compare that to today. I used the figure of £30,000 earlier – the average wage of a construction worker – £120 per day. That amounts to 260g of silver, compared to 11.5g for that Athenian worker. Today’s pay dwarfs that of any pre-20th century worker in history.

Wages have risen, of course they have – but not by this much relative to the cost of living, status and so on within a society.

The issue is not that wages have soared. It’s that silver – now that it no longer has any monetary role – has fallen to absurdly cheap (on a historical basis) levels. (It’s also absurdly cheap on a geological basis, as I argued here

If today’s wages of £120 were to equal the Athenian equivalent of 11.5g (say 12g for simplicity’s sake), you could make the argument that silvershould be £10 per gramme (currently 46p per gramme). That’s over 20 times higher than today’s silver price of $18.50 an ounce – more like $400 per ounce.

At $400 per ounce, not only do wages correspond, but so does the cost of building a ship or a landmark city building.

One day we will get some kind of silver reversion to its historical mean. Does that mean we should all go out and buy shedloads of silver with the expectation of making 20 times our money?

Not really. That day of historical mean reversion probably won’t come in our lifetime and most of us invest within three to five year time frames. But you should all own a little bit, just in case it does.

‘What wages in ancient Athens can tell us about the silver price today’ can be accessed on Money Week here

http://www.goldcore.com/us/gold-blog/silver- undervalued-historical-perpective-ancient-greece/

-END-

END

 

Ron Paul urges Arizona lawmakers to end the capital gains tax on gold coins.  He correctly states that gold really stays constant, it is paper money that is devaluing and that he claims that paper money is really “fraudulent money”

(courtesy Chris Powell./Ron Paul/GATA/Tuczon news/Fisher)

Ron Paul urges Arizona lawmakers to end capital gains tax on gold coins

Section:

By Howard Fischer
Arizona Daily Star, Tucson
Wednesday, March 8, 2017

http://tucson.com/news/ron-paul-to-az-lawmakers-end-capital-gains-tax-on…

PHOENIX — Invoking claims of illegally printed paper money, the use of gold in the Bible and even foreign entanglements, former Congressman Ron Paul urged Arizona lawmakers Wednesday to let coin collectors and investors escape the state’s capital gains tax.

Paul, a three-time presidential hopeful, told members of the Senate Finance Committee it’s not fair or even legal from his perspective for the government to take its share when someone who bought a coin at $300 later sells it for $1,200.

He said the value of the coin really remains the same. It’s the value of that paper money — money he contends is “fraud” — that’s gone down.

Paul’s testimony helped buttress similar claims by Rep. Mark Finchem, R-Oro Valley, who already has ushered the tax break in HB 2014 through the House. The result was the Senate panel giving its OK on a 4-3 party-line vote and sending it to the full Senate.

But the real hurdle remains Republican Gov. Doug Ducey who vetoed similar measures in 2015 and again last year saying he feared the unintended consequences of such a change in tax law.

That isn’t a unique concern. In 2013, Republican Jan Brewer also used her veto stamp.

“This would result in lost revenue to the state, while giving businesses that buy and sell collectible coins or currency originally authorized by Congress an unfair advantage,” she wrote at the time.

That was exactly the complaint made Wednesday by Sen. Steve Farley, D-Tucson, in urging colleagues to kill the measure.

He said the legislation would make sense if a $20 gold piece sold for $20 in what most people recognize as legal currency. But what it sells for, Farley said, is based on a combination of the amount of precious metal, the condition of the coin and the demand for what might be a rare coin.

“So to give someone a capital gains tax break on the money they make … from selling that coin seems like just simply a tax giveaway that other people would be paying for because we’re going to need to get enough money to pay for our roads and schools anyway,” Farley said.

“Why does the government need the money is the big question,” Paul said. Anyway, he said, if the government needs money it should tax people “more honestly” than by making them pay capital gains for their efforts to protect themselves against inflation.

Farley, for his part, said the flaw in the arguments by supporters of the legislation is that somehow the type of investment decision should govern its tax liability.

“There’s a lot of places people can decide to invest their money as a hedge against inflation,” he said.

“You can invest it in stocks, you can invest it in real estate, your house, a lot of other things,” Farley continued. “That also goes up in value over time and that represents, at least in some part, inflation.”

The difference here, Farley said, is that people pay capital gains taxes when they sell a stock or any other investment for a profit; this bill creates a special exemption for gold and silver coins.

“So to me that’s picking winners and losers,” he told the former Texas congressman.

“I understand your point,” Paul responded. “But the important point is stocks are not money and gold and silver are money.”

And that goes to his contention that there’s no legal basis for all this paper money out there.

“Congress is allowed to coin money,” Paul said. “They don’t have the authority to print money.”

One thing the panel did not consider is what would be the cost to the state of such an exemption.

No one was able to provide a figure of the tax implications of such an exemption.

 

END

 

The Arizona Senate passes the bill so as to treat gold as money and remove capital gains tax on it

(courtesy Boldin/TenthAmendment Center)

Arizona Senate Committee Passes Bill To Treat Gold As Money, Remove Capital Gains Tax

Via Michael Boldin of The Tenth Amendment Center,

Today, an Arizona Senate Committee passed a bill that would eliminate state capital gains taxes on gold and silver specie, and encourage its use as currency. Final approval of the legislation would help undermine the Federal Reserve’s monopoly on money.

Former US Rep. Ron Paul testified today in the Senate Finance Committee in support of House Bill 2014 (HB2014). The legislation, which previously passed the state House by a 35-24 vote, would eliminate state capital gains taxes on income “derived from the exchange of one kind of legal tender for another kind of legal tender.” The bill defines legal tender as “a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.” “Specie” means coins having precious metal content.

In effect, passage of the bill would, as Paul noted, “legalize competition in a Constitutional fashion.”

Under current Arizona law, gold and silver are subject to capital gains tax when exchanged for Federal Reserve notes, or when used in barter transactions. If the purchasing power of the Federal Reserve note has decreased due to inflation, the metals’ nominal dollar value generally rises and that triggers a “gain.” In most cases, of course, the capital gain is purely fictional. But these “gains” are still taxed — thus unfairly punishing people using precious metals as money.

“We ought not to tax money, and that’s a good idea. It makes no sense to tax money,” said Paul. “Paper is not money, it’s a substitute for money and it’s fraud,” Paul continued, noting the importance of honesty money vs federal reserve notes.

Today, the Senate Finance Committee passed the bill by a 4-3 vote along party lines.

AN IMPORTANT STEP FORWARD

Passage of HB2014 would remove the amount of any net capital gain derived from the exchange of one kind of legal tender for another kind of legal tender or specie (gold and silver coins) from their gross income on their state income tax. In other words, individuals buying gold or silver bullion, or utilizing gold and silver in a transaction, would no longer be subject to state taxes on the exchange.

Bill sponsor Rep. Mark Finchem (R-Tucson) discussed this as well. “What the IRS has figured out at the federal level is to target inflation as a gain. They call it capital gains.” He noted that the bill would help Arizona residents “protect their conversion of one kind of currency for another.”

Passage into law would mark an important step towards currency competition. If sound money gains a foothold in the marketplace against Federal Reserve notes, the people would be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency. The freedom of choice expanded by HB2014 would allow Arizona residents to secure the purchasing power of their money.

Ron Paul added that he considered the Arizona bill to be “very important” because it would also serve as an educational effort for other states. In fact, similar legislation is also under consideration in Idaho, Texas, Tennessee, Virginia, and Maine.

“The responsibility is on the states to follow the constitution,” said Paul.

BACKGROUND INFORMATION

Currently, all debts and taxes in Arizona must be paid with either Federal Reserve Notes (dollars), authorized as legal tender by Congress, or with coins issued by the U.S. Treasury — very few of which have gold or silver in them.

But the United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.”

The Arizona bills take a step towards that constitutional requirement, ignored for decades in every state. Such a tactic would undermine the monopoly or the Federal Reserve by introducing competition into the monetary system.

Professor William Greene is an expert on constitutional tender and said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.

“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”

Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there.

UP NEXT

 

HB2014 now moves to the Senate Rules committee for further consideration.

 

END

 

Bloomberg reports that Indian gold imports for the wedding season as tripled

(courtesy Bloomberg/GATA)

Indian gold imports said to almost triple on wedding demand

Section:

By Shruti Srivastava and Swansy Afonso
Bloomberg News
Wednesday, March 8, 2017

Gold imports by India, which competes with China for the role of world’s biggest consumer, are said to have risen almost three-fold in February from a year earlier as jewelers increased stockpiles before the festival and wedding period that starts next month.

Shipments jumped 175 percent to 96.4 metric tons in February from a year earlier, according to a person familiar with provisional data from the finance ministry, who asked not to be identified as the data aren’t public. Overseas purchases slid 32 percent to 595.5 tons in the 11 months to February. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-03-08/gold-imports-by-india…

 

END

 

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

 
 

1 Chinese yuan vs USA dollar/yuan MUCH WEAKER AT  6.9100( DEVALUATION SOUTHBOUND   /OFFSHORE YUAN NARROWS  TO 6.9042/ Shanghai bourse DOWN 23.91 POINTS OR .74%   / HANG SANG CLOSED DOWN 280.71 POINTS OR 1.18% 

2. Nikkei closed UP 64.55 POINTS OR 0.34%   /USA: YEN RISES TO 114.66

3. Europe stocks opened MOSTLY MIXED      ( /USA dollar index FALLS TO  102.06/Euro UP to 1.0563

3b Japan 10 year bond yield: RISES TO    +.096%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.66/ 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::  49.43  and Brent: 52.14

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.385%/Italian 10 yr bond yield UP  to 2.231%    

3j Greek 10 year bond yield FALLS to  : 7.199%   

3k Gold at $1206.25/silver $17.19(8:15 am est)   SILVER  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 46/100 in  roubles/dollar) 59.36-

3m oil into the 49 dollar handle for WTI and 52 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 DEVALUATION SOUTHBOUND   from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 114.66 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  1.0142 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0715 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.385%

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 2.569% early this morning. Thirty year rate  at 3.156% /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

Crude Plunges Below $49, Dragging Markets Lower; All Eyes On Draghi

While traders will be focused on the ECB, and Mario Draghi, early Thursday, it is unlikely that the European central bank will announce anything overly dramatic (see preview in a subsequent post), and instead the attention will be on the ECB’s inflation forecast for hints of when the ECB may accelerate tapering after its December 2016 QE cut, as Draghi scrambles to catch up with commodity inflation, if not so much core CPI, which has remained subdued.

CHART: Here’s how the past 6 forecasts compare with actual inflation. Expect 2017 to be revised upward today. http://bloom.bg/2n9emPl 

However, a more pressing development as US traders get to their desks today, will be the ongoing collapse in WTI, which after crashing 5.5% yesterday, has plunged as much as 3% this morning, sliding not only below $50 for the first time since December 1, but also dropped under $49, and was trading $48.90 at last check, as a near record number of net long spec positions suddenly rush to unwind their exposure.

The fact that yesterday the DOE reported that U.S. crude stockpiles rose by another +8.2m bbl to a record 528.4m bbl, will probably not help the selloff.

After resisting oil’s gravitational drag earlier, S&P futures snapped, and were trading lower by 0.2% at 2,357. Should the drop persist, this would be the longest losing streak for the index in five weeks.

Elsewhere, European and Asian stocks fell, ahead of the European Central Bank’s meeting while the Bloomberg Dollar Spot Index headed for its best back-to-back weeks since December, rising after yesterday’s blockbuster ADP report and expectations that tomorrow’s NFP will not derail the Fed’s March reta hike, the euro and yen dropped. Speaking of the ADP report, RBC chief economist Tom Porcellisaid the report was so strong it meant the payrolls report on Friday would have to be unbelievably dire to deter the Fed from hiking next week.

“There is almost no number that would stop them,” said Porcelli. “It would take an extreme event for the Fed to take a pass at this point.”

Indeed, he noted the ADP surprise meant there was a real chance payrolls could beat expectations, perhaps by a lot. “On the face of it, ADP is consistent with private payrolls of about 340,000,” he said. The current median forecast is for a rise of 190,000.

With a hike seemingly certain, and more likely over the year, yields on two-year Treasury notes climbed to 1.378 percent, the highest since August 2009. 10Y yields rose for the 9th consecutive day as central banks dominated markets on Thursday. The US 2Y premium over German debt widened to 220 basis points, the largest gap since early 2000. That is a burden for the euro that is likely to only get heavier as the European Central Bank seems wedded to its super-easy policy.

Jumping across the Atlantic, investors are looking for signs of an end to European stimulus during today’s ECB announcement . While economists surveyed by Bloomberg predict the ECB will reiterate that its monthly bond-buying program will run until at least December, traders will be on alert for a more hawkish tone from President Mario Draghi. Still, Draghi is expected to keep QE going at least until the end of the year with underlying price pressures muted. The ECB’s policy decision will be announced at 1:45 p.m. Frankfurt time and Draghi will hold a press conference 45 minutes later.

As Deutsche writes, it’s likely that the ECB meeting today contains a lot less drama. Nevertheless it does come at an interesting time what with the likely Fed rate hike next week and the surge in both the ADP and global bond yields yesterday. It’s probably far too early for the ECB to announce more tapering ahead especially given that we don’t start until next month. According to DB economists, the baseline of such a move is still 6 months away with the possibility of an earlier announcement in June. However they expect hints of a slow and gradual evolution to a less-dovish policy stance today. For example they could provide a less downbeat “balance of risks” to the economy, an adjustment to Forward Guidance to remove the option of reducing policy rates further and/or the removal of “very” from the statement that “a very substantial degree of monetary accommodation is needed”.

“Despite the positive outlook, risks remained skewed to the downside for now,” Anna Stupnytska, global economist at Fidelity International, said in a note. “A Brexit related slowdown could spill over via trade links, with Germany being particularly vulnerable. The heavy political timetable, with Dutch elections later this month and French presidential elections” starting in April are also reasons for ECB caution, she said.

Looking at global markets, with energy stocks on the run, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.9 percent. Australia’s main index eased 0.4 percent, while its resource sector fell more than 2 percent. Bucking the trend, Japan’s export-heavy Nikkei managed to take heart from a softer yen and added 0.3%.

Economic data out of China continued to surprise with consumer inflation coming in well under expectations at an annual 0.8 percent, largely due to falling food prices. That however was offset by the highest PPI in 9 years, as wholesale prices surged 7.8%, higher than the 7.7% expected, the biggest jump since September 2008.

The strong doller also pressured industrial metals which deepened their losses following louder Chinese jitters after the PBOC did not conduct a reverse repo, draining net liquidity for the 11th consecutive  day, and leading to concern among traders that the central bank is reall serious about tightening market conditions. Overnight everything fell,from iron ore to copper, which touched a seven-week trough. Gold fell 0.3 percent to $1,204.76 an ounce, declining for a fourth day.

Market Snapshot

  • S&P 500 futures up 0.03% to 2,364.75
  • WTI Futures down 2.8% to $48.87
  • Brent Futures down 1.3% to $52.41/bbl
  • Gold spot down 0.3% to $1,204.33
  • U.S. Dollar Index unchanged at 102.07
  • STOXX Europe 600 down 0.3% to 371.52
  • MXAP down 0.6% to 143.28
  • MXAPJ down 1.1% to 460.96
  • Nikkei up 0.3% to 19,318.58
  • Topix up 0.3% to 1,554.68
  • Hang Seng Index down 1.2% to 23,501.56
  • Shanghai Composite down 0.7% to 3,216.75
  • Sensex up 0.1% to 28,938.34
  • Australia S&P/ASX 200 down 0.3% to 5,741.20
  • Kospi down 0.2% to 2,091.06
  • German 10Y yield rose 1.3 bps to 0.383%
  • Euro up 0.2% to 1.0563 per US$
  • Brent Futures down 1.3% to $52.41/bbl
  • Italian 10Y yield rose 6.2 bps to 2.254%
  • Spanish 10Y yield fell 3.1 bps to 1.78%

Top Overnight News

  • Oil Drops Below $50 for First Time Since December on Supply Glut
  • ECB Said to Plan End to Long-Term Loan Offers to Banks for Now
  • ECB Inflation Outlook Set to Keep Bar High for Stimulus End
  • BOJ Is Said to Mull More Rate Guidance Once CPI Picks Up
  • EU Court Says No ‘Right to Be Forgotten’ for Company Registers
  • China Money Supply Growth Slows Amid Campaign to Contain Risk
  • Marathon Buys Permian Assets From BC Operating, Others for $1.1b
  • China’s Wanfeng Eyes U.S. Acquisitions Amid Trade Tensions
  • GE, Borusan EnBW, Fina, Ozgul to Invest $1.3b in Turkey Wind
  • Germany’s Merck Plans to Divest Biosimilars Unit by End of Year
  • National Co for Maize’s Biggest Shareholder May Sell Stake

Asia equity markets traded mostly lower following a similar lacklustre lead from the US, where energy underperformed after WTI Crude futures had their worst day in over a year with losses of 5.5%. This weighed on the ASX 200 (-0.3%) with mining stocks also suffering after gold continued its declines and iron ore shed 2.9%, while Nikkei 225 (+0.3%) was kept afloat as exporters benefitted from USD/JPY’s advance to above 114.00. Hang Seng (-1.2%) and Shanghai Comp. (-0.7%) were negative after the PBoC refrained from open market operations and participants digest mixed inflation figures in which CPI showed the slowest pace of increase since January 2015 while PPI was the strongest in over 8 years. 10yr JGBs tracked losses in T-notes amid early broad gains in yields across the Asia-Pac region which briefly saw the Australian 10yr yield increase to a 15-month high. Furthermore, the curve slightly flattened amid underperformance in the short end while the 5yr JGB auction failed to support as demand was weaker, with the b/c declining to 2.86 vs. Prey. 4.26 last month.

Top Asian News

  • China Factory Prices Surge Most Since 2008, Boosting Reflation
  • China Said to Plan Stricter Bank Capital Rules to Curb Risks
  • Kim’s Missiles Force Abe to Mull Capacity to Strike North Korea
  • Green Push Seen as Profit Risk for Top Philippine Coal Miner
  • Chemicals Mega-Mergers Have $200 Billion Headache: Markets Live
  • Wharf Mulls Separate Listing of Investment Properties Assets
  • Japan Regulator to Probe Regional Banks’ Foreign-Bond Risk
  • Bank Indonesia Has Had ‘Enough’ Rate Cuts, Deputy Governor Says
  • Indonesia, India See Modest Gains Supported by Carry: Asia NDFs
  • Aluminum Rally May Falter Despite China Cuts, Vedanta Says
  • Thriller in Manila Redux Sees Mine Foe Win Nod From Pacquiao

European bourses are likewise lower, also impacted by yesterday’s 5.5% plunge in oil prices, with energy names the laggard thus far in Europe. Consequently, this has led to slight underperformance in the FTSE 100, while soft inflation data out of China added to the negative tone with large fall due to falling food prices (Y/Y 0.8% vs. 2.5%).However, early morning losses in Europe has been curbed by the continued upside in financials with analysts anticipating that tomorrows US jobs report will be the cherry on the cake for the Fed to go ahead with a rate hike next week (particularly given firm ADP figures). In credit markets, outperformance has been observed in the Bund/OAT spread (tighter by 2.5bps) with the latest French election poll by Harris showing Macron extending his lead vs Le Pen in the second to 65-35 (prior 60-40), while the poll also interestingly showed Macron ahead of Le Pen in the first round.

Top European News

  • Akzo Says Considering Breakup After Rejecting Proposal From PPG
  • U.S. Nuclear Outlook Triggers $480 Million Loss for Europeans
  • EU Gets National Request to Probe NN Group/Delta Lloyd Deal
  • Etihad, Emirates Said to Talk About Possible Merger: HB
  • Scots Independence Vote May Be in Late 2018, Sturgeon Tells BBC
  • Orderly Decline in European Govt Bonds With Focus on ECB Meeting

In currencies, the Bloomberg Dollar Spot Index rose 0.1 percent after gaining 0.4 percent Wednesday. The British pound fell 0.1 percent as the euro added 0.2 percent. FX markets have certainly livened up since the release of the US ADP report yesterday, reinvigorating appetite for USDs as US Treasury yield moves higher again. USD/JPY has managed to work through the bulk of exporter offers through 114.50, but we continue to stall ahead of 115.00. However, the move against the EUR has been tempered to a large degree by the aforementioned Harris poll putting Macron further in the lead in the second round of the French election. Along with a market wary that the ECB may well sound a less dovish tone at the meeting and press conference today, we have seen the single unit outperforming across the board, though the view has been better expressed through the crosses. EUR/JPY has pushed through 121.00 accordingly, while EUR/CAD has been a primary target given the losses in Oil prices, with this pair now eyeing a move on 1.4300.  Cable has remained under pressure through the week, and the spot rate looks destined to test 1.2100, which is the next point of support. No fresh Brexit news to contend with, but GBP remains an easy target with the triggering of Article 50 nearly upon us.

In commodities, West Texas Intermediate crude has extended yesterday’s dramatic plunge, dropping  2.8% to $48.87 a barrel. It tumbled more than 5 percent the previous session to the lowest close since Dec. 7. Gold fell 0.3 percent to $1,204.76 an ounce, declining for a fourth day. Oil prices have been thrust back into the limelight in light of the latest build reported in the DoE report. While inventory has been less of a driver in recent times, amid the backdrop of fresh uncertainty of how further production agreements will play out beyond June as well as the compliance levels from non OPEC member as as well US Shale production, WTI and Brent have finally succumbed to pressure, with the former now through $49.00, so we could be on the verge of a major move given the range breakout. Elsewhere, the impact of falling Treasuries/rising USD have impacted on both precious and base metals, with Gold now eyeing a move on USD1200 and Silver USD17.15. The impact on Copper has been exacerbated by concerns over China demand, and losses here have now taken us through USD2.60 with Zinc showing similar losses on the day so far. Nickel has been a little more resilient on the day, as has Aluminium.

Looking at today’s calendar, away from the obvious focus on the ECB meeting, it’s a light day for data in the US with just the latest weekly initial jobless claims print and February import price index reading due. There’s not much away from the data. ECB President Draghi’s press conference kicks off at 12.45pm GMT while EU leaders are due to start a two-day meeting in Brussels with German Chancellor Merkel amongst those speaking. The UK Brexit Secretary David Davis is also due to answer questions in the House of Commons today including likely comments on the House of Lords ruling earlier this week.

US Event Calendar

  • 7:30am: Challenger Job Cuts YoY, prior -38.8%
  • 8:30am: Import Price Index MoM, est. 0.1%, prior 0.4%; YoY, est. 4.35%, prior 3.7%
  • 8:30am: Initial Jobless Claims, est. 238,000, prior 223,000; Continuing Claims, est. 2.06m, prior 2.07m
  • 9:45am: Bloomberg Consumer Comfort, prior 49.8
  • 12pm: Household Change in Net Worth, prior $1.59t

DB’s Jim Reid concludes the overnight wrap

I thought I’d been to the most remarkable Champions League game (the final in Istanbul in 2005) that we would ever see. However it’s possible that Barcelona’s stunning comeback against PSG last night runs it close. If you haven’t seen the details I urge you to read the back pages today but in short they were 4-0 down from the first leg and won 6-1 in the second leg after conceding an away goal at 3-0 up. In the 88th minute they were 5-3 down and needing 3 more goals. This follows 24 hours after Craig’s beloved Arsenal got knocked out after being a comparable 5-1 down from the first leg. They unfortunately lost 2-10 overall which now means every time I think of the yield curve slope I’m going to think of this tie!

Talking of European action, it’s likely that the ECB meeting today contains a lot less drama. Nevertheless it does come at an interesting time what with the likely Fed rate hike next week and the surge in both the ADP and global bond yields yesterday. It’s probably far too early for the ECB to announce more tapering ahead especially given that we don’t start until next month. Our economists’ baseline being that such a move is still 6 months away with the possibility of an earlier announcement in June.

However they expect hints of a slow and gradual evolution to a less-dovish policy stance today. For example they could provide a less downbeat “balance of risks” to the economy, an adjustment to Forward Guidance to remove the option of reducing policy rates further and/or the removal of “very” from the statement that “a very substantial degree of monetary accommodation is needed”.

This follows a fairly dull UK budget yesterday but one interesting theme was that although the chancellor is forecasting a steady fall in borrowing there is still an annual deficit in his forecasts out to 2021-22. This will mean 20 successive years of UK deficits and it reminded us of a chart we’ve often used in our long-term studies in recent years showing the G7’s (plus Italy) annual deficits since 1950 (after the WWII impact lessens). We’ve updated this in today’s PDF. Basically in the last 25 years surpluses have been very rare outside of Canada (which ran a small surplus for 12 years from 1997 and again in 2015). In fact over this period it has only really happened in mini bubbles for the odd country like with the boom period ahead of the 2000 equity bust and the housing bubble a few years later (e.g. Spain). In fact we believe government budgets started to move towards a natural state of deficits after the Bretton Woods system broke down in the early 1970s when global currencies’ link to Gold was abandoned. Prior to this (and for most of economic history) countries running persistent deficits would have seen Gold outflows which would have destabilised the domestic economy so it couldn’t be tolerated. Outside of wars budgets tended to be balanced. In a world of fiat currencies post the early 1970s the adjustments have tended to be via weaker currencies which makes deficits easier to run. So wide-scale cumulative deficits are a modern day (last 40+ years) phenomenon.

Over in markets, as noted at the top the big theme has been another 24 hours of rising bond yields. Yields were already on the move in Europe but it was the much better than expected ADP print which really got things going. The February print came in at 298k compared to expectations for 187k with the monthly reading the strongest since April 2014. In fact the reading that month was a bumper 331k while the corresponding NFP print came in at a near-identical 329k so yesterday’s number is already fuelling expectations that we’ll get a similar strong reading at tomorrow’s payrolls.

By the end of play Treasuries had closed just off their high in yield with 10y yields up 4.2bps at 2.560%. That is the highest close this year and only just off the high mark made back in December of 2.597%. It is also the eighth session in succession that yields have closed higher which is the longest such run since  March 2012. 2y yields also rose another 2.6bps to 1.354% and so extending their 8 and a bit year high. In Europe 10y Bund yields surged 4.9bps to close at 0.364% and the highest in 3 weeks. 2y Bund yields were up 2bps with some chatter of a weak 5y Bund auction (bid-to-cover of 1.1x versus 2.1x in November) as also playing a part in the overall soft day for Bonds yesterday. Peripheral yields in the 10y bucket were also up as much as 7bps while in EM we saw hard currency bond yields in the likes of Brazil, Colombia and Argentina spike between 12bps and 18bps higher.

Away from that the other big story in markets yesterday was the sharp fall in the price of Oil. Having traded in just an 8% range all year on an intraday basis between $51 and $55, yesterday WTI tumbled -5.38% to $50.28/bbl which was the biggest one-day fall since February last year and the lowest closing price since December 7th. The trigger appeared to be the latest rising US crude inventory data which seems to be overshadowing the optimism built up in the wake of the OPEC production cut agreement. The EIA numbers revealed that US crude stockpiles rose 8.2 million barrels last week which was well ahead of the 1.7 million forecast in the market according to the WSJ. In fact it wasn’t just Oil which had a poor day in the commodity space. Gold (-0.62%) and Silver (-1.48%) fell sharply for the third day in a row with a Fed rate hike next week now fully bedded in according to Bloomberg’s calculator post the ADP data. Meanwhile Iron Ore (-2.91%) and Nickel (-4.18%) also had another day to forget, while Copper (-0.13%) fell for the fifth session in succession.

Oil and commodity sensitive currencies were unsurprisingly decent underperformers yesterday with the likes of the Norwegian Krone (-1.11%), Aussie Dollar (-0.78%) and Russian Ruble (-1.23%) weakening significantly. Meanwhile in equity markets energy stocks also buckled under the pressure from Oil but overall bourses held in relatively OK all things considered. The S&P 500 ended -0.23% and down modestly for the third day in a row although the energy sector was down -2.54% alone. In Europe the Stoxx 600 (+0.08%) actually managed to snap a run of four consecutive down days.

This morning in Asia the focus has once again turned over to the latest data in China and this time the February inflation numbers. The data has made for a mixed read. On the one hand PPI has surged once again, printing at +7.8% yoy (vs. +7.7% expected) versus +6.9% in January. That is the sixth positive YoY reading following 54 months of deflation, and also the fastest pace since September 2008. However in contrast CPI printed at just +0.8% yoy (vs. +1.7% expected) from +2.5% in January with the MoM reading in February coming in at -0.2% mom. Sharply lower food prices (-4.3% yoy) were to blame and much like yesterday’s trade data it appears that the timing of the Lunar New Year holiday is the chief reason for that, distorting the base effects for YoY comparison. However, it does appear that China’s credit impulse did soften slightly in any case when looking at the three-month average into February (+0.3%) compared to the same period last year (+0.9%). Our economists think that the tame CPI will limit policy tightening and thus risks intensifying the property bubble in tier 1 and 2 cities. So one to
watch.

Bourses in China are sharply lower following the data with the Shanghai Comp and CSI 300 currently -0.85% and -0.75% respectively, although that is partly reflecting yesterday’s big fall for Oil with energy leading losses. The Hang Seng is also -0.98%, the ASX (-0.45%) and Kospi -0.08%. Only the Nikkei (+0.19%) is trading firmer. The China sensitive Aussie Dollar is down -0.24% also.

With regards to the other day yesterday, in the US there were no final revisions to either Q4 productivity (+1.3% qoq) or unit labour costs (+1.7% qoq). More notable though was the one-tenth downward revision to wholesale inventories in January to -0.2% mom. The end result of that was another cut in the Atlanta Fed’s GDP tracker for Q1 to 1.2% and furthering the gap again between that and the NY Fed’s measure (currently 3.1%). The most significant data in Europe yesterday came from Germany where industrial production was reported as rising +2.8% mom in January and slightly more than expected. Following a soft December reading though the three-month average suggests IP is going nowhere.

Looking at today’s calendar, away from the obvious focus on the ECB meeting at lunchtime the only data due out is from France where we’ll get the February Bank of France business sentiment print. It’s a light day for data in the US too with just the latest weekly initial jobless claims print and February import price index reading due. There’s not much away from the data. ECB President Draghi’s press conference kicks off at 12.45pm GMT while EU leaders are due to start a two-day meeting in Brussels with German Chancellor Merkel amongst those speaking. The UK Brexit Secretary David Davis is also due to answer questions in the House of Commons today including likely comments on the House of Lords ruling earlier this week.

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 23.91 POINTS OR .74%/ /Hang Sang CLOSED DOWN 280.71 POINTS OR 1.16% . The Nikkei closed UP  64.55 POINTS OR 0.34% /Australia’s all ordinaires  CLOSED DOWN 0.33%/Chinese yuan (ONSHORE) closed DOWN at 6.9100/Oil FELL to 49.43 dollars per barrel for WTI and 52.14 for Brent. Stocks in Europe ALL MOSTLY MIXED ..Offshore yuan trades  6.9042 yuan to the dollar vs 6.9100  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS CONSIDERABLY/ ONSHORE YUAN WEAKER AS IS THE OFFSHORE YUAN  COUPLED WITH THE STRONGER DOLLAR. CHINA SENDS A MESSAGE TO THE USA NOT TO RAISE RATES

3a)THAILAND/SOUTH KOREA/NORTH KOREA

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

This is not good for China.  The massive increase in paper supply as filtered down to producer prices as they rose a staggering 7.8% year over year.  As producer prices rise you can bet the farm that consumer prices will rise very shortly.

(courtesy zero hedge)

China Producer Prices Surge At Fastest Pace In 9 Years

While China consumer prices rose just 0.8% YoY (less than expected), producer prices continue to soar, pressuring margins and threatening any hope for further credit impulses from PBOC. February PPI rose a staggering 7.8% year-over-year – the most since September 2008.

After four and a half years of deflation, factory prices are now starting to appear out of control…

The biggest drivers of the surge are Fuels (+18.7% YoY) and Ferrous Metals (+21.4%).

Notably, just as with last night’s crazy trade data, the data are distorted by the week-long Chinese New Year holiday, which started in February last year, driving up food prices as families prepare for gatherings, whereas it fell in late January this year, when CPI climbed to a 2 1/2 year high of 2.5 percent.

 

END

 

A little thunder last night from China as the onshore yuan tumbles as well as the offshore yuan. POBC through the night tried to stabilize both yuans. However the big story is the lack of liquidity as interest rates skyrocket

we now have seen the following:

i) commodities like oil and copper plummet

ii) liquidity in China disappear as rates rise with the falling yuan

iii)interest rates throughout the globe rise

iv) higher USA dollar sends emerging markets tumbling..

v) high yield bonds crashing..

is this the signal that the all the bubbles created by the Fed et al are bursting..

(courtesy zero hedge)

 

Fed Ripples? Yuan Tumbles To 2017 Lows As Chinese Money Market Liquidity Dries Up (Again)

In what could be the beginning of ripples from The Fed’s jawboned ‘certainty’ of a March rate-hike, Chinese money market liquidity conditions appear to be drying up once again as overnight offshore yuan rates surge 142bps to one-month highs.

Additionally,  1-week CNH Hibor +1.05 ppts to 4.53017%; and 1-month CNH Hibor +70bps to 4.9395%

At the same, spot offshore Yuan  have plunged to their lowest since January 4th’s massive short squeeze. (6.9279 AT 10 PM EST)

As it appears 2017 is Shangahi Accord Redux time – (China ‘agrees’ to weaken the Yuan against non-USD currencies, while “stabilizing” the Yuan against the USD… until that breaks)

The question is – will a sudden renewed but of volatility in credit markets (high yield crashed this week), commodity markets (crude and copper collapse this week), emerging market stocks (tumbling), and now China money markets, be enough to stall a determined Fed, and crush their credibility once and for all?

 

END

 

I pointed this out to you yesterday.  China recorded its first trade deficit in 3 years as exports tumbled to negative.

This is scary for the reflationists and global growth…..

(COURTESY WANG/CAIXIN.COM) AND SPECIAL THANKS TO ROBERT H FOR SENDING THIS TO US:

China Posts First Trade Deficit in Three Years

By Fran Wang and Pan Che
A truck transports containers to be shipped abroad from a truck on a wharf at the Port of Qingdao in Qingdao, Shandong province, on Aug. 8. China had its first trade deficit in three years last month. Photo: IC
A truck transports containers to be shipped abroad from a truck on a wharf at the Port of Qingdao in Qingdao, Shandong province, on Aug. 8. China had its first trade deficit in three years last month. Photo: IC

(Beijing) — China recorded its first trade deficit in three years last month as imports surged on soaring commodity prices while exports declined, likely adding uncertainty to the country’s growth prospects.

The surprisingly robust rebound in imports may prove short-lived, while the disappointing performance of exports suggested that foreign demand remained slack, with rising anti-globalization led by U.S. President Donald Trump casting a pall on the outlook of Chinese overseas shipments, analysts said.

Imports soared 38.1% from a year ago to $129.2 billion in February, according to figures from the General Administration of Customs, beating the median projection of a gain of 18.8% in a poll of economists by Caixin.

Exports, however, lost 1.3% year-on-year to drop to $120.1 billion, the figures showed, missing analysts’ median forecast of an increase of 12.3%.

Therefore, the country logged a $9.15 billion trade deficit last month, the first since February 2014, when imports exceeded exports by $22.99 billion.

TRADE08new

The strong import growth last month was likely driven by improving domestic demand and higher commodity prices but is unlikely to last long, Nomura economist Zhao Yang said in a note.Exporters rushed to deliver while importers postponed purchases in January, the month in which this year’s Lunar New Year fell, which also distorted exports and imports in February, he said.

But domestic demand may moderate as the property market is expected to cool with the effects of government tightening measures to curb price increases kicking in, and as Beijing struggles to strike a balance between maintaining growth and implementing structural reforms, he said.

“Hence, we expect import growth to slow in the near future,” Zhao said.

In yuan terms, imports swelled 44.7% year-on-year and exports were up 4.2% in February. The trade surplus was 60.36 billion yuan ($8.75 billion).

The value of key resources China imported increased at a much faster pace than their quantity this year, according to customs figures, as commodity prices climbed higher.

For example, while iron ore imports rose 12.6% year-on-year in quantity in the January-February period, their value soared 94.6%.

The quantity of imported coal gained 48.5% in the period, but its value nearly tripled, customs data showed.

February’s fall in exports showed that external demand was yet to turn around, while the competitiveness of Chinese goods declined due to rising land and labor costs and stricter requirements to protect the environment in recent years, Wen Bin, an analyst with Minsheng Bank, told Caixin.

China’s overseas shipments have softened since 2015, posting drops in 21 of the past 26 months, according to Customs figures.

Wen said that growing anti-globalization could add further pressure on exports.

“Competition and disputes in trade between China and the U.S. may intensify now that Donald Trump has come into power, affecting exports of certain Chinese products,” he said.

China still held a yawning trade surplus against the U.S. in the first two months of the year at $31.84 billion, though it declined 12% from the same period in 2016.

February’s trade performance may increase the uncertainty about the sustainability of China’s growth acceleration that started in the latter part of last year. Economic expansion recorded a better-than-expected rate of 6.8% in the last three months of 2016, picking up from a 6.7% gain in the preceding nine months. Official data this year also seemingly pointed to economic traction.

The producer price index, a gauge of product prices received by producers and a leading indicator of consumer inflation, in January hit its highest since August 2011, with the government attributing the surge mainly to higher international commodity prices.

Activity in the manufacturing sector has continued to expand, with both the Caixin China General Manufacturing Purchasing Managers’ Index (PMI) and the official PMI increasing in February from January and factories reporting an increase in new orders.

But many analysts have also voiced concern that growth may lose steam later in 2017 due to possible corrections in the overheated property market, sluggish private investment, and limited government financial resources to boost infrastructure investment.

Premier Li Keqiang in his government work report delivered on Sunday announced that this year’s economic expansion target has been set at “around 6.5%, or higher if possible in practice.”

Contact reporter Fran Wang (fangwang@caixin.com)

 

end

“It Appears China Has Sent The World A Prodigious False Reflation Signal”

China has a massive amount of inventory of steel, iron ore etc. Johnson is of the view that China will destock much of these commodities and thus one should short them.

 

(courtesy Johnson)

 

Some material observations on China’s latest inflation data from Axiom’s Gordon Johnson.

QUICK THOUGHT: Overnight, China released CPI (a measure of the prices consumers are paying) and PPI (a measure of the prices producers, or the guys that make the stuff the consumers buy, are paying). In short, China’s PPI soared to +7.8% y/y (vs. +6.5% y/y last month), while CPI cratered to just +0.8% y/y, following last month’s +2.5% y/y growth.

OUR VIEW: As we have espoused for some time now, we believe the strength in China’s metals prices (which also drive global metals prices) has been driven by speculation at all levels to include steel/iron-ore mills, traders, and port stockers, all of whom are sitting on/near record levels of inventory at present (due to both hopes around Trump pushing global demand for metals [we firmly believe this view is wrong as China, not the US, is the majority consumer of many of the metals the define our coverage universe], and a reflation trade in China taking hold). We also believe a number of supply-side policy errors in China (see coking coal prices) have contributed to the rise in commodity prices – evidenced by comments from the NDRC earlier this week, where they stated that they will not re-impose the 276 day production limits that caused coking coal prices to spike last year, it appears that the technocrats in the ruling Chinese communist party see the error in their supply side efforts from last year.

Yet, as evidenced by the sharp contraction in China’s y/y PPI growth in Feb. ’17 (down to JUST +0.8%, from +2.5% in Jan. ’17), it appears that there is virtually no price pass through anywhere in the production chain in China. At risk of stating the obvious, this is not sustainable, as the people who actually sell the stuff that requires the steel, iron ore, coking coal, copper, etc. are seeing their margins squeezed as a result of rampant speculation in commodity markets (fueled by excess liquidity “sloshing” around), NOT END MARKET DEMAND.

This also suggests, as evidenced by China’s release of its Total Social Financing for Feb. ’17 this morning (where the actual number of CNY1.150tn missed the Consensus estimate of CNY1.450tn), further hopes for credit impulses from the PBoC will prove futile – credit is the life’s blood of China’s economy.

In short, we believe this year’s playbook is the opposite of last year. That is, last year, in the first three months of the year, the bears (us included) were calling for further declines in industrial/commodity stocks, after they had been annihilated in 2H15, ignoring the many loosening efforts that had been put in place in China starting in Sep. ’15. Contrastingly, however, in Sep. ’16 China began to tighten everything from housing to futures trading, and even more recently put restrictions on Wealth Management Products (“WMPs”) and, in an unprecedented move, the asset management industry (link). Still, today, investors are ignoring these measures, which we did last year, causing us to miss the trade of the decade (i.e., being long everything tied to commodities); thus, this year, we are not ignoring these signals from the Chinese government; net, net we feel this year is going to be defined by a massive destocking of inventory across a number of metals in China (steel, iron ore, copper, coking coal, etc.) creating the potential shorting opportunity of the decade – China, NOT THE US/Trump, is what matters for global steel and mining/industrial stocks (we feel many investors have lost focus of this fact).

HOW TO PLAY THIS THEME? On this theme, we think now is the time to be putting money to work shorting Rio Tinto (RIO; SELL) Fortescue (FMG: SELL), Cliffs Natural Resources (CLF; SELL), Caterpillar (CAT; SELL), US Steel (X; SELL), United Rentals (URI; SELL), GATX (GATX; SELL), and Trinity (TRN; SELL). We believe many still expect reflation to define this year; however, as the DATA today in China suggests, we believe these views are going to be met with a harsh reality. Caveat emptor.

Exhibit 1: China CPI vs. China PPI – rarely, since 2008, has CPI exceeded PPI

Source: China National Bureau of Statistics, Axiom Capital research.

Exhibit 2: Components China CPI

Source: Macrobusiness, China National Bureau of Statistics, Axiom Capital research.

Exhibit 3: Components China PPI


Source: Macrobusiness, China National Bureau of Statistics, Axiom Capital research.

4. EUROPEAN AFFAIRS

The ECB keeps rates on hold but this time keeps a very dovish “low rates for an extended period of time” in their forward guidance

(courtesy zero hedge)

ECB Keeps Rates On Hold, Keeps Dovish “Extended Period Of Time” Forward Guidance

Moments ago the ECB kept all three rates on hold, however in a dovish addition, it kept its current forward guidance which some analysts had expected may be scrapped, by noting that “the Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.”  As a result, the EURUSD has sign a modest drop on the announcement while Bunds futures gained once algos noticed that contrary to some expectations, the forward guidance would remain.

Full statement below:

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.

 

Regarding non-standard monetary policy measures, the Governing Council confirms that it will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of €80 billion until the end of this month and that, from April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the programme in terms of size and/or duration.

 

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

As usual, now attention turns to the Draghi press conference in 45 minutes, which was previewed earlier this morning .

 

end

 

The Euro rises, German bund yields rise as Draghi sees no longer urgency in taking further actions.  In other words, they are coming close to ending their QE

(courtesy zero hedge)

 

Euro, Bund Yields Spike As Draghi “No Longer Sees Urgency In Taking Further Actions”

ECB President Draghi said the “balance of risks to growth has improved” and noted that The ECB had “removed reference to signal a sense of urgency.” This combined with the removal of references to the use of all instruments has sparked EUR strength and Bund weakness.

  • *DRAGHI SAYS BALANCE OF RISKS TO GROWTH HAS IMPROVED
  • *DRAGHI: ECB REMOVED REFERENCE TO SIGNAL SENSE OF URGENCY GONE

Sent EUR higher…

 

And following Draghi’s comment that the ECB REMOVED REFERENCE TO USE ALL INSTRUMENTS, Bunds started to tumble…

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

RUSSIA/USA

This is surprising: Trump offers the Russian ambassadorship to Putin critic Jon Huntsman

(courtesy zero hedge)

Trump Offers Russia Ambassador Post To Putin-Critic Jon Huntsman

As had been periodically leaked over the past several weeks, overnight both Poliico and the WSJ confirm that President Trump has offered former Utah governor Jon Huntsman the job of U.S. ambassador to Russia and is in the process of submitting paperwork to accept the position; Huntsman is said to have accepted the offer. This is the latest sign of backtracking from plans for Washington-Moscow conciliation, a development which will make future reports based on “anonymous sources” that Trump is a Kremlin puppet even more problematic.

The 56-year-old Mr. Huntsman’s long record in politics and diplomacy—as governor of Utah and ambassador to Singapore under President George H.W. Bush and to China under President Barack Obama—likely will assure him of an easy confirmation in Congress. Huntsman, who served as ambassador to Singapore under President George H.W. Bush and then to China under President Barack Obama, was an outspoken critic of President Donald Trump during last year’s campaign.

Last October, Huntsman—who ran for president as a Republican in 2012—called on Trump to withdraw after a 2005 Access Hollywood video surfaced in which he bragged about his ability to sexually assault beautiful women. But Huntsman has since warmed to the president and the two have maintained a cordial relationship, according to a source with knowledge of their recent conversations. “It’s a bit bizarre because he was so anti-Trump last year,” said one source close to the administration. “But it’s also a smart choice, because he really knows his [stuff].”

The Russian ambassador position is viewed as one of the most sensitive and high profile ambassadorships, especially given the FBI and congressional investigations into Russian President Vladimir Putin’s apparent efforts to tip last year’s election in his favor and contacts between Russian officials and the Trump campaign. Should Huntsman accept and be confirmed as ambassador, Politico notes that it could come as a relief to Utah Republican Sen. Orrin Hatch, 82, who is up for reelection next year. Huntsman has been seen as a potential challenger.

Regarding Huntsman’s views on Russia, the WSJ adds that the former governor lately served as chairman of the Atlantic Council, a Washington, D.C.-based think tank deeply critical of Russian President Vladimir Putin and plans to patch up relations with him.  Some of Mr. Trump’s protégés have come under fire for too-close ties to the Kremlin, but Mr. Huntsman—a critic of Mr. Trump during the presidential campaign—will add to a stable of advisers who have openly disagreed with the president’s proposed Russia policies.

Last week the White House said it would tap Fiona Hill, a highly regarded Russia scholar with a “sober view” of Mr. Putin, to be the National Security Council’s senior director for Europe and Russia. Her boss at the NSC, Lt. Gen H.R. McMaster, is likewise a skeptic of U.S. rapprochement with the Kremlin, based on his past comments and views of those who know him.

With the appointment, Trump is clearly seeking to distance himself of being viewed as openly friendly toward Russia. Trump has complained about criticism of his advisers’ conversations with Russian officials and about leaks suggesting some of them are too close to Russia. Last week, Attorney General Jeff Sessions recused himself from investigations into the 2016 presidential campaign after questions arose about his conversations with the Russian ambassador to the U.S., Sergei Kislyak.

With pressure ratcheted up on his administration, Mr. Trump may be looking for a nominee who won’t create waves, said one former State Department official.

“Trump is bending to the critics of his efforts to have warmer relations with the Russians,” said the former official, who served under President George W. Bush. “He has selected a high-profile establishment Republican who is unlikely to face significant problems getting confirmed.”

In Moscow, he said, the selection will be viewed with “some skepticism and maybe concern.”

 

end

 

 

SYRIA/USA/RAQQA

A new offensive as the uSA sends in hundred of marines, 20 miles from Raqqa.  These troops will start firing on the ISIS capital and now doubt that this will be part of Trump’s promise to annihilate ISIS

(courtesy zerohedge)

US Sends Hundreds Of Marines 20 Miles From ISIS Capital

While the Trump administration waits to decide if it will send 1,000 troops to Kuwait to fight ISIS, overnight the Washington Post reported that the US has sent several hundred Marines to Syria to support an allied local force aiming to capture the Islamic State stronghold of Raqqa. Defence officials said they would establish an outpost from which they could fire artillery at IS positions some 32km (20 miles) away. US special forces are already on the ground, “advising” the Kurdish-led Syrian Democratic Forces (SDF) alliance according to the BBC.

The defence officials told the Washington Post that the Marines were from the San Diego-based 11th Marine Expeditionary Unit, and that they had flown to northern Syria via Djibouti and Kuwait. They are to set up an artillery battery that could fire powerful 155mm shells from M777 howitzers, the officials said. Another marine expeditionary unit carried out a similar mission at the start of the Iraqi government’s operation to recapture the city of Mosul from IS last year.

Under former President Barack Obama, US special operations forces were deployed to recruit, train and advise the SDF’s Arab and Kurdish fighters. However, their numbers were limited to 500.
The Marines’ deployment is considered temporary, so it is not affected by the cap. The western alliance is expected to launch an assault on Raqqa in the coming weeks, which virtually assures that hundreds more will be shipped in shortly.

A spokesman for the US-led multinational coalition against IS, Colonel John Dorrian, told Reuters news agency on Thursday that the dozens of Rangers who recently arrived on the outskirts of Manbij, about 110km (68 miles) from Raqqa, were also there “for a temporary period”.

Additionally, over the weekend, a separate force of elite US army Rangers was also deployed near a town north-west of Raqqa in heavily armoured vehicles, in an attempt to end clashes between SDF fighters and a Turkish-backed rebel force. Pentagon officials had earlier said the Rangers were taking part in a “reassure and deter” mission following clashes between Turkish-backed Arab rebels and local fighters from the Manbij Military Council, which was set up by the SDF when it captured the town from IS last year.

Last week, after Turkey’s president said the rebels aimed to capture Manbij, the council said it had agreed a deal with Russia to hand a string of villages on the frontline over to Syrian government forces in order to protect them. Turkey considers the Kurdish Popular Protection Units (YPG) militia, which dominates the SDF, an extension of the banned Kurdistan Workers Party (PKK), which operates inside Turkey.

Is this a US escalation?

The short answer: yes; the official one: “it is not yet clear”, but the deployment comes as President Donald Trump considers a new plan to defeat IS that was submitted by the Pentagon late last month. Reports say the review may lead to an increase in the number of US troops in Syria, but not a dramatic shift in strategy.

The Associated Press news agency reports that Mr Trump wants to give the Pentagon greater flexibility to make routine combat decisions in the fight against IS. Commanders on the ground were frustrated by what they considered micromanagement by the Obama administration, it adds. As reported last night, the US is also said to be preparing to send up to 1,000 troops to Kuwait to serve as a reserve force that can deployed to fight IS in Syria and Iraq if necessary.

In total, about 6,000 US troops are in the countries, but largely in advisory roles.

Why Is Raqqa so important?

As the WSJ writes overnight, the ongoing “three-way contest” for Raqqa will shape the mideast. Here are some details:

As the Syrian conflict enters its sixth year, the outcome of the scramble for Islamic State’s de facto capital will shape the balance of power in the Middle East for the foreseeable future.

 

With the self-styled caliphate rapidly shrinking in Iraq after the loss of much of Mosul, the fall of Raqqa and Islamic State’s remaining territories in Syria has become just a matter of time. The contest over who gets these spoils, however, threatens to unleash a new spiral of violence that could draw regional and global powers deeper into the conflict.

 

The three forces aiming for Raqqa—Sunni Arab rebels, the Syrian regime and Kurdish-led militias—all view control over that area as giving them crucial leverage in any political settlement of the war.

The complicated dynamic is further muddled by the strategic calculations of their main sponsors, whose own interests extend far beyond the power struggle inside Syria.

 

Turkey, the main supporter of the rebel Free Syrian Army and allied Sunni Arab militias, is most interested in weakening the main Syrian Kurdish political faction, which is affiliated with the PKK, or Kurdistan Workers’ Party. The PKK is waging a violent campaign inside Turkey and is considered a terrorist group by Washington and Ankara alike.

 

For the Syrian regime’s main backer Russia, which has developed ties with the Syrian Kurds and, of late, with some Sunni Arab rebels, the main goal is to capitalize on its costly investment in Syria and to cement the achievements of its military campaign through a political deal.

 

The Trump administration, meanwhile, is still reviewing its Syria policy. Its actions, for now, remain driven almost exclusively by the military priorities in the battle against Islamic State, with limited attention to America’s other interests and alliances in the region.

 

end

 

IRAN

A defiant Iran conducts more ballistic missile tests but this time from a navy vessel.  That should be good for a 10 dollar knockdown in the price of gold

(courtesy zero hedge)

Defiant Iran Conducts More Ballistic Missile Tests; This Time From Naval Vessel

As tensions between the U.S. and Iran continue to mount, the semi-official news agency Tasnim is reporting that Iran’s Revolutionary Guard has successfully conducted yet another ballistic missile test, this time from a navy vessel.  Called the Hormuz 2, these latest missiles are designed to destroy moving targets at sea at ranges up to 300 km (180 miles).

Reports on the latest test quotes Amir Ali Hajizadeh, commander of the IRGC’s Aerospace Force, who confirmed that “the naval ballistic missile called Hormuz 2 successfully destroyed a target which was 250 km away.”

The missile test is the latest event in a long-running rivalry between Iran and the United States in and around the Strait of Hormuz, which guards the entrance to the Gulf. About 20% of the world’s oil passes through the waterway, which is less than 40 km wide at its narrowest point.

Iran

 

* * *

Of course, this latest provocation follows additional tests conducted earlier this week in which Iran test-fired a pair of ballistic missiles into the Gulf of Oman and subsequently proceeded to provoke a U.S. Navy ship in the area.  For those who missed it, here is what we wrote earlier this week:

Trump’s geopolitical headaches continue to mount.

One day after North Korea launched 4 ballistic missiles, 3 of which fell into the East Sea inside Japan’s economic exclusion zone, and which have painted a spotlight on how Trump will react to this latest provocation, Fox reports that Iran also test-fired a pair of ballistic missiles this weekend into the Gulf of Oman, with one missile destroying a floating barge approximately 155 miles away.

The launches of the Fateh-110 short-range ballistic missiles were the first tests of the missile in two years, one official said. It was not immediately clear if this was the first successful test at sea — raising concerns for the U.S. Navy, which operates warships in the area.

According to one quoted official, Iran launched the two short-range ballistic missiles from Islamic Revolutionary Guard Corps bases in Bandar-e-Jask, in southeastern Iran. The first missile was fired on Saturday, but missed its target, though it landed “in the vicinity,” one official said. A day later, Iran made another attempt and was successful. The Iranian Fateh-110 Mod 3 has a new “active seeker,” helping the missile locate ships at sea, according to one official.

“It’s a concern based on the range and that one of the missiles worked,” said one official, who requested anonymity because he was not authorized to disclose the launch. Two years ago, Iranian cruise missiles destroyed a large barge designed to look like an American aircraft carrier. Iranian state-television broadcast the images publicly at the time.

The new Iranian short-range ballistic missile launches come a week after Iran successfully test-fired Russian surface-to-air missiles, part of the S-300 air defense system Russia sent to Iran recently.

According to the Foundation for Defense of Democracies, Iran has conducted as many as 14 ballistic missile launches since the landmark nuclear agreement in July 2015. A senior U.S. military official told Fox News that Iran had made great advances in its ballistic missile program over the past decade.

Late last month, Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford said Iran’s behavior had not changed since the White House put the Islamic Republic “on notice” following Iran’s successful intermediate-range ballistic missile test-launch in late January.

This launch appears to be in addition to what we reported on Saturday, in which Iran successfully test-fired a sophisticated, Russian-supplied S-300 air defense system, according to the official IRNA news agency reported on Saturday. The drill took place during a recent military exercise named Damvand, and was attended by senior military commanders and officials according to Tasnim.

In a separate report, Reuters notes that Iranian vessels came within 600 yards of U.S. Navy ship in Strait of Hormuz, forced it to change direction, Reuters says in tweet, citing unidentified official.

BREAKING: Iranian vessels came within 600 yards of U.S. Navy ship in Strait of Hormuz on Saturday, forcing it to change direction – official

It is unclear as of this moment if the two incident were related, and whether the White House plans on responding to either the North Korean ballistic missile launch or the latest moves by Tehran as the Trump administration has vowed to do.

6.GLOBAL ISSUES

7. OIL ISSUES

One of the big stories of the day:  Crude collapses which sends bond prices tumbling (yields rising) as energy risk escalates:

(courtesy zero hedge)

Energy Credit Risk Soars As Crude Carnage Continues

Just when you thought it was safe to go all-in on energy stocks, credit, and commodities because, well, what could go wrong; crude’s collapse in the last few days (amid record long speculators) has smashed Energy credit markets and sent high-yield bond prices cratering.

WTI Crude collapsed to a $48 handle at its lows today…

 

Sending yields on Energy bonds to 3 month highs (and prices tumbling)

 

 

And the result for high yields bonds is the year’s gains evaporated in 5 days…

 

Amid massive fund outflows…

end

8. EMERGING MARKETS

end

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

Euro/USA   1.0563 UP .0019/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 MIXED/   

USA/JAPAN YEN 114.66 UP 0.249(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 1.2152 DOWN .0021 (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 1.3526 UP .0038 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 19 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0563; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 23.91 POINTS OR 0.74%     / Hang Sang  CLOSED DOWN 280.71 POINTS OR 1.18% /AUSTRALIA  CLOSED DOWN 0.33%  / EUROPEAN BOURSES MOSTLY MIXED 

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 64.55 POINTS OR 0.34% 

Trading from Europe and Asia:
1. Europe stocks  MOSTLY MIXED

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 280.71 POINTS OR 1.18%       / SHANGHAI CLOSED DOWN 23.91.74  OR 0 .74%/Australia BOURSE CLOSED DOWN 0.33%/Nikkei (Japan)CLOSED UP 64.55 POINTS OR 0.34%  /  INDIA’S SENSEX IN THE  GREEN

Gold very early morning trading: $1204.40

silver:$17.15

Early THURSDAY morning USA 10 year bond yield: 2.569% !!! UP 1/2 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.156, UP 1/2 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 102.06 DOWN 6 CENT(S) from TUESDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS

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

JAPANESE BOND YIELD: +.096%  UP 2  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.839%  UP 3 IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.312 UP 6 POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 45 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.426% UP 7 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

Euro/USA 1.0583 up .0040 (Euro UP 40 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 114.75 UP: 0.333(Yen DOWN 33 basis points/ 

Great Britain/USA 1.2165 DOWN 0.0008( POUND DOWN 8 basis points)

USA/Canada 1.35608 UP 0.0022(Canadian dollar DOWN 22 basis points AS OIL FELL TO $48.97

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This afternoon, the Euro was UP by 40 basis points to trade at 1.0583

The Yen FELL to 114.75 for a LOSS of 33 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 8  basis points, trading at 1.2165/

The Canadian dollar FELL  by 22 basis points to 1.3508,  WITH WTI OIL FALLING TO :  $48.97

The USA/Yuan closed at 6.9085/
the 10 yr Japanese bond yield closed at +.096% UP 2  IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 2 IN basis points from WEDNESDAY at 2.585% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.172 UP 2  in basis points on the day /

Your closing USA dollar index, 101.95 DOWN 17  CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED DOWN 19.65 OR 0.27% 
German Dax :CLOSED UP 11.08 POINTS OR 0.09%
Paris Cac  CLOSED UP 21.03 OR 0.42%
Spain IBEX CLOSED UP 147.90 POINTS OR 1.50%
Italian MIB: CLOSED UP 88.85 POINTS OR 0.46%

The Dow closed UP 2.46 OR 0.01%

NASDAQ WAS closed UP 1.26 POINTS OR 0.02%  4.00 PM EST
WTI Oil price;  48.97 at 1:00 pm; 

Brent Oil: 51.02  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.33 DOWN 43/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD RISES TO +0.426%  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:$49.60

BRENT: $52.44

USA 10 YR BOND YIELD: 2.609%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.192%

EURO/USA DOLLAR CROSS:  1.0576 up .0032

USA/JAPANESE YEN:114.99   up 0.581

USA DOLLAR INDEX: 101.97  down 15  cents ( HUGE resistance at 101.80 broken)

The British pound at 5 pm: Great Britain Pound/USA: 1.2162 : down 11 BASIS POINTS.

Canadian dollar: 1.3509  up .0022

German 10 yr bond yield at 5 pm: +.426%

END

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

TRADING IN GRAPH FORM

Bond Blooodbath – Treasuries Haven’t Seen A Longer Losing-Streak Than This In 43 Years

Overnight saw Chinese money markets start to get angry and the Yuan tumble, Draghi didn’t help, and Spicer’s Glass-Steagal comments did not create hope – with credit, copper, crude, emerging markets, risk-parity funds, and now china all crumbling, is tomorrow’s payroll print the catalyst for stocks to wake up?

 

The Dow was desperately saved from being down 6 days in a row (which would have been the longest losing streak since the day before the election)…

Dow, S&P, and Nasdaq clung to unchanged from before the Trump speech ramp…

 

VIX was pressured once again to get The Dow green

 

Small Caps broke below the 50DMA…

 

Banks were stunned lower after Sean Spicer confirmed Trump’s commitment to Glass-Steagal…

 

Stocks remain adrfit from tightening financial conditions…

 

VIX is entirely decoupled from stocks…

 

Risk Parity funds are delevering hard…

 

Which explain sthe ongoing selling in both bonds and stocks…

 

Emerging Market stocks have collapsed – breaking away from the correlated Trump trade hype…

 

Another ugly day for bonds but we note both 10Y and 30Y remain below the post-fed rate hike high yields

 

Treasury yields have now risen for 9 straight days – the 10Y Treasury bond has not seen a longer streak of losses since April 1974…

10Y yields rose 9 straight days in June 2006 (fell 72bps in next month), and March 2012 (fell 96bps in next 2 months)

Debt Ceiling anxiety is becoming very clear in the T-Bill market – the yield curve across the March month-end is massively inverted…

 

As Treasury Cash Balance crashes towards zero…

 

High yield credit ETFs saw the biggest outflows since before the election…

 

As Credit markets crash to 3-month lows (near the 200DMA)..

 

And HY credit spreads have widened for 6 straight days – biggets spike since May 2016

 

 

EUR rallied (and Bund yields spiked) after Draghi didn’t offer too much…

 

March continues to be ugly for commodities…

 

Gold futures are down 8 straight days – the longest streak since May 2016 (which notably marked the swing lows and saw the precious metal rally 15% in the next month)

 

WTI and RBOB were monkeyhammered lower – smashing near pre-OPEC-Cut-Deal lows…

 

And Oil Vol is starting to spike…

 

Will stocks start to notice?

 

Bitcoin crossed back above Gold again…

 

And finally, this…

end

 

The low Canadian dollar is causing prices in Canada to rise.  This has causes USA import prices to soar to 5 yr highs.  Inflation is coming to all the globe

(courtesy zerohedge)

US Import Prices Soar To 5 Year Highs As Fuel Costs Spike

Thanks to a surge in prices from Canada and Asia Near East, US Import Prices soared more than expected in February. The 4.6% rise is the highest since February 2012, driven by a 40.5% surge year-over-year in Fuels and lubricants.

 

 

Notably US import prices from Mexico fell 0.3% YoY.

 

end

 

We highlighted the huge problems in the real estate market in the USA yesterday. Today the mega bears smell blood on the table as REIT are tumbling as bricks and mortar operations are faltering terribly.

(courtesy zero hedge)

 

 

Mega-Bears Smell Blood As REITs Tumble

While many have blamed today’s spike in yields for the broader underperformance of the REIT sector, which sent the Bloomberg North American REIT index down 1.4%, its biggest one-day drop since December in a widespread selloff across all property sectors with 194 of the 214 stocks in the index lower today, it’s more than just the jump in rates that is slamming the rate-sensitive sector.

While longs are grudgingly parting with some of the prized holdings, it is the short sellers that have emerged from hibernation and have smelled blood, first and foremost among mall REITs – the most vulnerable of the lot – and are turning their attention to the struggling chains’ retail landlords. The underlying retail story is familiar, but just in case here is a brief recap from WSJ: shares of retail-focused real-estate investment trusts, which own malls and shopping centers, have slumped since August last year, when Macy’s Inc. announced it would close 100 stores. Sears Holdings and J.C. Penney Co. later said they would close more than 100 stores each.

As a result, a regional-mall REIT index plunged about 22% from late July until March 6, according to data from the National Association of Real Estate Investment Trusts. And as the retail conflagration has spread, so has the shorting: the amount of short interest on retail-focused REITs increased to $7.6 billion as of March 6 from $5.6 billion as of the end of December, according to S3 Partners, a financial analytics firm, the WSJ reports.

S3 also reports that so far shorts against REITs with more class B and C malls, such as CBL & Associates Properties Inc., Pennsylvania Real Estate Investment Trust and Washington Prime Group, have been more profitable. However, increasingly shares of Class A mall REITs, which own the most productive malls in the country, have faced pressure. Short interest on mall giant Simon Property Group jumped to $1.3 billion on March 3 from $916 million at the end of 2016, near its record high. Over the same period, short interest trades in GGP Inc. increased to a record $689 million from $430 million.

Quote BTIG’s James Sullivan: “there has been a steady drumbeat of negative reports from anchor retailers in the mall. As a result, when we keep hearing bad news it adds to the impression that there is a problem in the malls.”

Well, there is, because as we reproted yesterday “A Third Of All Shopping Malls Are Projected To Close As ‘Space Available’ Signs Go Up All Over America” only for years most refused to accept the changing reality of America’s traditional “bricks and mortar” industry which has been decimated not only by online retailers such as Amazon but also as a result of ongoing deterioration in the US middle class whose disposable income and spending habits have not kept up with the “recovery.”

Other short sellers are focusing on mall debt, which as we also noted yesterday in “The Next Domino To Fall: Commercial Real Estate“, is fast becoming a source of potential of distress for capital markets. As the WSJ notes, losses on securitized mortgages tied to retail property rose to $1.7 billion last year from $1.3 billion in 2015, the only property segment that showed an increase in losses, according to Moody’s Investors Service. Kin Lee, senior portfolio manager at Angel Oak Capital Advisors, said his firm, which invests in commercial mortgage-backed securities, is becoming more selective in buying CMBS backed by malls.

“We don’t favor deals that have too much exposure to malls,” said Mr. Lee. “These headlines haven’t been completely new.”

Furthermore, as we warned one month ago in “Are CMBS Ghosts of The Past Reviving?” spreads on BBB-rated retail-heavy CMBS deals are rapidly widening, according to Trepp. Just like 10 years ago, when the “big short” was putting on the RMBX trade, and to a smaller extent, its cousin the CMBX, so now too some are starting to short CMBS through the CMBX, a CDS index which tracks the values of bonds backed by various commercial properties. They are betting against securities backed by malls in weaker locations where stores could close in quick succession, triggering debt defaults.

To be sure, some – like BTIG’s Sullivan – argue the mall REITs have been oversold. Defenders note that the department-store closures haven’t hit REIT-owned malls much so far, and mall REITs have been able to backfill other vacancies with new tenants, analysts said. Chicago-based GGP, for instance, has signed new tenants such as Dick’s Sporting Goods Inc., department store Belk Inc. and gym operator Life Time Fitness Inc. to replace Macy’s stores. Only a handful of the planned J.C. Penney closures are expected to occur in REIT-owned malls.

* * *

However, in this particular case, the bulls may be outnumbered, especially if some of the prominent shorts jump in the water smelling the REIT blood. The best example of precisely this is happening, is the latest note from one of the world’s most vocal mega-bears, Horseman Capital’s Russell Clark, who this week released a note titled “Mall Rats” focusing on, you guessed it, mall REITs:

“Intriguingly we have started to see volumes of real estate transactions for shopping malls fall. This means that the number of transactions to buy or sell properties is beginning to decline. Last time this happened, rents began to fall a year later.

His full note is below:

MALL RATS

Shopping mall REITS have been a fantastic investment over the years. Not only have they provided investors with large capital gains, they have also typically offered above market dividend yields. My interpretation of the REIT model is that the operator collects rents from a diverse number of retailers. This is then passed on to the end investors after costs and financing. The REIT manager reduces risk by diversifying the retailers paying rent, and by also spreading the risk geographically. If the REIT manager can acquire more real estate assets at a yield higher than what it needs to pay out as dividend yield, then the REIT can issue more shares and grow indefinitely. Mall REITs have generally done well, except during the financial crisis.

However, it seems to me that North America could well have too many shopping malls. On a per capita basis, the US has twice the space of Australia and 5 times that in the UK.

One source of REITs revenue growth comes from acquiring more malls. Intriguingly we have started to see volumes of real estate transactions for shopping malls fall. This means that the number of transactions to buy or sell properties is beginning to decline. Last time this happened, rents began to fall a year later. Perhaps it’s a sign that buyers believe rents have some downside risk?

Many people in the market are aware of the problems that the large department stores in the US are currently facing, and their resultant plans to retrench. This affects two of the largest shopping mall REITs that have the department stores as tenants. The reality is that the shopping mall REITs charge extremely low rents to the department stores. The large shopping malls use the department stores to lure traffic, and then make their money from higher rents charged to speciality retailers. Often the per square foot rent of the specialty retailer can be 30 times or higher that paid by the anchor tenant. Looking at the top 2 shopping mall operators, they disclose their top rent payers. Recent share prices performance of 8 shared tenants has been poor, and management commentary has seeming implied that they may also be looking to reduce store count.

It should also be pointed out that many tenants have a clause in their lease to reduce rents should an anchor close a store. Thus, even though the loss of rent due to an anchor closing is minimal, the knock-on effect of reduced rents from the remaining tenants is a serious concern for the REITs.

One of the other problems that shopping mall REITs face is that the size that the large department stores take up is more than 400 million square feet. The largest and most successfully specialty retailer is TJ Maxx which currently has 100 million square feet. It is difficult to see any single retailer quickly being able to fill the space made vacant by department store closures.

Back in the lead up to the financial crisis we found that the share prices of REITs and their tenants were very closely related. Recently we have seen tenants share price weaken again, but REITS remain relatively strong.

 

Investors are advised to exercise caution with the shopping mall REITs

 

end

 

Trump is championing the Ryan plan for health care in the House. However it looks like he is going to fall short as some Republicans are against some of the features in the plan. Also the centrist Republicans in the senate are also against some of the features.

(courtesy zerohedge)

 

Trump Vows “Full-Court Press” As Opposition To ‘RyanCare’ Mounts

As the U.S. House of Representative marks up Paul Ryan’s American Healthcare Act, the battle between the moderate and conservative factions of the Republican Party continues to mount behind the scenes all while opposition from a variety of advocacy groups is also growing.  “This is what good, conservative health-care reform looks like,” House Speaker Paul Ryan said Wednesday. “It is bold and long overdue. And it is us fulfilling our promises.”

Despite the public bickering, Republicans scored a victory early Thursday, pushing a measure through the House Ways and Means Committee repealing tax penalties on people who don’t buy insurance but otherwise progress on the bill has been slow.

As the Wall Street Journal notes, Ryan and House Republicans have to thread a very fine needle on healthcare legislation that appeals to a sufficient number of  conservatives to pass the House while not alienating the more moderate factions of the party in the Senate.

House Republican leaders are under pressure to ease passage through the House by making changes that appease conservatives who want a more aggressive repeal of the ACA. Those changes risk further jeopardizing support in the Senate, where centrist Republicans have said they are concerned the proposal will cause too many people to lose coverage, particularly those with low incomes.

 

Underscoring the Senate’s central role, a group of Republican governors representing states that expanded Medicaid under the existing law have largely given up on lobbying the House and instead are focusing their efforts on the Senate, according to two people familiar with their thinking.

“Yes, I do not think it will be well received in the Senate,’’ Sen.
Susan Collins (R., Maine) told Yahoo News. “But I do want to emphasize
that it’s still a work in progress. … So, who knows, maybe it’ll
eventually get better.’’ She also signaled she would oppose measures in
the House bill to end funding for Planned Parenthood.

Ryan

The GOP proposal topples many central provisions of Obamacare, including a requirement that most Americans buy health coverage or pay a penalty. The plan would end tax credits provided to lower-income people on the ACA’s exchanges and replace them with new tax credits for a broader set of people who don’t get insurance through their work.

The credits would be pegged to age and would phase out for higher-income earners. In many cases, analysts say, the credits would be less generous for older and low-income consumers, and for people in areas with high health costs, than the subsidies offered under current law.

The bill would repeal the majority of the health law’s taxes starting in 2018 and freeze federal funding in 2020 for the 31 states that expanded Medicaid. It would also overhaul and reduce federal funding for Medicaid.

But opposition is mounting from groups representing hospitals, doctors and seniors which are urging House Republican leaders to put the brakes on their plan to overhaul the Affordable Care Act, saying it risks stripping too many people of insurance and in some cases would hurt industry finances.

America’s Essential Hospitals, whose members serve large numbers of uninsured patients, sent a letter on Wednesday to House leaders saying it was ill advised to consider the legislation without an estimate of the costs and coverage implications from the Congressional Budget Office, the independent office that assesses legislation for Congress. Those assessments won’t arrive for several days. The hospital group also said some provisions would hurt patients.

 

“America’s Essential Hospitals cannot support the legislation to be considered by the committee,” Dr. Bruce Siegel, president and chief executive, said in the letter.

 

The American Medical Association, a physician group, said in a letter to Congress on Tuesday that it is unable to support the GOP bill because of “the expected decline in health insurance coverage and the potential harm it would cause to vulnerable patient populations.”

 

And a major association of insurers, America’s Health Insurance Plans, warned in a letter that the bill could damage the insurance market and hurt Medicaid enrollees.

Meanwhile, President Trump has promised a full-court press to rally support for RyanCare while reportedly saying that if the House GOP’s ObamaCare repeal and replace plan fails to pass, then he’ll simply let ObamaCare fail and will blame the Democrats.

“Trump said he will have football stadium events in states where he won by 10-12 points and he is going to dare people to vote against him,” a source at the meeting said.

 

“We’re going to have a full-court press,” Mr. Spicer told reporters. “You will see a lot of travel and a lot of activity by the president and all of the administration.”

Grab your popcorn, this fight should get fun.

 

end

 

Albert Edwards believes that right after Yellen raises rates, that event will unleash a bond market bloodbath similar to what happened in 1994

a must read..

(courtesy Albert Edwards/zero hedge)

Albert Edwards: Next Week The Fed Will Unleash “A Bond Market Bloodbath”

Following the Trump presidential victory, two prominent macro strategists have undergone a significant change in their outlook: while David Rosenberg, who started off with a deflationary, and bearish outlook, then flipped to inflationary (and bullish), has recently one again “mean-reverted” and expects a further drop in Treasury rates, as deflationary forces return, his SocGen peer, Albert Edwards – while still expecting a deflationary “ice age” in the longer-run (in case there is any confusion, he expressly states “make no mistake. Unlike most in the markets, I remain a secular bond bull and do not think this 35 year long bull bond market is over”) now expects an imminent “bond rout” in the coming weeks as the Fed’s rate hike cycle leads to an aggressive selloff in short- as well as long-term rates. The result will be another “central bank-inspired recession”, which will lead to the convergence of yields on the 10Y US Treasury with Japanese and European bonds below zero, as the global deflationary ice age enters the final round.

Edwards’ summary of his current state of mind, just as the Fed is about to make (yet another) historic mistake, is – as usual – rather picturesque:

Make no mistake. Unlike most in the markets, I remain a secular bond bull and do not think this 35 year long bull bond market is over. I believe the US Fed has created another massive credit bubble that will, when it bursts, lay the global economy very low indeed. Combine this with the problems of a Chinese economy dependent on increasingly ineffective injections of credit to produce increasingly pedestrian GDP growth and you have a right global mess. The 2007/8 Global Financial Crisis will look like a soft-landing when the Fed blows this sucker sky high. The seeds for that debacle have already been sown with the Fed having presided over one of the biggest corporate credit bubbles in US history. All that is needed now is for the Fed to sprinkle life-giving rate hikes onto these, as yet dormant, seeds of destruction. Accelerated Fed rate hikes will cause tremors in the Treasury bond markets, forcing rates up, most especially in the 2 year – just like 1994. But as yet another central bank-inspired global recession unfolds, I  believe US 10y bond yields will ultimately converge with Japanese and European yields well below zero – in other words, buy 10y bonds on weakness!

And speaking of 1994, and the reason why Edwards is confident that despite the market “pricing in” the Fed’s upcoming rate hikes, nobody has any clue what is about to be unleashed, the SocGen strategist reminds his clients of the Orange County “havoc” unleashed with the 1994 rate hike cycles.

For those few of us in the markets of a certain age, Orange County conjures up only one thing: 1994 goes down in infamy as one of the biggest ever bond market bloodbaths in history culminating at the end of the year with Orange County in California going bankrupt (younger clients in their late 20s will only know the OC as the mid-2000s teen programme based in Newport Beach, which I watched religiously with my then teenage son and daughter).

 

I remember the 1994 period as if it were yesterday (unlike yesterday itself). Despite the Fed telegraphing the series of rate hikes and market participants forecasting multiple hikes, it was most curious how the market went into total convulsion. I was chatting to my ?similarly young? colleague Kit Juckes about this and he reminded me that the whole yield curve gapped up some 50bp immediately! It was a bloodbath, especially for 2y paper.

For the benefit of readers who may have missed this particular episode in bond market history, Edwards here are some more details of how the 1993/1995 rate hike cycle flowed through to the bond market, and then promptly resulted in an inverted curve.

You really had to be there at the end of 1993 to understand just how widely expected the 4 February 25bp Fed rate hike was. I was at Kleinwort Benson back then and I remember articulating that rates could rise somewhat more than the market expected on our December 1993 macro European tour. There was no real pushback. I have managed to lose my Global Strategy Weekly files from that time to see exactly what I was saying then, but I have my yellowing press cuttings file! From the FT on 8 Feb 1994 I find this, “on Thursday (the day before the Fed’s first hike), Mr Albert Edwards of Kleinwort Benson  wrote: In the US, Alan Greenspan could not have been clearer. He regards 3% as an excessively low rate which has served its purpose to eliminate the banking crisis and alleviate the credit crunch. The Fed does not care what headline inflation is, rates are heading higher. The risk is that the markets do not view a ¼% rate increase in isolation but the first in a series of tightenings, which it will be”. I was not alone in that view. It was quite common on the sell-side. What though we could not anticipate was quite how savage the bond sell-off would be.

Additionally, Edwards also shares two articles from that year, first from Fortune entitled “The Great Bond Massacre of 1994” see link, and also from December, when The New York Times analysed events surrounding the most high profile casualty of that year, namely Orange County, link. In a word the problem was leverage.

Fortune Magazine wrote in 1994, “Just as in the U.S., European bond investors were operating on lots of leverage. That made them just as vulnerable when the margin calls started to come. The result: “You had a snowballing liquidation completely out of proportion to the (economic) fundamentals,” says Gilbert de Botton, chairman of Global Asset Management in London. “Both the U.S. and Europe had been overexploited by investors on margin.”

Back in New York, the report of extremely strong 6.3% real growth in the fourth quarter of last year, combined with Greenspan’s well-publicized fears about incipient inflation, struck new fear into bondholders. The Clinton Administration didn’t help matters. “The saber rattling over Japanese trade hurt a lot,” says de Botton. “(U.S. Trade Representative) Mickey Kantor’s allusions to the effect that the U.S. was not in favor of a strong dollar was an indirect source of forced selling (of U.S. bonds) by European investors.” Fearing currency losses and declining bond values, foreign holders of U.S. bonds began to pull out.

 

Given all the leverage in the market, it shouldn’t have been surprising that long rates moved up sharply when the Fed finally began boosting short-term rates. Indeed, some members of the Open Market Committee voiced fears at the February 4 meeting that even a small increase in the Federal Funds rate could rattle the bond market. Rattle it did. The initial rise in long rates brought forth a flood of margin calls. Rather than put up more money, which many of them didn’t have anyway, speculators liquidated their holdings. With individuals bailing out of bond mutual funds as well, and little or no new money  coming into the market, bond prices had nowhere to go but down.”

Edwards’ rhetorical question, here: “Does that snippet not sound eerily reminiscent of current events?

He also points out that while the Fed has so far hiked rates twice in the current tightening cycle, “these have become such isolated hikes that the market (Fed Fund futures strip) has lost confidence that the Fed will ever deliver their promises as represented by the Fed dots.” With next week’s rate hike, however, all this will change.

There is another key similarity between 2017 and 1994:

The top chart shows that back in 1994, just before the Feb 4 rate hike, 2y yields were trading some 100bp above Fed funds. That one 25bp rate hike prompted the 2y-Fed Funds spread to soar from 100bp to 250bp within the space of three months while the 10y-2y curve flattened rapidly, destroying carry-trade bets along the curve. The key similarity with 1994 is that currently US 2y yields at 1.35% still trade tightly to the current Fed Funds rate of 0.75% (see left-hand chart below). If the market really takes on board Janet Yellen?s much more aggressive rhetoric, then we could easily see 2y yields rise towards the 10y as we did in 1994. If that happens and the US 2y spread with German and Japan continues to soar (see righthand chart below), this will be like rocket fuel strengthening the US dollar

Finally, while Edwards is hardly a technician, he provides two charts to substantiate his claim that a historic bond rout may be imminent: while the right-hand chart shows that US yields have now broken out and are heading to 2.65% and then 2.85% in the short term, it is the left-hand chart that is most interesting, “showing that US 10y yields can rise all the way to 3¼% and beyond and the secular Ice Age bull market in government bonds would still be intact.”

Edward’s conculsion: “In 1994, it was excess leverage that broke the market, culminating in December 1994?s bankruptcy of Orange Country and also the Mexican Peso crisis in that same month (due to dollar strength). I?m going to look harder for my 1994 Global Strategy Weekly file, for despite remaining a secular bond bull, I think we are in for a rough ride – especially with equity markets at record highs.”

 

 

end

 

Exactly what we said would happen:  No tax reform until fiscal 2018:

(courtesy zero hedge)

Bad News For Wall Street: No Tax Reform Until Fiscal 2018, McConnell Warns

As explained, most recently two days ago, the key reason Wall Street is concerned about the complications involving Obamacare’s “repeal and replace”, which now appears will be stuck in Congress for a long time following vocal opposition from various conservative groups and outside lobby interests, is that it will delay tax reform. As Goldman laid it out over the weekend, “if Republican leaders cannot send the President an ACA bill by April or May, they will face two politically unpalatable options. First, they could continue to press for a solution, delaying consideration of tax reform for an indefinite period. This delay would occur because both proposals are expected to be considered under the “budget reconciliation” process. However, since only one tax bill and one spending bill can be considered under that process in each budget cycle—and ACA repeal legislation is expected to have tax and spending provisions—Republican leaders plan to consider the ACA bill in the FY2017 budget cycle, and to begin the FY2018 budget cycle, including instructions to pass tax reform, once the ACA bill has passed.”

The other option Goldman put forward would be to postpone ACA legislation and move to tax reform, essentially reneging on a campaign commitment.

That however is not going to happen. Instead, in some very bad news for Wall Street, earlier today Senate Majority Leader Mitch McConnell confirmed the worst case outcome, when he poured cold water on the Trump administration’s goal of completing tax reform by the August recess.  “I think finishing on tax reform will take longer,” McConnell said during a Playbook Live interview.

This automatically means that tax reform will be part of the 2018 Fiscal Year, and will not be implemented in the current budget year ag all.

Previously, Treasury Secretary Steven Mnuchin had raised Wall Street’s hopes when he said in February that the administration wants to wrap up a long-held GOP goal of overhauling the tax code before lawmakers leave for a month-long break.  “So we are committed to pass tax reform,” he told CNBC. “We want to get this done by the August recess.”

Alas, according to the Senator, this will not happen, and may instead drag on well into the end of 2017 or even 2018. The Senate is tentatively scheduled to leave town by July 31st and return during the first week of September.

Pressed about when he thought lawmakers would be able to complete tax reform, the Senate’s top Republican demurred.  “It is complicated. All of those discussions are already under way,” McConnell said. “How do you craft it?” As was already known – and eliminating Goldman’s second option above – McConnell added that the Senate has to wrap up work on an ObamaCare repeal bill, also being passed through reconciliation, before it can bring tax reform to the floor.

In other words, tax reform – the main catalyst behind the market’s relentless surge since the election – may not be coming this year at all. It also means that readers can now add 3-6 months for every “tax-related” catalyst date in the chart below.

Incindetally, Wall Street appears to be gradually coming to terms with this: below we show that investors have clearly downgraded their view of tax reform, judging by the relative performance of a basket of high-tax stocks, which should benefit disproportionately from tax reform. They no longer are.

 

end

 

Bankers were not happy campers when they heard that Trump is committed to restoring Glass Steagal.

(courtesy zero hedge)

 

Bank Stocks Tumble Into Red After Spicer Confirms Trump’s “Commitment To Restoring Glass-Steagal”

That’s not what the bankers want to hear…

  • *TRUMP STILL COMMITTED TO RESTORING GLASS-STEAGALL: SPICER

Interestingly this comment comes after President Trump met with a group of community bankers…

 

And that is weghing on The Dow…

So, deregulation… after the big banks have been broken up by Glass-Steagal-lite?

 

 

end

 

Mnuchin warns Congress that they are approaching their debt ceiling and they will use extraordinary measures to avoid the debt ceiling.  Generally they borrow from Trust funds.  They have only 87 billion in cash left.  They probably have enough “cash” to last until June

 

The yield curve inverts immediately upon the letter> the fun will begin next week.

 

(courtesy zero hedge)

Yield Curve Inverts As Mnuchin Warns Congress Of “Extraordinary Measures” To Avoid Debt Ceiling

With the Treasury cash balance collapsing near zero, Treasury Secretary Mnuchin has written to Congress to warn them that Treasury will need to start taking extraordinary measures when statutory limit on U.S. debt is reinstated on March 16.

A copy of the letter dated March 8 was posted on Treasury website:

“Treasury anticipates it will need to start taking certain extraordinary measures in order to temporarily prevent the United States from defaulting on its obligations”

Treasury will suspend the sale of State and Local Government Series (SLGS) securities, which count against the debt limit, as of March 15 and “until the debt limit is either raised or suspended” As it’s done in the past, Treasury will use additional extraordinary measures. Mnuchin says that “honoring the full faith and credit” of U.S. outstanding debt is a critical commitment.

As Treasury Cash Balance crashes towards zero…

As The Hill reports, Failing to raise the debt ceiling after those measures run out would risk the United States defaulting on its debt.

“By CBO’s estimate, the Treasury would most likely be able to continue borrowing and have sufficient cash to make its usual payments until sometime in the fall of this year without an increase in the debt limit, though an earlier or later date is possible,” the CBO said in the report.

 

Treasury Secretary Steven Mnuchin said during his confirmation hearing that he supports increasing the debt limit, and Office of Management and Budget Director Mick Mulvaney said last month that the administration plans to use extraordinary measures as long as possible.

 

“But we will deal with it,” he said, and “certainly” before Congress recesses in August.

But Debt Ceiling anxiety is already becoming very clear in the T-Bill market – the yield curve across the March month-end is massively inverted…

Axios notes there’s some history here: Mick Mulvaney, Trump’s director of the Office of Management and Budget, voted against raising the debt ceiling while serving as a U.S. congressman from South Carolina.

Trump also has expressed a willingness, in the past, to let the U.S. effectively default on its debt:

I cannot believe the Republicans are extending the debt ceiling—I am a Republican & I am embarrassed!

Republicans are always worried about their general approval. With proposing to ‘ignore the debt ceiling’ they are ignoring their base.

We suspect that attitude may change.

Perhaps the stock market will start to pay attention soon

 

end

 

Fox News confirms Obama Court Order and a Fisa court order in the wiretapping of  Trump Tower

(courtesy Fox News/and special thanks to Robert H for sending this to us)

 

Hannity CONFIRMS Obama Court Order & WIRETAPPING Donald Trump Tower | Hannity 3/8/17 | Fox News – YouTube

Wiggle room is smaller for Obama…
the wonky and only question is who is going to be sacrificed?https://m.youtube.com/watch?v=o8qEkXOC-7U

Cheers

Attachments area

Preview YouTube video Hannity CONFIRMS Obama Court Order & WIRETAPPING Donald Trump Tower | Hannity 3/8/17 | Fox News

Hannity CONFIRMS Obama Court Order & WIRETAPPING Donald Trump Tower | Hannity 3/8/17 | Fox News
end

Let’s end tonight’s commentary with Hugo Salinas Price talking with Greg hunter

(Hugo Price/Greg Hunter)

Bonds Will Not Turn Into a Noah’s Flood of Cash
by Hugo Salinas Price

I enjoyed talking with Greg Hunter. Greg caught me off balance at the beginning of our interview, with a question for which I was quite unprepared: ‘What happens when the debt cloud begins to rain debt on the world?”…

Full text: http://www.plata.com.mx/mplata/articulos/articlesFi lt.asp?fiidarticulo=307

***

Noah’s Flood of Cash Coming-Hugo Salinas Price

 

 

Mexican billionaire and retail magnate Hugo Salinas Price is a big proponent of using silver as money in Mexico. Salinas Price explains, “The idea is not to go back to a silver standard, but to create a parallel currency which would be a monetized silver coin.  It would not bear a stamped value.  It would be a plain silver coin with a quoted value given to it.  This value would be adjusted upward with a fall in the value of the peso or a rise with the price of silver.”

Salinas Price pushed ideas similar to this in the past. This idea is being talked about again in the Mexican legislature, but there is no guarantee it will become a reality.  Why silver coins for the Mexican people?  Salinas Price says, “All material progress comes from saving, not from spending.  You have to save first, and from savings comes investment, and from investment comes jobs and income for a better way of life.  Savings are the primary source of prosperity.”

It may get to be impossible to save in paper currency soon. Salinas Price reminds us that there are trillions and trillions of dollars in bonds hanging over the head of everyone on the planet.  When those bonds start liquidating, it’s going to rain inflationary money.  Salinas Price goes on to say, “All those clouds overhead are denominated in hundreds of trillions of dollars of debt hovering above the world.  It’s like a dark cloud.  There comes a point when that wants to become liquidated.  Bonds are presented for liquidation and turned into cash.  That’s when the trouble is going to start.  When they are liquidated, we are going to have a Noah’s Flood of cash.  With all this debt turned into cash, we are going to be wading in money.”

Could a Fed rate hike start the bond market to liquidate? Salinas Price contends, “Apocalypse is upon us . . . this boom in stocks is about to collapse.  The total debt when Reagan came into office was $391 billion.  Now, it’s $20 trillion.  Something has got to give.  When interest rates start to go up, as they might on March 15th, we are going to see liquidation.  People are going to say bonds are falling in value because interest rates are going up, I think I want to sell my bonds. . . .  I also think the stock market is going to collapse, a big collapse is coming.  I also think gold is being hammered in preparation for what’s going to happen.  I think it has been taken down, so, when it starts to go up, it will go up from a lower level.”

So, will we get hyperinflation? Salinas Price says, “I don’t know if it’s going to happen right now, but something is going to happen with this huge amount of debt.  It just can’t go on, and how is it going to end?  It’s going to end badly.  A lot of wealth is going to disappear. . . . I think, in the U.S. on March 15th, all hell is going to break loose because the U.S. will reach its debt limit.”

Join Greg Hunter as he goes One-on-One with billionaire financial expert Hugo Salinas Price.

(There is much more in the video interview.)

After the Interview:

Hugo Salinas Price has two free websites in Spanish and English.   It’s Plata.com.mxClick here for the English version.

end

Well that about does it for tonight

I will see you tomorrow night

H.

 

 

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