April 18/Gold withstands a huge banker attack (bankers supplied non backed 22,000 contracts) trying to quell gold’s advance/ Silver not so lucky as it was down 24 cents/Silver’s OI now at a record 227,775/UK calls a surprise election and catches the pound shorts offside: the pound advances smartly today/Pentagon is now contemplating shooting down any new North Korean nuclear test missile/

Gold: $1291.70  UP $2.30

Silver: $18.25  DOWN 24  cents

Closing access prices:

Gold $1290.00

silver: $18.30!!!










Premium of Shanghai 2nd fix/NY:$7.69


LONDON FIRST GOLD FIX:  5:30 am est  $1285.00




For comex gold:



 TOTAL NOTICES SO FAR: 658 FOR 65,800 OZ    (2.0466 TONNES)

For silver:

For silver: APRIL


Total number of notices filed so far this month: 744 for 3,720,000 oz



The open interest in silver continues to advance with today’s reading just under 228,000 contracts (227,775 contracts/a new record) or about 4000 contracts ABOVE the record set last year. The price of silver is a good $2.14 below the previous record price when that record OI was set last year. It seems that the boys want to attack our precious metals as they are quite nervous about silver and its gigantic high OI for the front month of May.

Tonight’s open interest for gold should rise by about 2,000 contracts.  The silver OI should fall because the price fell by 24 cents. A rise will cause migraines galore for our bankers.

Let us have a look at the data for today





In gold, the total comex gold ROSE BY 513  contracts WITH THE SMALL RISE IN THE PRICE OF GOLD ($3.50 with YESTERDAY’S TRADING). The total gold OI stands at 474,257 contracts.

we had 26 notice(s) filed upon for 2600 oz of gold.


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


We had  no  changes in tonnes of gold at the GLD:

Inventory rests tonight: 848.92 tonnes



We had no changes in silver inventory at the SLV today/

THE SLV Inventory rests at: 328.201 million oz



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

1. Today, we had the open interest in silver ROSE BY  277 contracts UP TO  227,775, A NEW COMEX RECORD WITH NO  RISE IN  SILVER YESTERDAY ( 0 CENTS). We no doubt had some attempted short covering which badly failed as the longs keep piling on making it difficult for them to cover and overpowered the bankers. Our managed money sector (the hedge funds) continue to remain steadfast in their conviction as they added to their positions again with yesterday’s attempted raid. In gold, the open interest rose by 513 contracts with the accompanying rise in price by $3.50

(report Harvey


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg



i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 25.45 POINTS OR 0.79%/ /Hang Sang CLOSED DOWN 337.12 POINTS OR 1.39%.  The Nikkei closed UP 63.33 OR 0.35% /Australia’s all ordinaires  CLOSED DOWN 79%/Chinese yuan (ONSHORE) closed UP at 6.8837/Oil DOWN to 52.19 dollars per barrel for WTI and 54.75 for Brent. Stocks in Europe  CLOSED DEEPLY IN THE RED   ..Offshore yuan trades  6.8817 yuan to the dollar vs 6.8837 for onshore yuan. NOW  THE OFFSHORE IS SLIGHTLY WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN SLIGHTLY STRONGER  AND THE OFFSHORE YUAN  STRONGER TO THE ONSHORE AND THIS IS  COUPLED WITH THE WEAKER  DOLLAR. 



see USA stories







Bill Blain explains what to expect with the upcoming election in the UK

( Bill Blain/MINT Partners)

ii)Deutsche bank explains why early elections are a game changer and will bring huge gains to the pound:

(courtesy zero hedge)

iii)British stocks in an absolute bloodbath with the surprise election:

( zero hedge)

iv) Then the pound explodes killing a huge number of shorts along the way:

the pound now: 1.28417 up 0.0250 or 250 basis points

( zerohedge)



USA fighter jets intercept two Russian tactical bombers only 100 miles from the Alaska coast.  Getting scary!

( zero hedge)


I warned you about this.  Russia seizes a tanker due to an unpaid shipping fees

( zerohedge)


Reuters: Toronto Canada

Government officials meet in Toronto trying to solve the biggest bubble ever created in real estate

( Reuters)


Oil slides after the market realizes that the Saudis will not extend their production cuts due to the increase in shale production from the uSA

( zero hedge)



i)Gold trading early this morning:

a massive 22,000 contracts thrown by the bankers but this will be to no avail

( zero hedge)

ii)Asia’s richest man Li Ka-Shing is now buying gold aggressively’

( Mac Slavo)

iii)India over the January through March period saw imports of gold total 230 tonnes which is excellent.  I should also point out that this does not include smuggling which is significant.  If this continues India will be back to importing over 1000 tonnes per year”

10. USA stories

i)USA trading early Tuesday morning:

The USA dollar begins to sink as Goldman Sachs covers its losing trade.  It blames the Fed and Trump. Goldman exits all long dollar trades.

( zerohedge)


ii)Gold skyrockets, bonds tumble as the Pentagon is planning on knocking out North Korea’s missiles once fired:

( zero hedge)

iii)Today’s big story; The Pentagon is now considering shooting down North Korea Missile tests:

( zero hedge)

iv)Goldman disappoints as fixed income sector the culprit.  Its stock slides as their average compensations hits 360,000
( zero hedge)
v)Industrial production tumbles and generally this will signal a recession
( zerohedge)

vi)Vacancy rates skyrocket in the USA’s 4 largest city Houston.

( zero hedge)

vii(And the USA is still having a massive increase in bartenders and waiters: the USA restaurant industry suffers its worst collapse since 2009

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 513 CONTRACTS UP to an OI level of 474,257 WITH THE  RISE IN THE PRICE OF GOLD ( $3.50 with YESTERDAY’S trading). The bankers again were certainly not shy in supplying the necessary paper to our newbie longs. 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 A LOSS OF 24 contract(s) FALLING TO 1,096. We had 7 notices served yesterday so we LOST 17 contracts or 1700 oz will NOT stand for delivery in the active delivery month of April AND THESE GUYS WITHOUT A DOUBT WERE CASH SETTLED THROUGH THE OBSCURE EFT ROUTE DESCRIBED BY JAMES TURK. 

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 LOST 21 contract(s) and thus its OI is 2294 contracts. The next big active month is June and here the OI ROSE by 718 contracts UP to 345,421.

We had 26 notice(s) filed upon today for 700 oz

And now for the wild silver comex results.  Total silver OI ROSE BY 277 contracts FROM  227,498 contracts UP TO 227,775 WITH YESTERDAY’S  0 CENT PRICE RISE.  In both gold and silver, the bankers had no choice as they supplied the necessary paper to contain both of our precious metal’s excitement. As I stated on Thursday night AND LAST NIGHT:
“They knew that they were cornered and they are now trying to figure out how to extricate themselves from their mess!!”
The line in the sand is $18.50 for silver.  Once pierced, the monstrous billion oz of silver shorts will blow up. The bankers are defended the Alamo with their last stand at the $18.50 mark.
We HAVE NOW SURPASSED  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.  EVEN THOUGH WE HAVE SET ANOTHER RECORD HIGH TODAY IN OI,  WE ARE STILL $2.20 BELOW THE PRICE OF $20.44 WHEN THE PREVIOUS RECORD WAS SET.

We are in the NON active delivery month is APRIL  Here the open interest GAINED 6 contracts UP to 86 contracts. We had 0 notices filed yesterday so we GAINED 6 contracts or an additional 30,000 oz will stand for delivery AND NO CONTRACTS WERE PAPER SETTLED THROUGH THE ERP ROUTE.

The next active contract month is May and here the open interest  LOST ONLY 4,759 contracts DOWN to 124,748 contracts which is astonishingly high. It is this front month that the crooked bankers are targeting as they must be frightened to see such a mammoth amount of contracts still standing for metal. Also remember that Good Friday was much earlier last year:  we have only 8 trading days before first day notice. The non active June contract GAINED  3 contracts to stand at 186. The next big active month will be July and here the OI gained 4442 contracts up to 71,194.


For those keeping score, the initial amount of silver oz that stood for delivery for the May 2016 contract month: 28.01 million oz.  By conclusion of the month only 13.58 million oz stood and the rest was cash settled.(EFP ROUTE)


We had 0 notice(s) filed for NIL oz for the APRIL 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 104,691  contracts which is poor.

Yesterday’s confirmed volume was 201745 contracts  which is good.

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for APRIL
 April 18/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 417.96 oz
13 kilobars
Deposits to the Dealer Inventory in oz 1799.855 oz


Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
26 notice(s)
2600 OZ
No of oz to be served (notices)
1070 contracts
107,000 oz
Total monthly oz gold served (contracts) so far this month
658 notices
65800 oz
2.0466 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   445,891.5 oz
Today we HAD 2 kilobar transaction(s)/
Today we had 1 deposit(s) into the dealer:
 i) Into Brinks:  1799.855 oz
total dealer deposits: 1799.855 oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 2 customer withdrawal(s)
i) Out of Manfra: 321.500  oz
(10 kilobars)
ii) Out of Delaware:  96.46 oz (3 kilobars)
total customer withdrawal: 417.96 oz
 we had 0 adjustments:

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 26 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 (658) x 100 oz or 65,800 oz, to which we add the difference between the open interest for the front month of APRIL (1096 contracts) minus the number of notices served upon today (26) x 100 oz per contract equals 172,800 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 (658) x 100 oz  or ounces + {(1096)OI for the front month  minus the number of  notices served upon today (7) x 100 oz which equals 172,800 oz standing in this non active delivery month of APRIL  (5.3748 tonnes)
we LOST 17 contracts or an additional 1700 oz will NOT  stand and THESE were cash settled via the PRIVATE EFP route. IT SURE SEEMS THAT THE COMEX IS OUT OF PHYSICAL METAL TO SUPPLY TO OUR LONGS. THE COMEX IS NOW ONE BIG JOKE!!
 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 4 months of  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: 5.3748
total for the 16 months;  250.204 tonnes
average 15.630 tonnes per month
Total dealer inventory 992,296.856 or 30.864 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,969,301.739 or 278.98 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.98 tonnes for a  loss of 24  tonnes over that period.  Since August 8/2016 we have lost 75 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
 April 18. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
101,118.243 oz
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
1,207,357.251 oz
597,304.73 oz
1029.82 oz
total:  1,805,691.801 oz
No of oz served today (contracts)
No of oz to be served (notices)
86 contracts
(430,000  oz)
Total monthly oz silver served (contracts) 744 contracts (3,720,000 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  10,222,760.2 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 4 customer withdrawal(s):
i) Out of CNT: 57,931.213 oz
ii) Out of Brinks:  3008.86 oz
iii) Out of Delaware: 5025.60 oz
iv) Out of Scotia: 35,152.57 oz
 We had 3 Customer deposits:
i) Into JPMorgan:  1,207,357.351 oz
ii) Into Brinks: 597,304.73  oz
iii) Into Delaware: 1029.82 oz
***deposits into JPMorgan have now resumed.
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits; 1,805,691.801 oz
 we had 1 adjustment(s)
i) out of CNT:
1,200,797.415 oz leaves CNT and enters the customer account of CNT.
The total number of notices filed today for the APRIL. contract month is represented by 0 contract(s) for NIL 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 744 x 5,000 oz  = 3,720,000 oz to which we add the difference between the open interest for the front month of APRIL (86) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the APRIL contract month:  744(notices served so far)x 5000 oz  + OI for front month of APRIL.(86 ) -number of notices served upon today (0)x 5000 oz  equals  4,150,000 oz  of silver standing for the APRIL contract month. 
We GAINED 6 contracts or an additional 30-,000 oz will stand for delivery in this non active delivery month of April. NO CONTRACTS WERE CASH SETTLED THROUGH THE EFP ROUTE


Initially for the April 2016 contract1,180,000 oz stood for delivery.  At the end of April 2016: 6,775,000 oz stood as bankers needed much silver to fill major holes elsewhere.

Volumes: for silver comex
Today the estimated volume was 62,007 which is huge 
Yesterday’s  confirmed volume was 74,701 contracts OR 374 MILLION OZ /huge.  (THE 374 MILLION OZ = 53 % OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA)
Total dealer silver:  29.088 million (close to record low inventory  
Total number of dealer and customer silver:   193.278 million oz
The total open interest on silver is  now at record levels of 227,498 contracts with the price of $18.42
The previous record was 224,540 contracts with the price at that time of $20.44


NPV for Sprott and Central Fund of Canada

will update later tonight the central fund of Canada figures

1. Central Fund of Canada: traded at Negative 5.6 percent to NAV usa funds and Negative 5.7% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.5%
Percentage of fund in silver:39.4%
cash .+0.1%( April 18/2017) 
2. Sprott silver fund (PSLV): Premium RISES TO   -.13%!!!! NAV (April 18/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES to +0.32% to NAV  ( April 18/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -.13% /Sprott physical gold trust is back into POSITIVE/ territory at +0.32%/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.


And now the Gold inventory at the GLD

April 18/no changes at the GLD/Inventory remains at 848.92 tonnes

April 17/no changes at the GLD/Inventory remains at 848.92 tonnes

April 13/a deposit of 6.51 tonnes into the GLD/Inventory rests at 848.92 tonnes

this no doubt is a paper deposit/

APRIL 12/no changes in gold inventory at the GLD/Inventory rests at 842.41 tonnes

April 11/a huge deposit of 4.12 tonnes into inventory/Inventory rests at 842.41 tonnes

this would no doubt be a paper gold entry. It would be difficult to find that amount of physical gold.

April 10/1.77 tonnes added into inventory at the GLD/inventory rests at 838.29 tonnes

April 7/a small withdrawal of .28 tonnes from the GLD/Inventory rests at 836.49 tonnes

April 6/no change in gold tonnage at the GLD/Inventory rests at 836.77 tonnes

April 5/no change in gold tonnage at the GLD/Inventory rests at 836.77 tonnes

April 4/no change in gold tonnage at the GLD/Inventory rests at 836.77 tonnes

April 3.2017: a huge deposit of 4.45 tonnes of gold into the GLD/Inventory rests at 836.77 tonnnes

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

April 18 /2017/ Inventory rests tonight at 848.92 tonnes


Now the SLV Inventory

April 18/no changes in inventory at the SLV/Inventory rests at 328.201 million oz

April 17/no changes in inventory at the SLV/Inventory rests at 328.201 million oz

April 13/no changes in inventory at the SLV/Inventory rests at 328.201 million oz

April 12/no changes in inventory at the SLV/Inventory rests at 328.201 million oz/

April 11/a paper deposit of 11.131 million oz into the SLV/no doubt yesterday’s entry of a withdrawal of 11.231 million oz was in error/328.201 million oz

April 10/ a paper withdrawal of 11.231 million oz of silver from the SLV and this silver was used in the raid today. Inventory rests at 317.231 million oz

April 7./ a withdrawal of 947,000 oz of silver from the SLV/Inventory rests at 328.201 million oz.

April 6/a tiny withdrawal of 136,000 oz of silver from the SLV/Inventory rests at 329.148 million oz

April 5/ a withdrawal of 1.042 million oz from the SLV/Inventory rests at 329.284 million oz

April 4/no change in inventory at the SLV/Inventory rests at 330.326 million oz/

April 3.2017; a withdrawal of 568,000 oz from the SLV/Inventory rests at 330.326

million oz/

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/
April 18.2017: Inventory 328.201  million oz

Major gold/silver trading/commentaries for MONDAY



Gold Erases Post- Election Fall as Trump Wrong on Dollar

Gold Bullion Erases Post- Election Fall as Trump Wrong on Dollar – Daily Prophet 

Robert Burgess of Bloomberg Prophets

President Donald Trump sent currency markets into a tizzy late Wednesday when he signaled his preference for a weaker dollar. “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me,” Trump told the Wall Street Journal.

Although the greenback immediately dropped before stabilizing Thursday, that’s only part of the story. In fact, it has been falling all year as traders lose confidence in Trump’s ability to push his pro-business, pro-growth policies through Congress. Judging by the Federal Reserve’s U.S. Trade Weighted Real Broad Dollar Index, the currency is weaker now than at the end of November, the month of Trump’s election victory. Other markets are sending similar signals. Stocks are rolling over and yields on Treasuries suggest optimism for stronger economic growth is quickly fading.

It’s no wonder that perhaps the only market hotter than the one for Treasuries is the one for gold. Bullion is up 11.4 percent this year to $1,289.10 an ounce. In a survey this week, traders and analysts were the most positive on gold since December 2015, according to Bloomberg News’ Eddie van der Walt and Ranjeetha Pakiam.

In yet another bullish sign, prices have climbed above the 200-day moving average and Britain’s Royal Mint said bullion purchases jumped 20 percent in the first quarter.

“We have all these latent threats that have been around for a while, Trump, European elections, Brexit, and they’re all just becoming a little more acute,” said Mark O’Byrne, a director at broker GoldCore Ltd. in Dublin.

Full article on Bloomberg Prophets here


Gold trading early this morning:

a massive 22,000 contracts thrown by the bankers but this will be to no avail

(courtesy zero hedge)

Despite Dollar Dump, Gold Just Got Slammed By $3 Billion Notional Sale

While the dollar index tumbles to its lowest level since days after the election…


Someone decided this morning was an opportune time to dump over 22,000 gold futures contracts (almost $3 billion notional) sparking a quick plunge in the precious metal…


Asia’s richest man Li Ka-Shing is now buying gold aggressively’


(courtesy Mac Slavo)

Asia’s Richest Man Is “Aggressively Adding Direct Exposure To Gold”

Authored by Mac Slavo via SHTFplan.com,

The world is awash in crisis with wars looming, economies crashing and revolutions brewing. Doomsday bunkers sales are soaring and individuals from coast to coast are getting ready for whatever tomorrow may bring. Moreover, even governments like China and Russia are preparing, having gone so far as to create their own exchange mechanism to trade directly with gold in the event of a global currency crisis or financial meltdown.

But it’s not just governments who have taken notice of the problems facing the globe. According to Gold Mining Chairman Amir Adnani and Sprott U.S. Holdings CEO Rick Rule, some of the biggest billionaire investors on the planet are actively seeking out precious metals like gold as wealth protection insurance amid the uncertainty of the current geo-political climate.

In a recent interview with SGT Report, Adnani explains that several super wealthy individuals with whom he works very closely, including mainland China’s biggest billionaire investor and the richest man in all of Asia Li Ka-shing, have a renewed and urgent interest in diversifying their assets into both, gold mining firms and the physical asset itself:

This individual’s net worth is about $35 billion… For the first time in a number of years of working with his team when it comes to investments in commodities that they believe were important to the strategic growth of China… for the first time they are looking for gold related investments.


The comment from the person heading this initiative for Li Ka-shing is very interesting… His right had man said to me ‘He’s not just looking for investing in gold mines… he literally wants to find more ways to take physical gold back to Hong Kong and have that exposure.’


This is the largest individual investor in mainland China and I tell you over the last few years of having worked with him on the energy side, this is the first time I have seen him so aggressively looking for gold related opportunities.

In the full interview, insiders Amir Adnani and Rick Rule share their experiences working with others large investors, current strategies and expectations of what’s to come:

(Watch at Youtube)The reason for why these high net worth individuals are rapidly moving into gold related assets, notes Adnani, is that they are not necessarily all that concerned with the current price and how high it may go in the future, but rather, because precious metals are backed with thousands of years of evidence that they are the asset of last resort during crisis:

That’s one… the second one… we’re very fortunate at Gold Mining… one of the board members of our company who has been a founder of the company since day one is a Brazilian billionaire by the name of Mario Garnero…


When I look at the level of interest that his organization has in terms of wanting that direct exposure to gold… I talked to them about why they are looking at this…


They’re focused on one factor that we seldom think about… We’re so fixated on price of gold… what they’re focused on… what the super wealthy are focused on… what the billionaires are focused on… is the fact that gold plays that hedge in your portfolio… that’s it’s the insurance in the portfolio…


It may not necessarily be as critical to think whether it’s $1200 an ounce or $1300… we fixate so much on the price… and we forget that irrespective of what it’s trading at on any given day it’s meant to be an insurance policy… it’s meant to be protection of wealth and preservation of wealth…


It’s a great reminder when you look at the first trading day after Brexit… I remember looking at my own portoflio.. and looking at the market… and everything is red… the Dow is down over 500 points… the only thing up are gold stocks…

But while insurance and wealth preservation are the key motivating factor for the super wealthy, another billionaire, Sprott U.S. Holdings CEO Rick Rule, says that even a tiny boost in investor demand could drive prices to new highs from here as investors stampede into hard asset stocks and physical holdings as the current bull market gains steam:

Let me give you a startling statistic that tells you what an awakening might do… physical precious metals, certificated precious metals, and precious metals equities occupy about one-third of one percent of the savings and investment assets of the United States.


The corresponding number at the top of the last bull market.. real bull market in 1981… was 8%…


One third of 1% now… 8% at the top.


I’m not suggesting to you that gold and precious metals related investments will ever get back to 8% but I would suggest to you that they will, in this bull market, approach the three decade median, which was 1.5%.


If that occurred, you would see a more than four-fold increase in demand for precious metals and precious metals related equities… I think that could be reasonably dramatic.


I am not one of these doom and gloom guys who says that gold is going win the war against the U.S. dollar.


But if gold lost the war a little less badly… in other words, if gold and gold equities market shares got up to 1.5% of the investment savings matrix of the United States, that would represent a four-fold increase in demand.

The world is primed for a serious, potentially devastating collapse of life as we know it. That may come with war, economic collapse, or both simultaneously. What we know from history is that those who prepared ahead of time and understood the ramifications of such events were positioned to not only survive, but thrive.

The high net worth individuals who are moving into gold related assets see the writing on the wall, and they are positioning themselves now to ensure their wealth will be preserved.

We strongly encourage you to do the same.



India over the January through March period saw imports of gold total 230 tonnes which is excellent.  I should also point out that this does not include smuggling which is significant.  If this continues India will be back to importing over 1000 tonnes per year”



The World’s Top Gold Market Just Had Its Strongest Buying In 3 Years

By PiercePoints on April 17, 2017 10:50 am in Politics

Sentiment has turned up in the gold market the last few weeks. And new data from the world’s top consuming center — India — shows there may indeed be cause for optimism amongst bullion buyers.

Data reported in the local press showed that India’s gold imports saw a big jump during the most recent quarter, January to March 2017. With total imports for the period hitting 230 tonnes.

To put that in perspective, consider some numbers from recent quarters — during which India’s gold imports showed some of the weakest figures on record.

During April to October 2016, gold imports totalled just 264 tonnes. Meaning that incoming shipments for that entire seven-month period were barely above the figures for the most recent three months.

That suggests a major surge in gold demand is happening here. In fact, imports for the Jan-Mar 2017 quarter were the strongest for those months since 2013.

The pick-up in buying appears to be related to the Indian government’s recent crackdown on cash. With the government having banned small banknotes effective as of early November.

Since that event, gold imports have jumped to 360 tonnes for the five months from November to March. More than 35% higher than total imports for the preceding seven months.

India’s citizens are reportedly turning to gold as a safe haven amid doubts about paper money. Which bodes well for continued support in this key gold market as 2017 goes on.

How big a lift could that give to global gold prices? If we annualize the figures from the past quarter, India is on pace to import 920 tonnes for this year. Which would represent a massive improvement from the 13-year low imports of 571 tonnes the country saw in 2016.

It’s notable that global gold prices also perked up during the past quarter. As the chart below from Kitco shows, we’ve gone from $1,150/oz at the beginning of January to $1,280 recently.

http://www.valuewalk.com/wp-content/uploads/2017/04/Gold- Market.gifhttp://www.valuewalk.com/wp-content/uploads/2017/04/Gold- Market.gifThe gold price jumped in Q1 as imports to India also showed a notable rise

Gold Market

It’s actually unusual to see India’s demand growing when gold prices are going up — with Indian buyers usually cutting back purchases when the metal gets more expensive.

The fact that prices and demand are rising in tandem could signal an important and positive shift in fundamentals — watch for April import figures in a few weeks to see if the trend continues.

Here’s to coming back to life,

Dave Forest

Article by Pierce Points

http://www.valuewalk.com/2017/04/worlds-top-gold-market- just-strongest-buying-3-years/


Your early TUESDAY 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  6.8837(   REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.8817/ Shanghai bourse DOWN 25.45 POINTS OR 0.79%   / HANG SANG CLOSED DOWN 337.12 POIONTS OR 1.39%

2. Nikkei closed UP 63.33 POINTS OR 0.35%   /USA: YEN FALLS TO 108.87

3. Europe stocks opened ALL DEEPLY IN THE RED        ( /USA dollar index FALLS TO  100.28/Euro UP to 1.0636


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.19 and Brent: 54.75

3f Gold DOWN/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.193%/Italian 10 yr bond yield DOWN  to 2.267%    

3j Greek 10 year bond yield RISES to  : 6.69%   

3k Gold at $1285.00/silver $18.41 (8:15 am est)   SILVER ABOVE  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 15/100 in  roubles/dollar) 56.06-

3m oil into the 52 dollar handle for WTI and 54 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 BIG REVALUATION NORTHBOUND 


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0012 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0687well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.193%

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 2.237% early this morning. Thirty year rate  at 2.901% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Stocks Slide As Iron Ore Crashes; Pound Jumps After UK Calls Snap Elections

European stocks slide as traders returned from a 4-day Easter holidays, Asian equities likewise drop pressured by the ongoing rout in iron ore, while U.S. stock-index futures point to a lower open. British markets were roiled after U.K. Prime Minister Theresa May said she would seek an early election on June 8, in a move aimed at strengthening her hand going into Brexit talks; the FTSE 100 dropped 1.3%, on the news, hitting the lowest since Feb. 24 while 10Y Gilts dropped below 1% for the first time since October.

The British pound first tumbled then surged on the news. Tracking today’s surprise announcement by the UK PM, sterling swung from gain to loss and back again versus the dollar before May set the vote for June 8. U.K. stocks fell by the most since January. The export-heavy FTSE 100 hits a seven-week low. The broader, more domestically focused FTSE 250, however, doesn’t see this as much of a negative:

Meanwhile, the Stoxx Europe 600 Index dropped to the lowest level in about three weeks as mining shares plunged, and government bonds in the region mostly rose as the build up to the French election intensified. Iron ore reeled as Citigroup Inc. said it’s bearish on the raw material’s outlook.

The catalyst for the overnight selloff came from Asia, where the iron ore rout continued, and after the latest 5% drop, the commodity has plunged 32% from high point in Feb this year.


The drop pressured Australian stocks (ASX 200 -1.0%) which declined to a 2-week low, as recent losses in iron ore and gold weighed on mining names. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.7 percent, while Tokyo’s Nikkei closed up 0.4 percent on earlier yen weakness.

A bounce in U.S. stocks Monday failed to cheer investors in the European session, as the standoff over North Korea’s nuclear weapons program rumbles on and the French presidential vote looms: here two candidates who want to take the country out of Europe’s common currency remain in contention in the most unpredictable race in recent history. As a result, the spread between German and Italian bonds continued to widen.  “Expect a lot of noise and probably elevated volatility this week” as the first round of voting approaches, Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a note.

The dollar dipped fractionally against a basket of major currencies. It earlier lifted off five-month lows versus the yen after U.S. Treasury Secretary Steven Mnuchin told the Financial Times a strong dollar was a positive in the long term while agreeing with U.S. President Donald Trump that it hurt exports in the short term.

Investors were also watching trade talks between the United States and Japan, whose deputy premier, Taro Aso, said the two sides agreed to combat unfair trade practices. “There was quite strong thinking in the market that the U.S. would maybe put pressure on Japan in terms of currency manipulation,” said Neil Jones, head of hedge fund FX sales at Mizuho in London.

Investor nervousness ahead of Sunday’s French election made itself felt in currency and debt markets. French 10-year government bond yields initially rose while ultra-safe German equivalents dipped, taking the gap between the two close to six-week highs. But French yields later fell and the spread with Germany narrowed to its tightest since April 13 after an opinion poll put centrist Emmanuel Macron first in the first round of voting, just ahead of far-right, anti-euro candidate Marine Le Pen with a bigger gap to far-left representative Jean-Luc Melenchon.

The cost of hedging against big moves in the euro against both the dollar and the yen over the next month jumped on Monday to their highest levels since Britain’s vote to leave the European Union.

“(Euro government bond) investors are going to be very careful this week and clearly the only thing that’s going to be on their minds is what happens in France,” said Chris Scicluna, head of economic research at Daiwa Capital Markets. Implied volatility in the STOXX 600 index hit its highest since early November 2016.

Oil prices fell after a U.S. government report indicated U.S. shale production was rising. Brent, the international benchmark crude, fell 29 cents a barrel to $55.07. Copper was down 0.6 percent at $$5,655 a tonne. Gold was marginally higher on the day at $1,283 an ounce, having touched a five-month high of $1,295 on Monday.

Economic data include March housing starts, industrial production. Scheduled earnings include J&J, Bank of America, IBM, UnitedHealth, Goldman Sachs.

Market Snapshot

  • S&P 500 futures down 0.4% to 2,336.00
  • STOXX Europe 600 down 0.6% to 378.44
  • MXAP down 0.5% to 146.17
  • MXAPJ down 0.8% to 476.46
  • Nikkei up 0.4% to 18,418.59
  • Topix up 0.4% to 1,471.53
  • Hang Seng Index down 1.4% to 23,924.54
  • Shanghai Composite down 0.8% to 3,196.71
  • Sensex up 0.3% to 29,512.93
  • Australia S&P/ASX 200 down 0.9% to 5,836.74
  • Kospi up 0.1% to 2,148.46
  • Brent Futures down 0.6% to $55.03/bbl
  • Gold spot little changed at $1,284.90
  • U.S. Dollar Index little changed at 100.31
  • German 10Y yield fell 0.9 bps to 0.178%
  • Euro up 0.07% to 1.0650 per US$
  • Brent Futures down 0.6% to $55.03/bbl
  • Italian 10Y yield rose 1.7 bps to 2.022%
  • Spanish 10Y yield fell 2.0 bps to 1.687%

Top Overnight News

  • Trump Seeks Shift in Visa Allotments Crucial to Tech Outsourcing
  • Netflix Trades User Growth for Profits With No ‘House of Cards’
  • Post to Buy Weetabix From Bright Food in $1.8 Billion Deal
  • U.S. Trade Deal With South Korea Falling Short, Pence Warns
  • Blackwater Founder Erik Prince Said to Have Advised Trump Team
  • CDH Investments Said to Lead Buyout of Shoe Retailer Belle
  • United Gains 1% on 1Q Beat, 2Q Prasm View; Peers AAL, DAL Rise
  • Barracuda Falls After 2018 Revenue View Midpoint Trails Estimate
  • Freeport Workers to Rally Against Grasberg Lay Offs April 20-22
  • Allergan, Novartis to Run Phase 2b Study for NASH Treatment
  • Arconic Shareholder Orbis Says Board Should Seek New Leadership
  • Gigamon, CBL & Associates, Cytokinetics to Join S&P SmallCap 600
  • Cardiovascular Systems to Recall 900 Pumps, Sees $1.5m Expense
  • HP CEO Says Import Tax May Boost Prices for Users in Industry
  • AdCare CEO Ousted After Board Says He Lied About MBA From UCLA
  • Cemex to Sell Pacific Northwest Unit to Cadman for $150M

Asian equity markets dropped, failing to keep up with the positive momentum from Wall Street, where stocks rebounded as focus shifted to earnings and financials outperformed. ASX 200 (-1.0%) declined to a 2-week low, as recent losses in iron ore and gold weighed on mining names. Conversely, Nikkei 225 (+0.3%) was positive as exporter names benefited from a weaker JPY, while the financial sector performed similarly to its US counterparts. Shanghai Comp. (-0.8%) and Hang Seng (-1.4%) were subdued despite the PBoC resuming liquidity operations and firm Chinese Property Prices, as a continued rampant property sector could attract funds away from stocks. 10yr JGBs traded lower amid spillover selling from USTs and a somewhat positive risk tone in Japan, although losses were stemmed following a 5yr auction in which the b/c and accepted prices were higher than prior. Chinese House Price Index (Mar) Y/Y 11.3% (Prey. 11.8%). China house prices increased M/M in 62 out of 70 cities (Prey. 56) and increased Y/Y in 68 out of 70 cities (Prey. 67). PBoC injected CNY 40bIn in 7-day reverse repos, CNY 20bIn in 14-day reverse repos and CNY 20bIn in 28-day reverse repos.

Top Asian News

  • Stock’s 9,800% Rise Shows Hong Kong Billions Exist Just on Paper
  • Drugs and Booze Shares Benefit as China Investors Turn Defensive
  • Japan, U.S. Eco Talks Should Have Near-Term, Concrete Results
  • Hongqiao Drops $1.6 Billion Loften Purchase Citing New Rules

European equities have failed to hold on to opening gains and trade lower across the board with the FTSE 100 the laggard throughout the session. The commodity-heavy FTSE 100 bucked the trend at the open and started the week off on the backfoot alongside softness in energy and materials names with losses in gold overnight and iron ore prices hitting two week lows. Thereafter, European equities followed suit and shed their opening gains amid ongoing key risk factors as participants eye Sunday’s first round of voting for the French Presidential election with polls showing an increasingly narrow margin between the four main candidates. Elsewhere, downbeat comments from US treasury secretary Mnuchin on the fate of tax reform and mounting geopolitical tensions have also added to the sombre tone. In fixed income markets, prices saw a relatively tentative start to the session before then being lent a helping hand by some of the softness in European equities. The focus however has been on French paper which trades relatively flat ahead of the 1st round election in which the election polls have narrowed somewhat, indicating the 1st round is a now a 4-horse race amid the surge in support for far-left Melenchon. Additionally, the shock announcement by PM Theresa May that the UK will hold a snap election on June 8 has thrown local traders for a loop, unleashing volatility both in sterling and the FTSE100, which hit its lowest level since Feb. 24

Top European News

  • French Race Up for Grabs Days Before First Ballot Is Cast
  • Bank Brexit Exodus Seen Hastened by Close Regulator Scrutiny
  • London House-Price Growth at Five-Year Low as Luxury End Slumps
  • Deutsche Bank Sees 2017 High-Yield Market Defying Political Risk
  • Swiss Aren’t Manipulating Their Currency, Gasser Tells CNBC
  • JPMorgan Stays Constructive Europe Banks Long Term; Nordics Best
  • European Miners Post Worst Drop on Stoxx 600 as Iron Ore Tumbles

In currencies,  a choppy morning for GBP as the early running saw near term ‘radio silence’ prompting a fresh push higher in  Cable as we pierced 1.2600. This proved short lived however as news that UK PM May announced a snap election sent cable tumbling then rebounding sharply higher. The EURGBP will struggle for upside traction ahead of the French elections, with the first round voting set for Sunday 23      April. The polls are tight, but looking at the EUR across the board, there does not seem to be any major panic, with EUR/USD sticking close to 1.0650 (large expiry here today), and EUR/JPY finding some near-term demand below 116.00. EUR/CHF treads a very tight range under 1.0700, but no prizes for guessing what is behind this. The JPY ‘relief’ looks to be based on what some perceive to be a near term ‘verbal’ impasse between the US and North Korea. Further JPY strength may be unwarranted at this stage, but resuming to steady risk on is still further out on the horizon. USD/JPY is back under 109.00 though, but techs point to a strong support zone in the 107.00-108.00 which may be tempting in value buyers irrespective of the mood in equities. AUD has suffered on the RBA minutes overnight as their concerns over the labour market and household indebtedness edge a rate cut back into policy considerations. AUD/USD is languishing in the lower 0.7500’s, but downside momentum has faded here for now as traders focuses on AUD/NZD, which has now taken out modest support at 1.0750. NZD/USD propped above 0.7000 as a result. Oil prices take a dip to push USD/CAD back above 1.3350, but as we have seen in recent weeks, selling interest through  1.3400 has been strong, so we may see orders marked down given the domestic data has been supportive in recent  months.

In commodities,  Gold has come off better levels in line with a modest uptick in the USD, with the key USD1300.00 having held  amid last week’s fall and heightened risk aversion. We see little which would have arrested the drop off in risk  sentiment, but this is not an unfamiliar scenario, but the yellow metal is likely remain underpinned alongside Silver. The latter has comfortably established a foothold above USD18.00. Oil prices continue to turn up and down on inventory data and rig counts, but with WTI inside USD50-55, we again see little cause for concern unless the risk mood in equities turns sharply. The same can be said for base metals with Copper prices largely range bound after coming off better levels in recent weeks. Palladium and aluminium modest outperformers on the day.

US Event Calendar

  • 8:30am: Housing Starts, est. 1.25m, prior 1.29m; MoM, est. -2.95%, prior 3.0%
    • Building Permits, est. 1.25m, prior 1.21m; MoM, est. 2.8%, prior -6.2%
  • 9:15am: Industrial Production MoM, est. 0.4%, prior 0.0%; Capacity Utilization, est. 76.1%, prior 75.4%; Manufacturing (SIC) Production, est. 0.0%, prior 0.5%

DB’s Jim Reid concludes the overnight wrap

One wonders how many Italian Governments there will be in the next 117 years but in the near-term there will be more focus on this coming Sunday’s first round in the French Presidential elections which will dominate a week that also includes the first busy week of US earnings season (46 S&P 500 companies report) and the influential flash PMIs on Friday. In our 2017 outlook written nearly 6 months ago now (how time flies) the French election was one of those events where we thought volatility would increase notably into it even though we thought there’d be a market friendly outcome at the end of it. So far this year vol has been much lower than we anticipated but it has been picking up of late ahead of this election and also due to geopolitical rumblings, some slightly disappointing data and market concerns that Mr Trump’s growth agenda may be faltering. We still think 2017 will ultimately be ok from a growth and risk asset point of view but it might be that we’re now past the calmest point of the year.

As we approach the election, the polls are now incredibly close with all four main candidates within a few percentage points of each other. Indeed the last 3 polls (Elabe, Ifop-Fiducial and OpinionWay) have an average high-low range amongst the top 4 candidates of 4.5% with the most notable trend now being a slight dip in support of Le Pen to around 22-23% from closer to 25% earlier this month. Market friendly candidate Macron remains well ahead of his 3 main rivals in a straight head-to-head run-off (16-26% lead) but obviously there’ll be some concern with the first round getting tighter that he’ll fail to be in that  run-off with the worst case market scenario a Le Pen/Melenchon battle. So expect a lot of noise and probably elevated vol this week. The VSTOXX index closed at 23.39 on Thursday (double where it was back in mid-March) which as a reminder is the highest level this year and also the highest level since November 8th. Meanwhile the VIX closed at 14.66 last night which is down from Thursday’s YTD high of 15.96 but still well above the 2017 average of 12.01.

That move lower in the VIX yesterday reflects what was a fairly calm session on Wall Street last night. Coming off the back of a -1.13% weekly loss last week the S&P 500 bounced back +0.86% yesterday on low volumes while there was a similar rebound for the Dow (+0.90%) and Nasdaq (+0.89%) as well. Ahead of today’s results it was the Banks that led the way with the sector up just over 2% – as a recap both JP Morgan and Citigroup set a decent pace last week with Q1 revenue and earnings both coming in slightly ahead of the consensus estimate. Geopolitics was less of a factor yesterday despite that weekend news of the failed North Korea missile launch. Instead some decent data out of China including the Q1 GDP report helped to support a strong start to the week.

Indeed China’s Q1 GDP print of 6.9% came in one-tenth ahead of the consensus estimate and also improved from 6.8% and 6.7% in Q4 and Q3 of 2016 respectively. At the same time all headline activity indicators in March were supportive. Industrial production came in at 7.6% yoy (vs. 6.3% expected) from 6.0% in February. Retail sales stabilised at 10.9% yoy (vs. 9.7% expected) and fixed asset investment grew to 9.2% yoy (vs. 8.8% expected) from 8.9%. It’s worth noting that the latter was driven by property investment growth as opposed to infrastructure investment. Our economists in China also highlighted  that property sales growth moderated slightly in March on a monthly basis but was still picking up if you look at the 3-month moving averages. At the same time growth of land sales and new housing starts also continued to grow. As a result of the data our economists have now revised up their GDP growth forecast to 6.7% in 2017 and 6.3% in 2018 (6.5% and 6.0% before revision). Importantly though, our team believe that growth has likely peaked in Q1 as credit growth slows and indeed they maintain the view that growth will drop on a quarterly basis to 6.8%, 6.6% and 6.5% in Q2, Q3 and Q4 respectively.

That data in China yesterday was attributed to the leg up for Copper (+1.14%), Aluminium (+0.58%) and Zinc (+0.88%) prices although the rest of the commodity complex was a little softer with Gold (-0.08%) and WTI Oil (-1.00%) both easing – although that does follow a decent rally last week. In sovereign bond markets 10y Treasury yields initially dipped below 2.200% at the open before steadily rising back as the session progressed to finish up just over 1bp at 2.251%. The focus in FX meanwhile was on the Turkish Lira which was as much as 2.5% stronger at the open before paring gains into the close. The rally came after President Erdogan secured victory in Turkey’s referendum which will now hand him sweeping powers including economic and monetary policies. Notwithstanding a possible recount as demanded by the opposition parties, our economist in Turkey notes that the bulk of the amendments, including a formal shift to an executive presidency, will kick in with the next dual elections (Parliamentary and Presidential) scheduled to be held in November 2019. The immediate changes post referendum are (i) removal of the current constitutional ban on the President’s formal association with a political party, (ii) restructuring of the Supreme Council of Judges and Prosecutors, and (iii) abolishment of military courts. The Parliament will now have six months to make subsequent amendments in the related laws, including the electoral law, as well as Parliamentary bylaws.

Before we recap the rest of the news since we’ve been away, this morning in Asia it’s been a fairly mixed start to the day with most major bourses open again following the long weekend. While the Nikkei (+0.23%) and CSI 300 (+0.08%) have edged a bit higher, the Hang Seng (-0.96%), Kospi (-0.18%) and ASX (-1.13%) are all lower while US equity index futures are also slightly in the red. There’s not been much new newsflow to report overnight although the latest house price data is out in China with house prices reported as rising in 62 of the 70 cities tracked by the government in March. That compares to 56 cities in February.

Moving on. Another story which attracted a bit of attention yesterday was US Treasury Secretary Steven Mnuchin’s interview with the FT. In it he said that the target to get tax reforms through Congress by August was “highly aggressive to not realistic at this point” and that “it is fair to say it is probably delayed a bit because of the healthcare (reform pushback)”. Mnuchin also responded to Trump’s statement about the strength of the dollar last week by saying that “the President was making a factual comment about the strength of the dollar in the short term” and that there is “a big difference between talk and action”. Mnuchin also suggested that the border-adjustment tax plan is not off the table but that there may be other ways of raising revenues.

Before we look at the week ahead, it’s worth quickly wrapping up what has been a busy last couple of days for US data. The significant release on Friday was the March CPI report where headline inflation came in at a well below market -0.3% mom (vs. 0.0% expected). The core was also softer than expected at -0.1% mom (vs. +0.2% expected). The end result of that is a drop in the annual rates for both the headline (to +2.4% from +2.7%) and core (to +2.0% from +2.2%). Also out on Friday was the March retail sales figures where headline sales were reported as retreating -0.2% mom as expected. Excluding autos and gas,  pending was up +0.1% mom while the control group component was up a more robust +0.5% mom (vs. +0.3% expected) removing the impact of building materials. Meanwhile yesterday we learned that the NY Fed’s empire manufacturing index fell 11.2pts to 5.2 in April and the lowest since November, while the NAHB housing market index declined 3pts to 68 from what had been a 12-year high. It’s worth noting that the Atlanta Fed is now forecasting for Q1 GDP growth of just +0.5% (from +0.6%).

Moving now to this week’s calendar. With no data due out in Europe this morning the focus will instead be on the US this afternoon where March housing starts and building permits data is due out alongside the March industrial and manufacturing production reports. Turning to Wednesday, data due out in Europe includes the March CPI report for the Euro area along with the latest trade balance print. In the US tomorrow there is no data due out although in the evening the Fed’s Beige Book will be released. Japan kicks things off on Thursday with the March trade data due out. In Europe we’ll get PPI in Germany as well as the April consumer confidence reading for the Euro area. In the US on Thursday initial jobless claims, Philly Fed business outlook and Conference Board’s leading index are the scheduled releases. We end the week on Friday with a first look at the global flash April PMI’s including the manufacturing print in Japan and manufacturing, services and composite readings in Europe and the US. Also due out is retail sales data in the UK and existing home sales data in the US. Away from the data, this week’s Fedspeak includes George today, Rosengren on Wednesday, Powell on Thursday and Kashkari on Friday. Over at the ECB Hansson, Coeure and Praet are amongst the speakers this week while the BoE’s Carney speaks on Thursday. Also worth highlighting this week is US Vice- President Mike Pence’s meeting with Japan PM Abe and the release of the IMF’s World Economic Outlook today, Italy PM Gentiloni’s meeting with President Trump on Thursday and the annual Spring Meetings of the World Bank Group and IMF kicking off on Friday. Earnings wise this week we’ve got 46 S&P 500 companies accounting for 10% of the index market cap. The highlights include Goldman Sachs, Bank of America, Yahoo, Johnson & Johnson and IBM today, eBay and Morgan Stanley on Wednesday, Verizon on Thursday and Schlumberger on Friday.



i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 25.45 POINTS OR 0.79%/ /Hang Sang CLOSED DOWN 337.12 POINTS OR 1.39%.  The Nikkei closed UP 63.33 OR 0.35% /Australia’s all ordinaires  CLOSED DOWN 79%/Chinese yuan (ONSHORE) closed UP at 6.8837/Oil DOWN to 52.19 dollars per barrel for WTI and 54.75 for Brent. Stocks in Europe  CLOSED DEEPLY IN THE RED   ..Offshore yuan trades  6.8817 yuan to the dollar vs 6.8837 for onshore yuan. NOW  THE OFFSHORE IS SLIGHTLY WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN SLIGHTLY STRONGER  AND THE OFFSHORE YUAN  STRONGER TO THE ONSHORE AND THIS IS  COUPLED WITH THE WEAKER  DOLLAR. 




Bill Blain explains what to expect with the upcoming election in the UK

(courtesy Bill Blain/MINT Partners)

What Does Theresa May’s Stunning Announcement Mean: Bill Blain Explains

Authored by Bill Blain via MINT Partners,

There will be load of unhappy Labour politicians this afternoon… even though many of them hold “safe seats”, I suspect many will be updating their CVs and looking for new jobs.

May’s intent is to clear the decks of dissent. SNP leader Nicola Sturgeon was the only person name checked in May’s announcement rant. That is a clear message to the Scottish Nationalists: the Conservatives intend to win this election nationally, and I should imagine we’ll see a massive effort to back up the resurgent Scottish Conservatives over the next 6 weeks. Scottish Conservatives will focus on the SNPs domestic track record running the country rather than pushing for independence – its not a good one.

There are risks:

May does risk losing her overall majority – its only 16 – especially if voters responds favourably to the Liberals who will try to turn it into a vote on Brexit. 

However, this is a national election where its the country that matters – the Conservatives have lost by-elections on Brexit protest last year, but I suspect we are beyond that in the coming national plebiscite. Wont stop the Liberals telling people how wrong they were last year.

The SNP will try to make it a Brexit/Independence vote, but the Tories only hold one seat in Scotland so the SNP have little to gain and everything to lose. I’ll be looking at Scottish seats in detail.

Labour are the party in trouble. Although many of their seats are supposedly safe, electoral dissatisfaction with Corbyn and their pro-Brexit demograph means they’ll have to play a real election with muddled policies, a disorganised party under a hapless leader… which must have been irresistible to May.  Shame.

The election notice and vote in Westminster should pass tomorrow. If she can’t get the 2/3rd majority to overturn the 2011 fixed-term government act, a simple no-confidence vote will suffice to trigger the election.

What does it mean for markets?

Sterling Spiked Higher.

GBPUSD is at its highest since early Feb on the news – breaking aboive its 200-day moving average for the first time since Brexit.

Gilts went down (up in yield). FTSE done little.

Generally this should be seen as dampening Scottish Uncertainty, giving the Tories a clearer mandate on Brexit by default, and positive for the economy.

But let’s look at the electoral constituencies in detail to work out the likely trends. Might the Tories lose their majority to a resurgent Liberal crew (doubt it). Might Labour get wiped.. (perhaps).


And don’t believe the polls…




Deutsche bank explains why early elections are a game changer and will bring huge gains to the pound:

(courtesy zero hedge)

Deutsche Bank: “Early UK Elections Are A Gamechanger; We Are Closing Our Bearish GBP Trades”

This morning’s shocking announcement caught virtually everybody by surprise, and is prompting one bank after another to thoroughly revise their cable forecasts, case in point Deutsche Bank, whose strategist George Saravelos just announced he is changing his view on sterling because the “early elections are a game-changer”, something which the market clearly anticipated judging by the surge in cable…

… a surge which will prompt the near record number of GBP shorts to cover en masse.

To be sure, May’s announcement does make sense in retrospect: as Unicredit’s Vasileios Gkionakis notes, May’s logic is sound: “It’s good to have the elections now that you have good U.K. numbers, which are mostly dependent on global growth, because when you start seeing the U.K. idiosyncratic factors filtering through, potentially her popularity is going to throb a bit”

As for Saravelos, his full note below:

Changing view on sterling: early elections a game-changer


This morning’s announcement from PM May of a snap general election on the 8th June is in our view a game-changer for both the UK’s Brexit negotiations and sterling. We argued last year that an early general election was the only way to resolve the political impasse the U.K. government faces in conducting Brexit negotiations. The 2020 General Election imposed a hard deadline on delivering Brexit on an unrealistic timeline as well as making the Prime Minister reliant on a small Euro-sceptic majority. Both of these factors would have required political and market pressure to impose the appropriate political shifts that would have allowed a realistic deal to emerge.


In contrast, today’s general election announcement changes the outlook. We do not see the election as a mandate for hard Brexit. Instead, assuming current polling proves correct, it should result in a larger Conservative majority. This will have three material implications, in our opinion.

  • First, it makes the deadline to deliver a “clean” Brexit without a lengthy transitional arrangement by 2019 far less pressing given that no general election will be due the year after.
  • Second, it will dilute the influence of MPs pushing for hard Brexit, strengthening the government’s domestic political position and allowing earlier compromise over key EU demands for a
  • transitional arrangement.
  • Third, it strengthens the PM’s overall negotiating stance who in recent weeks has clearly fallen in line with the European negotiating approach.


This will involve a settlement of the Brexit payments and other divorce aspects first, to be followed by a lengthy transitional period during which the final outcome of Brexit will emerge. This sequenced approach materially reduces the “crash risk” of Brexit negotiations as well as strengthening the Prime Minister’s hand in pursuing an orderly (and very lengthy) withdrawal. All of the above in turn reduce downside risks for the U.K. growth outlook over Brexit negotiations.


We have been structurally bearish on sterling for the last two years but are now changing view. We are closing out all our bearish FX trades. We intend to review our sterling forecasts in coming days.

That said, some disagree. As Bloombergs Richard Jones writes after the announcement, the early election is not likely to shift the dial “much” for investors. Key highlights from his take:

It’s hard to see how an early U.K. election will be a game changer for markets.


The process to leave the European Union has already been initiated with the triggering of Article 50. And polls show the Conservatives will win hands down and return to the government with an increased majority. Domestic politics hasn’t been a great source of uncertainty. It is rather the economic implications of Brexit and the attendant lack of clarity that has ratcheted up consumer, business and investor anxiety.


The clock is ticking, the political dynamics aren’t likely to shift, so investors have no reason to radically alter their views on the implications of Brexit with Tuesday’s announcement.


The longer-term implications of Brexit are perhaps best summarized in a recent paper from the San Francisco Fed, a prognosis not dissimilar to the views expressed by Bank of England Governor Mark Carney.


The lack of access to the EU single market will likely damp potential U.K. growth for years, with Britain both less specialized and less efficient post-Brexit, the San Francisco Fed argued.


If today’s price action is any indication, market moves will probably be noisy during the election campaign. But unless there is any unexpected shift in domestic political dynamics, the issues currently in place will remain after June 8.

For now, however, it’s the short covering panic that is driving price at least for the immediate future.





British stocks in an absolute bloodbath with the surprise election:

(courtesy zero hedge)

British Bloodbath – Stocks Plunge Most Since Brexit After Surprise Election News

While most eyes were on the surge in sterling, British stocks plunged almost 2.5%…


The biggest daily drop since the Brexit referendum in June 2016.


This has erased all FTSE 100 gains for 2017…

Then the pound explodes killing a huge number of shorts along the way:

the pound now: 1.28417 up 0.0250 or 250 basis points

(courtesy zerohedge)

Cable Flash Smash: Pound Explodes As Stops Taken Out

In what looks and smells like a combination of a margin call and an algo stop-run, cable just exploded through 1.28 and 1.29 in seconds only to quickly fade back on massive volume…

Spot FX…


Sterling Futures show the surge in volume…


That’s what happens when you have a record speculative net short position…


Which hammered the dollar to 3-week lows…



USA fighter jets intercept two Russian tactical bombers only 100 miles from the Alaska coast.  Getting scary!

(courtesy zero hedge)

US Fighter Jets Intercept Two Russian Tactical Bombers 100 Miles Away From Alaska

The U.S. Air Force scrambled two F-22 stealth fighters on Monday night to intercept a pair of Russian nuclear-capable bombers which came as close as 100 miles from Alaska’s Kodiak Island, Fox reports. This was the first time since President Trump took office that Moscow has sent bombers so close to the U.S.

The two Russian Tu-95 “Bear” tactical bombers flew roughly 280 miles southwest of Elmendorf Air Force Base, within the Air Defense Identification Zone of the United States. The U.S. Air Force promptly scrambled two F-22 stealth fighter jets and an E-3 airborne early warning plane to intercept the Russian bombers.

The American jets flew alongside the Russian bombers for 12 minutes, before the Russian bombers reversed course and headed back to their base in eastern Russia.

An official quoted by the Washington Examiner said that while TU-95s are capable of carrying nuclear weapons, the planes involved in Monday’s incident did not appear armed. The interception was conducted in a “safe and professional” manner, the official added, as the bombers did not violate U.S. airspace or break international norms.

Monday’s incident comes amid escalating tension between Russia and the U.S., particularly over Syria’s ongoing civil war. Trump’s decision to strike Assad’s government earlier this month put the U.S. at odds with Russia, which has long supported Assad. Russian Foreign Minister Sergei Lavrov said last week that the chemical attack was staged.

Lavrov also said that another U.S. military strike in Syria could prompt “grave consequences not only for regional but global security.” Secretary of State Rex Tillerson said earlier this month that U.S.-Russia relations have hit “a low point” following the strike. The top U.S. diplomat added that “improvement in the long-term relationship” between both nations is required to resolve the conflict in Syria.

* * *

The last time Russian bombers flew near the U.S. was July 4, 2015, when a pair of Russian bombers flew off the coasts of Alaska and California, coming as close as 40 miles to Mendocino, Calif. Russian President Vladimir Putin called then-President Barack Obama to wish him a happy Independence Day while the bombers cruised the California coastline.




I warned you about this.  Russia seizes a tanker due to an unpaid shipping fees

(courtesy zerohedge)

Russia Takes $30 Million In Venezuela Oil Hostage Over Unpaid Debt

Despite having made its bond payment due last week, Venezuela’s state oil company, PDVSA, remains in fire financial straits, with virtually no funds or liquidity, and regardless of the close Russia-Venezuela ties, a Russian state-run shipping company has taken a tanker of PDVSA crude “hostage” in the Caribbean over $30 million worth of unpaid shipping fees.

Russia’s shipper Sovcomflot sued PDVSA in the Dutch island St. Maarten in the Caribbean and “imposed garnishment on the aforementioned oil cargo,” Reuters reported on Tuesday, citing a St. Maarten court decision. PDVSA had sent the oil cargo to the Caribbean in October last year, hoping it could net around $20 million from the sale of the crude, but Sovcomflot claims the cash-strapped state-run Venezuelan company owes $30 million in unpaid shipping fees.

Nearly half a year after crossing the Caribbean, the NS Columbus has transfered its cargo of crude to a storage terminal on St. Eustatius, an island just south of St. Maarten, under the court court. Another tribunal in England will decide if Sovcomflot will ultimately take the oil. Reuters adds that the dispute, which is being heard by the United Kingdom Admiralty Court, highlights how shipping companies are becoming increasingly aggressive in pursuing PDVSA’s debts.

It also shows that political allies such as Russia are losing patience with delinquent payments from Venezuela, whose obsolete tankers are struggling to export oil and even to supply fuel to the domestic market.

Making matters even more complicated, PDVSA owes not only shipping fees to the Russian company, but also millions of U.S. dollars to terminals around the Caribbean, including the St. Eustatius terminal – where the oil is currently held – owned by U.S. company NuStar Energy, Reuters reported citing a PDVSA executive and an employee at one of the terminals. Furthermore, PDVSA’s “tangled web of payment disputes” now spans the entire world, from unpaid shipyards in Portugal and half-built tankers in Iran and Brazil to the seized cargo in tiny St. Eustatius, whose strategic location in the Caribbean made it an 18th century colonial-era trading hub.

That’s not all: as a result of the recent liquidity crunch at PDVSA, the oil company also finds itself months behind on shipping crude oil and fuel to China and Russia under oil-for-loan agreements with its two key political allies. The shipments that PDVSA has failed to deliver to Chinese and Russian state-held companies were worth around $750 million, a Reuters analysis showed back in February.

Will the issue be resolved amicably?

On one hand, Russia has consistently supported President Nicolas Maduro with financing arrangements and oilfield investments. State-run oil firm Rosneft has lent money to PDVSA since 2016 and last month was in talks to help PDVSA make a hefty bond payment. However, problems had been brewing for months between Venezuela and Sovcomflot, which provides about 15% of vessels that PDVSA charters to ship crude to its clients amid a steady deterioration of its own fleet, according to a captain and two shipbrokers working with PDVSA.

Debts to Sovcomflot had by 2016 swelled enough that company’s top brass complained in person to PDVSA President Eulogio Del Pino in the Russian city of Sochi, according to source from PDVSA’s trade department with knowledge of the meeting.


Del Pino agreed to a payment schedule proposed by his trade and fleet executives and accepted by Sovcomflot, the source said. But PDVSA – saddled with heavy bond payments and billions of dollars in unpaid bills to oilfield services providers – was unable to make sufficient payments to avoid Sovcomflot’s unusually public debt-collection gambit.

“Hostage” situations such as this one are rare: detentions of oil cargoes have been unusual because creditors rarely have sufficiently detailed information on tanker movements to obtain timely court orders.

Furthermore, since Venezuela also tends to ensure that any cargoes that leave its ports legally belong to the clients rather than to PDVSA – meaning they are rarely in a position to be seized – suggests that either the company made a rookie contractual error or it can’t even afford to buy insurance on its cargo. Additionally, the Sovcomflot dispute was unique in that the creditors are the tanker owners. Although the crude onboard the NS Columbus had already been sold to Norway’s Statoil, the cargo was being carried in a tanker navigating with a bill of lading under PDVSA’s name, according to two inspectors and a representative of one of the companies involved.

Meanwhile, the liquidity crisis at PDVSA, not to mention the economic crisis in Venezuela, has spiraling so far out of control, that the nation with the world’s largest oil reserves recently raged after a gasoline shortage developed in its capital of Caracas.



Reuters: Toronto Canada

Government officials meet in Toronto trying to solve the biggest bubble ever created in real estate

(courtesy Reuters)

Canada, Ontario face hard choice as Toronto home bubble builds

By Matt Scuffham | TORONTO

Officials from Canada and its most populous province will meet on Tuesday to bring Toronto’s hot housing market to heel, under pressure from voters angry that speculators or foreigners are fueling a bubble in Canada’s largest city.

While no immediate action is expected from the gathering of Sousa and Toronto Mayor John Tory, the first concerted effort to Finance Minister Bill Morneau, Ontario Finance Minister Charles rein in Toronto house prices, all three are pushing for policy options to cool prices without crashing the market.

Toronto prices rose 33 percent in March from a year earlier and the average price of a detached home surpassed C$1.2 million ($903,000) last month, sparking warnings from Bank of Canada Governor Stephen Poloz last week that speculation is likely at play.

Sousa and Morneau have jockeyed back and forth over who is responsible for the increasingly feverish market, and appear at odds over whether a tax on speculation or foreign investment is the best approach.

“Everyone is worried: what if this is the measure that crashes the market?” said John Andrew, director of Queen’s University Real Estate Roundtable.

In the end, it may be voter anger that drives Sousa to act first, with the provincial Liberal government suffering in opinion polls and measures to address “affordability” already promised in his April 27 budget.

“You’re looking to raise your family and grow in the community and you’re being outbid and outpriced by people that are just using it as a commodity,” said Fred Altbaum, 34, a marketing professional struggling to buy a home with his wife and daughter.

Like many others, Altbaum is calling for either a foreign buyers tax – like the one imposed in Vancouver in August – or a change to capital gains taxes to discourage investors from flipping properties.

A foreign buyers tax will slow but not stop money coming from Chinese investors, said real estate broker Tony Ma, whose HomeLife Landmark Realty Inc is one of the largest brokerages in Toronto serving buyers of Chinese descent.

But even Ma, who said only 5 to 8 percent of the 10,000 deals his 1,100 agents did last year involved foreign investors, thinks it is time for the government to do something about the housing bubble.

“Prices have jumped too fast … anything over a 10 (percent) increase is an overheated market. As a broker nobody likes it – every night you are a loser (in a bidding war),” said Ma.

(Writing by Andrea Hopkins in Ottawa; Editing by Chizu Nomiyama)


Oil slides after the market realizes that the Saudis will not extend their production cuts due to the increase in shale production from the uSA

(courtesy zero hedge)

Oil Slides After Saudis Unexpectedly Cast Doubt On Production Cut Extension

One week after “unnamed sources” reported that Saudi Arabia had backed the proposed 6 month extension to oil production cuts, this morning oil is lower after the world’s biggest oil producer appeared to backtrack on its trial balloon from last week, when Saudi Arabia’s energy minister said it is “too early” to decide whether OPEC will extend its crude-production-cutting agreement for the rest of the year.

Quoted by the WSJ, Khalid al-Falih, told reporters in Riyadh Monday that “it is premature to talk about extending the cut.” OPEC’s 13 national ministers are scheduled to decide that question on May 25.

Falih’s unexpectedly cautious tone “has taken some of the wind out of the bulls’ sails,” according JBC analysts.

It wasn’t just the sudden Saudi retiscence: as the WSJ adds, Falih’s comments were among a range of factors keeping pressure on oil prices, chief among them that U.S. drilling is now set to increase by 123,000 barrels a day in May, according to the U.S. Energy Information Administration, the steepest monthly rise since February 2015. The EIA figures are the latest sign that U.S. companies have been quick to increase production because of higher prices and has “added another bearish element to the market,” said JBC analysts.

A surge in U.S. production is a major threat to OPEC’s effort to reset the still-oversupplied global oil market. The U.S. oil rig count has been on the rise 13 weeks and now stands at its highest level in two years, according to oil-field services firm Baker Hughes Inc. The number of U.S. active drilling rigs rose again last week—by 11 to 683.

“You have supportive data from Saudi Arabia showing a large drop in exports but on the other hand you have an increase in U.S. production,” said Olivier Jakob from Switzerland-based consultancy Petromatrix.  “The prices are going lower,” he said. “There is some profit-taking on short positions.”

In nearly-daily public jawboning, OPEC has alleged good compliance with the oil output cuts, with Saudi Arabia contributing the most: the oil price shot up from the mid-$40s as recently as 3 weeks ago after expectation of an extension to the production cuts in May re-emerged following OPEC’s recent Kuwait meeting.  Until now, those trends had “put investors in optimistic mood,” said analysts from Commerzbank Commodity Research, however Saudi Arabia – reassessing the market share gains by US shale producers – appears to have reassessed.

Meanwhile, even as data due on Wednesday is expected to show U.S. inventories shrinking for only the 2nd week in 2017, US drillers have continued to add rigs for past 13 week.

“At this rate, the U.S. is likely to reach a new recent record level of production by the end of the third quarter” Olivier Jakob added.

It’s not just supply, however: concerns about oil demand have also weighed on prices. The IEA said last week that global oil demand is expected to grow at a slower pace for the second year in a row. The IEA reduced its forecast for 2017 demand growth to 1.3 million barrels a day, warning that this outlook could still “prove optimistic.”

Don’t count oil just yet, with China – as usual – left as the last hope for oil bulls. As the WSJ adds, “there are signs oil prices could go higher. Chinese gross domestic product for the first quarter rose more than expected, at 6.9%. China is one of the world’s largest oil consumers and its intake of crude fell only by 50,000 barrels a day in March from the January and February average. Good Chinese economic growth “could spur additional oil consumption,” said Michael Poulsen, oil risk manager at Global Risk Management.”


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



GBP/USA 1.26662 UP .01111 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED


Early THIS TUESDAY morning in Europe, the Euro ROSE by 27 basis points, trading now BELOW the important 1.08 level  RISING to 1.0636; 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 25.45 POINTS OR 0.79%    / Hang Sang  CLOSED DOWN 337.12 POINTS OR 1.39%/AUSTRALIA  CLOSED DOWN .79% / EUROPEAN BOURSES CLOSED DEEPLY 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 TUESDAY morning CLOSED UP 63.33 POINTS OR 0.35%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 337.12 OR 1.39%  / SHANGHAI CLOSED DOWN 25.45 POINTS OR 0.79%/Australia BOURSE CLOSED DOWN .79% /Nikkei (Japan)CLOSED UP 63.33 OR 0.35%  / INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1284.40


Early TUESDAY morning USA 10 year bond yield: 2.237% !!! DOWN 1 IN POINTS from MONDAY 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  2.901, DOWN 0  IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 100.09 DOWN 20  CENT(S) from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING


And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.818%  DOWN 7  in basis point(s) yield from MONDAY 

JAPANESE BOND YIELD: +.01%  UP 1   in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.670%  DOWN 3 IN basis point yield from MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.261 DOWN 5  POINTS  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 59 points HIGHER than Spain.





Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/12:00 PM 

Euro/USA 1.0700 UP .0057 (Euro UP 57 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 108.49 DOWN: 0.639 (Yen UP 64 basis points/ 

Great Britain/USA 1.2762 UP 0.0071( POUND UP 201 basis points)

USA/Canada 1.3388 UP 0.0065(Canadian dollar DOWN 65 basis points AS OIL FELL TO $52.28


This afternoon, the Euro was UP by 57 basis points to trade at 1.0700


The POUND ROSE BY 201  basis points, trading at 1.2762/

The Canadian dollar FELL by 65 basis points to 1.3388,  WITH WTI OIL FALLING TO :  $52.28

The USA/Yuan closed at 6.88203/
the 10 yr Japanese bond yield closed at +.010% UP 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 3 IN basis points from MONDAY at 2.188% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.849 DOWN 5  in basis points on the day /

Your closing USA dollar index, 99,78 DOWN 51  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 TUESDAY: 1:00 PM EST

London:  CLOSED DOWN 180.09 POINTS OR 2.46% 
German Dax :CLOSED DOWN 108.56 POINTS OR .90% 
Paris Cac  CLOSED DOWN 80.85 POINTS OR 1.59%
Italian MIB: CLOSED DOWN 330.97 POINTS OR 1.67%

The Dow closed DOWN 113.64 OR 0.55%

NASDAQ WAS closed DOWN 7.31 POINTS OR 0.12%  4.00 PM EST
WTI Oil price;  52,28 at 1:00 pm; 

Brent Oil: 54.79 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: $54.76


USA 30 YR BOND YIELD: 2.839%


USA/JAPANESE YEN:108.42   DOWN 0.700

USA DOLLAR INDEX: 99.51  DOWN 78  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2841 : UP .0254  OR 254 BASIS POINTS.

Canadian dollar: 1.3385  UP .0061 (CAN DOLLAR DOWN 61 BASIS PTS)

German 10 yr bond yield at 5 pm: +.156%








and the USA is threatening Russia?

Hilarious Radio Conversation between US naval ship and Spanish authorities

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


‘May’hem Strikes – Dollar & Bond Yields “Pounded” To Post-Election Lows

Bonds have given up, commodities have given up, inflation expectations have given up, bank stocks have rolled over, and even ‘soft’ data is starting to rollover… still the ‘rally’ is in tact, it’s just a flesh wound according to the business media…


Bonds just overtook The Dow year-to-date, Banks are red and gold leads…


This is getting silly…


A turmoily day:

  • Theresa May announce surprise general election – crashes FTSE100 (most since Brexit), sends cable soaring most in 3 months to highest since Oct 3rd
  • Goldman big miss – worst day since Brexit
  • Industrial Production disappoints with plunge in factory output – never been down this long outside of a recession
  • US Macro Surprise index plunges most since May 2011
  • Dollar tumbles most in a month after Goldman folds on Long Dollar (and cable strength) – lowest close since day after election
  • 30Y Treasury yield tumbles most since first day of January – lowest close since day after election

But, thanks to the ever-present willingness to sell vol, stocks managed to BTFD…


Small Caps managed to close green…


After yet another squeeze…as soon as Europe closed


VIX call volumes are spiking…


With a record net speculative short positioning, it is perhaps not surprising that Cable exploded higher today…


But then margin calls and algo panic ran the pair over 1.29 in the afternoon…


The Dollar Index and The Long Bond (yield) have plunged to the lowest levels since 11/9/17… blame The Fed…


The front-end reflation trade has tumbled…


The Treasury curve has collapsed to 6-month lows…


Goldman suffered the worst day since Brexit…


Surprise!! Maybe Goldman credit markets were right after all?


Still a lot of hope priced into Goldman shares…


Banks have been ugly since Trump spoke to Congress…


Gold was mysteriously hammered into the London Fix but headlines about The Pentagon planning to shoot down North Korean missiles sent the precious metal soaring again…


WTI and RBOB bounced back in the afternoon (ahead of tonight’s API data)


But weakness across Asia last night was dominated by the collapse in industrial commodities…whoich have erased all the gains post-Trump


So, what happens to the stock market next?

Of course this is no surprise to bond traders…

USA trading early Tuesday morning:


The USA dollar begins to sink as Goldman Sachs covers its losing trade.  It blames the Fed and Trump. Goldman exits all long dollar trades.

(courtesy zerohedge)

Dollar Sinks As Goldman Covers ‘Top Trade’ Recommendations; Blames Fed, Trump

Just a few short weeks after Goldman’s top FX strategist (whose favorite trade was ‘long dollar’) quit, the banking behemoth has reversed its call on two so-called “top trades”…

Before Goldman’s chief FX strategist Robin Brooks quit (the replacement to the infamous Thomas Stolper), he suggested

…coming Dollar appreciation will arguably take the Dollar into overvalued territory, but given the outperformance of the US vis-à-vis others, US policy makers will have to accept this as part of a necessary tightening in financial conditions.

And now, just a few short weeks later, Goldman says they are closing their two long-Dollar ‘Top Trade’ recommendations: long USD versus EUR and GBP, and long USD/CNY via the 12-month NDF.

We see three main reasons why these trades have not performed since initiation in mid-November, and no longer warrant a place among our ‘Top Trades’:

(1) The pickup in global growth, which has reduced the degree of US outperformance.


(2) Concerns about Dollar appreciation from the Trump Administration.


(3) The Fed’s turn towards balance sheet normalization, which has resulted in less hawkish communication about the funds rate than we might have expected.

In addition to closing these two recommendations, we are putting the remainder of our foreign exchange forecasts under review.

We do not anticipate making major changes to the rank ordering of return expectations, but we may adjust a number of spot rate forecasts to reflect a flatter trajectory for the trade-weighted Dollar.

In recent years we have generally maintained a bullish Dollar view, and the greenback still has a number of things going for it, including a healthy domestic economy, an active central bank, and lower political uncertainty compared with the UK and Euro area. In the near term the Dollar could gain if the Trump Administration makes progress on fiscal stimulus or if the Front National wins the upcoming presidential election in France.


However, a number of fundamentals have changed on the margin, such that the long-Dollar story no longer warrants a place among our ‘Top Trades’. In addition to closing these two recommendations, we are putting the remainder of our foreign exchange forecasts under review. We do not anticipate making major changes to the rank ordering of our return expectations, but we may adjust a number of spot rate forecasts to reflect a flatter trajectory for the trade-weighted Dollar. Our current forecasts imply an appreciation in the Dollar NEER (nominal effective exchange rate) of 6.5-7.0% over the next 12 months, which we now see as too high.

And the dollar is reacting (help by strength in cable after Theresa May’s moves)


The big question is – did Goldman let Trump front-run this?

Goldman tells clients to go long USD, tells Trump to short it


Gold skyrockets, bonds tumble as the Pentagon is planning on knocking out North Korea’s missiles once fired:

(courtesy zero hedge)

Dollar, Bond Yields Tumble On Pentagon Plans

Gold is resurging…


and bonds are bid (bond yields tumbling to their lowest since Nov 10th) after reports that The Pentagon is planning to shoot down North Korean missile tests.

Interestingly, there is no safe haven bid for the dollar, which is also tumbling to post-election lows…


Combined with commodities freefall…

it seems like every Trumpflation dream is being shattered.


Today’s big story; The Pentagon is now considering shooting down North Korea Missile tests:

(courtesy zero hedge)

Pentagon Considers Shooting Down North Korea Missile Tests

Just when a few hours had passed without any escalation around the Korean Peninsula, The Guardian reports that the US military is considering shooting down North Korean missile tests as a show of strength to Pyongyang according to two sources briefed on the plans.

As the USS Carl Vinson heads towards the peninsula, along with two oither carriers, the Pentagon is looking for ways short of war to pressure North Korea into denuclearization, particularly if Pyongyang goes forward with an anticipated sixth nuclear test.

The option, which defense secretary James Mattis has briefed to Congress, has, as The Guardian reports, yet to mature into a decision by the military to intercept a tested missile. One US official said the prospective shoot-down strategy would be aimed at occurring after a nuclear test, with the objective being to signal Pyongyang that the US can impose military consequences for a transgression Donald Trump has said is unacceptable. But experts and former officials said shooting down a North Korean missile during a test risks an escalation that Washington may not be able to control, one that risks war on the Korean peninsula and potentially devastating consequences to allies South Korea and Japan.

“I would see such an action as escalatory, but I couldn’t guess how Kim Jong-un would interpret it,” said Abraham Denmark, the senior Pentagon policy official for Asia in Barack Obama’s administration.


“But I would be concerned he would feel the need to react strongly, as he would not want to appear weak.”

Both sources said the military was not looking to use the high-profile missile-defense system the US is providing to South Korea, the Terminal High Altitude Area Defense (Thaad). Thaad’s 200km range and sophisticated radar have unnerved China, whose president, Xi Jinping, has been coaxed by Trump into pressuring North Korea. 

In the past, several US administrations have considered shooting down North Korean missile tests, only to turn away from the option when considering the consequences of escalation against an unpredictable and bellicose adversary. Rumors have circulated since Trump took office that he has been mulling a shoot-down. A US official said the military was discussing a potential shoot-down ahead of Trump’s meeting with Xi on 6 April at Trump’s Mar-a-Lago resort in Florida. The discussion also preceded Friday’s North Korean military parade, during which Pyongyang displayed advancements in its intercontinental ballistic missile program and anti-ship missiles, as well as a test-launch failure on Saturday. Senior Pentagon officials pondering the shoot-down option are said to have conceded they are unsure how North Korea would respond, especially considering North Korea’s comments…

“If the U.S. is reckless enough to use military means, from that very day, there will be all out war. Our nuclear weapons protect us from that threat,” Vice Foreign Minister Han Song-Ryol told the BBC’s John Sudworth. “We’ll be conducting more missile tests on a weekly, monthly and yearly basis,” he threatened. He said that an “all-out war” would result if the US took military action.

Neither Pentagon nor US Pacific Command representatives responded to a request for comment. Another factor complicating a shoot-down would be the risk of embarrassment should Aegis interceptors miss a North Korean target, which might embolden Pyongyang and unnerve US regional allies.

Ken Gause, director of the international-affairs group at the CNA thinktank influential with the Pentagon, said US planners have grown frustrated with coercive diplomacy amid North Korea’s maturing nuclear and missile capability. But Gause said that while Washington might spin a shoot-down as a step below an attack on North Korea or an attempt to overthrow its government, it risked validating Kim’s position that North Korea needs nuclear weapons and long-range missiles to respond to American aggression.

“I still see this as escalatory and playing with potential fire. At the end of the day, Kim Jong-un cannot be seen internally as backing down from pressure”, Gause said.

It seems odd that the US would telegraph this intent – given Trump’s campaign discussions of not doing exactly this. Or is this simply a way of showing that the Pentagon remains on a war footing despite a very temporary lull in global thermonuclear ware rhetoric

Goldman disappoints as fixed income sector the culprit.  Its stock slides as their average compensations hits 360,000
(courtesy zero hedge)

Goldman Misses As FICC Disappoints, Stock Slides As Average Banker Comp Hits $360K

Unlike the other big banks, Goldman’s earnings release is a breeze: since the bank has virtually no balance sheet to use as a source of income (or loss), it is all about the income statement. And it was here that there was a big surprise, because despite expectations of a blowout result, with whisper numbers well above consensus estimates, Goldman unexpectedly disappointed, reporting Q1 revenues of $8.03BN, below the $8.53BN expected, translating to EPS of $5.15, fractionally below the $5.17 estimate, which nonetheless was 92% higher compared to EPS of $2.68 reported one year ago.

Unlike other banks Goldman did not benefit as much from a pick-up in trading activity during the period: net revenues from the institutional client services division were up 25% from a year earlier to $3.4bn, below the $3.62bn expected, of which FICC contributed $1.685 billion, which also missed expectations of a $2 billion number.

Despite the miss in FICC, Goldman reported beats in virtually every other revenue line time,

“The operating environment was mixed, with client activity challenged in certain market-making businesses and a more attractive backdrop for underwriting in our investment banking franchise,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “As the economy improves, we are wellpositioned to not only meet our clients’ diverse needs, but also to generate operating leverage for our shareholders.”

Broken down by key operating group, most segments reported numbers that beat expectations with the exception of FICC:

  • FICC sales & trading revenue was $1.695bn, missing estimates of $2.03bn
  • Overall sales and trading revenue $3.36 billion, missing estimates of $3.62 billion
  • Investment banking revenue of $1.7bn beating estimates of $1.56bn.
  • Investment and Lending, formerly known as prop, reported $1.48bn in revenue, virtually unchanged from a year ago.

The full breakdown of Goldman’s various revenue segments is shown in the chart below:

Other metrics:

  • Q1 return on avg. equity 11.4%
  • Q1 Basel III common equity Tier 1 ratio 12.9%
  • Assets under management $1.37t

Goldman also reported Q1 compensation expenses, which while rising from $2.662 billion to $3.291 billion, came in modestly below the expected $3.52 billion. Also notable: Goldman staff decreased 7% Y/Y, with the firm closing the first quarter with 34,100 workers. As the following chart shows, the average accrued banker compensation rose from $338,576 to $360,000, the highest since Q3, 2015.

Finally, for all those Goldman bankers who sold their stock at the top, congratulations. As of this moment, GS shares are down over 3%, and back to levels not seen since the election.

Industrial production tumbles and generally this will signal a recession
(courtesy zerohedge)

Factory Output Tumbles In March – This Has Never Happened Outside Of Recession

US Industrial Production peaked in November 2014 and remains down almost 2% from those record highs (despite surging stocks).


This has never happened without the US economy being in recession in history.


While Industrial production headlines met expectations, factory output for March plunged 0.4% – the biggest drop since Feb 2015.


Still who needs ‘production’ when we have Snapchat and Netflix!??



Vacancy rates skyrocket in the USA’s 4 largest city Houston.

(courtesy zero hedge)

Houston Commercial Rents Plunge As Vacancies Hit 22-Year High

There is seemingly no end to the growing problem of commercial real estate vacancies across the country.  And while we’ve spent a lot of time talking about the largest markets of New York and San Francisco, Houston, one of the hardest hit markets from the collapse of oil prices, is also in the midst of its own real estate collapse.  In fact, per a recent Q1 market update from NAI Partners, commercial vacancies in Houston have just reached a 22-year high.

Houston’s overall vacancy rate rose to 20.0% in Q1 2017, an increase of 100 basis points quarter-over-quarter and 260 basis points year-over-year. Net absorption stood at negative 778,758 sq. ft. as of the quarter’s end—on the heels of the more than 1.4 million sq. ft. of negative absorption for full-year 2016. In addition, both Houston citywide overall rent and leasing activity are down from last quarter, as well as from Q1 2016.


Meanwhile, the Houston market ended the first quarter of 2017 with negative 778,758 sq. ft. of net absorption after a brief recovery in early 2016.


And, after averaging just 3.3 million square feet in 2014 before the oil bust, the amount sublease space up for rent now stands at over 3x that level, or roughly 11.1 million square feet.

The overall availability rate, which measures the total amount of space being marketed for lease, rose to 25.7%, an increase of 70 basis points from the previous quarter’s 25.0%. Available sublease space has dipped from a peak of 12.0 million sq. ft. in Q3 2016 to 11.5 million sq. ft. at the end of 2016 and now settling at 11.1 million sq. ft. as of the first quarter of 2017. Before 2014, available sublease space in Houston had been averaging about 3.3 million sq. ft. Since the oil downturn began to manifest in the office market in 2014, available sublease space in Houston has more than tripled. With everything considered, the sublease market seems to have reached its bottom; however, there is more than 4.5 million sq. ft. of sublease space that will be returned to landlords in the form of direct space through 2019. The large sublease market is a critical element in regaining positive momentum and could be viewed as beneficial as the big blocks become more competitive.


All of which has, of course, pushed rents lower…


…but, as usual, has had minimal impact on the willingness of builders to continue adding new capacity, with roughly 2.0 million square feet of new real estate currently under construction, and about half of that space available for lease.


But we’re sure OPEC will save the day for Houston real estate developers any day now..




And the USA is still having a massive increase in bartenders and waiters: the USA restaurant industry suffers its worst collapse since 2009

(courtesy zero hedge)

US Restaurant Industry Suffers Worst Collapse Since 2009

What tentative hope had emerged for a rebound for the U.S. restaurant industry at the start of the year, was doused last month when in its February Restaurant Industry Snapshot, TDn2K found that “Restaurant Sales and Traffic Tumble in February” and reported that same-store sales fell -3.7% in February, with traffic declining -5.0% . It did however leave a possibility that things may turn around as a result of the prompt disbursement of withheld tax refunds in the month, which it suggested may have adversely affected sales and traffic.

Alas, that did not happen, and restaurant struggles continued in March as sales and traffic again declined year-over-year: same-store sales were down 1.1% while traffic dropped 3.4%. March results were disappointing for an industry desperately trying to reverse performance trends; with sales now negative in 11 out of the last 12 months, the longest stretch since the financial crisis. There was a modest improvement sequentially, however, and while still negative, sales improved by 2.5% points compared to February as traffic rose marginally by 1.6%.

Source: TDn2K

Explaining the sequential “improvement”, Victor Fernandez, executive director of insights and knowledge for TDn2K, said “March sales were expected to be somewhat better than February due in part to the catch-up of tax refunds that were initially delayed in February. In addition, the industry likely benefited from the shift in the Easter holiday, which fell in March in 2016. For the largest segments (quick service and casual dining), this holiday represents a potential loss of sales.”

However, it was not enough: “The fact that sales were still negative in March given these tailwinds highlights the challenge chains have faced since the recession. Factors like restaurant oversupply and additional competition for dining occasions continue to take their toll on chain traffic.

As TDn2K further adds, with a same-store sales decline of 1.6%, the first quarter of 2017 was the fifth consecutive quarter of negative results. The last time the industry experienced a similar period was in 2009 and the first half of 2010, as the economy began recovery following the recession. Only this time the move is in the opposite direction.

Furthermore, the first quarter of 2017 followed a very disappointing 2.4 percent sales drop in the fourth quarter of 2016, highlighting the difficult operating environment currently facing many operators.

Worse, same-store traffic dropped even more, or -3.6% in Q1, consistent with the average -3.4% quarterly declines experienced since the beginning of 2016.

The growth rate in check average continues to trend down slowly. For the first quarter of 2017, the average check was up 1.9%, somewhat lower than the average 2.3%growth reported for 2016. This is likely the result of brands relying more on promotions and conservative menu price increases in response to continual declines in traffic. It confirms that restaurants don’t have even the most modest pricing power to offset volume declines.

On the other side of the spectrum, as has been the case in recent quarters, segments with the highest and lowest average check experienced better results. The strongest performance in the first quarter came from upscale casual, followed by fine dining and quick service. It is important to mention that fine dining and upscale casual are among the segments most negatively impacted by the shift in Easter.

Meanwhile, the worst segments in the first quarter were family dining and fast casual. Family dining concepts were also among the most negatively affected by the Easter shift.

A separate report from the National Restaurant Association found that its proprietary Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 98.8 in February – up 0.2 percent from a level of 98.6 in January, however this was the fifth consecutive month in which the Current Situation Index contracted (below 100), as  operators continued to report dampened same-store sales and customer traffic levels.

Furthermore, the NRA found that restaurant operators overall continued to report soft same-store sales in February, with results that were similar to January’s levels. 33% of restaurant operators reported a same-store sales increase between February 2016 and February 2017, while 51% reported a sales decline, a deterioration from January. Restaurant operators also reported dampened customer traffic levels in February.

Only 27% of restaurant operators reported an increase in customer traffic between February 2016 and February 2017, while 57% reported a decline in customer traffic. In January, 26  percent of operators reported higher customer traffic levels, while 54% said their traffic declined.

One notable finding in the TDn2k report was that despite waiters and bartenders being the fastest growing job category under the Obama “recovery”, restaurant operators list finding enough qualified employees to keep restaurants fully staffed as a primary concern. This is mainly due to skyrocketing restaurant churn rates as current restaurant workers believe they can find better options elsewhere, only to return disappointed. Turnover for restaurant hourly employees as well as managers increased again during February according to TDn2K’s People Report. These rates are currently higher than they have been in over ten years and rising.

Making matters worse for restaurants, some are finding that only by  offering higher compensation can they retain workers. So even if wages have been increasing slowly in recent years, this is expected to change soon as the labor market continues to tighten. In fact, according to a recent survey by People Report, about 80% of restaurant companies reported having to offer additional financial incentives to attract candidates in tough recruiting markets. In most almost all cases, those incentives take the form of higher base pay. Who would have though that there is a shortage of line cooks and waiters in the US.

While many continue to seek answers in the pernicious tailspin in the US restaurant industry within the supply side – pricing, competition, layout – the reality is that the key variable may remain with demand.  As some have speculated, it could simply be the reluctance or inability to eat out when money is being inflated elsewhere, to cover higher cost-of-living increases in other areas, such as rent or healthcare, even as wages for large parts of the population remain frozen.

To be sure, restaurant spending is a thermometer for discretionary spending, which varies with how well consumers are doing, and it’s the first to react as Wolf Richter correctly points out. When consumers hit their limits, the first things they cut are discretionary items, such as eating out.

As such, the worst tailspin in the US restaurant industry since 2009 remains the biggest flashing red alert suggesting that when it comes to that invincible dynamo behind the US economy, the American consumer, things have not been this bad in a long time.

(courtesy David Stockman/DailyReckoning)

The Anything President And The Everything Bubble


The lemmings were running hard towards the cliffs yesterday. Despite a renewed burst of bombs and drones careening into the already rubble-strewn wastelands of Afghanistan, Yemen, Syria and Iraq.

Or the outbreak of cold war style nuclear brinksmanship on the Korean peninsula — what one commentator properly called a Cuban missile crisis in slow motion.

Likewise, forget that the vacationing Congress is set to return on April 25 to an endless sequence of shoutdowns, showdowns and shutdowns on continuing resolutions and debt ceiling increases.

That is, it will be struggling to keep the fiscal lights on in the Imperial City, not enacting the Donald’s DBA (dead before arrival) fantasy about making the American economy great again.

Indeed, while the Donald has been out huffing and puffing in his new role as global Spanker-in-Chief, the domestic front has turned from bad to worse. His economic policy machinery has now been seized entirely by the Vampire Squid’s latest chieftains in the White House — Gary Cohn, Steve Mnuchin and Jared Kushner.

I am quite confident that none of these three has ever voted Republican in their life or have even the foggiest idea of how to craft a fiscal plan and tax program that could coalesce the warring GOP factions from the hardline Freedom Caucus to the moderate Tuesday Group.

And if the Goldman trio should even attempt to go the old Boehner-Obama “bipartisan” route, as Wall Street devoutly wishes, Speaker Ryan will come to understand what it means to be drawn-and-quartered.

As I stated earlier, it should be crystal clear by now that there will be no great Trump Stimulus. And what lies ahead is an unprecedented outbreak of dysfunction, paralysis and unmitigated mayhem in the Imperial City.

Moreover, the fact that the Donald is now flipping, flopping, pivoting and whirling on issues in an almost random manner is surely compounding the dysfunction.

While the clucking commentariat at CNN may find the Donald’s betrayal of core campaign positions and constituencies to be evidence of a “refreshing” flexibility — or even as “presidential” — it is actually just the opposite.

It’s proof that the Donald didn’t mean a thing he said during the campaign.

And that for GOP politicians on Capitol Hill, lining-up behind a whirling dervish of impetuous unpredictability is fast becoming a career hazard with vanishing appeal.

After all, the Donald has now flip-flopped not on campaign brochure footnotes, but on five core issues:

China’s blatant currency manipulation over two decades, the Fed’s egregious bubble finance that left Flyover American behind, the Export-Import bank’s crony capitalist subsidies to Boeing and GE, NATO’s obsolescence and intervention on both sides of the Syrian civil war were all front and center to the Donald’s appeal.

Yet the fact that he jettisoned his clear positions on these issues in less than a week’s time indicates that he is truly flying by the seat of his ample britches, and that his attention span does indeed compress into 140 characters or less.

Yet, when the bell rung yesterday afternoon, the S&P 500 index was still up an unjustified 12% since November 8. So I will say it again with renewed emphasis: This century’s third great bubble’s days are numbered and in just a few digits.

The remaining bullishness and buy-the-dips robo-trading that temporarily sustained the dotcom bubble through March 2000 and the housing bubble through September 2008 will soon give way.

That’s especially true because the Fed is out of dry powder, and is raising interest rates and preparing to shrink its massive balance sheet in order to prepare for the next recession.

Given that the global economy languishes under $225 trillion of debt and massive excess capacity, the stock market is surely in the midst of the “Everything Bubble.”

As I stated above, the median stock is now trading at the highest multiple of earnings in history — including 2000 and 1929.

To top it all off, the state of American retail is indeed perilous.

With the recent chapter 11 filing by Payless shoes, it now appears that upwards of 3,500 stores will close in early 2017 alone.

Even the Bureau of Labor Statistics’ fudge factory seems to be getting the word about the scorched earth condition of the malls.

During the last two months, it has reported a 60,000 decline in the seasonally maladjusted job count; and a 758,000 drop in the actual count since the December holiday peak. By the way, that compares to only a 644,000 drop over December-March during the prior year.

Retailers stores closing 2017

The fact is, other than easy credit-fueled auto sales, which are now also rolling over, and purchases through Amazon’s cut rate e-Commerce juggernaut, the American consumer has been quasi-comatose for nearly three years now.

Reported sales at general merchandise stores in February were no higher than they were 30 months ago in August 2014 — and I do mean “nominal” sales. Since the Consumer Price Index (CPI) is up 2.8% during the last year alone, inflation adjusted sales are actually already well into recession territory.

More importantly, the plunge in department store sales — which comprise the anchor and driver of 70% of mall traffic — have not abated in the slightest. As of the most recent reading, the monthly sales rate was down 30% from the pre-crisis peak.

Again, that’s in nominal dollars. In real terms, department store sales have fall by upwards of 50% since the early years of this century.

Moreover, debt-encumbered American consumers are dropping, not shopping, because this entire so-called recovery has been wasted. That is, consumers can’t spend energetically because there has been no significant deleveraging since the 2008 crisis.

Despite all the Fed’s madcap money-printing, they are impaled on Peak Debt.

In a word, the retail mall sector is facing insuperable headwinds and the worst of both worlds. That is, flagging demand and immense over-capacity.

It now appears, in fact, that nearly 150 million of retail square footage could close during 2017 — an all-time record.

Does the foregoing paint a picture of economic health? Hardly. Quite the contrary, in fact.

So contrary to what the Wall Street stimulus junkies would have you think, the U.S. and global economies are hardly “accelerating.”

Of course, they have been preaching the same gospel since 2013. But this time, reality will come breaking in and finally shatter the delusion.

The U.S. economy is sliding toward recession. And with the Imperial City impossibly gridlocked, the chances that the “stimulus” baton will be handed off to some ballyhooed Trump Reflation are lower than those of the proverbial snowball in the hot place.

Which leads me to my sincerest piece of advice: get out of the casino before it’s too late.


David Stockman
for The Daily Reckoning






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