March 17/Gold rises by $3.30 and silver up 9 cents/in a surprise the open interest on both gold and silver drops precipitously despite the huge gain in price/Tillerson and Trump both warn North Korea: any escalation and they will undergo military action/Jim Willie gives a plausible explanation for the sudden rise in gold and silver seconds after the USA raised rates/Turkey now threatens to release 15,000 migrants per month until all 2 million have left/

Gold: $1229.80  UP $3.30

Silver: $17.38  UP 9 cents

Closing access prices:

Gold $1230.00

silver: $17.43











Premium of Shanghai 2nd fix/NY:$1426


LONDON FIRST GOLD FIX:  5:30 am est  1228.75




For comex gold:



For silver:

For silver: MARCH


Total number of notices filed so far this month: 3296 for 16,480,000 oz

Let us have a look at the data for today



In silver, the total open interest SURPRISINGLY FELL by 2566 contracts DOWN to 186,990  despite the huge rise in price with respect to yesterday’s trading.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  0.940 BILLION TO BE EXACT or 134% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold also  SURPRISINGLY FELL BY A MONSTROUS 5130  contracts DESPITE WITH  THE HUGE RISE IN THE PRICE OF GOLD ($26.40 with YESTERDAY’S TRADING). The total gold OI stands at 425,717 contracts.

we had 0 notice(s) filed upon for NIL oz of gold.


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


We had a huge change in tonnes of gold at the GLD:a withdrawal of 2.37 tonnes

Inventory rests tonight: 837.06 tonnes



We had no changes in inventory at the SLV/

THE SLV Inventory rests at: 331.272 million oz



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

1. Today, we had the open interest in silver FELL by 2,566 contracts DOWN to 186,990 DESPITE THE FACT THAT SILVER WAS UP 41 CENT(S) with YESTERDAY’S trading. The gold open interest FELL BY A HUGE  5,130 contracts DOWN to 425,717 DESPITE THE HUGE RISE IN THE PRICE OF GOLD OF $26.40  (YESTERDAY’S TRADING).

(report Harvey


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) COT report



i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 32.49 POINTS OR .96%/ /Hang Sang CLOSED UP 21.85 POINTS OR 0.09% . The Nikkei closed DOWN 68.55 POINTS OR 0.35% /Australia’s all ordinaires  CLOSED UP 0.23%/Chinese yuan (ONSHORE) closed DOWN at 6.9052/Oil ROSE to 49.03 dollars per barrel for WTI and 52.02 for Brent. Stocks in Europe ALL IN THE GREEN    ..Offshore yuan trades  6.8888 yuan to the dollar vs 6.9052  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS CONSIDERABLY AGAIN/ ONSHORE YUAN WEAKER AS IS  THE OFFSHORE YUAN WHICH IS MUCH WEAKER AND THIS IS  COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA TIGHTENS 


North Korea

i)Strategic patience has now ended as Tillerson warns that military action is on the table with any elevated threat

( zerohedge)

ii) Following Tillerson, it is Trump’s turn to slam North Korea for “behaving badly”. Trump blames China for not keeping North Korea in order.  Odds of an attack have greatly increased and now we have a mad man at the nuclear switch



i)We note Jim Willie’s interpretation above and it is a must read.  Zero hedge and Bloomberg also weigh on by why the Chinese unexpectedly raised rates 10 hours after the Fed:

( zero hedge)

ii)Every dollar of deal with China is a dollar lost in western production. China is clearly doing what it can to offset lower demand in the US. Each deal is a dagger into the heart of uSA hegemony.

( zero hedge)

and special thanks to Robert H for sending this to us;



France has been having terrible trouble with migrant attacks in Paris and other places in the South of France. Today the Euro/USA drops as LePen’s support jumps:

( zero hedge)



Syria claims it shot down an Israeli jet of which the Israeli denied.  However the Israeli did say they had multiple missions inside Syria;

( zero hedge)


The Turkish foreign minister is fanning the fires:  He states that religious wars will soon start in Europe. The relations between Turkey and Holland are now at an all time low.

( zero hedge)

iii)This is what Europe should be afraid of:  Turkey is threatening Europe with 15,000 refugees per month leaving Turkey for Greece:

the total number of migrants housed by Turkey; 2 million!!

( zero hedge)



Rig counts continue to rise causing oil production from the USA to escalate. This is causing huge grief to OPEC

( zero hedge)



As I pointed out to you yesterday, Maduro is going full blast as he escalates the war against the bakers:  he is ready to confiscate all the bakeries in the country:

( zerohedge)


Jim Willie discusses what happened second after Yellen raised rates.  I have been telling you as well as others that China has been sending signals to the USA not the raise rates. It seems that the Chinese have now been double crossed and they are ready for action:  i.e. to shun the dollar for payment and then orchestrate a gold backed international currency for payment of goods.

a must read..

I think he is correct.

( Jim Willie/HatTrickLetter)


i)Instead of an expected .2% rise in Industrial production, we got another hard data disappointment with a zero gain

( zerohedge)

ii)With Industrial production showing a zero gain, Janet is having a tough explaining why she raised rates when the economy is certainly not surging ahead.  Q1 according to the Atlanta Fed is heading for a gain of only 0.9%

(courtesy zero hedge)

( zero hedge)

iv)The uSA consumer still has a deflationary mindset as the Consumer inflation expectations crash to record lows.  The Fed wants a reflation expectation and this is going counter to what they want!

( zero hedge)

v)In the University of Michigan Consumer Confidence report we see a wide disparity between Republicans and Democrats: Democrats expect a deep recession and Republicans a new golden age

( zero hedge)

vi)Michael Snyder gives 12 reasons why Janet and her gang made a terrible mistake in raising rates

( Michael Snyder/EconomicCollapse Blog)


Just look at the damage that the soda tax has done in Philadelphia.  Now Temple University has been forced to hike student costs by 400,000 dollars.
( Reuters)

Let us head over to the comex:

The total gold comex open interest FELL BY 5,130 CONTRACTS DOWN to an OI level of 425,717 DESPITE THE HUGE RISE IN THE  PRICE OF GOLD ( $26.40 with YESTERDAY’S trading). WE THEREFORE HAD CONSIDERABLE SHORT COVERING BY THE BANKERS.  We are now in the contract month of MARCH and it is one of the poorer delivery months  of the year. In this MARCH delivery month  we had a GAIN of 14 contract(s) UP to 38. We had 0 contact(s) served YESTERDAY, so we GAINED 14 CONTRACT(S) or  AN ADDITIONAL 1400  ounces will stand for delivery.  The next active contract month is April and here we saw it’s OI LOSE 7,660 contracts DOWN TO 182,880 contracts.

For comparison purposes, the April 2016 contract at this time had an OI of 248,452 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 LOSE 20 contract(s) and thus its OI is 907 contracts. The next big active month is June and here the OI ROSE by 2,817 contracts up to 150,773.

We had 0 notice(s) filed upon today for NIL oz

 And now for the wild silver comex results.  Total silver OI FELL BY 2,566 contracts FROM 189,556 DOWN TO 186,990 DESPITE YESTERDAY’S HUGE 41 CENT GAIN. AGAIN WE MUST HAVE HAD CONSIDERABLE BANK SHORT COVERING.  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 177 contracts down to 620 contracts. We had 154 notices served upon yesterday so we neither lost 23 CONTRACTS OR 115,000 OZ WILL NOT STAND in this active delivery month of March.

For historical reference: on the first day notice for the March/2016 silver contract:  19,020,000 oz stood for delivery . However 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 11 contract(s) to 1005 contracts. The next active contract month is May and here the open interest LOST 2260 contracts DOWN to 142,383 contracts.


Initially for the April 2016 contract1,180,000 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 72 notice(s) filed for 360,000 oz for the MARCH 2017 contract.

VOLUMES: for the gold comex

Today the estimated volume was 165.416  contracts which is fair.

Yesterday’s confirmed volume was 284,584 contracts  which is very  good

volumes on gold are getting higher!

INITIAL standings for MARCH
 March 17/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 nil OZ
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
0 notice(s)
NIL oz
No of oz to be served (notices)
38 contracts
3800 oz
Total monthly oz gold served (contracts) so far this month
59 notices
5900 oz
0.1835 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     57,961.1 oz
Today we HAD 0 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits:  nil oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil  oz
We had 0  adjustment(s)

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 0 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the MARCH. contract month, we take the total number of notices filed so far for the month (59) x 100 oz or 5900 oz, to which we add the difference between the open interest for the front month of MARCH (38 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 9700 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 (59) x 100 oz  or ounces + {(38)OI for the front month  minus the number of  notices served upon today (0) x 100 oz which equals 9700 oz standing in this non active delivery month of MARCH  (.3017 tonnes)
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.
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: 0.3017 tonnes
total for the 15 months;  244.536 tonnes
average 16.302 tonnes per month vs last yr  61.82 tonnes total for 15 months or 4.12 tonnes average per month (last yr).
Total dealer inventory 1,379,264.072 or 42.900 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,935,490.29 or 277.93 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.93 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
 March 17. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
204,087.989  oz
CNT, Delaware
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 nil oz
No of oz served today (contracts)
(360,000 OZ)
No of oz to be served (notices)
548 contracts
(2,740,000  oz)
Total monthly oz silver served (contracts) 3296 contracts (16,480,000 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  3,592,256.0 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of CNT: 200,125.72 oz
ii) Out of Delaware: 3,962.269 oz
 we had 0 customer deposit(s):
***deposits into JPMorgan have now stopped.
total customer deposits;  nil   oz
 we had 0  adjustment(s)
The total number of notices filed today for the MARCH. contract month is represented by 72 contract(s) for 360,000 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 3296 x 5,000 oz  = 16,480,000 oz to which we add the difference between the open interest for the front month of MAR (620) and the number of notices served upon today (72) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the March contract month:  3296(notices served so far)x 5000 oz  + OI for front month of Mar.( 620 ) -number of notices served upon today (72)x 5000 oz  equals  19,220,000 oz  of silver standing for the Mar contract month. This is  now average for an active delivery month in silver.  We lost 23 contract or 115,000 oz will not stand for delivery.
Volumes: for silver comex
Today the estimated volume was 39,227 which is  good!!!
Yesterday’s  confirmed volume was 88,884 contracts  which is huge.
Let’s take today’s estimated volume of 88,884 contracts:  that represents:444 million oz of silver or approx. 63% of annual global supply (ex Russia ex China)
Total dealer silver:  38.801 million (close to record low inventory  
Total number of dealer and customer silver:   188.261 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.


And now the Gold inventory at the GLD

March 17/a huge withdrawal of 2.37 tonnes from the GLD/Inventory rests at 837.06 tonnes

March 16/no changes in gold inventory at the GLD/Inventory rests at 839.43 tonnes

March 15/ANOTHER HUGE DEPOSIT OF 4.44 TONNES/inventory rests at 839.43 tonnes

March 14/strange they whack gold and yet the GLD adds 2.93 tonnes of gold./inventory rests at 834.99 tonnes

March 13/a deposit of 6.78 tonnes of gold into the GLD/Inventory rests at 832.03 tonnes

March 10/ a withdrawal of 4.886 tonnes from the GLD/Inventory rests at 830.25

this tonnage no doubt is off to Shanghai

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

March 17 /2017/ Inventory rests tonight at 837.06 tonnes
*FROM FEB 1/2017: a net    41.82 TONNES HAVE BEEN ADDED.


Now the SLV Inventory
March 17/no change in silver inventory/SLV inventory rests at 331.272 million oz
March 16/no changes in silver inventory/SLV inventory rests at 331.272 million oz
March 15/no change in silver inventory/SLV inventory rests at 331.272 million oz
March 14/ a deposit of 1.136 million oz of inventory into the SLV/Inventory rests at 331.272 million oz
March 13/no change in silver inventory at the SLV/Inventory rests at 330.136 million oz.
March 10/no change in silver inventory at the SLV/Inventory rests at 330.136 million oz/
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
March 17.2017: Inventory 331.272  million oz
At 3:30 pm we receive the COT report and this report will be very intriguing as we see what the managed money sector (hedge funds) did in silver as well as the commercials in both gold and silver
Let us now head over to the gold COT:
COT Gold, Silver and US Dollar Index Report – March 17, 2017
 — Published: Friday, 17 March 2017 | Print  | Disqus

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
210,315 104,277 69,088 102,535 225,822 381,938 399,187
Change from Prior Reporting Period
-19,654 7,993 7,931 3,051 -26,310 -8,672 -10,386
155 100 88 52 53 245 209
Small Speculators  
Long Short Open Interest  
44,232 26,983 426,170  
441 2,155 -8,231  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, March 14, 2017
Our large specs:
Those large specs that have been long in gold liquidated a huge 19,654 contracts from their long side and this was from March 7 to March 14 when they whacked gold down below 1200.00
Those  large specs that have been short in gold somehow decided to add 7993 contracts to their short side having been goaded by the crooked banks
Our commercials
Those commercials that have been long in gold added 3051 contracts to their long side
those commercials that have been short in gold covered a monstrous 26,310 contracts.
Our small specs:
those small specs that have been long in gold added 441 contracts to their long side
those small specs that have been short in gold added 2155 contracts to their short side
Managed money
this is a subset of the large/small specs and basically these guys are the hedge funds:
these guys pitched a huge 29,098 contracts from their long side and added 14,775 contracts to their short side for an increased short position this week of 43,873 contracts
And now our silver COT:
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
102,675 19,797 12,918 46,747 144,746
-10,762 -187 3,591 -27 -7,890
101 34 39 29 37
Small Speculators Open Interest Total
Long Short 186,936 Long Short
24,596 9,475 162,340 177,461
1,736 -976 -5,462 -7,198 -4,486
non reportable positions Positions as of: 144 99
Tuesday, March 14, 2017   © SilverSee
Our large specs:
Those large specs that have been long in silver liquidated a huge 10,762 contracts
those large specs that have been short in silver covered a tiny 187 contracts from their short side.
Our commercials:
those commercials that have been long in silver pitched a tiny 27 contracts from their long side.
those commercials that have short in silver covered 7890 contracts from their short side  (they did not cover their silver shortfall compared to gold)
Our small specs:
those small specs that have been long in silver did not fall for the antics on the banks and they added 1736 contracts to their long side
Those small specs that have been short in silver, also saw the light and covered 976 contracts from their short side.
Managed money (hedge funds) subset of large/small specs
these guys pitched 13,905 contracts from their long side and added 1980 contracts to their short side or a net increase short for the week:  15,885.
compared to gold many of the hedge funds stayed put despite the whack in silver price having faltered to below 17 dollars..
The commercials go net long this week to the tune of 7863 contracts.  This is bullish but it looks like they wanted to cover a lot more of their shortfall.

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 6.0 percent to NAV usa funds and Negative 6.2% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.9%
Percentage of fund in silver:39.0%
cash .+0.2%( Mar 17/2017) 
 will update Sprott later tonight
2. Sprott silver fund (PSLV): Premium RISES  to -.37%!!!! NAV (Mar 17/2017) 
3. Sprott gold fund (PHYS): premium to NAV falls to  + 0.24% to NAV  ( Mar 17/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.37% /Sprott physical gold trust is back into POSITIVE territory at +0.24%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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


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

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.


Major gold/silver trading/commentaries for FRIDAY


Gold Cup – Horse Racing’s Greatest Show, Gambling and ‘Going for Gold’

– Gold Cup at Cheltenham – Most important event on horse racing calendar  

– Gold Cup trophy contains 10 ounces of gold

– Today’s prize is worth over £9,000 in gold terms

– £600 million bets on horses, 220,000 pints of Guinness will be drunk, 9 tonnes of potato eaten 

– Gold constantly and universally awarded as top prize 

– Ultimate prize to award our heroes as early as 408 BC

– Humanity recognises it as very rare and very valuable

– Gold a great prize and a good bet but works best as hedge and a safe haven

– Better to take a ‘punt’ on gold than the horses

Cheltenham Gold Cup – Wikipedia

This week 65,000 people have been gathering in Cheltenham for one of the most important events on the horse racing calendar, the world famous Cheltenham Festival and the Gold Cup race.

Over 25 races will be raced over the four day gathering with £4,305,000 of prize money will be handed out this week at Cheltenham Festival.

The Cheltenham Gold Cup is the most famous race of the festival and happens on the final day of the four-day event. The Gold Cup is the most prestigious of the most prestigious of all National Hunt events and it is sometimes referred to as the Blue Riband of horse jump-racing.

The race takes place over 3 miles 2½ furlongs (5,331 m) and includes 22 fences to be jumped.

The prize? 10 ounces of gold and £575,000. The prize for those who turn up to watch the world famous event? The chance to experience the excitement and fun of race day and likely lose a few bob – with a massive £600 million staked on the outcome of the races. The bookie always wins … well nearly always.

10 ounces of gold and over half-a-billion British pounds of cash surrounding one event. What does this say about the state of our economy today and how we award our sporting heroes?


The Greatest Show on Turf

It is nearly 200 years since the most exciting race in the UK calendar was first run in 1819.  230,000 people are expected to attend this year, with 10,000 of them expected to make the special trip from Ireland in order to celebrate their jockey riders, amazing horses and indeed St. Patrick’s Day –  this being March 17th.

And what comes hand in had with horse racing? The big spending, gambling and lots of drinking.

Over 220,000 pints of Guinness will be drunk, 9 tonnes of potato eaten and 3 tonnes of smoked salmon enjoyed. Cash machines will be working hard to keep up with everyone’s spending as they churn out £2.2 million of notes and assist punters to place over £1 million of bets per race.

And what are they all there for? They’re there for the run up to or the main event itself that is the Cheltenham Gold Cup, a near 200 year old race that is the darling of the racing calendar.

What makes it so exciting is that it is the only major race that is not run on the flat. Whilst the predecessor to the Gold Cup race was first run flat in the 19th century it wasn’t until 1924 that there was the  “introduction of a level weights extended three mile steeplechase, called The Cheltenham Gold Cup”.

The Gold Cup is a chance to see the best in horse racing. It is so prestigious that it is rarely cancelled, and is considered to be the most important of steeplechase races. For race-goers the event is a chance to win big, ever hoping that the bookies get it as wrong as they did last year and misplace their odds.

For the riders, trainers and owners the race is not only about the honour that comes with winning but also about getting their hands on the infamous Cheltenham Gold Cup.

I’ve got a golden ticket cup

Today nearly 30 horses and jockeys will run the race of their lives in the hope of bringing home 10 ounces of gold, neatly melted into the form of a small trophy.

As with the Olympic medals and the Oscars, a new gold cup is made each year for the owners. But a gold cup hasn’t always been the reward for this infamous race.

The owner of the first winner, Spectre, received 100 guineas. At the time, the coins would have contained a quarter ounce of gold akin to British gold sovereigns, so 25 ounces of gold in total.

The gold price in 1819 was $19.39, so this prize in gold terms would have been worth $484.75. That same amount of gold today is worth $30,750. Not bad for a prize that was received nearly 200 years ago.

There is less gold in today’s prize cup than there was in that stash of guineas nearly 200 years ago, but 10 ounces is nothing to be sniffed at. With less than 50% of the gold that was on offer when the race was first run in 1819, this year’s cup is worth £9,950.

Is this why we reward the best of the best with gold?

Because it will serve to reward them in decades to come? Really, no one will care about a piece of paper that says they won. What humanity will still believe in, and judge value with, in the years that follow is the most precious metal of all.

Gold gives value to our winners

Whether it’s spending on your ‘gold card’, or competing for a gold medal, receiving a Nobel Prize or even travelling Gold Class, the yellow metal is still believed to be the best.

We can go back to the early days of gold’s discovery that we regarded gold as the ultimate way to recognise our champions. In his play Plutus, even the comic playwright Aristophanes wrote in 408BC of how Olympians should be awarded with gold .

Olympic first place medal from the Athens Games of 1896 (obverse), from the collection of the Olympic Museum (IOC via Wikimedia)

“Why, Zeus is poor, and I will clearly prove it to you. In the Olympic games, which he founded, and to which he convokes the whole of Greece every four years, why does he only crown the victorious athletes with wild olive? If he were rich he would give them gold.”

Whilst the Greek playwright was joking, his point was a valid one and one that still strikes a chord today. We crown the best amongst us with gold. Even when the headlines have died down, even when no-one can remember who won a famous race four years ago, the winner is still left with a timeless piece of gold that the world will certainly remember the value of.

This is more important than ever when we live in a world that places far greater value on things – many frequently superficial things – that really do not deserve it.

A prize is no better than jewellery or fancy coin

Whilst the cup might contain a whopping ten ounces of gold (more than an Olympic gold medal or Academy Award), this doesn’t mean the price of the metal is reflected in the perceived value of the prize.

In 2010, the 1988 Cheltenham Gold Cup owners had their prize stolen from them . At the time of winning (assuming the make-up of the Cup is the same as it is today) the cup’s gold content was worth £2,446. Today, that same cup is worth £9,950. To the winners, however they could not be objective about its real value. To them, it was understandably worth a lot more.

When it was stolen, the owners offered £15,000 for its return. At the time, the Cup’s owner told the BBC, ‘”What’s the point in melting it down? To me it’s worth a fortune. It’s the sentimental value, not the monetary value that’s at play here.” Unfortunately, you can be sure that melting it down is exactly what the thieves planned to do with it.

This is where prizes are similar to collectible coins or jewellery, the price beyond the underlying metal content is purely subjective. Whilst you might buy a commemorative coin for a few thousand dollars, the market may well disagree with you in a few years’ time and deem it only to be worth the few grams of gold that it really is.

The same can be said for jewellery which receives a huge markup when it arrives on the market and also attracts VAT and sales tax – unlike tax free gold coins and bars and tax free silver coins.

Whilst one might argue that the Cheltenham Gold Cup is worth more than its weight in gold, this is only the case for the winners and the small market that is interested in horse racing memorabilia.

The beauty about owning 10 ounces of pure gold bullion, rather than a cup that signifies a particular race, is that you know it will only ever be priced according to the value of the precious metal content and that the market is highly liquid. You will not go from one buyer to the next wondering if you are getting a fair price, or if you will be able to sell it at all.

Gold is for winners, not for the gamblers

Of course, there is only one Cheltenham Gold Cup to be won this week, but there are plenty of opportunities for punters to win big (and lose) at the bookies. For the £600 million plus that is at stake this week, we wonder if some of those gamblers might be better to take a leaf out of the competitors’ book and ‘go for gold’ instead.

Gambling for some is a bit of fun, and you hopefully only gamble what you can afford to lose. But what happens when you lose? You might think that you only gamble small amounts, or just a couple of times a year, so where’s the harm? There probably isn’t much harm but it’s what’s happening with the rest of your money that is where the risk is.

As we have pointed out countless times before, those same bank accounts that punters are using to fund a day at the races are also being used by the banking system to keep their own game of probability and risk and massive speculation going.

Gold is a form of insurance to protect you when this game goes wrong and the house of cards collapses as it began to in 2008.

When it comes to gold, you’re doing the opposite of gambling, you’re buying insurance for the times when others make a bad bet playing with your money. You are taking some of your hard earned ‘chips off the table’ of the global casino.

What about the winners of the Cheltenham Gold Cup today?

We would advise them to not only take a punt on their horses but also make a safe haven punt on gold.

They should also enjoy their hard earned and well deserved victory and take pride in their beautiful Gold Cup Trophy.

Congratulations to them, winning anything is always a good thing and the achievement should be celebrated.


Jim Willie discusses what happened second after Yellen raised rates.  I have been telling you as well as others that China has been sending signals to the USA not the raise rates. It seems that the Chinese have now been double crossed and they are ready for action:  i.e. to shun the dollar for payment and then orchestrate a gold backed international currency for payment of goods.

a must read..

I think he is correct.

(courtesy Jim Willie/HatTrickLetter)



Something big is afoot in the Shanghai Gold market. It seems that we are at the door of the RESET finally, with China being betrayed by the USGovt and USFed in concerted collusion. The attempt to reduce the USDollar while maintaining ultra-low bond yields seems the final straw. The inference is made that the jig is up finally, and a significant turning point is upon us.


A contact at Evolution Consulting has reported that his best contact notified him thatVIPs are being invited to take tours of the Shanghai Gold Exchange operation. This man was among one of the guests. These tours are not being arranged in some congenial welcoming event, not at all. Rather they are informational and official in granted preview. They are almost surely being staged to inform the opposition that it is all over for them now. With a cherry on top, the VIP guests were required to pay for the tour. The above juicy tidbit was provided by a client, passing the word along. Something big is afoot.



China seems to have changed its position toward aggressive in the gold market introduction with gusto and emphasis. Conclude easily that where there is smoke, there is fire, and the heat will be on physical gold metal demand in Asia. In turn the pressure will be put on the USDollar, whose custodians are not honorable and for perhaps the last time, have betrayed the Chinese. Lower USDollar valuation combined with already chronic low bond yield could have turned the Chinese hostile in the wake of the USFed rate hike. The Jackass raises the conjecture (stronger and more classy than guess) that the USGovt and its bankster masters lied to China about a rate hike, and the Chinese are very angry. The sleazy central banker crew defaulted on the gold lease from 1999, evident in 2014. The same sleazy vile crew have used tricks like bank derivatives to create phony bond demand, tricks like Reverse REPO to undo the last rate hike by ramping up to dangerous levels the bond leverage, alongside massive bond default on legacy bonds from nearly a century ago. The fact that a bond is old does not invalidate the bond’s integrity and requirement for honoring it. The criminal central banker crew in all likelihood stole at least $3 trillion in Saudi USTBonds as well, which serve as ESFund core. China has probably seen enough, and will proceed with the Global Currency RESET. Their nation is under stress, and the imposition of the Gold Standard should right their course well enough, even if it derails the United States to the point of entry into the Third World.


London Paul believes something significant is on the verge of breaking the paper gold market. The clues have come on the behavior of the gold market since the Yellen Fed announced its small rate hike. It was small but significant, and probably involved a lie to the Chinese Govt finance ministers. Such coincidences do happen, but odds are against a coincidence in this case, since so critically important. Time will bear out the conclusion. The Western bankers have a long history of lies, deceit, betrayal, subterfuge, sabotage, and pilferage. They might have sacked their economies on the road to the Global Fascist State, but China has not signed up for the destructive evil development and pathway.



EuroRaj confirmed London Paul’s suspicion and tentative conclusion. He mentioned that such view is absolutely right, given the market reaction. Someone at the Shanghai Gold Exchange spiked the price higher the moment the Fed raised rates, which required the paper market to follow higher. He stated unequivocally that the Chinese do not consider the USFed, the banker cabal, and the US Elite as honest business partners any longer. He expects their harsh clear revenge to follow, with the launch of the long awaited Global Currency RESET to come next. US President Trump visiting the Andrew Jackson grave site was another sign, as Jackson was an arch-enemy of the banker cabal. He survived an assassination attempt. Neither Trump nor China wanted the rate hike. Trump does not want higher USGovt borrowing costs or the added economic headwind. China does not want lower bond principal value and lower USDollar value. Hence the East appears to have burned the Western banker cabal with a paper fire that could turn into a bonfire in gold metal demand. China likely perceived a maneuver to sabotage Trump by the banker cabal, and the Beijing leaders yelled PUNT, game over, no more cooperation.


It will soon become every nation for itself in a global free for all battle. It is hard to imagine the USDollar enduring what comes in an unscathed manner. The global USTBond dumping will continue until it forces the US derivative chicanery into the open with cracks wide enough to drive an armored truck through. Either the US debt market will falter or else the global trade will result in USTBill rejection in payment. At least in the Eastern hemisphere, the USDollar is about to be kicked to the curb, shunned in trade payment usage. The non-USD platforms will be given much greater emphasis. The game is about to change, to enter the extreme danger zone.


Make clear the sequence. Very likely after the Gold price went up in USD terms, the Boyz were forced to weaken the USD by strengthening the Euro and British Pound currencies. It was urgent to keep the Gold price under control in EUR and GBP terms. They gave high priority to keep the price low in order to prevent the public (sheeple) from making a bullion run on the back of political risk. EuroRaj’s personal read is that the London Bullion Market Assn (LBMA) is bust or close to bust. As footnote, he added that the Sprott PHYS gold fund has closed at a positive premium for last two days.



In time, expect an eventual refusal by Eastern producing nations to accept USTreasury Bills in payment for trade. The United States Govt cannot continue on numerous glaring fronts of gross negligence and major violations. These violations have prompted the BRICS & Alliance nations to hasten their development of diverse non-USD platforms toward the goal of displacing the USDollar while at the same time to take steps toward the return of the Gold Standard.


The New Scheiss Dollar will arrive in order to assure continued import supply to the USEconomy. It will be given a 30% devaluation out of the gate, then many more devaluations of similar variety. The New Dollar will fail all foreign and Eastern scrutiny. The USGovt will be forced to react to USTBill rejection at the ports. The US must accommodate with the New Scheiss Dollar in order to assure import supply, and to alleviate the many stalemates to come. The United States finds itself on the slippery slope that leads to the Third World, a Jackass forecast that has been presented since Lehman fell (better described as killed by JPM and GSax). The only apparent alternative is for the United States Govt to lease a large amount of gold bullion (like 10,000 tons) from China in order to properly launch a gold-backed currency. The annual trade deficit would immediately render the entire batch of gold at risk of forfeit. Any such lease would open the gates for a generation of commercial colonization, but actual progress in returning capitalism to the United States. The cost would be supply shortages to the USEconomy, a result of enormous export increases to China. Even if the USGovt can secure such a large hoard of gold, like from Bush Family and Rubin Clan seizures of stolen Fort Knox gold reserves, the United States will be vulnerable from a $550 billion annual trade deficit. Its settlement after one year would exhaust all 10,000 tons, since at $1300/oz, such gold tonnage would be worth $420 billion. The United States is truly trapped in an economic insolvency situation, with inadequate industry and a huge unresolved trade deficit.


Failure to produce a legitimate bonafide gold-backed currency, together with an adequate industrial base, would mean the United States will be confronted with a real big nasty currency crisis. Any new currency, even with gold backing, would be subjected to a series of devaluations due to the enormous trade deficit. The result would be heavy powerful painful price inflation from the import front. The effect would be to reverse a generation of exported inflation by the United States. The entire USEconomy would go into a downward spiral with higher prices, supply shortages, and social disorder. However, the rising prices would come from the currency crisis, and not so much from the hyper monetary inflation. That flood of $trillions has been effectively firewalled off. During the crisis that comes, the gold price will find its true proper value between $5000 and $10,000 per ounce. Then later, it goes higher, as it seeks equilibrium in a new world where gold serves as the global arbiter in trade and banking and currencies.



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


1 Chinese yuan vs USA dollar/yuan WEAKER AT  6.9052( DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES CLOSER TO ONSHORE AT   6.8888/ Shanghai bourse DOWN 31.49 POINTS OR .96%   / HANG SANG CLOSED UP 21.85 POINTS OR 0.09% 

2. Nikkei closed DOWN 68.55 POINTS OR 0.35%   /USA: YEN FALLS TO 113.17

3. Europe stocks opened ALL IN THE GREEN     ( /USA dollar index RISES TO  100.40/Euro DOWN to 1.0742


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  49.03  and Brent: 52.02

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.456%/Italian 10 yr bond yield UP  to 2.375%    

3j Greek 10 year bond yield RISES to  : 7.39%   

3k Gold at $1229.50/silver $17.38(8:15 am est)   SILVER  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 3/100 in  roubles/dollar) 57.84-

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.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9962 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0702 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.456%

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 2.522% early this morning. Thirty year rate  at 3.133% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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


Quiet Start To Quad-Witching St. Paddy’s Day: Futures Flat, Global Stocks Mixed

A quiet start to today’s quad-witching St. Patrick’s day, with European stocks mixed, Asian shares and U.S. index futures (-0.1%) little changed ahead of industrial production data with just Tiffany’s set to report earnings.

Emerging markets headed toward the best week in eight months even as the global equities rally spurred by the Federal Reserve’s outlook lost momentum. The lack of a more hawkish tone in the FOMC’s statement meant the dollar was poised for its biggest weekly loss since February. As Bloomberg observes, markets from Malaysia to Turkey climbed, while Jakarta’s benchmark touched a record before erasing gains. Shares in Tokyo dropped weighing down the MSCI Asia Pacific Index after it posted its biggest gain since November. Chinese stocks slipped 1 percent as investors sought more evidence of a sustainable economic recovery, but indexes were set for a 1 percent increase for the week. Hong Kong’s Hang Seng index touched its highest level since August 2015 on Friday. While up only marginally on the day, it was on track for a 3.2 percent gain for the week, its biggest since September. The MSCI Emerging Markets Index rose 0.2 percent, bringing its rally for the week to 4.2 percent, far outpacing a 1.3 percent advance for the MSCI All-Country World Index.

European shares opened lower although have since rebounded into the green, while futures on the S&P 500 Index retreated some more following Thursday’s modest decline, after climbing to within 0.5% of an all-time high. The Bloomberg Dollar Spot Index was little changed after a two-day loss, while Treasuries recovered some of the previous day’s declines.

“The story in global markets over the past 24 hours has centered on a broad-based tightening of monetary policy conditions (and the perception of future tightening),” Chris Weston, chief market strategist at IG in Melbourne, wrote in a note.

Global stocks are on course for the best week since January in a week full of central bank announcements but none more improtant thatn the Fed raising its benchmark lending rate a quarter point without accelerating the timetable for future hikes, a move which according to Goldman and RBC was misinterpreted by a market which no longer believes that the Fed could possibly do anything to harm equities according to SocGen’ Albert Edwards.

“A less hawkish monetary policy in the U.S. is more likely to push assets outside of the U.S. into higher-risk, higher-return markets,” James Woods, a Sydney-based investment analyst at Rivkin Securities, said in a phone interview. “A weaker dollar is supportive of those emerging markets generally. I’m not sure whether its going to be long-lived though. People are going to get back to focusing on the next Fed hike, and also Trump’s policies which would be dollar supportive.”

The Stoxx Europe 600 Index was unchanged in early trading, holding on to a modest weekly gain after reaching the highest closing level since December 2015 on Thursday. The MSCI Asia Pacific Index retreated 0.2 percent, after closing Thursday at the highest since June 2015. Japan’s Topix fell 0.4 percent, capping its biggest weekly decline in more than a month. The MSCI Emerging Markets Index rose 0.2 percent, bringing its rally for the week to 4.2 percent, far outpacing a 1.3 percent advance for the MSCI All-Country World Index.

The Jakarta Composite Index gained as much as 0.7 percent to a record before erasing gains. India’s Sensex Index climbed 0.3 percent, taking its gains for a holiday-shortened week to 2.6 percent. South Korea’s Kospi and Taiwan’s Taiex jumped 0.7 percent. Hong Kong’s Hang Seng and the Hang Seng China Enterprises Index were little changed after soaring the most since May on Thursday.

Futures on the S&P 500 slipped 0.1 percent, after the benchmark gauge fell 0.2 percent Thursday. MSCI’s all-country world stock index held near Thursday’s all-time high on Friday, on track to end the week 1 percent higher.

The pound was unchanged on Friday after strengthening Thursday as some Bank of England policy makers said they may not be far behind Kristin Forbes who’s leaning toward raising interest rates. The dollar index, which tracks the greenback against a basket of six trade-weighted peers, retreated 0.2 percent to 100.18. It hit a five-week low on Thursday, and is down 1 percent for the week. The dollar was steady at 113.32 yen but is on track to post a 1.2 percent loss for the week.

Meanwhile, the fascination with volatility remains, as it continues to retreat after the central bank policy decisions, while at the same time, the defeat in this week’s Dutch elections of anti-immigration candidate Geert Wilders is being seen as a blow to populist political leaders, easing concerns ahead of French elections. A gauge of volatility on the Euro Stoxx 50 Index plunged 26 percent on Thursday, the most on record.

 “Volatility is scarily low and there’s just a lot of complacency out there,” James Audiss, a senior wealth manager at Shaw and Partners in Sydney, said in a phone interview. “After we get through the big macro events with governments and elections, we have to start to look to corporate earnings. That’s where it becomes not so much a systemic stock market move as stock selection.”

In commodities, U.S. and Brent crude held above a 3-1/2-month low breached early this week, supported by a weaker dollar. Gold was up slightly at $1,228 an ounce. It was poised to gain 1.8 percent for the week, its first in three, driven by the Fed’s more moderate monetary policy stance.

* * *

Market Snapshot

  • S&P 500 futures down 0.1% to 2,378.00
  • STOXX Europe 600 up 0.02% to 377.81
  • MXAP down 0.2% to 147.85
  • MXAPJ up 0.3% to 478.99
  • Nikkei down 0.4% to 19,521.59
  • Topix down 0.4% to 1,565.85
  • Hang Seng Index up 0.09% to 24,309.93
  • Shanghai Composite down 1% to 3,237.45
  • Sensex up 0.3% to 29,682.41
  • Australia S&P/ASX 200 up 0.2% to 5,799.65
  • Kospi up 0.7% to 2,164.58
  • German 10Y yield rose 1.8 bps to 0.466%
  • Euro down 0.01% to 1.0765 per US$
  • Brent Futures down 0.04% to $51.72/bbl
  • Italian 10Y yield rose 6.4 bps to 2.366%
  • Spanish 10Y yield rose 3.5 bps to 1.934%
  • Brent Futures down 0.04% to $51.72/bbl
  • Gold spot up 0.1% to $1,228.05
  • U.S. Dollar Index down 0.08% to 100.28

Top Overnight News

  • Airbus Probed by French Authorities as U.K. Fraud Case Widens
  • Amazon Seeks Nod to Invest, Partner in India Food Supply Chain
  • Amec Foster Wheeler Wins Share of $950m U.S. Air Force Contract
  • AstraZeneca Says FDA Issues Response for ZS-9 in Hyperkalaemia
  • Morgan Stanley Veteran Wong Said to Leave to Help Set Up PE Fund
  • Trump Adviser Gary Cohn Said to Sell Stake in China’s ICBC: NYT
  • Apple Plans R&D Centers in China’s Shanghai and Suzhou
  • Freeport Indonesia Axes About 2,100 Workers as Talks Continue
  • Cerro Verde Says Union Could Start Indefinite Strike March 24
  • U.K. Pulls YouTube Adverts, Summons Google Over Content: Times

In Asian markets equities traded mixed, following a weak lead on Wall St. with markets relatively calm following a tumultuous 2 weeks packed with key risk events and ahead of quadruple witching. ASX 200 (+0.2%) was buoyed by gold names as the precious metal held on to most of its post-FOMC gains, while strength in the largest weighted sector financials further underpinned the index. Nikkei 225 (-0.3%) lagged as USD/JPY languished, while Shanghai Comp. (-1.0%) and Hang Seng (flat) were mixed with the mainland underperforming after the PBoC conducted a net weekly drain of CNY 120bIn. 10yr JGBs were flat despite weakness in riskier Japanese assets, while a mixed enhanced-liquidity auction for 2yr, 5yr, 10yr and 20yr JGBs also failed to spur demand. The PBoC injected CNY 20bIn in 7-day reverse repos, CNY 20bIn in 14-day reverse repos and CNY 20bIn in 28-day reverse repos, for a net weekly drain of CNY 120bIn vs. CNY 110bIn net drain last week.

In European bourses, price action has been similarly uneventful as the week closes, with major indices failing to find a firm direction as participants keep one eye on the quadruple witching throughout the day. The FTSE has managed to hold near yesterday’s fresh all time highs, despite miners seeing some profit taking in the wake of recent strength. The softness in miners has been offset by the likes of Berkeley, who led the index at the open after their pre-market earnings. Yields continue to climb in the fixed income space, with bund prices lower today by around 50 ticks after the Nowotny comments yesterday. Elsewhere, Greek yields also continue to climb after yesterday’s commentary from an EU official suggesting it is likely the bailout review will be completed by early April.

In currencies, the Bloomberg Dollar Spot Index added less than 0.1 percent, after dropping 0.2 percent on Thursday on top of a 1.3 percent post-FOMC drop. The gauge is down 1.2 percent for the week, the most since the period ended Feb. 3. The yen was little changed at 113.25 per dollar, paring its biggest weekly gain in more than a month. The pound rose 0.2%, rebounding just shy of $1.24. The currency is up 1.6 percent for the week, its biggest gain since January. The euro was little changed at $1.0769, bringing its advance for the week to 0.9 percent, following yesterday’s hint by Nowotny that rate hikes in Europe may be coming. The USD continues to struggle this morning — this in spite of US Treasury yields balancing out after the sell off post FOMC. Both the EUR and GBP are still gaining ground against the greenback this morning, and both from an interest rate perspective, where yesterday’s MPC conclusion revealed the majority of the BoE see a case for a rate hike sooner on the timeline. This came alongside the dissenting Forbes who voted for a hike this time around, though tempered by the fact that she leaves the committee in Jun. Cable has pushed higher today to test the stronger resistance levels seen ahead of 1.2400, but has held for now. EUR/GBP was testing support ahead of 0.8650 late yesterday before the ECB’s Nowotny hit the newswires with hints towards a rate move ahead of tapering — distinguishing their exit strategy to that of the US. The cross rate turned tail to reclaim 0.8700, but has topped out ahead of 0.8750 before moving lower again. This has come in tandem with a EUR/USD move towards 1.0800, but selling intensifies the closer we get to this level.

In commodities, oil rose 0.2 percent to $48.84, heading toward its first weekly gain in three weeks thanks to a surge on Wednesday. Gold added 0.1 percent after a two-day gain, trading at $1,228.33 an ounce and poised for a 2 percent increase for the week. Oil prices have recovered courtesy of the latest inventory data from API, perhaps less so the DoE. Saudi Arabia have also alluded to a potential extension to production cuts beyond June, but this will be cause for consolidation more than anything else, and it is now surprise to see WTI struggling to get back into the $50-55 range — currently just under $49.00. The moderate retracement in the USD has also been supportive, as it has across the commodity spectrum, with the impact on base metals positive along with some fresh optimism over demand. Supply issues have also aided Copper and Zinc price, but levels still comfortably off the recent highs seen. Gold continues to track the USD, and with a tighter correlation in Treasuries, USD/JPY has been a good indicator, with some calls for a move back to $1250.00.

Looking at the day ahead in the US we’ll get the February industrial and manufacturing production prints for February where the consensus is for +0.2% mom and +0.5% mom respectively. The conference board’s leading index for February is also due along with the first estimate of the March University of Michigan consumer sentiment print. It’s worth noting that over the weekend China will also release February property prices data. There are a couple of other things to highlight starting today. One is the G-20 finance ministers meeting which continues into tomorrow and the other is the Scottish National Party conference which also continues into tomorrow, where clearly most will be looking for further debate on a possible second referendum.

US Event Calendar

  • March 17-March 20: Labor Market Conditions Index Change, est. 2.5, prior 1.3
  • 9:15am: Industrial Production MoM, est. 0.2%, prior -0.3%; Capacity Utilization, est. 75.5%, prior 75.3%; Manufacturing Production, est. 0.5%, prior 0.2%
  • 10am: U. of Mich. Sentiment, est. 97, prior 96.3; Current Conditions, est. 111, prior 111.5; Expectations, est. 87.1, prior 86.5
    • U. of Mich. 1 Yr Inflation, prior 2.7%; 5-10 Yr Inflation, prior 2.5%
  • 10am: Leading Index, est. 0.5%, prior 0.6%

Jim Reid concludes the overnight wrap, with the announcement that his wife is expecting twin boys

What have Amal Clooney, Beyoncé and my wife got in common? Please don’t spill your coffee when reading the following but shock of all shocks they are all expecting twins. We had our 12 week scan yesterday – which I just managed to get back in time for after storm Stella delayed me – and it all went well. Ours are identical which are a 1 in 300 occurrence, and totally hit us for six when we found out a few weeks ago. I knew nothing about twins beforehand but apparently identical ones are totally random across age, region, religion and family history. There are absolutely no clues to their likelihood. Indeed given our age and a long time trying we thought Maisie was a miracle. What this qualifies as we’ve no idea. However poor Trudi has been suffering from extreme morning sickness for the last 2 months and has been on medication to help combat it. Apparently it’s twice the hormones with twins and can be twice the sickness. Homelife has been a bit of a nightmare over this period and I’ve had to step up to the plate a lot and also get care for poor Maisie. She is still sick and exhausted but is slowly getting slightly better. So please feel for her growing two replicas of us inside of her. Also it being twins and our geriatric age (combined 87 years old around delivery… and I’m the toy boy!) make it a risky pregnancy so hopefully everyone will have their fingers crossed for us. To build some suspense there will be a gender reveal in today’s PDF. I’ve no idea how gender reveal parties have caught on in recent years but luckily I’ve avoided going to all I’ve been invited to. All you have to do is open the PDF for all to be made apparent. Oh and I’m sure there are some twins or parents of twins out there reading this. Any advice will be gratefully received – especially with identicals. It’s fair to say we’re still in shock. We certainly don’t know how to tell poor Bronte!!

Talking of sickness, tracking bond yields over the last 36 hours has left you in danger of experiencing quite bad motion sickness as Wednesday night’s fierce rally partly and suddenly reversed yesterday. 10y Treasury yields rose +4.7bps to 2.541% and in doing so reversed just under 50% of the post Fed move. 2y yields also darted back up +3.3bps to 1.334% and unwound a similar percentage of the prior day rally. I had a lot of clients email me yesterday wondering why bonds should have rallied so much in the first place when the Fed had hinted that they could let inflation run symmetrically around their target which might mean a period where’s it’s allowed to run a little hot. The relatively dovish dots seemed to dominate activity Wednesday night but perhaps there was some acknowledgment yesterday that this actually could mean 10 year yields should rise not fall. Anyway there are many ways of interpreting the Fed and at the moment yields are still notably lower than before the decision.

That said in Europe bond markets yesterday did pretty much complete the post Fed u-turn. 10y Bund yields backed up +3.4bps to finish at 0.443%, yields in the periphery were up to +6.7bps higher while similar maturity Dutch yields were +2.6bps higher at 0.683%. Indeed the biggest driver appeared to be that market-friendly Dutch election result and specifically the defeat for the populists, helping to lower expectations of a possible Le Pen shock in France. ECB board member Praet also spoke and sounded generally upbeat on European growth prospects although did still sound some caution on the inflation outlook. Later in the evening and after the European close the ECB’s Nowotny also caused a bit of a hawkish buzz after being quoted in the Handelsblatt saying that the ECB doesn’t necessarily need to follow the US model of completing QE before raising rates, and also that the ECB could raise the deposit rate before the main refinancing rate. We’ll see the reaction in the front end this morning.

The Euro spiked on Nowotny’s comments having traded flat for most of yesterday, closing up +0.30% versus the Dollar and it’s up a little bit more this morning at 1.078. Generally positive sentiment in Europe was reflected in a decent session for risk assets yesterday with the Stoxx 600 closing +0.70%, with European Banks +0.94% and to a new 15-month high. The iTraxx Main and Crossover indices were 2bps and 7bps tighter respectively. In contrast the S&P 500 (-0.16%) and Dow (-0.07%) both eased back, albeit very modestly with the S&P 500 still up about +0.30% versus the pre-Fed level. EM on the other hand surged again with the MSCI EM index up a bumper +2.09% and to the highest since July 2015.

Meanwhile it’s worth highlighting that President Trump’s budget came and went without causing too much of a ripple. The President proposed steep cuts to a number of domestic departments to pay for higher military spending, amongst other things. Indeed much of the chatter is that Congress will almost certainly reject most of the proposals. House Speaker Paul Ryan confirmed that the budget request is part of a “long, ongoing” process.

Overnight in Asia it’s been fairly quiet for the most part. Equity bourses are fairly mixed but moves have been modest with the Nikkei (-0.36%) and Shanghai Comp (-0.24%) a little softer but the Hang Seng (+0.28%), Kospi (+0.35%) and ASX (+0.37%) all slightly firmer. Rates and currencies are also fairly quiet while Oil and Gold are a little firmer.

Staying in Asia, after China’s mini tightening yesterday it was good timing from our chief economist Zhiwei Zhang who published a note looking at how the property bubble is getting bigger with policy behind the curve. Zhiwei thinks the root cause of this bubble is excessively loose monetary policy set to achieve growth above its potential. He thinks aggressive monetary tightening is unlikely in 2017 though and that the bubble might help the economy in the near term, partly through a large wealth effect for households as well the government. But it severely heightens macro risks, particularly for 2018-2020.  Talking of bubbles our asset allocation team published a note yesterday suggesting that US real yields are extremely misvalued if not actually in a bubble and are at levels comparable to those seen at the depths of the financial crisis.

So after a week of a Fed hike and a mini Chinese one, here in the UK there was some surprise that BOE member Kirsten Forbes dissented from the rest of the committee yesterday and voted for a 25bp hike. She does leave the committee in the summer which perhaps downplays the move but the tone in the minutes were on the hawkish side notwithstanding the MPC acknowledging that wage inflation was “notably weaker” than the expectations from the Inflation Report in February. As DB’s Mark Wall highlights, first there was a reference to “some members” (beyond Forbes) feeling that it would not take much upside relative to current growth and inflation expectations for an immediate tightening of policy to be warranted. Second, the MPC sees potential offsets against the baseline view that weaker consumption weakens GDP, for example, more supportive net trade. Mark’s baseline view is for an indefinite hold on rates but yesterday’s tone increases the risks of upcoming tightening.

Away from the central banks, yesterday’s data was largely second tier by nature in the US. The most notable was perhaps the Philly Fed manufacturing index which declined a bit less than expected in March (32.8 vs. 30.0 expected; 43.3 in February) albeit with the index still at fairly elevated levels. The details also revealed a small uptick in new orders by 0.6pts to 38.6. Away from that housing starts were reported as rising +3.0% mom in February (vs. +1.4% expected) however permits fell -6.2% mom (vs. -1.9% expected). On the employment front initial jobless claims held steady at 241k while the BLS JOLTS report for January showed a small lift in the quits rate to 2.2% which matches the post-recession high from December 2015. The hiring rate rose to 3.7% from 3.6% and was the first increase since July.

Finally the only notable data in Europe was the final February inflation report for the Euro area where headline CPI was confirmed at +0.4% mom and the YoY rate at +2.0%. There were no final revisions to the core either at +0.9% yoy. Away from that central bank decisions from Switzerland, Norway and Turkey saw benchmark rates left on hold.

Looking at the day ahead it’s a fairly quiet end to the week for data in Europe this morning with Q4 wages data in France and the latest trade balance reading for the Euro area the only releases of note. In the US we’ll get the February industrial and manufacturing production prints for February where the consensus is for +0.2% mom and +0.5% mom respectively. The conference board’s leading index for February is also due along with the first estimate of the March University of Michigan consumer sentiment print. It’s worth noting that over the weekend China will also release February property prices data so it’ll be worth seeing if the data backs up our aforementioned economists’ view. There are a couple of other things to highlight starting today. One is the G-20 finance ministers meeting which continues into tomorrow and the other is the Scottish National Party conference which also continues into tomorrow, where clearly most will be looking for further debate on a possible second referendum.

Meanwhile I’ll still be walking round in a state of shock.



i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 32.49 POINTS OR .96%/ /Hang Sang CLOSED UP 21.85 POINTS OR 0.09% . The Nikkei closed DOWN 68.55 POINTS OR 0.35% /Australia’s all ordinaires  CLOSED UP 0.23%/Chinese yuan (ONSHORE) closed DOWN at 6.9052/Oil ROSE to 49.03 dollars per barrel for WTI and 52.02 for Brent. Stocks in Europe ALL IN THE GREEN    ..Offshore yuan trades  6.8888 yuan to the dollar vs 6.9052  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS CONSIDERABLY AGAIN/ ONSHORE YUAN WEAKER AS IS  THE OFFSHORE YUAN WHICH IS MUCH WEAKER AND THIS IS  COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA TIGHTENS 


Strategic patience has now ended as Tillerson warns that military action is on the table with any elevated threat

(courtesy zerohedge)

“Military Action Is On The Table”: Tillerson Warns “Patience” With North Korea Has Ended

The U.S. policy of “strategic patience” with North Korea has ended, Secretary of State Rex Tillerson said in South Korea on Friday quoted by Reuters, adding that military action would be “on the table” if North Korea elevated the threat level. Tillerson said that 20 years of trying to persuade North Korea to abandon its nuclear program had “failed” and that he was visiting Asia “to exchange views on a new approach.”

“I think it’s important to recognize that the political and diplomatic efforts of the past 20 years to bring North Korea to the point of denuclearization have failed,” Tillerson said. “Let me be very clear: the policy of strategic patience has ended. We are exploring a new range of security and diplomatic measures. All options are on the table,” Tillerson told a news conference in Seoul and added that any North Korean actions that threatened the South would be met with “an appropriate response.”

Rex Tillerson speaks as South Korean Foreign Minister Yun Byung-Se looks on

during a news conference in Seoul, South Korea March 17, 2017.

“If they elevate the threat of their weapons program to a level that we believe requires action, that option is on the table,” Tillerson said when asked about military action.

The harshly worded warning came as Tillerson began his first Asian visit as secretary of state; after Japan and South Korea, he will travel to China on Saturday with a main focus on finding a “new approach” on North Korea after what he described as two decades of failed efforts to denuclearize the insular nation.

Soon after Tillerson’s remarks, in a sign of mounting tensions, the North Korean Embassy held an extraordinary news conference in Beijing to blame the potential for nuclear war on the United States while vowing that its homegrown nuclear testing program will continue in self-defense, the WaPo added. North Korea has amassed a sizable nuclear stockpile and appears at the brink of being able to strike the U.S. mainland and American allies in Asia. The rising threat from the isolated military dictatorship has prompted the Trump administration to begin assessing its options for how to respond and serves as an early test for how the president will confront an increasingly volatile international situation.

Tillerson also called on China to implement sanctions against North Korea and said there was no need for China to punish South Korea for deploying an advanced U.S. anti-missile system aimed at defending against North Korea. In recent weeks China has lashed out at the Korean deployment of the Terminal High Altitude Area Defense (THAAD) system’s powerful radar, saying it is a threat to its security.

“We believe these actions are unnecessary and troubling,” Tillerson said, referring to what South Korea sees as Chinese retaliation in the form of business restrictions in response to the deployment of the missile system. “We also believe it is not the way for a regional power to help resolve what is a serious threat for everyone. So we hope China will alter its position on punishing South Korea. We hope they will work with us to eliminate the reason THAAD is required.”

South Korean Foreign Minister Yun Byung-se told the joint news conference the missile system was only intended to defend against North Korea, not any other country, although China clearly does not see it that way.

North Korea has conducted two nuclear tests and a series of missile launches since the beginning of last year. Last week, it launched four more ballistic missiles and is working to develop nuclear-tipped missiles that can reach the United States. Meanwhile, China has resented U.S. pressure to do more on North Korea and says it is doing all it can but will not take steps to threatened the livelihoods of the North Korean people. Beijing has urged North Korea to stop its nuclear and missile tests and said South Korea and the United States should stop joint military exercises and seek talks instead.

Chinese Foreign Ministry spokeswoman Hua Chunying reiterated that talks were the best way to resolve the problems of the Korean peninsula. “As a close neighbor of the peninsula, China has even more reason than any other country to care about the situation,” she told a briefing.

Hua also said the THAAD would “upset the regional strategic balance”. Its radar, with a range of more than 2,000 km (1,250 miles), meant it could cover a large part of China, far outside the scope of the threat South Korea faces, Hua said. “We do not oppose South Korean taking necessary measures to protect its security, but these measures cannot be based upon harming the security interests of South Korea’s friendly neighbor, China,” she said.

Meanwhile, as previewed one week ago, the odds of an unexpected North Korean WMD attack are rising. According to the Predata-Beyond Parallel concultancy’s prediction model, there was a 43% chance of North Korean WMD activity taking place in the next 14 days (as of last Friday), while in the next 23 days, there is a 62% chance for North Korean WMD activity. Beyond Parallel defines WMD activity as nuclear tests and ballistic missile launches. A military response by the US now looks increasingly probable.


Following Tillerson, it is Trump’s turn to slam North Korea for “behaving badly”. Trump blames China for not keeping North Korea in order.  Odds of an attack have greatly increased and now we have a mad man at the nuclear switch


(courtesy zero hedge)

Trump Slams North Korea For “Behaving Very Badly”, Blames China

Following Secretary of State Tillerson’s clear warning of the potential for a first strike against North Korea this morning:

“I think it’s important to recognize that the political and diplomatic efforts of the past 20 years to bring North Korea to the point of denuclearization have failed,” Tillerson said. Let me be very clear: the policy of strategic patience has ended. We are exploring a new range of security and diplomatic measures. All options are on the table,” Tillerson told a news conference in Seoul and added that any North Korean actions that threatened the South would be met with “an appropriate response.”


President Trump has tweet-chimed-in…

North Korea is behaving very badly. They have been “playing” the United States for years. China has done little to help!

Stirring the pot at both ends, just as China relations were starting to heal a little (even with the THAAD deployment).

Meanwhile, as previewed one week ago, the odds of an unexpected North Korean WMD attack are rising.


According to the Predata-Beyond Parallel concultancy’s prediction model, there was a 43% chance of North Korean WMD activity taking place in the next 14 days (as of last Friday), while in the next 23 days, there is a 62% chance for North Korean WMD activity. Beyond Parallel defines WMD activity as nuclear tests and ballistic missile launches. A military response by the US now looks increasingly probable.




We note Jim Willie’s interpretation above and it is a must read.  Zero hedge and Bloomberg also weigh on by why the Chinese unexpectedly raised rates 10 hours after the Fed:

(courtesy zero hedge)

Why China Unexpectedly Hiked Rates 10 Hours After The Fed

As we reported on Wednesday evening, something interesting took place on Thursday morning in Beijing: in a case of eerie coordination, China tightened monetary conditions across many of the PBOC’s liquidity-providing conduits just 10 hours after the Fed raised its own interest rate by 0.25% for only the third time in a decade.

The oddly matched rate hikes, prompted Bloomberg to think back to the mysterious “Shanghai Accord” of February 2016, which took place during the peak days of last year’s global capital markets crisis, and whose closed-door decisions – to this day kept away from the public – prompted the market rally that continues to this day. As Bloomberg wrote, the coordinated “response suggests that pledges by the Group of 20 economies a little over a year ago in Shanghai to “carefully calibrate and clearly communicate” policies may not have been hollow after all.”

That said, it was not the first time the People’s Bank of China has acted on the heels of a Fed move. At the peak of the financial crisis, the PBOC cut lending rates after six of its counterparts, including the Fed, had announced a simultaneous rate cut. That October 2008 move enhanced China’s emerging reputation as a global player on the international economic-policy circuit. “Growth divergence is morphing into growth synchronization,” said Chua Hak Bin, a Singapore-based senior economist with Maybank. “Policy divergence was also a narrative for those expecting a strong dollar, but that is moving now to policy synchronization.”

Coordinated or not, as of last night financial conditions in China, like in the US, have become incrementally tighter even if both the Chinese and US stock markets failed to respond accordingly.

So, for those curious what China did – after all the days of shotgun Interest rate or RRR moves appear to be on hibernation for the time being – here is a convenient primer from SocGen’s Wei Yao explaining not only the mechanics, but the reason why.

As Yao notes, the PBoC followed the Fed closely, at least timing-wise, and raised the rates on its major liquidity management tools by 10bp across the curve today, earlier than many had expected. After the hikes, the rate on the 7D reverse repo operations – the most critical of all – is now at 2.45%.


The central bank, in its press release, stressed that these interbank rate hikes simply follow the market’s development, thus not true policy rate hikes, and only hikes of benchmark lending and deposit rates count. Nevertheless, it also listed four classical rate-hike reasons for the interbank rate changes: the economic recovery, rising inflation (particularly that of housing), strong credit growth and Fed’s rate hikes.

SocGen’s interpretation of this statement is:

  1. The PBoC is responding to the fundamentals of growth, inflation and financial stability. And it is looking through the low food prices, which have suppressed CPI, and paying due attention to domestic asset bubbles and credit growth.
  2. But it still prefers a tightening approach so as to match its neutral stance, which means that adjusting interbank liquidity and interbank rates will likely remain the main actions. This may be because the headline CPI is muted after all, or because it has to change its policy rates from benchmark deposit/lending rates to interbank-linked rates sooner or later and so better start practicing now. In any case, it does not want the market to get ahead itself and price in too much tightening, just like the Fed.
  3. Fed’s policy and US-China interest rate differentials do play a role in PBoC’s consideration. It may not be a very big role, as offering 10bp for every 25bp from the Fed is at best half-hearted help to the RMB. However, the Fed’s action offered the PBoC a timing to make the move, appearing to support the argument that the interbank rate hikes are “following the market”.

Given PBoC’s latest move and our view that growth stability will stay until the end of 2017, SocGen now expects further interbank rate hikes: 20bp in 2Q, 10bp in 3Q and no change in 4Q.

The equally critical development to watch is the evolution of interbank market rates as resulted from PBoC’s daily liquidity management. The trend of these market rates leads the changes of rates on PBoC’s instruments, thus a more timely indication of PBoC’s intention. Before today’s moves, the 28-day moving average of the 7d repo was already 50bp above the low back in August 2016.

Finally, while China has traditionally shied away from criticizing the Fed using conventional channels, in a surprising editorial in the Economic Information Daily, the authors said that China should be wary of a “spillover effect” from the Fed rate hikes, warning that “selfish” US interest rate policies have historically triggered crises in many other nations, the newspaper says in its front-page commentary. Finally, it warned that frequent Fed rate hikes may have “serious impact” on global economy.

Keep a close eye on tonight’s reverse repo facility: if China is really concerned, it very well may “hike” again.




Every dollar of deal with China is a dollar lost in western production. China is clearly doing what it can to offset lower demand in the US. Each deal is a dagger into the heart of uSA hegemony.

(courtesy zero hedge)

and special thanks to Robert H for sending this to us;


Factbox: Saudi Arabia, China sign deals worth potentially $65 billion

Saudi Arabia’s King Salman oversaw the signing of deals worth as much as $65 billion on the first day of a visit to Beijing on Thursday, as the world’s largest oil exporter looks to cement ties with the world’s second-largest economy.

The agreements include deals for infrastructure, refining, chemicals, training, technology and other sectors:

– Saudi Aramco [IPO-ARMO.SE] and Norinco Group [CNIGC.UL]signed a memorandum of understanding (MoU) to develop a refinery and chemical facilities in Panjin City.

– Saudi Aramco and Aerosun Corp signed an MoU to manufacture reinforced thermoplastic pipe and components.

– The Saudi Fund for Development signed an agreement with China Export & Credit Insurance Corporation to cooperate in providing finance and guarantee of exports.

– King Abdulaziz City for Science and Technology and China’s CASA signed an agreement to manufacture drones.

– SABIC and Sinopec signed an agreement to study opportunities for joint projects in Saudi Arabia and China.

– Saudi’s SAGIA investment authority awarded licenses to telecommunications equipment supplier ZTE to build smart meters and Shandong Tiejun Electric to carry out electrical and industrial activities.

Saudi’s Royal Commission for Jubail and Yanbu signed an agreement with PAN-ASIA to assign the location for a petchem project with $2 billion investments.

– China’s Huawei will build a center for training in Yanbu.

Saudi companies also signed agreements with Chinese developers in areas including information technology and renewable energy.

(Sources: Saudi Press Agency, Saudi Energy Ministry Twitter feed)

(Compiled by Reem Shamseddine, Katie Paul and Marwa Rashad)




France has been having terrible trouble with migrant attacks in Paris and other places in the South of France. Todaythe Eur/USA drops as LePen’s support jumps:

(courtesy zero hedge)

EURUSD Tumbles As Le Pen Support Jumps

Given the collapse of European VIX to record lows, one could be forgiven for thinking that there’s nothing to worry about. However, a one point jump in first-round support for French far-right presidential candidate Marine Le Pen has sparked a notable drop in EURUSD this morning.

MLP 28% (+1)
EM 25% (=)
FF 20% (+1)
BH 12% (-1)
JLM 11% (-1)

European FX investors look anything but comfortable…


Overall however, according to the polls, Le Pen is unlikely to win…

But then again – Brexit and Trump proved that means nothing.




Syria claims it shot down an Israeli jet of which the Israeli denied.  However the Israeli did say they had multiple missions inside Syria;

(courtesy zero hedge)

Syrian Army Claims It Shot Down Israeli Jet After Raid Near Palmyra

The Syrian Army said Israeli warplanes targeted Syrian army positions and hit a “military target” near Palmyra in a Friday morning raid, in what it described as an act of aggression that aided Islamic State. In retaliation the jets were targeted by Syrian anti-aircraft missiles with one of the Israeli fight planes shot down.

According to a statement by the Syrian Army, a total of four Israeli jets breached Syrian airspace on Friday morning, Reuters reports. Syria’s air defenses shot down one of the Israeli jets over “occupied ground” and damaged another.

The Israeli Army confirmed it had conducted airstrikes on several targets in Syria, Israel National News reported. However, as usual the IDF insists that none of the jets was harmed. “At no point was the safety of Israeli civilians or the IAF [Israeli Air Force] aircraft compromised,” an Israeli military spokesman said.

Overnight, IAF aircrafts struck several targets in Syria and were fired upon by anti-aircraft missiles.

Following the breach of the country’s airspace, the Syrian Army warned Israel of “direct” retaliation “with all means at its disposal,” Haaretz reports. Earlier, a spokesperson of the Israel Defense Forces (IDF) said that Israeli military jets were targeted by anti-aircraft missiles after they struck several targets in Syria. “I can say that the sirens were the result of the incident,” an Israel Defense Forces spokesperson told Sputnik, referring to the launch of missiles at Israeli planes that carried out attacks on targets in Syria.

As Reuters further adds, after Israeli Air Force planes struck several targets in Syria on Thursday night, Damascus retaliated by activating its air defense systems and firing a number of missiles at Israeli jets, according to Haaretz. None of the missiles struck the jets, but one was intercepted by a missile defense system north of Jerusalem, Haaretz reports, adding there were no Israeli casualties in the incident.

“Overnight IAF (Israeli Air Force) aircraft targeted several targets in Syria. Several anti-aircraft missiles were launched from Syria following the mission and IDF (Israel Defence Force) Aerial Defence Systems intercepted one of the missiles,” the military said in its statement, as cited by Reuters.

A rocket siren was heard at around 3:00am Friday morning in the Jordan Valley area, after which witnesses heard an explosion. The IDF later confirmed that the sirens were a result of Israeli airstrikes on several targets in Syria, Israel National News reports.

Friday’s incident is the third time that Israel has bombed targets on Syrian territory. Recent, in mid-January, Israeli forces hit the Mezzeh Military Airport west of Damascus, with the facility rocked by several explosions according to RT. On December 7, the state agency SANA reported that multiple surface-to-surface missiles had been fired by the IDF from the Golan Heights. Syrian authorities have repeatedly accused Israel of endorsing terrorism by carrying out the attacks. Regarding the strikes, Israeli authorities previously said they were targeting positions of Lebanon’s Hezbollah group inside Syria. Israel views the organization as enemy militants.




TURKEY/EUROPEThe Turkish foreign minister is fanning the fires:  He states that religious wars will soon start in Europe. The relations between Turkey and Holland are now at an all time low.(courtesy zero hedge)



Rig counts continue to rise causing oil production from the USA to escalate. This is causing huge grief to OPEC

(courtesy zero hedge)

Rising Rig Count Is Pushing OPEC To Breaking Point

For the 9th straight week (and 35th of the last 37 weeks), the US oil rig count rose this week (surging by 14 to 631 – highest since September 2015).

The rig count continues to track the lagged WTI price


US Crude production has accelerated at a faster pace than the lagged rig count


And that is pushing OPEC to the breaking point:


Who’s the sucker at that table?

As’s Michael McDonald points out, the trend in the United States of accelerating oil production does not seem to be slowing down. Recent reports show that oil production from U.S. shale producers will increase in April, according to the Energy Information Administration. High market prices are currently being supported by OPEC cutbacks, and these higher profits are funding the growth of American drilling.

The release from the EIA predicts that net oil production will increase by 109,000 barrels per day in April. The seven major oil and gas basins that were included in the report will then have an output over nearly 5 million barrels per day collectively.

The monthly projections from the EIA have been climbing month after month since December. That month, 11 large oil exporting countries joined the supply cuts established by OPEC to control what they believed was an oversupplied market for crude oil.

In the United States, the main benefactors have been drillers at the Permian Basin, in Western Texas and southern New Mexico. The basin has been producing high volume since the end of 2016. The EIA expects the Permian drillers to see a gain of 70,000 barrels per day next month in their projections.

However, the Permian Basin is not the only United States site trying to capitalize on high prices. Drillers in southeast Texas, the Eagle Ford region, have also been ramping up production. Those drillers will amount for an increase 28,000 barrels per day in the EIA’s overall growth projections. Prior growth expectations for Eagle Ford producers was half on that number, at an increase of 14,000 barrels per day; the growth is not only steady, but is accelerating.

The EIA report for next month also shows a decline at several U.S. drilling sites. Take, for instance, the Niobrara region of Colorado and the Bakken Shale production in North Dakota. Both will experience declines of 11,000 barrels per day, and 10,000 barrels per day respectively.

The supply increases by the U.S. have capped any gains to be seen for OPEC nations from their cutbacks. This has been keeping crude futures within a tight range. On Monday, March 13th, U.S. crude ended at $48.40, a price that hasn’t been seen since before OPEC announced their cutbacks in December 2016.

These recent developments have led analysts to believe OPEC’s cutback policy is fated to end in the near future. It is clear that the United States has a sustainable means to regulate prices in the global oil market. Furthermore, the dynamics of U.S. outputs indicate that the country will not have any desire to participate in the cutbacks; U.S. law prohibits any such price controls. The United States will continue to threaten any gains to be had by OPEC. 

Saudi Arabia has been the leader in the cutbacks thus far, compensating for Russia’s hesitation with withholding supply. Historically, the kingdom has refused to participate in such cuts. However, under the tutelage of new oil minister Khalid al-Falih, they have exceeded their cuts far beyond the original OPEC deal. However, without total compliance, markets will remain unstable – regardless of how much the Saudis holdback.

These factors combined have led analysts to believe the OPEC deal will be forced to end, if only to end the profitability to U.S. growth and production.


As I pointed out to you yesterday, Maduro is going full blast as he escalates the war against the bakers:  he is ready to confiscate all the bakeries in the country:

(courtesy zerohedge)

As Venezuelan “Bread War” Escalates, Maduro Warns Bakers “You Will Pay, I Swear”

With its people resorting to eating flamingoes, the Venezuelan government has decided to find yet another thing to blame for the collapse of the socialist utopia – the bakers!

As The BBC reports, the Venezuelan government says it will expropriate bakeries which fail to abide by new government regulations aimed at tackling bread shortages.

In a growing row between the government and bakers, officials said that bakeries could face fines if people had to queue to get their bread. Severe shortages of basic goods mean that Venezuelans often have to queue for hours to buy essential items.

The government says the shortages are caused by an “economic war”.

Venezuela does not produce wheat and relies on imports bought in by the government which it then sends to mills where it is ground and then distributed.


The government blames bakers for the bread shortages, accusing them of using the flour allocated to them to bake pastries rather than simple baguette-style bread in order to maximise their profits.



Croissants and other sweet baked goods are more expensive than baguettes and French-style breads, as the prices for the latter are controlled by the socialist government.

So the government has decided that more price controls will fix the problem and has unveiled new rules for bakers

  • Use 90% of flour to bake savoury bread and only 10% for pastries and cakes
  • Provide a constant supply of bread throughout the day from 07:00 to 19:00
  • Ensure next day’s supply by holding over bread from the previous day

And the rules will be strictly enforced…

On Sunday, President Nicolas Maduro announced that inspectors would be sent to 709 bakeries in the capital, Caracas, to ensure they were complying with the new rules.


He said that those “speculators who hide the bread from the people will face the weight of the law”.


“They’re going to pay, I swear. Those responsible for the bread war are going to pay and they better not complain that it was a political persecution,” he added.


Vice-President Tareck El Aissami warned that “bakeries which do not follow [the rules] will be occupied by the government”.

As The Miami Herald notes, two bakeries were already seized for 90 days for breaking a number of rules, including selling overpriced bread.

Juan Crespo, the president of the Industrial Flour Union called Sintra-Harina, which represents 9,000 bakeries nationwide, said the government’s heavy hand isn’t going to solve the problem. “The government isn’t importing enough wheat,” he said. “If you don’t have wheat, you don’t have flour, and if you don’t have flour, you don’t have bread.” He said the country needs four, 30-ton boats of wheat every month to cover basic demand.

The notion that bread could become an issue in Venezuela is yet another indictment of a socialist economic system gone bust.


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





Early THIS FRIDAY morning in Europe, the Euro FELL by 30 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0623; 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 31.49 POINTS OR 0.96%     / Hang Sang  CLOSED UP 21.85 POINTS OR 0.09% /AUSTRALIA  CLOSED UP 0.23%  / EUROPEAN BOURSES ALL IN THE GREEN 

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

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

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

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

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

The NIKKEI: this FRIDAY morning CLOSED DOWN 68.55 POINTS OR 0.35% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 21.85 POINTS OR 0.09%       / SHANGHAI CLOSED DOWN 31.49 OR .96%/Australia BOURSE CLOSED UP 0.23%/Nikkei (Japan)CLOSED DOWN 68.55 POINTS OR 0.35%  /  INDIA’S SENSEX IN THE  GREEN

Gold very early morning trading: $1228.90


Early FRIDAY morning USA 10 year bond yield: 2.522% !!! DOWN 1 IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.133, DOWN 1 IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 100.40 UP 4 CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING


And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 4.295%  UP 2  in basis point yield from THURSDAY 

JAPANESE BOND YIELD: +.075%  par  in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.885%  PAR IN basis point yield from THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.368 UP 2 POINTS  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 49 points HIGHER than Spain.





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

Euro/USA 1.0745 DOWN .0007 (Euro DOWN 27 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.70 UP: 0.646(Yen UP 65 basis points/ 

Great Britain/USA 1.2379 UP 0.0029( POUND up 29 basis points)

USA/Canada 1.3362 UP 0.0041(Canadian dollar DOWN  41 basis points AS OIL FELL TO $48.71


This afternoon, the Euro was DOWN by 27 basis points to trade at 1.0745


The POUND ROSE BY 29  basis points, trading at 1.2379/

The Canadian dollar FELL by 41 basis points to 1.3362,  WITH WTI OIL FALLING TO :  $48.71

The USA/Yuan closed at 6.8999/
the 10 yr Japanese bond yield closed at +.075% PAR IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 2  IN basis points from THURSDAY at 2.499% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.109 DOWN  3  in basis points on the day /

Your closing USA dollar index, 100.31 DOWN 5  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 UP 9.01 OR 0.12% 
German Dax :CLOSED UP 12.06 POINTS OR 0.10%
Paris Cac  CLOSED UP 15.86 OR 0.32%
Spain IBEX CLOSED UP 77.80 POINTS OR 0.77%
Italian MIB: CLOSED DOWN  35.48 POINTS OR 0.18%

The Dow closed DOWN 19.93 OR 0.10%

NASDAQ WAS closed UP 0.24 POINTS OR 0.00%  4.00 PM EST
WTI Oil price;  48.71 at 1:00 pm; 

Brent Oil: 51.68  1:00 EST




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

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


BRENT: $51.68





USA DOLLAR INDEX: 100.37  UP 14  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2392 : UP .0042  OR 42 BASIS POINTS.

Canadian dollar: 1.3344  UP .0024

German 10 yr bond yield at 5 pm: +.433%


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


Stocks Sink On ‘Quad Witch’ As Dollar Suffers Worst Week In 8 Months

One. Big. Squeeze…


It was quite a week for ‘uncertainty’ as Europe’s VIX crashed to record lows, and FX and Rate vols plunged after the Fed move and Dutch elections…


Small Caps were the week’s biggest winners (and Trannies the losers)… The Dow clung to the week’s gains


Financials had the 2nd worst week of the year – erasing the Trump Congress speech ramp


Heading into the quad witch close VIX was well bid (after the panic selling around the open), busting the plan to break The Dow back above 21,000…


Post-Fed, Gold is the biggest winner…


Notably, after the worst week in 13 months last week, HYG managed the best week in 3 months, boucing off the 200DMA again…


Today’s record low inflation expectations sent bond yields and the dollar tumbling to post-Fed lows…


Some context for these moves… The Dollar is back near post-election lows and the 30Y yield stumbled once again at 3.20%


On the week 2s10s notably flattened…


This was the Dollar’s worst week in 8 months…And AUD, JPY, and Cable strength dragged on The Dollar Index…


The USD is down over 3% in Q1 and is unchanged since March 2015…


The Mexican Peso surged this week, erasing the entire post-Trump decline…


With the debt ceiling deadline now passed, we note that USA sovereign risk has not moved yet, but Russia (which is junk rated but saw a positive outlook upgrade today) is now trading tighter (less risky) than investment grade Italy…


This was gold’s best week in the last six weeks… (silver also bounced after 2 down weeks)…


Gold and Silver closed above key technical levels…


Finally, this…


And here’s why Nasdaq hit a new record high…


Instead of an expected .2% rise in Industrial production, we got another hard data disappointment with a zero gain

(courtesy zerohedge)

Another ‘Hard’ Data Disappointment: US Industrial Production Misses, Stagnant In February

After a brief jump in December, US industrial production was unchanged in February (thanks to tumble in utilities which offset modest manufacturing gains). Industrial Production peaked in the US in Nov 2014, as the US equity market took off after the end of QE3.

February saw Industrial production unchanged against expectations of a 0.2% MoM rise (and January was revised modestly higher).

But then again, when has real economic data mattered?


Manufacturing was in line at +0.5%, but utilities tumbled for the 2nd month in a row (down 5.7%) and Mining output rose 2.2%.

Most of the major non-energy market groups recorded increases in February. For a second consecutive month, however, a drop in the output of utilities contributed substantially to losses in the overall indexes for consumer goods, business supplies, and materials through their energy components.

The production of consumer goods moved down 0.4 percent overall, reflecting a drop in consumer energy products. The index for consumer durables was unchanged, as a loss of 3.6 percent in appliances, furniture, and carpeting was outweighed by increases in other groups. The production of consumer non-energy nondurables rose 0.3 percent because of improvements in foods and tobacco and in clothing. The output of business equipment moved up 0.7 percent, with both information processing equipment and industrial and other equipment recording increases.

The output of construction supplies jumped 1.3 percent; the index has advanced more than 4 percent over the past six months. The indexes for non-energy business supplies and non-energy materials each rose more than 1/2 percent. Within materials, both durable and nondurable materials posted gains.


(courtesy zero hedge)

(courtesy zero hedge)

Albert Edwards: This Is The Reason Why The Market Doesn’t Believe The Fed Any More

While it was generally a quiet day in the market, an unexpected tension emerged today: first central banker incubator Goldman Sachs, and then RBC both made the case that Janet Yellen has not only failed to communicate what yesterday’s rate hike means, but that the Fed has effectively lost control of the market, by unleashing just the opposite reaction of what the Fed had intended: in fact, as Goldman explained, the response to the market was the equivalent of “almost one full cut in the federal funds rate.” In other words, instead of hiking, the market interpreted the Fed’s action as a rate cut, which according to Goldman will force the Fed to explain that the market was wrong, prompting even more volatility when the market’s inevitable cognitive dissonance hits.

But is it the market’s fault it no longer believes the Fed? Of course not, and as SocGen’s Albert Edwards notes, it is the “Fed’s lack of verbal assertiveness means the market still cannot bring itself to believe the Fed’s own projections for interest rate hikes.”

There are several factors at play here, not only the confusing dots (which as RBC pointed out moved in a hawkish fashion for 2017). As Edwards’ co-worker Kit Juckes summed up. “the Fed’s reluctance to  send an aggressive tightening signal, instead preferring to again shuffle upwards its dots just slightly, has disappointed markets. But to be fair, the problem isn’t really with the famous dots. It’s with the market, which just doesn’t believe the Fed will tighten as fast as they say they plan to (see left-hand chart below). If the market took the FOMC at their word and discounted a 3% Fed Funds rate at the end of 2019 and beyond, then we’d probably have a 3% nominal 10-year Treasury yield by now.”



Kit also points out ?after spending the 1980s defeating inflation, the Fed has allowed rates to spend progressively longer and longer below the nominal growth rate of the economy (see right-hand chart above). Trend nominal growth is only a first estimate of where the natural rate of interest might be – and it?s definitely been dragged lower than that in recent year – but depressed market volatility, and the strength of asset prices is a result of low rates. And nominal GDP growth is at 3½% while the FOMC?s range for the dots in 2019 was 3% wide, from 0.9% to 3.9% with a median at 2.9%.?

So how did the Fed become what is essentially a joke to traders, and why does the market no longer believe it any time the message may be a negative one?

One reason why the market doesn’t believe the Fed dots is that investors cannot conceive of Fed tightening to the point that it causes the stockmarket any serious damage. Time and time again over both this and previous cycles the Fed has backed off rate hikes as soon as the going got tough. Maybe that is why the S&P trades at such a huge PE premium to the rest of the world?s equity markets (see chart below), for only a small part of this divergence can be attributed to sector composition.


Edwards also notes something that is quite significant from the PE chart above: namely how Japanese forward PEs are roughly the same as where they have been for the last six years whereas the US and the eurozone have seen considerable PE expansion. Yet Japan has seen much more rapid profits growth since the 2008 crisis. Some will put this solely down to the Abe-inspired weak yen, but the domestic-dominated whole economy profits measure shows exactly the same record-breaking profile as the overseas-dominated stockmarket indices.

Just as troubling is that the whole economy profits in the US are not recovering anywhere near as quickly as the stockmarket measures. Indeed it is at this late point in the cycle that US stockmarket non-GAAP, “pro forma” profit measures become increasingly manipulated and detached from the whole economy profit measures.

So what is an alternative metric to look at? According to Edwards, the US whole economy profits measure gives a more ?truthful? representation of companies underlying profit conditions ? the data comes from the IRS and companies don?t tend to lie to the IRS. The whole economy profits data is not so timely as the stockmarket data as the IRS and the Bureau of Economic Analysis have to give the data a good scrub. Hence the Q4 whole economy profits data will only be released with the 3rd estimate of Q4 GDP on 30 March. But a sneak preview is buried deep in the recently released Fed Z1 Flow of Funds release.

What it shows is that very much against expectations, whole economy measures slipped again in Q4 in line with unit labour cost data that show corporate margins are being squeezed. This is in contrast to the heavily massaged stockmarket measures which have been recovering briskly.

As Edwards concludes “we’?ve seen this divergence before at the end of the cycle and I know which I believe. This adds to my concerns that US PE valuations are totally unjustified ? in stark contrast to Japanese PEs.”

Ironically, if Edwards is correct about the collapse in profits, then the market is spot on not believing the Fed: after all, the trend confirms a recession is imminent. As such, after 1-2 more rate hikes, the Fed will not only swiftly cut back to zero, or maybe go ECB/SNB/BOJ, but be forced to launch that $1 trillion in fresh QE4 which Deutsche Bank has been quietly expecting for some time.



The uSA consumer still has a deflationary mindset as the Consumer inflation expectations crash to record lows.  The Fed wants a reflation expectation and this is going counter to what they want!

(courtesy zero hedge)

Dollar Drops As Consumer Inflation Expectations Crash To Record Lows



Having warned in November 2015 of a “deflationary mindset”, University of Michigan survey director Richard Curtin notes that things have done nothing but get worse.

While reflation trades run amok in capital markets, real people’s expectations of inflation in the medium-term has collapsed to its lowest on record…


In the latest massive setback for the Federal Reserve, which is desperate to break the recent “deflationary mindset” to have gripped the US population (see Japan for the results), long term inflation expectations declined to the lowest level since 1980: an annual rate of 2.2% was expected in the next five years, down from 2.5% last month and 2.3% in December. Just 6% expected long term deflation. These lows were supported by the fewest complaints of rising prices eroding their living standards—just 6%, the lowest since 2002 and barely above the all-time low of 4%.

And this is weighing on the dollar…


The Dollar Index is very close it slowest since the election – seemingly erasing the hope of reflation and exuberance.



In the University of Michigan Consumer Confidence report we see a wide disparity between Republicans and Democrats: Democrats expect a deep recession and Republicans a new golden age

(courtesy zero hedge)

Consumer Confidence: Democrats Expect “Deep Recession”, Republicans Look To New Golden Age

UMich consumer confidence rose in the preliminary March print, beating expectations at 97.6 with current conditions surging but expectations stalling somewhat.

This exuberance is occurring as real earnings growth slumps. But crucially, the partisan divide is unprecedented.


The overall level of consumer sentiment remained quite favorable in early March due to renewed strength in current economic conditions as well as the extraordinary influence of partisanship on economic prospects.

The Current Economic Conditions component reached its highest level since 2000, largely due to improved personal finances. While current economic conditions were not affected by partisanship, this was not true for the component about future economic prospects: among Democrats, the Expectations Index at 55.3 signaled that a deep recession was imminent, while among Republicans the Index at 122.4 indicated a new era of robust economic growth was ahead.

Interestingly, those who self-identified as Independents had an Expectations Index of 88.3, which was nearly equal to the midpoint of the partisan difference.

Importantly, there was no moderation in these extreme views from last month, with the maintenance of the partisan divide fueled by selective attention to economic news, with Democrats more frequently reporting unfavorable developments and Republicans more frequently hearing of favorable changes.

Expectations regarding future economic conditions remained highly partisan. Continuous good times in the economy over the next five years were expected by 87% of Republicans, but only 22% of Democrats. In contrast, renewed economy-wide downturns were anticipated by 71% of Democrats, but only 11% of Republicans. This would imply that Republicans anticipate the longest economic expansion in more than a century. Perhaps even more extreme were expectations regarding unemployment: 75% of Republicans anticipated declining unemployment, compared with just 12% of Democrats. Indeed, based on the traditional correspondence between unemployment expectations and subsequent changes in the unemployment rate, the Republican data would be consistent with a zero unemployment rate in 2018! While the Republican data certainly represent unattainable outcomes, the data for Democrats, while within traditional ranges, also represent extreme predictions.

Overall, the sentiment data has been characterized by rising optimism as well as by rising uncertainty due to the partisan divide. Optimism promotes discretionary spending, and uncertainty makes consumers more cautious spenders. This combination will result in uneven spending gains over time and across products.



Michael Snyder gives 12 reasons why Janet and her gang made a terrible mistake in raising rates

( Michael Snyder/EconomicCollapse Blog)

12 Reasons Why The Fed Just Made The Biggest Economic Mistake Since The Last Financial Crisis


Authored by Michael Snyder via The Economic Collapse blog,

Has the Federal Reserve gone completely insane?  On Wednesday, the Fed raised interest rates for the second time in three months, and it signaled that more rate hikes are coming in the months ahead.  When the Federal Reserve lowers interest rates, it becomes less expensive to borrow money and that tends to stimulate more economic activity.  But when the Federal Reserve raises rates , that makes it more expensive to borrow money and that tends to slow down economic activity.  So why in the world is the Fed raising rates when the U.S. economy is already showing signs of slowing down dramatically?  The following are 12 reasons why the Federal Reserve may have just made the biggest economic mistake since the last financial crisis…

#1 Just hours before the Fed announced this rate hike, the Federal Reserve Bank of Atlanta’s projection for U.S. GDP growth in the first quarter fell to just 0.9 percent.  If that projection turns out to be accurate, this will be the weakest quarter of economic growth during which rates were hiked in 37 years.

#2 The flow of credit is more critical to our economy than ever before, and higher rates will mean higher interest payments on adjustable rate mortgages, auto loans and credit card debt.  Needless to say, this is going to slow the economy down substantially

The Federal Reserve decision Wednesday to lift its benchmark short-term interest rate by a quarter percentage point is likely to have a domino effect across the economy as it gradually pushes up rates for everything from mortgages and credit card rates to small business loans.


Consumers with credit card debt, adjustable-rate mortgages and home equity lines of credit are the most likely to be affected by a rate hike, says Greg McBride, chief analyst at He says it’s the cumulative effect that’s important, especially since the Fed already raised rates in December 2015 and December 2016.

#3 Speaking of auto loans, the number of people that are defaulting on them had already been rising even before this rate hike by the Fed…

The number of Americans who have stopped paying their car loans appears to be increasing — a development that has the potential to send ripple effects through the US economy.


Losses on subprime auto loans have spiked in the last few months, according to Steven Ricchiuto, Mizuho’s chief US economist. They jumped to 9.1% in January, up from 7.9% in January 2016.


“Recoveries on subprime auto loans also fell to just 34.8%, the worst performance in over seven years,” he said in a note.

#4 Higher rates will likely accelerate the ongoing “retail apocalypse“, and we just recently learned that department store sales are crashing “by the most on record“.

#5 We also recently learned that the number of “distressed retailers” in the United States is now at the highest level that we have seen since the last recession.

#6 We have just been through “the worst financial recovery in 65 years“, and now the Fed’s actions threaten to plunge us into a brand new crisis.

#7 U.S. consumers certainly aren’t thriving, and so an economic slowdown will hit many of them extremely hard.  In fact, about half of all Americans could not even write a $500 check for an unexpected emergency expense if they had to do so right now.

#8 The bond market is already crashing.  Most casual observers only watch stocks, but the truth is that a bond crash almost always comes before a stock market crash.  Bonds have been falling like a rock since Donald Trump’s election victory, and we are not too far away from a full-blown crisis.  If you follow my work on a regular basis you know this is a hot button issue for me, and if bonds continue to plummet I will be writing quite a bit about this in the weeks ahead.

#9 On top of everything else, we could soon be facing a new debt ceiling crisis.  The suspension of the debt ceiling has ended, and Donald Trump could have a very hard time finding the votes that he needs to raise it.  The following comes from Bloomberg

In particular, the markets seem to be ignoring two vital numbers, which together could have profound consequences for global markets: 218 and $189 billion. In order to raise or suspend the debt ceiling (which will technically be reinstated on March 16), 218 votes are needed in the House of Representatives. The Treasury’s cash balance will need to last until this happens, or the U.S. will default.


The opening cash balance this month was $189 billion, and Treasury is burning an average of $2 billion per day – with the ability to issue new debt. Net redemptions of existing debt not held by the government are running north of $100 billion a month. Treasury Secretary Steven Mnuchin has acknowledged the coming deadline, encouraging Congress last week to raise the limit immediately.

If something is not done soon, the federal government could be out of cash around the beginning of the summer, and this could create a political crisis of unprecedented proportions.

#10 And even if the debt ceiling is raised, that does not mean that everything is okay.  It is being reported that U.S. government revenues just experienced their largest decline since the last financial crisis.

#11 What do corporate insiders know that the rest of us do not?  Stock purchases by corporate insiders are at the lowest level that we have seen in three decades

It’s usually a good sign when the CEO of a major company is buying shares; s/he is an insider and knows what’s going on, so their confidence is a positive sign.


Well, according to public data filed with the Securities and Exchange Commission, insider buying is at its LOWEST level in THREE DECADES.


In other words, the people at the top of the corporate food chain who have privileged information about their businesses are NOT buying.

#12 A survey that was just released found that corporate executives are extremely concerned that Donald Trump’s policies could trigger a trade war

As business leaders are nearly split over the effectiveness of Washington’s new leadership, they are in unison when it comes to fears over trade and immigration. Nearly all CFOs surveyed are concerned that the Trump administration’s policies could trigger a trade war between the United States and China.

A decline in global trade could deepen the economic downturns that are already going on all over the planet.  For example, Brazil is already experiencing “its longest and deepest recession in recorded history“, and right next door people are literally starving in Venezuela.

After everything that you just read, would you say that the economy is “doing well”?

Of course not.

But after raising rates on Wednesday, that is precisely what Federal Reserve Chair Janet Yellen told the press

“The simple message is — the economy is doing well.” Federal Reserve Chair Janet Yellen said at a news conference. “The unemployment rate has moved way down and many more people are feeling more optimistic about their labor prospects.”

However, after she was challenged with some hard economic data by a reporter, Yellen seemed to change her tune somewhat

Well, look, our policy is not set in stone. It is data- dependent and we’re — we’re not locked into any particular policy path. Our — you know, as you said, the data have not notably strengthened. I — there’s noise always in the data from quarter to quarter. But we haven’t changed our view of the outlook. We think we’re on the same path, not — we haven’t boosted the outlook, projected faster growth. We think we’re moving along the same course we’ve been on, but it is one that involves gradual tightening in the labor market.

Just like in 2008, the Federal Reserve really doesn’t understand the economic environment.  At that time, Federal Reserve Chair Ben Bernanke assured everyone that there was not going to be a recession, but when he made that statement a recession was actually already underway.

And as I have said before, I wouldn’t be surprised in the least if it is ultimately announced that GDP growth for the first quarter of 2017 was negative.

Whether it happens now or a bit later, the truth is that the U.S. economy is heading for a new recession, and the Federal Reserve has just given us a major shove in that direction.

Is the Fed really so clueless about the true state of the economy, or could it be possible that they are raising rates just to hurt Donald Trump?

I don’t know the answer to that question, but clearly something very strange is going on…


Michael Snyder echoes David Stockman that the debt ceiling is going to be a huge crisis for Trump:

(courtesy Michael Snyder)

The Debt Ceiling Deadline Has Passed, And Now The Biggest Test Of Donald Trump’s Presidency Begins…

By Michael Snyder, on March 16th, 2017

On Wednesday, the temporary suspension of the debt ceiling ended, and so now the federal government is not going to be able to go into any more debt until the debt ceiling is raised. For the moment, the Trump administration can implement “emergency measures” to stay under the debt limit, but it won’t be too long before we get to a major crisis point because the federal government is quickly running out of cash. Already, the U.S. Treasury has less cash on hand than Apple or Google, and that cash balance is going to keep on dropping until the debt ceiling is finally lifted.

You may remember that the debt ceiling became a major issue a couple of times during the Obama years. Last time around, Barack Obama and the Republicans in Congress agreed to a horrendous deal which suspended the debt ceiling until several months after the 2016 election

Since President Barack Obama signed the “Bipartisan Budget Act” on Nov. 2, 2015 there had been no legal limit on the amount of money the federal government could borrow until now. That law included a section entitled “Temporary Extension of Public Debt Limit.” It said that the law imposing a limit on the federal debt “shall not apply for the period beginning on the date of the enactment of this Act and ending on March 15, 2017.”

During the 16 and a half months between the signing of that deal and today, the U.S. national debt rose by a whopping $1,414,397,000,000.

But now the U.S. national debt will not be allowed to rise by another penny until the debt ceiling is raised or suspended once again.

The Trump administration is pushing hard to get the debt ceiling raised, and this is a complete reversal from how Donald Trump felt about the debt ceiling back in 2013. The following comes from the L.A. Times

Trump sided with hard-liners in 2013, publicly opposing an increase. “I cannot believe the Republicans are extending the debt ceiling — I am a Republican & I am embarrassed!”he tweeted then.

Trump was actually right about the debt ceiling in 2013, and he is wrong now.

We simply cannot afford to keep adding trillions of dollars to the national debt. What we are doing to future generations of Americans is beyond criminal, because we are literally destroying their future just so that we can enjoy an inflated standard of living that we do not deserve today.

Treasury Secretary Steven Mnuchin has already begun to implement “extraordinary measures” to keep us under the debt ceiling. The first step that was taken was the suspension of the sale of SLGS securities

“Today,” Mnuchin wrote, “Treasury is announcing that it will suspend the sale of State and Local Government Series (SLGS) securities. SLGS are special-purpose Treasury securities issued to states and municipalities to assist them in conforming to certain tax rules. These securities count against the debt limit. The suspension of SLGS sales will commence on March 15, 2017, and continue until the debt limit is either raised or suspended. As in the past, it is likely Treasury will utilize additional extraordinary measures.”

The federal government will be able to keep going for a little while by implementing such “extraordinary measures”, but the Treasury cash balance is going to continue to dwindle and at some point a major squeeze is going to happen.

As things get tighter and tighter, the Trump administration will become increasingly desperate to get the debt ceiling raised. As I wrote about yesterday, the key for Trump is going to be finding 218 votes in the House of Representatives that will be willing to go along with him.

You would think that since Republicans control the House that this should be easy, but the truth is that there are a lot of conservative Republicans that are not inclined to agree to a debt ceiling increase without substantial accompanying budget cuts.

The proposed budget that Trump released this week is getting a lot of criticism from the left for cuts to social programs, but the truth is that it actually doesn’t reduce the deficit at all

President Trump’s “skinny” budget blueprint for 2018 features a proposed $54 billion increase in defense spending and an equal number of spending cuts from the smallest part of the federal budget.

That means his changes won’t add to next year’s projected $487 billion deficit. But they won’t reduce it, either.

And remember, that “$487 billion” figure is just for show. During the Obama years the U.S. national debt increased by an average of well over a trillion dollars a year, and that is almost certainly going to continue for years to come as long as the debt ceiling is raised.

Republicans are supposed to be the party of fiscal responsibility.

So now is their big test.

If they raise the debt ceiling and continue adding more than a trillion dollars a year to the national debt, they will lose all credibility with conservative voters on fiscal issues.

But if they try to force the federal government to start living within its means that is going to severely harm the economy in the short-term.

Donald Trump is going to have to try to figure out a way to navigate this crisis. He has already promised that he will not touch Social Security and Medicare, and those are the two biggest drivers of our budget deficits. In fact, it is being projected that entitlement spending and interest on the debt will eat up every single penny that the federal government takes in within 20 years.

So if Trump won’t touch the big entitlement programs, where will he possibly find enough cuts to satisfy the fiscal conservatives in Congress?

Without them, Trump does not have enough votes to raise the debt ceiling.

In addition, many of the conservatives in Congress absolutely hate the new Republican health care plan, and they hope to use this debt ceiling crisis as leverage to change the bill.

If Trump can’t work out something with conservatives, perhaps he could turn to the Democrats. But most Democrats are extremely resistant to work with him on anything after all that has been said and done, and so for Trump to get a deal with them he would have to make extreme concessions.

This represents the biggest political test for the Trump presidency so far, and if we get down the road a couple of months and nothing gets done, this debt ceiling crisis could spark the kind of financial crisis that I describe in my novel entitled “ The Beginning Of The End“.

Barack Obama pushed things right to the brink a couple of times, but he was savvy enough politically to never let things go over the edge.

Now it is Trump’s turn, and somehow he has got to find a way to get the debt ceiling raised without making extremely deep compromises that would gut the rest of his agenda.

And he had better get to work on this quickly, because time is running out and the clock is ticking… ceiling-deadline-has-passed-and-now-the-biggest-test-of- donald-trumps-presidency-begins


Just look at the damage that the soda tax has done in Philadelphia.  Now Temple University has been forced to hike student costs by 400,000 dollars.
(courtesy Reuters)

Philadelphia Soda Tax Forces Local University To Hike Student Costs By $400,000

Students at Temple University in Philadelphia, or perhaps their parents, are getting a great lesson today on the real life economic consequences of liberal political policies run amok.  Courtesy of Philly’s new 1.5 cent per ounce ‘soda tax’, Temple has been forced to hike it’s 2017-2018 boarding costs by $400,000, or roughly 4.8%.  Per, Temple’s CFO said they will roll back the planned $400,000 meal plan hike if the soda tax is repealed.

Board rates will rise an additional 4.8 percent for 2017-18 solely because of the 1.5-cent-per-ounce sweetened-beverage tax, which went into effect this year, the university said. The tax was enacted to help fund parks, recreation centers, and early childhood education. Heated debate over it continues, with PepsiCo having announced planned layoffs and retailers reporting steep losses.


The total impact of the new tax is estimated to be $400,000 per semester, said Ken Kaiser, Temple’s chief financial officer. The university will roll back the board increase if the tax is repealed, he said.


“This is another example of the damaging impact this tax is having on Philadelphia families,” said Anthony Campisi, a spokesman for Ax the Philly Bev Tax Coalition, made up of a number of Philadelphia businesses and residents, many of them involved in the soda industry. “It’s ironic that a tax the mayor sold on the basis of expanding educational access is now going to be making higher ed less affordable for students.”



Of course, Philadelphia’s Mayor, who has come under fairly constant attack for the controversial tax, said that Temple is simply using his legislation as a scapegoat to “pay for their ever-growing administrative salaries and new, expensive buildings and amenities.”

“The beverage tax is becoming a popular scapegoat for unpopular decisions,” said spokeswoman Lauren Hitt. “Universities across the country have been raising meal-plan fees because families are increasingly chafing at tuition increases, and universities still want to pay for their ever-growing administrative salaries and new, expensive buildings and amenities.”


“Temple’s own administration staff has grown by 40 percent in recent years; they are planning to build a multimillion-dollar stadium; their new 24-story dorm includes flat screen TVs; and, sure enough, they have a history of raising their meal-plan fees to cover those costs – by 2.5 percent in 2015 and 4.3 percent in 2014.”

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


Then came the layoffs as soda sales slumped as much as 40% forcing Pepsi to lay off 80 to 100 workers at three distribution plants that serve Philly. And since Pepsi only employed 423 people in the city, it meant that as much as 20% of its employees were suddenly out of a job due to a disastrous ordnance that was meant to provide additional municipal funding and instead will now lead to an increase in unemployment, coupled with a general decline in consumption, not to mention tax revenues for the city of Philadelphia.

A spokesman for Pepsi said “The layoffs come in response to the  beverage tax, which has cut sales by 40 percent in the city…Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles.”

But not to worry, we’re sure Philly students can just take out more student loans to cover these increased costs…we certainly wouldn’t want them to have to divert any portion of their student loans that they’ve already set aside for Cancun.



Let’s wrap up the week with this offering from Greg Hunter of USAWatchdog

(courtesy Greg Hunter/USAWatchdog)

Somebody is Lying About Spying, Fed Hikes Rates & Gold Spikes, War Update

By Greg Hunter’s (WNW 276 3.17.17)

Somebody is lying about spying on Donald Trump. The Senate says they see “no evidence,” and yet the New York Times runs a story about revealing information that came from “wiretapping Trump aides.”  Respected Judge Andrew Napolitano says British Intelligence did the spying because it has 24/7 access to NSA records.  The British Spy agency denies this charged.  Bottom line, The Trump Administration is overtly and covertly under attack, and that is clear.  Expect a counterattack and soon from the Trump camp.

The Federal Reserve hiked a key interest rate this week. Fed Head Janet Yellen said, “The simple message is . . . the economy is doing well.”  Maybe somebody should have talked to the Atlanta Fed because it just revised the GDP in the first quarter down to .9% from a paltry 1.2%.  That was just a few hours before Yellen made the rate hike announcement.  Gold investors loves the hike as gold spiked in price.

Secretary of State Rex Tillerson is in Asia. The top subject is North Korea and its recent aggression aimed at Japan.  Japan is now hinting at some sort of “first strike” against nuclear armed North Korea.  Meanwhile, South Korea is installing the U.S. made missile defense system call THAAD.  China is not happy about the missiles, and Tillerson will be stopping in China on his trip to Asia.

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

After the Wrap-Up:

The “Early Sunday Release” will be Michael Pento of Pento Portfolio Strategies.  He says the world is headed into a “Depression,” a very big nasty “Depression.”   He lays out his case for economic doom in the Early Sunday Release.

(To Donate to Click Here)


Well that is all for this week

I will see you on Monday night





  1. In light of what Jim Willie said and you seem to think as well here are chart patterns I’ve never seen before.

    Harvey, or any other expert, how do you interpret the following chart pattern in Gold and Silver?
    Silver 17/03/2017

    Gold 17/03/2017

    The silver chart in particular shows a pattern which could only be interpreted as an algorithm which is designed to push price higher or at least prevent it from falling through a pre-determined level.
    Never noticed anything like this before.
    What’s your take on this?

    And btw, thanks a lot Harvey for your daily updates and ferreting out all the important news; a lot of work, much appreciated!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: