March 31/Gold and silver advance/Silver open interest within 12,000 of record high levels despite being 2 dollars less when the record was hit/Raid in Netherlands headquarters of Credit Suisse claiming tax evasion/Atlanta Fed lowers 1st quarter GDP as consumer spending falters/

Gold: $1247.30  UP $2.30

Silver: $18.23  UP 5  cents

Closing access prices:

Gold $1249.50

silver: $18.27!!!










Premium of Shanghai 2nd fix/NY:$18.32


LONDON FIRST GOLD FIX:  5:30 am est  1241.70




For comex gold:



For silver:

For silver: APRIL


Total number of notices filed so far this month: 271 for 1,355,000 oz

Options expiry week is now over and gold and silver will resume their upwards trajectory. The silver open interest skyrockets today and no doubt we will see an even higher number as hedge funds and/or a large entity is taking on the criminal bankers



Let us have a look at the data for today





In gold, the total comex gold also FELL BY A GIGANTIC 13,887  contracts WITH THE  FALL IN THE PRICE OF GOLD ($8.70 with YESTERDAY’S TRADING).We thus continue with the strange events that every time we enter an active month, the open interest obliterates, rather than rolling to the next active month. The total gold OI stands at 414,893 contracts.  We are only 22,000 contracts away from solid rock bottom OI.(393,000)

we had 164 notice(s) filed upon for 16,400 oz of gold.


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


We had another big change in tonnes of gold at the GLD: a withdrawal of 1.19 tonnes

Inventory rests tonight: 832.32 tonnes



We had no changes in inventory at the SLV/

THE SLV Inventory rests at: 330.894 million oz



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

1. Today, we had the open interest in silver ROSE BY AN UNBELIEVABLE 3753 contracts UP TO  to 211,522 AS SILVER WAS DOWN 4 CENT(S) with YESTERDAY’S trading. The gold open interest FELL BY A HUGE 13,887 contracts DOWN to 414,893 DESPITE THE  FALL IN THE PRICE OF GOLD TO THE TUNE OF $8.70  (YESTERDAY’S TRADING).

(report Harvey


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c  COT report



i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 12.27 POINTS OR .38%/ /Hang Sang CLOSED DOWN 189.50 POINTS OR 0.78% . The Nikkei closed DOWN 153.66 OR 0.81% /Australia’s all ordinaires  CLOSED DOWN 0.28%/Chinese yuan (ONSHORE) closed UP at 6.8883/Oil ROSE to 50.06 dollars per barrel for WTI and 52.85 for Brent. Stocks in Europe ALL IN THE RED   ..Offshore yuan trades  6.8883 yuan to the dollar vs 6.8795 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS AGAIN/ ONSHORE YUAN STRONGER AND THE OFFSHORE YUAN  MUCH  WEAKER AND THIS IS  COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS SATISFIED WITH WASHINGTON’S RESPONSE 



none today


i)The rhetoric from the Trump camp begins ahead of the big meeting with Xi on April 6.  He states that the USA cannot have massive trade deficits.  However what Trump is missing is the fact that the uSA dollar then cannot be the reserve currency of the world as many countries will no longer hoard dollars.

( zerohedge)

ii)If you believe their figures, Chinese manufacturing PMI jumps.  The markets are skeptical

( zerohedge)


i)Huge raid in the Netherlands at Credit Suisse, as there are multiple tax probes of many people.  Gold bars, paintings and jewelry were seized.

I guess Credit Suisse did not put the last criminal penalty behind them (3 yrs ago)

(zero hedge)

ii)The EU draft is now ready and it is not punitive at all.  It allows for parallel negotiations to continue and that is exactly what the UK wants. It certainly looks like the UK will be much better off!

( zerohedge)

iii)A good account as to why the Italian banking sector is in serious trouble

(courtesy Don Quijones/and special thanks to Robert H for sending this to us)



i)Relations between Trump and Russia sour and “worse than the cold war” according to Putin spokesman Vladimir Peskov

( zero hedge)

ii)Then in response, Tillerson blasts Russia for their Ukraine aggression.  Germany slams Trump with unrealistic NATO spending of 2% of GDP

( zero hedge)


Gordhan is fired as head of the Central Bank of South Africa.  He is widely regarded so his dismissal will create havoc for the Rand:

(courtesy zero hedge)


1 Rig counts continue to rise in the USA which will without a doubt produce more oil which in turn will drive the Saudis crazy.

2 Saudi Arabia are now cutting prices to Asia because of the oil glut

(courtesy zero hedge)



Brazil unemployment hits a record 13.2% as the world’s growth problem is hitting this commodity country hard

( zero hedge)

Luisa Ortega attorney general breaks ranks with Maduro and states that his new mandate is nothing but a “coup”.  Bonds tank as this nation spirals out of control

( zero hedge)


i)Gold trading early NY  est:

The following sets the tone for gold as Dudley warns of Q1 weakness as he sees through the phony soft data:

( zero hedge)

ii)A very important paper by Persson and Manly as they ask the important question:  who sets the gold price, the  paper market or the physical one:  the answer, regrettably for now:  the paper gold market.

( Persson Manly/.Bullionstar)

iii)This is good: our good friend Peter Boehringer has a great chance gaining a seat at the Bundestag

(  Chris Powell/GATA)


iv)The Fed and other central bankers still use Keynesian theory much to their detriment:

( Danielle DiMartino Booth/Bloomberg)

v) China lies about curbing production and now they have a record iron ore glut. This does not bode well for the steel industry:

( zero hedge)

10. USA stories

i)Wolf Richter echoes David Stockman that earnings growth is going nowhere

( Wolf Richter/WolfStreet)

ii)The American consumer seems worried as their savings rate increases and spending disappoints

(courtesy zero hedge)

iii)Chicago’s soft data PMI jumps to a 2 year high despite a plunge in the employment index??

( zero hedge)

iv)Soft data University of Michigan Consumer Confidence disappoints

( zerohedge)

v)Right on cue, the Atlanta Fed reports that first quarter GDP is revised southbound to .9% from 1.0% on the poor consumer spending report.

( zero hedge)

vi)Seattle Mayor, Ed Murray files a lawsuit over the sanctuary city non funding.

( zero hedge)

vii)Trump continues with his protectionists views as he is seeking to halt trade abuses i.e. countries with huge trade surpluses with the USA

( zero hedge)

viii) Very popular Michael Snyder talks about 2 major areas that will no doubt blow up the system:

1 Unfunded pension

2 bricks and mortar malls and commercial asset backed paper which funds these malls

( Michael Snyder/EconomicCollapseBlog)

ix) Todays wrap up with Greg Hunter/

Let us head over to the comex:

The total gold comex open interest COLLAPSED BY ANOTHER HUGE 13,887 CONTRACTS DOWN to an OI level of 414,893 WITH THE  FALL IN THE PRICE OF GOLD ( $8.70 with YESTERDAY’S trading). We continue to witness the same events as the open interest obliterates once we are about to enter an active delivery month. We are now in the contract month of APRIL and it is one of the BETTER delivery months  of the year. In this APRIL delivery month  we had AN UNBELIEVABLE LOSS OF 27,048 contract(s) FALLING TO 5450. The loss in percentage from the previous day: 84%. I have never seen anything like this at the comex before! By definition, then 5450 contracts x 100 oz  equals 545,000 oz will be the initial amount standing for delivery in the active delivery month ( 16.95 tonnes)


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 525 contract(s) and thus its OI is 2739 contracts. The next big active month is June and here the OI ROSE by only 11,293 contracts up to 293,898.

We had 164 notice(s) filed upon today for 16,400 oz

 And now for the wild silver comex results.  Total silver OI ROSE BY ANOTHER 3,753 contracts FROM 207,769 UP TO 211,522 WITH YESTERDAY’S 4 CENT LOSS.  THE BANKERS SUPPLIED THE NECESSARY CONTRACTS TO OUR HEDGE FUND LONGS WHO CONTINUE TO PILE INTO SILVER ON THE LONG SIDE.  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 ONLY 12,000 CONTRACTS AWAY FROM RECORD HIGHS IN OI AND YET WE ARE $2.40 BELOW THE PRICE OF $20.44 WHEN THAT RECORD WAS SET.

We are in the NON active delivery month is APRIL  Here the open interest fell by only 2 contracts as we enter this delivery month. The new total of open interest for the front month of April is thus  735. In other words nobody rolled!! UNHEARD OF!!!!!

Thus by definition, the amount of silver initially standing in April is:

735 x 5000 oz = 3,675,000 oz

wow! this is huge for a non active delivery month.


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.

The next active contract month is May and here the open interest GAINED 2689 contracts UP to 154,768 contracts. The next big active month will be July and here the OI gained 619 contracts up to 31,761.


We had 271 notice(s) filed for 1,355,000 oz for the APRIL 2017 contract.

VOLUMES: for the gold comex

Today the estimated volume was 160,831  contracts which is fair.

Yesterday’s confirmed volume was 279,421 contracts  which is excellent

volumes on gold are getting higher!

INITIAL standings for APRIL
 March 31/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 nil oz
Deposits to the Dealer Inventory in oz 3500.000 oz



Deposits to the Customer Inventory, in oz 
 1,052.88 oz
incl 29 kilobars
No of oz served (contracts) today
164 notice(s)
16400 OZ
No of oz to be served (notices)
5286 contracts
528,600 oz
Total monthly oz gold served (contracts) so far this month
164 notices
16400 oz
0.5101 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  oz
Today we HAD 3 kilobar transaction(s)/
Today we had 1 deposit(s) into the dealer:
 i) into Brinks: 3500.000 oz ????
exact deposit???
total dealer deposits: 3500.000 oz
We had nil dealer withdrawals:
total dealer withdrawals:  nil oz
we had 3  customer deposit(s):
 i) Into Scotia: 128.60 oz
4 kilobars
ii) Into Manfra: 803.75 oz (25 kilobars)
iii) Into Brinks: 120.53 oz
total customer deposits; 1052.88   oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil  oz
 we had 3 adjustments:
i) Brinks:  38,527.990 oz leaves the dealer and enters the customer account
ii) Manfra:  13,310.100 oz leaves the dealer and enters the customer account of Manfra
iii) Out of Scotia:  28,667.651 oz leaves the dealer and enters the customer account of Manfra
total amount of gold leaving the dealer: 80,505.74 oz

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 164 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 APRIL. contract month, we take the total number of notices filed so far for the month (164) x 100 oz or 16,400 oz, to which we add the difference between the open interest for the front month of APRIL (5450 contracts) minus the number of notices served upon today (164) x 100 oz per contract equals 18,700 oz, the number of ounces standing in this  active month of APRIL.
Thus the INITIAL standings for gold for the APRIL contract month:
No of notices served so far (164) x 100 oz  or ounces + {(5450)OI for the front month  minus the number of  notices served upon today (164) x 100 oz which equals 545,000 oz standing in this non active delivery month of APRIL  (16.951 tonnes)
 We had 21.206 tonnes of gold initially stand for delivery in April 2016.  By the month’s conclusion we had only 12.39 tonnes stand.
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/2016.   29.931 tonnes
JAN/2017     3.9004 tonnes
FEB/ 18.734 tonnes
March: 0.5816 tonnes
April/2017: 16.951
total for the 16 months;  261.762 tonnes
average 16.360 tonnes per month
Total dealer inventory 949,344.376 or 28.528 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 9,018,121.165 or 280.501 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 280.501 tonnes for a  loss of 22  tonnes over that period.  Since August 8/2016 we have lost 73 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 31. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
361,074.800 oz
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 600,695.675 oz
No of oz served today (contracts)
(1,355,000 OZ)
No of oz to be served (notices)
514 contracts
(2,570,000  oz)
Total monthly oz silver served (contracts) 271 contracts (1,355,000 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  7,112,665.4 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil oz
we had nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of Brinks:  300,614.08 oz
ii) Out of Scotia: 60,460.720 oz
 We had 1 deposits:
i) Into CNT: 600,695.675 oz
***deposits into JPMorgan have now STOPPED.
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
total customer deposits; 600,695.675   oz
 we had 3 adjustment(s)
i) Out of Delaware:  1,441,231.125 oz leaves the dealer of Delaware and enters the customer account of Delaware
ii) Out of CNT: 1,337,506.880 oz leaves the customer of CNT and enters the dealer account of CNT
iii) Out of Scotia; 4,536,048.702 oz leaves the Dealer and enters the customer account of Scotia
total amount of silver leaving the dealer net:  4,639,772.9 oz
we are now in a non active month:  why the huge amount of silver leaving??
The total number of notices filed today for the MARCH. contract month is represented by 271 contract(s) for 1,355,000 oz. To calculate the number of silver ounces that will stand for delivery in APRIL., we take the total number of notices filed for the month so far at 271 x 5,000 oz  = 1,355,000 oz to which we add the difference between the open interest for the front month of APRIL (735) and the number of notices served upon today (271) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the APRIL contract month:  271(notices served so far)x 5000 oz  + OI for front month of APRIL.( 735 ) -number of notices served upon today (271)x 5000 oz  equals  3,675,000 oz  of silver standing for the APRIL contract month. 
Volumes: for silver comex
Today the estimated volume was 57,605 which is excellent and it will be higher with the addition of access trading
Yesterday’s  confirmed volume was 68,348 contracts  which is huge!!.
Total dealer silver:  29.502 million (close to record low inventory  
Total number of dealer and customer silver:   190.223 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.


At 3:30 pm we receive the COT report and this is from Tuesday March 21 through to March 28

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
227,839 90,019 74,805 104,760 256,874 407,404 421,698
Change from Prior Reporting Period
8,120 -13,448 -7,777 3,478 26,595 3,821 5,370
167 87 86 45 51 253 190
Small Speculators  
Long Short Open Interest  
42,014 27,720 449,418  
-1,283 -2,832 2,538  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, March 28, 2017

Our large speculators:

Those large specs that have been long in gold added 8120 contracts to their long side

those large specs that have been short in gold covered a huge 13,448 contracts from their short side.

Our commercials:

those commercials that have been long in gold added 3478 contracts to their long side

those commercials that have been short in gold added a whopping 26,595 contracts to their short side.

Our small specs:

those small specs that have been long in gold pitched 1283 contracts from their long side.

those small specs that have been short in gold covered 2832 contracts from their short side

MANAGED MONEY (hedge funds)

this is a subset of the large/small specs and are generally referred to as hedge funds:

The managed money on the long side increased their longs by 2,773 contracts and they reduced their short position by 230 contracts;  net gain: 3003 contracts.

conclusions:  It is no wonder why we had a raid this week as the commercials continued to go net short by 23,117 contracts: thus very bearish

And now the silver COT


Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
112,197 21,509 18,846 48,127 149,894
11,860 284 1,484 -341 7,692
94 39 46 28 38
Small Speculators Open Interest Total
Long Short 201,829 Long Short
22,659 11,580 179,170 190,249
-1,993 1,550 11,010 13,003 9,460
non reportable positions Positions as of: 143 108
Tuesday, March 28, 2017   ©

Our large speculators:

those large specs that have been long in silver added 11,860 contracts to their long side

those large specs that have been short in silver added 284 contracts to their short side??

Our commercials:

those commercials that have been long in silver pitched a tiny 341 contracts from their short side

those commercials that have been short in silver added a huge 7692 contracts to their short side


Our small specs;

those small specs that have been long in silver pitched 1993 contracts from their long side??

those small specs that have been short in silver added 1550 contracts to their short side??

Managed money (hedge funds)

This subset of the large/small specs: added a huge 14,086 contracts to their long side and also covered a large 2299 contracts from their short side

thus the hedge funds (managed money) went all in…


the hedge funds in silver have changed their game plan.  They refuse to buckle when the bankers attack and when they do, they add to their positions.  This is a game of winner take all.

the commercials went net short by 8033 contracts.





And now the Gold inventory at the GLD

March 31/another withdrawal of 1.19 tonnes of gold inventory fro the GLD/this inventory would no doubt be heading for Shanghai/GLD inventory: 822.32 tonnes

March 30/no changes in gold inventory at the GLD/Inventory rests at 833.51 tonnes

March 29/a withdrawal of 1.78 tonnes of gold out of the GLD/Inventory rests tongith at 833.51 tonnes

March 28/this is good!! A deposit of 2.67 tonnes of gold into the GLD/Inventory rests at 835.29 tonnes.

March 27/no changes in gold inventory at the GLD/Inventory rests at 832.62 tonnes

March 24/another withdrawal of 1.78 tonnes from the GLD/Inventory rests at 832.62 tonnes

March 23/no change in gold inventory at the GLD/Inventory rests at 834.40 tonnes

March 22/no changes in gold inventory at the GLD/Inventory rests at 834.40 tonnes

March 21/a deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 834.40 tonnes


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

March 31 /2017/ Inventory rests tonight at 832.32 tonnes


Now the SLV Inventory
March 31/no change in inventory at the SLV/Inventory rests at the SLV/Inventory rests at 330.894 million oz/
March 30/a huge withdrawal of 2.746 million oz from the SLV/inventory rests at 330.894 million oz/
March 29/a deposit of 1.136 million oz into the SLV/Inventory rests at 333.640 million oz
March 28/no changes in inventory at the SLV/Inventory rests at 332.504 million oz/
March 27/no changes in inventory at the SLV/Inventory rests at 332.504 million oz/
March 24/no change in inventory at the SLV/Inventory rests at 332.504 million oz/
March 23/no change in inventory at the SLV/Inventory rests at 332.504 million oz
March 22/no change in inventory at the SLV/Inventory rests at 332.504 million oz
March 21/no change in inventory at the SLV/Inventory rests at 332.504 million oz/
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/
March 31.2017: Inventory 330.894  million oz

NPV for Sprott and Central Fund of Canada

will update later tonight the central fund of Canada figures

1. Central Fund of Canada: traded at Negative 6.1 percent to NAV usa funds and Negative 6.1% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.3%
Percentage of fund in silver:39.6%
cash .+0.1%( Mar 31/2017) 
2. Sprott silver fund (PSLV): Premium FALLS  to -57%!!!! NAV (Mar 31/2017) 
3. Sprott gold fund (PHYS): premium to NAV falls to – 0.47% to NAV  ( Mar 31/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -57% /Sprott physical gold trust is back into NEGATIVE territory at -0.47%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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


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

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

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

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

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

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

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

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

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

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

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

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


Major gold/silver trading/commentaries for FRIDAY


Three Wise Men’ Warn Crash Coming, Own Gold

‘Three wise men’ are warning that the next financial crash is coming and that one of the ways to protect and grow wealth in the coming crash will be to own gold.

The men who have recently warned are Jim Rogers (video below), Martin Armstrong (blog below) and Tony Robbins (video below). Each come from somewhat different backgrounds and are respected experts in their respective fields.

Each has different views in terms of asset allocation and how best to weather the coming financial storm but all are united in believing that gold will act as a wealth preservation tool and will likely rise in value when other assets fall.

Jim Rogers is a world renowned investor who co-founded the Quantum Fund with fellow investor George Soros.  He is an investor, traveler, financial commentator and author who believes that this will be the ‘Asian Century.’

In his usual plain speaking, honest manner, Jim Rogers warned on Bloomberg TV that

“the Federal Reserve… has no clue what they are doing. They are going to ruin us all.” 

Central banks have driven rates to all time record lows and in the process, debt has “sky-rocketed.”

Rogers slams the ‘counterfactual’ arguments that things would have been a lot worse if the Fed had not done all this, “propping up zombie banks and dead companies is not the way the world is supposed to work. … It’s been nine years and we have nothing to show for it [economically] except staggering amounts of debt.”

Rogers is pessimistic about the outlook for America and thinks that Donald Trump will see the US continue on the path to bankruptcy – a path set by Bush and Obama before him.

He concludes the Bloomberg interview ominously by saying that “this is all going to end very, very, very badly.”

In recent years, Rogers has consistently said that he wants to own more gold and silver and will continue to accumulate the precious metals on any price dips.

Watch Rogers on Bloomberg TV here

Financial analyst and trends forecaster, Martin Armstrong warned on his Armstrong Economics blog this week that governments are in increasing trouble and people will start to lose confidence in their governments:

“Gold and the stock market will take off when people realize that government is in trouble. When they lose confidence, that is when they will start to pour into tangible assets.”

Armstrong is nervous about gold in the short term and thinks it could fall as low as $1,000 per ounce prior to surging to as high as $5,000 per ounce in the coming years.

Tony Robbins, performance coach and self help guru has warned that “The Crash is Coming.”

Robbins, who is focusing more on finances and wealth in recent years and in his latest book, ‘Money: Master The Game’, says plan now for what’s to come. Things may be looking rosy on Wall Street as of late, but the crash will come.

“We are in a really artificial situation. There is a new high, on average, every month. Feds around the world have been printing money,” said Robbins in a tv interview.

Robbins has long advocated owning gold as part of a diversified portfolio and has cited Kyle Bass, Marc Faber and more recently Ray Dalio as his financial gurus. In his recent book, Robbins cited Dalio and recommended an asset allocation strategy that involves a 7.5% allocation to gold.

All Seasons strategy via Ray Dalio via Tony Robbins

Given the increasing risks of another financial crash, the warnings from these very different three men should be taken heed of. They underline the importance of being prudent, of real diversification and of owning gold.

The smart money sees what is coming and is once again preparing.


Gold trading early NY  est:

The following sets the tone for gold as Dudley warns of Q1 weakness as he sees through the phony soft data:

(courtesy zero hedge)

Gold Jumps As “Dovish” Dudley Sees The Light On ‘Hard’ Economic Data, Warns Of Q1 Weakness

It may be the fastest transition from a “hawkish” to “dovish” stance by a Fed talking head in history, after  New York Fed President Bill Dudley went from “it is important not to overreact to every short-term wiggle in financial markets” and predicting “gradual rate hikes for the rest of the year” yesterday after the close, to “the Fed is in no rush to hike” in an interview with Bloomberg this morning.

Meanwhile, it’s getting harder for the mainstream media and their asset-gathering sponsors to hide the reality of the post-Trump rally economic ‘improvement’ from investors’ eyes.

During the Bloomberg interview, Dudley also admitted there’s “no rush to hike” as the “economy is clearly not overheating,” warning of the potential for Q1 weakness as “sentiment [improvements] are not showing up in the hard data yet.” Perhaps he finally saw the following chart?

Indeed Mr. Dudley: and the ‘hard’ data has NEVER caught up to spiking sentiment…

Given his hawkishness yesterday and dovishness today, markets are reacting to the what now appears to be yet another policy re-convergence with the suddenly dovish ECB.

As RBC explained yesterday, the Trump Reflation trade only works when the Fed and ECB diverge on policy, with the former seen as hawkish, and the latter, dovish.

As of this moment, the Fed once again appears to have no idea what it wants to be, having realized that the entire economic rebound it hiked rates on was purely psychological.


A very important paper by Persson and Manly as they ask the important question:  who sets the gold price, the  paper market or the physical one:  the answer, regrettably for now:  the paper gold market.

(courtesy Persson Manly/.Bullionstar)

Persson and Manly: What sets the gold price — the paper market or the physical one?


9:40a Thursday, March 30, 2017

Dear Friend of GATA and Gold:

Bullion Star’s Torgny Persson and Ronan Manly today scan the world’s gold markets and conclude that mere paper trading, not the physical exchange of gold, continues to determine prices, though they conceive of circumstances whereby physical exchange eventually might influence prices. Persson and Manly note that “ultra-secretive” gold lending by central banks to bullion banks is crucial to the current price-setting process and the entire fractional-reserve gold banking system.

Their analysis is headlined “What Sets the Gold Price — Is It the Paper Market or Physical Market?” and it’s posted at Bullion Star here:…

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


This is good: our good friend Peter Boehringer has a great chance gaining a seat at the Bundestag

(courtesy  Chris Powell/GATA)


Founder of Germany’s ‘Repatriate Our Gold’ campaign has good chance for parliament


12:21a SST Friday, March 31, 2017

Dear Friend of GATA and Gold:

Peter Boehringer, founder of Germany’s “Repatriate Our Gold” campaign and a longtime GATA supporter, reports that the new Alternative for Germany party has placed him second on its list of Bavarian candidates for Germany’s parliament, the Bundestag. Since polls show AfD gaining about 10 percent support of voters in the country’s coming parliamentary election and since a party’s threshold for parliamentary membership is 5 percent, Boehringer would seem to have a good chance of election.

For many years Boehringer has campaigned for transparency in the gold market generally and from the Bundesbank particularly, and he is largely responsible for inducing the Bundesbank to recall much of Germany’s gold reserve from New York, London, and Paris. Boehringer supports free markets and Germany’s withdrawal from the European Union. He opposes the uncontrolled immigration that is destroying Germany and Europe.

If Boehringer is elected, the Bundesbank may face many challenging questions it is now able to avoid because members of the Bundestag are so timid in the face of the financial elite.

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



The Fed and other central bankers still use Keynesian theory much to their detriment:

(courtesy Danielle DiMartino Booth/Bloomberg)


Danielle DiMartino Booth: The Fed is bedeviled by Keynes’ paradox


By Danielle DiMartino Booth
Bloomberg News
Thursday, March 30, 2017

The economist John Maynard Keynes warned that ultra-low interest rates would backfire on central banks seeking to spur borrowing and spending, yet they seemed surprised that the current recovery is the weakest in postwar history after cutting rates to near zero, or even below in some cases.

Keynes is credited with popularizing the “paradox of thrift,” which is the economic theory that posits people tend to save more during recessions as rates fall to offset the income their savings is not generating. Of course it is the case that when you save more, you spend less. Since the U.S. economy is fueled by consumption, it also stands to reason that growth suffers as a result.

It’s been two years since Swiss Re produced a report that calculated U.S. savers had foregone some $470 billion in interest income. The analysis was based on what rates would have been had the Federal Reserve followed the Taylor Rule, which would have put rates, then at zero, at 1.7 percent.

Even as the Fed has begun to raise rates, it is clear that hundreds of billions of dollars have been squirreled away as savers play defense to counteract the Fed’s ultraloose monetary policy. Some $11.7 trillion is sitting in bank deposits, up from $7.23 trillion at the start of 2009 shortly after the Fed cut rates to near zero, central bank data show.

Although the Swiss Re report acknowledged that higher home prices and stock market values somewhat offset what households missed out on in earned in interest, the caveat was that the bulk of the wealth created via those two avenues flowed to the wealthiest. Two years on, the skew is, if anything, more acute. Even as the prices of stocks and luxury homes have scaled new heights, for the vast majority of Americans, so has the cost to buy or rent a home and that of healthcare. …

… For the remainder of the commentary:…



China lies about curbing production and now they have a record iron ore glut. This does not bode well for the steel industry:

The huge drop in iron prices last night will without a doubt bring the global reflation rally to a complete halt.  Two stories



(courtesy zero hedge)

China’s Record Iron Ore Glut: Enough To Build 13,000 Eiffel Towers

Earlier this week we discussed the reason for the recent drop in iron ore prices, which had been attributed to the discovery of massive data fabrication and misrepresentation of commodity production cuts in China (think OPEC), whose biggest steel-producing province was found lying about mandatory output reductions, and instead of curbing was in fact accelerating production.

A steel factory in Wu’an, Hebei province

As Reuters reported at the time, Hebei, China’s biggest steel-producing province, launched a probe into steel overproduction in the city of Tangshan “amid concerns that firms have continued to raise output despite mandatory capacity cuts.”

Tangshan is the heartland of Chinese steel production. The city is home to the headquarters of the state-owned Tangsteel Group, which in 2006 merged with other companies to form Hebei Steel Group, the second-largest steel producer in the world. Located around 100 miles east of the capital Beijing, Tangshan is on the frontline of the country’s “war on pollution”, and was seventh on the list of China’s ten smoggiest cities in the first two months of this year.


Hebei was ordered by China’s central government to investigate firms in Tangshan that have “restricted but not cut production, restricted production but not actually cut emissions, and cut capacity but actually increased output,” the provincial dated March 25 said, and circulated by traders on Monday.


The notice, sent on Saturday, cites orders from President Xi Jinping and Zhang Gaoli, the vice-premier, for Tangshan to investigate the problem of falsely reported plant closures and rising steel output.

Fast forward to Friday, when the environmental protection ministry quickly found pervasive problems “including data fabrication and output curb failure” in air pollution checks in 1Q at some 3,119 companies or nearly 40% of the 8,500 companies inspected, according to a statement from the ministry. Among the companies names, Chalco’s Henan unit didn’t fully implement output curbs in heavy pollution days, according to findings of the inspection while an affiliate to BAIC Group found to have “not strictly implemented VOC emission standards.” Amusingly, companies including a Foxconn affiliate in Langfang city tried to reject inspections The inspection covered more than 8,500 companies in regions including Beijing and Tianjin.

Ok, so China lied again; that in itself is hardly newsworthy. After all China lies about everything, from its GDP, to its gold holdings, to its reserve outflows, to the total debt in its economy.

However, for iron ore traders, the implications could be dire, as China’s activity means that instead of reducing production to reach a demand equilibrium, it had merely been stockpiling iron ore inventory at various ports around the country, while giving the world the false impression that output, and thus the market, was tighter than it was in reality, sending iron ore prices nearly doubling over the past year – one of the primary culprits for the global reflation wave that has been misconstrued as a global economic recovery – even though in recent weeks iron ore prices have stumbled as China’s ruse has finally been exposed.

The question then becomes what happens with China’s unprecedented iron-ore stockpiles, especially at a time when Beijing is actively seeking to impose curbs on the housing bubble. For those unfamiliar, this is what China’s total iron ore inventories look like as of this moment: they are now at all time highs.

That chart above, however does not do justice to China’s inventory glut, so here is another attempt at putting it in context from Reuters, which writes that with enough iron ore to construct Paris’s Eiffel Tower nearly 13,000 times over, China’s ports are bursting with stockpiles of the raw material and some of them are demolishing old buildings to create more storage space, trading sources said.

Inventory of imported iron ore at 46 Chinese ports reached 132.45 million tonnes on March 24, SteelHome consultancy said, the highest since it began tracking the data in 2004. A third of the stocks belongs to traders and the rest is owned by China’s steel mills, SteelHome said. That volume would make about 95 million tonnes of steel, enough to build 12,960 replicas of the 324-metre (1,063-foot) high Eiffel Tower in Paris.

Some ports, trying to manage their storage space, have in recent weeks rejected vessels carrying lower grade iron ore that is less preferred than higher quality material and could take months to clear, said a source at a foreign trading firm that has millions of tonnes of the steelmaking ingredient at Chinese ports.

“We have sent our people around the major ports in China and some are trying to find extra space. They’re demolishing some abandoned buildings to create more space,” said the source, who declined to be named because he is not permitted to discuss the matter publicly.

It’s only getting worse: if iron ore stocks continue rising “we’re going to reach maximum physical capacity at all ports in China by early June, said the source. “We saw some ports rejecting low-grade shipments which are very difficult to liquidate.”

* * *

Meanwhile, having believed China’s lies about production cuts and sending prices to a two and a half year high, global commodity traders are suffering from a case of accumulated buyer’s remorse with global iron ore prices now just above $80 a tonne from a 30-month peak of $94.86 reached in February, largely due to the growing port inventory.

Prices surged 81% last year, bringing relief to miners after a three-year rout. The rally stretched into 2017, inspiring marginal producers to resume business and lifting supply as China’s steel demand waned. Further falls in the price of iron ore risk shuttering Chinese capacity again. That could boost China’s reliance on top-grade exporters Vale, Rio Tinto and BHP Billiton.

The recent price surge only made matters worse, with China’s domestic iron ore production jumping 15.3% in January-February as a price rally last year extended into 2017, causing imported ore to pile up at the ports of the world’s top buyer.

Needless to say, local merchants and producers are already starting to panic at visions of iron ore prices in freefall. Including another 40 million tonnes of iron ore at China’s steel mills “that’s too much of stock,” said Li Xinchuang, vice chairman at China Iron and Steel Association. “It will be very dangerous for the price. That’s what’s very worrying about it,” Li told Reuters at an industry conference on Thursday. Worse, Li said most of the stocks in ports were high quality iron ore despite perceptions in the market that the bulk of it was low-grade eliminating the ability to deny low quality ore.

An official at Jingtang port in Tangshan told Reuters there are 15 million tonnes of iron ore stocked there currently, not far from its capacity of 20 million tonnes.

Paradoxically, even as China’s iron ore glut hits extreme proportions, China continues to import the commodity with Australian miner Fortescue Metals Group, the world’s No. 4 iron ore supplier which ships lower grade material mainly to China, saying its deliveries to the country are “continuing as normal.”

“While port stocks overall are at relatively high levels, Fortescue’s share of those stocks aligns with our market share of imported ore into China,” Fortescue CEO Nev Power said by email in response to a Reuters query.

A truck drives past piles of iron ore at the dump site of a port in Rizhao.

Chinese ports can refuse discharge of some shipments and it’s up to the importer to find another port but costs due to delays would be borne by the importer, said a shipping manager for a Chinese trading firm. Still, slow demand could swell port stocks further as more shipments tied to Chinese mills’ long-term contracts with miners arrive and traders scour the market for clients.

“We have a fleet of vessels on their way to China with no buyers. We’re trying to find buyers,” said the foreign trading source.

If no buyers are found, iron ore prices will plunge, resulting in another shock to China’s manufacturing sector, leading to another collapse in cash flows, a surge in bailouts and defaults, and a fresh deflationary wave being unleashed on the rest of the world as China’s wholesale inflation once again tumbles into negative territory.





The huge drop in iron prices last night will without a doubt bring the global reflation rally to a complete halt.

( zero hedge)


Why China Is About To Bring The Global Reflation Rally To A Halt

Previously we reported that iron ore prices – having almost doubled in the past year and launching a global reflationary wave – are on the verge of tumbling as the world becomes increasingly aware that China has a “13,000 Eiffel Tower” record inventory problem.


And while we previously discussed the immediate adverse implications for iron ore bulls, the conseqences for the global economy could be far more material.

Conveniently, in a note this morning, BMO’s Mark Steel looked at the same issue, focusing on the big picture implications.

His note titled “China’s greatest gift to the US” – a “gift” which will become clear in moments – takes aim at the latest overnight selloff in iron ore, when prices fell 1.7% on Friday.

“Iron has already broken below its 50d MA, the BMO analyst writes, and has already broken below trade support, and it is now poised at the bottom of the channel, so, yes, here is another potential “pre-breakdown” view – Exhibit 1.”

He then notes that “that kinda looks a lot like inflation expectations, which if anything are just a tad ahead, as they have already broken to the downside in the US, and also in Canada, and also in Germany, and also in France, and also in Japan, and also in Mexico. You get the picture, the inflation trade like a fifty-year-old doing the breakdance for the first time. For the reflationists, it’s not a pretty picture – Exhibit 2.

The conclusion is troubling for the global reflation rally:

We don’t want to make up any new theory, about what drives asset prices. Oh wait, yes we do, and indeed did, with the record-setting Trump disapproval rating looking a lot like the contracting yield curve, but we digress. We are saying that the decent, albeit worsening fit of movements of inflation expectations and commodity house driven oil, is currently improved upon by looking at long term poor, yet currently superior fit of inflation expectations and iron ore – Exhibits 3, 4.



Amusingly, Trump just gifted Mexico $17bn (two minutes in). We are not sure what the POTUS will inadvertently offer China this weekend, but according to the CBO, China’s greatest gift to the US would probably be lower inflation. Just sayin…

Recall: it was China, whose gargantuan credit expansion, monetary easing and “Shanghai Accord” in early 2016 unleashed the global reflationary wave which central banks are currently mistaking for “growth.” It is only appropriate that China will be the catalyst that ends it.



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


1 Chinese yuan vs USA dollar/yuan STRONGER AT  6.8883(  SMALLER REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.8795/ Shanghai bourse DOWN 12.27 POINTS OR .38%   / HANG SANG CLOSED DOWN 189.50 POINTS OR 0.78% 

2. Nikkei closed DOWN 153.96 POINTS OR 0.81%   /USA: YEN RISES TO 111.86

3. Europe stocks opened ALL IN THE RED      ( /USA dollar index RISES TO  100,53/Euro DOWN to 1.0683


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  50.06 and Brent: 52.85

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.328%/Italian 10 yr bond yield UP  to 2.302%    

3j Greek 10 year bond yield FALLS to  : 6.931%   

3k Gold at $1242.90/silver $18.09 (8:15 am est)   SILVER  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 49/100 in  roubles/dollar) 56.49-

3m oil into the 50 dollar handle for WTI and 52 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT SMALL REVALUATION NORTHBOUND   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  01.0007 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0692 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.328%

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 2.416% early this morning. Thirty year rate  at 3.03% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

S&P Futures, Global Stocks Fall In End To Best US Quarter Since 2015


Stocks fell worldwide on the last day of the quarter, with US equity futures pointing to a lower open even as the S&P is set for its best quarter since 2015 amid persistent economic and political uncertainty.

WTI held gain above $50 a barrel, capping the biggest weekly gain of 2017 while the rand fell after South Africa’s finance minister was fired. European government bonds and Treasuries were steady with gold. Another three Fed presidents are set to speak on Friday; today’s economic data in the US includes University of Michigan consumer sentiment, as well as personal income and spending.

Global stocks dipped on Friday with the MSCI All-Country World Index declining 0.4% as investors locked in some of the more than 6% gain that has given them their best start to year since 2012, while the dollar inched toward what could be its strongest week of 2017 so far. As we look back on a particularly strong Q1, we find a remarkably quiet, and “unvolatile” quarter in which most asset classes outperformed around the world, global stocks were poised to end a blockbuster quarter with a whimper, with investors seeing little reason to take shares higher amid political and economic uncertainty in the coming quarter. As discussed last night, the saga involving Zuma and South Africa’s finance minister came to a close after he was fired, sending the plunging as much as 2.9% before recovering losses.

Asian and European shares both saw profit-taking as traders squared up for the quarter perhaps driven by an unwind of positions into Japan’s year end, though there was plenty still going, not least in South Africa where the sacking of its respected finance minister sent a spasm through the local currency.

European stocks fell for the first time in four days, with the Stoxx down -0.4%. as the Europe’s Basic Resources index where big miners are listed, fell 1.7 percent to leave London’s FTSE and the pan-European STOXX 600 index down 0.5-0.6%. Still, the later was on track for a 5% rise and third straight quarterly gain in a row, although emerging markets have been the big winners. MSCI’s EM stocks index is up 12.5 percent on a dollar-adjusted basis.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan retreated 0.55 percent after its 12.5 percent charge over the quarter. Hong Kong shares fell 0.6 percent, but were still headed for a 9.8 percent quarterly jump and China’s CSI 300 index added 0.4 percent, putting it on track for a 4.3 percent quarterly rise. Japan’s Topix became one of the few gauges in Asia posting a loss this quarter, wiping out a morning rally despite positive economic data. The Shanghai Composite Index added 0.4 percent. China’s official factory gauge climbed to the highest in almost five years, the latest evidence of gathering momentum in the world’s second-largest economy.

“Asia saw some pretty healthy profit-taking after a few sessions of solid gains, and as investors await euro zone and U.S. inflation data tonight,” said James Woods, global investment analyst at Rivkin Securities in Sydney.

Next week promises to an interesting start to the second quarter. Trump and Chinese President Xi Jinping will meet in Florida and the U.S. president has set the tone by tweeting that Washington could no longer tolerate massive trade deficits and job losses. He will also sign executive orders on Friday aimed at identifying abuses that are causing the deficits and clamping down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said. Chinese Vice Foreign Minister Zheng Zeguang said on Friday that it does not have a policy to devalue its currency to promote exports, and neither does it seek a trade surplus with the United States.

“The dialogue emanating from that is going to help set the tone of the relationship between the U.S. and China and these days it goes beyond trade. There is a lot to discuss geopolitically, not least North Korea,” said PIMCO portfolio manager Yacov Arnopolin.

Against a basket of the world’s other major currencies the dollar was up 0.1 percent and close to a 1 percent weekly gain that would be its best in an otherwise lackluster year. Over the quarter the greenback has fallen 1.7%, its worst showing in a year, on doubts that U.S. President Donald Trump was not prioritizing to push through Congress the economic reforms that had driven the dollar to 14-year highs at the start of the year.

“We are relatively optimistic on global growth but we think the cyclical trade has rotated away from the Trump trade and near-term U.S. fiscal stimulus,” said Schroders’ multi-asset Portfolio Manager Angus Sippe. “We are now more optimistic on the euro zone,” he said, adding he was also “marginally short the dollar.”

The euro held its own at just under $1.07 as data showed euro zone inflation had slowed in March by far more than the economists had expected, driven down mostly by a deceleration of energy price rises. Eurozone inflation in March printed weaker than expected, as recent German CPI prints suggested, with headline CPI coming in at 1.5% vs 1.8% exp, while core inflation printed at 0.7% (also below the 0.8% exp.), and the lowest since April 2015.

There were tentative signs too that the euro zone’s weakest members would be hit the hardest by an imminent scaling back of the European Central Bank’s asset purchase program. The yield, an indication of borrowing costs, on bonds of southern euro zone states including Portugal and Italy headed higher in the final day of trading before the ECB drops its monthly purchases of debt from 80 billion to 60 billion euros. Top ECB policymaker Benoit Coeure emphasized the bank would tread carefully with any further changes.

In commodities, Brent oil and U.S. crude dipped to $52.91 a barrel and $50.35 a barrel, having zipped higher on Thursday after Kuwait backed an extension of OPEC production cuts. Oil was heading for a 6.8 percent loss for the quarter, though. In contrast gold which was at $1,241.81 has gained nearly 8 since the start of the year. Brent set for biggest weekly gain of 2017 on ongoing OPEC jawboning.  Benchmarks remain on course for biggest weekly gain of the year as expectations grow for an extension of OPEC output cuts. Brent declines slightly, near $52.75/bbl. WTI near $50.25 with rig count due later.

Yields on 10-year Treasuries rose one basis point to 2.43 percent, after climbing four basis points on Thursday. German 10-year yields were steady at 0.34%.

According to Bloomberg, investor focus in the second quarter looks set to be on whether political developments in the U.S. and Europe will cloud the a brightening global economic outlook. President Donald Trump’s setback on a flagship health-care bill has cast a shadow on his fiscal agenda, while French elections could be a litmus test for the rise of European populism.

“There’s a strong sense of political uncertainty going forward in both the U.S. and Europe,” said Masaru Hamasaki, head of the investment information department at Amundi Japan Ltd. “In the U.S., the repeal of the Obamacare replacement bill has continued to create confusion. In Europe, we’ve only just had the U.K. trigger Article 50. We’ve already essentially entered the new fiscal year, and its difficult to keep buying when you look to the future.”

Bulletin Headline Summary From RanSquawk

  • European equities have seen a particularly tentative session thus far amid light newsflow on the last trading day of the quarter
  • FX markets have been relatively quiet so far today, given it is month end — and year end in Japan
  • Looking ahead, highlights include US PCE, University of Michigan sentiment, ECB’s Coure and Fed’s Bullard & Kashkari

Market Snapshot

  • S&P 500 futures down 0.3% to 2,358.25
  • STOXX Europe 600 down 0.3% to 379.44
  • MXAP down 0.9% to 146.81
  • MXAPJ down 0.6% to 479.90
  • Nikkei down 0.8% to 18,909.26
  • Topix down 1% to 1,512.60
  • Hang Seng Index down 0.8% to 24,111.59
  • Shanghai Composite up 0.4% to 3,222.51
  • Sensex down 0.02% to 29,640.20
  • Australia S&P/ASX 200 down 0.5% to 5,864.91
  • Kospi down 0.2% to 2,160.23
  • German 10Y yield rose 0.5 bps to 0.338%
  • Euro up 0.2% to 1.0693 per US$
  • Italian 10Y yield rose 1.1 bps to 2.148%
  • Brent Futures down 0.6% to $52.66/bbl
  • Gold spot unchanged at $1,242.64
  • U.S. Dollar Index up 0.06% to 100.47

Top Overnight News

  • Flynn Said to Seek Immunity to Testify in Russia Probes
  • KKR Said to Woo State Funds on Deal for $12 Billion Tower Firm
  • Quorum Health Holder KKR May Engage in Talks With Management
  • South African Assets Tumble as Gloom Pervades Fiscal Outlook
  • EU Says U.K. Only Gets Trade Talks After Progress on Brexit Bill
  • AstraZeneca’s Tagrisso Wins Full FDA Approval for Lung Cancer
  • Johnson & Johnson Declares Actelion Tender Offer Successful
  • German Unemployment Falls to New Record Low as Economy Booms
  • Berkshire Hathaway Energy Boosts 3-Year Capex Plan by $4.6b
  • Denmark Teams Up With Industry Lobby to Boost F-35 Order Log
  • Borgwarner Sees Hybrid Cars With Turbochargers Fuelling Growth
  • Boeing Awarded $2.2 Billion Contract for 17 P-8A Poseidon Jets
  • Gas Exports to Send U.S. Stockpiles to 3-Year Low Before Winter

Asian equity markets traded somewhat mixed with some slight indecision heading into month, quarter and fiscal year-end, while the region also digested firm Chinese PMI data and the positive lead from Wall St. where the NASDAQ printed fresh record highs. Nikkei 225 (-0.8%) traded lower despite JPY weakness and better than expected Industrial Production, while ASX 200 (-0.3%) was dampened by property names following tighter mortgage lending regulations. Shanghai Comp. (+0.4%) and Hang Seng (-0.7%) were mixed as strong Official Manufacturing and Non-Manufacturing PMI data was counter-balanced by the PBoC’s hiatus from open market operations which resulted to a net weekly drain of CNY 290b1n. Furthermore, stocks in Hong Kong were also pressured after PetroChina missed on earnings and the world’s largest lender ICBC posted its weakest profit growth in over a decade. Finally, 10yr JGBs were lower amid heightened risk sentiment in Japan, while the curve flattened with underperformance seen in the short end. PBoC refrained from open market operations, for a net weekly drain of CNY 290b1n vs. last week’s net injection of CNY 80bIn.

Top Asian News

  • Rupee Set for Best 1Q Since 1975 as Foreigners Pour $12 Billion
  • China Manufacturing Gauge Climbs to Highest in Almost Five Years
  • China’s Factory Gauge Climbs to Highest in Almost Five Years
  • BOJ Cuts Purchase Size Range of 1-3, 3-5 Year JGBs in April
  • Battle With Apple Takes a Toll on Chinese Phone Giant Huawei
  • Indian Stocks Slip Ahead of Closing Best Quarter Since June 2014
  • BOJ to Purchase Fewer 1-to-5-Year Bonds in April, Rest Unchanged
  • IDR, INR, TWD Post Quarterly Gains Amid Fund Inflows: Asian NDFs
  • Japan Post Bank Applies to Expand Business Into Overdrafts, CDS
  • China Issues Free-Trade Zone Plans for Some Regions: Xinhua
  • China Benchmark Money Rate Climbs to Highest Since April 2015

European bourses remain quiet on typical Friday trade, but South African exposed companies are taking a major hit this morning. Investec (-7.5%) and Old Mutual (-7.5%) are down off the back of President Zuma sacking finance minister Gordhan. Elsewhere, markets remain quiet with Material names underperforming, albeit modestly so. Fixed income markets are also rangebound amid no real fundamental catalysts for any significant moves with markets somewhat unreactive to the latest raft of Eurozone inflation data which saw the headline Y/Y fall short of expectations (1.5% vs. Exp. 1.8%), with markets prepped for a soft figure given yesterday’s German numbers.

Top European News

  • French Upset Signaled by Internet Chatter Flagging Macron Flaws
  • U.K. House Prices Fall for First Time in Almost Two Years
  • RBS CEO Says Bank Would Move to England on Scotland Independence
  • Tusk Says ‘No Such Thing’ as a ‘Brexit Bill’ for U.K.
  • Marine Harvest Warns Food Safety Authority of Suspected PD Case
  • Too Early to Decide Location for Brexit Job Moves: UBS’s Orcel
  • U.K. Raises $14.7 Billion in Blackstone-Prudential Mortgage Deal

In currencies, the rand plunged as much as 2.6 percent before paring losses to trade 0.7 percent lower. South African President Jacob Zuma replaced Finance Minister Pravin Gordhan and overhauled his cabinet in a late-night move that threatens to trigger a revolt against the administration. The Bloomberg Dollar Spot Index rose 0.1 percent. The euro was little changed at $1.0679 after tumbling 0.9 percent Thursday. FX markets have been relatively quiet so far today, given it is month end — and year end in Japan. Alongside some notable data releases, we sense real money flow today is keeping specs largely on the sidelines, but the USD remains near better levels as US Treasury yields build (very) modestly on yesterday’s gains. USD/JPY buying has taken the pair up to highs just shy of 112.20, but traders wary of sporadic JPY repatriation flow which could hit at any time into the London fix. EUFt/USD hit lows around 1.0670-75 before trying to reclaim 1.0700, but decent intra day selling seen here, and only tempered by the usual flow anticipated in EUFt/GBP. EU wide inflation has come in weaker than expected, but the miss is slightly less in the core rate, with ECB officials already tempering some of the reactions in the rate markets this week to limit today’s reaction. 1.0700 capping for now, but strong demand seen from the mid 1.0600’s lower down. For EURGBP, the triggering of Article 50 and the subsequent response from the EU is what will be driving trade from here, but we saw strong demand just below 0.8550 this morning, generating an initial test back to 0.8600 recently.

In commodities, West Texas Intermediate crude fell 0.1 percent to $50.31, paring some big gains on Thursday that were spurred by a report Kuwait and other countries support prolonging production cuts. Oil prices remain buoyed this morning, with WTI notably holding above USD50.00, but looks fragile at present as the USD seems to have found fresh life. Lower than expected rises in inventory levels as reported from the API and DoE this week have been key to this, as have comments that discussions are in process on a potential extension to the production cut agreement. Iron ore prices under pressure due the stockpiles reported, but copper prices notably resilient. Gold edged lower on the back of the latest move higher in US Treasuries, but the yellow metal has held off USD1240 so far today. Silver remains above USD18.00.

Looking at the day ahead, it’s a busy day in the US this afternoon and headlined by the personal income, spending and PCE deflator data for February. Expectations is for a +0.2% mom rise in personal spending and +0.4% mom rise in income, while the deflator is expected to increase +0.1% mom. Away from that we will also get the March Chicago PMI before we finish the day with the final revisions to the University of Michigan consumer sentiment data for March. Away from the data there is more Fedspeak scheduled with Dudley, Kashkari and Bullard due to speak.

US Event Calendar

  • 8:30am: Personal Income, est. 0.4%, prior 0.4%
    • Personal Spending, est. 0.2%, prior 0.2%
    • Real Personal Spending, est. 0.1%, prior -0.3%
    • PCE Deflator MoM, est. 0.1%, prior 0.4%, PCE Deflator YoY, est. 2.1%, prior 1.9%
    • PCE Core MoM, est. 0.2%, prior 0.3%, PCE Core YoY, est. 1.7%, prior 1.7%
  • 9:45am: Chicago Purchasing Manager, est. 56.9, prior 57.4
  • 10am: U. of Mich. Sentiment, est. 97.6, prior 97.6, Current Conditions, prior 114.5, Expectations, prior 86.7,
    • 1 Yr Inflation, prior 2.4%
    • 5-10 Yr Inflation, prior 2.2%

Central Banks

9am: Fed’s Dudley Speaks to Mike McKee in Bloomberg TV Interview
10am: Fed’s Kashkari Answers Questions at Banking Conference
10:30am: Fed’s Bullard Speaking in New York

DB’s Jim Reid concludes the overnight wrap

A big factor for the strong performance in Q1 has been the incredibly calm start to the year as evidenced by what various measures of volatility have done this quarter. Indeed at the close of last night the VIX is now at 11.54 and just a shade above the January low of 10.58. It’s also down from 14.04 at the end of Q4. FX vol as measured by the CVIX (DB’s currency vol index of 9 major currency pairs) is now at 9.02 and also near the bottom of the range having started the year at 11.03.

We thought it would be interesting to put into context how low volatility has been in Q1 this year compared to Q1’s over the last 10 years. The VIX has traded in just a 5.14pt range this year using the intraday high to lows over the full quarter. The second lowest range in the VIX over the last 10 years came in 2014 when the range was 9.67pts while the highest came in 2009 when the range was 20.48pts. The average Q1 range from 2008 to 2016 was in fact 14.04pts. The highest level the VIX has hit in 2017 so far is 15.11 while the high points from the prior 9 year range from 21.48 to 57.36. In fact the high print for Q1 this year would rank as the sixth lowest level in the prior 9 Q1’s. So anyway you cut it this has been an incredibly low Q1 for volatility over the last decade.

As we highlighted in the EMR yesterday global economic data surprises are hovering around 6 and a half-year highs and it is interesting that this has coincided with US political uncertainty – as measured by the Baker, Bloom & Davis index – hitting the lowest level in the Trump-presidency era yesterday and in fact the lowest level since October 10th.

That backdrop is proving supportive for risk. Last night the S&P 500 closed up +0.29% and finished higher for the third day in a row. The index is also all of a sudden back to within just 33 points of the all-time high made at the start of this month. Unlike Wednesday banks were the big driver of the broader move higher yesterday with US banks finishing up +1.48%. That move came after Treasury yields reversed course for the fourth day in a row reflecting some fairly hawkish Fedspeak over the last 36 hours or so and a bigger than expected revision to Q4 GDP in the US. 10y Treasury yields closed 4.3bps higher at 2.421% and in fact are pretty much back to where they closed last Friday despite moves of at least 3.4bps up or down each day this week. Energy stocks also contributed positively yesterday after WTI Oil (+1.70%) rose for the third day in a row and finished above $50/bbl for the first time in 3 weeks with more suggestions that the OPEC production cut will be extended beyond the initial timeframe agreed.

Over in Europe equity markets also edged higher with the Stoxx 600 closing up +0.51%. Bonds were more mixed though and 10y Bund yields in fact edged down 1.1bps to 0.328%. A disappointing CPI print in Germany for March didn’t help (+0.2% mom vs. +0.4% expected) ahead of the wider Euro area reading today while the ECB’s Nowotny – who as a reminder a couple of weeks ago said that the ECB could raise the deposit rate before the prime rate – suggested that the ECB doesn’t want to prematurely raise interest rates and that there is no reason right now to deviate from the already defined monetary policy strategy for 2017.

Jumping quickly to the overnight session now where there has been a steady stream of both significant data and political related headlines. In China the official March PMI’s have been released. The manufacturing PMI has risen two-tenths to 51.8 this month (vs. 51.7 expected) and the highest since April 2012. The nonmanufacturing PMI has also risen to 55.1 from 54.2 and the highest since May 2014. That’s helped bourses in China to rise with the Shanghai Comp and CSI 300 +0.40% and +0.45% respectively. Elsewhere, in South Korea a court has ordered the arrest of former President Park Guen-hye following the issue of a warrant in connection with bribery and abuse of powers. The Kospi is little changed following the news. Over in EM the big story is out of South Africa where President  Zuma has dismissed finance minister Pravin Gordhan and 8 other cabinet members, which in turn is heightening political uncertainty in the country again. The news has caused the Rand to sell off sharply and is currently down about -3.60% from when the headlines broke. Finally in Japan core CPI was reported as rising +0.2% yoy in February and up for the second month in succession, while industrial production and jobless rate data also showed signs of improvement. Household spending data was a little softer than expected however. The Nikkei is +0.66% following that and the Yen a touch firmer.

Back to that data yesterday, where in the US Q4 GDP was revised up in the third and final revision to +2.1% qoq annualized from +1.9%. Growth in PCE was revised up five-tenths to +3.5% qoq annualized while corporate profits were recorded as growing modestly in the quarter by +0.5% qoq. That means corporate profits have now risen for two consecutive quarters for the first time since Q3 and Q4 of 2014. Elsewhere, initial jobless claims nudged down 3k last week to 258k. In Europe the only other data was the European Commission’s economic sentiment index which edged down 0.1pts to 107.9.

In terms of the Fed speakers, late last night NY Fed President Dudley said that he favours tapering reinvestments of the balance sheet “gradually and predictably” instead of outright ending them. Dudley also confirmed that the 2% inflation target for the Fed is not a ceiling and that risks for both economic growth and inflation over the medium to longer term are gradually shifting to the upside. Our favourite line from Dudley yesterday though was his reference to William McChesney Martin – the ninth and longest serving Fed Chair who famously said that the job of the Fed is to “take away the punch bowl just as the party gets going”. Dudley last night said that “I don’t think we are removing the punch bowl yet” but that “we’re just adding a bit more fruit juice”. Meanwhile the Dallas Fed’s Kaplan confirmed that two more hikes this year is a “good base case” although didn’t rule out more depending on how the economy evolves.

Looking at the day ahead, this morning in Europe we’ll be kicking off in Germany where the February retail sales data is due out before we then get the latest Nationwide house prices data in the UK for the month of March. Following that we’ll get CPI and PPI data out of France before Germany then releases unemployment data for March. It’s back to the UK after that where the final revisions to Q4 GDP will be released before we then get March CPI for the Euro area where consensus is for a slight dip in both the headline and core readings to +1.8% yoy and +0.8% yoy respectively. It’s just as busy in the US this afternoon and headlined by the personal income, spending and PCE deflator data for February. Expectations is for a +0.2% mom rise in personal spending and +0.4% mom rise in income, while the deflator is expected to increase +0.1% mom. Away from that we will also get the March Chicago PMI before we finish the day with the final revisions to the University of Michigan consumer sentiment data for March. Away from the data there is more Fedspeak scheduled with Dudley (2pm BST), Kashkari (3pm BST) and Bullard (3.30pm BST) due to speak. The BoE’s Haldane is due to speak this evening while the ECB’s Coeure speaks this morning.




i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 12.27 POINTS OR .38%/ /Hang Sang CLOSED DOWN 189.50 POINTS OR 0.78% . The Nikkei closed DOWN 153.66 OR 0.81% /Australia’s all ordinaires  CLOSED DOWN 0.28%/Chinese yuan (ONSHORE) closed UP at 6.8883/Oil ROSE to 50.06 dollars per barrel for WTI and 52.85 for Brent. Stocks in Europe ALL IN THE RED   ..Offshore yuan trades  6.8883 yuan to the dollar vs 6.8795 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS AGAIN/ ONSHORE YUAN STRONGER AND THE OFFSHORE YUAN  MUCH  WEAKER AND THIS IS  COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS SATISFIED WITH WASHINGTON’S RESPONSE 




The rhetoric from the Trump camp begins ahead of the big meeting with Xi on April 6.  He states that the USA cannot have massive trade deficits.  However what Trump is missing is the fact that the uSA dollar then cannot be the reserve currency of the world as many countries will no longer hoard dollars.

(courtesy zerohedge)

“We Can’t Have Massive Trade Deficits”: Trump Warns Of “Very Difficult” Meeting With China

One day after Kushner’s family confirmed they had ended talks with China’s Anbang Insurance Group concerning their interests in 666 Fifth Avenue in New York, a deal that would have netted the Kushner’s $400 million in cash, President Trump has decided to strike an aggressive tone ahead of his first meeting with China’s President Xi Jinping scheduled for next Thursday and Friday at his Mar-a-Lago resort in Florida.

After recent reports suggested that his administration may be softening on trade-related issues, Trump once again took to twitter to caution that his meetings with Xi may get a little turbulent, saying “we can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives.”

“The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives.”

The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits…

The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits…

…and job losses. American companies must be prepared to look at other alternatives.

Of course, these tweets follow a similar tone from Sean Spicer earlier today during his daily press briefing in which he said “there are big issues of national and economic security that need to get addressed.”  Per Reuters:

U.S. administration officials say the need for China to do more on North Korea, the large U.S. trade imbalance with China, and Beijing’s pursuit of expansive claims in the South China Sea will top the agenda. Trump has sharply criticized China on all of the issues.


White House spokesman Sean Spicer told a news briefing the meeting was be an opportunity for Trump “to develop a relationship in person with President Xi.”


“He’s spoken to him on the phone a few times, but we have big problems … everything from the South China Sea, to trade, to North Korea. There are big issues of national and economic security that need to get addressed.”


“Right now we’re not worried so much about slogans as much as progress. There’s a lot of big things that we need to accomplish with China, and I think that we will – we will work on them.”


The summit will follow a string of U.S.-China meetings and conversations aimed at mending ties after strong criticism of China by Trump during his election campaign.

Meanwhile, China has also been irritated at being told repeatedly by Washington to rein in North Korea’s nuclear and missile programs, or face U.S. sanctions on Chinese businesses trading with North Korea, and by the U.S. decision to base an advanced missile defense system in South Korea.

Beijing is also deeply suspicious of U.S. intentions toward self-ruled Taiwan, which China claims as its own, after Trump broke with decades of U.S. policy by taking a phone call from Taiwanese President Tsai Ing-wen and saying that Washington did not have to stick to a “one China” policy.

Of course, only time will tell if Trump will take the same approach with China that he did with Merkel and pass Xi a bill for the present value of past trade deficits.



If you believe their figures, Chinese manufacturing PMI jumps.  The markets are skeptical

(courtesy zerohedge)

China Manufacturing PMI Jumps To Five Year High


China’s reflation story (on the back of a record amount of debt created last year) was put on display on Friday morning when both the Chinese manufacturing and non-manufacturing PMI rose more than expected, with the Manufacturing PMI rising to a level not seen since April 2012. According to the NBS, China’s Mfg PMI rose from 51.6 to 51.8 in March, the highest in almost five years, and above the 51.7 consensus estimate, while the non-manufacturing PMI also jumped, rising from 54.2 to 55.1, the highest in two years.

The National Bureau of Statistics reported that New Orders rose from 53.0 to 53.3 while new export orders rose to 51, the highest since early 2012. Broken by firm size, the state-measured PMI showed largest enterprises were the strongest at 53.3, followed by medium-sized companies, while small firms remained in contraction at 48.6. Perhaps the most notable internal metric was the employment index, which hit the 50 level for the first time since May 2012, marking the first time the manufacturing sector has not lost jobs in nearly 5 years.

As the chart below shows, the catalyst for the move higher has been the recent surge in producer prices, which have soared as much as 7% Y/Y on the back of soaring commodity prices; both have since peaked and it is expected that in the coming months, China’s inflationary pressures will subside especially given the recent efforst by Beijing to reign in out of control credit, especially shadow, issuance.

A subindex for construction activity rose in March for the first time since the start of the year, hitting 60.5. As a reminder, and as Deutsche Bank explained two weeks ago, the only thing that matters for both China, and the rest of the world, is making sure China’s housing bubble, as explained in “Why The Fate Of The World Economy Is In The Hands Of China’s Housing Bubble,” does not burst.

“The first quarter is off to a good start,” said Wang Qiufeng, an analyst at China Chengxin International Credit Rating in Beijing, quoted by Bloomberg. “The upbeat momentum may last through the first half of this year, as the government is pushing investment.”

“The fact that the real strength is with the non-manufacturing PMI suggests that there’s fundamentally a good story going on here,” said James Laurenceson, deputy director of the Australia-China Relations Institute at the University of Technology in Sydney. “Manufacturing is where you’d expect to see the effects of stimulus showing up.”

So is China worried by the potential inflationary signals carried by today’s PMI prints? Oh yes, which is why the PBOC did not conduct a reverse repo liquidity injection for the sixth consecutive day, saying in a statement that the liquidity level if “relatively high” despite traditional month-end liquidity demands; as a result in the past 6 days, the PBOC has now drained some 320 billion yuan from the banking system.

In recent days this has led to a sharp move higher in various repo tenors, most notably the benchmark 7-Day repo, which on Thursday fell w bps to 2.81%, but has jumped sharply in the past week as interbank funding problems have emerged, leading to the biggest drop in months in the Shanghai composite index overnight. Keep an eye on the the repo market in Friday’s session for any acute liquidity shortages, especially since China’s onshore market is closed on Monday and Tuesday.



Huge raid in the Netherlands at Credit Suisse headquarters, as there are multiple tax probes of many people.  Gold bars, paintings and jewelry were seized.

I guess Credit Suisse did not put the last criminal penalty behind them (3 yrs ago)

(zero hedge)


Credit Suisse Offices Raided In Multiple Tax Probes: Gold Bars, Paintings, Jewelry Seized

Credit Suisse has confirmed that the Swiss bank, some of its employees and hundreds of account holders are the subjects of a major tax evasion probe launched in UK, France, Australia, Germany and the Netherlands, setting back Swiss attempts to clean up its image as a haven for tax evaders.

According to Bloomberg, Dutch investigators seized jewellery, paintings and even gold bars as part of a sweeping investigation into tax evasion and money laundering in the Netherlands. They added that the sums involved amounted to “many millions” of lost tax revenue.

Two individuals who were arrested on Thursday in connection with the raids were accused of concealing millions of euros from authorities by placing them, where else, in Swiss bank accounts, the Fiscal Information and Investigation Service said in a statement Friday. Criminal investigations are also underway in Australia, Germany, the U.K. and France.

The Swiss bank also said Friday that its offices in London, Paris and Amsterdam were raided Thursday by authorities in connection with client tax matters.

In a statement by the U.K. tax authority, it said it was investigating “senior employees” at a global financial institution. Australia’s Serious Financial Crime Taskforce said it had identified 346 of its citizens “with links to Swiss banking relationship managers alleged to have actively promoted and facilitated tax evasion schemes.”

While Credit Suisse said it was cooperating with the authorities, the investigations threatened an international row, with the Swiss public prosecutor expressing “astonishment” at the actions taken by Dutch authorities. The raids were done without informing authorities in Switzerland, the attorney general’s office in that country said in a statement. The Swiss aren’t conducting a criminal probe into the matter, a spokeswoman said.

According to the FT, statements by authorities in the UK and Netherlands did not mention Credit Suisse by name but suggested the inquiries were widespread with the potential to expand further.

The bank said it has “implemented Dutch and French voluntary tax disclosure programs and exited non-compliant clients,” and has applied a withholding tax agreement with the U.K. since 2013.

The latest tax crackdown takes place years after the second largest Swiss bank was hopeful it had put its tax-evasive days in the past.

To be sure, Credit Suisse was hit hard in the past over tax evasion allegations, and was fined $2.6 billion in the U.S. in 2014 and pleaded guilty to helping Americans evade taxes. The bank paid a 150 million-euro fine in Germany in 2011 to end court proceedings over allegations it helped clients evade taxes.

“The sheer volume of data and its international scope makes this an exceptional case,” said Thierry Boitelle, a lawyer with Bonnard Lawson in Geneva.

As Bloomberg adds, the investigations come as Credit Suisse begins implementing a new global standard for the automated exchange of information for its European locations. About 100 countries, or jurisdictions, including Switzerland, have agreed to collect data from banks to share annually with other tax authorities, making it harder for tax dodgers and money launderers to hide money with private banks.

Meanwhile, the Dutch public prosecutor’s office confirmed that authorities had received information on 55,000 people with accounts at a Swiss bank, including 3,800 Dutch people, spokeswoman Marieke van der Molen said. In the Netherlands, there are “dozens of suspects,” she said.

“The international reach of this investigation sends a clear message that there is no hiding place for those seeking to evade tax,” the U.K. authority said in its statement.

What is most confusing about this latest scandal, however, is that years after Obama launched an unprecedented crackdown on Swiss banking secrecy, effectively ending it, tens of thousands of clients still entrusted Swiss banks with their untaxed savings without concerns of confiscation. The other confusing aspect of this whole affair, namely that Europeans still save money at a time of negative interest rates, we will leave to the philosophers to debate.



The EU draft is now ready and it is not punitive at all.  It allows for parallel negotiations to continue and that is exactly what the UK wants. It certainly looks like the UK will be much better off!

(courtesy zerohedge)

The EU’s Draft Brexit Guidelines Look Anything But Punitive

Open Europe’s Vincenzo Scarpetta gives his initial take on the first draft of the EU’s guidelines for the upcoming Brexit negotiations.

European Council President Donald Tusk is a man of his word. He promised he would have a first draft of the Brexit negotiating guidelines for the 27 remaining EU member states ready within 48 hours from the moment the UK triggered the Article 50 exit mechanism – and he delivered. Overall, the document reads as anything but punitive. Below are my initial thoughts.

The door is wide open for parallel negotiations, albeit not from the very beginning

Over the past couple of days, the media have been (arguably too) quick to jump on carefully worded statements by a number of EU leaders – notably including German Chancellor Angela Merkel, on whose remarks my colleague Henry Newman blogged here – and conclude that the 27 were going to flat out reject Theresa May’s request to run ‘parallel negotiations’ on the terms of the divorce and the future UK-EU relationship.

However, the draft guidelines make it clear that parallel negotiations will be fully possible during the two-year timeframe stipulated by Article 50 – provided that “sufficient progress” on the terms of the withdrawal is achieved. In other words, the door is wide open for parallel negotiations – albeit not from the very beginning. This is the exact wording,

An overall understanding on the framework for the future [UK-EU] relationship could be identified during a second phase of the negotiations under Article 50. The [European] Union and its member states stand ready to engage in preliminary and preparatory discussions […] as soon as sufficient progress has been made in the first phase towards reaching a satisfactory agreement on the arrangements for an orderly withdrawal.

Crucially, Tusk himself told reporters in Brussels this morning,

It must be clear that the EU, as 27, decides if sufficient progress has been achieved, probably in the autumn, at least I hope so.

If his prediction is accurate, there would be about one year to discuss the future UK-EU relationship – although, of course, any successor agreement would need to be concluded after the UK formally leaves the EU and becomes a third country. It was always going to be the case that the EU27 would seek to discuss process and principles first – a point Open Europe has repeatedly made.

Non-members can’t enjoy same benefits as members – what else could EU27 say?

The draft guidelines stress that,

A non-member of the Union, that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member.

This is clearly an important statement, but possibly the most unsurprising of the entire document. The EU27 have always been adamant that any future settlement with the UK has to be “inferior” to membership of the bloc. From the EU’s point of view, stating the opposite would just not make sense. Furthermore, Theresa May has repeatedly said – including in her letter triggering Article 50 – that the UK accepts the indivisibility of the ‘four freedoms’ (free movement of goods, services, capitals and workers) and will therefore not seek continued membership of the EU’s single market.

Expats and the principle that ‘nothing is agreed until everything is agreed’

Another point that drew my attention concerns the rights of expats – both nationals of EU member states living in the UK and UK nationals living across the EU. The draft guidelines say,

Agreeing reciprocal guarantees […] will be a matter of priority for the negotiations.

However, in an earlier paragraph, the document also stresses,

In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately.

In other words, while an agreement on the rights of expats remains, in my view, relatively easy to wrap up and announce, the draft guidelines appear to suggest it would somewhat be tied to the overall success (or failure) of the withdrawal negotiations. Indeed, this cuts both ways and the EU27 will no doubt be determined to get this point settled.

A few potential sticking points

To be sure, the draft guidelines do include a few potential sticking points. Firstly, what has become known as the ‘Brexit bill.’ The document says,

A single financial settlement should ensure that the Union and the UK both respect the obligations undertaken before the date of withdrawal. The settlement should cover all legal and budgetary commitments as well as liabilities, including contingent liabilities.

Importantly, though, the draft guidelines do not mention any specific figure – suggesting the exact amount is up for discussion – and do not say anything about when the bill would be due.

Maltese Prime Minister Joseph Muscat, whose country holds the rotating presidency of the EU’s Council of Ministers, provided further clarity in his joint press conference with Tusk this morning, by saying,

The idea is that we have to come up with a methodology that shows and calculates those commitments, and also what Britain needs to take from European assets, as in a clear balance sheet.

Secondly, the draft guidelines imply that the EU27 might want the European Court of Justice (ECJ) to play a role as the dispute settlement mechanism “regarding the application and interpretation of the withdrawal agreement.”As I previously noted on this blog, this would be rather unpalatable for the UK government.

Thirdly, somewhat unsurprisingly, the document stresses the UK “will no longer be covered” by the trade deals the EU has concluded with third countries. We recommended on several occasions that the UK should look to ‘grandfather’ those trade deals after Brexit, in order to safeguard existing global supply chains and support growth in global trade. Encouragingly, the draft guidelines also say,

A constructive dialogue with the UK on a possible common approach towards third country partners and international organisations concerned should be engaged.

Finally, the draft guidelines mention the possibility of transitional arrangements “to provide for bridges towards the foreseeable framework for the future relationship”, and emphasise,

Should a time-limited prolongation of the Union acquis [the body of EU law] be considered, this would require existing Union regulatory, budgetary, supervisory, and enforcement instruments and structures to apply.

In plain English, this suggests the EU27’s preference for a transition period would essentially be a continuation of the status quo – whereby the UK would be expected to keep contributing to the EU budget and be subject to ECJ jurisdiction. Indeed, we have heard this before (see what Maltese Prime Minister Muscat said back in January). However, the UK is keen on a ‘phasing-in’ period – which involves gradual steps towards a new relationship with the EU. This divergence of views will need to be ironed out.

These draft guidelines will now be discussed among the ‘sherpas’ of the 27 remaining EU member states, with a view to EU27 leaders formally adopting them at their extraordinary summit on April 29. They are therefore subject to change, but after reading them I am more optimistic about the prospect of a good deal – for the UK and the rest of the EU.



A good account as to why the Italian banking sector is in serious trouble

(courtesy Don Quijones/and special thanks to Robert H for sending this to us)


Here’s Why Italy’s Banking Crisis Has Gone Off the Radar

Just how many banks are insolvent? Turns out, a lot! But elections are coming up.

by  • Mar 30, 2017


For a country that is on the brink of a gargantuan public bailout of its toxic-loan riddled banking sector, or failing that, a full-blown financial crisis that could bring down the European financial system, things are eerily quiet in Italy these days. It’s almost as if the more serious the crisis gets, the less we hear about it — otherwise, investors and voters might get spooked. And elections are coming up.

But an article published in the financial section of Italian daily Il Sole lays out just how serious the situation has become. According to new research by Italian investment bank Mediobanca, 114 of the close to 500 banks in Italy have “Texas Ratios” of over 100%. The Texas Ratio, or TR, is calculated by dividing the total value of a bank’s non-performing loans by its tangible book value plus reserves — or as American money manager Steve Eisman put it, “all the bad stuff divided by the money you have to pay for all the bad stuff.”

If the TR is over 100%, the bank doesn’t have enough money “pay for all the bad stuff.” Hence, banks tend to fail when the ratio surpasses 100%. In Italy there are 114 of them. Of them, 24 have ratios of over 200%.

Granted, many of the banks in question are small local or regional savings banks with tens or hundreds of millions of euros in assets. These are not systemically important institutions and can be resolved without causing disturbances to the broader system. But the list also includes many of Italy’s biggest banks which certainly are systemically important to Italy, some of which have Texas Ratios of over 200%. Top of the list, predictably, is Monte dei Paschi di Siena, with €169 billion in assets and a TR of 269%.

Next up is Veneto Banca, with €33 billion in assets and a TR of 239%. This is the bank that, together with Banco Popolare di Vicenza (assets: €39 billion, TR: 210%), was supposed to have been saved last year by an intervention from government-sponsored, privately funded bank bailout fund Atlante, but which now urgently requires more public funds. Their combined assets place them seventh on the list of Italy’s largest banks.

Some experts, including the U.S. bank hired last year to save MPS, JP Morgan Chase, have warned that Popolare di Vicenza and Veneto Banca will not be eligible for a bailout since they are not regarded as systemically important enough. This prompted investors to remove funds from the banks, further exacerbating their financial woes. According to sources in Rome, the two banks’ failure would send shock waves through the wider Italian financial industry.

There are other major Italian banks with Texas Ratios well in excess of 100%. They include:

  • Banco Popolare (the offspring of a merger of Banco Popolare di Verona e Novara and Banca Popolare Italiana in 2017 and then a subsequent merger with Banca Popolare di Milano on 1 January 2017): €120 billion in assets; TR: 217%.
  • UBI Banca: €117 billion in assets; TR: 117%
  • Banca Nazionale del Lavoro: €77 billion in assets; TR: 113%
  • Banco Popolare Dell’ Emilia Romagna: €61 billion in assets; TR: 140%
  • Banca Carige: €30 billion in assets; TR: 165%
  • Unipol Banca: €11 billion in assets; TR: 380%

In sum, almost all of Italy’s largest banking groups, with the exception of Unicredit, Intesa Sao Paolo and Mediobanca itself, have Texas Ratios well in excess of 100%.

But, as Eisman recently pointed out, the two largest banks, Unicredit and Intesa Sanpaolo, have TRs of over 90%. As long as the other banks continue to languish in their current zombified state, they will continue to drag down the two bigger banks. And if either Unicredit or Intesa begin to wobble, the bets are off.

To stay on the right side of the solvency threshold, Unicredit has already had to raise €13 billion of new capital this year and last week it took advantage of the ECB’s latest splurge of charitable lending (formally known as TLTRO II) to borrow €24 billion of free money. But as long as the financial health of the banks all around it continues to deteriorate, staying upright is going to be a tough order.

This is where things get complicated. In order to qualify for public assistance, banks must be solvent. Presumably, that would automatically disqualify any bank with a Texas Ratio of over 150%, which includes MPS, Banco Popolare, Popolare di Vicenza, Veneto Banca, Banca Carige and Unipol Banca. The bailout must also comply with current EU regulations including the Bank Recovery and Resolution Directive of Jan 1, 2016, which specifically mandates that before public funds are injected into a bank, shareholders and creditors must be bailed in for a minimum amount of 8% of total liabilities, as famously happened in the rescue of Cyprus’ banking system in 2013.

The Italian government knows that this approach could end up wiping out retail investors (otherwise known as voters) who were missold, in many cases fraudulently, subordinated bonds by cash-hungry banks in the wake of the last crisis, in turn wiping out the government’s votes. To avoid such an outcome, the government has proposed compensating those retail bondholders with public funds, just as the Spanish government did with the holders of preferente bonds. Which, of course, is in direct contravention of EU laws.

So far, the European Commission has stayed silent on the issue, presumably in the hope that the resolution of Italy’s financial sector can be held off until at least after the French elections in late April, if not the German elections in September. Then, if those elections go Brussels’ way, a continent-wide taxpayer funded bailout of banks’ NPLs can be unleashed, as already requested by ECB Vice President Vitor Constancio and European Banking Authority President Andrea Enria.

With no guarantee that Italy’s NPL-infested banks can hold out that long, it’s a dangerous waiting-and-hoping game. In the meantime, shhhhhhhh…




Relations between Trump and Russia sour and “worse than the cold war” according to Putin spokesman Vladimir Pesk ov

(courtesy zero hedge)


Russia Turns On Trump, Blames Him For Relations That Are “Worse Than The Cold War”

While few predicted the stock market surge should Trump get elected, virtually everyone anticipated a thawing of relations between Russia and the US if Donald Trump were to occupy the White House. And yet, 5 months later, the opposite has happened: stocks are just shy of the record 2,400 while relations between the Kremlin and the White House, despite all the rhetoric of Trump being an extended KGB agent or whatever the NYT/WaPo unsubstantiated narrative of the day is, have remained abysmal with no hope of improvement in sight.

As much was confirmed by Putin’s spokesman Vladimir Peskov today, who said on Friday that the relationship between the U.S. and Russia may worse now than it was during the Cold War.

When asked by “Good Morning America” host George Stephanopoulos if the U.S. and Russia were in a “new Cold War,” Peskov said the current situation may be worse, blaming the US for disintegrating the cooperation between the two countries.

But what will come a shock to the new generation of McCarthyist witch hunters, who see a Russian spy behind every criticism of US policy, or economic data, or of course democrats, Peskov blamed none other than the “present presidential administration”

“New Cold War? Well, maybe even worse. Maybe even worse taking into account actions of the present presidential administration in Washington,” Peskov told Stephanopoulos.

Curiously, as an example of collapsing relations, Peskov cited the decision to expel 35 Russian diplomats from the U.S. in December, which however was made under Obama and not President Trump.

The relationship between Trump and Russia has been the subject of intense scrutiny since before the real estate mogul took office in January. The U.S. intelligence committee unanimously concluded late last year that the Kremlin meddled in the 2016 election to help Trump, and he has spoken warmly of Putin, expressing a desire to improve U.S.-Russian relations. The House and Senate intelligence committees are conducting a probe of Russian election meddling, as well as Trump and his aides’ alleged ties to Moscow. The FBI is also investigating.

Putin denied that Russia sought to interfere in the presidential election, and has blamed the accusations on anti-Russian sentiment in the U.S.

However, as the the daily newsflow vividly indicates, the anti-Russia witchhunt continues. And, in keeping with the spirit of anti-Soviet (sic) paranoia sweeping the land, we are confident that Peskov’s statement will be interpreted by the left as an attempt by Russia to cover up their undisclosed “ties” to the Trump administration by turning on him.


Then in response, Tillerson blasts Russia for their Ukraine aggression.  Germany slams Trump with unrealistic NATO spending of 2% of GDP

(courtesy zero hedge)

Tillerson Blasts Russia For “Ukraine Aggression” As Germany Slams Trump’s “Unrealistic” NATO Demands

Secretary of State Rex Tillerson tried to reassure America’s nervous European counterparts over Washington’s commitment to NATO on Friday but it didn’t quite work out as expected when he pressed them again to spend more on defense, triggering a sharp rebuke from Germany.

“As President Trump has made clear, it is no longer sustainable for the U.S. to maintain a disproportionate share of NATO’s defense expenditures,” Tillerson said at a meeting of allied foreign ministers in Brussels.

Repeating what Trump told Angela Merkel during her US visit (when the US president reportedly handed the Chancellor an invoice for $375 billion for “overdue” NATO defense expenses) Tillerson said he wants member states of the North Atlantic Treaty Organization to agree at their summit in May to increase such spending by the end of the year or to make concrete plans to reach? 2% of gross domestic product by 2024—a target the Germans have contested.

What set off NATO ally anger however was Tillerson’s suggestion that the U.S. would prefer to micromanage the process, and wants to see annual milestones that would ensure the defense investment pledge? is implemented by the 2024 deadline, the WSJ reported.

NATO Foreign Ministers take part in a meeting at the Alliance’s headquarters

in Brussels, Belgium March 31, 2017. REUTERS/Yves Herman

Germany’s Foreign Minister Sigmar Gabriel was particularly incensed, acknowledging that while Germany should spend more, he said demands for spending 2% of GDP were “totally unrealistic.” To meet the U.S. target, he said, Germany would have to increase spending by some €35 billion ($37 billion).

Two percent would mean military expenses of some €70 billion. I don’t know any German politician who would claim that is reachable nor desirable,” Gabriel told the first meeting of NATO foreign ministers attended by Tillerson.

“The United States will realize it is better to talk about better spending instead of more spending,” he said, noting that humanitarian, development and economic aid to stabilize countries and regions should also count.

As the WSJ adds, Gabriel declined to answer questions about whether Germany intended to develop the kind of spending plans pushed by the U.S. Raising German military spending—now at about 1.2% of GDP—has long been seen by the U.S. as key to Europe shouldering more of its own defense.

Gabriel, a member of the left-leaning Social Democratic Party, has stepped up his criticism of further spending increases as September elections near, arguing that a strong defense isn’t enough to ensure security.


German Chancellor Angela Merkel, of the ruling Christian Democrats, has been more supportive of increased military spending than the SPD, who is a junior partner in her governing coalition.

Germany’s anger erupted first shortly after Trump’s meeting with Merkel earlier this month, when he made waves in Berlin by tweeting that “Germany owes…vast sums of money to NATO,” an accusation that roiled German officials.

Despite Germany’s rebuke, NATO Secretary-General Jens Stoltenberg embraced the push by the U.S. and said Europe must raise its spending and improve its military capabilities. “Increased military spending isn’t about pleasing the United States. It is about investing more in European security because it is important to Europe,” Stoltenberg said.

Stoltenberg noted that the U.S. has demonstrated its commitment, including by adding troops in Eastern Europe this year as part of a force meant to deter Russia. While Stoltenberg rejected Gabriel’s call to include non-military spending toward the goal, he said Germany was moving “in the right direction” with more military spending after years of cuts.

* * *

Meanwhile, Tillerson remained unswayed, and said allies will need to pay up or outline plans for meeting that target when NATO leaders meet on May 25 – the first NATO which will be attended by Trump himself. Trump has famously criticized NATO as “obsolete” and suggested Washington’s security guarantees for European allies could be conditional on them spending more on their own defense. He has also said he wants NATO to do more to fight terrorism.

“Our goal should be to agree at the May leaders meeting that by the end of the year all allies will have either met the pledge guidelines or will have developed plans that clearly articulate how…the pledge will be fulfilled,” Tillerson said.

U.S. defense expenditure makes up about 70 percent of the total NATO allies’ defense spending. Only four European NATO members – Estonia, Greece, Poland and Britain – meet the two-percent target.

While US demands for more money from NATO allies did not sit well with Germany, Tillerson did offer assurances of Washington’s commitment to NATO during his brief stop in Brussels, although U.S. officials said he did not have time for one-on-one meetings, which according to Reuters are customary during such gatherings. As previously reported, Tillerson’s initial decision to skip his first meeting with NATO foreign ministers while keeping his commitment for a trip to Russia, sparked a media frenzy added to questions about the Trump administration’s commitment. The meeting was later rescheduled and he attended on Friday.

“The United States is committed to ensuring NATO has the capabilities to support our collective defense,” Tillerson said. “We will uphold the agreements we have made to defend our allies.”

* * *

Finally, in keeping with the recent momentum of renewed deterioration in relations US-Russian relations, Tillerson said NATO was fundamental to countering Russian aggression in Ukraine. As Bloomberg reports, “Tillerson sought to assuage worries that the new administration would seek closer ties with Russia at NATO’s expense, particularly after Trump said during the 2016 presidential campaign that the alliance was “obsolete.”

“Let me be very clear at the outset of my remarks: the U.S. commitment to NATO is strong and this alliance remains the bedrock for trans-Atlantic security,” Tillerson said Friday in Brussels. “The NATO alliance is also fundamental to countering both nonviolent, but at times violent, Russian agitation and Russian aggression.”

He said U.S. sanctions on Russia for annexing Crimea “will remain until Moscow reverses the actions that triggered our sanctions” and “we will continue to hold Russia accountable.”

Defense Secretary James Mattis, a retired general known for his straight talk, was even more outspoken. At a briefing in London on Friday, he said Russia’s “violations of international law are now a matter of record — from what happened with Crimea to other aspects of their behavior in mucking around inside other people’s elections, that sort of thing.”


It was a blunt reference to Russia’s hacking and leaking of Democratic documents in last year’s American presidential election, a campaign that U.S. intelligence agencies found was aimed at hurting Trump’s rival Hillary Clinton and ultimately at helping him win.

Meanwhile, as relations between the Kremlin and the White House deteriorate with every passing day before Trump has even met with Putin, accusations that Trump is a puppet of the Kremlin remain the topic du jour across the US media.


Gordhan is fired as head of the Central Bank of South Africa.  He is widely regarded so his dismissal will create havoc for the Rand:

(courtesy zero hedge)

Gordhan Learned He Was Fired On TV

In his first comments to journalists since his stunning termination by South Africa’s president Zuma on Thursday night, ousted finance minister Pravin Gordhan dismissed an intelligence report used to justify his sacking as “absolute nonsense”. Quoted by the FT, the internationally respected, if feuding with Zuma, Gordhan said the report, which alleged he was plotting to overthrow president Jacob Zuma, was “not the basis on which you fire a minister”.

“There is an allegation circulating that sickens me, that I had secret meetings and the intention was to undermine this government,” Gordhan added and added that the Treasury had been subjected to the “most horrific attacks” in the past year, and said “we hope more and more South Africans will make it absolutely clear that our country is not for sale”. What is surprising is how resilient the rand had been during this period of “attacks”, even if it since given up most of its gains following the Gordhan sacking.

The former finance minister added that South Africans would support his deputy, Mcebisi Jonas, for refusing “a bag of cash”, a reference to allegations last year that Jonas was offered a bribe to be finance minister by the prominent Gupta family in 2015. The Guptas deny this allegation.

Conflict over the influence of the Gupta business family, friends of Mr Zuma’s, formed a key part of the year-long power struggle between the president and his finance minister.


Mr Zuma prompted speculation of an imminent cabinet reshuffle by recalling Mr Gordhan from an investor trip to London on Monday, and sacked him in a late-night cabinet reshuffle on Thursday.

But perhaps the most memorably part of the conference was Gordhan telling reporters that he and his deputy “learnt our fate from the TV screen. Not from any phonecall, chat or conversation. So that was I’m sure as interesting for us as it was for you.”

Cyril Ramaphosa, the deputy president who is one of the main contenders to replace Mr Zuma as ANC leader later this year, called Mr Gordhan’s firing “unacceptable” – but said he would not resign in protest. “I will stay in my position to serve the people of this country,” he said. South African assets have been hit hard by the news, with the rand, bond prices and bank stocks all tumbling and analysts predicting imminent downgrades to the country’s credit ratings.

* * *

Meanwhile, the shockwave over Zuma’s decision has sent South African assets tumbling and the Rand crashing.

As we reported yesterday, Zuma replaced Gordhan, with whom he feuded over state finances, with Home Affairs Minister Malusi Gigaba, who has no financial or business experience. He also named lawmaker Sfiso Buthelezi to take over from Mcebisi Jonas as deputy finance minister. The cabinet overhaul came in a late-night move that threatens to split the 105-year-old ruling African National Congress and trigger a revolt against the president. The rand extended losses, heading for its worst week in more than a year.

“Zuma has been playing Russian Roulette with our investment-grade rating through his actions,” Colin Coleman, head of sub-Saharan Africa at Goldman Sachs Group Inc., said in an interview on Bloomberg TV on Friday.

Zuma’s decision to replace Gordhan, popular with investors because of his efforts to rein in spending, came in the face of opposition from three of the top six members of the ANC and its alliance partner, the South African Communist Party. Some cabinet ministers were said to be ready to turn against the president, who’s survived a series of corruption scandals and presided over the party’s worst-electoral performance since the end of apartheid in 1994 in municipal elections in August.


While Zuma told the ANC leaders about Gordhan’s removal at the Thursday night meeting, they weren’t consulted about the rest of the cabinet changes, according to the party’s secretary-general, Gwede Mantashe. Gigaba was a compromise candidate, he said.

Gordhan’s ouster marked the end of a stormy relationship that began almost as soon as Zuma named him as finance minister in December 2015, four days after the president triggered a sell-off in the rand by replacing the respected Nhlanhla Nene with a little-known lawmaker. He clashed with his boss over the affordability of building nuclear power plants and the management of state-owned companies.

While removing an opponent in a key position may strengthen Zuma’s grip over the government in his final year as ANC leader, a backlash within the party would galvanize his detractors as he seeks to secure his choice as successor in a party election in December.

According to Bloomberg, the cabinet changes will leave South Africa’s credit rating vulnerable. Moody’s Investors Service, which rates South Africa’s debt at two levels above junk and with a negative outlook, is scheduled to publish a review of the nation’s creditworthiness on April 7. S&P Global Ratings and Fitch Ratings Ltd. kept their assessments at the lowest investment grade late last year.

“We expect the current explosion of political turmoil and its resulting economic and fiscal uncertainties to catalyze sovereign rating downgrades,” said Phoenix Kalen, director of emerging-market strategy at Societe Generale SA in London.

“Unlike when Nene was fired, the opposition to Zuma within his government is now much stronger, presaging a full-blown political crisis,” said Nicholas Spiro, a partner at London-based Lauressa Advisory Ltd., which advises asset managers.

Zuma’s made 20 changes to his administration, capping a dramatic week when he ordered Gordhan on Monday to cancel a series of meetings with investors in the U.K. and the U.S. and return home. South Africa’s fourth finance chief in 15 months, Gigaba, 45, was appointed as minister of home affairs in May 2014. A former president of the ruling party’s youth wing, he trained as a teacher and holds a masters degree in social policy. He previously served as the minister of public enterprises, deputy home affairs minister and as a lawmaker for the ANC.

* * *

Finally, for those curious how to trade the political upheaval in South Africa, here are some thoughts from Mark Cudmore, a former FX trader who writes for Bloomberg.

Zuma Snatches Rug From Beneath South African Assets: Macro View

Political developments in South Africa mean much more pain for local assets, but it’s not going to be easy to trade because the terrible domestic story is running against a very positive global macro environment.

  • President Jacob Zuma’s cabinet reshuffle is about as bad a development for South African assets as could have been feared.
  • The news came late in the local day, so U.S. and Asia commentators were focused on the headlines about Finance Minister Pravin Gordhan being dimissed. That alone is certainly very bad news but it’s distracting from the larger fact that a total of 20 ministers and deputy ministers were removed.
  • Despite speculation all week, the enormity of what has happened will still impact significantly when South Africa- focused market participants get up to speed Friday morning.
  • The country’s institutional integrity has been seriously undermined, and credit rating downgrades beckon. This really matters given the large amount of foreign money in the bond market –- some of which will be forced to divest by mandate amid a downgrade to junk status.
  • As outlined in this column on Tuesday, a far greater risk premium needs to be priced into South African assets. And this will be ongoing. Don’t think the correction is anywhere near complete.
  • But it won’t be a straight line affair. The theme of 2017 is of both the dollar and U.S. yields far underperforming hyped expectations. This continues to provide a massive tailwind for emerging-market assets.
  • Another support for South Africa is that, despite recent weakness, the country’s terms of trade have improved markedly during the past year.
  • These positives won’t be nearly enough to counter the negative shift Zuma initiated this week, but they will provide two-way volatility to the trading environment.


Two important points here:

1 Rig counts continue to rise in the USA which will without a doubt produce more oil which in turn will drive the Saudis crazy.

2 Saudi Arabia are now cutting prices to Asia because of the oil glut

(courtesy zero hedge)

Rig Count Continues To Threaten Oil Price Recovery, Saudis Cut Prices To Asia (Again)

For the 11th week in a row, the number of US oil rigs rose (up 10 to 662 – the highest since September 2015). US Crude production continues to track the lagged rig count, pouring more cold water on OPEC’s production cut party.

The rig count grows, tracking the lagged oil price in a self-defeating cycle…

And crude production appears to have plenty more room to run…

And don’t forget, as Nick Cunningham detailed, there are thousands of drilled shale wells are sitting idle, unfracked and uncompleted.

(Click to enlarge)

Once the DUCs are completed, new production will come online. And just as before, that backlog still weighs on the market. Wood Mackenzie estimates that if the Permian Basin’s DUC list was completed, it would add 300,000 bpd in new supply.That supply sitting on the sidelines will put downward pressure on any new oil price rally.

And worse still, as’s Tsvetana Paraskova, it seems the Saudis are starting to panic at the loss of market share… Abundant supply of light oil in Asia and weaker demand amid some seasonal refinery maintenance will likely prompt Saudi Arabia to cut the official selling price for most of its crude varieties bound for Asia in May.

At the beginning of March, Saudi Arabia unexpectedly lowered the April price for the light crude it sells to Asia. According to trade sources who spoke to Reuters, Saudi Arabia’s official selling price (OSP) for Arab Light was set for April at the low end of the range expected by a Reuters survey. At that time, the price for Arab Extra Light was cut by $0.75, which was more than expected.

For the May OSP, according to a Reuters survey of four Asian refiners, Saudi Arabia would likely cut the price of its Arab Light crude by $0.10-$0.40 per barrel from the April OSP.

“I’m seeing price reductions across the board,” one of the refiners surveyed told Reuters.

The Arab Light and Arab Extra Light grades prices are expected to drop more than the medium and heavy grades, since the Asian market is oversupplied mostly with light oil varieties, according to the sources Reuters has polled.

OPEC’s output cuts have made it profitable for oil traders to send crude from as far as the U.S., the North Sea and West Africa to Asia, and this has weakened demand for spot market purchases from Middle Eastern grades.

Another respondent in the Reuters survey for May prices said:

“The spot market is weak. Almost every type of crude is sold at discount against its OSP.”

Saudi Arabia releases OSPs for its grades around the fifth of each month, and as a policy Saudi Aramco does not comment on the monthly prices that Saudi Arabia is setting. The Saudi OSPs generally establish the trend for the prices that Iran, Kuwait, and Iraq charge for Asia-bound crude.



Brazil unemployment hits a record 13.2% as the world’s growth problem is hitting this commodity country hard

(courtesy zero hedge)

Brazil Unemployment Hits Record High, Same As Government’s Disapproval Rating

Things are going from bad to worse in Brazil where, contrary to what the stock market suggests, the economy continues to disintegrate.

Earlier today, the government reported that the labor market deteriorated further in February, with the unemployment rate surging to a record high (and higher than expected) 13.2%, resulting in 13.5 million unemployed workers (up from 10.4mn a year ago). The national unemployment rate printed at 13.2% in the 3-month period ending in February, up from 10.2% a year ago, and 7.4% two years ago. In seasonally adjusted terms the unemployment rate rose to 13.1% in February, from 12.9% in January and 10.1% a year ago.

Employment declined 2.0% yoy in the 3-month period ending in February and the economically active labor force expanded 1.4% yoy (slightly higher than the 1.3% yoy increase of the working age population). The labor force participation rate did not change from either January or a year ago.  Formal salaried employment in the private sector contracted 3.3% yoy, while employment in the informal sector rose 5.5% yoy. Self-employment declined 4.8%. By sector of economic activity, industrial employment retrenched by 4.3% yoy (-511 thousand jobs), and employment in the construction sector declined 9.7% yoy (-749 thousand jobs).

There was some good news on the wage front where average real wages rose by 1.5% yoy in February: with average real wages of the self-employed down 2.5% yoy and of those working in the formal sector of the economy up 0.6% yoy. However, the overall real wage bill of the economy declined 0.2% yoy in February driven by the retrenchment of employment (-2.0% yoy).

According to Goldman Sachs, looking forward, the labor market is likely to deteriorate further as the economy is yet to show signs of minimal positive growth to absorb new entrants into the labor force and with that stabilize the unemployment rate. Some analysts hope that the labor market dynamics will stabilize during 2H2017, and to start to recover towards the end of the year, however that hopeful take has yet to be validated.

The economy depression has taken a big hit on president Temer’s popularity, whose government was rated “Good/Very Good” by only 10% in a just released CNI/Ibope Poll, compared to 13% in the previous survey conducted in December. On the other side, Temer’s government was rated “bad/terrible” by 55% vs 46% in previous poll; rated “average” by 31% vs 35% previously.

Temer’s personal approval rating dropped to 20% vs 26% previously, while his personal disapproval rating rose to 73% vs 64% previously. Furthermore, 79% of respondents don’t trust Temer vs 72% in previous poll, and at the same time only 17% trust Temer vs 23% previously.

Should these trends continue, less than one year after the Rouse ff impeachment, Temer himself may soon have to worry about a political overhaul of his own.



Luisa Ortega attorney general breaks ranks with Maduro and states that his new mandate is nothing but a “coup”.  Bonds tank as this nation spirals out of control

(courtesy zero hedge)

Venezuela Bonds Crash As Political Situation Turns “Explosive”

Venezuela sovereign bonds crashed on Friday as a result of soaring political tensions after the annulment of the country’s legislature by its high court on Wednesday, a move that ignited protests, invoked international condemnation and prompted the opposition to call for a military response to what it deemed a “coup.”

One day after our report on the latest attempt by Maduro to seize unilateral control of the government and to isolate the opposition, the political situation turned “explosive” on Friday when Venezuela’s powerful attorney general Luisa Ortega broke ranks with President Nicolas Maduro’s government after the Supreme Court annulled congress, a rare show of internal dissent as protests and international condemnation grew. As a reminder, the pro-Maduro Supreme Court on Wednesday said it was assuming the legislature’s functions because it was in “contempt” of the law. The opposition promptly slammed the decision as a “coup” against an elected body.

Luisa Ortega, appointed attorney general in 2007 and a staunch ally of the Socialists who have ruled for the last 18 years, made an unexpected ideological U-turn and rebuked the Supreme Court’s controversial move to take over the opposition-led National Assembly’s functions.

In a speech before reporters, Ortega said Wednesday’s ruling against the congress “violates the constitutional order.” She was speaking at a scheduled briefing on the state of her office. “It’s my obligation to express my great concern to the country.” Ortega added that she was speaking in the name of her office’s 10,000 workers and 3,000 prosecutors. “We call for reflection, so that you take democratic paths that respect the constitution” and “guarantee peace,” she said, receiving a standing ovation

At that moment, state television immediately cut off transmission of her talk but other private media outlets continued to carry her remarks, which were quickly picked up by social media.

Venezuelan Attorney General as seen Friday on state-owned VTV television
broadcast before the channel pulled the plug on her criticism of the Supreme
Court’s move against congress

While various prominent political figures have leveled criticism after leaving the government, it is extremely rare for a senior Venezuelan official to criticize Maduro in this manner. One person who has known Ortega for years said it was not the first time she had expressed dissent within government, though never so publicly.

“Luisa has suffered a lot of threats from all sides for her principled actions,” the person said quoted by Reuters, asking not to be named for fear of reprisals.

Ortega had carefully toed Maduro’s line for years, jailing his opponents on trumped-up charges and declining to prosecute cases of endemic corruption the WSJ added. In recent months, however, she had distanced herself from the government, issuing release orders for detained opposition activists and meeting secretly with opposition leaders. Ortega’s speech could trigger even more defections within Venezuela’s sprawling bureaucracy and armed forces, said retired Maj. Gen. Cliver Alcalá, a top confidant of Mr. Chávez who broke ranks with Mr. Maduro last year  the WSJ added.

The military and bureaucrats have up to now maintained a show of iron unity in the face of the spiraling economic and political crisis, however in the most troubling development since the start of Venezuela’s crisis, the army may soon turn against Maduro, effectively leading to a presidential coup.

“The Armed Forces are part of Venezuelan society and as such have an obligations to put themselves in defense of the constitution,” Gen. Alcalá said.

The opposition alliance has lauded Ms. Ortega’s speech and called Venezuelans to a campaign of civil disobedience to prevent what they call the country’s slide into dictatorship. The opposition plans to march in Caracas Saturday.

* * *

Meanwhile, throughout Friday, pockets of protesters blocked roads, unfurled banners and chanted slogans against Maduro’s unpopular government. In Caracas, several dozen students marched to the Supreme Court, but were pushed back by soldiers with riot shields.

Some protesters also briefly blocked highways in the capital, holding banners reading: “No To Dictatorship.”

Police moved them on, and several were detained, according to a local human rights group. “We have to demand our rights, in the streets, without fear,” said opposition lawmaker Miguel Pizarro, who led a knot of demonstrators into a subway train. In volatile western Tachira state, several dozen demonstrators tore up copies of court sentences in front of local judicial buildings.

* * *

In addition to domestic condemnation, foreign leaders took the opportunity to slam Maduro’s move. Germany accused Venezuela’s president of holding the country’s population as “hostages” in his battle with parliament. German government spokesman Steffen Seibert on Friday urged the country to “return to democratic principles and the separation of powers.”

He told reporters in Berlin that “it is intolerable how President Maduro is making the population of his country hostages to his own power ambitions,” AFP reported.

In Spain, Prime Minister Mariano Rajoy tweeted that “if the division of powers is broken, then democracy is broken.” Rajoy expressed support “for freedom, for democracy and the rule of law in Venezuela.”

* * *

While some government critics were skeptical of Ortega’s criticism, speculating her comments may have been a show to feign separation of powers and give the government an excuse to tweak the controversial decision, the market disagreed and in response to the political situation which appeared on the verge of collapse, the price on Venezuela’s 9.25% bonds of September 2027 fell by more than 3.5 cents to around 46.4 cents on the dollar, the yield surging to 23%, the highest since last August. It was the largest one-day rise in yield since October.

Longer-dated bonds plunged even more: the more illiquid 7% of March 2038s were bid at 40 cents on the dollar, down from 42.6 cents on Thursday. Their yield rose to 18.22% from 17.17%.

It is unclear how much downside Venezuela’s sovereign debt has should the already explosive political situation escalate further, leading to the ouster of Maduro.  And perhaps an even more relevant question is what will happen to the price of crude should this more dire scenario play out.


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



GBP/USA 1.2457 DOWN .0018 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED


Early THIS FRIDAY morning in Europe, the Euro FELL by 5 basis points, trading now BELOW the important 1.08 level  FALLING to 1.0742; 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+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 12.27 POINTS OR 0.38%     / Hang Sang  CLOSED DOWN 189.50 POINTS OR 0.78% /AUSTRALIA  CLOSED DOWN 0.28%  EUROPEAN BOURSES IN THE RED

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

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

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

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

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

The NIKKEI: this FRIDAY morning CLOSED DOWN 153.96 POINTS OR 0.81%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 189.50 POINTS OR 0.78% / SHANGHAI CLOSED DOWN 12.27 OR .38%/Australia BOURSE CLOSED DOWN 0.28%/Nikkei (Japan)CLOSED DOWN 153.96 OR 0.81%  / INDIA’S SENSEX IN THE  RED

Gold very early morning trading: $1241.90


Early FRIDAY morning USA 10 year bond yield: 2.416% !!! DOWN 1 IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.03, PAR  IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 100.53 UP 2  CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING


And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 3.98%  UP 2  in basis point yield from THURSDAY 

JAPANESE BOND YIELD: +.07%  UP 1/5  in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.667%  UP 2 IN basis point yield from THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.318 UP 16 POINTS  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 65 points HIGHER than Spain.





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

Euro/USA 1.0693 UP .0005 (Euro UP 5 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.45 DOWN: 0.290(Yen UP 29 basis points/ 

Great Britain/USA 1.2539 up 0.0063( POUND up 63 basis points)

USA/Canada 1.3310 DOWN 0.0021(Canadian dollar UP 21 basis points AS OIL ROSE TO $50.40


This afternoon, the Euro was UP by 5 basis points to trade at 1.0693


The POUND ROSE BY 63  basis points, trading at 1.2539/

The Canadian dollar ROSE by 21 basis points to 1.3310,  WITH WTI OIL RISING TO :  $50.40

The USA/Yuan closed at 6.8831/
the 10 yr Japanese bond yield closed at +.070% UP 1/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 1/ 2  IN basis points from THURSDAY at 2.407% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.033 UP 1  in basis points on the day /

Your closing USA dollar index, 100.32 DOWN 9  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 DOWN 46.60 OR 0.63% 
German Dax :CLOSED UP 56.44 POINTS OR 0,46%
Paris Cac  CLOSED UP 32.87 OR 0.65%
Spain IBEX CLOSED UP 57.60 POINTS OR 0.55%
Italian MIB: CLOSED UP  125.19 POINTS OR 0.61%

The Dow closed DOWN 65.27 OR 0.31%

NASDAQ WAS closed DOWN 2.61 POINTS OR 0.04%  4.00 PM EST
WTI Oil price;  50.40 at 1:00 pm; 

Brent Oil: 53.33  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: $53.63


USA 30 YR BOND YIELD: 3.011%

EURO/USA DOLLAR CROSS:  1.0653 down .0036


USA DOLLAR INDEX: 100.53  up 2  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2536 : UP .0061  OR 61 BASIS POINTS.

Canadian dollar: 1.3312  DOWN .0017 (CAN DOLLAR UP 17 BASIS PTS)

German 10 yr bond yield at 5 pm: +.328%


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


Stocks End Best Quarter In Years With A Whimper But Gold Is Winner


So Q1 is over and this happened…


And the message is clear…


Gold wins…

It’s been an interesting quarter…

  • Nasdaq best Quarter since Q4 2013
  • S&P best quarter since Q4 2015
  • Dow up 6 quarters in a row – since The Shanghai Accord (the longest streak since Q4 2006)
  • Financials up four quarters in a row
  • USD Index second worst quarter since Q3 2010
  • Gold second best quarter since Q3 2012
  • WTI Crude’s worst quarter (and first losing quarter) since Q4 2015
  • US Crude Production had biggest quarter since Q3 2014

Nasdaq the big winner in US equities… (Trannies and Small Caps melted up to green in the last few days)


Energy was Q1’s big loser, Financials managed to bounce off unch, and Tech was the big gainer…


Only 2Y Yields were higher over Q1 – that’s with 2 rate hikes-ish…

The USD Index was a one-way trade in Q1 – down!


And for the month of March, gold also led (though most assets were negative)

Highlights of the month

  • Nasdaq up 5 months in a row (longest streak since May 2013)
  • Dow worst month since Oct 2016
  • S&P up 5 months in a row
  • Financials worst month since Sept 2016
  • USD Index second worst month since April 2016
  • HY Bonds’ worst month since Oct 2016
  • WTI Crude’s worst month since Jul 2016
  • US crude production is up 6 months in a row

Small Caps squeezed up to unchanged on the month and every effort was undertaken to keep the S&P green for March…BUT FAILED!


Financials were March’s biggest loser, Tech the leader again…


Given all the vol in equities and crude oil, bonds ended the month practically unch… Policy Error?


Treasury yields have been trading in a very wide range for 5 months…


The dollar tumbled after The Fed’s dovish rate hike…


Despite USD weakness, commodites all ended the month in the red – with Gold almost breaking even and crude ugly…


And finally for the week (after a big whipsaw last Friday on the pulled healthcare vote)…massive squeeze for Trannies and Small Caps


Ugly close for stocks with a big MOC Sell order…NOT off the lows…


Treasury yields leaked lower today as Dudley’s dovish words sent risk-off, leaving yields unch for the week…


The dollar dropped to a session low in choppy trading after New York Fed’s Dudley said that 2 more rate increases in 2017 seem about right, though there’s no need to hurry given that the economy is far from overheating, but ended the week marginally higher…


Despite the dollar’s gains, Crude squeezed over 5% higher on the week… Gold unch


WTI ended the week back above $50…


And gold above $1250 with Silver over $18 holding gains post Fed rate hike…



Wolf Richter echoses David Stockman that earnings growth is going nowhere

(courtesy Wolf Richter/WolfStreet)

The Last Two Times After The Government Reported Data Like This, Stocks Crashed

Authored by Wolf Richter via,

Wall Street claims surge in stocks is based on rising corporate earnings.

So, let’s see. The Commerce Department’s Bureau of Economic Analysis released its third estimate of fourth quarter 2016 GDP and corporate profits today. This second revision of its first estimate of January 27 contains more data and is considered a more accurate approximation of what happened in the vast, devilishly hard-to-quantify US economy.

In terms of GDP, the fourth quarter was revised up slightly, but there were adjustments for prior quarters, and overall GDP growth for the year 2016 remained at a miserably low 1.6%. We’ve come to call this the “stall speed.” It’s difficult for the US economy to stay aloft at this slow speed. As Q4 gutted any hopes for a strong finish, GDP growth in 2016 matched the worst year since the Great Recession.

And corporate profits, despite a stock market that has been surging for years, are even worse. A lot worse. They’ve declined for years. In fact, they declined for years during the prior two stock market bubbles, the dotcom bubble and the pre-Financial-Crisis bubble. Both ended in crashes.

However, Wall Street remains assiduously silent on this.

The BEA offers various measures of corporate profits, slicing and dicing them in different ways. One of them is its headline number: “Corporate profits with inventory valuation and capital consumption adjustments.”

It estimates “profits from current production,” based on profits before taxes, not adjusted for inflation, but with adjustments for inventory valuation (IVA) and capital consumption (CCAdj).These adjustments convert inventory withdrawals and depreciation of fixed assets (as they appear on tax returns) to the current-cost economic measures used in GDP calculations.

It’s a broad measure, taking into account profits by all corporations, not just the S&P 500 companies. This measure is reflected in the first chart below. Later, we’ll get into after-tax measures without those adjustments. They look even worse.

In Q4, profits rose to $2.15 trillion seasonally adjusted annual rate. That’s what the annual profit would be after four quarters at this rate. But profits in the prior three quarters were lower. And so Q4 brought the year total to $2.085 trillion. This was down from 2015, and it was down from 2014, and it was up only 2.6% from 2013, not adjusted for inflation.

This 20-year chart shows that measure. Note that the profits are not adjusted for inflation, and there was a lot of inflation over those 20 years:

Things get even more interesting when we look at after-tax profits on a quarterly basis. The chart below shows two measures:

  • Dark blue line: Corporate Profits after tax without adjustments for inventory valuation and capital consumption (so without IVA & CCAdj).
  • Light blue line: Corporate Profits after tax with adjustments for inventory valuation and capital consumption (so with IVA & CCAdj).

Q4 profits, at a seasonally adjusted annual rate, but not adjusted for inflation, were back where they’d been in Q1 2012:

By this measure, corporate profits have been in a volatile five-year stagnation. However, during that time – since Q1 2012 – the S&P 500 index has soared 70%.

It’s hard to blame oil: The price didn’t start collapsing until the fall of 2014. Earnings didn’t get hit until 2015. By mid-2016, oil was recovering. These dynamics have influenced the V-shaped drop and rise in 2015 and 2016. But the stagnation in the two prior years occurred when WTI was trading above $100 and occasionally above $110 a barrel!

The chart also shows that there were two prior multi-year periods of profit stagnation and even decline while the stock market experienced a massive run-up: from 1996 through 2000, leading to the dotcom crash; and from 2005 through 2008, which ended in the Financial Crisis.

This peculiar phenomenon – soaring stock prices during years of flat or declining profits – is now repeating itself. The end point of the prior two episodes was a lot of bloodletting in the markets that then refocused companies – the survivors – on what they needed to do to make money. For a little while at least, it focused executives on productive activities, rather than on financial engineering, M&A, and similar lofty projects. And it showed in their profits.

But that’s not happening now. Instead, executives are chasing after deals and paying record premiums to acquire other companies. And even data-provider Dealogic blamed stock market “exuberance” for driving merger valuations and premiums that have “soared to the highest level on record.” Read….  Why Does Pre-Collapse Year 2007 Keep Popping Up in M&A?


The American consumer seems worried as their savings rate increases and spending disappoints

(courtesy zero hedge)

Animal Spirits? Americans’ Spending Disappoints As Savings Rate Jumps To 4-Month Highs

For 12 months in a row, Americans’ spending has grown faster than their incomes.

Income growth YoY is the highest since May 2015 as spending growth slowed… with real disposable personal income seeing its first YoY increase since July.


February personal spending disappointed modestly, rising just 0.1% MoM while incomes grew at 0.4% MoM, as the savings rate rose to its highest since October 2016


Not exactly the animal spirits everyone is expecting.




Chicago’s soft data PMI jumps to a 2 year high despite a plunge in the employment index??

(courtesy zero hedge)

Chicago PMI Jumps To 2 Year Highs Despite Plunge In Employment Index

The good news – another ‘soft’ survey data item inches to a new post-Trump high as Chicago PMI rises to 57.7 – highest since Jan 2015. However, the bad news is that exuberant hope is not translating into hard reality as the employment sub-index collapsed into contraction.

The 57.7 print beat expectations of a modest decline to 56.9, but the employment component crashed from 57.7 to 49.9 – into contraction.

Business barometer rose at a faster pace, signaling expansion

  • Prices paid rose at a slower pace, signaling expansion
  • New orders rose at a faster pace, signaling expansion
  • Employment fell and the direction reversed, signaling contraction
  • Inventories rose at a faster pace, signaling expansion
  • Supplier deliveries rose at a faster pace, signaling expansion
  • Production rose at a faster pace, signaling expansion
  • Order backlogs fell at a slower pace, signaling contraction
  • Business activity has been positive for 12 months over the past year.


Soft data University of Michigan Consumer Confidence disappoints

(courtesy zerohedge)

UMich Confidence Measure Disappoints Amid “Rising Uncertainty Due To The Partisan Divide”

As University of Michigan’s Richard Curtin writes, Democrats expect an imminent recession, higher unemployment, lower income gains, and more rapid inflation, while Republicans anticipate a new era of robust growth in incomes, job prospects, and lower inflation. It is a rare situation that combines increasing optimism, which promotes spending, and rising uncertainty which makes consumers more cautious spenders.”

While MoM UMich headline data improved modestly, it declined from intra-month levels and missed expectations as both current and future expectations slipped from preliminary data…

Expectations for higher incomes declined intra-month and timing for buying a home, car, or major appliance declined.

Curtin tries to explain the divergence…

The high prevailing level of sentiment reflects the use of changed evaluative criteria.


Like economists who have lowered growth prospects, consumers have done the same, and have thus judged lower rates of growth more favorably than they would have in an earlier era.


Overall, the data indicate both rising optimism as well as rising uncertainty due to the partisan divide. The data indicate that real consumer spending will advance by 2.7% in 2017, but those gains will be uneven over time and across products.”

Meanwhile, inflation expectations slipped MoM (but gained modestly from preliminary record lows)


Right on cue, the Atlanta Fed reports that first quarter GDP is revised southbound to .9% from 1.0% on the poor consumer spending report.

(courtesy zero hedge)


Seattle Mayor, Ed Murray files a lawsuit over the sanctuary city non funding.

(courtesy zero hedge)

Seattle Mayor Files Lawsuit Over ‘Sanctuary City’ Funding; Blasts Trump’s “War On Cities”

Ed Murray, the Mayor of the city of Seattle, has just launched yet another federal lawsuit against the Trump administration’s threat to withhold federal grants to so-called “sanctuary cities,” citing the 10th Amendment that deals with states’ rights.  Murray also took to his bully pulpit to blast the Trump administration’s “war on cities” while simultaneously declaring that Seattle isn’t “breaking any laws” by simply choosing to ignore certain federal mandates.  Per NBC News:

“Apparently the Trump administration, their war on facts, has now become a war on cities,” Seattle Mayor Ed Murray said. He said the goal of the suit is to have a judge declare the order unconstitutional.


“Let me be clear about the facts: We are not breaking any laws and we are prioritizing safety,” Murray said.

Communities become LESS safe every day under Trump’s orders as residents become more afraid to report crimes. That’s why we must act now.


Of course, the comments from Murray followed Attorney General Jeff Sessions’ surprise appearance at Sean Spicer’s daily White House press briefing earlier this week to announce that his DOJ would be taking steps to not only require that so-called “sanctuary cities” enforce federal immigration laws but would also be seeking to claw back past DOJ awards granted to those cities if they refuse to certify compliance.

“Today, I’m urging states and local jurisdictions to comply with these federal laws.  Moreover, the Department of Justice will require that jurisdictions seeking or applying for DOJ grants to certify compliance with 1373 as a condition for receiving those awards.”


“This policy is entirely consistent with the DOJ’s Office of Justice Programs guidance that was issued just last summer under the previous administration.”


“This guidance requires jurisdictions to comply and certify compliance with Section 1373 in order to be eligible for OJP grants.  It also made clear that failure to remedy violations could result in withholding grants, termination of grants and disbarment or ineligibility for future grants.”


“The DOJ will also take all lawful steps to claw back any fines awarded to a jurisdiction that willfully violates Section 1373.”

Sessions’ full comments can be viewed below:


Meanwhile, Seattle’s AG also decided to chime in:

Seattle City Attorney Pete Holmes said the effects of the executive order have already been felt, with victims in domestic violence cases choosing not to pursue prosecution due to immigration status. He said local governments do not enforce federal immigration laws. Holmes noted that terms like “sanctuary cities” are nebulous and ill defined.


“Instead of the press conferences from Washington, instead of the Tweets from the White House, we want to have a sober statement of the law that can be reassuring to the communities that this is still the rule of law, and it’s still a nation of laws,” he said.

Of course, the snowflake bastion of San Francisco has already filed suit against the Trump administration’s executive order, also citing the 10th Amendment. “This strikes at the heart of established principles of federalism and violates the United States Constitution,” attorneys for the city and county of San Francisco wrote in its complaint.  A federal judge set a hearing for the city’s motion for a preliminary injunction to block the executive order for April 14.

Seems like the Trump administration, and few billion dollars in federal taxpayer subsidies, have struck a nerveSanctuary




Trump continues with his protectionists views as he is seeking to halt trade abuses i.e. countries with huge trade surpluses with the USA

(courtesy zero hedge)


Trump To Sign Executive Orders Seeking To “Halt Trade Abuses”, Boost Collection Of Duties

In a reminder that Donald Trump’s trade policies – at least as he represented in the past, before surrounding himself with ex-Goldman globalists – are largely protectionist, on Friday, the US President will sign executive orders aimed at “identifying abuses” that are causing “massive U.S. trade deficits” and clamp down on non-payment of anti-dumping and anti-subsidy duties on imports, his top trade officials said quoted by Reuters.

The latest executive orders come at a sensitive time, one week before Trump is set for his first face-to-face meeting with Chinese President Xi next week in Florida, where trade issues promise to be a major source of tension. China was the biggest contributor to the $734 billion U.S. goods trade deficit last year, and the meeting “will be a very difficult one” Trump said in a tweet on Thursday night.

The directives, if actually implemented, should allow Trump to focus on meeting his campaign promises to combat the flow of unfairly traded imports into the United States just a week after his pledge to repeal and replace Obamacare imploded in Congress. Commerce Secretary Wilbur Ross told reporters that one of the orders directs his department and the U.S. Trade Representative to conduct a major review of the causes of U.S. trade deficits.

These include trade abuses such as dumping of goods below costs and unfair subsidies, “non-reciprocal” trade practices by other countries and currencies that are “misaligned.”

Ross was careful to differentiate that currency misalignment was not the same as manipulation, and only the U.S. Treasury could define currency manipulation. But he said in some cases, currencies can become misaligned from their traditional valuations unintentionally, citing the Mexican peso’s sharp decline late last year after Trump’s election.

As Reuters adds, Chinese Vice Foreign Minister Zheng Zeguang on Friday acknowledged there was a trade imbalance, but said it was mostly due to differences in the two countries’ economic structures and noted that China had a trade deficit in services. “China does not deliberately seek a trade surplus. We also have no intention of carrying out competitive currency devaluation to stimulate exports. This is not our policy,” Zheng told a briefing about the Xi-Trump meeting.

The study also will examine World Trade Organization rules that Ross said do not treat countries equally, such as on taxation. The United States has long complained that WTO rules allow exports to be exempt from value-added taxes, but do not allow export exemptions from the U.S. corporate income tax.

* * *

The ordered study also will examine the effects of trade deals that have failed to produced forecast benefits, Ross said. The aim was to complete the study and report the findings to Trump in 90 days – a time frame that coincides with the expected start of negotiations to revamp the U.S.-Canada-Mexico North American Free Trade Agreement.

The study’s findings will underpin the Trump administration’s future trade policy decisions, Ross said, and will be the first “systematic analysis” of the trade deficit’s causes, “country-by-country, product-by-product.”


“It will demonstrate the administration’s intention not to hipshoot, not to do anything casual, not to do anything abruptly,” Ross told a White House briefing.


Ross has promised tougher enforcement of U.S. trade laws and more anti-dumping and anti-subsidy cases initiated by the Commerce Department, rather than relying on companies to claim injuries from imports.


He said the study would focus on those countries that have chronic goods trade surpluses with the United States. China tops the list, with a $347 billion surplus last year, followed by Japan, with a $69 billion surplus, Germany at $65 billion, Mexico at $63 billion, Ireland at $36 billion and Vietnam at $32 billion.

A second trade order to be signed by Trump aims to halt the non-payment and under-collection of anti-dumping and anti-subsidy duties the United States slaps on many foreign goods. White House National Trade Council Director Peter Navarro said $2.8 billion in such duties went uncollected between 2001 and the end of 2016 from companies in some 40 countries.

Navarro said the order directs the Commerce and Homeland Security departments to close these gaps by imposing tougher bonding requirements to ensure duty collections and new legal requirements for assessing risks associated with importers. Navarro, a harsh critic of China’s trade practices, insisted that the orders were not aimed at sending a message ahead of Xi’s visit.


Nothing we are saying tonight is about China,” he said. “This is a story about trade abuses, this is a story about under-collection of duties, this is a story about 40 countries that basically subsidize their products unfairly and send them into our country or dump their products.”

While Navarro has been a staunch supporter of anti-globalist trade practices, his voice has been muted in recent weeks by Trump’s “Goldman circle” of advisors, who share a very much opposing view on trade than Navarro and Bannon.



Very popular Michael Snyder talks about 2 major areas that will no doubt blow up the system:

1 Unfunded pension

2 bricks and mortar malls and commercial asset backed paper which funds these malls

(courtesy Michael Snyder/EconomicCollapseBlog)



Snyder Warns Of The Ticking Time Bomb That Could Wipe Out Virtually Every Pension Fund In America

Authored by Michael Snyder via The Economic Collapse blog,

Are millions of Americans about to see the big, juicy pensions that they were counting on to fund their golden years go up in flames in the biggest financial disaster in U.S. history? When Bloomberg published an editorial entitled “Pension Crisis Too Big for Markets to Ignore“, it simply confirmed what a lot of people already knew to be true.  Pension funds all over America are woefully underfunded, and they have been pouring mind boggling amounts of money into very risky investments such as Internet stocks and commercial mortgages.  Just like with subprime mortgages in 2008, this is a crisis that everyone can see coming well in advance, and yet nothing is being done about it.

On a day to day basis, Americans generally don’t think very much about pensions.  Most of those that have been promised pensions simply have faith that they will be there when they need them.

Unfortunately, the truth is that pension plans all over the country are severely underfunded, and this has already resulted in local fiascos such as the one that we just witnessed in Dallas.

But what happened in Dallas is just the very small tip of a very large iceberg.  According to Bloomberg, unfunded pension obligations on a national basis “have risen to $1.9 trillion from $292 billion since 2007″…

As was the case with the subprime crisis, the writing appears to be on the wall. And yet calamity has yet to strike. How so? Call it the triumvirate of conspirators – the actuaries, accountants and their accomplices in office. Throw in the law of big numbers, very big numbers, and you get to a disaster in a seemingly permanent state of making. Unfunded pension obligations have risen to $1.9 trillion from $292 billion since 2007.

And of course that $1.9 trillion number is not actually the real number.

That same Bloomberg article goes on to admit that if honest math was being used that the real number would actually be closer to 6 trillion dollars…

So why not just flip the switch and require truth and honesty in public pension math? Too many cities and potentially states would buckle under the weight of more realistic assumed rates of return. By some estimates, unfunded liabilities would triple to upwards of $6 trillion if the prevailing yields on Treasuries were used. That would translate into much steeper funding requirements at a time when budgets are already severely constrained. Pockets of the country would face essential public service budgets being slashed to dangerous levels.

So where are all of these pensions eventually going to come up with 6 trillion dollars?

That is a very good question.

Ultimately, even if financial conditions stay as stable as they are right now, a whole lot of people are not going to get the money that they were promised.

But things will get really “interesting” if we see a major downturn in the financial markets.  According to Dave Kranzler, if the stock market were to fall by 10 percent or more and stay there for a number of months, that “would cause every single public pension fund to blow up”.  And Kranzler is also deeply concerned about the tremendous amount of exposure that these pension funds have to commercial mortgages…

Circling back to the mall/REIT ticking time-bomb, while the Fed can keep the stock market propped up as means of preventing an immediate nuclear melt-down in U.S. pensions (all of which are substantially “maxed-out” in their mandated equities allocation), the collapse of commercial mortgage-back securities (CMBS) will have the affect of launching a nuclear sub-missile directly into the side of the U.S. financial system.


The commercial mortgage market is about $3 trillion, of which about $1 trillion has been packaged into asset-backed securities and stuffed into yield-starved pension funds. Without a doubt, the same degree of fraud of has been used to concoct the various tranches in these CMBS trusts that was employed during the mid-2000’s mortgage/housing bubble, with full cooperation of the ratings agencies then and now. Just like in 2008, with the derivatives that have been layered into the mix, the embedded leverage in the commercial mortgage/CMBS/REIT model is the financial equivalent of the Fukushima nuclear power plant collapse.

I have previously talked about the ongoing retail apocalypse in the United States which threatens to make so many of these commercial mortgage securities go bad.  It is being projected that somewhere around 3,500 stores will close in the months ahead, and this is going to absolutely devastate mall owners.  In turn, it is inevitable that a lot of their debts will start to go bad, and pension funds will be hit extremely hard by this.

But the coming stock market crash is going to hit pension funds even harder.  Stocks are ridiculously overvalued right now, and if they simply return to “normal valuations”, pension funds are going to lose trillions of dollars.

We are talking about a financial tsunami that will be absolutely unprecedented in our history, and yet investors continue to act like the party can last forever.  In fact, we just learned that margin debt on Wall Street has just hit another brand new record high

The latest data from the New York Stock Exchange show margin debt, or cash borrowed to buy shares, hit a record $528.2 billion in February, up from its prior high of $513.3 billion in January.

Of course my regular readers already know that margin debt also shot up to dramatic peaks just before the last two stock market crashes as well

Prior periods when margin debt hit records occurred around stock market peaks, including 2000 when the dot-com stock boom went bust, and 2007 when stocks began to crater amid early signs of trouble in the housing market ahead of the 2008 financial crisis.


Margin debt jumped 22% from the end of 1999 before peaking in March 2000 at $278.5 billion, the same month stocks peaked. In 2007, margin debt shot up to $381.4 billion in July, three months before stocks topped.

We are perfectly primed for the greatest financial disaster in American history, and yet very few people are sounding the alarm.

This massive financial bubble is a ticking time bomb, and when it finally goes off it is going to wipe out virtually every pension fund in the United States.



Well let us close out the week with this wrap up courtesy of Greg Hunter of USAWatchdog

(courtesy Greg Hunter/USAWatchdog)

Surveillance on Trump Backfires, Russian Collusion False Narrative, Are Markets Topping

By Greg Hunter’s

The pile of felonies against people in the Deep State that illegally released classified information, for the purpose of embarrassing and destroying the incoming Trump Administration, keep stacking up. This crime is orders of magnitude worse that Watergate.  The White House invited leaders of Congress to see documents from whistleblowers that point to improper handling of Intel surrounding the Trump team.

Meanwhile, the Democrats and their allies in the mainstream media (MSM) continue to push a false narrative of Trump and his team colluding with the Russians without one single piece of evidence of wrongdoing after 8 months of an FBI investigation. The leader of Russia, Vladimir Putin, said this week that Russian interference in the 2016 Presidential Election is “fictional, illusionary, provocations and lies . . . used for domestic political agendas.”

On the economy, two headlines from point to a dangerous top forming in the markets. One proclaims “Margin Debt Hits New Record High but Analysts Say “Don’t Worry.”   Another says “Fed’s Dudley: ‘I Don’t Think We Are Removing the Punch Bowl Yet.”  If these headlines are not the sign of an extreme market top, I don’t know what it would take?

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

After the Wrap-Up:

The “Early Sunday Release” will feature four time, best-selling book author James Rickards. He talks about the coming financial collapse, how assets will be frozen by the elite, what President Trump has to do now, and goes deep into gold and silver prices and why everybody needs to own some physical metal.

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I will see you Monday night





  1. Your reports have become very easy to peruse and evaluate according to specific need. Thank you.


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