March 20/Gold up $3.80 and silver is up 2 cents/a massive 6.81 tonnes of gold leaves the GLD despite gold rising these past few days/SLV inventory gains 1.232 million oz/Open interest on the gold and silver comex hardly budge with the rise in price on Friday/North Korea is one step closer to a ICBM/China tries to save face with respect to the meeting of Rex Tillerson and Xi/ USA tries to encourage the IMF to walk away from Greece/Deutsche bank stock plummets with a huge dilution of 35%/ DB guides lower/The EU has a new plan to save Italian banks: a Europe wide bad bank/UK to trigger article 50 on March 29/

Gold: $1233.60  UP $3.80

Silver: $17.40  UP 2 cents

Closing access prices:

Gold $1234.80

silver: $17.45










Premium of Shanghai 2nd fix/NY:$7.75


LONDON FIRST GOLD FIX:  5:30 am est  1233.00




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 467 contracts DOWN to 186,523  despite the RISE IN PRICE ( 9 CENTS) WITH RESPECT TO FRIDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  0.931 BILLION TO BE EXACT or 133% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold also ROSE BY 3,573  contracts  WITH  THE RISE IN THE PRICE OF GOLD ($3.30 with FRIDAY’S TRADING). The total gold OI stands at 431,292 contracts.

we had 13 notice(s) filed upon for 1300 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 6.81 tonnes

no doubt that this gold is heading to Shanghai.

Inventory rests tonight: 830.25 tonnes



We had a big changes in inventory at the SLV/ a big inventory deposit of 1.232 million oz

THE SLV Inventory rests at: 332.504 million oz




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

1. Today, we had the open interest in silver FELL BY 467 contracts DOWN TO  to 186,523 DESPITE THE FACT THAT SILVER WAS UP 9 CENT(S) with FRIDAY’S trading. The gold open interest ROSE BY  3,573 contracts UP to 429,290 WITH THE RISE IN THE PRICE OF GOLD OF $3.30  (FRIDAY’S TRADING).

(report Harvey


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg



i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 13.36 POINTS OR .41%/ /Hang Sang CLOSED UP 192.06 POINTS OR 0.79% . The Nikkei closed FOR HOLIDAY /Australia’s all ordinaires  CLOSED DOWN 0.35%/Chinese yuan (ONSHORE) closed DOWN at 6.9072/Oil FELL to 48.16 dollars per barrel for WTI and 51.30 for Brent. Stocks in Europe ALL IN THE RED    ..Offshore yuan trades  6.8957 yuan to the dollar vs 6.9072  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS CONSIDERABLY AGAIN/ ONSHORE YUAN WEAKER AS IS  THE OFFSHORE YUAN WHICH IS ALSO WEAKER AND THIS IS  COUPLED WITH THE SLIGHTLY WEAKER DOLLAR. CHINA TIGHTENS 


North Korea is now one step closer to an ICBM after a successful test of a “new type” of rocket engine. The USA. South Korea and China have a problem that they must deal with:

( zero hedge)


Shinzo Abe seems to be embroiled in a school scandal as the government sells land at 1/7 the official going rate and Abe lies about a donation receipt to that school

( zero hedge)


i)China prepares for the worst as they will counter all USA trade penalties.

( zero hedge)

ii)China now expands its non existent marine force by over 400%

( Daniel Lang/


i)USA is now pressuring the IMF to walk away from Greece.  If they do, then Greece will default in July and much of the derivative mess with its accompanying debt crisis will be upon Europe and the ECB

( Mish Shedlock)


Wow!! that is a huge discount in the new rights offering of Deutsche bank. It closed on Friday with the stock trading at 17.86 euros. The existing shareholders have a right to buy the stock at 11.65 euros for a discount of 35%.  The dilution will be a huge 688 million shares.

( zero hedge)

iib The market reacts to two big news items:

  1. a massive dilution of their stock with the above rights offering
  2. another huge revenue warning

( zerohedge)


My goodness: a new plan.!! An EU bad bank which will buy up much of the 1 trillion in bad loans.  And the party who will end up holding the bag:  the taxpayer

( Don Quijones/WolfStreet)


The Dutch election did not change the tide; citizens are still anti migrant and are titlting more to far fight populsim than globalism

(courtesy Gorka/StrategicCulture Foundation)


v)Theresa May now will officially trigger Article 50 on March 29.  The long arduous process begins

( zero hedge)

vi)The bad news is already out:  so why did the Article 50 headlines this morning cause CABLE  (Pound/USA) to fall:

( zero hedge)




They are dropping like flies! Another senior Russian official has died of stab wounds while he faces embezzlement charges/  He was being held in prison awaiting trial…probably nothing…

( zero hedge)


Israel threatens Syria that it will destroy it’s air defense systems if it continues to engage in military action. Israel fires on a convoy bringing weapons to Hezbolloh in Lebanon.

( zerohedge)


Friday night:

Disagreements with the USA and the rest of the G20 over the future of global trade.  The USA wants protectionism and the others free trade.  They cannot agree on wording.




OPEC tries to jawbone oil higher but are having great difficulty

(courtesy zero hedge)



i)A terrific commentary from Steve St Angelo.  He comments that China has always been a silver nation.  However he reports that China supplied the USA in 1935 almost 1/2 billion oz of silver.  After that year, the amounts supplied were less and they ended probably around 1939. As I have speculated and now Steve, that China did supply the USA once the “Manhattan project silver” had been used up.

( Steve St Angelo/SRSRocco report)

ii)Silver according to this Bloomberg author is going to climb faster than gold

( Bloomberg/Pakiam)

iii)Hedge funds were surprised at the slowness of the Feds to raise rates in the long term.e.g the “dots”

( Bloomberg/GATA)

iv)Bill Murphy is interviewed by Reluctant Preppers


v)Bill Murphy interviewed by Mark Leibovit of Wall Street Raw


vi) Craig Hemke is interviewed with his views on manipulation of the precious metals, the latest on the class action lawsuits and how the physical markets will overpower the paper markets

( Mike Gleeson/ Hemke)

vii) An excellent commentary from Lawrie Williams as he describes the fake data coming out of all governments e.g. the CPI etc.

(courtesy Lawrie Williams/Sharp’s Pixley)




a)Market trading

(graph/zero hedge)

b)OH!OH! The markets are negatively to reports that Fed President Evans warns of rising uncertainty and that if Trump gets his fiscal stimulus they will need to raise rates faster.  Not what the market wanted to hear:

( zero hedge)

i)A must read..David Stockman

Two major points here:

  1. If the uSA wants to raise rates so that the 1o yr bond rate rises to 3.0% by 2019 then a massive amount of excess bank reserves must be drained which will cause huge harm to the economy.’
  2. the debt ceiling crisis is upon as as both sides of the House and Senate will not agree on anything!

(courtesy David Stockman/Daily Reckoning)


Trump warns Germany that it owes vast sums of money to the USA because Germany has not committed to spending 2% of her GDP on defense.  Trump is correct on his figures

( zerohedge)


Germany is angry at  Trump’s claims that it owes vast sums to NATO and the USA. However it is true that Germany only spends 1.2% of her GDP on defense

( zerohedge)


G20 results:  Trump wins and the G20 drop the “anti protectionist, free trde and climate change funding committment

( zero hedge)

v)Trump is now beginning to roll back some of Obama’s protections for students who have been hit with agencies trying to collect on defaulted loans

( zero hedge)


The Intelligence Chair  states on Sunday there is no collusion between Trump and Russia.  However the Chair does state that the only crime is the leak of the transcript of private citizen Flynn talking to the Russian ambassador

( zero hedge)

vii)Used car prices continue to crash and generally when they do, we see a shift in purchases from brand new cars  to the used car.  This should hurt the USA car industry quite hard

( Mike Shedlock/Mishtalk)


Let us head over to the comex:

The total gold comex open interest ROSE BY 3,573 CONTRACTS UP to an OI level of 429,290 WITH THE  RISE IN THE  PRICE OF GOLD ( $3.30 with FRIDAY’S trading). WE PROBABLY HAD SOME MORE 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 LOSS of 6 contract(s) DOWN to 32. We had 0 contact(s) served ON FRIDAY, so we LOST 6 CONTRACT(S) or  AN ADDITIONAL 600  ounces will stand for delivery.  The next active contract month is April and here we saw it’s OI LOST 2966 contracts DOWN TO 179,914 contracts.

For comparison purposes, the April 2016 contract at this time had an OI of 237,867 contracts. At the end of April/2016 only 12.3917 tonnes stood for physical delivery, although 21.306 tonnes stood initially at the beginning of April 2016.

The non active May contract month GAINED 45 contract(s) and thus its OI is 952 contracts. The next big active month is June and here the OI ROSE by 3,497 contracts up to 154,270.

We had 13 notice(s) filed upon today for 1300 oz

 And now for the wild silver comex results.  Total silver OI FELL BY 467 contracts FROM 186,990 DOWN TO 186,523 DESPITE FRIDAY’S NICE 9 CENT GAIN.  AGAIN WE MUST HAVE HAD SOME 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 67 contracts down to 553 contracts. We had 72 notices served upon yesterday so we  GAINED 5 CONTRACTS OR AN ADDITIONAL 25,000 OZ WILL 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 LOST 2 contract(s) to 1003 contracts. The next active contract month is May and here the open interest LOST 2122 contracts DOWN to 140,261 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 0 notice(s) filed for 360,000 oz for the MARCH 2017 contract.

VOLUMES: for the gold comex

Today the estimated volume was 81,383  contracts which is poor.

Yesterday’s confirmed volume was 185,20 contracts  which is very fair

volumes on gold are getting higher!

INITIAL standings for MARCH
 March 20/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 nil OZ
Deposits to the Dealer Inventory in oz 1299.95 oz


Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
13 notice(s)
1300 oz
No of oz to be served (notices)
19 contracts
1900 oz
Total monthly oz gold served (contracts) so far this month
72 notices
7200 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 1 deposit(s) into the dealer:
i) Into Brinks:  1299.95 oz
total dealer deposits: 1299.95  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 13 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 (72) x 100 oz or 7200 oz, to which we add the difference between the open interest for the front month of MARCH (32 contracts) minus the number of notices served upon today (13) 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 (72) x 100 oz  or ounces + {(32)OI for the front month  minus the number of  notices served upon today (13) x 100 oz which equals 9100 oz standing in this non active delivery month of MARCH  (.2830 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: 0.2839 tonnes
total for the 15 months;  244.517 tonnes
average 16.301 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 1,380,564.022 or 42.940 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,936,790.240 or 277.97 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.97 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 20. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
nil  oz
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 5088.128 oz
No of oz served today (contracts)
No of oz to be served (notices)
553 contracts
(2,765,000  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 0 customer withdrawal(s):
 we had 1 customer deposit(s):
i) Into Delaware:  5088.128 oz
***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 0 contract(s) for NIL 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 (553) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the March contract month:  3296(notices served so far)x 5000 oz  + OI for front month of Mar.( 553 ) -number of notices served upon today (0)x 5000 oz  equals  19,245,000 oz  of silver standing for the Mar contract month. This is  now average for an active delivery month in silver.  We GAINED 5 contracts or  additional 25,000 oz will  stand for delivery.
Volumes: for silver comex
Today the estimated volume was 15,367 which is poor!!!
Yesterday’s  confirmed volume was 42,962 contracts  which is good.
Total dealer silver:  38.801 million (close to record low inventory  
Total number of dealer and customer silver:   188.266 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 20 /2017/ Inventory rests tonight at 830.25 tonnes


Now the SLV Inventory
March 20/a gain of 1.232 million oz of silver into the SLV/inventory rests at 332.272 million oz/
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 20.2017: Inventory 332.504  million oz

NPV for Sprott and Central Fund of Canada


1. Central Fund of Canada: traded at Negative 5.3 percent to NAV usa funds and Negative 5.2% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.2%
Percentage of fund in silver:38.7%
cash .+0.1%( Mar 20/2017) 
will update Sprott later tonight
2. Sprott silver fund (PSLV): Premium RISES  to -.13%!!!! NAV (Mar 20/2017) 
3. Sprott gold fund (PHYS): premium to NAV remains at  + 0.28% to NAV  ( Mar 20/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -0.13% /Sprott physical gold trust is back into POSITIVE territory at +0.28%/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 MONDAY


The Best Ways to Invest in Gold Today

The Best Ways to Invest in Gold Today

– The cost of buying and selling gold
– How to buy gold on the cheap
– How to avoid paying capital gains tax (CGT) on your gold
– Open an account with one of the online bullion dealers – the likes of GoldMoney, GoldCore or Bullion Vault
–  Gold Sovereigns and Gold Britannias make for a considerable saving on cost because of the CGT exemption

Gold Britannias and Sovereigns are free of Capital Gains Tax (CGT)

Dominic Frisby
has looked at the best ways to invest in gold in the UK’s best selling financial publication Money Week.

Frisby looks at the various ways to invest in and own gold and points how gold ETFs are not much cheaper than online gold bullion dealers such as GoldMoney, GoldCore or Bullion Vault and yet there is the difficulty of taking delivery which is “cumbersome.”

The other important consideration when investing in gold is to consider the tax implications and the capital gains tax (CGT).

Buyers of gold ETFs and digital gold through e-gold providers like Bullion Vault and GoldMoney are subject to capital gains tax. However buyers of Gold Britannias and Gold Sovereigns are not subject to this expensive tax:

Competition between ETFs and bullion dealers has conspired to drive down prices, much to the benefit of the consumer. But there is one huge cost that neither of these methods is able to avoid – tax. This assumes you’re not buying your gold via an ISA or a SIPP, which it is, for the most part, possible to do via ETF or bullion dealer.

Capital gains tax (CGT) currently stands at 20% in the UK for higher rate taxpayers and 10% for lower. Funds don’t pay CGT. It is paid by the investor when they sell or redeem, assuming they made a profit. It kicks in once you have made profits of more than £11,100 in a year (£11,300 from next tax year).

So over and above that level, you’re facing an unavoidable 10% or 20% cost for buying and selling gold at a profit. It used to be 18% or 28%. We have George Osborne and his team to thank for lowering it – but even at current rates, it’s a considerable dent to profits.

There’s another method of buying gold (and silver), which, quite legally, avoids this cost altogether. There is a slightly higher premium to spot when you buy, there are slightly higher storage costs, and there is a slight discount to spot when you sell – but we are talking about a few per cent here, nothing like 20%.

Given the potential savings involved, it’s surprising that more UK investors don’t buy their gold and silver in this way. The method I’m describing, if you haven’t already figured it out, is to buy sovereigns and Britannias.

Frisby concludes the piece by pointing out how GoldCore offer capital gains tax (CGT) free gold sovereigns and gold britannias and how Frisby likes GoldCore:

“I like Goldcore. You can deal with them either over the phone or open an account online. You can buy sovereigns, Britannias, bars and probably even bells, and they’ll take care of the storage too.”



A terrific commentary from Steve St Angelo.  He comments that China has always been a silver nation.  However he reports that China supplied the USA in 1935 almost 1/2 billion oz of silver.  After that year, the amounts supplied were less and they ended probably around 1939. As I have speculated and now Steve, that China did supply the USA once the “Manhattan project silver” had been used up.

(courtesy Steve St Angelo/SRSRocco report)


The Record Year The U.S. Imported Nearly A Half Billion Ounces Of Silver

by SRSROCCO , March 18, 2017

How many precious metals investors know the year the United States imported a record amount of silver? This figure is so great, there is no other single year in U.S. history that comes anywhere close to this amount. Even more impressive than that, it turns out to be more than double the global annual mine supply that year. It is such an unbelievable amount, its record has never been surpassed to this day.

Actually, I was quite surprised by the data when I was researching through some old official records. Even though the United States currently imports a lot of silver to supply its growing jewelry, industrial and investment demand, it pales in comparison to the nearly half a billion ounces imported this record year.

For example, U.S. silver imports are estimated to reach 6,100 metric tons (mt) in 2016, or 196 million oz (Moz), up from 191 Moz in 2015. Thus, 196 Moz of U.S. silver imports last year accounted for 22% of global mine supply which is estimated to be 887 Moz.

However, if we look at the following chart, we can plainly see, it doesn’t remotely compare to the massive 473 Moz of silver imported by the United States in 1935:

As we can see, total U.S. silver imports in 1935 stick out like a sore thumb. Even though U.S. silver imports trended higher from 1980 to 2016, there was this huge anomaly in 1935. So, what gives?

Well, due to the U.S. Silver Purchase Act of 1934, the U.S. Treasury went on a massive buying spree by jacking up the price of silver to $0.77 in 1935 from $0.44 in 1934. There is a lot that can be written about the U.S. 1934 Silver Purchase Act, but the motivation by the U.S. Government was to acquire more silver to back their outstanding currency base.

According to a paper written in 1936 titled, Effect Of The Silver Purchase Act Of 1934 On The United States, China, Mexico and India, it stated the following:

Source: Effect Of The Silver Purchase Act Of 1934 On The United States, China, Mexico and India

In order to increase the proportion of silver monetary stocks to gold, the U.S. had to get its hands on a lot of silver. In this paper, it stated that the U.S. Treasury would have to purchase 1,244,000,000 oz of silver to arrive at this 4:1 Gold-Silver monetary stock ratio.

So, where did the United States import this amazing 473 Moz of silver in one year?? Well, if you guessed China, you are correct. Of course, not all the silver came from China (India as well), but one hell of a lot did. This next bit of text from the same paper quoted above shows just how much silver China imported between 1918 and 1931:

Source: Effect Of The Silver Purchase Act Of 1934 On The United States, China, Mexico and India

During that time period (1918-1931), the Chinese imported one billion oz of silver, or 30% of total global mine supply during that time. After the signing of the U.S. Silver Purchase Act in June 19, 1934, Shanghai silver stocks plummeted:

Source: Effect Of The Silver Purchase Act Of 1934 On The United States, China, Mexico and India

Not all Chinese silver was heading to the United States, but a large percentage. Unfortunately, this paper did not list and Chinese silver stock figures for 1935, but I do have one from the U.S. Bureau of Mines Mineral Yearbook:

Source: U.S. Bureau of Mines 1937 Mineral Yearbook

In 1935, the United States imported a total of $354.5 million worth of silver. It is hard to tell exactly what was the average price the U.S. Treasury paid for all of its silver imports that year, but if we apply the $0.77 stated price, the $354.5 million worth of silver imports equals approximately 460 Moz… very close to the 473 Moz stated figure in the first chart published by the USGS silver statistics.

In order for the U.S. Treasury to build up its silver stocks, it pushed up the price it would pay for silver to acquire the metal from various countries throughout the world. Because of this large increase in the silver price by the U.S. Treasury, it forced the Chinese to go off their silver standard.

Again, there is a lot that could be written about this historic point in time, but that will be for another time. I just wanted to show just how much silver the U.S. imported in a single year. If we compare the same figures shown in the first chart above to global mine supply, this is the result:

Thus, U.S. silver imports of 473 Moz in 1935, were more than double the global mine supply of 221 Moz. Which means, the U.S. Treasury realized it would take a great deal of time to purchase the 1.24 billion oz of silver unless it motivated the rest of the world to let go of some of their silver. By pushing the price of silver from $0.44 in 1934 to $0.77 in 1935, the U.S. was able to import nearly 40% of their 1.24 billion oz target in just one year.

While the U.S. Silver Purchase Act of 1934 nationalized silver, the U.S. Treasury only purchased 109 Moz from American citizens during the 90-day time limit (source: 1939 Silver Money book). Which means, the majority of silver the U.S. Treasury needed came from foreign countries like China and India.

There has been articles written by several analysts (Charles Savoie for example) that state the U.S. Silver Purchase Act of 1934 was instrumental in removing the silver standard in several countries like China and Mexico. While this may be true, the United States was becoming the power-house of the world due to its massive oil discoveries. We must remember, the U.S. was the Saudi Arabia of the world during World War II.

Regardless, the 473 Moz of silver the U.S. imported in 1935 was the largest amount ever. Even though U.S. silver imports were quite high in 1936 at 222 Moz, they were less than half of the previous year.

Lastly, many precious metals investors believe the Chinese have a massive hoard of silver. Honestly, I do not belong to that mindset. While the Chinese did have a lot of silver at one time, they sold quite a lot of it during the 1930’s and also more in the 2000’s. Very few Central banks hold any silver. Most of the silver today is held in private hands or by large institutions… not Central Banks.

The advent of modern technology also forced the United States to remove silver from its coinage in 1965. However, times are rapidly a-changing. In the future, the value of silver will not be based on how much is consumed by industry, jewelry or investment demand, but rather how it functions as a HIGH QUALITY STORE of VALUE compared to most other assets that will be disintegrating as the massive amount of debt and derivatives implodes.



Craig Hemke is interviewed with his views on manipulation of the precious metals, the latest on the class action lawsuits and how the physical markets will overpower the paper markets

(courtesy Mike Gleeson/ Hemke

Craig Hemke Exclusive: Physical Metals Demand Plus Manipulation Suits Will Break Paper Market

Mike Gleason: It is my privilege now to welcome in Craig Hemke of the TF Metals Report. Craig runs one of the most highly respected and well known blogs in the industry and has been covering the precious metals for close to a decade now, and he puts out some of the best analysis on banking schemes, the flaws of Keynesian economics and evidence of manipulation in the gold and silver markets.

Craig, it’s great to have you back and thanks for joining us again today and how are you?

Craig Hemke: Mike, I’m fine thank you. It’s always a pleasure and I appreciate the invitation.

Mike Gleason: Well, I know time is short here so we’ll get right into it. First off, we’ve been seeing a decent little correction in the metals over the last few weeks although they’re rallying a bit here today and now that the Fed decision is out, as we’re talking on Wednesday afternoon. Gold and silver were probably due for a pullback after a very strong first eight or nine weeks of the year. So how do things look technically speaking here, Craig, after this recent pause and the uptrend? Do you think we’re still in the midst of a bull run and has this just been a healthy correction? How do you see things here?

Craig Hemke: Well, I guess the biggest picture possible we pulled back these couple last weeks, once it became obvious that the Fed was going to hike rates again, and we pulled back in a manner, very similar to what we saw in November of 2015 and November of 2016 before the previous two rate hikes, and now here we are in the hours immediately following the hike, we’re rallying. Now, the last two rate hikes that came in December of ’15 and December of ’16, gold bottomed the very next day and began to rally quite strongly. Now, here we apparently bottomed earlier today, and are rallying quite strongly this afternoon as Mother (Fed Chair Janet Yellen) is just slaughtering the dollar bowls with all of her press conference and everything else.

Well, I guess the biggest picture possible we pulled back these couple last weeks, once it became obvious that the Fed was going to hike rates again, and we pulled back in a manner, very similar to what we saw in November of 2015 and November of 2016 before the previous two rate hikes, and now here we are in the hours immediately following the hike, we’re rallying. Now, the last two rate hikes that came in December of ’15 and December of ’16, gold bottomed the very next day and began to rally quite strongly. Now, here we apparently bottomed earlier today, and are rallying quite strongly this afternoon as Mother (Fed Chair Janet Yellen) is just slaughtering the dollar bowls with all of her press conference and everything else.

From a technical standpoint, both gold and silver have recently seen a bullish cross of moving their 50-day moving averages up through their 100-day moving averages, so that’s pretty important. And if price can now get above that 50-day – and we’re making a run at it here on Wednesday – if we can get above there and close there on Friday, there’s going to be a lot of folks who will start getting very interested in the metals from a technical standpoint.

Mike Gleason: Craig, you regularly discuss just how manipulated and phony the gold and silver future markets are. You’ve been doing that for years, people called you out as a conspiracy theorist for it. For some reason, lots of folks couldn’t accept the notion that banks employ a combination of crooked traders and high frequency trading machines to dominate these exchanges. Now, in recent months however we’ve seen smoking gun evidence in the form of documents and recordings from Deutsche Bank where traders working at various banks colluded with one another to rig markets and cheat their own clients. WikiLeaks published a memo sent to the Treasury Department for the future exchanges were launched in the early ’70s.

Officials were clear regarding their intent for those exchanges. They sought to create enormous price volatility and to discourage physical ownership of the metal and they’ve succeeded. We can be pretty sure that the bought and paid for regulators will manage somehow to ignore the evidence and fail once again to hold any bank to account, but Deutsche Bank has agreed to pay roughly 100 million dollars in damages and other banks involved could be in even bigger trouble. So, my question is whether you have gotten any apologies from the people who labeled you as crazy for talking about manipulation? And then give us your thoughts on these revelations… can the civil courts help us get to more honest markets and is there any fixing this broken and rigged system, Craig?

Craig Hemke: Yeah I tell you, no I haven’t gotten any apologies, Mike. I guess we should start there and I’m not expecting any, but that doesn’t matter. Most of those folks that always claim that the gold and silver paper markets were free and fair were just simply trolls for the establishment. I remember one guy in particular was a particularly virulent troll and he admitted to be a former Deutsche Bank trader. Okay, well you can connect the dots there, right? Look, none of this is surprising and obviously it’s nice to know as we’ve always said, it’s conspiracy fact, historical fact, not some kind of whacked out conspiracy theory.

But nonetheless, it’s the market that we have to deal with for now, where this trading of these paper derivatives is somehow allowed to discover a physical price. I mean, it’s nonsense. It’s a fraud, it’s a sham, and until those paper markets break because they don’t have the physical to deliver into the demand, it’s pretty much what we’re stuck with. Where this all goes from here in terms of the manipulation is – we have to let the process play out. When this news first broke, heck, it’s almost a whole year ago, Mike. This was back in what? April or May last year when we learned that Deutsche Bank was being pressured by the German regulators to settle. A lot of folks thought that was going to change things overnight.

No, it’s not going to change things overnight but it is a huge change because in all of the history of class action lawsuits, alleging price manipulation and seeking damages, they’ve all been thrown out by the courts before we could ever get to the process of legal discovery. Well, not only are we moving forward on legal discovery for the first time, Mike, there are now going to be countless new lawsuits to join as information comes out. The emails and the text messages that you referenced came out through the discovery process. That’s going to bring even more lawsuits, and then additionally we’ve got a bank at one of the major players in the manipulation, Deutsche Bank, who has essentially turned state’s evidence, that is singing like a mafia songbird, a mafia informant, providing information.

So, people have to let this play out, these legal processes never move too quickly, but this is some serious blood in the water and if nothing else, if the physical demand doesn’t break the paper markets, I’m pretty confident that this whole legal process eventually will.

Mike Gleason: Speaking of manipulators, the FOMC just made their announcement, we had a bit of a respite as markets stopped obsessing quite so much about Fed policy for a few months following Trump’s election, but Janet Yellen and the FOMC are back in the news today. We may see some renewed focus on what to expect from our central planners going forward. Now, Trump and some of his surrogates have been critical of the strong dollar, but the Fed is hiking rates and pushing the dollar even higher, this despite the fact that the economic growth estimates keep being revised lower. Is there a conflict brewing between the president and the Fed? Are Janet Yellen and other bankers working to undermine Trump perhaps, by withdrawing stimulus and throwing a wrench into the equity and bond markets, or is this simply just to preserve what little credibility they have left by delivering some hikes instead of just jawboning? Give us your thoughts there, and do you have any guesses about where the Fed Funds rate might be say a year from now?

Craig Hemke: Well, it makes you wonder doesn’t it? The latest first quarter of this year guess that’s been put out by the Atlanta Fed… which is always about the most accurate in trying to predict where GDP is… the latest guess came out earlier today and it’s actually under 1%. It’s only 0.9%, if you want to call that growth. That gentleman that does that model actually had it 3.4% just six weeks ago, so you can see the trend here. After all of last year came in at just 1.6%, we’re going to begin this year at .9, and into that environment, Mother Fellen (Janet Yellen) has now hiked twice in 90 days and these three rate hikes are the first ones we’ve seen in almost 10 years. Doesn’t make any sense, and it kind of underlies what is really going on there. People think that the Federal Reserve is part of the federal government, and it’s not.

People think that the Federal Reserve is some altruistic, benevolent organization that’s trying to help the American people, it’s not. Their primary people is to help their banks. Hiking rates into a flat economy does nothing for the average American, but it does help the banks which is why they’re doing it. Going forward, Mother said today, and all of the FOMC said today that they think GDP for all of 2017 is going to be 3%. Well, here’s the problem with that, Mike. If we do come in at quarter one at just 1% and again, the latest guess is .9, that means the next three quarters of this year are going to have to average 3.7%, average 3.7%, just to get Mother’s 3% target. I mean, you think that’s going to happen, my friend? No.

I’ll give you one more problem that this is happening. We’ve always maintained that the Fed cannot raise rates because of what it would do to the American fiscal situation, the debt and the deficit. Well, Mother is raising the short end, but what isn’t happening and this is what we’ve always contended, is you can’t move the long end up because of what it’ll do to blow out the deficit and the debt. That’s exactly what we’re seeing, the yield curve is flattening. The spread between the 2-year note and the 10-year note is under 120 basis points. This is a terrible sign for the U.S. economy. So yeah, where is this going to go? Mother’s going to be cutting rates in 2018, if not by the end of this year, and not hiking them, simply because they are inducing recession that may have already begun.

So, this is going to be quite a wild ride as we go through this year, not the easy, predictable rising interest rates and stronger dollar that so many predicted just three months ago.

Mike Gleason: If we do get that about face and when it comes to interest rates, you’ve got to think that’s going to be very bullish for gold, and negative real interest rates, of course, would be a fantastic thing for the yellow metal, would you agree?

Craig Hemke: Always has been in the past, Mike. That’s always been something. More importantly, what I watch on a daily basis is the Dollar-Yen, which is the Forex pair trade of the value of the U.S. dollar in Yen or vice versa. That seems to be the key driver of the HFT trading machines that dominate the COMEX paper market. The Dollar-Yen clearly peaked out with a double top back in December and into early January, and has been a downtrend since. That’s what has helped to drive algo demand for paper gold so far this year. That thing rolls back over and heads back down to, oh, currently it’s around 113 and a half. If it heads back down to 100, which is where it was last July, then you’re going to see COMEX gold go back to near $1,400 where it was last July. They may not be able to contain it at that point.

Again, for me, I’ve been preaching to people on my site not to buy this what we call the “generally accepted narrative for 2017.” There’s so many people talking about how the bond bubble’s about to burst, the 35 year bond bubble’s finally going to burst, and it was supposedly a fait accompli. In fact, I saw a chart just last weekend that showed there was record net short position of hedge funds in the treasury market. Man, it never works. When everybody’s on the same side of the trade, it never goes that direction. Again, that’s what we’re seeing right now. The long end, the 10-year note and the 30-year long bond are actually lower in yield than they were 90 days ago, while the fed has jacked up the short end.

Again, that’s a flatting of the yield curve. Anybody that’s ever taken Econ 101 in college knows that a flat yield curve is a precursor of recession and I just have very little doubt at this point that that’s where we’re headed.

Mike Gleason: Again, that’s a flatting of the yield curve. Anybody that’s ever taken Econ 101 in college knows that a flat yield curve is a precursor of recession and I just have very little doubt at this point that that’s where we’re headed.

Craig Hemke: Well, most folks at TFMR are general, aggressive stackers of physical metal, whether it’s gold or silver. Buying on a regular basis and just simply adding to their stack in preparation for this great economic financial reset that’s eventually going to come, because the debt just can’t simply going parabolically higher without either having to be reset or debt jubilee or whatever. We all stack metal and take advantage of the lower prices when they come. A lot of folks are trading the miners as well for leverage, and so folks have been very concerned, I can tell you that, over the way the miners have performed in the last few weeks. But they’re up today, too, and they have very well have put in their own higher low on the chart, and so folks are excited about that.

Eventually, we’re really watching, we’re going to be paying very close attention to what Theresa May does over the next couple of weeks in England, regarding Brexit and moving it forward. And that French election coming up, I think it’s on May the 7th, is going to be a really big event. Even if it’s not France, if it’s Italy, if it’s Greece, there are major, major problems with the euro currency, that being the second largest, second most heavily used currency in the world. If you factor in that currency may very well be going the way of the dodo bird, and negative interest rates across the continent of Europe, that’s a double whammy, extremely positive fundamental for physical gold ownership. And it is that physical gold ownership that eventually breaks the paper system.

So, we’re keeping a real close eye on events in Europe in the, let’s just call it the months ahead, because again some of those things might actually hold the key to finally breaking the shackle hold that the paper derivatives market has on the physical price. Because that’s what we’re all waiting for, is the day that the paper market fails and it’s probably not going to happen tomorrow, but events sure seem to still be trending that direction.

Mike Gleason: Well, wonderful insights as usual, Craig. We always enjoy hearing from you and before we say goodbye for today, please tell people how they can learn more about the TF Metals Report and what it is they’ll find when they visit your site?

Craig Hemke: Well, they’re going to find a vibrant community of people that are… all here to help each other out. I provide content on a daily basis and there’s a subscription component there that’s I don’t know, about $3 a week I guess. It’s not very expensive. But there’s also free content, too, and the great value comes not just from my input but from the input of all the subscribers and the members who are constantly discussing the metals, the global economy, politics, everything else, finding links, providing information to everybody else. It’s like a recognition that we’re all in it together like I said, in a community trying to help each other out. If anybody’s listening to this and they think, “Hey, sounds like me,” stop by and join us,

Mike Gleason: Outstanding stuff. Hope you have a great weekend and look forward to speaking with you again soon, Craig.

Craig Hemke: Mike, thanks so much. All the best.

Mike Gleason: Well that will do it for this week. Thanks again to Craig Hemke. The site, definitely a fantastic source for all things precious metals and a whole lot more. We urge everyone to check that out and you’ll want to check it out regularly for some of the best commentary on the metals markets that you will find anywhere.

Silver according to this Bloomberg author is going to climb faster than gold

(courtesy Bloomberg/Pakiam)

Silver seen climbing faster than gold as Yellen wakens bulls


By Ranjeetha Pakiam
Bloomberg News
Thursday, March 16, 2017

Investors may be better off with silver rather than gold. The Federal Reserve’s pledge to stick to its dovish outlook on U.S. monetary policy has fueled a rally in precious metals and silver usually beats its more valuable peer in a rising market.

After the Fed raised interest rates by a quarter percentage point Wednesday, Chair Janet Yellen said the central bank was willing to tolerate inflation temporarily overshooting its 2 percent goal and intended to keep its policy accommodative for “some time.” UBS Group AG said the gradual pace of tightening means negative rates will deepen, the dollar weaken and gold rise.

“Silver is substantially undervalued compared to gold and has plenty of space to appreciate both in dollar terms and relative to gold,” Gregor Gregersen, founder of Singapore-based Silver Bullion Pte, said in a email. “Currently the move into silver is a trickle, but it might very well become a flood once the mood of the market at large shifts.” …

… For the remainder of the report:…


Hedge funds were surprised at the slowness of the Feds to raise rates in the long term.e.g the “dots”

(courtesy Bloomberg/GATA)

Yellen surprises hedge funds that cut gold wagers before rally


By Luzi-Ann Javier
Bloomberg News
Sunday, March 19, 2017

Janet Yellen’s soothing words on the pace of U.S. interest rate hikes were a day late for hedge funds losing faith in the metal.

Money managers cut their bullish bets on bullion by the most since 2015 in the week ended March 14. The next day, Federal Reserve Chair Yellen reiterated that monetary policy will remain accommodative for “some time,” easing market fears that there might be more than three rate hikes this year. Her words sparked the biggest gold rally since November.

Gold, which climbed through the first two months of the year, had foundered in March as the prospect of higher borrowing costs curbed the appeal of non-interest-bearing assets. Yellen’s remarks came as the Bank of Japan maintains its unprecedented monetary easing program and the Bank of England holds its benchmark rate at a record low, helping to keep yields on trillions of dollars worth of debt below zero. …

… For the remainder of the report:…


Bill Murphy is interviewed by Reluctant Preppers

(courtesy GATA)

GATA Chairman Bill Murphy interviewed by Reluctant Preppers


10:30a ICT Monday, March 20, 2017

Dear Friend of GATA and Gold:

In an interview with Dunagun Kaiser of Reluctant Preppers, GATA Chairman Bill Murphy discusses what might become indicators of a breakdown in the suppression of gold and silver prices. Murphy says that with Goldman Sachs people renewing their control of the U.S. Treasury Department under President Trump, he doesn’t expect a change in U.S. policy, though he acknowledges that the president could change it. Murphy’s interview is a half-hour long and can be heard at You Tube here:

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



Bill Murphy interviewed by Mark Leibovit of Wall Street Raw

(courtesy GATA)

Mark Leibovit of ‘Wall Street Raw’ interviews GATA Chairman Murphy


11:21a ICT Monday, March 20, 2017

Dear Friend of GATA and Gold:

Mark Leibovit, editor of the VR Gold Letter (…) and host of the “Wall Street Raw” internet radio program, just interviewed GATA Chairman Bill Murphy about the organization’s work to expose the manipulation of the gold market by governments and central banks. The interview is eight minutes long and begins at the 41:30 mark of the audio download available here:

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


An excellent commentary from Lawrie Williams as he describes the fake data coming out of all governments e.g. the CPI etc.

(courtesy Lawrie Williams/Sharp’s Pixley)

LAWRIE WILLIAMS: Lies, Damn Lies, Fake News, Fake Views and Gold

So much of the data we are fed by governments and quasi-governmental outfits like the US Fed are so massaged in favour of trying to maintain a positive sentiment among the great unwashed that they cannot be seen as comparable with supposedly the same stats from the the past. I am indebted once again to Grant Williams (no relation) who points some of these anomalies out in great detail in his latest Things than make you go hmm… newsletter entitled ‘Fake Views Part II’ bringing the oft-quoted “There are three kinds of lies: lies, damned lies, and statistics” into mind. Interestingly the quote is often attributed to Mark Twain but he himself is said to have attributed it to British Prime Minister Benjamin Disraeli who may have been ahead of his time in forecasting statistical manipulation as political spin!

To illustrate his point Grant draws heavily on data and charts provided by yet another member of the Williams clan, John Williams (again no relation to Grant or myself) who runs the fascinatingShadowStats website which calculates government data the way it used to be calculated before the current era of using statistics as political weaponry. This has distorted the figures used by US government entities, on which many, or most, of their economic decisions are justified, beyond recognition. Indeed a significant part of the problem is that those making these decisions no longer question government-provided economic data but automatically assume its accuracy.

Take the cost of living for example. If one goes by Fed figures CPI is growing at an annual rate of around 1.8-2% – a figure few consumers would recognise as applying to them! If one calculates the Cost of Living index the way it was calculated back in 1980, inflation is actually rising on that basis at the much more recognisable figure of nearer 9% per annum – see the Shadowstats chart below:

As John Williams, as quoted in the TTMYGH newsletter, points out: In the early-1990s, political Washington moved to change the nature of the CPI. The contention was that the CPI overstated inflation (it did not allow substitution of less-expensive hamburger for more-expensive steak for example). Both sides of the aisle and the financial media touted the benefits of a “more-accurate” CPI, one that would allow the substitution of goods and services.

The plan was to reduce cost of living adjustments for government payments to Social Security recipients, etc. The cuts in reported inflation were an effort to reduce the federal deficit without anyone in Congress having to do the politically impossible: to vote against Social Security.

The inflation-calculation changes had the further benefit to government fiscal conditions of pushing taxpayers artificially into higher tax brackets, thus increasing tax revenues. The changes afoot were publicized, albeit under the cover of academic theories. Few in the public paid any attention.

And so it goes with much of the other data on which the US Government bases its figures, although CPI (and perhaps the calculation of GDP) are the most obvious examples. And it is not just the US which massages its figures thus. Most developed world politicians/economies have done likewise. It’s a way of keeping the population in check by releasing government-calculated figures which appear to show everything is rosy and under control when a deeper analysis might show that we are actually sinking into the abyss.

These massaged figures – described by Grant Williams as ‘Fake Views’ – have to be of considerable importance to the gold investor who is told that gold benefits in times of negative interest rates and where the gold price can be knocked back by the prospect of interest rates rising by tiny amounts even though they may still remain at zero or are, in fact, marginally negative. But as the ShadowStats CPI figures show, real interest rates as experienced by the person in the street are not just marginally negative, they are in fact HUGELY negative and wealth is being eroded at an unprecedented rate. On this basis the gold price should be going through the roof, but unfortunately for the precious metals investor, the financial world at large is mesmerised by the official statistics and unless, and until, there is a realisation that the data is just not representative of reality, a lacklustre gold price will continue to result. I don’t know what one can do to change this reality of the belief in government data – shouting it from the rooftops in the hope that someone in authority will listen is almost certainly not enough. Those in authority have a vested interest in maintenance of the status quo.

There is also currently the Trump effect – he is seen as the second coming of Ronald Reagan – and equities markets have been booming. Trump rails against ‘Fake News’ as trying to damage his Presidential plans, but he is also himself a source of equally ‘Fake News’ in support of his policies and no doubt ‘Fake News’ on the strength of the US economy, and how well, and how fast he is proceeding to ‘Make America great again’ will continue to be broadcast by his spin doctors and press aides.

Grant Williams in his newsletter also questions the level of the VIX (uncertainty) index which is extremely low, yet perhaps should be riding high given the difficulties Trump appears to be having in getting his policies and appointees in place. He also appears to be having continuing problems with the judiciary over his immigration executive orders. This has to bring the fruition of some of his other forthcoming plans into doubt – notably the proposed changes to Obamacare – even with a Republican dominated Congress given that he appears to be having problems keeping some members of his adopted political party on side.

So what is the take-away from all this. We live in such a spin-dominated world where even ‘official’ statistics and data have to be suspect. These may be accurate as far as the calculation process is concerned but often one will find the goalposts have been made to make true comparisons with the past difficult to correlate. Ultimately one has to trust one’s own judgement and hope the truth will come out which will, in this case, be long term positive for gold and silver in particular but they may have a tough time finding their true value in the light of concerted efforts to hide it. lies-damn-lies-fake-news-fake-views-and-gold_265282.html


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


1 Chinese yuan vs USA dollar/yuan WEAKER AT  6.9072( DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES CLOSER TO ONSHORE AT   6.8957/ Shanghai bourse UP 13.36 POINTS OR .41%   / HANG SANG CLOSED UP 192.06POINTS OR 0.79% 

2. Nikkei closed HOLIDAY   /USA: YEN FALLS TO 112.85

3. Europe stocks opened ALL IN THE RED     ( /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::  48.16 and Brent: 51.30

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.463%/Italian 10 yr bond yield UP  to 2.390%    

3j Greek 10 year bond yield RISES to  : 7.44%   

3k Gold at $1232.00/silver $17.41(8:15 am est)   SILVER  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 30/100 in  roubles/dollar) 57.48-

3m oil into the 48 dollar handle for WTI and 51 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  0.9972 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0726 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.463%

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 2.506% early this morning. Thirty year rate  at 3.122% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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


Global Stocks, US Futures Slide Spooked By G20 Protectionist Shift; Dollar Drops For 4th Day


Global markets start the week mixed with Asian stocks rising (Japan was closed for holiday), European stocks sliding, weighed down by declines in oil-and-gas shares and banks, and S&P500 futures also down. The dollar fell to a six-week low, falling four days in a row for the first time since early November as G20 leaders scrap a long-standing commitment to reject all forms of trade protectionism, suggesting the “weak Dollar” camp in Trump’s inner circle is winning.

Equities retreated in Europe, Australia and New Zealand, as did S&P 500 Index futures. Japan’s stock market was closed Monday for a holiday. Indexes rose in Hong Kong, Malaysia and Thailand. The Australian 10-year yield resumed a retreat after rising at the end of last week. The yen touched its strongest in three weeks, while the Korean won was the highest in five months. Oil fell for the ninth day in 11.

“European equity markets have started the week with a heavy risk-off sentiment after the G20 communiqué explicitly reflected U.S. intentions to establish trade protectionist measures,” Ipek Ozkardeskaya, senior market analyst at London Capital Group, told Reuters. “As the world’s number one economy is preparing to set significant barriers against the world, investors are increasingly worried,” she said.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose almost 0.4 percent to hit its highest level in more than two years on Monday. As a result, MSCI’s global benchmark equity index was little changed.
On Friday, Wall Street was flat to negative, dragged lower by bank shares that fell along with Treasury yields. Futures on the S&P 500 Index were down 0.1 percent. The underlying gauge rose 0.2 percent last week.  The Stoxx Europe 600 index fell 0.2 percent. The FTSE 100 and Dax index were also both down 0.2 percent. Australia’s S&P/ASX 200 Index and South Korea’s Kospi lost 0.4 percent. The Hang Seng Index advanced 0.8 percent, while the Shanghai Composite Index rose 0.4 percent. New Zealand’s S&P/NZX 50 Index slid 1.4 percent, the most since November, dragged lower by Fletcher Building Ltd., which identified more expected losses in its construction division.

For those readers who missed the weekend’s big news, the G20 omitted a pledge to resist all forms of protectionism in its communique from its meeting in Germany over the weekend. That shift followed hours of wrangling that kept officials in suspense on whether the G-20 would even mention trade, with occasional doubts that a communique might be produced at all.

Despite some modest weakness, global stocks are coming off their best week since January, even as the dollar has slumped 1.7% after the Federal Reserve raised interest rates on March 15 yet didn’t accelerate the timeline for future tightening. The dollar index of its value against a basket of six currencies fell to a six-week low of 100.02 on Monday.  It fell 0.2 percent against the yen before recovering to trade flat on the day at 112.70 yen JPY=D4, while the euro rose 0.3 percent to $1.0770 EUR=.  Citi became the latest major bank to abandon its headline forecast for a fall in the euro to below parity with the dollar, upping its prediction for the single currency over the next six to 12 months to $1.04 from $0.98 previously.

The dollar index of its value against a basket of six currencies fell to a six-week low of 100.02 on Monday. It fell 0.2 percent against the yen before recovering to trade flat on the day at 112.70 yen, while the euro rose 0.3 percent to $1.0770.

Volatility remains low across markets from equities to currencies and fixed-income as investors strive to assess how sustainable the nascent global economic recovery is.  As the chart below shows, following the recent volley of central bnk announcements, FX volatility has tumbled.

The greenback extended its recent decline, with the Bloomberg Dollar Spot Index touching its lowest level since November, pressured by investors who kept the latest bearish trend intact. A Japanese holiday and the previously noted Group-of-20 meeting that left most business unfinished suppressed flows in the major currencies; dropping a reference from the G-20 statement to resist trade protectionism weighed on the dollar, with macro and leveraged accounts adding to shorts positions, according to a London-based trader. Volumes were near the lowest they have been in March, a Europe-based trader noted. The Bloomberg dollar index, the BBDXY dropped, as much as 0.3% to 1223.95, lowest since Nov. 11, before paring decline; investors may look for guidance by speeches by Fed’s Dudley and Yellen expected later this week before meaningfully adjusting their current positioning.

Currency markets will also be focused on a raft of speeches by Fed officials this week, including Chicago’s Charles Evans on Tuesday and Friday, Chair Janet Yellen on Thursday, Dallas’s Robert Kaplan and Minneapolis’s Neel Kashkari on Friday and New York’s William Dudley on Saturday.  “Sentiment towards the dollar has deteriorated significantly,” Societe Generale FX analysts said in a note to clients on Monday.

In rates, the 10-year U.S. Treasury yield has fallen around 10 basis points below 2.50 percent since the Fed raised rates last week for only the third time in over a decade. The gap between two- and 10-year yields has shrunk, meaning the yield curve has flattened. This suggests investors are skeptical growth and inflation will be strong enough to warrant a sustained cycle of rate hikes, and has subsequently weighed on the dollar.

In commodities, oil prices continued their downward trend as OPEC supplies remained steady despite touted cuts and rising U.S. drilling contributed to concerns about a supply glut.  U.S. crude dropped 1% to $48.29 a barrel.  Global benchmark Brent fell 0.7% to $51.40.  The weaker dollar boosted gold which rose 0.4 percent at $1,233 an ounce, after touching a two-week high earlier in the session.

Bulletin Headline summary from RanSquawk

  • European equities trade modestly lower so far, with Deutsche Bank weighing on the financial sector has they begin their capital raising
  • FX price action has been relatively muted amid light newsflow, while oil trades lower after lEA’s Birol highlighted an increase in US oil output
  • Highlights include, Chicago Fed National Activity Index, Bundesbank Report and comments from Fed’s Evans and BoE’s Haldane.

Market Snapshot

  • S&P 500 futures down 0.2% to 2,371.00
  • MXAP up 0.2% to 148.64
  • MXAPJ up 0.4% to 481.53
  • Nikkei down 0.4% to 19,521.59
  • Topix down 0.4% to 1,565.85
  • Hang Seng Index up 0.8% to 24,501.99
  • Shanghai Composite up 0.4% to 3,250.81
  • Sensex down 0.5% to 29,516.48
  • Australia S&P/ASX 200 down 0.4% to 5,778.91
  • Kospi down 0.4% to 2,157.01
  • STOXX Europe 600 down 0.1% to 377.86
  • German 10Y yield rose 0.5 bps to 0.44%
  • Euro up 0.3% to 1.0766 per US$
  • Brent Futures down 0.4% to $51.58/bbl
  • Italian 10Y yield fell 0.9 bps to 2.357%
  • Spanish 10Y yield rose 0.5 bps to 1.886%
  • Brent Futures down 0.4% to $51.58/bbl
  • Gold spot up 0.4% to $1,233.53
  • U.S. Dollar Index down 0.2% to 100.15

Top Overnight News via BBG

  • German Chancellor Angela Merkel and Japanese Prime Minister Shinzo Abe called for a concerted effort to defend free trade, expanding the list of economic powers joining together to counter the U.S. shift toward protectionism
  • Money managers cut bets on rising West Texas Intermediate crude by a record amount during the week ended March 14, while wagers on a further price drop doubled as oil remained below $50 a barrel
  • Deutsche Bank to Raise $8.6 Billion After Pricing Share Sale
  • Deutsche Bank Says Revenue to Stay ‘Broadly Flat’ This Year
  • Cerberus-Backed Albertsons Said to Consider Merger With Sprouts
  • Blackstone Venture Acquires $1.4 Billion of Hansteen Properties
  • Hansteen Rises to Highest in 10 Years on Blackstone Asset Sale
  • Alphapharm Begins Recall of Epipen Auto-Injector in Australia
  • Ford’s Lincoln to Offer Its First Hybrid Model in China
  • Arconic Reports Multi-Year Deal Supply With Toyota North America
  • FDA Investigating Rate of Cardiac Events With Abbott’s BVS
  • Cognizant Said to Likely Fire Over 6,000 Employees, ET Now Says

In Asian markets, stocks traded mixed amid a lack of key drivers and with Japanese trade closed for the Spring Equinox public holiday, while ASX 200 (-0.5%) was led lower by telecoms and profit-taking in gold related stocks. China was positive with Hang Seng (+0.7%) the outperformer after a firm liquidity injection of CNY 100bIn by the PBoC and as participants digested earnings releases, while Shanghai Comp. (+0.4%) lagged after Chinese property prices continued to surge with Bejing prices up over 20% Y/Y, which could essentially attract funds away from stocks. Elsewhere, US equity futures were pressured and broke below Friday’s lows, while Nikkei 225 remained shut due to the public holiday. Chinese Property Prices (Feb) Y/Y 11.8% (Prey. 12.2%). PBoC injected CNY 60bIn in 7-day reverse repos, CNY 20bIn in 14-day reverse repos and CNY 20bIn in 28-day reverse repos.

Top Asian News

  • Risk Appetite Goes Missing as Asia Starts the Week: Markets Wrap
  • Yellen’s Shadow Looms Large Over China Central Bank Policy
  • Selling Dollars Is Becoming The New Trump Trade: Markets Live
  • Meitu Erases 28% Surge as Shares Seen Volatile Before Earnings
  • China Said to Temporarily Suspend Beef Imports From Brazil
  • Hong Kong Stocks Extend Weekly Rally as Shenhua Jumps on Payout
  • Credit Suisse Co-Head of Asia Cash Equities Lee Said to Leave
  • Malaysia Should Improve ‘Fragmented’ Military, Honeywell Says
  • Morgan Stanley Said to Lose Second Senior M&A Banker in Asia

European bourses have kicked off the week in tentative fashion with the calendar looking somewhat light. EU bourses are trading with minor losses amid slight weakness in the financial sector with Deutsche Bank commencing their EUR 8bIn capital raising plan, while UBS are set to go on trial in their tax case in France. Elsewhere, Vodafone initially saw telecoms as the only sector in the green after agreeing to merge their Indian unit with Idea Cellular, however with Co. shares paring the initial upside amid suggestions that the merger may struggle to pass through regulatory requirements. Price action in fixed income markets has been somewhat contained with Bunds only modestly lower, with slight underperformance observed in the belly of the curve. Ahead of the French TV debate in the presidential race, OATs had been underperforming for much of the morning with the German/French spread widening the most in 2 weeks.

Top European News

  • Deutsche Bank Says DoJ Closed Criminal Inquiry in FX Matter
  • Merkel, Abe Call for EU-Japan Deal to Stem Trade Barriers
  • Visco Says ECB Could Shorten Break Between QE Exit And Rate Hike
  • Atos Denies Worldline Preparing Ingenico Bid, Reuters Says
  • Hugo Boss Drops After Report Frere’s GBL Isn’t Shareholder
  • Ingenico Rises After La Lettre Report Worldline Preparing Bid
  • Troim’s Borr Buys Transocean’s Jack-Up Fleet for $1.35 Billion
  • Paris Climate Accord Could Make the World $19 Trillion Richer
  • Vodafone, Idea Agree on Merger to Create India Mobile Leader

In currencies, the yen was little changed at 112.74 per dollar as of 8:26 a.m. in London after reaching its strongest since Feb. 28. The euro climbed 0.3 percent to $1.0769, while the Australian and New Zealand dollars rose 0.3 percent and 0.4 percent, respectively. The British pound gained 0.2 percent. The South Korean won jumped 1 percent to its highest since Oct. 20, leading gains in emerging Asian markets. The baht also reached its strongest level since October. The USD-index continues to weakn post the G20 meeting as finance leaders caved into pressure from the US and scrapped a commitment to reject all forms of trade protectionism. As such, the pullback in the greenback has supported its major counterparts, with GBP making a break above 1.2400. Additionally, from a UK stand point reports report have been circulating that PM May’s closest have been calling for a potential snap election on May 4th in order to take seats from the SNP and reduce the likelihood of a second Scottish referendum. Another thing to keep an eye out for will be the French Election TV debate scheduled at 1900GMT, consequently, price action in EUR could be somewhat tame throughout the day, as has been the case so far, with the notable data of the morning coming I the form of Eurozone labour cost index, which was in line with Exp. ECB’s Visco (Dove) said that deflation risk seems to have passed and that the ECB could shorten the time gap between exit from QE and first rate hike.

In commodities, another rise in oil rigs continues to put the pressure on crude prices as WTI looks to test USD 48 to the downside, while lEA’s Birol added to these concerns having noted that he expects a major boom in US oil output and shale gas volumes. Elsewhere, copper will be in focus after labour unions at Chile’s Escondida mine slams new offer from management.  West Texas Intermediate crude slid 0.7 percent to $48.42 a barrel. It has dropped 10 percent this month, heading for the steepest one-month slide since July. Gold rose 0.3 percent to $1,232.97 an ounce, climbing for a fourth day. Base metals fell on the London Metal Exchange, with copper forwards down 0.2 percent and tin retreating 0.3 percent.

US Event Calendar

  • 8:30am: Chicago Fed Nat Activity Index, est. 0.03, prior -0.05

* * *

DB’s Jim Reid concludes the overnight wrap

Markets look set to be a little less interesting than my bedroom arrangements this week with perhaps the highlights being lots of Fed speakers, the first televised French Presidential debate tonight and the flash global PMIs on Friday. The Fed speakers will likely reinforce the message from the FOMC but watch for signs of increased confidence in their outlook. The French debates might start to lead to some bigger moves in the polls which have been relatively steady of late. As for the PMIs, volatility has been very subdued in the face of high political uncertainty due to continued strong data, especially survey data so the flash PMIs are often the best real time update of the global economic pulse.

Over the weekend the G-20 meeting ended with the “resist all forms of protectionism” line dropped from the previous communiqué. The US were the stumbling block but it’s still early days in the new Trump administration so for now it seems that markets will wait and see before becoming too scared by the implications. Indeed the more significant meeting may be the G-20 meeting in Hamburg in July by which time some of that uncertainty around the new US administration may have started to clear up. Aside from that the rest of the weekend news has been fairly light. The general view of the meeting between President Trump and Chancellor Merkel was that it was inconclusive with the President also tweeting after that “Germany owes vast sums of money to NATO and the United States must be paid for the powerful, and very expensive, defence it provides to Germany”.

Over in markets there hasn’t been too much a reaction to the weekend headlines with bourses generally mixed in Asia, albeit with fairly modest moves. Indices in China are little changed while the Kospi (-0.52%) and ASX (-0.47%) are down. The Hang Seng (+0.53%) is up however and in doing so has passed the 24,000 level for the first time since 2015. Elsewhere, US equity index futures are down about -0.20% while in FX the USD is a smidgen weaker.

Staying in Asia, there was also some data released in China over with the weekend with the release of the February house prices data. For new homes excluding subsidized housing, prices were reported as rising in 56 out of the 70 major cities which compares to 45 cities in January. It’s worth noting that Beijing’s municipal government on Friday increased the down payment requirement on second homes by 10% in an attempt to cool prices. The maximum length of a mortgage was also cut to 25 years from 30 years.

The relatively quiet start this morning follows Friday’s session in which markets appeared to run out of steam following a packed week. That was certainly the case for equity markets where the S&P 500 closed with a modest -0.13% loss and so capping the weekly return at +0.24%. In Europe the Stoxx 600 did however end +0.16% despite Banks underperforming and so making the weekly return a solid +1.36%. Last week’s winner was EM however with the MSCI EM index rising every day last week, including a +0.25% gain on Friday, to finish +4.26% for the week and the strongest week since July last year.

Meanwhile, over in bond markets and following those Nowotny comments late on Thursday suggesting that the ECB could raise the deposit rate before the main refinancing rate and also prior to QE ending, the front end of the Bund curve saw yields tick higher, with 2y yields up 1.8bps to -0.792% and to the highest since February 6th. 10y and 30y Bund yields on the other hand finished 1.4bps and 3.1bps lower. Our European fixed income strategy team highlighted in their weekly on Friday that the market is now pricing a significant probability of a oneoff hike in the deposit facility rate. They note that a 10bp hike is priced by Jan-18, a 15bp hike by May-18 and a 20bp hike by Aug-18. Indeed they believe that the sequencing of the ECB’s easing decisions since the start of QE suggests that a one-off hike in the deposit rate is likely, however at the same time could present some communication challenges highlighted by the steepening of the money market curve in the recent repricing of the timing of the first 10-20bp move in Eonia rates.

Elsewhere 10y Treasury yields retraced much of the previous day’s move by falling 4bps to 2.501%. The Fed’s Kashkari spoke – who as a reminder was the lone dissenter at the FOMC vote last week – and said that relatively little change in recent data and his belief that the job market slack remains tilted his vote towards favouring not raising rates.

While there wasn’t much particularly going on in markets, Friday was however another busy session for data releases in the US. The most anticipated was the February industrial production report which came in a  little disappointing with production flat during the month versus expectations for a +0.2% mom rise, while capacity utilization also ticked down one-tenth to 75.4%. Manufacturing production did however rise +0.5% mom during the month and matching consensus. Away from that the first look at the March University of Michigan consumer sentiment reading revealed a 1.3pt rise in the headline sentiment reading to 97.6 (vs. 97.0 expected). Most notable in the details was the 3pt rise in the current conditions index to a new high of 114.5. The expectations component on the other hand rose a much more modest 0.2pts to 86.7 while both 1y and 5-10y inflation expectations fell three-tenths each to 2.4% and 2.2% respectively. The other data out on Friday was the conference board’s leading index which rose +0.6% mom in February and the labour market conditions index which strengthened by 1.3 index points in February. All told the Atlanta Fed’s Q1 GDP tracker remains unchanged at 0.9%. That continues to fly in the face of the NY Fed model which, while revised down 0.4% last week, still sits at 2.8%.

Over to this week’s calendar now where, after all the excitement last week, it looks set to be a fair bit quieter this week. The lone data in Europe this morning is PPI in Germany while in the US the only data due is the Chicago Fed national activity index. On Tuesday the early focus is on the UK with both the February CPI/ PPI/RPI prints and also the CBI trends orders data and public sector net borrowing data for last month. In the US we’ll get the current account balance reading. Kicking off Wednesday is Japan where the latest trade data is due. There is nothing of note in Europe on Wednesday while in the US we’ll get the FHFA house price index and February existing home sales. The diary is a bit busier on Thursday with various confidence readings due in France and Germany in the morning along with UK retail sales data for February. Over in the US we will then get new home sales, initial jobless claims and the Kansas City Fed’s manufacturing index. We end the week with what looks set to be the busiest day on Friday. In the morning we will get the flash March manufacturing PMI in Japan before we then get the flash manufacturing, services and composite PMI’s in Europe. France GDP will also be released. In the US we then end with preliminary February durable and capital goods orders and also the flash manufacturing PMI.

Away from the data this week’s Fedspeak consists of Evans this evening, Dudley, George and Mester on Tuesday, Fed Chair Yellen on Thursday along with Kashkari and Kaplan, and then Evans on Friday along with  Bullard. Bundesbank President Weidmann is also due to speak today and the ECB’S Lautenschlaeger on Thursday. The BoJ minutes from the January meeting are due out on Tuesday. Other events worth watching is the live televised debate between the French presidential candidates tonight and also the Euro area finance ministers meeting today, including a discussion on Greece.



i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 13.36 POINTS OR .41%/ /Hang Sang CLOSED UP 192.06 POINTS OR 0.79% . The Nikkei closed FOR HOLIDAY /Australia’s all ordinaires  CLOSED DOWN 0.35%/Chinese yuan (ONSHORE) closed DOWN at 6.9072/Oil FELL to 48.16 dollars per barrel for WTI and 51.30 for Brent. Stocks in Europe ALL IN THE RED    ..Offshore yuan trades  6.8957 yuan to the dollar vs 6.9072  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS CONSIDERABLY AGAIN/ ONSHORE YUAN WEAKER AS IS  THE OFFSHORE YUAN WHICH IS ALSO WEAKER AND THIS IS  COUPLED WITH THE SLIGHTLY WEAKER DOLLAR. CHINA TIGHTENS 


North Korea is now one step closer to an ICBM after a successful test of a “new type” of rocket engine. The USA. South Korea and China have a problem that they must deal with:

(courtesy zero hedge)

North Korea “One Step Closer To ICBM Launch” After Successful Test Of “New Type” Rocket Engine

One day after Rex Tillerson warned that the US is contemplating a pre-emptive military attack on North Korea, the isolated nation announced it has conducted a ground test of a new type of high-thrust rocket engine that leader Kim Jong Un is calling a “revolutionary breakthrough” for the country’s space program, the North’s state media said Sunday. Kim attended Saturday’s test at the Sohae launch site, according to the Korean Central News Agency, which said the test was intended to confirm the “new type” of engine’s thrust power and gauge the reliability of its control system and structural safety.

A previous demonstration of a “new rocket engine” in this undated photo released
by North Korea’s KCNA in Pyongyang September 20, 2016

Kim called the test “a great event of historic significance” for the country’s indigenous rocket industry, the KCNA report said. He also said the “whole world will soon witness what eventful significance the great victory won today carries” and claimed the test marks what will be known as the “March 18 revolution” in the development of the country’s rocket industry. The report indicated that the engine is to be used for North Korea’s space and satellite-launching program.

The claim of a successful test of the high-thrust rocket engine would put North Korea a step closer to being able to launch an intercontinental ballistic missile, as Mr. Kim said the country would do this year in his new-year address, the WSJ reported.

North Korea is banned by the United Nations from conducting long-range missile tests, but it claims its satellite program is for peaceful use, a claim many in the U.S. and elsewhere believe is questionable.

As AP further reports, North Korean officials have said that under a five-year plan, they intend to launch more Earth observation satellites and what would be the country’s first geostationary communications satellite — which would be a major technological advance. Getting that kind of satellite into place would likely require a more powerful engine than its previous ones. The North also claims it is trying to build a viable space program that would include a moon launch within the next 10 years.

Saturday’s engine test, at North Korea’s Sohae Satellite Launching Station, near its border with China, came as U.S. Secretary of State Rex Tillerson was en route to Beijing for a series of meetings with Chinese leadership that were to include discussions about how to rein in Pyongyang’s nuclear threat. On Friday, Tillerson told reporters in Seoul that the U.S. wasn’t interested in conducting direct talks with North Korea to halt its weapons program, saying instead that tighter sanctions enforcement and the possibility of a military strike were being considered as part of a continuing North Korea policy review by the White House.

“All options are on the table,” Tillerson said.

It’s unclear whether this test was deliberately timed to coincide with Tillerson’s visit, but Pyongyang has been highly critical of ongoing U.S.-South Korea wargames just south of the Demilitarized Zone and often conducts some sort of high-profile operation of its own in protest. Earlier this month, it fired off four ballistic missiles into the Sea of Japan, reportedly reaching within 200 kilometers (120 miles) of Japan’s shoreline.

Japan, which was Tillerson’s first stop before traveling to South Korea and China, recently held its first civilian missile evacuation drill over concerns of an unexpected North Korean attack.

While building ever better long-range missiles and smaller nuclear warheads to pair with them, North Korea has marked a number of successes in its space program. It launched its latest satellite — the Kwangmyongsong 4, or Brilliant Star 4 — into orbit on Feb. 7 last year, just one month after conducting what it claims was its first hydrogen-bomb test. It put its first satellite in orbit in 2012, a feat few other countries have achieved. In 2013, rival South Korea launched a satellite into space from its own soil for the first time, though it needed Russian help to build the rocket’s first stage.

In a controversial attempt to contain the threat from a potential North Korean missile attack, last week, the US military also began the deployment of its THAAD anti-missile system in S. Korea, despite Russia and China objecting to the move as being “counter-productive.” Beijing said THAAD’s deployment was harming the “regional strategic balance,” since it might damage China’s nuclear deterrent capabilities and potentially fuel US first-strike ideas. Moscow said Washington was “instigating an arms race in the sub region.”

“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,” Chinese Foreign Ministry spokeswoman Hua Chunying said on Friday, as quoted by Reuters. Washington and Seoul however continue to maintain that the deployment of THAAD is a “defensive” measure against Pyongyang, and countries “other than North Korea” have nothing to worry about, according to US Defense Secretary James Mattis.


Shinzo Abe seems to be embroiled in a school scandal as the government sells land at 1/7 the official going rate and Abe lies about a donation receipt to that school

(courtesy zero hedge)

Abe School Scandal Set For Major Escalation After Donation Receipt Emerges

The crisis that has rocked the previously unshakeable administration of Japanese Prime Minister Shinzo Abe is not the result of bungled economic policies, party in-fighting or any of the other calamities that have brought down Japanese leaders in the past, which includes Abe’s first administration as prime minister. Abe is struggling to shake off a scandal involving a kindergarten.

Japan’s Prime Minister Shinzo Abe and his wife Akie

 As the SCMP recently reported, just a few weeks ago, Abe was riding high in the polls and making plans to run for an unprecedented third term as head of the dominant Liberal Democratic Party. So when questions first began to be asked about Moritomo Gakuen, a kindergarten operator in Osaka with what was initially described as a conservative curriculum, the prime minister felt confident to declare that he shared many of the philosophies of the school’s president, Yasunori Kagoike.

It would emerge in swift succession last month that the premier’s wife, Akie Abe, had been named honorary principal of a new school being planned by Kagoike; that the school was being built on land purchased from the government by Moritomo Gakuen for a fraction of its estimated value; that Abe’s wife Akie allegedly donated 1 million yen ($8,800) to the foundation in September 2015 on behalf of her husband (they both deny it), and that the operator’s philosophies imposed upon his young pupils were not just conservative, but tended towards far-right pre-war nationalism. 

As the East Asia Forum adds, the scandal surrounding the sale of state-owned land to educational institution Moritomo Gakuen, and the exposure of the ultra-nationalist curricula at its privately run schools, has brought to the fore the uncomfortable questions that have always lurked in the background of Mr Abe’s political career and are now ensnaring his cabinet because of its links to far-right lobby groups. The scandal is significant not only because it has enveloped Prime Minister Shinzo Abe and his wife, Akie, but also because of what it says about Abe’s vision for Japan.

Some more details:

Last month it was revealed that Moritomo Gakuen had bought a parcel of land last year in Osaka for construction of its Mizuho-no-kuni Elementary School for 134 million yen (US$1.18 million), about a seventh of its appraised value of 956 million yen (US$8.39 million). The government has attempted to explain away the cost difference being due the need to clean up waste materials on the site. Yet a similar sized neighbouring plot of land was sold for 1.4 billion yen (US$12.3 million) in 2010.


For a country where political money scandals are a regular occurrence, this one is fairly small beer. A much bigger issue is what Moritomo Gakuen schools are teaching and how the prime minister and his wife have been tarred with their agenda.

As the details of the scandal emerged, the Osaka Prefecture Education Bureau enquired of the Ministry of Education as to whether Moritomo Gakuen had violated the Basic Education Law which stipulates that all schools, including kindergartens, ‘must not conduct political education or other political activities that support or oppose certain political parties’.

The Prime Minister and Mrs Abe, it transpires, have been deeply involved in promotion of the Moritomo Gakuen enterprise. Mrs Abe was set to be the honorary principal of the school until the land sale scandal came to light. She had publicly expressed support for the school in a message which, on prime ministerial request, has since been removed from its website, ‘stating that it is “wonderful”, “remarkable” and “fosters children to have pride as Japanese and a strong inner self”’.

The adverse impact on Abe’s popularity was swift: as Reuters reports support for Abe plunged after questions were raised in parliament about the murky elementary school land deal to which his wife had ties, according to an online poll published on Wednesday. An online survey by Japan’s Nikkei business daily found that Abe’s support fell to 36.1 percent in a survey conducted from March 4 to 7 from 63.7 percent in the previous week. Additionally, 78 per cent of those polled reckoned that Mrs Abe should not have accepted the appointment as honorary principal at Moritomo Gakuen and 76 per cent agreed that its chair should be summoned before the Diet to explain, a course that the prime minister has so far deflected.

On one hand, Abe could simply admit his error and apologize: according to EA forum, “Abe might in the end succeed in brushing the scandal off as an error of judgment on his wife’s part. But the vast majority of Japanese are in no doubt about the inappropriateness of their role in the affair.”

Many factors, apart from how successful he is in pragmatically scrambling away from his right-wing links to reclaim the centre ground, will determine whether the Osaka kindergarten scandal will knock Mr Abe off his political pedestal for very long. But the affair is a timely reminder of how important the constraints of institutions, the independent application of law and the role of a free press are in protecting against the inclinations of extremism to pervert the good sense of Japanese or any other society.

 Japanese markets have so far shrugged off the news,
mainly because the school scandal is still viewed as a transient factor,
said Hiroaki Hiwada, a strategist at Toyo Securities Co. “Up
to now, there haven’t been any scandals in which Abe was the main
actor, so that even though some foreign investors may be using this as a
reason to hold back there are still many expectations for his policies
based on the success of the recent Japan-U.S. leaders’ summit,” he

* * *

Things got more complex last week when the head of the scandal-tainted school, Yasunori Kagoike, told a delegation of Diet members in Osaka Thursday that he received a donation from Prime Minister Shinzo Abe to help build an elementary school that promotes a nationalist education. Abe has denied the claim, according to Chief Cabinet Secretary Yoshihide Suga.

Kagoike made the comments to nearly a dozen visiting lawmakers at the site of a Moritomo-run elementary school , which is embroiled in a land scandal that has reached the highest levels of government. He said that while the plan to open the new school in April was called off, the structure was built and the scandal has affected all of the companies involved in its construction.

“We tried to build this school to everyone’s intentions. I’m announcing that Prime Minister Shinzo Abe’s donation was included,” Kagoike said in remarks picked up by news cameras from the grounds of the Mizuho no Kuni elementary school.


During his regular news conference in Tokyo late Thursday afternoon, Suga dismissed the claim. Suga told reporters that when he asked Abe about the matter, the prime minister denied making any donation himself, through his wife Akie or any other third party


The Diet delegation, led by Liberal Democratic Party lawmaker Ichita Yamamoto, departed for Tokyo without immediately commenting on the matter. Kagoike did not speak to reporters immediately after the visit.


Despite the denial, Kagoike’s comment is sure to refocus Diet inquiries into Moritomo back on the prime minister and possibly his wife Akie, who served as honorary principal of the new elementary school before resigning last month. Akie also spoke at the school in September 2015. Kagoike’s claim comes after a sudden visit to Tokyo on Wednesday, where he met with freelance journalist Tamotsu Sugano after canceling an appearance at the Foreign Correspondents’ Club of Japan.


On Wednesday night, Sugano told reporters that Kagoike had told him that another politician, a Cabinet member, was involved in the scandal in which Moritomo was able to purchase land from the government valued at ¥946 million for only ¥134 million. Abe has said neither he nor his wife was involved in the land deal.

Yet while ignoring the scandal may have been possible had Abe simply owned up to the revelations, a problem emerged once Abe decided to sternly deny any wrongdoing, and said neither he nor his wife, Akie, was involved in the deal or donating to the scandal-hit school. The PM couple dug themselves even deeper last Thursday, when Abe’s wife Akie also officially denied making any donations, the nation’s top spokesman said. According to Bloomberg, Chief Cabinet Secretary Yoshihide Suga made the announcement when speaking to reporters in Tokyo last Thursday.

The prime minister “said he had not made a donation through his wife Akie, through his office or through a third party,” Suga told reporters, adding that he had “absolutely no idea” on what basis Kagoike made his remarks.

Most problematically for Abe, on Satuday Japan’s Mainichi Shimbun reported that it has obtained a copy of a post office receipt for a deposit of 1 million yen that scandal-hit Moritomo Gakuen claims to have been donated by Prime Minister Shinzo Abe’s wife Akie Abe. In other words, should the receipt be authenticated, Mr and Mrs. Abe’s version of events collapses as an outright lie.

The post office receipt for a 1 million yen deposit that Moritomo Gakuen made
is seen. The school o
perator claims the transaction was to deposit a donation
made by Prime Minister Shinzo Abe’s wife Akie

As Mainichi adds, Moritomo Gakuen President Yasunori Kagoike claims that he received the 1 million yen donation from Akie for a new elementary school that the operator planned to open in Toyonaka, Osaka Prefecture. The receipt copy for the deposit shows Moritomo Gakuen as the depositor handwritten over whiteout tape. When the receipt is held up to the light, the name “Shinzo Abe” can be made out underneath the whiteout. The seal of the post office that handled the payment is stamped over the whited-out portion.

The receipt confirms a previous report that Abe’s wife Akie donated 1 million yen ($8,800) to the foundation in September 2015 on behalf of her husband, according to a Twitter post by Communist Party lawmaker Kotaro Tatsumi. Akie Abe had been scheduled to act as an honorary principal of the school but has since severed links with it.

During an interview with nonfiction author Tamotsu Sugano, Kagoike’s daughter said the school operator tried to make the deposit under Prime Minister Abe’s name, but was told by the post office that the name of the depositor on the receipt had to match the name on the transaction form kept by the post office. She said the school operator corrected the name using whiteout tape after consulting with its accountant.

While there has been little reporting on this scandal outside of Japan, the fact that it had such a swift adverse impact on Abe’s ratings before the couple officially lied could potentially result in an escalation in turmoil, should the scandal refuse to go away especially if the receipt is confirmed, and if the prime minister family is forced to explain to the Japanese public why they though they could get away with a simple lie over the growing scandal.

What happens next?

“Abe’s very unlikely to resign over this issue,” said Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University’s Japan campus in Tokyo. “It’s not illegal to make donations to schools, but the issue really is about whether Abe was involved in the land deal.”

According to the new revelations, not only was Abe supposedly involved, but he lied about said involvement.

The coming days could be key: Yasunori Kagoike, the head of a scandal-hit school operator will testify in parliament on March 23 after the lower house budget committee agreed to summon Kagoike; as a note, private citizens are rarely asked to give testimony in parliament, especially if what they are about to disclose may provide further evidence the prime minister was deliberately lying to avoid a further escalation of the scandal.


China prepares for the worst as they will counter all USA trade penalties.

(courtesy zero hedge)

Behind The Smiles: China “Prepares For The Worst”, Will Counter All US Trade Penalties

On the one hand, recent tensions between China and the US appeared to have been defused following this weekend’s visit by US Secretary of State Rex Tillerson to Beijing, where it was “all smiles” during his meeting with China’s president. With warm words from Xi, Tillerson on Sunday ended his first trip to Asia since taking office, with an agreement to work together with China on North Korea and putting aside trickier issues. Furthermore, as Reuters adds, preparatory work for a meeting between Chinese President Xi Jinping and U.S. President Donald Trump has begun, China’s Foreign Ministry said on Monday, after a weekend visit to Beijing by U.S. Secretary of State Rex Tillerson. The planned summit between Xi and Trump could happen as soon as next month in the United States.

On the other hand, however, China’s government is already preparing for retaliation for what it deems an inevitable first trade war step by the US, and has been seeking advice from its think-tanks and policy advisers on how to counter potential trade penalties from U.S. President Donald Trump, “getting ready for the worst,” even as they hope for business-like negotiations Reuters adds. The policy advisers believe the Trump administration is most likely to impose higher tariffs on targeted sectors where China has a big surplus with the United States, such as steel and furniture, or on state-owned firms.

China could respond with actions such as finding alternative suppliers of agriculture products or machinery and manufactured goods, while cutting its exports of consumer staples such as mobile phones or laptops, they said. Other options include imposing tax or other restrictions on big U.S. firms operating in China, or limiting their access to China’s fast-growing services sector, they added.


Beijing was a particular target of Trump’s rhetoric during last year’s election campaign, and officials see some friction as inevitable due to China’s large trade surplus, according to several sources involved in the internal discussions. China’s State Council Information Office, the government public relations arm, and the Ministry of Commerce did not return requests for comment.

“There is still room for both sides to resolve problems through co-operation and consultation, rather than just resorting to retaliation,” said a policy adviser who spoke on condition of anonymity. “But we should have plans in case things go wrong.”

Premier Li Keqiang said last week that Beijing did not want to see a trade war with the United States and urged talks between both sides to achieve common ground. U.S. Treasury Secretary Steven Mnuchin also said last week that the Trump administration did not want trade wars, but that certain trade relationships needed re-examining to make them fairer for U.S. workers.

No major U.S. measures have been announced, and there were no public indications of Washington’s intentions on trade at the weekend when Secretary of State Rex Tillerson visited China.


Meanwhile, maintaining the facade that all is well, Trump is expected to host President Xi Jinping next month.


A glimpse of the uncertain future, however, came on Saturday in a communique after a meeting of finance ministers at the G20 in Germany, which dropped a pledge to keep global trade free and open,  acquiescing to an increasingly protectionist United States after the two-day meeting failed to yield a compromise. The sources said China could step up some imports from the United States and boost its investment there to help create more jobs as a goodwill gesture, but would not meekly accept any unilateral U.S. action.

We will have contingency plans to cope with the worst policies from Trump,” said a second policy adviser. Trump has previously threatened a 45 percent tariff on China’s exports and frequently said on the campaign trail that he would label China a currency manipulator, even though Beijing has not been actively weakening the yuan in recent years.

In an interview with Reuters on Feb. 23, he declared China the “grand champions” of currency manipulation. “It’s hard to say his views have changed or he has become more pragmatic,” said the first adviser. Mnuchin has pledged a more methodical approach to analyzing Beijing’s foreign exchange practices.

Under the three criteria set by the U.S. Treasury to determine whether a country is manipulating its currency for a trade advantage, China only meets one: running a trade surplus of more than $20 billion with the United States. The U.S. Treasury’s next report on the issue is due in April. China’s surplus with the United States fell by $20.1 billion to $347 billion in 2016, the U.S. Commerce Department said on Tuesday, while Chinese data put it somewhat lower.

One of Reuters’ sources said he thought it unlikely that Trump would label China a currency manipulator. “If he does that, China will let the yuan go, and the yuan will fall sharply,” the source said. Weakening the yuan or dumping some of China’s massive holdings of U.S Treasuries could be considered only when trade relations deteriorate sharply, the sources said.

Earlier this month, former commerce minister Gao Hucheng said during the annual meeting of parliament that China was not afraid of a trade war, though it hoped to avoid one. “We are willing to deal with it properly, but we are not afraid. Once the U.S. side take certain measures, we will evaluate and analyze such measures, and take actions when necessary,” Gao said.

* * *

Finally, in a parallel report from Axios, the website cites China expert Richard McGregor who lists 5 things he believes Xi wants from Trump in order to maintain cordial relations between the two nations:

  1. Don’t upend the status quo with North Korea: China’s worst nightmare is that the regime would collapse and be subsumed by South Korea, which would make for a U.S.-ally on their border. It needs North Korea as a buffer state. Contra Washington conventional wisdom, the Chinese can’t just snap their fingers and tell the North Koreans what to do. China and North Korea deeply distrust each other. So the Chinese hope Trump’s tough talk is just bluster.
  2. Avoid a confrontation in the South China Sea: Xi will likely deliver to Trump a quiet warning on the South China Sea. During his confirmation hearing, Rex Tillerson told Senators China needed to stop its island building there. The Chinese want Trump to understand they will defend their interests if the U.S. pushes back. (See our Facts Matter on the South China Sea.)
  3. Stick to “One China”: Regarding Taiwan, they want Trump to stick with the “One China” policy. Xi was furious when Trump took a call from Taiwan’s president, and wouldn’t speak with him over the phone until Trump agreed to support the status quo. (See our Facts Matter on the One China policy.)
  4. No trade war: The Chinese, like everyone else, don’t know what Trump might do on trade. They are closely following the reports about the tussle within the White House between nationalists (especially Bannon and Wilbur Ross) and the Goldman Sachs wing, led by Trump’s chief economic advisor, Gary Cohn. As Axios revealed: trade in automobiles is the big sleeper issue.
  5. The big picture: Xi wants a stable international environment that allows China to continue to develop and accumulate wealth and power. They abhor the prospect of military disruptions and interruptions to trade, with Xi going to Davos this year to sell China as an apostle of the open international order to all the folks Bannon would call “globalists.” McGregor says China’s ideal state for America is “slow and steady bourgeois decline.” Anything too chaotic — Trump’s MO, basically — hurts China.

Clearly, point #4 will be the most controversial one in the coming months.




China now expands its non existent marine force by over 400%

(courtesy Daniel Lang/



Beijing Goes Global: China Expands Marine Force 400%; First Overseas Military Base Almost Complete

Authored by Daniel Lang via,

For most of its recent history, China has largely been a land power with no significant naval capabilities. They haven’t been able to exert much military influence beyond their coastline for hundreds of years. In fact, one of the reasons why Western powers had no trouble bullying China during the 19th and 20th centuries, was because the Imperial Navy under the Qing dynasty was incredibly weak. With that in mind, it’s no surprise that lately, China has been putting a lot of effort into building an effective overseas naval force.

Not only have they been busy constructing their first combat-ready aircraft carrier, the Chinese have also been developing new aircrafts to accompany it. Of course, a navy can’t really exert much military influence if it doesn’t have soldiers to deploy. That’s why Chinese officials have recently announced that they are preparing to rapidly expand the ranks of the People’s Liberation Army Marine Corps.

Chinese media is reporting the People’s Liberation Army’s ambitious new plans following the announcement of a 7 per cent increase to $200 billion in defence spending last week.

Among the details to emerge is a move to boost China’s marine corps — highly trained and well equipped troops intended for rapid deployment and offensive missions launched from the sea — from an existing 20,000 troops to more than 100,000.

Chinese officials have stated this is to protect arterial maritime trade routes and enforce its growing overseas interests.

“What growing overseas interests” you might ask?

Well, China has been in the process of building their first overseas military base in Djibouti, on the Horn of Africa. And that base is expected to be completed this summer.

Marine Gen. Thomas Waldhauser, commander of AfriCom, told the Senate Armed Services Committee that he expected the Chinese base on the Horn of Africa to be operational later this summer.


Without getting specific, Waldhauser said he recently met with Djibouti’s President Ismail Omar Guelleh “and expressed our concerns about some of the things that are important to us about what the Chinese should not do at that location.”


The Chinese base would be about four miles from the U.S. base at Camp Lemonnier, one of the Pentagon’s largest and most important foreign military installations, where about 3,000 U.S. military personnel and contractors are assigned to Combined Joint Task Force-Horn of Africa.

Given that base’s close proximity to Camp Lemonnier, China’s intentions are obvious.

They want what the United States has, which is a vast overseas empire, and an expeditionary force that can reach any coastline in the world. They want to compete with our current role in the global theater. Unfortunately, there isn’t enough room in the world for two countries carrying out that role. We may very well be witnessing the first stages of a new conflict between the United States and China.



USA is now pressuring the IMF to walk away from Greece.  If they do, then Greece will default in July and much of the derivative mess with its accompanying debt crisis will be upon Europe and the ECB


(courtesy Mish Shedlock)

US Pressures IMF to Walk Away From Greece: Déjà Vu, All Over Again

17Friday Mar 2017

Posted by | March 17, 2017 1:57:05

Greece is in reverse. Greek Unemployment Rose to 23.1%, GDP contracted 1.2% last quarter, and now the US is pressuring the IMF to back away from continued bailouts.

4th “Bailout” Needed

Greece’s labor market seems immune to the broader improvements in jobs growth seen elsewhere in Europe where average unemployment has now fallen to a four-year low of 9.8 percent.

The economy, which has the highest debt burden in the bloc at 180 per cent, also suffered a sharp growth setback in the last three months of the year, contracting by 1.2 per cent.

It was the worst GDP performance since the height of its debt crisis in the summer of 2015 and reflects renewed uncertainty in its bailout talks. Average eurozone GDP rose 0.4 percent in the fourth quarter of 2016.

“Bailout” History

US Pressures IMF to Walk Away From Greece

Now, conservatives in US Congress say Europeans should solve the crisis on their own. This puts the IMF Under Pressure Over the Greek Bailout.

In what was labeled an “America First” budget revealed on Thursday, the president proposed a $650m cut in US funding over the next three years for multilateral development banks including the World Bank. He also this week nominated two conservative economists with a history of criticizing the IMF and the Bank for the two top international posts at the US Treasury.

But conservative Republicans in Congress are eager for him to go a step further. They want him to assert US power over such bodies by taking a hard line and opposing further IMF involvement in Greece, which is sliding towards another crisis this summer unless its European creditors agree to cover billions more in debt payments.

A bill introduced on Thursday by Bill Huizenga, a Michigan conservative who was first elected to Congress with Tea party backing in 2011, calls for the Trump administration to oppose any further IMF participation in a Greek bailout. Should the US fail to achieve that aim, the bill would also require the US to oppose any broader IMF quota reforms until Greece had repaid all of its debts to the IMF.

“The IMF is supposed to be a lender of last resort, not a fig leaf of first resort for eurozone members,” Mr. Huizenga said.

“The IMF isn’t a fund to rescue political parties in creditor nations, nor should it be a junior partner to outside organizations that lack the commitment to do their work,” he said. “For seven years now, the IMF has been used to shield eurozone officials from their voters, which has tarnished the fund’s reputation, prolonged Greece’s misery, and put off hard choices about Europe’s future that must be made regardless.”

Grexit Déjà Vu

The Council on Foreign Relations writer Robert Kahn reports Greece on the Brink: Déjà Vu, All Over Again.

Greece appears to have neither the will nor the resources to make its payments, so avoiding default will require European creditors to disburse from their existing loan programs.

Bottom Line: Greece and its creditors are again locked in a showdown over reforms, cash, and debt relief. Another cliff-hanger ahead of heavy July debt payments looks likely. Extend-and-pretend is a dead end for Greece and an increasingly populist Europe, and a more ambitious agreement seems ruled out by bailout fatigue in creditor countries. Markets are once again underestimating the risks of “Grexit.”

Conclusion: All of this suggests that, for economic and political reasons, the window may be closing on a comprehensive resolution of Greece’s crisis. I would not bet against a deal to buy time, though probably without the involvement of the IMF. With each showdown, the risk increases that the Greek government will decide that its economic future is better outside the eurozone.

Key Differences This Time

In regards to bailouts, Kahn notes two key differences between now and past last minute deals.

  1. The IMF has taken a much firmer stance against the current program, and its fire has been aimed at both the creditors and the debtor.
  2. The second new element is the rising populist backlash against continued bailouts in the European Union (EU). Notably, it is extraordinarily difficult for a Dutch or German policymaker, pressured by anti-immigration and anti-EU sentiments at home during an election period, to make precedent-setting concessions to Greece on debt.

Greece is Hopeless

Clearly, Greece is hopeless.

But nothing has changed.  Greece is no more hopeless today than it was in 2009, three “bailouts” ago.

Of course, those bailouts were never designed to help Greece. They were designed to help Greece’s creditors and to calm down Eurozone fissures.

With new and more important fissures to worry about, Germany and the rest of the Eurozone countries are increasingly prepared to throw Greece under the bus. On its part, Greece was never willing to implement much-needed reforms.

So here we are, Grexit has been staved off so many times now, most think it can never happen again.







Wow!! that is a huge discount in the new rights offering of Deutsche bank. It closed on Friday with the stock trading at 17.86 euros. The existing shareholders have a right to buy the stock at 11.65 euros for a discount of 35%.  The dilution will be a huge 688 million shares.

(courtesy zero hedge)

Deutsche Bank Prices €8 Billion Stock Offering At 35% Discount

Two weeks after Deutsche Bank first announced it would raise €8 billion in capital as part of a comprehensive restructuring, the German lender on Sunday announced the terms of its upcoming massive dilution.

In a nutshell, Deutsche Bank said it will raise €8 billion ($8.6 billion) by selling stock at a 35% discount to Friday’s closing price in a rights offering. The TERP (Theoretical ex-right price) of €15.79, is based on the last closing price of €17.86. The transaction subscription price is €11.65. The Subscription price represents a 26% discount to TERP based on the March 17 closing price.

The mechanics of the offering: Deutsche Bank will issue 687.5 million new shares at €11.65 apiece, it said in a statement Sunday, in-line with the firm’s March 5 announcement on the planned sale. The offer compares with the stock’s closing price of €17.86 on Friday, and is almost 41% lower than where the stock traded when Bloomberg first broke the news of the imminent capital raising on March 3.

As part of the rights offering, DB shareholders may subscribe for 1 new ordinary share for every 2 existing shares held. The subscription rights expected to be traded on German exchanges March 21-April 4, and on NYSE March 21-31. As Bloomberg adds, the reference price for rights is expected to be approximately €2.07.

The sale of equity will be the fourth capital infusion for Deutsche Bank since 2010. Chief Executive Officer John Cryan, who had previously said he didn’t want to tap shareholders, reversed course this month after the shares almost doubled from their September low and Deutsche Bank was unable to find a buyer for a consumer banking unit. Still, even after DB’s shares decline this month ahead of the capital increase, the stock is still up 80% from the record low on Sept. 30, amid what Bloomberg call “renewed optimism for banks as investors speculate economic growth and rising borrowing costs could revive earnings.”

“The environment for the share sale is almost perfect, given the expectation of higher interest rates and buoyant equity markets,” Ingo Frommen, an analyst with LBBW who has a hold recommendation on the stock, said ahead of Sunday’s announcement.

So “perfect” in fact, buyers of DB equity would not take less than a 35% discount to market.

As a reminder, Deutsche Bank earlier said that the capital increase was fully underwritten at €11.65 a share by banks including Credit Suisse, Barclays, Goldman Sachs, BNP Paribas, Commerzbank, HSBC, Morgan Stanley and UniCredit. The group of banks underwriting the deal has increased to 30, it said Sunday.

Who is the dumb money this time around: Qatar’s royal family and China’s HNA Group Co., two of Deutsche Bank’s biggest investors, plan to buy shares in the rights offer with a view to increasing their stakes, Bloomberg reported.


The market reacts to two big news items:

  1. a massive dilution of their stock with the above rights offering
  2. another huge revenue warning

(courtesy zerohedge)

Deutsche Bank Plunges Into Red For 2017 After Dilution, Revenue Warning

After raising capital at a 35% discount over the weekend, Deutsche Bank shares are tumbling once again – back into the red for 2017 – after CEO John Cryan warned that revenue would be “broadly flat” in 2017. As Bloomberg reports,

Germany’s biggest bank has seen revenue falling or little changed from last year across most of its businesses. For the full year, the lender expects revenue to be “broadly flat,” it said in its annual report published Monday.


While an economic recovery in Europe, expectations for fiscal stimulus in the U.S. and rising interest rates should bolster the bank, “2017 will remain a year of change,” Cryan said in the report.



In a prospectus for the offering, also published Monday, the bank said “segmental revenues” through mid-March are “slightly lower” than in the comparable period last year. Revenue was flat in equities sales and trading, while debt sales and trading as well as corporate finance are up from a year earlier, though by a smaller margin than in the first two months. Revenue in the private wealth and commercial clients unit is flat in the first two months of the year, and global transaction banking declined.

And the “cautious” outlook is not appreciated by shareholders…

Deutsche Bank said earlier this month that the new phase of its overhaul will cause the loss of additional jobs, without specifying how many. That comes after an announcement in 2015 that it would eliminate about 9,000 jobs by the end of 2018 to cut costs.

“Our progress should become even more visible once we resolve outstanding litigation matters, modernize our technology and further strengthen our controls,” Cryan said in a letter to shareholders. “This will entail additional restructuring expenses.”

Judging by the stock’s recent collapse – there’s more work to be done.




The Dutch election did not change the tide; citizens are still anti migrant and are titlting more to far fight populsim than globalism

(courtesy Gorka/StrategicCulture Foundation)

Dutch Election Results Confirm ‘Far Right Populism’ Still On The Rise In Europe

Authored by Alex Gorka via The Strategic Culture Foundation,

Those who support the idea of globalism and strive for closer European integration believe the results of the Dutch election indicate the tide has been stemmed, with Eurosceptics and «populist» forces on the defensive. The buck stops here. This is the end of domino effect. The reshaping of Europe has been prevented. The pro-NATO, pro-EU establishment elites are to see glory days again.

Is it really so if you get to the bottom of it?

The future of Europe remains to be at stake, including the UK, Germany and France. Will the concept of United Europe exist in one form or another? Will Scotland stay in the United Kingdom? Will Germany and France distance themselves from the United States? Some of these questions could be answered sooner than expected.

This year may become a turning point with the votes to take place in Germany, France and, probably, Italy. In a month, France will have a new president and Germans will have a new parliament elected in September. The example of the Netherlands may have little influence on the votes.

Let’s look at the facts. Geert Wilders’ Party for Freedom made a substantial gain. It won 20 seats (of 150) according to the preliminary results, which is 5 seats more than in the previous election in 2012. The two governing parties got half as many seats as at the last election in 2012. The prime minister’s Party for Freedom and Democracy lost 8 seats and its coalition partner, the Labor Party (PvdA), lost 29 – an impressive defeat!

Actually, it’s a significant loss for those who ruled the country and a big gain (not big enough but still) for the right wing Eurosceptics led by Wilders. Many key points of the Party for Freedom’s program were «borrowed» by PM Mark Rutte’s People’s Party for Freedom and Democracy (VVD) and Christian Democrats. The popularity was raised due to the tough stance taken in the conflict with Turkey – something Wilders had been calling for. Actually, Prime Minister Rutte was riding to power on a wave of anti-migrant, anti-Islam sentiments.

The Sybrand Buma’s Christian Democratic Appeal (CDA) is all but certain to participate in the next governing coalition with 19 seats won (12, 5%) – an increase of 6 seats. The party has gained ground by adopting a tough line similar to Rutte’s on immigration, adding a focus on communal values and a touch of nationalism to tap voter concerns about Dutch identity. It has proposed introducing singing the national anthem in schools and mandatory community service. According to Sybrand Buma, Her Majesty Queen Máxima should renounce her Argentine citizenship (she was born in Buenos Aires). The CDA presence in government would ensure a conservative stamp on any coalition.

Media rarely mention the fact that another right wing anti-EU and anti-migrants party – the Forum for Democracy – took part in its first election to win 2 seats (1,8%) – not a bad start for a party created only in September 2016. It calls for restoring ties with Russia among other things.

The main result is opposite to what it appears to be at first glance. The outcome of the Dutch election conforms to the current trend – Euroscepticism is on the rise across Europe. The winning forces are often called populist but in reality they are anti-establishment movements which emerged as a result of voters being fed up with left or right windbags. People want them gone and the entire political landscape in Europe fundamentally changed.

Socialists have few chances in France and the chances of Angela Merkel becoming Chancellor again are dim enough. Martin Schultz is a serious rival to reckon with.

Newly founded or old anti-establishment parties continue to make gains. Perhaps not today, but they will come to power. In a couple of months Marine Le Pen may become President of France to radically reform European politics. Even if she loses, Le Pen will remain the most popular politician in the country who is able to win the presidential election in 2022. Artificial creations designed by experts for a particular task, like Emmanuel Macron, for instance, can’t stop it. Nothing can prevent the new wave of politicians from coming to power.

The Dutch election has not changed anything. It has failed to turn the tide. The EU continues to fall apart. The European integration will never be the same. More and more EU members challenge the existing pattern.

The March 16 vote in the Netherlands is far from being a harbinger of Eurosceptics’ movements fading away. Quite to the contrary, it has confirmed the trend – the Old Continent is going through changes. We’ll never have the EU we once knew. The process may temporarily slow down but it’s too late to stop it.


My goodness: a new plan.!! An EU bad bank which will buy up much of the 1 trillion in bad loans.  And the party who will end up holding the bag:  the taxpayer

(courtesy Don Quijones/WolfStreet)


EU Taxpayers Brace As Deepening Banking Crisis Means Euro-TARP Looms

Authored by Don Quijones via, 

If the ECB scales back stimulus, banks face even greater risk of collapse. But now there’s a new solution

Events are moving so fast in Europe these days, it’s almost impossible to keep up. While much of the attention is being hogged by political developments, including the election in the Netherlands, Reuters published a report warning that the European banking sector may face even higher bad loan risks if the ECB begins to scale back its monetary stimulus programs, something it has already begun, albeit extremely tentatively.

The total stock of non-performing loans (NPL) in the EU is estimated at over €1 trillion, or 5.4% of total loans, a ratio three times higher than in other major regions of the world.

On a country-by-country basis, things look even scarier. Currently 10 (out of 28) EU countries have an NPL ratio above 10% (orders of magnitude higher than what is generally considered safe). And among Eurozone countries, where the ECB’s monetary policies have direct impact, there are these NPL stalwarts:

  • Ireland: 15.8%
  • Italy: 16.6%
  • Portugal: 19.2%
  • Slovenia: 19.7%
  • Greece: 46.6%
  • Cyprus: 49%

That bears repeating: in Greece and Cyprus, two of the Eurozone’s most bailed out economies, virtually half of all the bank loans are toxic.

Then there’s Italy, whose €350 billion of NPLs account for roughly a third of Europe’s entire bad debt stock. Italy’s government and financial sector have spent the last year and a half failing spectacularly to come up with a solution to the problem. The two “bad bank” funds they created to help clean up the banks’ toxic balance sheets, Atlante I and Atlante II, are the financial equivalent of bringing a butter knife to a machete fight. So underfunded are they, they even struggled to hold aloft smaller, regional Italian banks like Veneto Banca and Popolare di Vicenza, which are now pleading for a bailout from Rome, which in turn is pleading for clemency from Brussels.

What little funds Atlante I and Atlante II have left are hemorrhaging value as the “assets” they’ve been used to buy up, invariably at prices that were way too high (often at over 40 cents on the euro), continue to deteriorate. The recent decision of Italy’s two biggest banks, Unicredit and Intesa Sao Paolo, to significantly write down their investment in Atlante is almost certain to discourage the private sector from pumping fresh funds into bailing out weaker banks.

Which means someone else must step in, and soon. And that someone is almost certain to be the European taxpayer.

In February ECB Vice President Vitor Constancio called for the creation of a whole new class of government-backed “bad banks” to help buy some of the €1 trillion of bad loans putrefying on bank balance sheets. Constancio’s idea bore a striking resemblance to a formal proposal put forward by the European Banking Authority (EBA) for the creation of a massive EU-wide bad bank that, in the words of EBA president Andrea Enria, would “make it much easier to achieve critical mass and to create a well functioning market for (impaired) assets.”

Here’s how it would work, according to Enria (emphasis added):

The banks would sell their non-performing loans to the asset management company at a price reflecting the real economic value of the loans, which is likely to be below the book value, but above the market price currently prevailing in illiquid markets. So the banks will likely have to take additional losses.


The asset manager would then have three years to sell those assets to private investors. There would be a guarantee from the member state of each bank transferring assets to the asset management company, underpinned by warrants on each bank’s equity. This would protect the asset management company from future losses if the final sale price is below the initial transfer price.

One of the biggest advantages of launching an EU-wide bad bank is that it would avoid the sort of public “resistance” that would occur if it was done at a national level, says Enria. Italian lenders would presumably be able to continuing pricing bad loans at or around 40 cents on the euro on average, even though their real value — i.e. the current value priced by the market — is often much lower. The difference between the market price, if any, and the price the banks end up receiving for their bad debt will be covered by Europe’s taxpayers.

If given the green light, the scheme would pave the way to the biggest one-off bail out of European banks in history. It would be Euro-TARP on angel dust, with even fewer checks and balances and much less likelihood of ever recovering taxpayer funds. According to a banker source cited by Reuters, while Germany has not yet endorsed the EBA plan, the EU documents describe the development of a secondary market for NPLs as a priority. According to Enria, the EBA hopes to finalize matters “at the European level” in the Spring.

The documents also include proposals for a wider “restructuring of banking sectors” as states address the NPLs problem. This “could lead to mergers among EU banks after they offload their bad loans,” a banking industry official said.

In other words, EU taxpayers would have to spend potentially hundreds of billions of euros saving yet more banks from the consequences of their own acts and bail out their bondholders and potentially their stockholders too, with funds desperately needed in other areas. Those banks, once saved and their balance sheets cleansed, would then be handed on a platter to much bigger banks. In return, taxpayers would end up with an even more concentrated, consolidated, interconnected financial system that is even more prone to abuse, corruption, and excess.

The ECB’s policy isn’t about creating inflation but about keeping a financial system and a currency union from collapsing upon each other. Read…  ECB Trapped in its Own “Doom Loop” as Inflation Surges


Theresa May now will officially trigger Article 50 on March 29.  The long arduous process begins

(courtesy zero hedge)

Theresa May Will Trigger Article 50 On March 29, Starting Brexit Process

It appears that the long-awaited Article 50 trigger, officially beginning the Brexit process, will take place next Wednesday, March 29, because moments ago a Theresa May spokesman confirmed a report in the UK’s CityAM, reporting that Article 50 will be triggered next Wednesday.


Some more details from Bloomberg:

  • U.K. envoy to European Union Tim Barrow informed European Council President Donald Tusk’s office of Brexit trigger date Monday, Prime Minister Theresa May’s spokesman James Slack tells reporters in London.
  • Slack says Britain will trigger Article 50 of the Lisbon Treaty, formally starting Brexit process, on March 29, via letter to EU
  • Slack: “After we trigger, the 27 will agree their guidelines for negotiations and the Commission’s negotiating mandate”
  • Says: “President Tusk has said he expects an initial response within 48 hours. We want negotiations to start promptly”

EU Council president Donald Tusk is now expected to respond formally within 48 hours although the detailed EU negotiating position is not expected to emerge until later in the spring.

David Davis, the UK’s Brexit secretary added that “The Government is clear in its aims: a deal that works for every nation and region of the UK and indeed for all of Europe – a new, positive partnership between the UK and our friends and allies in the European Union.”

As the FT adds, the pre-announcement of the timing of the Article 50 letter is partly aimed at preparing financial markets for the formal start of the Brexit process which will last at least two years.  Downing St has been anxious in recent months to counter the risk that major Brexit announcements are inevitably accompanied by falls in the value of the pound.

Meanwhile, cable has not reacted to the news, with the pound trading at a three-week high against the dollar at $1.2410 on Monday.



The bad news is already out:  so why did the Article 50 headlines this morning cause CABLE  (Pound/USA) to fall:

(courtesy zero hedge)

Cable Slides After Article 50 Headlines; Traders Ask “Why Sell Sterling Now?”

FX traders had a slightly delayed reaction to news that UK PM Theresa May will trigger Article 50 next Wednesday but Cable is now sliding on the headlines. However, with speculative positioning already at record lows, many are asking “why would a long-term trader sell the pound now?”

As Bloomberg’s Mark Cudmore notes, it’s a question worth asking, because it seems that the vast majority of potential catalysts are skewed to be positive ones.

A lot of bad news/sentiment is priced. So much so that sterling now struggles to weaken on negative news. The Bloomberg Pound index made its multi-year low in October. Since then, there’s been a series of “higher lows” -– in November, January and March. The gradual uptrend is clear.



A market that can no longer fall on bad news is ripe to rally significantly if good news transpires.


Scotland may be dominating British news outlets but it’s irrelevant for markets right now. Not only was independence safely rejected less than three years ago, but there are far too many other factors to influence U.K. assets in the interim few years until the next vote.


There’s more than enough uncertainty around Brexit to deal with first.


That’s the thing though — we know that well. It’s been the most anticipated “disaster” in financial market history. Everyone has written about all the problems the U.K. will face in the coming years. I don’t see how Brexit can surprise negatively from here?


Kristin Forbes’ recent dissent on monetary policy has flagged the fact that the next move for U.K. rates is higher. A shift may not be imminent but, when it comes, it will be supportive for sterling.


The economic data continues to massively outperform consensus expectations. Bloomberg’s U.K. economic surprise index has been resolutely in positive territory since before Brexit. When will the doom-mongers just admit they were wrong, rather than constantly revising their Armageddon dates? Even the structural current-account deficit is starting to narrow thanks to the currency weakness.

However, not everyone agrees that the bad news is all out. Goldman Sachs overnight noted thate have now unquestionably entered the ‘lull’ period of the month after a flurry of important G10 data releases and central bank meetings.

As the dust settles, short Sterling remains one of our favorite views. That is true both from a near-term tactical standpoint (where we target 0.90 on EUR/GBP in 3 months, from 0.87 currently) as well as on a longer, more structural horizon.

While the BoE meeting last week took a more hawkish tone, our short Sterling view has never been about monetary policy. We think the imminent activation of Article 50 will trigger difficult trade negotiations, which is not properly priced into the currency. Moreover, while global growth and positive data surprises have been picking up, as shown by our CAI and MAP indexes, data in the UK have gone the other way. Sterling therefore offers perhaps the best divergence trade in the G10, particularly in this otherwise quiet period.


Looking at this week’s CFTC Commitment of Traders report, we are not alone in this view. The data show GBP net shorts reached a new all-time high, exceeding $8 billion for the first time since the data began in 1999. FX markets are always preoccupied with positioning, so the natural question is whether short Sterling is simply too consensus to be profitable.


It is of course true that the build-up in speculative shorts raises the potential for a violent short squeeze. However, in the quiet data period ahead, that seems like less of a risk than normal, in no small part because Brexit-related uncertainty is unlikely to decline significantly anytime soon.



In addition, in the past, we have actually found that stretched short positioning is a momentum signal on average for GBP/$. Specifically, when our Sentiment Index – measured as the percent of the way between max short (0) and max long (100) positioning over the last three years – is under 10, we find that GBP/$ tends to fall by 1.0 percent and 2.4 percent over the next four and eight weeks (Exhibit 1).

Trade accordingly.



They are dropping like flies! Another senior Russian official has died of stab wounds while he faces embezzlement charges/  He was being held in prison awaiting trial…probably nothing…

(courtesy zero hedge)

Another Senior Russian Official Has Died

Since the day of Donald Trump’s election, high-ranking Russian officials have been dropping like flies and today’s reports that a top official of Russia’s space agency has been found dead brings the total to eight.

As we noted previously, six Russian diplomats have died in the last 3 months – all but one died on foreign soil. Some were shot, while other causes of death are unknown. Note that a few deaths have been labeled “heart attacks” or “brief illnesses.”

1. You probably remember Russia’s Ambassador to Turkey, Andrei Karlov — he was assassinated by a police officer at a photo exhibit in Ankara on December 19.


2. On the same day, another diplomat, Peter Polshikov, was shot dead in his Moscow apartment. The gun was found under the bathroom sink but the circumstances of the death were under investigation. Polshikov served as a senior figure in the Latin American department of the Foreign Ministry.


3. Russia’s Ambassador to the United Nations, Vitaly Churkin, died in New York this past week. Churkin was rushed to the hospital from his office at Russia’s UN mission. Initial reports said he suffered a heart attack, and the medical examiner is investigating the death, according to CBS.


4. Russia’s Ambassador to India, Alexander Kadakin, died after a “brief illness January 27, which The Hindu said he had been suffering from for a few weeks.


5. Russian Consul in Athens, Greece, Andrei Malanin, was found dead in his apartment January 9. A Greek police official said there was “no evidence of a break-in.” But Malanin lived on a heavily guarded street. The cause of death needed further investigation, per an AFP report. Malanin served during a time of easing relations between Greece and Russia when Greece was increasingly critiqued by the EU and NATO.


6. Ex-KGB chief Oleg Erovinkin, who was suspected of helping draft the Trump dossier, was found dead in the back of his car December 26, according to The Telegraph. Erovinkin also was an aide to former deputy prime minister Igor Sechin, who now heads up state-owned Rosneft.

If we go back further than 3 months…

7. On the morning of U.S. Election Day, Russian diplomat Sergei Krivov was found unconscious at the Russian Consulate in New York and died on the scene. Initial reports said Krivov fell from the roof and had blunt force injuries, but Russian officials said he died from a heart attack. BuzzFeed reports Krivov may have been a Consular Duty Commander, which would have put him in charge of preventing sabotage or espionage.


8. In November 2015, a senior adviser to Putin, Mikhail Lesin, who was also the founder of the media company RT, was found dead in a Washington hotel room according to the NYT. The Russian media said it was a “heart attack,” but the medical examiner said it was “blunt force injuries.”


9. If you go back a few months prior in September 2016, Russian President Vladimir Putin’s driver was killed too in a freak car accident while driving the Russian President’s official black BMW  to add to the insanity.

If you include these three additional deaths that’s a total of nine Russian officials that have died over the past 2 years… until today…

As AP reports, a top official of Russia’s space agency has been found dead in a prison where he was being held on charges of embezzlement.

A spokeswoman for Russia’s Investigative Committee, Yulia Ivanova, told the state news agency RIA Novosti that the 11 other people in Vladimir Evdokimov’s cell were being questioned.


Investigators found two stab wounds on Evdokimov’s body, but no determination had been made of whether they were self-inflicted.


Evdokimov, 56, was the executive director for quality control at Roscosmos, the country’s spaceflight and research agency.


He was jailed in December on charges of embezzling 200 million rubles ($3.1 million) from the MiG aerospace company.

So, while motive is unclear in all of these cases, that brings the total number of dead Russian officials in the past two years to ten. Probably nothing…



Israel threatens Syria that it will destroy it’s air defense systems if it continues to engage in military action. Israel fires on a convoy bringing weapons to Hezbolloh in Lebanon.

(courtesy zerohedge)

Israel Threatens To Destroy Syrian Air Defence Systems

Two days after Syria claimed it had shot down an Israel jet over its territory on Friday morning, an incident Israel denied even if it admitted violating Syria’s sovereign airspace by engaging in an air raid near Palmyra, the Israeli defense minister threatened to destroy Syrian air defenses after they shot (but allegedly did not down) at Israeli warplanes, which violated Syrian airspace and bombed targets on Syrian soil.

Next time, if the Syrian aerial defense apparatus acts against our planes, we will destroy it,” Avigdor Lieberman told Israeli Public Radio on Sunday, in a statement which seemed to lend credence to the Syrian contention that it had taken down an Israel jet.

Israeli minister threatens to destroy Syrian air defence systems

It was not exactly clear why Israel was so offended by Syria “acting against” its planes which were located above Syrian airspace at the time of shooting. In any case he warned that “we won’t hesitate. Israel’s security is above everything else; there will be no compromise.”

An Israeli F-15 fighter jet

The minister was referring to the previously reported morning raid of the Israeli Air Force, the latest of several reported over the past few years, in which Israel claimed it targeted weapons bound for the Lebanese militant movement Hezbollah. Israel says it has to protect itself from advanced weapons which the militants try to obtain from the Syrian government. Syria shot surface-to-air S-200 missiles at the Israeli planes as they were flying back from the night mission. As noted above, Damascus claims it shot down one of the planes, although Israel still denies.

The Israeli media said one of the Syrian missiles was intercepted by Israel’s Arrow air defense system. According to RT, it was the first time Israel officials have confirmed combat use of the advanced anti-missiles, which are originally meant to intercept heavy long-range ballistic missiles. The Israeli military is investigating whether the decision to fire Arrow interceptors against the Syrian anti-aircraft missiles was justified, according to Haaretz.

The former prime minister and defense minister, Ehud Barak, said Saturday that the involvement of the system forced Israel to acknowledge cross-border military activity. “It could be that with more thorough thought, it wasn’t worth firing,” Barak said at a community lecture in Be’er Sheva. “We have usually tended to reserve what would be called ‘room for denial’ for Syrian President [Bashar] Assad,” he added.

While Israeli acknowledgment of an intervention in Syria is rare, it is not unprecedented. Last April, Prime Minister Benjamin Netanyahu confirmed for the first time that an attack on dozens of Hezbollah targets in Syria was indeed conducted by Israeli warplanes, as speculated by the media.

And, perhaps to give Syria just the opportunity to “provoke” it, on Monday morning, according to several media reports Israel has again bombed a Hezbollah convoy in Syria. It was unclear as of publication time if Syria had retaliated.



Friday night:

Disagreements with the USA and the rest of the G20 over the future of global trade.  The USA wants protectionism and the others free trade.  They cannot agree on wording.

(courtesy zerohedge)



Row Breaks Out At G-20 Over Future Of Global Trade

One day after yesterday’s at times painfully uncomfortable first official meeting between Angela Merkel and Donald Trump, it will hardly come as a surprise that during today’s G-20 meeting in Baden Baden, Germany- the first for the Trump administration, whose delegation is led by Treasury Secretary Steven Mnuchin – where the dominant topic is trade, and specifically globalization vs protectionism, that a row would break out over how the post-Trump world will deal with trade.

At stake is the language in the official communique to be released later on Saturday and which is expected to serve as the blueprint for future trade relations, which pressured by Trump may be increasingly transformed from multi-lateral to bilateral.

As Bloomberg reports, at the heart of the disagreement are globalist (and mercantilist) powers such as Germany (and China) defending the existing rules-based system, on the other the U.S. is calling for a recognition that trade must be “fair” without however explicitly stating what that means. Chinese
Finance Minister Xiao Jie said in a Saturday statement that the G-20
should be “adamantly against” protectionism.  According to reports,
China has been the most insistent on a commitment to the current system
that the World Trade Organization represents, which is understandable: together with such exporting powerhouses as Germany and South Korea, China has the most to lose from a dramatic overhaul of the status quo.

Yet while many had expected difference to emerge, the degree of immediate animosity and disagreement caught most by surprise. According to Bloomberg, negotiations were bogged down on Saturday with the U.S. rejecting the latest German compromise on wording over trade. Meanwhile, an earlier German suggestion that accommodated some U.S. concerns was rejected by delegations including France, the U.K., Italy, Brazil and the European Union.

The standoff is over how to deal with trade pledges from previous G-20 meetings, such as a commitment to “resist all forms of protectionism,” Bloomberg’s sources reported. The surprisingly bitter impasse reflects the atmosphere the previous day at the White House, where U.S. President Donald Trump met German Chancellor Angela Merkel and repeated his complaints that his country has been treated “very, very unfairly” in trade arrangements.

Meanwhile, the French who are likewise facing a bitter presidential election and where the topic of protectionism is at the top of political issues, are desperate to avoid giving in to US demands to unwind multilateral trade as Marine Le Pen would promptly seize on the weakness and demand similar terms for France, ostensibly boosting her approval.

“It’s an administration, the fruit of American democracy, that needs to be respected, but also with a lot of resolve on the French position, which is shared by a lot, if not to say all the members of the G-20 except for this country,” French Finance Minister Michel Sapin told reporters on Friday. “We don’t want a rollback on what was said before by the G-20.

“We” don’t, but Trump does, and therein lies the rub.

Of course, if Trump is successful at overturning years of draft language in G-20 communiques, all those nations reliant on the status quo would be impacted. If Trump sees Germany, with whom the US has a $68 billion trade deficit…

… as having gotten the better of trading arrangements, then China (and South Korea, Taiwan, and many other smaller Asian nations) would also fall into the same category. Its newly found stance as the prime defender of the status quo reflects its economic gains under the rules-based system since it joined the WTO in 2001.

“China has been able to do well based on the multilateral system; it has been able to leverage the gray areas,” said Dominico Lombardi, director of global economy at the Centre for International Governance Innovation in Waterloo, Ontario. “The Trump administration is for a level trading field. In the case of China, there are complaints of subsidies so ‘fair’ trade is what Washington wants to push for.”

* * *

Reflecting just how important the trade relationship between China and the US is, Bloomberg adds that Mnuchin and Xiao held a bilateral meeting in Baden-Baden on Saturday, a G-20 official said. While Trump started his presidency by shooting down regional trade deals and floating measures such as a border tax, his Chinese counterpart Xi Jinping laid out his position at the World Economic Forum in Davos this year when he said protectionism was like “locking oneself in a dark room.”  That his sentiment is shared by many in Baden-Baden was shown when delegations knocked back a proposal by Germany to compromise by referring to “fairness, openness and inclusiveness” in trade: terms demanded by Trump and whose inclusion would suggest admission of creeping change to the status quo.

“We’ve been having these G-20 summits for quite some time and there is an appropriate wording there” on trade, Turkish Deputy Prime Minister Mehmet Simsek said in Bloomberg Television interview on Saturday. “Openness to trade is key. There is no evidence that trade is destroying jobs.”

Yet while most nations remain adamant in not conceding to any changes to the G-20 draft, Germany is – perhaps surprisingly – the nation most willing to concedde and accommodate some U.S. concerns to keep it involved in the multilateral process, rather than to isolate and antagonize the delegation, giving the Trump administration an excuse to turn its back.

That approach, of course, assumes that Trump would be content with a modest diplomatic concession instead of a shortgun transformation to global trade overnight, which is dubious at best. For his part, Mnuchin stressed that trade is only fair if it’s balanced, and although he argued that the U.S. is unfairly treated, he didn’t elaborate on what that meant in detail, a G-20 official told Bloomberg.

Finance ministers and central bankers aren’t usually the key officials for trade talks, but their statements normally reflect a consensus. This time, if they can’t agree, the topic could be pushed to a leaders’ summit in July, France’s Sapin said.

Needless to say, such an acrimonous end to the weekend’s summit would likely result in a surge in FX volatility when markets open for trading late on Sunday, reflecting the new state of global trade flux, in which the future of the US Dollar is completely unknown, and reflecting the emerging chaos over the future parameters of trade.

Which is why in the summit’s last hours, delegates are making a last ditch scramble to reach an agreement before they head out of the German spa town. Japan, whose Prime Minister Shinzo Abe has been keen to foster relations with the Trump administration, has joined Merkel in pushing for a compromise language, and isn’t opposed to mentioning fairness.  Likewise, Canada’s Finance Minister William Morneau referred to “fair trade” in a Frankfurt speech one day before the G-20. Canada, like Japan, may be tempted to avoid conflict as it prepares for potential NAFTA talks, while also carrying on exploratory talks with China and pushing for ratification of its EU trade deal. That said, Morneau is pushing for pro-trade language in the final communique, a Canadian government official said on Friday, adding that the inclusion of such a reference is more important than the precise wording.

The nations who will be most vocal in their opposition to inclusion of the “fair” language are those whose net trde surplus with the US is measured in double digit % of GDP terms as they stand to lose the most.

* * *

And speaking of Sunday’s FX open, Bloomberg also notes that among the other language in the communique under review is a pledge to refrain from currency manipulation, which however is expected to remain unchanged from last year. Little time is being devoted to global banking regulations, with major developments not expected. In a move that is set to infuriate environmentalists, the whole section on climate change is set to be dropped.

In any case, the focus remains trade: “The U.S. has been pushing a more protectionist agenda –  the high uncertainty at the moment is what that will exactly look like,” said Torsten Slok, chief international economist at Deutsche Bank in New York. “It makes sense that in this case the Chinese, who benefit from a rules-based trade system, are trying to preserve it. We just don’t have any firm ideas about what the alternative will be.”



OPEC tries to jawbone oil higher but are having great difficulty

(courtesy zero hedge)


OPEC Jawbones Spike In Crude As Hedgies Dump Longs At Fastest Pace On Record

The bounce off a $47 handle on Friday in WTI was fading fast again this morning…

following news that money managers cut their bullish Brent and WTI oil bets by 154,871 to a net-long position of 699,209 contracts – the biggest decline on record.

While the drop was large, net longs remain extreme suggesting the long squeeze has more to go…

Which of course OPEC had to try and jawbone away…


And sure enough…


We wonder how long this will last?



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





Early THIS MONDAY morning in Europe, the Euro ROSE by 29 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0756; 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 UP13.36 POINTS OR 0.41%     / Hang Sang  CLOSED UP 192.06 POINTS OR 0.79% /AUSTRALIA  CLOSED DOWN 0.45%  / EUROPEAN BOURSES ALL IN THE RED 

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

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

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

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

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


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


Gold very early morning trading: $1231.60


Early MONDAY morning USA 10 year bond yield: 2.5060% !!! PAR IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.122, UP 1 IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 100.22 DOWN 10 CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING


And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 4.24%  DOWN 6  in basis point yield from FRIDAY 

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

SPANISH 10 YR BOND YIELD: 1.858%  DOWN 3 IN basis point yield from FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.368 PAR POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 51 points HIGHER than Spain.





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

Euro/USA 1.0742 UP .0015 (Euro UP 15 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.64 DOWN: 0.092(Yen UP 9 basis points/ 

Great Britain/USA 1.2342 DOWN 0.0047( POUND DOWN 47 basis points)

USA/Canada 1.3359 UP 0.0042(Canadian dollar DOWN  42 basis points AS OIL FELL TO $48.37


This afternoon, the Euro was UP by 15 basis points to trade at 1.0742


The POUND FELL BY 47  basis points, trading at 1.2342/

The Canadian dollar FELL by 47 basis points to 1.3359,  WITH WTI OIL FALLING TO :  $48.39

The USA/Yuan closed at 6.9049/
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 FRIDAY at 2.475% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.092 DOWN 1  in basis points on the day /

Your closing USA dollar index, 100.28 DOWN 4  CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 9.01 OR 0.12% 
German Dax :CLOSED DOWN 30.30 POINTS OR 0.25%
Paris Cac  CLOSED DOWN 6.65 OR 0.13%
Italian MIB: CLOSED DOWN  70.40 POINTS OR 0.35%

The Dow closed DOWN 8.76 OR 0.04%

NASDAQ WAS closed UP 0.53 POINTS OR 0.01%  4.00 PM EST
WTI Oil price;  48.83 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: $51.62


USA 30 YR BOND YIELD: 3.077%



USA DOLLAR INDEX: 100.32  UP 0  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2358 : DOWN .0032  OR 32 BASIS POINTS.

Canadian dollar: 1.3351  UP .0033

German 10 yr bond yield at 5 pm: +.436%


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


Bank Stocks Stumble To 1-Month Lows As Yield Curve Slumps Post-Fed

Not sure why but this seemed appropriate after listening to the drivel from Washington (and Fed speakers) all day…


Bonds and Bullion the big winners post-Fed…


There were 3 notable legs lower in stocks today… The catalysts seemed to be


With Evans comments inferring whatever gains Trump gets will be offset by Fed hikes. Of course, then VIX was clubbed like a baby seal to get The Dow green but once the stops were run, it was over…


But while VIX was slammed, SKEW hit a record high!!


Nasdaq manage to scrape green but everything else was red…


Retail Stocks suffered their biggest drop since Feb today as “the next (original) big short“, i.e., CMBX, shows that recent negative trends are accelerating to the downside.


High Yield bonds slipped lower again – following avery similar pattern to the election bounce off the 200DMA..


With Japan closed, overnight liquidity was thin in Treasuries but once the US woke up, bonds were bid…


Treasury yields have done nothing but fall since The Fed hiked…


Notably, the yield curve has flattened dramatically in the week since The Fed hiked…


And that is (for once) weighing on bank stocks…now at one-month lows


Of course – this whole move has not been about the yield curve – no matter what the mainstream media want to tell you


The USD Index drifted lower in a very narrow range…


Very quite day in FX land though with Cable the biggest mover (dropping after May saying Article 50 dropping next week)


Crude prices dropped once again but RBOB bounced to one-week highs…

“The reopening of the Libyan ports is the reason for today’s drop and the U.S. rig count doesn’t help,” says Bob Yawger, director of futures division at Mizuho Securities USA. “The drop in net-length is a signal from speculators that the market is vulnerable”“

It looks like someone is trying to jawbone the market,” says Gene McGillian, manager of market research for Tradition Energy in Stamford, Connecticut “The fundamental picture remains weak, with massive inventories and rising U.S. production”

Gold held on to gains on the day to March highs as Bitcoin suffered further after “fork” discussions raise more concerns…


Finally there’s this…

And this.,..



OH!OH! The markets are negatively to reports that Fed President Evans warns of rising uncertainty and that if Trump gets his fiscal stimulus they will need to raise rates faster.  Not what the market wanted to hear:

(courtesy zero hedge)


Stocks Slump Into Red After Fed’s Evans Warns Of Rising Uncertainty

We expected a hawkish tilt to the Fed’s speakers this week – in confusing opposition to Yellen’s dovish commentary – and after Harker’s earlier comments, it appears Fed’s Evans comments that he “sees more upside possibility in uncertainty” facing The Fed, has sparked a wave of selling in stocks…


And Evans offered this more hawkish bias too…

“This is a challenging time period to all of a sudden have a big injection of positive fiscal policy expansion because we are pretty close to full employment. We might be at full employment,”

In other words, any Trump success (in a fiscal boost) will be met with more rate hikes.

That’s not what the market wanted to hear…


This worried perspective follows Harker’s earlier hawkishness:


Bonds don’t seem to care…

A must read..David Stockman

Two major points here:

  1. If the uSA wants to raise rates so that the 1o yr bond rate rises to 3.0% by 2019 then a massive amount of excess bank reserves must be drained which will cause huge harm to the economy.’
  2. the debt ceiling crisis is upon as as both sides of the House and Senate will not agree on anything!

(courtesy David Stockman/Daily Reckoning)


More Proof of Janet Yellen’s Idiocy

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


During the last 129 months, the Fed has held 86 meetings. On 83 of those occasions it either cut rates or left them unchanged.

So you can perhaps understand why Wednesday’s completely expected (for the last three weeks!) 25 bips left the day traders nonplussed. The Dow rallied over 100 points that day.

Traders understandably believe that this monetary farce can continue indefinitely, and that our Keynesian school marm’s post-meeting presser was evidence that the Fed is still their friend.

No it isn’t!

Janet Yellen’s sing-song gibberish was the equivalent of a monetary DEFCON 1, alerting all except the most addicted Kool-Aid drinkers to get out of the casino.

Our monetary politburo has expanded its balance sheet by a lunatic 22X during the last three decades and in the process has systematically falsified financial asset prices and birthed a mutant debt-fueled of simulacrum of prosperity.

But once it begins to withdraw substantial amounts of cash from the canyons of Wall Street as per its newly reaffirmed “normalization” policy, the whole house of cards is destined to collapse.

There will be a stock market implosion soon, and that will in turn generate panic in the C-suites as the value of stock options vanish. Like in the fall of 2008 — except on an even more sweeping and long-lasting scale — corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street.

But there is nothing left to brake the casino’s fall.

If the money market rate conforms to the Fed’s latest command and settles at 88 basis points, it is still effectively at the zero bound. Our monetary politburo is thus still out of dry powder — except for the nuclear option of QE4, which Yellen herself made quite clear would never happen until after the next recession is already underway.

Yet by then it will be too late — way too late. That’s because the market is priced as if the business cycle has been outlawed and as if the feckless band of Keynesian pretenders who have seized control of financial markets have ushered in the Nirvana of permanent full-employment. World without end.

Needless to say, they haven’t because they haven’t repealed the law of supply and demand. That is, if the Fed plans to keep raising until rates until they reach 3.0% by 2019, it will have to suck massive amounts of cash out of the financial markets.

So doing, it will drive long-term yields substantially higher and thereby obliterate the ultra-low cap rate delusion on which the entire regime of Bubble Finance is based.

In fact, in a blathering response at her presser about the pace by which the Fed intends to shrink its bloated $4.4 trillion balance sheet, Yellen proved she is clueless about the financial firestorm our rogue central bank is about to unleash.

She claimed that the Fed could implement 3-4 money market rate increases a year, while deferring the shrinkage of its balance sheet into the indefinite future.

But that it most assuredly cannot do.

With a staggering overhang of $2.1 trillion of excess reserves in the financial system, even our vaunted monetary politburo cannot command the tides to recede. If it wants the money rate to rise on its appointed path through 2019, it must drain loads of cash from Wall Street.

At the same time, the other event from Wednesday — the freezing in of the Federal debt ceiling at $19.9 trillion will means that the cash drain will soon intensify.

That’s because the U.S. Treasury has blown a massive wad of cash in order to pay its bills during the last few months, but will soon be back into the market borrowing hand-over-fist. That is, draining cash from the dealer market as it floods Wall Street with new bills, notes and bonds.

At the peak level of its cash hoard on October 24, the U.S. Treasury was sitting on $482 billion of cash.

But as of Wednesday, the Treasury’s cash balance stood at just $77 billion, meaning it burned through $305 billion of cash in just 51 calendar days since the inauguration, and nearly $360 billion since the October 24 peak.

But now that the debt ceiling is again frozen into place, an explosive political crisis is coming soon.

There is simply no pathway to a Congressional majority to raise it until Washington reaches the brink of political crisis and has gone beyond.

The prolonged and turbulent debt ceiling crisis that is coming down the pike is surely not “priced-in.” As I have said, the robo-machines can read headlines, but they can’t read the Washington tea leaves.

The fact is, what is impending is nothing like the 2011 crisis when Obama’s Keynesian advisors scared the wits out of him about a debt rating downgrade, and the GOP backbenches were set-up for a patented betrayal by House Speaker “Lawnchair Johnny” Boehner.

This time there will be no timely compromise.

That’s because the Deep State and its Democratic shills are attempting to re-litigate the election, while the Donald has declared war on them in turn — compounded by his aggressive actions on the immigrant ban, deportation of illegals and the erection of provocative controls and walls at the Mexican border.

The fact is, as a political matter, Hispania is the 51st state, and the channel through which the Democrats hang on to power. They will not support a debt-ceiling increase unless Trump throws in the towel on Obamacare and his anti-immigrant dragnet.

Yet if he folds on those core issues, he will incite a massive revolt in the GOP rank and file, which would make a majority for a debt ceiling increase even more problematic.

Besides, the temporary expedients and accounting gimmicks which the Treasury will now began to roll-out to temporarily defer the day of reckoning actually make no difference where it counts.

Last year during the March through May period, in fact, net debt rose by $96 billion, and there is every reason to believe that this year the shortfall will be even higher.

Accordingly, the current meager cash balance at the Treasury will not even last to Memorial Day.

After that, Uncle Sam will be back on Wall Street borrowing cash hand-over-fist — even as the Fed continues destocking its hoard of government debt through the back door of the repo market.

So what commenced this week and what will remain into the indefinite future is that Washington will be draining massive amounts of cash out of financial markets that have been suckling on the teat of government “stimulus” for most of the past three decades.

Does the school marm running the Wall Street casinos banking window see any of this double whammy coming?

Au contraire.

Again Wednesday she professed to see no bubbles anywhere, while floundering incoherently when asked about the timing of the Fed’s belated normalization campaign. A questioner wondered why the Fed is now raising rates just as the U.S. economy shows signs of gathering weakness and the global economy — centered in China and its supply chain — lurches forward in a slow-motion train wreck.

Anyone buying stock based on confidence that the Fed has their back notwithstanding Wednesday’s action surely deserves the pounding just ahead. What Yellen had to say doesn’t even reach the status of babbling; it was flaming incoherence:

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.

So when faced with actual facts about declining real wages, collapsing Q1 GDP estimates, disappointing retail sales and a wild and woolly fiscal process ahead, the Fed chairman defended the third rate hike in 11 years by saying that the “data is noisy.”

What isn’t noisy is the data on the stock market’s bubble of a lifetime.

When it finally pops Yellen and her posse of Keynesian money printers will be incoherent, speechless and finished.

And that pop could come awfully soon.


David Stockman
for The Daily Reckoning





Trump warns Germany that it owes vast sums of money to the USA because Germany has not committed to spending 2% of her GDP on defense.  Trump is correct on his figures

(courtesy zerohedge)

Trump Warns Germany “Owes Vast Sums To US… Must Be Paid For Defense”

Amid #NoHandshakeGate and the “we have something in common” moment, yesterday’s meeting between President Trump and German Chancellor Merkel was at best cordial, judging by the G-20 discussions, and this latest tweet from Trump…

Despite what you have heard from the FAKE NEWS, I had a GREAT meeting with German Chancellor Angela Merkel. Nevertheless, Germany owes…..

…vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!

Of course this is not the first time he has pointed this out… NATO, he said, “has problems.”

“[NATO] is obsolete, first because it was designed many, many years ago,” Bild quoted Trump as saying about the trans-Atlantic military alliance. “Secondly, countries aren’t paying what they should” and NATO “didn’t deal with terrorism.”


While those comments expanded on doubts Trump raised about the North Atlantic Treaty Organization during his campaign, he reserved some of his most dismissive remarks for the EU and Merkel, whose open-border refugee policy he called a “catastrophic mistake.”

FACT CHECK: Trump is 100% CorrectGermany has been under-funding its defense budget for years… NATO’s 28-member countries committed in 2014 to spending 2 percent of their gross domestic product on defense within a decade. But only the U.S. and four other members of the post-World War II military coalition are meeting the standard, Pence said.

Failure to meet the commitment, he said, “erodes the very foundation of our alliance.”

“Let me be clear on this point: The president of the United States expects our allies to keep their word, to fulfill this commitment and, for most, that means the time has come to do more,” Pence said.

More awkward looks to come…




Germany is angry at  Trump’s claims that it owes vast sums to NATO and the USA. However it is true that Germany only spends 1.2% of her GDP on defense

(courtesy zerohedge)


Germany Slams Trump’s Claim That It Owes “Vast Sums” To NATO And The U.S.

The pleasantries, lack of handshake between Trump and Merkel notwithstanding, are officially over.

One day after Trump returned to his favorite medium to slam Germany for abusing NATO’s funding scheme, and US defense spending generosity, accusing Germany of owing “vast sums” of money to both NATO and the US, Germany has struck back. As a reminder, this is what Trump tweeted on Saturday morning:

Despite what you have heard from the FAKE NEWS, I had a GREAT meeting with German Chancellor Angela Merkel. Nevertheless, Germany owes vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!

That in turn, was followed on Sunday morning by a statement by German Defense Minister Ursula von der Leyen in which she responded to Trump, rejecting the US president’s claim: “There is no debit account at NATO,” von der Leyen said in a statement, adding that it was wrong to link the alliance’s target for members to spend 2 percent of their economic output on defense by 2024 solely to NATO.

German Defense minister Ursula von der Leyen

“Defense spending also goes into UN peacekeeping missions, into our European missions and into our contribution to the fight against IS terrorism,” von der Leyen said. The defense minister added that everyone wanted the burden to be shared fairly and for that to happen it was necessary to have a “modern security concept” that included a modern NATO but also a European defense union and investment in the United Nations.

Before taking office, Trump suggested that the U.S. might not come to the defense of allies who didn’t meet the 2 percent spending goal, and said the coalition doesn’t always best serve American interests. But U.S. officials have publicly praised the alliance since Trump took office, and Merkel is among European leaders who have outlined steps to boost defense spending to the target level.

To be sure, Trump wasn’t the first U.S. leader to complain that most NATO nations, including Germany, weren’t meeting the alliance’s goal that members spend 2 percent of their GDP on defense. Germany spends about 1.2% currently.

In fact, none other than President Barack Obama in 2016 said in an interview with The Atlantic about his foreign policy doctrine that “free riders aggravate me.” Sigmar Gabriel, Germany’s foreign minister, said a few weeks ago said that meeting the 2 percent goal is “unrealistic,” although that’s a much lower percentage than the U.S. spends on defense.

The exchange of barbs took place shortly after Friday’s visit by Merkel, postponed from earlier in the week by a snowstorm, which was a day of tense cordiality and sometimes awkward body language. Trump was unresponsive when Merkel leaned in for a handshake in the Oval Office at the request of photographers. There were few public attempts at the jocularity leaders often use to leaven such encounters, except for a barbed reference Trump made that they had “in common, perhaps” the experience of surveillance by U.S. intelligence.

As Bloomberg adds, the visit was a test of Trump’s foreign policy vision and represented Trump’s first face-to-face talks with a veteran German leader whom he frequently maligned on the campaign trail, and whose free-trade, open-border politics stand in marked contrast to Trump’s nationalistic rhetoric. “He’s been president less than two months; she has been chancellor more than 10 years,” said Richard Haass, president of the Council on Foreign Relations. “She has all this experience. She’s the most important leader in Europe. Some would say she’s the most important leader in the world right now.”

Trump was infuriated at a German reporter’s question about his accusations that Obama had placed him under surveillance before jokingly referning a disclosure that emerged as a result of the Snowden revelations that president Obama was intercepting Merkel’s mobile phone communications. Turning to Merkel, he joked, “At least we both have something in common, perhaps.”

Merkel didn’t smile.

Merkel has been looking to Trump to ease concerns within Europe that the U.S. could abandon efforts to pressure Moscow into changing course. So far it remains unclear just what Trump’s latest diplomatic track is vis-a-vis the Kremlin following a media barrage that his aides have had undisclosed relations with Russia. This week there is a hearing on Russian “hacking” of the US elections, where Trump’s ties to Moscow will be a prominent fixture of discussion.



G20 results:  Trump wins and the G20 drop the “anti protectionist, free trde and climate change funding committment

(courtesy zero hedge)

Trump Wins: G-20 Drops ‘Anti-Protectionist, Free-Trade, & Climate-Change Funding’ Commitment

After delays and hours of discussions amid tensions over ‘trade’ comments between the United States and the rest of The G-20, it appears President Trump has ‘won’. While China was “adamantly against” protectionism, the finance ministers end talks without renewing their long-standing commitment to free trade and rejection of protectionism after US opposition.

The world’s financial leaders are unlikely to endorse free trade and reject protectionism in their communique on Saturday because they have been unable to find a wording that would suit a more protectionist United States, G20 officials said.

This would break with a decade-old tradition among the finance ministers and central bankers of the world’s 20 top economies (G20), who over the years have repeatedly rejected protectionism and endorsed free trade.

But the new administration in the United States is considering trade measures to curb imports with a border tax and would not agree to repeat the formulations used by previous G20 communiques, clashing with China and Europe, the officials said.

“Unless there is a last minute miracle, there is no agreement on trade,” one official, who declined to be named, told Reuters. 

“This is not a good outcome of the meeting,” a G20 delegate quoted Bundesbank President Jens Weidmann as saying.

In a partial face-saving move, the communique may contain a reference to the importance of trade for the economy.

Reuters also points out another potential win for Trump as the communique will also drop a reference, used by the G20 last year, on the readiness to finance climate change as agreed in Paris in 2015 because of opposition from the United States and Saudi Arabia.

Trump has called global warming a “hoax” concocted by China to hurt U.S. industry and vowed to scrap the Paris climate accord aimed at curbing greenhouse gas emissions.


Trump’s administration on Thursday proposed a 31 percent cut to the Environmental Protection Agency’s budget as the White House seeks to eliminate climate change programs and trim initiatives to protect air and water quality.


Asked about climate change funding, Mick Mulvaney, Trump’s budget director, said on Thursday, “We consider that to be a waste of money.”

The G20 do agree, however, to show continuity in their foreign exchange policies, using phrases from the past on foreign exchange markets.

As we noted earlier, needless to say, such an acrimonous end to the weekend’s summit would likely result in a surge in FX volatility when markets open for trading late on Sunday, reflecting the new state of global trade flux, in which the future of the US Dollar is completely unknown, and reflecting the emerging chaos over the future parameters of trade



Trump is now beginning to roll back some of Obama’s protections for students who have been hit with agencies trying to collect on defaulted loans


(courtesy zero hedge)

Trump Administration Rolls Back Obama Protections On Student Loans

Just days after reports emerged that student loan defaults are soaring, which is undoubtedly due to some combination of, among other things, poor job prospects for the millions of snowflakes who graduate each year with their $200,000 educations in anthropology and the moral hazard created by liberal politicians constantly calling for student debts to be ‘forgiven’ (a.k.a. forcefully jammed down the throats of taxpayers), the Trump administration has revoked rules put in place by Obama that barred student debt collectors from charging penalty fees on past-due loans.

Originating from the Department of Justice, the “Dear Colleague” letter (full letter included at end of post) says that Obama’s unilateral rules implemented in 2015 could have “benefited from public input”…but what good is being King if you can’t unilaterally force new laws on the masses? Per the Washington Post:

The Education Department is ordering guarantee agencies that collect on defaulted debt to disregard a memo former President Barack Obama’s administration issued on the old bank-based federal lending program, known as the Federal Family Education Loan (FFEL) Program. That memo forbid the agencies from charging fees for up to 16 percent of the principal and accrued interest owed on the loans, if the borrower entered the government’s loan rehabilitation program within 60 days of default.


The Obama administration issued the memo after a circuit court of appeals asked for guidance in a case against United Student Aid Funds (USA Funds) challenging the assessment of collection costs. Bryana Bible took the company to court after being charged $4,547 in collection costs on a loan she defaulted on in 2012. Though she had signed a “rehabilitation agreement” with USA Funds to set a reduced payment schedule to resolve her debt, the company assessed the fees.


Education officials sided with Bible, prompting USA Funds to sue the department in 2015. Earlier this year, the company agreed to pay $23 million to settle a class-action lawsuit born out of the Bible case, though it did not admit any wrongdoing.



Of course, it didn’t take long for Elizabeth Warren to draft a letter to the Education Department urging them to not take away ‘freebies’ from America’s entitled snowflakes.

On Monday, Sen. Elizabeth Warren (D-Mass.) and Rep. Suzanne Bonamici (D-Ore.) sent a letter urging the Education Department to uphold the Obama administration’s guidance on the collection fees, which they said “results in an unnecessary financial burden on vulnerable borrowers.”


“Congress gave borrowers in default on their federal student loans the one-time opportunity to rehabilitate their loans out of default and re-enter repayment,” the letter said. “It is inconsistent with the goal of rehabilitation to return borrowers to repayment with such large fees added.”

Of course, these new rules came just days after new data published by the U.S. Department of Education revealed that $137 billion of federal student loans were in default as of December 2016, a 14% year-over-year increase.  Key findings from the Consumer Federation of America:

Average amount owed is $30,650 per federal student loan borrower. Average amount owed per borrower continues to tick up, rising 17% since the end of 2013, when borrowers owed on average of $26,300.


$137 billion in default. For federal loans originated by financial institutions (FFEL) and the US Department of Education (Direct), a total of $137.4 billion in balances were in default, a 14% increase from 2015. This cumulative level of defaulted balances includes loans which defaulted in previous years. Defaulting on a federal student loan comes with severe consequences. Borrowers can face seizure of their tax refund, garnishment of their wages, and an inability to pass employment verification checks.


1 million Direct Loan defaults in 2016. In 2016, 1.1 million Federal Direct Loan borrowers defaulted. Federal law typically defines a federal student loan default as being 270 days past due. Borrowers defaulting for the first time slightly decreased compared to 2015, though borrowers re-defaulting slightly increased compared to 2015.

Seems the cost of financing those spring break trips to Cancun just got a little costlier…sorry, snowflakes.



The Intelligence Chair  states on Sunday there is no collusion between Trump and Russia.  However the Chair does state that the only crime is the leak of the transcript of private citizen Flynn talking to the Russian ambassador

(courtesy zero hedge)


Intel Chair: “No Collusion Between Trump and Russia… Leak Is The Only Crime”

Just as was predicted, based on the expectations management being undertaken by high-ranking Democrats, House Intelligence Committee Chairman Devin Nunes confirmed on Sunday that he’s seen no evidence of collusion between President Trump’s campaign and Russia.


As The Hill reports, Nunes was asked during an interview on “Fox News Sunday” if he has seen any evidence of any collusion between “Trump world” and Russia to swing the 2016 presidential election.

I’ll give you a very simple answer: ‘no,’ ” Nunes said. “Up to speed on everything I have up to this morning. No evidence of collusion.”

However, Nunes notes that the probe did discover one crime during the probe – related to the leaking of former Trump aide Michael Flynn’s name and transcript…

“The one crime we know that’s been committed is that one: the leaking of someone’s name …,”


“That’s what we’re trying to get to the bottom of: were there any other names that were unmasked, leaked and leaked out?”

And Rand Paul is demanding that whoever leaked transcript of former NSA Michael Flynn’s contacts with Russian ambassador should “go to jail”


Glenn Greenwald sums up the farce well, given the way these Russia conspiracies have drowned out other critical issues being virtually ignored under the Trump presidency, it’s vital that everything be done now to make clear what is based in evidence and what is based in partisan delusions. And most of what the Democratic base has been fed for the last six months by their unhinged stable of media, online, and party leaders has decisively fallen into the latter category, as even their own officials are now desperately trying to warn.


Paul Ryan reveals the latest changes to the Republican Health care but it looks like it does not have enough votes as 41 Republicans are against it.  Not only that but some some Republicans in the Senate are against it

(courtesy zero hedge)

Paul Ryan Reveals Latest Changes To Republican Healthcare Bill

As first discussed on Friday, in order to overcome vocal objections to Obamacare repeal by conservative republicans, the White House won the support of the Republican Study Committee members by agreeing to give states the option to impose work requirements on Medicaid recipients and the option to block grant Medicaid instead of the cap system in the bill.  Today, during the Sunday morning TV circuit, Paul Ryan elaborated further that House Republicans are working on additional changes to the Obamcare repeal bill which seek to provide more generous tax credits for older Americans, while confirming the addition of the work requirement for the Medicaid program for the poor.

Speaking on Fox News Sunday, Paul Ryan said Republican leaders still plan to bring the healthcare bill to a vote on the House of Representatives floor on Thursday, adding that leaders were working to address concerns that had been raised by rank-and-file Republicans to the legislation.  

“We think we should be offering even more assistance than the bill currently does,” for lower-income people age 50 to 64, Ryan said of the tax credits for health insurance that are proposed in the legislation, one week after the CBO found it would cause higher premiums for people in their 50s and 60s. Ryan also said Republicans are working on changes that would allow federal block grants to states for Medicaid.

Coming into the weekend, Republicans remained deeply divided over the shape of Obamacare repeal, President Trump’s first major legislative initiative which aims to fulfill his core campaign pledge to eliminate Obama’s Affordable Care Act. As noted last week, Trump has been “wooing” lawmakers to vote for the bill, Reuters reported. He won the backing of a dozen conservative lawmakers on Friday after an Oval Office meeting in which the president endorsed a work requirement and block-grant option for Medicaid.

Striking an optimistic tone, the Wisconsin Republican said “we feel very good where we are,” adding “we’re still having conversations with our members. We’re making fine-tuning improvements to the bill to reflect people’s concerns, to reflect people’s improvements.”

Ryan said he’s also impressed with how President Trump is helping the GOP to “close this bill.” “We feel like we’re on track,” Ryan said, “and we’re right where we want to be.”

However, holdouts remains.

Even as Ryan said he felt “very good” about the health bill’s prospects in the House, a leading conservative lawmaker told the C-Span “Newsmakers” program that there were currently 40 Republican “no” votes in the House. While Republicans hold a majority in the chamber, they cannot afford to have more than 21 defections for the measure to pass. Representative Mark Meadows, the chairman of the hardline conservative House Freedom Caucus, said the bill would “absolutely not” pass the way it is now.

Meadows, a North Carolina Republican, also said the changes being considered for the Medicaid program would not go far enough, if they left it up to states to decide whether to put in place a work requirement.


An optional work requirement for Medicaid would be “a step backwards, not a step forwards,” Meadows said in an appearance on C-Span’s “Newsmakers.”

Furthermore, even if the healthcare bill were to pass the House, it also would face significant challenges in the Senate. There, Senator Tom Cotton, a conservative Arkansas Republican who has been a critic of the legislation, said that the problem with the legislation was that it would not reduce premiums for people on the private insurance market. Lawmakers need to slow down and solve this problem, he said. “It’s fixable, but it’s going to take a lot of work,” Cotton said on CNN’s “State of the Union.”

Elsewhere, Senator Rand Paul on Sunday said he does not believe proposed Republican healthcare legislation will pass through Congress. “I don’t believe so. I think there’s enough conservatives that do not want ‘ObamaCare lite,’ ” Paul said on ABC’s “This Week.” Paul during the interview stressed a clean repeal of ObamaCare. “None of us ran on this plan. We ran on repealing ObamaCare because it doesn’t work,” Paul told ABC’s “This Week.”

Quoted by The Hill, Paul has dubbed the new GOP plan, released earlier this month by House Republicans, “ObamaCare lite,” and has vowed to vote against the measures once they reach the Senate.  “I was elected in 2010 right after it came into place, to repeal it,” Paul said of former President Barack Obama’s signature healthcare legislation.

In addition to conservatives, moderate Republicans have also expressed concerns about the bill, and their worries are often not the same as conservatives’. Speaking on NBC’s “Meet the Press,” Republican Senator Susan Collins of Maine said she was concerned about the impact of the proposal on older Americans. She also worried the bill would shift Medicaid costs to states — something critics say a block-grant approach would only make worse.

Collins said coverage issues must also be dealt with, citing a report from the Congressional Budget Office that said 14 million people would lose health coverage under the House bill over the next year and 24 million over the next decade.

While there has been a modest uptick in optimism in recent days, should the upcoming House vote on Thursday fail to pass, Trump will face his first major rebuke by a republican-dominated Congress, which would be a major setback to Trump’s entire domestic agenda, leading to a delay not only in Obamacare repeal, but also implementing tax reform, which as we discussed last week, Goldman now anticipates passing no sooner than Fiscal 2018.



Used car prices continue to crash and generally when they do, we see a shift in purchases from brand new cars  to the used car.  This should hurt the USA car industry quite hard

(courtesy Mike Shedlock/Mishtalk)

Used Car Prices Crash Most Since 2008

Authored by Mike Shedlock via,

According to NADA Used Car Guide, wholesale prices on used vehicles are getting crushed. Let’s take a look at the details.

Used Car Prices Since 1995

Used Car Prices by Type of Vehicle

Used Market Update

In a reversal of what typically occurs in February, wholesale prices of used vehicles up to eight years old fell substantially last month, dropping 1.6% compared to January. The drop was counter to the 1% increase expected for the month and marked just the second time in the past 20 years prices fell in February (last years’ scant 0.2% being the other instance).


NADA Used Car Guide’s seasonally adjusted used vehicle price index fell for the eighth straight month, declining 3.8% from January to 110.1. The drop was by far the worst recorded for any month since November 2008 as the result of a recession-related 5.6% tumble. February’s index figure was also 8% below February 2016’s 119.4 result and marked the index’s lowest level since September 2010.


Incentives Jump by 18.1%

Automakers grew incentive spending once again in February, making it the 23rd month in a row where spending was increased. On average, spending reached $3,594 per unit versus $3,043 per unit in February 2016 according to Autodata.


Among the U.S. Big Three, GM raised incentives by 27.4% in February to an average of $5,125 per unit. Spending at Ford Motor Company rose by 20.9% to $4,012 per unit, while FCA increased incentives by 10.6% to $4,365.


As for Import automakers, Toyota Motor Sales raised incentives by 7.9% in February, reaching an average of $2,267 per unit. American Honda grew incentives by 26.6% to $1,886, while Nissan North America increased spending by 20.1% to $4,080 for the month.


Inventory Falls to 74 Days

Compared to January, days’ supply fell by 11 days in February, landing at 74 days for the period. Looking back, February 2016 saw a supply of only 69 days according to Wards Auto.


GM’s supply reached 91 days over the month, due largely to Buick’s industry high 167-day inventory. Ford Motor Company’s supply fell to 78 days, while FCA’s inventory dropped to 83 days.


Toyota Motor Sales’ supply decreased to a lean 67 days, matching Nissan’s figure for 67 days for the month. Meanwhile, inventory for Honda fell to 74 days. Subaru’s 38 days of supply remained lowest in the industry.


As for luxury automakers, BMW’s inventory fell to 46 days, while Daimler inventory remained unchanged versus January at 44 days’ supply. Cadillac’s inventory of 107 days was the highest in the luxury sector, while Tesla’s two days was the lowest.

Desutche Bank is gravely concerned…

We’ve grown increasingly concerned about U.S. Used Vehicle Pricing down 7.7% yoy during February, per NADA. A decline in used prices has been widely anticipated given a significant increase in used vehicle supply (off-lease vehicles). But the magnitude of the recent drop was nonetheless surprising (February’s drop was largest recorded for any month since Nov. 2008). NADA cited a number of factors contributing to the drop, including an increase in late model auction supply from rental fleets, and delayed tax refunds. Used prices have a significant impact on New Vehicle demand/pricing through their effect on affordability (most new car purchases involve a trade-in).



New/Used Vehicle Pricing & Demand Relationship. Some consumers shift from New to Used when Used Vehicle prices become relatively more attractive, negatively impacting New Vehicle demand. Used price deterioration also has an impact on credit, as lenders watch loan loss severity (and frequency), and tighten when this stat. weakens (potentially creating a negative feedback loop). At a more macro level, used vehicle price weakness is also seen as an indicator of aggregate vehicle supply/demand imbalance in the economy–caused by new vehicles entering the parc significantly faster than the rate of scrappage and net new licensed driver growth. This situation should ultimately self-correct as new car sales come under pressure. That said, the biggest fear for investors is that Auto OEMs become incrementally more price aggressive to support New Vehicle sales. Historically, every 1% decline in Used Vehicle prices has corresponded with a 0.2% decline in New Vehicle prices.

Fundamentally Speaking

NADA partially blames late tax refunds for some of the declines in March.

While it’s true the IRS slowed claims for the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC) to combat fraud, late refunds in 2017 cannot possibly explain an eight-month trend.

Yet, based on tax refunds, NADA expects a rebound in used car prices in March.

With massive incentives on new vehicles, I say, let’s see. Regardless, it’s pretty clear that car sales are slowing, and it takes bigger and bigger incentives to push them out the door.

Recall that on March 7, GDPNow 1st Quarter Forecast Plunges to 1.3% Following Vehicle Sales and Factory Orders Reports.

Also recall that the FRBNY Nowcast did not take auto sales into consideration.

On March 15, I reported GDPNow Forecast Dips to 0.9%: Divergence with Nowcast Hits 2.3 Percentage Points – Why?

Is this all related to slow tax refunds? We will soon find out.



Let us close tonight with this great interview of Michael Pento with Greg Hunter

(courtesy Michael Pento/Greg Hunter/USAWatchdog)

Great Recession Headed for Greater Depression-Michael Pento

By Greg Hunter On March 19, 2017 In Market Analysis

(Early Sunday Release)

Money manager Michael Pento says don’t believe the Fed when it says “the economy is doing well.” It’s not. Pento explains, “As long as the stock market continues to go up, the Fed is going to continue to slowly raise interest rates. So, when the inevitable collapse occurs, and that’s what the Fed does, the Fed is in the business of lowering interest rates, creating asset bubbles, which pile up the level of debt, then raising rates and collapsing the economy. That’s their mantra. That’s their MO (modus operandi) and it has happened over and over again. The occurrences are going to be much more dire as we go through time. So, the Fed is trying to get bullets in the chamber. The Fed is going to raise rates slowly. The yield curve is going to invert. . . . We are going to have another catastrophe in the stock market and in the bond market and in the real estate market and in the global economy.”

With the latest GDP number now coming in at less than 1%, Pento says the Fed will be forced to reverse course soon when the economy tanks again. Pento contends, “They will have no choice, this is what they are going to do. They are going to do everything they can to rebuild the asset bubble, but it’s going to take a lot more than lowering interest rates and a little bit of QE. They’re going to have to have helicopter money, and I think that’s going to happen right after we enter this next depression. I don’t use hyperbole here either. I say depression because I look at the data. The data tells me the great recession that was headed towards a depression started in 2007 and ended in 2009. They were talking about not getting money out of the ATMs and massive bank defaults. That was going to make the Great depression in the 1930’s look like a Sunday picnic. That was caused by a Fed Funds rate at 1% for one year and a housing bubble. You look at the bubbles we have today, the national debt in 2008 was $10 trillion. It’s now $20 trillion. . . . You have the entire globe that has massively and exponentially raised its level of debt . . . and the level of asset bubbles. . . . Most of the metrics are at all-time record highs. The GDP has been artificially boosted by 100 months of 1% or lower Fed Funds rate. I think a depression is absolutely unavoidable. What did they fix? Absolutely nothing. They just made the economy exponentially more artificial and more dependent on free money.”

Pento predicted the bond market would ultimately collapse in his 2013 book titled “The Coming Bond Market Collapse.” He says the collapse has started and will get worse quickly. Pento is watching Europe and says, “When the European Central Bank (ECB) announces they are going to take the $60 billion a month of easing and take it to zero, you are going to see a bond market revolt. The free market, whatever is left of it, is going to aggressively start shorting bonds. You will see yields spike in Europe, which is going to drag up bond yields across the globe. That’s when this thing will all unravel and unravel very, very quickly.”

In closing, Pento predicts, “The stock market is a bubble. It’s going to fall at least 50% for starters and before Janet Yellen gets to helicopter money. You better be ready.”

Join Greg Hunter as he goes One-on-One with money manager Michael Pento of Pento Portfolio Strategies.

(There is much more in the video interview.)

Video Link greater-depression-michael-pento/


Well that about does it for tonight

I will see you tomorrow night


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: