Gold: $1281.90  UP 50 CENTS

Silver: $17.99  DOWN 15  cents

Closing access prices:

Gold $1282.50

silver: $18.04!!!










Premium of Shanghai 2nd fix/NY:$11.33


LONDON FIRST GOLD FIX:  5:30 am est  $1279.90




For comex gold:



 TOTAL NOTICES SO FAR: 667 FOR 66700 OZ    (2.0746 TONNES)

For silver:

For silver: APRIL


Total number of notices filed so far this month: 892 for 4,460,000 oz



The open interest in silver continues to advance with today’s reading just UNDER 230,000 contracts (229,227 contracts/a new record) or about 4000 contracts ABOVE the record set last year AND 1000 CONTRACTS ABOVE THE RECORD SET YESTERDAY.   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.


Let us have a look at the data for today





In gold, the total comex gold FELL BY 4213 contracts WITH THE FALL IN THE PRICE OF GOLD ($10.30 with YESTERDAY’S TRADING). The total gold OI stands at 468,050 contracts.

we had 1 notice(s) filed upon for 100 oz of gold.


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


We had  A HUGE   changes in tonnes of gold at the GLD: A WITHDRAWAL OF 6.51 TONNES OF GOLD INTO THE GLD

Inventory rests tonight: 854.25 tonnes



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

THE SLV Inventory rests at: 326.308 million oz



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

1. Today, we had the open interest in silver ROSE BY 1,243 contracts UP TO  229,227, A NEW COMEX RECORD DESPITE THE  FALL IN  SILVER YESTERDAY (12 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 FELL by 4,213 contracts WITH the accompanying FALL in price by $10.30

(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  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 1.41 POINTS OR 0.04%/ /Hang Sang CLOSED UP 231.10 POINTS OR 0.97%.  The Nikkei closed DOWN 1.71 OR 0.01% /Australia’s all ordinaires  CLOSED UP 25%/Chinese yuan (ONSHORE) closed UP at 6.8836/Oil UP to 50.89 dollars per barrel for WTI and 53.43 for Brent. Stocks in Europe  MOSTLY IN THE GREEN   ..Offshore yuan trades  6.8798 yuan to the dollar vs 6.8836 for onshore yuan. NOW  THE OFFSHORE IS SLIGHTLY STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN SLIGHTLY STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN ALSO  STRONGER AND THIS IS COUPLED WITH A WEAKER DOLLAR. CHINA IS HAPPY


North Korea

Our pleasingly plump buffoon, Kim Jong un threatens the USA with a “super mighty preemptive strike”

(courtesy zero hedge)


Japan doing OK but their trade surplus in March melted

( zero hedge)





The rise in popularity of the communist candidate Melenchon has cause a possible nightmare scenario in the French elections coming up this Sunday.

here is a preview:

( zero hedge)



Conflicts between the Ukraine forces and the rebels inside the Donbass intensifies:

(courtesy Federioc Pieraccini/Strategic Culture Foundation)



Ontario cracks down on foreign (mainly Chinese buyers) of homes as they launch a 15% foreign buyers tax.   Also rent controls on all units will now be implemented with increases of only 1.5%.  That should shut the door on Chinese purchases and this will no doubt send them to other destinations to deposit their hot money.  Since considerable  government revenues comes from land transfer taxes, Ontario will need to find other means to find revenue.

( zerohedge).


Despite oil prices remaining calm, banks are planning to cut oil lending even more this year

(courtesy Rupert Hargreaves/ValueWalk.com)



Not good!  Maduro seizes the operating General Motors Plant in Valencia, Venezuela..

they will run this into the ground.

( zero hedge)


i)Gold slammed for the 3rd consecutive day:
( zero hedge)
ii) The new clearing system was one of the reasons for the discrepancy in the London gold fixes vs NY trading;

( Bloomberg/GATA)

10. USA stories

i)More soft data collapses.  This time, it was the Philly Fed mfg index

( zero hedge)

ii) Amazing  the FBI now admits that the leaks of documents provided to Wikileaks was not Russians but an insider

( zero hedge)

iii)There are 16 counties in Tennessee that has no providers and Iowa may soon be next.  If there is no provider there is no back up plan

In a nutshell: Obamacare is in a mess

( Mish Shedlock/Mishtalk)

iii b) A new plan will be on the table but do not get your hopes up too high

( zerohedge)

(iv)Goldman Sachs believes that the government will pass a clean resolution without any conflict so that they could keep on going.  However the problems will occur once they run out of money  and cannot pass a new debt ceiling

( Goldman Sachs/zerohedge)

v)This should be interesting:  Trump demands money for border wall funding.  This may kill the continuing resolution “clean” bill and force a government showdown

( zerohedge)

vi)Trump to sign executive order to sanction imports of steel on ‘national security” grounds

( zerohedge)

vii)Over the past few years, we have alerted you on the potential fraud of this company, Ocwen Financial.  It plunged today after the North Carolina Commissioner issued a cease and desist order to the company to address mishandling of consumer escrow account and a deficient financial condition

( zero hedge)

viii)Mnuchin’s tax cut proposals have no chance to pass both houses:

( zero hedge)

ix)Subway for the first time in its 52 yr history is shuttering hundreds of USA stores.

Business must be good..

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY 4213 CONTRACTS DOWN to an OI level of 468,050 DESPITE THE  FALL IN THE PRICE OF GOLD ( $10.30 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 87 contract(s) FALLING TO 843. We had 8 notices served yesterday so we LOST 79 contracts or 7,900 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/2017 contract month LOST 101 contract(s) and thus its OI is 2164 contracts. The next big active month is June/2017 and here the OI FELL by 5477 contracts DOWN to 336,491.

We had 1 notice(s) filed upon today for 100 oz

And now for the wild silver comex results.  Total silver OI ROSE BY 1,243 contracts FROM  227,984 UP TO 229,227 WITH YESTERDAY’S  12 CENT PRICE LOSS.  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
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 defending 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 $2.29 BELOW THE PRICE OF $20.44 WHEN THE PREVIOUS RECORD WAS SET LAST YEAR.

We are in the NON active delivery month is APRIL  Here the open interest LOST 24 contracts LOWERING TO 62 contracts. We had 86 notices filed yesterday so we  gained 62 contracts or an additional 310,000  silver ounces will standing for delivery and nothing was lost through the EFP route.

The next active contract month is May and here the open interest SHOCKINGLY  LOST ONLY 9,022 contracts DOWN to 102,240 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 6 trading days before first day notice. The non active June contract LOST 26 contracts to stand at 191. The next big active month will be July and here the OI gained 10,283 contracts up to 94,280


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 62 notice(s) filed for 310,000 oz for the APRIL 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 230,727  contracts which is good.

Yesterday’s confirmed volume was 274,313 contracts  which is very good.

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for APRIL
 April 20/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 707.300.000 oz
23 kilobars
Deposits to the Dealer Inventory in oz nil oz


Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
1 notice(s)
100 OZ
No of oz to be served (notices)
842 contracts
84200 oz
Total monthly oz gold served (contracts) so far this month
667 notices
66700 oz
2.0746 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   452,673.8 oz
Today we HAD 2 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits: nil oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 2 customer withdrawal(s)
i) Out of Scotia: 643.000 oz
20 kilobars
ii) Out of Manfra: 64.30 oz
2 kilobars
total customer withdrawal: 707.300 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 1 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 1 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 (667) x 100 oz or 66700 oz, to which we add the difference between the open interest for the front month of APRIL (843 contracts) minus the number of notices served upon today (1) x 100 oz per contract equals 150,900 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 (667) x 100 oz  or ounces + {(843)OI for the front month  minus the number of  notices served upon today (1) x 100 oz which equals 150,900 oz standing in this non active delivery month of APRIL  (4.6953 tonnes)
we LOST 80 contracts or an additional 8,000 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: 4.6953
total for the 16 months;  249.52 tonnes
average 15.595 tonnes per month
Total dealer inventory 992,396.791 or 30.867 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,92,619.374 or 278.46 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.46 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
 April 20. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 598,179.510 oz
Deposits to the Dealer Inventory
417,321.04 oz
Deposits to the Customer Inventory 
597,181.510 oz
609,536.400 oz
total:  1,206,717.910 oz
No of oz served today (contracts)
(3100,000 OZ)
No of oz to be served (notices)
0 contracts
(nil  oz)
Total monthly oz silver served (contracts) 892 contracts (4,460,000 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  11,432,392.1 oz
today, we had  1 deposit(s) into the dealer account:
 i)_ Into Brinks:  417,321.04 oz
total dealer deposit: 417,321.04 oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of Scotia: 597,181.51 oz  and this lands again into JPMorgan’s vault
ii) Out of Delaware:  998.000 oz??? exact weight
 We had 1 Customer deposits:
i) Into JPMorgan:  597,181.510 oz
ii) Into CNT: 609,536.420 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; 1,206,717.910oz
 we had 0 adjustment(s)
The total number of notices filed today for the APRIL. contract month is represented by 62 contract(s) for 310,000 oz. To calculate the number of silver ounces that will stand for delivery in APRIL., we take the total number of notices filed for the month so far at 892 x 5,000 oz  = 4,460,000 oz to which we add the difference between the open interest for the front month of APRIL (62) and the number of notices served upon today (62) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the APRIL contract month:  892(notices served so far)x 5000 oz  + OI for front month of APRIL.(62 ) -number of notices served upon today (62)x 5000 oz  equals  4,460,000 oz  of silver standing for the APRIL contract month. 
We GAINED 62 contracts or an additional 310,000 oz will stand for delivery in this non active delivery month of April. NO CONTRACTS WERE CASH SETTLED THROUGH THE EFP ROUTE.  SOMEBODY IS AFTER A HUGE AMOUNT OF SILVER!!


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 150,860 which is huge 
Yesterday’s  confirmed volume was 98,862 contracts
Total dealer silver:  30.532 million (close to record low inventory  
Total number of dealer and customer silver:   194,303 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
 I will update the NPV for Sprott and Central fund later tonight at around 11 pm

NPV for Sprott and Central Fund of Canada

will update later tonight the central fund of Canada figures

1. Central Fund of Canada: traded at Negative 6.7 percent to NAV usa funds and Negative 6.6% to NAV for Cdn funds!!!! 
Percentage of fund in gold 60.8%
Percentage of fund in silver:39.0%
cash .+0.2%( April 20/2017) 
will update later tonight
2. Sprott silver fund (PSLV): Premium FALLS TO   -.57%!!!! NAV (April 20/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS to +0.26% to NAV  ( April 20/2017)
Note: Sprott silver trust back  into NEGATIVE territory at -.57% /Sprott physical gold trust is back into POSITIVE/ territory at +0.26%/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

 Section: Daily Dispatches

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.


I will update gold inventory and silver inventory (GLD and SLV) at 11 pm tonight.

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 20 /2017/ Inventory rests tonight at 854.25 tonnes


Now the SLV Inventory


April 19/a withdrawal of 1.893 million oz/inventory rests at 326.308 million oz/

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 20.2017: Inventory 326.308  million oz

Major gold/silver trading/commentaries for THURSDAY


When Trump Turns On “Enemy Within” Fed It May Create 1970s Style Stagflation

David McWilliams has written an interesting article in which he puts forward the case that Trump is likely to turn on the “enemy within,” the Federal Reserve and bully them into “printing money.”

He points out that this was seen in 1971 when Nixon bullied the Fed into printing and debasing the dollar. McWilliams says this would be bad for stocks markets which would fall in value as was seen in the 1970s.

This would be positive for gold as the printing of dollars, rising inflation and stagflation saw gold surge in the 1970s when it rose from $35 per ounce in 1971 to over $850 per ounce in January 1980 (see chart). Along the way there was a significant correction when gold prices fell by nearly 50% – very much akin to gold’s price falls from 2013 to 2015.

Gold in USD in 1970s

McWilliams does not expressly say that it is positive for gold but the 1970s, the historical record and the data shows that the printing of money and currency debasement is positive for gold in the long term.

McWilliams writes:

“What happens if Trump bullies the Fed into accepting his higher growth rates which he achieves by boosting government spending and borrowing billions? Could it happen in the first place?

Yes it could. In the 1970s, Richard Nixon bullied the Fed into printing money so that he could win the 1972 election. It can happen because it has happened. This would mean that all the old rules go out the window. American wages would rise much quicker than they have in the past few decades. The average guy will feel richer and then he will be persuaded to vote for Trump again.

Wall Street would wobble and the stock market fall, but the vast majority of people don’t own stocks, so they won’t care. And Trump will get his re-election and the only people who will squeal in the short term are rich bankers and investors on CNBC.

Sounds logical? That’s because it is. The Fed gets put in its technocratic place, the White House spins it as a victory for democracy over technocracy, and the Democratic Party is robbed of its electoral clothes.

From a Trumpian perspective, what’s not to love? That’s exactly why it’s likely.”

Full article hereWhen Trump turns on the enemy within — the Fed 

Gold slammed for the 3rd consecutive day:
(courtesy zero hedge)

Gold Slammed For 3rd Day As USDJPY Spikes

A little earlier than the last two days (right before the London Fix)…


But gold is suddenly under pressure again this morning as USDJPY just decided unilaterally to spike bursting beyond 109.00…


On heavy volume again…


But it does appear the slamming efforts are fading.



The new clearing system was one of the reasons for the discrepancy in the London gold fixes vs NY trading;
(courtesy Bloomberg/GATA)

Gold trading systems experience growing pains


By Shelley Goldberg
Bloomberg News
Wednesday, April 19, 2017

On the afternoon of April 11, London’s daily gold price benchmark fix took a peculiar turn: It was about $12 under the spot price. The auction appeared to be stuck on a descending escalator from an initial $1,265.75, before fixing at $1,252.90.

Such a discrepancy affects many participants in the global gold markets — hedgers and speculators, along with miners, refiners and jewelers, as well as banks and portfolio managers. But there was no mention of fat fingers. The initial reports attempting to explain this anomaly pointed to a new algorithm that U.S.-based Intercontinental Exchange, known as ICE, began using to determine prices, as a replacement for the standard auction chair setting the price.

The historic London Gold Fix was a telephone-based benchmark price auction, which began in 1919, when each representative raised a tiny British flag after receiving any price change from their dealing room. As long as a flag was up, the chairman could not declare the price as fixed. In 2015, this system was replaced by an electronic alternative, the London Bullion Market Association Gold Price, due to regulatory pressure and U.S. lawsuits alleging rigging by the banks that set bullion prices.

But it’s now evident that the discrepancy was all about a rush to gain market share in the fiercely competitive global marketplace for gold trading. Only one day before, ICE, an operator of global exchanges and clearing houses and provider of data and listings services, in its urgency to obtain a bigger slice of the global gold market pie, introduced Central Clearing for the LBMA’s Gold Price Auction. The LBMA owns the intellectual property rights to the auction. …

… For the remainder of the report:



Dave Kranzler’s take on the silver market

(courtesy Dave Kranzler /IRD

Massive Attacks On Gold Reek Of Desperation

The paper silver open interest on the Comex is at all-time highs.  The previous all-time high was 224k contracts when the price of silver was pushing $50 in 2011.  The current paper silver open interest is 229k contracts with the price of silver at $18.  At least the degree of fake silver open interest in silver was more appropriate to the price level at which silver was trading in 2011.

Having said that, the current paper silver open interest is entirely inappropriate relative to the amount of silver reported to be held in Comex silver vaults.  229 thousand silver contracts translates into 1.15 billion ozs of paper silver.  That number represents  about 37% more actual silver ounces produced by global by mining companies in one year.  Compare that paper representation of silver to the actual 193 million ozs of silver reported to be held in Comex vaults, primarily “held” by JP Morgan which is reporting nearly 102 million ozs of silver in its vault.

Notwithstanding whether or not those 101 million ozs of silver are actually sitting physically in JP Morgan’s Comex-designated custodial vault (and much of it has likely been hypothecated), the amount of paper silver issued primarily by Comex bullion banks is nearly 6x the total amount of silver reported to be held in Comex vaults.

But it gets worse.  The amount of silver that has been designated as available for delivery, or “registered silver,” is only 30 million ozs.  In other words, the amount of paper silver issued by the Comex is 38x greater than the amount of silver made available to be delivered to the holders of those silver contracts.

The point here is that the Comex is likely the world’s most fraudulent market. In fact, It’s inappropriate to refer to the Comex as a “market.”  The Comex is nothing but a mechanism by which the Fed, in conjunction with the Treasury’s Exchange Stabilization Fund and the Comex bullion banks, exerts control over the price of silver.

The degree to which the Fed et al has to exert fraud in order to contain the price of silver is reflected by the absurd imbalance between paper silver contracts issued in relation to the amount of the underlying silver available for delivery.   In any other commodity sector this situation would be labeled “criminal.” With silver and gold it’s labeled, “nothing to see here, move along.”

As with silver, the trading patterns in gold reflect a high degree of desperation by the bullion banks to contain the price and demand of physical gold.  Interestingly, right now most of the blatant manipulation appears to be connected to the London p.m. gold fix activity on the LBMA.  We believe it’s evidence of a growing shortage of physical gold available to deliver into India, China and other gold-buying countries.   We explain this view in detail in today’s Shadow of Truth episode:


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


1 Chinese yuan vs USA dollar/yuan STRONGER  6.8836(   REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES STRONGER TO ONSHORE AT   6.8793/ Shanghai bourse UP 1.41 POINTS OR 0.04%   / HANG SANG CLOSED UP 231.10 POINTS OR 0.97%

2. Nikkei closed DOWN 1.71 POINTS OR 0.01%   /USA: YEN RISES TO 109.06

3. Europe stocks opened MOSTLY IN THE GREEN        ( /USA dollar index FALLS TO  99.62/Euro UP to 1.0742


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  50.89 and Brent: 53.43

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.233%/Italian 10 yr bond yield UP  to 2.273%    

3j Greek 10 year bond yield RISES to  : 6.725%   

3k Gold at $1278.70/silver $18.18 (8:15 am est)   SILVER ABOVE  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 33/100 in  roubles/dollar) 56.23-

3m oil into the 50 dollar handle for WTI and 53 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT SMALL REVALUATION NORTHBOUND 


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  .9962 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0702 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.233%

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 2.228% early this morning. Thirty year rate  at 2.886% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Europe And S&P Futures Higher, Dollar Drops As OPEC Talks Oil Up

European stocks rose amid earnings beats, offsetting weakness in the energy sector and easing investor concerns ahead of the weekend’s French election. Asian shares and U.S. futures also rise. The dollar weakens against the euro and most crosses, while crude oil rebounds following renewed OPEC chatter of a production cut, this time with Saudi Arabia seemingly onboard.

World stocks eked out small gains on Thursday, with the MSCI’s world stock index up 0.13 percent, as investors resisted risky bets ahead of the first round of the French presidential election over the weekend. Oil prices, which fell sharply on Wednesday on supply news, regained some losses after Saudi Arabia’s energy minister said that OPEC is likely to reach an agreement to extend the group’s production cuts into the second half of 2017. Overall, markets have stuck to familiar trading ranges buffeted by concern over political risks and continued tensions over North Korea.

What happened overnight? Here is a 30 second summary from JPM:

Stocks were mixed in Asia while equities in Europe have a bid and US futures are bouncing too. On the macro front, nothing major occurred (although there are a few interesting headlines, esp. the ones concerning easier China capital controls). The main focus was on earnings w/a slew of reports out of both the US and Europe (on balance earnings over the last 12-18 hours were positive although no single report is altering the broader market narrative). There were a bunch of articles talking about the potential for a US gov’t shutdown (which still seems unlikely). Finally, Saudi Arabia sounds confident in extending the OPEC deal although maybe by less than 6 months.

Looking at markets, the Stoxx Europe 600 Index fluctuated before advancing 0.1%, helped by a rally in food producers after Unilever NV and Nestle SA results beat estimates. It has been a pretty busy morning of Eurozone earnings w/a bunch of large reports (ABB, Man Group, Nestle, Pernod Ricard, Publicis, Rio Tinto, Schneider Electric, Unilever, and more). Pretty much all the large caps are rallying in Europe after reporting. Man Group, Schneider Electric, and Publicis are some of the top stocks in the SXXP following their earnings. Sawai Pharmaceutical said on Thursday it would buy U.S. generic drug maker Upsher-Smith Laboratories for $1.05B (per Reuters). VIRT has reached a deal to buy KCG and an announcement is likely Thurs; VIRT will pay $20/shr. (per Bloomberg and CNBC).

In Asian trading, Japanese stocks failed to hold on to slim gains and closed flat on the day. S&P 500 futures rose 0.3% after the cash market slid 0.2% on Wednesday.

Quoted by Reuters, Fan Cheuk Wan, head of investment strategy and advisory, Asia, at HSBC Private Banking said that “given the binary risk of the French presidential elections and geopolitical concerns over North Korea, investors are staying on the sidelines.”

Investors are facing a stern test of nerves on Sunday where polling ahead of the first round of the French elections suggests that any two candidates can make it into the second round.

Millions of French voters remain undecided, making this the least predictable vote in France in decades, and raising fears of a potential surprise result that could spread turmoil in markets. As Reuters notes, however, France’s borrowing costs nudged down on Thursday before a bond auction that is likely to be watched more closely than usual. There was some optimism for a market-friendly “status quo” outcome when a Harris Interactive-France Televisions poll show Macron’s lead rising by 1 point to 25% over Le Pen at 22%, which in turn sent the EUR to session highs.

However, a subsequent poll from OpinionWay showed that Macron’s lead remained unchanged at 23%, just 1 point above Le Pen at 22% and Fillon and Melenchon both within poll error distance.

Additionally, ongoing tensions around North Korea and Syria ratchet up market risks. U.S. President Donald Trump’s travails trying to implement his fiscal agenda are also clouding the growth picture, while the Federal Reserve’s plan for monetary tightening looks increasingly unsure. “This political uncertainty’s not going away for a while,”  said Ben Kumar, a London-based investment manager at Seven Investment Management.“Markets are trying to get their heads around whether that will actually affect company earnings. For the first part of this year the message was no, it doesn’t matter, earnings upgrades came through in Europe and the U.S.”

Indeed, a run of disappointing U.S. economic data and questions about whether the Trump administration can push through tax cuts have dented some of the enthusiasm for risky assets in recent weeks. A sharp dip to three-week lows in oil prices overnight was the latest sign of an unwind in the global reflation trade. Crude oil clawed back some of the loss but concerns about a supply glut capped the rebound.

“Rising U.S. oil inventory data is now starting to impact the market’s aggressive long position in crude,” said analysts at Morgan Stanley in a note to clients.

Following the abovementioned Saudi comments on a potential deal extension, Brent crude futures were up 0.5% to $53.22 a barrel after sliding more than 3 percent in the previous session. U.S. West Texas Intermediate crude futures CLc1 were up 0.4%.

In currency markets, the euro rose 0.4 percent to a three-week high of $1.0748 against the dollar. The greenback was 0.2 percent weaker against a basket of major currencies

The greenback slipped against most peers. Commenting on the dollar slide, SocGen’s Kit Juckes writes that “the Fed’s biggest challenge may be that inflation expectations are still falling, steadily de-coupling from its 2% target. It’s hard to see how the Fed can remain hawkish against a backdrop of falling inflation expectations and hard, in the process, to see the dollar getting more than a nominal bounce until there are clearer signs of economic robustness.”

USD/JPY has been faithfully following real yields, and does look increasingly like a buy closer to 105. AUD/JPY may come back into its own at around the same time. We just can’t see the justification for US real yields to fall all that much further, and stability around here may be all that is needed to get USD/JPY trending back up within the current trading range.


The bigger dollar story remains against the euro. French election polls continue to show the top four candidates’ poll rankings bunching around 19-23%, which will keep markets nervous, though the only major risk to the market is that Le Pen and Mélenchon make the second round together – something that is getting slightly less likely as M. Mélenchon’s poll ranking fails to break above 20%.

It is a quiet day in the US where economic data include initial jobless claims. Philip Morris, Verizon are among companies scheduled to publish results. On the DC docket, U.S. Vice President Mike Pence continues his Asia-Pacific trip with a stop in Jakarta.

Bulletin Headline summary from RanSquawk

  • Indecisive trade across the main European indices this morning with the downside in the energy sector counterbalanced by the gains in consumer staples
  • Modest moves across the currency spectrum in G10 this morning, with modest gains for the EUR, GBP and AUD against the USD as yields remain suppressed
  • Looking ahead, highlights include US weekly jobs, Philly Fed, Fed’s Powell, Rosengren and BoE’s Carney

Global Market Wrap

  • US futures are up 6-7 points
  • Asia: Japan Nikkei -0.01%, Japan TOPIX +0.09%, China +0.04%, Hong Kong +0.97%, KOSPI +0.50%, Taiwan -0.08%, Australia +0.30%
  • Stoxx 600, +0.11%. EuroStoxx 50 +0.73%, FTSE -0.05%, DAX +0.27%, CAC +1.10%, Italy +0.31%, Spain +0.84%
  • USD (DXY) down 0.27%, EUR up 0.48%, GBP up 0.38%, JPY down 0.17%, CNY Onshore up 0.07%, CNH Offshore up 0.06%, AUD up 0.27%
  • VIX down 4.22% to 14.3
  • Gold down 0.10% to $1,278.95
  • Silver up 0.04% to $18.17
  • Copper up 0.63% to $256.50
  • WTI Crude up 0.69% to $50.79
  • Brent Crude up 0.74% to $53.32
  • Natural Gas up 0.31% to $3.20
  • Corn up 0.48% to $3.70/bu
  • Wheat up 0.23% to $4.36/bu
  • Treasuries 2yr yields are up ~0.4bps at 1.181%, 10yr yields are up ~1.1bps at 2.225% and 30yr yields are up ~0.6bps at 2.879%
  • Japan 10yr yields 0.003%, up ~0.8bps on the day
  • France 10yr yields 0.966%, up ~2.3bps on the day
  • Italy 10yr yields 2.288%, up ~3.1bps on the day
  • Spain 10yr yields 1.687%, up ~3.8bps on the day
  • Germany 10yr yields 0.234%, up ~3.4bps on the day

Top Overnight News from Bloomberg

  • Fischer Says Foreign Economies Better Able to Handle Fed Hikes
  • Sky Expands Partnership With HBO to Counter Netflix on Drama
  • Nestle, Unilever Price Increases Stoke Food Industry Optimism
  • Saudi Arabia Says Some Oil Producers Reach Deal to Extend Cuts
  • Russia Says Extension of OPEC Oil Deal Still Under Discussion
  • General Motors Ceases Venezuela Operations After Assets Seized
  • Amazon Confirms Australia Opening, Seeks Marketplace Merchants
  • Enbridge Announces 27% Apportionment on Line 4/67 in May
  • Encana Sees Montney Asset Producing 70k Barrels a Day by 2019
  • American Air to Combine Flight Attendant Operations in Oct. 2018
  • AbbVie Veliparib Phase 3 Studies Didn’t Meet Primary Endpoints
  • Deere Mentioned Cautiously by Grant’s Interest Rate Observer
  • Microsoft in Talks to Buy Cloudyn for $50m-$70m: Calcalist
  • Buffett May Have Voted Shares to Back Wells Fargo Board: Reuters
  • Apple to Start Trial Assembly of iPhones Starting Next Month: ET
  • Virtu Financial to Buy KCG Holdings for $20/Share Cash: CNBC

Asia equity markets traded mostly higher after shrugging off the weak lead from Wall Street, where weakness in the energy complex weighed on sentiment. ASX 200 (+0.2%) traded in the green as strength in financials upstaged losses in commodity related sectors, while Nikkei 225 (flat) was initally led higher by Toshiba after interest surrounding its chip business gave shares a 4% boost, with strong Japanese trade data also underpinning exporter sentiment, before losing steam heading into the close. In China, Shanghai Comp. (-0.1%) and Hang Seng (+0.9%) initially conformed to the improved tone amid reports of tax cuts and after the PBoC upped its liquidity injections, although the mainland bourse later failed to sustain the momentum. Finally, 10yr JGBs traded lower amid the increased risk appetite in the region, although prices were supported off the lows following a firm 20yr JGB auction in which the b/c rose to its highest since 2014. PBoC injected CNY 70bIn in 7-day reverse repos, CNY 20bIn in 14-day reverse repos and CNY 10bIn in 28-day reverse repos.

Top Asian News

  • Hon Hai Eyes Amazon, Dell Roles in Toshiba Chip Bid: Mainichi
  • Abu Dhabi’s Taqa Seeking to Sell Some Overseas Energy Assets
  • China’s New Market Anomaly: Stocks Refuse to Drop More Than 1%
  • The Indian Bank Bonds Everyone Wants. If Someone Would Sell
  • Sun Hung Kai & Co. Said to Revisit Finance Unit IPO in Hong Kong
  • Rainforest Wood Breaches Tokyo Green Olympic Vow, Activists Say
  • Sawai to Buy U.S. Generic Drug Business for $1 Billion
  • Macquarie Buys U.K. Green Investment Bank for $3 Billion

European bourses have seen modest upside this morning indices this morning with the downside in the energy sector counterbalanced by the gains in consumer staples. More focus has been on the latest slew of financial results as European earning season cranks up a notch, with the likes of Unilever and Nestle higher this morning after they announced better than expected figures. WTI and Brent crude futures have clawed back some of yesterday’s sharp losses, this comes amid talk from the Saudi Energy Minister Al-Falih who stated that a preliminary agreement (but still not including all producers) has been reached, although did highlight that an extension may not necessarily be another 6-months but instead an additional 3-months. Softness in EGBs had been partially attributed to the spate of supply this morning with Spain and France coming to market, all of which was relatively well digested by the market despite some concerns over French paper ahead of this weekend’s election. Elsewhere, German paper has been showing somewhat of a bear steepening bias with a narrowing in the FR/GE 10yr spread to 65.9bps as markets begin to position ahead of the aforementioned event.

Top European News

  • ECB Officials Inch Toward the Day They Discuss Stimulus Exit
  • ABB Sees Signs of Markets Stabilizing as Smaller Orders Advance
  • Pandora Rebounds as Transparency Issues Addressed, Guidance Kept
  • BioMerieux Shares Surge on First-Quarter Sales Increase of 16%
  • Schneider Quarterly Sales Rise Amid Push for Solar Business
  • Croat Opposition to Seek FinMin Maric’s Ouster on Agrokor: Grbin
  • Euro Option Traders Focus More on First Round France Vote Risks

In currencies, the Bloomberg Dollar Spot Index fell 0.2 percent after rising 0.5 percent Wednesday. The pound jumped 0.5 percent to $1.2835 and the euro climbed 0.5 percent to $1.0766. The yen advanced 0.2 percent to 109.02 per dollar, following a 0.4 percent decline on Wednesday. Modest moves across the currency spectrum in G10 this morning, with modest gains for the EUR, GBP and AUD against the USD as yields remain suppressed. One would expect a little more pressure on the EUR spot rate given the election risk over the weekend, with the French polls — which garner little confidence in light of the past year — still showing a very tight race. EUR/USD now pushing for new highs towards 1.0800, but we expect sellers to gain the upper hand as we get close to the figure. Cable looks to be following to a modest degree, but is hampered by tentative gains seen in EUR/GBP. The cross rate found support after the stab through 0.8333 earlier in the week — this a level we always have to watch out for (inverse rate 1.2000), as it generates a large amount of hedging activity from UK corporates. The fundamental backdrop will dictate at some stage, but amid the air of Brexit uncertainty, we have to assume this as a key support level in the interim.

In commodities, West Texas Intermediate oil increased 0.9 percent to $50.87 a barrel, after tumbling 3.8 percent Wednesday when a report showed U.S. gasoline supplies increased for the first time since February, while crude output keeps rising. Gold fell 0.1 percent to $1,278.79 an ounce.  Focus in the commodity markets back on Oil price once again as leading OPEC members crank up the rhetoric on looking to extend the output cuts into H2. Saudi Arabia and Kuwait have both commented positively on the intent continue production cuts for another 6 months, and this has given WTI a modest boost, having reclaimed USD51.00 but somewhat cautiously as yet. Yesterday’s heavy downturn stopped short of the USD50.00 mark, but there is still very little on the horizon to suggest a test of USD55.00 higher up. Precious metals look to be taking their feed off risk rather than Treasuries at moment, with Gold stabilising around USD1280 as Silver has edged back towards USD18.10-15. Base metals continue to meander inside familiar ranges, and taking the lead off Copper which is pushing further up away from the earlier base ahead of USD2.50. Zinc is the outperformer on the day.

Looking at the day ahead, data due out includes initial jobless claims, Philly Fed business outlook and conference board’s leading index. Away from the data, the Fed’s Powell is due to speak this afternoon at 8am BST while the BoE’s Carney speaks at two separate events in the early evening. US Treasury Secretary Steven Mnuchin is also due to speak. In terms of earnings, 21 S&P 500 companies are pencilled in to report including Verizon (prior to the open) and Visa (after the close).

US Event Calendar

  • 8:00am: Fed’s Powell Speaks on Economic Growth And Capital Markets
  • 8:30am: Initial Jobless Claims, est. 240,000, prior 234,000; Continuing Claims, est. 2.02m, prior 2.03m
  • 8:30am: Philadelphia Fed Business Outlook, est. 25.5, prior 32.8
  • 9:45am: Bloomberg Consumer Comfort, prior 51; Bloomberg Economic Expectations, prior 54
  • 10am: Leading Index, est. 0.2%, prior 0.6%

DB’s Jim Reid concludes the overnight wrap

A couple of weeks ago we published a note illustrating that 2017 has been the least volatile year on record for credit which has been a surprise to us. Since this point volatility outside of credit has picked up notably, especially in VSTOXX. This morning we’ve published a short Credit Bites entitled “Credit now expensive vs. Volatility” where we look at the close historical relationship between credit spreads and vol and how credit looks a little more expensive now given the recent moves. Obviously the vol could be short lived and credit illiquid enough that trading in and out might not be worth the costs. However the move does have an impact on valuation which is worth highlighting and overall the results in the note are consistent with our general views that IG should outperform HY on a relative basis from here.

Over in markets it had looked like we’d be in for a relatively calm session yesterday after European equities inched higher (Stoxx 600 +0.24%) and the surge in the VSTOXX abated with the index edging just off its highs to close below 25 again. However things rolled over after Europe went home. The S&P 500 initially rose +0.44% helped by some better than expected earnings from Morgan Stanley which sent shares up 2%. However a sharp leg lower for Oil prices saw the energy sector tumble which in turn sent the S&P 500 to a -0.17% loss by the end of play while the VIX edged back up over 3% to 14.93. The energy sector was down -1.43% alone with WTI plunging -3.76% to $50.44/bbl for its biggest one-day loss since March 8th. The move came after the latest EIA data revealed an unexpected increase in US gasoline stockpiles last week and in fact the first climb in two months.

Unsurprisingly oil and commodity sensitive currencies felt the brunt of that selloff with the likes of the Norwegian Krone (-0.80%), Canadian Dollar (-0.78%), Mexican Peso (-1.28%) and Brazilian Real (-1.36%) amongst the biggest underperformers. Sterling (-0.50%) also gave back some of Tuesday’s big rally but is still up some +1.70% or so since the snap election announcement. It’s worth noting that yesterday, as expected, the UK Parliament passed the necessary approval to hold the June 8th election. Meanwhile, despite the slide for oil yesterday bond yields across most core markets actually ticked higher. 10y Treasury yields finished back above 2.200% again (at 2.215%) after climbing 4.6bps while similar maturity Bund yields finished an equal amount higher at 0.199%. A heavy day for corporate issuance with $10bn of bank IG issuance yesterday was cited as a factor while comments from various ECB speakers were also reasonably upbeat. ECB Governing Council member Hansson said that growth rates in Europe are “probably higher than potential” and that the “output gap is closing”. Peter Praet said after this that he doesn’t “personally see risks to the downside anymore”.

Meanwhile over at the Fed there was some focus on comments from Rosengren (non-voter) and Fischer. The former told his audience that the Fed’s balance sheet reduction could begin “relatively soon” and that the “tightening of short term interest rates should not need to be much different than it would be in the absence of shrinking the balance sheet”. His compatriot at the Fed, Vice-Chair Fischer, said “I expect that the Fed’s removal of accommodation will be driven by a continued expansion of the US economy” while also adding that “foreign output expansions appear more entrenched and downside risks to those economies appear noticeably smaller than in recent years”.

Staying with the Fed, it’s worth highlighting our economists’ latest global economics perspectives piece published yesterday titled “global inflation risks rising”. They note that the market has marked down inflation expectations noticeably over the years to come with gridlock in Washington and some very recent declines in inflation. They believe that this revision is misguided. In their view inflation risks in the US have shifted significantly to the upside, and the move from deflation risk to rising inflation elsewhere around the globe has been impressive.

This morning in Asia, despite the energy sector also coming under pressure most major bourses are actually posting modest gains this morning. The Nikkei (+0.31%), Hang Seng (+0.38%), Shanghai Comp (+0.18%), Kospi (+0.35%) and ASX (+0.22%) are amongst those currently up, while US equity index futures are also showing small gains overnight. The overnight data has been supportive. In Japan exports were reported as rising +12.0% yoy in March (vs. +6.2% expected) and up from +11.3% in February. A big jump in imports did however see the trade surplus shrink slightly. Meanwhile in NZ headline CPI came in at a higher than expected +1.0% qoq (vs. +0.8% expected) in Q1. Our economists also noted that the core measure was robust.

Moving on. There wasn’t much to report at all on the data front yesterday. In Europe we got confirmation of the final March CPI prints with headline growth confirmed at +0.8% mom and +1.5% yoy and the core confirmed at +0.7% – the latter resulting in a two-tenths of a percent decline from the February reading. There wasn’t any data in the US although we did get the Fed’s Beige Book. It reported that economic activity increased in each of the twelve Fed reserve districts between mid-February and the end of March, with the pace of expansion said to be equally split between “modest and moderate”. Interestingly the labour market was described as remaining “tight, and employers in most districts had more difficulty filling low-skilled positions”.

Before we look at today’s calendar, a quick mention that this morning our European equity strategy team have published a note on European vs. US equities. They note that with US equities trading at  historically elevated valuation levels, investors have turned increasingly positive on the outlook for European versus US equities. However, our European equity strategist Sebastian Raedler argues that the three conditions that are typically required for European equities to outperform are not in place. First, Europe tends to outperform only when Euro area GDP growth is above that in the US, but neither our  economists nor consensus expects this to happen either this year or next. Secondly, the relative performance of Europe versus the US tracks the trajectory of relative EPS growth – and projections by our strategy teams in Europe and the US suggest the US will continue to benefit from premium EPS growth this year (13% versus 9%). Lastly, Europe has typically outperformed when the global composite PMI was above 55 (i.e. global GDP growth was strong, at around 4%), while our global economists’ growth projections suggest that it will ease back to around 53, from the current 53.6 (implying around 5% underperformance by Europe versus the US). Contact Sebastian.Raedler@db.com for the full report.

Looking at the day ahead, this morning in Europe the only data due out is the Germany PPI reading for March. This afternoon we will also get the flash April consumer confidence reading for the Euro area while in the US the data due out includes initial jobless claims, Philly Fed business outlook and conference board’s leading index. Away from the data, the Fed’s Powell is due to speak this afternoon at 1pm BST while the BoE’s Carney speaks at two separate events in the early evening (the first at 4.30pm BST). US Treasury Secretary Steven Mnuchin is also due to speak. In terms of earnings, 21 S&P 500 companies are pencilled in to report including Verizon (prior to the open) and Visa (after the close).


i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 1.41 POINTS OR 0.04%/ /Hang Sang CLOSED UP 231.10 POINTS OR 0.97%.  The Nikkei closed DOWN 1.71 OR 0.01% /Australia’s all ordinaires  CLOSED UP 25%/Chinese yuan (ONSHORE) closed UP at 6.8836/Oil UP to 50.89 dollars per barrel for WTI and 53.43 for Brent. Stocks in Europe  MOSTLY IN THE GREEN   ..Offshore yuan trades  6.8798 yuan to the dollar vs 6.8836 for onshore yuan. NOW  THE OFFSHORE IS SLIGHTLY STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN SLIGHTLY STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN ALSO  STRONGER AND THIS IS COUPLED WITH A WEAKER DOLLAR. CHINA IS HAPPY


Our pleasingly plump buffoon, Kim Jong un threatens the USA with a “super mighty preemptive strike”

(courtesy zero hedge)


North Korea Threatens US With “Super-Mighty Preemptive Strike”

Whether China is right about North Korea conducting a nuclear test on April 25 remains to be seen, but for now Kim Jong-Un is content with merely escalating the verbal warfare and overnight North Korean state media warned the United States of a “super-mighty preemptive strike” following the latest round of comments by Rex Tillerson who said the United States was looking at ways to bring pressure to bear on North Korea over its nuclear programme.

The Rodong Sinmun, the official newspaper of the North’s ruling Workers’ Party, did not mince its words: “In the case of our super-mighty preemptive strike being launched, it will completely and immediately wipe out not only U.S. imperialists’ invasion forces in South Korea and its surrounding areas but the U.S. mainland and reduce them to ashes” it said according to Reuters.

The threat will hardly come as a surprise: the reclusive communist nation regularly threatens to destroy Japan, South Korea and the United States “and has shown no let-up in its belligerence after a failed missile test on Sunday, a day after putting on a huge display of missiles at a parade in Pyongyang.”

The comments come in response to Tillerson statement in Washington on Wednesday when he told reporters that “we’re reviewing all the status of North Korea, both in terms of state sponsorship of terrorism as well as the other ways in which we can bring pressure on the regime in Pyongyang to re-engage with us, but re-engage with us on a different footing than past talks have been held,”

Furthermore, Paul Ryan said during a visit to London the military option must be part of the pressure brought to bear. “Allowing this dictator to have that kind of power is not something that civilised nations can allow to happen,” he said in reference to Kim. Ryan said he was encouraged by the results of efforts to work with China to reduce tension, but that it was unacceptable North Korea might be able to strike allies with nuclear weapons.

Meanwhile, the US and Russia clashed at the United Nations on Wednesday over a U.S.-drafted Security Council statement –  which has to be agreed by all participants in the 15-member council – to condemn North Korea’s latest failed ballistic missile test. Curiously, diplomats said China had agreed to the statement.

Previous statements denouncing missile launches “welcomed efforts by council members, as well as other states, to facilitate a peaceful and comprehensive solution through dialogue”. The latest draft statement dropped “through dialogue” and Russia requested it be included again.


“When we requested to restore the agreed language that was of political importance and expressed commitment to continue to work on the draft … the U.S. delegation without providing any explanations cancelled the work on the draft,” the Russian U.N. mission said in a statement.

Chinese Foreign Ministry spokesman Lu Kang said China believed in the Security Council maintaining unity. “Speaking with one voice is extremely important to the Security Council appropriately responding to the relevant issue on the peninsula,” he told reporters.

With North Korean tensions lingering, there remains some confusion over the whereabouts of a U.S. aircraft carrier group after Trump said last week he had sent an “armada” as a warning to North Korea, even as the ships were still far from Korean waters. The U.S. military’s Pacific Command explained that the USS Carl Vinson strike group first had to complete a shorter-than-planned period of training with Australia. It was now heading for the Western Pacific as ordered, it said.

The incident has also become a source of mockery for China, whose influential Global Times newspaper, which is published by the People’s Daily, wondered whether the misdirection was deliberate.

“The truth seems to be that the U.S. military and president jointly created fake news and it is without doubt a rare scandal in U.S. history, which will be bound to cripple Trump’s and U.S. dignity,” it said.



Japan doing OK but their trade surplus in March melted

(courtesy zero hedge)

Japanese Trade Surplus Slumps To 14-Month Lows As Exports, Imports Surge

Japanese adjusted trade balance tumbles over 500 billion yen in March (after surging around 500 billion yen in February) as lunar new year effects washed out and left the lowest trade surplus since January 2016.


Exports (up 12% YoY) and Imports (up 15.8% YoY) both soared at the fastest pace in years.

Japan’s exports expanded for a fourth consecutive month in March, supporting a moderate economic recovery, according to data released by the Ministry of Finance on Thursday.

Under the surface it was all China…

  • Exports to the U.S. increased 3.5 percent from a year earlier.
  • Those to the EU rose 1.4 percent.
  • Shipments to China, Japan’s largest trading partner, climbed 16.4 percent.

“The February exports number was pretty high because of the Lunar New Year, so the March number will be more stable,” said Yoshiki Shinke, chief economist at Dai-Ichi Life Research Institute, before the release. “That should just be seen as volatility from the holiday. Exports are continuing to increase.”



Great reason to bomb gold and silver today:  China puts its bombers on high alert:

(courtesy zero hedge)

China Puts Bombers On High Alert

The US has seen evidence that the Chinese military is preparing “for a potential North Korea contingency“, CNN reports citing a US defense official, and adds that Chinese air force land-attack, cruise-missile-capable bombers were put “on high alert” on Wednesday.

The official added that the US has also seen an extraordinary number of Chinese military aircraft being brought up to full readiness through intensified maintenance.

The official said that these recent steps by the Chinese are assessed as part of an effort to “reduce the time to react to a North Korea contingency.”

Among the contingency options listed is the “risk of an armed conflict breaking out as tensions on the peninsula have risen in the wake of multiple North Korean missile tests.”

There has also been ratcheted up rhetoric from the US and Pyongyang, with the latter’s state media warning Thursday that a pre-emptive strike by North Korea would result in the US and South Korea being “completely destroyed in an instant.”


Beijing has long been concerned about potential instability in North Korea should the regime in Pyongyang collapse, fearing both an influx of refugees and the potential of reunification under a South Korean government closely allied to the US.

Meanwhile, China remains opposed to the US military’s presence in South Korea, protesting the recent US and South Korea decision to begin deploying elements of the THAAD missile defense system.

Given the close economic links between North Korea and China, US military officials have said that Beijing is critical to solving the North Korean situation, with President Donald Trump recently commending Chinese President Xi Jinping for Chinese efforts to curb Pyongyang’s activities.

Earlier on Thursday, Nikkei reported that as a form of ratcheting up pressure on North Korea, China may halt crude exports to North Korea should Pyongyang conduct its sixth nuclear test, “signalling a tougher attitude by Beijing.”

* * *

Meanwhile, with much confusion over the current whereabouts of the Carl Vinson aircraft carrier, and various other US naval forces around the globe, here is the latest map courtesy of Stratfor.



The rise in popularity of the communist candidate Melenchon has cause a possible nightmare scenario in the French elections coming up this Sunday.

here is a preview:

(courtesy zero hedge)


“The Nightmare Scenario” And Everything Else: The Full French Election Matrix

Yesterday, we presented a Deutsche Bank research report which tried to evaluate whether, despite polls suggesting otherwise, a Le Pen-Melenchon first round victory was possible in the French election this coming Sunday. In a surprising break from the conventional wisdom, this is what DB concluded:

Melenchon’s rise in the polls has been one of the key market drivers since the end of March. Further decline in Hamon’s votes is unlikely to support Melenchon to the same extent as it did in the last three weeks. However, the more important point is that the risk around the first round persists as (a) the top 4 candidates are within the historical margin of error and (b) the high level of undecided voters increases the uncertainty of the outcome.

Why so much attention on Le Pen-Melenchon? Because as the WSJ wrote  this morning, “with the start of the French election just days away, investors are contemplating their nightmare scenario: a choice between far-left and far-right candidates. In recent days, a surge in opinion polls has placed Jean-Luc Mélenchon, a left-wing firebrand who promises higher wages and fewer working hours, as a potential candidate to move past this Sunday’s first round of voting. That could set up a second-round vote in May 7 with Marine Le Pen, an economic nationalist who wants to pull France out of the euro.”

A runoff between Ms. Le Pen and Mr. Mélenchon “would be a disaster for France…[and] a disaster for Europe,” said Patrick Zweifel, chief economist at Pictet Asset Management.


Under that scenario, investors would dump the debt of France and of weaker European economies and send the euro sharply lower, analysts say. 

Ok, so we know what the nightmare scenario is, and that as DB explains, it is certainly a probable outcome. What are the other 5 possible permutations for the second round? Here, courtesy of Market News is a breakdown of all 6 scenarios:

  • Macron-Le Pen (63%/37%, Ipsos poll April 14): The most plausible. The 2 candidates have led the polls for a few months. This scenario would come with no surprise on the financial markets, which have already integrated it.
  • Melenchon-Le Pen (60%/40%): The most feared. Risk is not fully priced, so it would come as a bomb on markets. Choose between the devil and the deep blue sea.
  • Macron-Fillon (64%/36%): The most welcome. This would give much appeasement with both Le Pen and Melenchon moved away.
  • Melenchon-Fillon (60%/40%): The most surprising. Fillon was not even favoritein the right party primary elections (Juppe was), Melenchon got 11% in 1st Round in 2012 Presidential, but French people know how an outsider can surprise (2002 elections, Le Pen (father) passing in 2nd Round)…
  • Fillon-Le Pen (56%/44%): The most at right. With huge abstention expected from left voters in this scenario, financial markets would not exclude a Le Pen win.
  • Macron-Melenchon (55%/45%): The most erratic. It would be feared that Le Pen voters slide towards Melenchon.

That’s the summary. For those looking for a more detailed matrix-based breakdown of what to expect, here is BofA’s Gilles Moec laying out the nuances of the French “binary event with multiple scenarios”

Next Sunday France will hold the first round of the presidential elections. Out of the 11 candidates, only the two with the highest proportion of the votes will qualify for the decisive second round on May 7. The opinion polls are so tight between the four top contenders that, once taking into account the error margins – as Deutsche Bank has done – they suggest 6 second-round combinations are arithmetically possible, with Le Pen-Melenchon a distinct probability.

BofA continues:

This only should be enough to keep the market on its toes. Indeed, the following scenario analyses indicates that out of these 6 combinations, only one would be “market friendly” (Emmanuel Macron vs François Fillon) in the sense that their stated policies suggest both would strive to keep France in the Euro area and, to varying degrees, would implement reforms to spur potential growth. We also found one scenario “market adverse” (Marine Le Pen vs Jean-Luc Melenchon), with both contenders being eurosceptic to varying degrees and supporting ultra-loose fiscal policy and a re-regulation of
the French economy. The remaining four combinations are binary, opposing one pro-European supply-sider to one Euro-sceptic big spender, see Table 1. We note based on available polls, in three of these cases, the “pro-European” candidate would defeat the “Euro-sceptic” (Macron would win against Le Pen and Melenchon, Fillon would win against Le Pen, although by a smaller margin than Macron). The riskiest of these binary combinations would be Fillon against Melenchon, in our view. Only a few polls tested this hypothesis, but they suggest the radical left candidate would win in this configuration with a comfortable margin.

Finally, here is a detailed breakdown of the supply vs demand economics, and pro-EU vs EU sceptics:

In nutshell, the economic debate around this election is centred on a dichotomy between reform – in particular deregulating the labour market – and protect – in particular affirming the French comprehensive welfare state. The relationship to Europe is to a large extent a by-product of this reform/protection focus. The reformists (Macron/Fillon) insist on the need for France to adapt to the current architecture of the EU, which promotes free competition and sets limits to national fiscal policies. Those who focus on protection consider either that the EU, and in particular the Euro area, is essentially incompatible with maintaining the French welfare state (Le Pen) or needs to be thoroughly reformed to offer space for demand-side fiscal policies and more social rights (Melenchon). Below, we briefly review main stated policies of the main four candidates (starting from the very left going towards the extreme right):




Melenchon wants to use fiscal policy to bolster the welfare state and growth. This includes a deficit-financed EUR 100bn capex programme and EUR 173bn additional public expenditure over five years. Consequently, the public deficit is expected to balloon to 4.8% in 2018 before gradually declining again, if all goes well (Melenchon explicitly counts on a large multiplier effect). An expansion of social security benefits, and adjustments of public sector pay are intended. Higher tax rates for higher incomes (including an income tax on the revenues of French citizens living and working abroad), revoking past labour market reforms and lowering the statutory pension age to 60 years (from currently 62) are discussed. Nationalisations of previously public companies (energy sector in particular) are among his goals, together with higher regulation and higher taxation for the financial sector.


Melenchon is EU sceptic: He has stated that he wants to renegotiate EU Treaties to provide France with more autonomy again, and though not his flagship project, an EU referendum on the renegotiated EU terms is among his considerations. While EMU exit is not explicitly part of his plan (unlike for Marine Le Pen), he is challenging the current functioning of the monetary union. He wants to change the status of the ECB, explicitly allowing the central bank to directly monetise government debt, and lifting the inflation target to 4-5% p.a.


In a Melenchon scenario, after an initial sell-off, the market could attempt to stabilise on the belief that Melenchon’s EU goals are sufficiently vague and his parliamentary support sufficiently thin to favour a sort of compromise solution. Although less extreme than Le Pen’s policies, we would still expect that having the second largest economy of the Euro area politically constrained and/or experimenting with ultra-loose fiscal policy would remain a durable drag on any rekindling of animal spirits in the whole region, in our opinion.




On fiscal issues, Macron’s policies are more prudent, combining nods to Germany – respecting the 3% limit for the deficit – with a protection of demand: reduction limited to 3% of GDP, public investment programme, no tax hikes and some income boosting measures for low to middle income families (abolition of the payroll tax to fund healthcare, offset by a rise in a wider-base tax , abolition of one local tax  for 80% of households). The idea there is to do just enough to procure from Germany some progress on fiscal union (harmonisation of fiscal policy, taxation, unemployment benefits etc are within his considerations as well as a joint Euro area budget and a Euro area minister of economics) and stabilise French debt.


On structural reforms, Marron’s motto is “flexibility”. Effects on potential growth will be predominantly through increased total factor productivity, ie better relations between employers and labour unions and a facilitated integration of innovation in production procedures. But this means that the overall manifesto is vague on the definition of the measures themselves. Here, Macron seems to be pursuing a social-democratic agenda, in which the state sets guidelines but social partners (employers and unions) deal with details at the national or local level. This would allow Macron to avoid frontal controversies with the unions. He wants the pension system to be unified and to offer more choice to employees, but without reducing the overall generosity of the system. The same holds for the unemployment benefit insurance, which would be more efficient – and force jobseekers to be more active – but the overall replacement income would not fall. Working time would be treated in a similar way; 35 hours per week would remain a reference, but with more capacity at the local level to take deviate from it.


The overall agenda is tilted towards the supply-side – with for instance a decline in corporate tax from 33% to 25% over the mandate, but the social-democratic approach on structures has never really been tried in France, where unions are weak (less than 10% unionisation) and traditionally the government intervenes in a detailed manner.


This unusual approach provides Macron with a sense of novelty, but also deprives him of strong attention-grabbing, quantified measures for investors.


While a Macron scenario suggests to us that French and peripheral assets would probably benefit from the disappearance of the Frexit risks, there could be a cap on where French assets could go until proof of some capacity to deliver is shown.




The Republican candidate (Fillon) was the first to publish a full-blown and consistent supply-side intense reform program including corporate tax cuts, labour cost cuts, abolishment of the 35 hour week financed by a 2ppt VAT hike and non-replacement of public sector employees bound to retire. Public expenditure is planned to decline by EUR 100bn during the mandate. The pension age is set to increase to 65 (from currently 62). His program is the most reform-intense on paper with the potential to ‘unlock’ potential growth of c 1.5%. But as we argued before, sequencing becomes key for his plan to work: Supply side reforms will likely only work if demand does not falter, making a delayed implementation of the VAT hike, for instance, an important determinant of the potential outcome of his reform programme.


Broadly speaking, Fillon is pro-European. His supply-side economics reform approach is not far off what Germany has done in 2002-05, and his focus on lowering the deficit and debt burden would probably facilitate further Franco-German cooperation. However, it is less clear how fast and how much additional integration Fillon is actually envisaging for the EU. His policies are clearer on what he does not want (further EU enlargement, additional free trade agreements), while his plans to negotiate fiscal harmonisation (including a Franco-German initiative on corporate tax) are relatively less emphasised.


In a Fillon scenario, in short, while the market would probably react positively to Fillon’s clear economic agenda and higher probability of achieving a working majority in parliament, implementation may not be as far-reaching as it seemed a month ago and some lack of visibility on the European project could take the edge off the relief rally on the periphery.


Le Pen:


Le Pen’s flagship project is the EU/Euro area referendum. She wants to renegotiate EU Treaties with Brussels in the first six month of her election. Her stated goal is to restore national sovereignty, and hold an EU referendum. She previously argued that her staying in power would be conditional on a referendum outcome.


Popular initiatives shall become a more widely used tool, in general, conditional on 500K signatures from the electorate. Her far-right stance comes with strict restrictions on immigration (10K limit per year) and more limitations to citizenship access.


Her economic goal is very similar to that of the far-left: bolstering the purchasing power of households, through income taxes in the lower tranches, helping SMEs through targeted corporate tax cuts and enforcing a production and purchases ‘home bias’ by levying a social charge on imports.


Explicitly part of her programme is the central bank: Banque de France independence from the ECB is a key feature, including direct credit financing of the government deficit (planned to reach 4.5% of GDP in 2018), hence her goal not only to reshape the EU, but also to take France out of the monetary union.


In a Le Pen scenario, in short, after an initial sell-off, the market could attempt to stabilise on the belief that Le Pen’s capacity to trigger and win a Frexit referendum. Still, we would still expect that having the second largest economy of the Euro area politically constrained and/or experimenting with ultra-loose fiscal policy would remain a durable drag on any rekindling of animal spirits in the while region, in our opinion.

* * *

Here is the bottom line: if on Sunday night the two candidates left standing are the following, it may be too late to sell.  



Conflicts between the Ukraine forces and the rebels inside the Donbass intensifies:

(courtesy Federioc Pieraccini/Strategic Culture Foundation)

A Ukraine On The Verge Of Disaster Benefits No One

Authored by Federico Pieraccini via The Strategic Culture Foundation,

In the past three months, the lines of contact between Ukraine and the forces in Donbass have seen an escalation of considerable tension. Both the republics of Lugansk and Donetsk have suffered violent attacks at the hands of Kiev’s military forces. Of course all these violations are in stark contrast to what was established in the Minsk II agreements, in particular as regards the use of certain weapons systems.

In addition to the military issues between Donbass and Ukraine, Kiev faces important internal struggle between oligarchs regarding economic issues. Symptomatic of this were the clashes in Avdeevka, then the attempts to capture the water filtration plant in Donetsk, and finally the blockade of coal transit from Donbass to Ukraine. All these have further deepened divisions between the components of the Ukrainian state’s power. The consequences of these events have led to greater instability in the country and decisive moves by the nationalist fringe alongside the Ukrainian SBU and other components of the military, who are the authors of the blockade of the railway lines between the Donbass and the rest of Ukraine. Intensifying the divisions within the country, the meeting between Tymoshenko and Trump has further increased tensions, with Prime Minister Volodymyr Groysman defining Timoshenko as the source of all problems, both economic as well are regarding corruption. Ukraine is politically divided, exacerbated by disputes between Poroshenko and Timoshenko, and these divisions are being exploited by foreign actors like Israel and Turkey, propping up the nationalist and banderist fringe within the National Guard battalion.

External pressure is clearly exerted indirectly on the Poroshenko administration in order to force it to keep the extreme factions of the nationalist battalions under control. For his part, Trump, by meeting with Tymoshenko, has sent a clear signal that in the case of excessive chaos in Kiev, the succession of power has already been decided. In the same way, the IMF exerts pressure on Kiev, slowing down the funding necessary for Ukraine to survive.

The danger that Western planners see is at the same time simple and delicate. On the one hand, there is a need to avoid a failure of the Ukrainian state, and nearly $18 billion of IMF aid serves that purpose. On the other hand, the withholding of IMF funding is applied whenever there is a need to get something done by the government in Kiev. An example can be easily seen with the escalation in Avdeevka that indirectly led the IMF to reduce the overall aid package, with the justification being that corruption remains high in the country. The goal was actually to avoid a complete breakdown of the Minsk II agreements and put a halt to the Ukrainian operation on Avdeevka. Even in the meeting between Tymoshenko and Trump, the strong signal sent to Poroshenko was clear: stop the nationalists and their provocations or there will be consequences.

The subtle game that is being played in Ukraine sees many components involved, often with diverse objectives and methods. The nationalist component hardly responds to the oligarchs in Kiev and to the central authority. They are often the first to receive training and weapons from western colleagues serving in NATO. American and British instructors have for more than two years provided their services to this component in the country. The National Guard received the blessings of the neoconservative factions of American power, as confirmed by the presence of Lindsey Graham and John McCain in Ukraine a few months ago. In addition to support from the Atlantic networks and the local Ukrainian intelligence service (SBU), these battalions have Turkish support, which involves Islamic extremists in the National Guard. Moreover, they receive both political and economic support from infamous oligarch Igor Kolomoisky. Going straight to the problem, one can see that the National Guard, despite strong political and economic support is not able to deliver a decisive blow to the Donbass and inflict any significant damage, let alone organize an efficient offensive. The problem is therefore clear that the alliance between nationalists loyal to NATO/neocons, Turkish extremists, and Israeli oligarchs like Kolomoisky enable the nationalists to carry out provocations but not to organize a serious military offensive against well-fortified and organized positions of the Donbass republics. To attempt an offensive of this kind would at least need a real army that is well organized and motivated.

Ukraine is back to the usual problems that emerged in 2014 and now plague military planners in Kiev. The Ukrainian army, essential to achieving a real push towards Donbass, lacks the motivation needed to fight. These considerations were already clearly known three years ago at the beginning of the infamous anti-terrorist operation (ATO) Kiev carried out in the east of the country. Two years later, Donbass is much stronger. Thanks to a variety of military acquisitions from Russia, as well as targeted training and an important fortification of their defensive positions, Donbass now has a defensive capability that must be taken into account.

In this situation, there are multiple dangers that can unfold for Kiev. Poroshenko must give the nationalists and international networks connected to them the ability to operate virtually without restrictions in Ukraine. He was put in power exactly for that purpose. When this does not happen, as seen in Avdeevka and with the water-supply center in Donetsk, where National Guard battalions had to pull back, there are consequences. In his sense, the National Guard blockade on Donbass is, other than being part of the usual provocations between oligarchs, an explicit message aimed at Kiev, causing considerable economic damage. No wonder Poroshenko sent the army to remove the blockade, which, unsurprisingly, did not actually change the situation.

The blockade actually obliged Kiev to buy coal from Russia, which was ironically left the only supplier. This fact was exploited by the same nationalists who created the blockade in the first place, blasting the Kiev government for buying coal from their enemy. In this mess, the Kiev government and Poroshenko should be aware of the consequences of excessive provocations against Donbass by the National Guard battalions. The ability of the Donbass to provide a firm response to any further aggression should be pondered by Kiev, even as tensions within Poroshenko’s inner circle continue to rise. The Ukrainian president is forced to support the nationalists and their rhetoric against “terrorists in the east” to ward off new Maidan.

At the same time, he needs to by all means avoid a military response from the two separatist republics. Kiev is aware that it does not possess the capacity to conquer the Donbass in terms of personnel and equipment, and is also aware that if the conflict got out of hand, with the complete collapse of the Minsk II agreements, the DPR and LPR would have the capability to extend their boundaries decidedly to the south, setting their sights on the Ukrainian coastline along the Black Sea.

Realistically, this scenario would be a nightmare for all the actors opposing the Donbass, especially for NATO and Poroshenko. Mariupol and Odessa appear to be the likely targets of a hypothetical new advance of the Donbass should the Minsk II agreements collapse. The Russian Federation and Donbass have made it amply clear that any new aggression from Ukraine will be met with a firm response. While this would not involve a direct attack on Kiev, it would establish a larger buffer zone that could include Mariupol and maybe even Odessa. This posture intends to create the necessary awareness in Kiev, and even in NATO, that it is not in their interests for an all-out war to be waged against Donbass.

The consequences of these actions call directly into question the NATO strategy in the Black Sea. The ultimate purpose of NATO is not to save Ukraine from a non-existent Russian threat but rather to put continuous pressure on the Russian Federation in every possible way. The objective is not even to reconquer Donbass, something that is also unfeasible for the military planners in Brussels, but the continuum of tension on Russia’s borders, occupying the attention of Moscow and continuously creating hotbeds of tension on its borders. In this regard, the Ukrainian access to the Black Sea is fundamental for NATO. The continued presence of NATO ships in the Black Sea to carry out joint exercises with Ukraine violates the Treaty of Montreux and is done to exert pressure on Russia from the sea. To bypass the Montreux convention and have a semi-permanent presence, the United States intends to donate a couple of ships to the Ukraine Navy in order to change the flag of the vessels, thus ensuring NATO’s legal permanent presence in the Black Sea without violating the Montreux Treaty. The port of Odessa is central in these calculations and it is of no particular surprise that in the event of a Novorossiya offensive following a Ukrainian attack, both Odessa and Mariupol would be difficult to defend for the Ukrainian army. Already in 2014, both Mariupol and Odessa had been calculated as possible targets of a wider strategy to liberate the cities from Kiev’s forces.

The bottom line is that the Kiev government is between two fires. On one side, the oligarchs battle each other, without regard for the life of Ukrainian citizens or the residents of Donbass, solely focussed on enriching themselves. On the other side, the western components in Ukraine (known as neoconservatives) fan the flames of conflict with military trainers and equipment banned by the Minsk II agreements, providing them to the Azov battalion, the most extremist wing of the National Guard. At the same time, Germany, and especially Russia, is gravely concerned over a possibility of the Ukraine economy defaulting, and of what that could mean in terms a huge wave of migration towards both countries, a situation Berlin would struggle to digest after all the migration coming from the Middle East over the last two years.

A potential default of the Ukrainian economy, and resulting destruction of the country, overshadows any struggles between oligarchs, and even the battle against Donbass. Options for Putin, Trump and Merkel all seem to be on the table with economic (nationalization of industries in the Donbass, slowdown in lending by the IMF), political (Trump meets Tymoshenko, a rival of Poroshenko) and military pressure (strong Russian presence behind the two separatist republics) applied in every way to prevent an all-out war in Ukraine.

The main danger is now clear to everyone involved – to Russia, the Donbass, NATO and Kiev. A new war between Donbass and Ukrainian would result in the defeat of Ukrainian forces, with consequences for NATO, since Donbass would hardly stop outside Mariupol and would instead proceed to Odessa. Kiev has a very weak capacity to mobilize motivated forces ready to sacrifice their lives for what are deeply corrupt oligarchs. This situation would cause an internal dilemma for NATO as was the case in 2014. Would NATO deploy its forces alongside those of Kiev to defend the ports in question, especially Odessa? If doubts where high three years ago, hardly anything has changed in recent years. NATO will not rally to the Kiev’s side. And the reasons remain the same, namely the risk of a direct confrontation with Russian troops, although Trump’s recent actions in Syria have raised much concern in Moscow in relation to the Ukrainian situation. A war against Donbass could easily lead to a wider conflict between superpowers, something impractical for even the most hyped warmongers on the Atlantic sphere. Realistically, Donbass troops, after repulsing Ukrainian aggression, would go on the offensive, and enjoying clear superiority in the region, thanks to Russia as well as to a higher level of motivation, would probably make their way all the way up to Odessa, securing the entire coastline.

The consequences of such a defeat would lead to the collapse of the central authority in Kiev, to an open war between oligarchical factions, to an end of loans from the International Monetary Fund, condemnation from European and American politicians, and to a definitive collapse of the Ukrainian economy. This would spell the end of business for Poroshenko and other business oligarchs, both in Kiev and in the West. Again, no one is interested in seeing such a scenario coming to fruition.

It is also important not to underestimate the partial unwillingness of Moscow to support an open war on the offensive by the Donbass army, especially given the political and economic consequences that the West would visit on Moscow.

The economic assistance that the Donbass would require from Moscow is another important consideration and something that the Russian Federation would prefer to avoid. It should, however, be stressed that in the unlikely event that Ukraine does not hold at bay its eagerness to wage war in Donbass, Moscow would openly side in favor of the Donbass, and the consequences for Ukraine and NATO would be disastrous, as we have seen. There would be enormous concern in such a scenario from Moscow, and the Russian Federation would take every step to avoid such a scenario, but if things got worse, Putin would be ready to support the advance of Novorossiya up to Odessa in order to secure once and for all the republics of Donetsk and Lugansk.

All the provocateurs in Ukraine should be aware that playing the nationalist card can be dangerous and can even result in a defeat that, when compared to 2014-2015, would be dramatically worse, condemning Ukraine to an economic, social and political crisis without precedent or a way out. It literally could be the beginning of the disintegration of Ukraine as we know it today.




Ontario cracks down on foreign (mainly Chinese buyers) of homes as they launch a 15% foreign buyers tax.   Also rent controls on all units will now be implemented with increases of only 1.5%.  That should shut the door on Chinese purchases and this will no doubt send them to other destinations to deposit their hot money.  Since considerable  government revenues comes from land transfer taxes, Ontario will need to find other means to find revenue.

(courtesy zerohedge).

Ontario Finally Cracks Down On Toronto Housing Bubble: Launches 15% Foreign Buyer Tax

Almost a year after Vancouver, ground zero of Canada’s housing bubble inflated with Chinese “hot money”, implemented a foreign buyer tax, and just weeks after Toronto’s housing bubble officially went nuts as prices soared 33% Y/Y, prompting economists such as David Rosenberg to demand a government intervention, Ontario’s Liberal government has finally cracked down on foreign buyers and according to CBC will join Vancouver in slapping a 15% tax on home purchases by non-resident foreigners, while expanding the province’s existing rent control system to cover all tenants.

The moves come after the price of the average home in the Greater Toronto Area jumped 33 per cent in a year, triggering warnings of a real estate bubble, as well as after reporting by CBC Toronto revealed landlords slapping massive rent increases on tenants.

The announcement, which is expected to be made Thursday morning, will include in addition to the foreign buyers tax and expanded rent control, the following measures:

  • A rebate of development cost charges to encourage building of more rental housing.
  •     A standardized lease document for all tenants.
  • A ban on flipping of pre-construction units by speculators.
  •     A review of the rules governing the conduct of real estate agents.

The full details will be unveiled at 9 a.m. today by Premier Kathleen Wynne, in Toronto’s neighbourhood of Liberty Village, along with Finance Minister Charles Sousa and Housing Minister Chris Ballard.

The highlight, however will be the 15% foreign buyer tax, which after being implemented in Vancouver halted the local housing bubble dead in its tracks and led to a sharp pullback in both home price appreciation and a torrid pace of transactions. Some more details:

Sources with knowledge of the announcement tell CBC News that Ontario will impose a 15 per cent tax on residential real estate purchases by anyone who is not a citizen or permanent resident, if they are not living in the province. Called the “Non-Resident Speculation Tax,” it is similar to the tax imposed in Metro Vancouver last year, but with a rebate for homebuyers who become resident within a limited time period after the purchase.


The tax will apply to purchases in the Greater Golden Horseshoe, an expanse of land that includes the Greater Toronto and Hamilton Area, as well as the surrounding region stretching from Peterborough through Barrie, Waterloo and the Niagara Peninsula to the U.S. border.

In addition to the tax aimed squarely at Chinese buyers, the Ontario government will bring all tenants under the province’s existing rent control system, ending the exemption that currently allows unlimited rent increases in units built after 1991. The change will mean annual rent increases for all tenants who stay in their rental housing will be limited to Ontario’s inflation-based guideline (which this year is set at 1.5 per cent), unless the landlord gets approval from the Landlord and Tenant Board.

The province will also introduce reforms making it harder for landlords to get approval for a higher-than-inflation rent hike. For instance, landlords who have yet to repair elevators after being ordered to do so will be unable to apply for such an increase. Ontario will also bring in a standardized lease, such as exists in Quebec, to stop landlords from putting illegal clauses in their contracts with tenants.

To make up for the expansion of rent control, CBC adds that the government will announce new incentives to developers for building dedicated rental accommodation targeted at the middle- and lower-income market. The key incentive will be an up-front provincial rebate of development cost charges. In addition, the government will free up more provincial land for building affordable housing, both for sale and for rental.

Additionally, the government will ban speculators from “assignment flipping” in the pre-construction housing market. The move is targeted at investors who put deposits on multiple units at pre-construction prices — typically in condominiums, but sometimes in new subdivisions — then sell the title for profit before the building is complete, a process known as assignment. Sousa has previously signaled his intent to target such investors, labelling them “property scalpers” who are driving up prices.

Finally, anyone who buys real estate in Ontario will have to reveal their citizenship and place of residence. The measure was promised by Sousa last November, but takes effect on Monday, along with a range of other disclosure requirements. Buyers will also be required to state whether the property is to be used as a primary residence or investment, whether the buyer is acting as a representative for the eventual owner, and to reveal the names behind any numbered company purchasing real estate.

* * *

What this really means is that as two of China’s favorite targets of capital outflows shut their doors to more Chinese “investment”, the local oligarchs will simply have to find a new willing recipient. We expect that cities along the US West Coast – not to mention Warren Buffett, who as we reported earlier this week is now selling US houses to Chinese buyers – will be more than delighted to greet China’s trillions in capital outflows with open arms.



Despite oil prices remaining calm, banks are planning to cut oil lending even more this year

(courtesy Rupert Hargreaves/ValueWalk.com)

Banks Plan To Cut Oil Lending Even More This Year

Authored by Rupert Hargreaves via ValueWalk.com,

Oil lending could go down even more

Even though the price of oil has nearly doubled from its lows printed at the beginning of last year, it seems that for many oil and gas companies, the downturn continues to weigh on operations.

According to the most recent issue of the Haynes and Boone, Borrowing Base Redeterminations Survey, conducted last quarter, around 24% of exploration and production borrowers expect to see a decrease in their borrowing base redeterminations for spring 2017. Even though the number of responses indicating a reduction in borrowing capacity has decreased dramatically since last year (down from 41% in the fall of 2016) it is notable that many sector stakeholders believe further adjustments are ahead despite the changes that have taken place over the past 12 months.

Banks Plan To Cut Oil Lending Further 

163 Borrowing Base surveys were completed for the spring 2017 issue with respondents spread across the lending, producer, services and other oil and related industries. Far more borrowers believe borrowing bases will be cut this year than lenders with 27% of borrowers predicting a cut and 20% of lenders holding the same opinion.

Still, despite the anticipation that borrowing bases will be curtailed further during 2017, almost all of the respondents to the survey (89%) predict that exploration and production capital expenditure budgets will increase in 2017 as compared to 2016, with nearly two-thirds of the respondents expecting those budget increases to be substantial (20% or greater).

While lenders may be considering placing further restrictions on oil and gas company borrowing bases the sector’s funding freeze that was in place for the majority of 2016 seems to be coming to an end. When asked what is likely to be the preferable path for lenders and borrowers to take if faced with a borrowing base deficiency this year, most survey respondents (43%) claimed that they would negotiate an amendment/extensions with the lender.

This time last year only 36% of respondents chose this option. The sale of non-core assets also seems to be more appealing, with 37% of respondents stating that they will take this option if faced with a funding shortfall, up from 31% this time last year. The biggest change in sentiment seems to be regarding bankruptcy. Only 3% of respondents to the survey indicated that they would use this option if faced with a funding shortfall, down from 13% in the fall of 2016.

On the other hand a Reuters article notes:

Investors who took a hit last year when dozens of U.S. shale producers filed for bankruptcy are already making big new bets on the industry’s resurgence.


In the first quarter, private equity funds raised $19.8 billion for energy ventures – nearly three times the total in the same period last year, according to financial data provider Preqin.


The quickening pace of investments from private equity, along with hedge funds and investment banks, comes even as the recovery in oil prices from an 8-year low has stalled at just over $50 per barrel amid a stubborn global supply glut.

So maybe it is just a matter of how one looks at the data?



Not good!  Maduro seizes the operating General Motors Plant in Valencia, Venezuela..

they will run this into the ground.

(courtesy zero hedge)


Venezuela Seizes General Motors Car Plant

While the US has a habit of invading or attacking sovereign nations any time the president’s approval rating dips below a certain threshold, Venezuela has a similar, if less dramatic mechanism to provide a brief boost to Maduro’s popularity: it nationalizes foreign plants on its soil.

It did so last July, when the country was once again suffocating under a wave of violent protests, when just hours after Kimberly-Clark said it will shutter its Venezuela operations after years of grappling with soaring inflation and a shortage of hard currency and raw materials, Venezuela retaliated by announcing it would seize the factory.

It did so again overnight, when General Motors said on Wednesday that Venezuelan authorities had illegally seized its plant in the industrial hub of Valencia; as a result the carmaker said it would immediately halt operations in Venezuela.

“Yesterday, GMV’s (General Motors Venezolana) plant was unexpectedly taken by the public authorities, preventing normal operations. In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities,” the company said in a statement.

The automaker said the seizure showed a “total disregard” of its legal rights. “[GM] strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions, within and outside of Venezuela, to defend its rights.”

GM’s subsidiary in the country – General Motors Venezolana – has operated in Venezuela for nearly 70 years. It employs nearly 2,700 workers and has 79 dealers in the country. GM said it would make “separation payments” to its workers.

While the US carmaker vowed to defend its rights, it has no chance of success of recouping its property under the current regime, which no longer recognize either local or international law. The seizure comes amid a deepening economic crisis in leftist-led Venezuela that has already roiled many U.S. companies.

GM said the seizure would cause irreparable damage to the company, its 2,678 workers, its 79 dealers and to its suppliers.

The seizure will hardly be of use to the Maduro regime as Venezuela’s car industry has been in freefall, hit by a lack of raw materials due to lack of foreign currency to fund imports and stagnant local production, with many plants are barely producing at all. Last month, according to official statistics, only several hundred cars were sold.

GM is not the first US carmaker to suffer the irrational wrath of Venezuela’s dictator: in early 2015, Ford wrote off its investment in Venezuela when it took an $800 million pre-tax writedown. Others have been hit too, and as a result a growing number of US companies are taking their Venezuelan operations out off their consolidated accounts. ExxonMobil pulled the plug on its operations in Venezuelan in 2007 after former President Hugo Chavez attempted to nationalized one of its projects. The oil producer then took the government to court. Coca-Cola was forced to halt production of Coke and other sugar-sweetened beverages last year due to a sugar shortage.

Finally, for those seeking legal remedies, we have one word of advice – patience: Venezuela still faces around 20 arbitration cases over nationalizations under late leader Hugo Chavez.

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



GBP/USA 1.2794 UP .0014 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED


Early THIS THURSDAY morning in Europe, the Euro ROSE by 28 basis points, trading now BELOW the important 1.08 level  RISING to 1.0742; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP1.41  POINTS OR 0.04%    / Hang Sang  CLOSED UP 231.10 POINTS OR 0.97%/AUSTRALIA  CLOSED UP .25% / EUROPEAN BOURSES MOSTLY IN THE GREEN EXCEPT LONDON’S FTSE

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 1.71 POINTS OR 0.01%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 231.10 OR 0.97%  / SHANGHAI CLOSED UP 1.41 POINTS OR 0.04%/Australia BOURSE CLOSED UP .25% /Nikkei (Japan)CLOSED DOWN 1.71 OR 0.01%  / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1279.10


Early THURSDAY morning USA 10 year bond yield: 2.228% !!! UP 1 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.886, UP 1  IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 99.62 DOWN 12  CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING


And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.777%  DOWN 4  in basis point(s) yield from WEDNESDAY 

JAPANESE BOND YIELD: +.02%  UP 1   in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.700%  UP 2 IN basis point yield from WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.268 UP 2  POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 57 points HIGHER than Spain.





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

Euro/USA 1.0751 up .0036 (Euro up 36 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.38 UP: 0.550 (Yen DOWN 55 basis points/ 

Great Britain/USA 1.222 UP 0.0041( POUND UP 41 basis points)

USA/Canada 1.3479 DOWN 0.0004(Canadian dollar UP 4 basis points AS OIL FELL TO $50.46


This afternoon, the Euro was UP by 36 basis points to trade at 1.0751


The POUND ROSE BY 41  basis points, trading at 1.2822/

The Canadian dollar ROSE by 5 basis points to 1.3477,  WITH WTI OIL FALLING TO :  $50.46

The USA/Yuan closed at 6.8822/
the 10 yr Japanese bond yield closed at +.02% UP 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 5 IN basis points from WEDNESDAY at 2.255% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.905 UP 5  in basis points on the day /

Your closing USA dollar index, 99,64 DOWN 10  CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 4.18 POINTS OR 0.06% 
German Dax :CLOSED UP 10.87 POINTS OR .09% 
Paris Cac  CLOSED UP 74.18 POINTS OR 1.48%
Italian MIB: CLOSED UP 24.83 POINTS OR 0.13%

The Dow closed UP 174.22 OR 0.85%

NASDAQ WAS closed UP 53.74 POINTS OR 0.92%  4.00 PM EST
WTI Oil price;  50,46 at 1:00 pm; 

Brent Oil: 53.11 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: $52.98


USA 30 YR BOND YIELD: 2.884%


USA/JAPANESE YEN:109.31  UP 0.480

USA DOLLAR INDEX: 99.82  UP 8  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2812 : UP .0031  OR 31 BASIS POINTS.

Canadian dollar: 1.3469  DOWN .0014 (CAN DOLLAR UP 14 BASIS PTS)

German 10 yr bond yield at 5 pm: +.244%


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


Shorts Smoked – Stocks End ‘High’ As Dollar Dumps’n’Pumps

Despite tumbling soft data and disappointing earnings data…

Stocks soared most in 6 weeks…



Another day, another one-way trip in stocks. VIX clubbed to a 13 handle again stocks soar…

Trannies and Small Caps once again led the day (short squeeze) and S&P lagged but everything was awesomely green again…


Another big short squeeze…


The Dow continues to lag – managing to scramble back to unchanged from last Wednesday’s close before fading into the close…


Financials limped back into the green for 2017…


The Dow remains below its 50DMA, S&P and Small Caps are clinging to it, Nasdaq is well above it…


The Dollar Index dumped early and then pumped after Europe closed and extended to unchanged on Mnuchin’s comments…


EURUSD moved notably lower after Europe closed enthusiastically… USD remains lower on the week…


The strong TIPS auction was also supportive of the renewed hope for the reflation trade…


Treasury yield rose on the day but bonds rallied in the afternoon to push back lower on the week…


The entire yield curve is moving very parallel – not much steepening or flattening in a relatively narrow range…


Gold was hit again pre-London Fix (but not as hard as the last two days)…and the fix was higher…


But USDJPY and Gold were joined at the hip all day…


Crude slid on doubts over Saudi jawboning and a stronger dollar, back to a $50 handle…


Finally there’s this…




More soft data collapses.  This time, it was the Philly Fed mfg index

(courtesy zero hedge)

Soft’ Data Slumps – Philly Fed Plunges Most In Over 2 Years As Trumphoria Fades

Having surged to its highest levels since 1984 in February, Philly Fed’s Manufacturing survey (soft data) has collapsed in the last two months (biggest drop since Jan 2015). The 22.00 print missed expectations and was the lowest since Dec 2016 amid a big slump in new orders and shipments.


The index for current manufacturing activity in the region decreased from a reading of 32.8 in March to 22.0 this month. The index has been positive for nine consecutive months and remains at a relatively high reading but has moved down the past two months. Thirty-seven percent of the firms indicated increases in activity in April, while 15 percent reported decreases.

Crucially the ‘hope’ subcomponent plunged to 45.5 (contracting) – the lowest since the election.

The full breakdown shows the big decline in shipments and new orders.

The current new orders and shipments indexes remained at high readings but declined 11 points and 10 points, respectively. Both the delivery times and unfilled orders indexes were positive for the sixth consecutive month, suggesting longer delivery times and increases in unfilled orders. Firms reported an increase in manufacturing employment and work hours this month. The percentage of firms reporting an increase in employment (27 percent) exceeded the percentage reporting a decrease (8 percent).

The current employment index improved 2 points, its fifth consecutive positive reading . Firms also reported an increase in work hours this month: The average workweek index was nearly unchanged at 18.9 and has registered a positive reading for six consecutive months.

Furthemore it appears Reflation fatigue is seting in as the prices paid index decreased 7 points to 33.7. With respect to prices received for firms’ own manufactured goods, 30 percent of the firms reported higher prices, and 13 percent reported lower prices. The prices received index decreased 4 points.

Soft data is giving up the hope…

FBI Admits It Was Not The Russians – Launches Manhunt For “Insider” Who Leaked CIA Docs To WikiLeaks

Having exclaimed that WikiLeaks is “a non-state hostile intelligence service often abetted by state actors like Russia,” laying the blame for every embarrassing leak at Moscow’s footsteps, the FBI and CIA have admitted that they are searching for an “insider” (not a Russian) who exposed thousands of top-secret documents that described CIA tools used to penetrate smartphones, smart televisions and computer systems.

As CBS News reports,  a manhunt is underway for a traitor inside the Central Intelligence Agency.

Sources familiar with the investigation say it is looking for an insider — either a CIA employee or contractor — who had physical access to the material. The agency has not said publicly when the material was taken or how it was stolen.


Much of the material was classified and stored in a highly secure section of the intelligence agency, but sources say hundreds of people would have had access to the material. Investigators are going through those names.


The trove was published in March by the anti-secrecy organization WikiLeaks.

In his first public comments as director of the CIA just last week, Mike Pompeo railed against WikiLeaks and its founder Julian Assange.

“It is time to call out WikiLeaks for what it really is: A non-state hostile intelligence service often abetted by state actors like Russia,” he said.

WikiLeaks has said it obtained the CIA information from former contractors who worked for U.S. intelligence. The CIA has not commented on the authenticity of the WikiLeaks disclosures or on the status of the investigation.

It seems once again that WikiLeaks’ facts were ‘facts’ and CIA/FBI ‘facts’ were ‘fake’.



There are 16 counties in Tennessee that has no providers and Iowa may soon be next.  If there is no provider there is no back up plan

In a nutshell: Obamacare is in a mess

(courtesy Mish Shedlock/Mishtalk)


No Obamacare In Most Of Iowa, Tennessee – What Happens? Fallback Plans?

Authored by Mike Shedlock via MishTalk.com,

Nearly the entire state of Tennessee has a single Obamacare provider. In sixteen counties, none of this year’s providers want to do business.

Mississippi, Alabama, South Carolina, Oklahoma, Alaska, and Wyoming are states where there is only a single provider for the entire state. Iowa is likely to be covered by a single provider next year. Most of North Carolina, Florida, Missouri, and Arizona are also in a single-provider situation.

Enrollment for 2018 starts in November. Will the problem be fixed by then? If not, What Happens if Places Have No Obamacare Insurers?

The markets created by the Affordable Care Act have always relied on the voluntary participation of private companies. If the government set up the right conditions for the market, the thinking went, insurers would want to jump in. But, as Sarah Kliff at Vox.com has reported, the law contained no real backup plan if that vision didn’t work out.


So far, there are parts of Tennessee where none of this year’s insurers want to sell insurance next year. Other counties have only one carrier, and in some of them, that carrier is looking shaky.


If insurers do all decide to exit a market, no one is exactly sure what will happen next. Some experts have brainstormed about possible workarounds, but all would entail uncharted legal territory.


Senator Lamar Alexander of Tennessee, the state currently at greatest risk of bare counties, has introduced a bill that would create options for customers shut out of their Obamacare market. But even if Congress passed such a law, regulators would have to work very fast to make anything happen before next year’s enrollment period, which begins in November.

No Backup Plan

Vox asks What if Obamacare Insurers Falls to Zero?

Multiple sources tell me that White House staff held a meeting today to discuss cost-sharing reduction subsidies — that $8 billion Obamacare program whose fate still hangs in limbo. Ending these payments could “blow up” the health law’s marketplaces, but President Trump has so far waffled on what he’ll do about the issue. The meeting didn’t include any outside advisers or industry officials, only administration staff.


Right now there are 16 counties in Tennessee where no health insurer wants to sell Obamacare coverage. Iowa could be next: Half its Obamacare insurers announced this month that they would no longer participate in the marketplace. That leaves 94 of the state’s 99 counties with just one insurer — and regulators there aren’t totally sure that plan, Medica, will stick around.


“We don’t have any commitment from the two carriers that remain that they will be there,” says Doug Ommen, Iowa’s insurance commissioner. “They’re not required to file with us until June. Certainly we’re hopeful, but unless Congress acts, our market will continue to be very unstable.”


What happens if no one wants to sell coverage? Does the law have any fallback plan? The short answer is no. There is no backup plan for places where no insurer wants to sell Obamacare coverage.


Even before the election, some big insurers had decided that the Obamacare marketplaces were not good for their bottom lines. Aetna and UnitedHealth mostly withdrew in 2016, leaving lots of places with just one insurer.


Since the election, health insurers have only gotten more skittish. Humana announced in February that it would no longer participate. That left those 16 Tennessee counties without any plans, and many more counties with just one option.

Ryan’s Folly

The articles mentioned that Trump could call up providers and bully them into offering coverage. But does that make any sense from a party that wants to Kill Obamacare?

The system is set up to implode and there is no point to doing anything until it does. After an implosion, there will be bipartisan support to do something. Right now there is no bipartisan support to do anything.

The folly of House Speaker Paul Ryan’s ill-fated attempt to fix the problem is readily apparent.

His poor decision to attempt to fix the unfixable accomplished nothing useful, but it did move partial ownership of the problem to Republicans.




A new plan will be on the table but do not get your hopes up too high

(courtesy zerohedge)

Republicans Said To Near New Healthcare Deal

After weeks of fits and starts, Obamacare repeal may be back on the table. According to the Huffington Post, the chair fo the House Freedom Caucus, Mark Meadows and Tuesday Group co-chairman Tom MacArthur have reached a tentative Trumpcare deal. But while the two Republican lawmakers say they are nearing a deal on changes to the ObamaCare replacement bill that could move the measure closer to passage, doubts remain.

According to a summary of the amendment posted by Politico,  states would have the option to apply for waivers to allow them to repeal one of ObamaCare’s core protections for people with pre-existing conditions,. That means insurers would no longer be prevented from charging people with pre-existing conditions higher premiums because of their illness. The measure would also allow states to repeal ObamaCare’s essential health benefits, which mandate that insurers cover a range of health services, including mental health and prescription drugs.

Additionally, benefits like prescription drug coverage, pregnancy and mental health services would be included again in the bill, but states could get a waiver for that too if they prove it would lower premiums, or provide some other benefit to people.

Yet while the new agreement could find support among more conservatives, moderates are likely to remain an obstacle according to the Hill.

“There’s no deal,” said an aide to a moderate House GOP lawmaker. “I wouldn’t be surprised if they started to lose more moderates” because of the new changes, he added.

Many Republicans objected to similar changes that were discussed before the recess earlier this month. Rep. Patrick McHenry (R-N.C.), the chief deputy GOP whip, called similar changes earlier this month a “bridge too far for our members.”

He said that he and much of the Republican conference wanted to maintain ObamaCare’s community rating protection for people with pre-existing conditions. Many moderate Republican lawmakers also pledged to protect that provision at town halls over the recess.


These new changes will be a test of whether moderate Republicans lawmakers will hold to that position.


Conservatives argue that funding for high-risk pools will allow for people with pre-existing conditions to get coverage. Democrats counter that high-risk pools were underfunded and did not work before ObamaCare.  The new amendment would also not change deep Medicaid cuts and coverage losses that moderates have objected to.

A previously scheduled conference call for all House GOP lawmakers on Saturday will be a chance to discuss the changes.



This should be interesting:  Trump demands money for border wall funding.  This may kill the continuing resolution “clean” bill and force a government showdown


(courtesy zerohedge)


Trump Demands For Border Wall Funding May Force Government Shutdown Next Week

After a week of flip-flops on everything from the value of NATO to labeling China a currency manipulator, moves which quickly earned him the moniker of ‘flipper-in-chief’ from a disgruntled base, Trump, under internal pressure to show legislative achievements ahead of the 100-day mark, is gearing up for a government shutdown fight to secure money for a border wall, more immigration enforcement officers and a bigger military.

Once Congress returns to work from their Easter break they’ll have just 5 days to unveil, debate and pass a spending bill, or trigger a government shutdown on April 28 which would come right before the 100th day of Donald Trump’s presidency.  That said, officials could also strike a one-week compromise, giving them more time for a broader agreement.

People familiar with the negotiations say Mick Mulvaney, the budget
director, and Marc Short, the White House legislative affairs director, are pushing congressional appropriators to include “billions” for their agenda in private conversations. The White House, one person familiar with the conversations said, has pushed for $3 billion for the border wall, and discussions have been ongoing.

“The CR is our biggest focus right now,” one senior administration official said, referring to the continuing resolution on spending.

Of course, in order to get a budget passed, the Trump administration will likely require some Democratic support in the House and certainly in the Senate.  That said, Democratic leaders Schumer and Pelosi insist that any budgets that include funding for Trump’s ‘beautiful’ border wall is a non-starter.  Per Politico:

Securing the $1.4 billion down payment would help Trump fulfill a top campaign promise but it’s facing stiff Democratic resistance. Senate Minority Leader Chuck Schumer has said adding wall funding would be “a loser” — finding few Democratic votes while even losing some Republicans.


“The only thing that could derail that progress is the White House insisting on their extraneous demands, which would meet bipartisan opposition,” said Matt House, a spokesman for Senate Minority Leader Chuck Schumer. House Minority Leader Nancy Pelosi warned Thursday that including funding for the border wall will almost certainly cause a loss of Democratic support. “I would hope that they wouldn’t try that,” she said, adding, “the American people don’t even support it.”



But, the border wall and additional funding for immigration enforcement aren’t the only issues that could force a government shutdown.  As Politico notes, disputes over withholding funding to so-called ‘Sanctuary Cities’, and/or the defunding of Obamacare subsidies or Coal miners’ health benefits could also end in a stalemate.

“Sanctuary cities”

One of the latest threats to a bipartisan accord comes directly from White House budget director Mick Mulvaney.


The former conservative GOP lawmaker has been privately urging Republicans to include a provision blocking federal grants for any city that doesn’t enforce federal immigration law. To Democrats, the idea is a nonstarter. But Mulvaney sees it as a chance to get his former House Freedom Caucus colleagues to back the bill, so GOP leaders wouldn’t have to rely on Democratic votes.


Obamacare subsidies

The 2010 health care law is again in the middle of a funding fight, but this time, it’s Democrats who are making an issue of it.


Democratic leaders declared that any spending bill must provide money for a key Obamacare subsidy program after Trump threatened to defund the cost-sharing subsidies; the president sees the program as a way to force Democrats to the negotiating table.


Schumer told reporters this week that Democrats are “very hopeful” the payments would be included, but Republicans aren’t exactly eager to pay for the health subsidies, which they have sued to block.


In the wake of last month’s Obamacare repeal meltdown by the House GOP, Republicans are in no mood to further prop up the law. But key health and business lobbies, including the U.S. Chamber of Commerce, say GOP leaders may have no choice if they want to prevent an imminent collapse of the individual insurance marketplace. Another option is simply for the Trump administration to continue making the payments and avoid any final decision in the spending bill.


Coal miners’ benefits

Congress was hours away from a government shutdown last fall over a disputed miners’ health care program. Now, the benefits of 16,000 retired workers and federal funding are again on the line.


Democrats and some coal country Republicans have insisted on a long-term solution for the workers’ health care as well as a separate pension fund, but a 10-year fix could cost about $3 billion and is running into opposition among conservative groups like The Heritage Foundation along with House GOP budget hawks.

So what say you?  Are we headed for another government shutdown or will the flipper-in-chief cave again?




Trump to sign executive order to sanction imports of steel on ‘national security” grounds


(courtesy zerohedge)



Trump Signs Order Granting Steel Import Sanctions On “National Security” Grounds

At noon, Donald Trump will sign an executive order calling for a probe whether imports of foreign-made steel are hurting U.S. national security. The order will revive a decades-old, rarely used law to explore imposing new barriers on steel imports, in this case aimed loosely at China.

Trump will sign the memorandum related to section 232 of the Trade Expansion Act of 1962 at an event in the White House that will include leadersd of several U.S. steel companies; the law will allow the president to impose restrictions on imports for reasons of national security. Trump’s directive will ask Ross to conduct the probe “with all deliberate speed and deliver the results to the president with his recommendations.”

An official cited by Reuters sad that there are national security implications from imports of steel alloys that are used in products such as the armor plating of ships and require a lot of expertise to create and produce.

The move is another step in Trump’s “America First” policies in which he has tried to boost U.S. manufacturers and preserve American jobs. It comes as he tries to coax China into taking a more active role in reining in North Korea’s nuclear and missile programs.

While an official said that the directive is not aimed at a specific country but is “product oriented”, in recent years the US has seen a substantial increase in imports of Steel and related products from China, which has been dumping its exports around the globe, although in recent months has been either warehousing the product domestically, or using it as part of the latest housing bubble.

As the WSJ adds, the U.S. government hasn’t used the law to impose penalties since the creation of the World Trade Organization in 1995, which discourages such unilateral sanctions. The law was most famously used by President Richard Nixon in 1971 to impose an across-the-board 10% import surcharge to contain the U.S. trade deficit at the time.

The planned ceremony follows a Trump rally Tuesday at Wisconsin tool factory where he ordered aides to craft new policies increasing “Buy American” provisions for government procurement spending. In the speech unveiling the action, he blasted the WTO as “another one of our disasters,” and vowed to accelerate acting on his campaign promises to rewrite American trade policy.



Goldman Sachs believes that the government will pass a clean resolution without any conflict so that they could keep on going.  However the problems will occur once they run out of money  and cannot pass a new debt ceiling


(courtesy Goldman Sachs/zerohedge)


Goldman Warns 1-In-3 Chance Of Government Shutdown In May

Goldman’s Jan Hatzius believes the odds of a government shutdown next week are fairly low, but rise to around one in three if the debate extends into May. A shutdown at the start of the next fiscal year, in October, is a greater risk in their view.

  • President Trump has continued to focus on “reciprocity” in trade but has clearly changed course on his prior view that economic relations with other countries should not be subordinated to geopolitical concerns. In light of the range of geopolitical concerns at the moment, this suggests that trade policy changes may be more incremental in the near term.
  • Despite clear indications that they would postpone further consideration of health legislation, Republican leaders appear intent on trying to pass health legislation one more time. House passage of a broad ACA replacement bill seems unlikely, and we expect that the House will either pass a much narrower bill or will ultimately move on to other issues by June.
  • The renewed focus on health care has once again delayed tax reform efforts, however. We still believe tax legislation is likely to become law, but continued delays suggest that enactment is likely to slip to early 2018.
  • Strong Democratic performance in recent special elections for the House of Representatives has generated discussion of more significant than expected Republican losses in the 2018 midterm election. While special elections do have some predictive power, a simple analysis of special elections back to 1970 shows a fairly weak relationship between special elections and the following midterm election results.

Q: How much of a risk is a government shutdown at the end of next week?

A: There is a risk of a partial federal shutdown, but we believe the risk is fairly low next week, rising slightly if the debate is pushed into May, and rising further still later this year. Congressional appropriations expire April 28, and Congress will need to reach an agreement on a new spending bill by that time to avoid a partial shutdown of the federal government. Even if all Republicans support the bill passage is not guaranteed, since it is likely to need 60 votes in the Senate, or at least 8 Democrats in light of the 52-seat Republican majority. In the House, the bill is likely to need some Democratic support as well, since some fiscal conservatives are likely to vote against it.

In our view, there is only a one in four chance of a shutdown on April 29, because it appears likely that if an agreement is not in place by that time, Congress will pass a “clean” short-term extension that avoids controversial issues. The cumulative probability of a shutdown by May is somewhat higher in our view—around one in three—since lawmakers might eventually demand a longer extension through the end of the fiscal year, which would require resolution of any controversial items.

Thus far, Republican leaders appear to be trying to keep controversial items out of the bill, in the hope of avoiding a shutdown. New funding for President Trump’s proposed border wall or provisions that would strip federal funding for so-called “sanctuary cities” have been raised as possibilities but at this point seem unlikely to be included. A recent push by congressional Democrats to include funding for the cost-sharing subsidies under the Affordable Care Act (ACA) poses greater risk; if Democrats insist on its inclusion, it could be difficult to secure broad Republican support. Our expectation is that the White House might need to commit to not unilaterally withdraw funding for these subsidies, reversing President Trump’s recent suggestion he might do so.

The risk of a government shutdown appears more serious at the end of the fiscal year (September 30), for two reasons.

First, it is likely to intersect with the debt limit, which we expect to become a constraint on Treasury borrowing by October.


Second, at that point Congress will need to make more significant decisions regarding spending levels.

While congressional Republicans and the White House might be willing to accept lower defense spending and higher domestic spending than they would like for the remainder of the current fiscal year, they are much less likely to accept spending bills for the fiscal year that starts October 1 unless they increase defense spending and reduce non-defense spending, and fund some of the President’s other initiatives such as increased border enforcement.

Q: What have the last few weeks demonstrated regarding the Trump Administration’s trade policy?

President Trump has continued to emphasize reciprocity, but has downplayed the notion that foreign policy and trade policy should be delinked. Coming into the year, there appeared to be two driving principles behind the Trump Administration’s trade policy: reciprocity and a separation of strategic from economic interests in foreign policy. Reciprocity continues to be a core principle of the President’s trade agenda, judging from recent comments in support of a “reciprocal tax” on imports, which would apparently apply the same tariff on a particular good from a particular country as that country applies on the US good.

By contrast, the President seems to have explicitly reversed his previously stated view that economic considerations should not be subordinate to geopolitical or strategic considerations in foreign policy. For example, in its recent report to Congress on the Administration’s key principles on trade policy, the Office of the US Trade Representative, part of the White House, said that it “reject[s] the notion that the United States should, for putative geopolitical advantage, turn a blind eye to unfair trade practices.” However, President Trump appears to be making an exception for China for the moment, stating “we have tremendous trade deficits with everybody, but the big one is with China…and I told them, ‘You want to make a great deal?’ Solve the problem in North Korea. That’s worth having deficits. And that’s worth having not as good a trade deal as I would normally be able to make.”

Where does this leave trade policy overall? For now, it suggests that the Administration is still likely to pursue some incremental restrictions on certain products but that major actions are unlikely in the near term. That said, this does leave some tension between the President’s stated goal of reciprocity, which would ultimately require higher tariffs and other restrictions on imports from many countries, and his view that some strategic goals justify less favorable trade terms for the US.

Q: Is health legislation really coming back onto the legislative agenda?

We expect some type of health legislation to become law eventually, but we’re skeptical a revised health bill can become law in the near term, for three reasons.

First, despite a renewed interest among Republican leaders in addressing the issue—President Trump said last week that he once again expects to address the health bill before the tax bill, if it can be passed quickly—not much has changed; the fundamental disagreements that sank the bill in late March have not been resolved.


Second, the Senate faces different political constraints than the House and would likely have an even more difficult time passing legislation similar to what the House nearly voted on in late March.


Third, the health bill seems unlikely to produce much if any savings over the next ten years, and therefore probably cannot be used to meaningfully offset the cost of a tax cut; the most recent version of the House bill would have reduced the deficit by about $150bn over the next ten years, or enough to reduce the corporate tax rate by 1pp. It is true that it would have also reduced taxes by nearly $1 trillion over ten years, but this is relevant mainly if one assumes that without the health bill Congress would include that $1 trillion in tax cuts in its tax bill instead.

In our view, the House is likely to make a final attempt at passing health legislation in mid- to late May. If this is a scaled-down bill that addresses only certain less popular aspects of the Affordable Care Act (ACA), like the individual mandate, it might pass the House and Senate and become law. Alternatively, if it is similar to the American Health Care Act (AHCA) that the House was scheduled to vote on in late March, we would expect the bill to once again fail to pass.

Q: Where does all of this leave tax reform?

Not much further along than where it was a few months ago. We recently wrote that our view continues to be that tax legislation is likely to become law, but that it is more likely to be a tax cut with limited elements of reform, namely a 25% corporate rate with provisions allowing for low-tax repatriation of foreign profits, incremental base broadening, and no border adjusted tax. However, the timing does appear to be slipping once again; if the legislative focus remains on health legislation through May, a vote on tax reform at the committee level might not occur in the House until July, which could make final enactment of tax legislation before year-end challenging. At this point, we expect that enactment is more likely in Q1 2018 than Q4 2017.

Q: What do recent special elections tell us about the 2018 midterm election outlook?

Not much that is not already known. Special elections for the House of Representatives last week (April 11) and again yesterday (April 18) have resulted in a stronger Democratic showing than would normally be expected given the political leanings of the respective districts. In Kansas, the Democratic candidate trailed by only 7 points in a district that went to President Trump by 27 points last November. Preliminary results in the Georgia race show Democratic candidates winning a cumulative 49% of the vote and Republicans 51% (there were several candidates of each party in the preliminary round, with a final two-way race scheduled for June 20), slightly better than President Trump’s 1-point win there in 2016.

There appears to be a loose positive relationship between the seats a party gains in special elections and that party’s results in the following midterm election, as shown in the exhibit below. The horizontal axis shows the gain or loss of seats by the president’s party, as a share of all seats that changed control as a result of special elections. The vertical axis shows the net change in seats resulting from the following midterm election (special elections following presidential election years are excluded).

The relationship suggests that the party controlling the White House typically loses around 19 seats in midterm elections, all else equal, with a loss of an another 14 seats if the president’s party consistently loses special elections in the run-up to the midterm (Democrats would need to win 24 seats to win the House majority in the 2018 midterm election). While these results are not statistically significant, a longer sample analyzed by Smith and Brunell back to 1900 show a stronger relationship. Regardless, we note that special elections have sent false signals in the recent past, such as the run-up to the 2010 midterm election, when Democrats won seven of nine special elections in the House but lost 63 seats in the general election in November.

Additional special elections are expected in May in Montana and in June in California and South Carolina, and again in Georgia. These are likely to be watched closely as a barometer of political sentiment ahead of the 2018 midterm election. If Democrats outperform in these races, it could increase the motivation among congressional Republicans and the White House to move away from controversial issues like health care and to focus more on tangible legislative achievements like tax legislation or an infrastructure program.

Source: Goldman Sachs


Over the past few years, we have alerted you on the potential fraud of this company, Ocwen Financial.  It plunged today after the North Carolina Commissioner issued a cease and desist order to the company to address mishandling of consumer escrow account and a deficient financial condition


(courtesy zero hedge)

Ocwen Crashes Over 50% After N.C. Bank Commissioner Issues Cease And Desist Letter

Former hedge fund hotel darling Ocwen Financial plunged over 50% after the North Carolina Commissioner of Bank and state mortgage regulators from over 20 states issued a Cease and Desist order to subsidiaries of Ocwen to address mishandling of consumer escrow accounts and a deficient financial condition. Specifically, the order prohibits the acquisition of new mortgage servicing rights and the origination of mortgage loans by Ocwen Loan Servicing.

The summary findings from the C&D (link)

The Commissioner of Banks (“Commissioner”) having determined that Ocwen Financial Corporation has engaged in, or is engaging in, or is about to engage in, acts or practices constituting violations of state and federal law and applicable regulations, hereby issues the following FINDINGS OF FACT and ORDER TO CEASE AND DESIST.

And some further details:

During the examination, the Examining States identified several violations of state and federal law, including, but not limited to, consumer escrow accounts that could not be reconciled and willful and ongoing unlicensed activity in certain states. Additionally, it was determined that Ocwen’s financial condition was significantly deteriorating.


Although the Examining States were unable to gather comprehensive documentation of the extent of unlicensed activity because Ocwen’s management failed to respond to requests for information in a timely manner, the examination found that Ocwen subsidiaries were conducting unlicensed servicing activity in numerous jurisdictions. This unlicensed activity was cited in the report of exam. The Examining States had numerous conversations with the Board of OFC in which the Examining States communicated that these continuing violations were unacceptable and would not be tolerated. Although OFC partially addressed the unlicensed activity two years after it was initially cited, unlicensed activity is believed to continue in certain jurisdictions.


The MMC examination found that Ocwen has been unable to accurately reconcile many of the consumer escrow accounts in its portfolio. Consumer escrow accounts are accounts that contain consumer funds held for the payment of taxes and insurance. The MMC examination further found that Ocwen failed to make timely disbursements to pay for taxes and insurance from escrow accounts on numerous loans. The MMC examination also found that Ocwen routinely sent consumers inaccurate, confusing, and/or misleading escrow statements.


In 2015, Ocwen failed to provide key financial documents and reconcilements of its financial statements to regulators.


Based on the findings of the examination and subsequent communications with OFC, the state regulators and Ocwen entered into a Memorandum of Understanding (MOU) on December 7, 2016.


The MOU required Ocwen to retain an independent auditing firm to perform a comprehensive audit and reconciliation of all consumer escrow accounts, with a report to be furnished by the Auditor to Ocwen and the MMC within five business days thereafter. The audit plan was to be submitted to, and approved by, the MMC no later than January 13, 2017.


Ocwen’s response to the state regulators on January 13, 2017, was that the reconciliation of escrow accounts, which is paramount in ensuring the appropriate management of consumer funds, would cost $1.5 billion and be well beyond Ocwen’s financial capacity to fund. Ocwen has suggested instead that a sample of 457 escrow accounts be reconciled out of 2.5 million active first lien escrow accounts that Ocwen has serviced since January 2013. This proposal could leave a vast number of consumers with unaudited and inaccurate escrow accounts.


The company is currently facing numerous substantiated consumer complaints regarding escrow accounts that have been mismanaged, resulting in significant harm to consumers, and request for reimbursement of monies wrongfully withheld or misapplied.


The MOU required Ocwen to provide, among other things, a viable going forward business plan that encompassed an analysis of its financial condition going forward. The purpose of the plan was to analyze Ocwen’s future financial condition incorporating and encompassing all known or reasonably certain liabilities.


Ocwen’s going forward plan submitted in response to the MOU did not provide a complete assessment of its financial condition because it excluded significant liabilities. If the going forward plan accurately accounted for known or anticipated regulatory penalties and other operational costs, including, but not limited to, the expenses of moving to a new servicing platform and complete reconciliation of consumer escrow accounts with restitution to impacted borrowers, it would indicate that Ocwen continuing as a going concern would be in doubt.

The stock is plunging on the news that its business model may be terminally impaired.

Mnuchin’s tax cut proposals have no chance to pass both houses:

(courtesy zero hedge)

Stocks, Dollar, Yields Rally On Mnuchin Tax Cut Comments

In a day full of upside catalyst for the reflation trade including the strong TIPS auction, the speculation that the Obamacare repeal effort is back on track, and perhaps best of all the absence of hard data (today’s Philly Fed “soft data” was, well, quite soft), the dollar, the S&P and Treasury yields all rose, after Treasury Secretary Steven Mnuchin said that “we are close to bring forward major tax reform”, refuting speculation that it may be delayed into 2018.

In kneejerk reaction to the Mnuchin seemingly confident comments, the Bloomberg dollar index, BBDXY, erased its intraday drop to trade little changed while the USDJPY pressed to new session highs.

Speaking at a Institute of International Finance event in Washington, Mnuchin said that the Trump administration’s priority is creating growth in U.S. economy, international goal is for “fair and balanced” trade.

He noted that two main ways to create economic growth are tax reform and regulatory relief. He added that regulatory reform aims to ensure banks can lend and taxpayers aren’t at risk.

Regarding tax reform, Mnuchin said that the objective is making business taxes competitive and bringing back trillions of dollars to invest: “We hope this won’t take until the end of the year, it will be sweeping.”

Mnuchin also said that “the tax plan will pay for itself” with growth and the admininstration fundamentally believes in dynamic scoring, although he did not explain just how that would happen aside to note that some cuts in tax rates to be offset with less deductions.

He also said that the administration is looking at simpler tax code, with fewer tax brackets and less deductions concluding that some aspects of border-adjusted tax we like, some we dislike, and finally – in what may be the final dagger in the heart of the BAT – said he remains concerned about border tax impact on currency. Which, incidentally, was the weakest point in Mnuchin’s comments as it is very likely that members of Congress, and especially Paul Ryan, will have different plans on tax reform.

But perhaps the most interesting comment from Mnuchin was that he is confident the nation’s debt ceiling will be raised and hopeful it happens before summer, and that the US will keep its AAA credit rating. We assume this excludes S&P’s infamous “less than AAA” rating…


Subway for the first time in its 52 yr history is shuttering hundreds of USA stores.

Business must be good..

(courtesy zero hedge)

For The First Time In Its History, Subway Shutters Hundreds Of US Stores

For the first time in its 52 years of operation, Subway announced that it contracted in 2016, shuttering 359 US locations which as Bloomberg described was the “biggest retrenchment in the history of the restaurant chain” whose total store count dropped 1.3% from 27,103 in 2015 to 26,744 even as it remained the most ubiquitous fast-food eatery in the US, although McDonalds still tops if by sales.

“Sales for 2016 reflect our focus on international growth,” the Connecticut-based company said in a statement. “We are undertaking an exciting transformation that includes introducing new and improved products, creating an even greater customer experience, refining operations, and positioning Subway franchisees for continued success.”

Confirming that the domestic sales slowdown has continued into 2017, even as the Sub-par chain has been competing with dozens of newer, more exciting fast food eateries, U.S. same-store sales continued to slide during March, dropping 0.6% in the fourth straight month of decreases, according to MillerPulse data cited by Bloomberg.

The good news is that despite the domestic contraction, Subway is still growing internationally with sales outside the U.S. rising 3.7% to $5.8 billion as it continued to open locations.

The private company has been pressured not only by a sharp recent decline in US restaurant traffic and sales  – an industry which as we reported recently suffered its worst collapse since 2009 – but by the industry’s heavy reliance on discounts and promotions. Subway also has lost some of its luster as a healthier-food option, Bloomberg notes as it has been working to restore its status by eliminating antibiotics from its chicken and switching to cage-free eggs.

In another bid to revive growth, Subway is adding delivery services — a strategy that’s also been embraced by McDonald’s. And it even unveiled a new, more contemporary logo. But so far, the changes haven’t helped much: Sales fell 1.7 percent last year to about $11.3 billion.

As Bloomberg adds, the sandwich chain, which infamously lost its iconic spokesman Jared Fogle in 2015 under humiliating circumstances, has also been overhauling its management team. On Wednesday, the company said it’s bringing on former McDonald’s executive Karlin Linhardt to lead marketing for the more than 30,000 Subway stores in the U.S. and Canada.

Last year, Subway hired Katie Coleman to handle global public relations. She was tasked in part with helping the chain recover from a scandal involving former spokesman Jared Fogle. He pleaded guilty to child pornography charges and was sentenced to prison in 2015.


Subway, owned by Doctor’s Associates Inc., was founded about 52 years ago by Fred DeLuca and Peter Buck. DeLuca died in 2015, leaving the company in the hands of his younger sister, Suzanne Greco, who became chief executive officer. The chain’s restaurants are entirely owned by franchisees.

Meanwhile, as US eaters seemingly grow tired with Subway’s choices, UBS was out with the following report…


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