May 1/China and Europe closed (the physical markets) so an ideal time to raid gold/silver/War of words escalate with respect to North Korea and the uSA/Chinese relflation trade just hit a brick wall/ Talks betwen the UK and the EU on settlements talk not going well at all/Riots erupt in Brazil/Venezuela in utter chaos as they raise minumum wage by 60% and start handing out free homes/Congress reaches deal to keep government going until Sept 30: now face the dreaded debt ceiling in June/The house will try on Wednesday to pass another version of the health care bill/the days are numbered for Puerto Rico as their temporary 1 yr halt to bankruptcy proceedings is coming to an end/

Gold: $1254.30  down 11.80

Silver: $17.62  DOWN 38  cents

Closing access prices:

Gold $1257.00

silver: $16.86!!!










Premium of Shanghai 2nd fix/NY:$14.02


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




For comex gold:




For silver:

For silver: MAY


Total number of notices filed so far this month: 2178 for 10,890,000 oz




In Feb we had $7,841,000 worth of gold housed at the FRBNY valued at 42.21 dollars per oz


Last month: we had the same;  $7,841,000  of gold valued at 42.21


thus 0 oz of gold moved out.




Today is May Day and a holiday throughout Europe and China.  Both of these areas are physical zones so it was quite easy for our crooks to orchestrate a raid.  The bankers supplied over 1 billion USA dollars worth of gold contracts short in their bid to manipulate the prices of our precious metals lower.  The object of their exercise is silver and we should start to see the open interest start to rise this month until we see another record level of open interest with a lower price than the previous records.





Let us have a look at the data for today





In gold, the total comex gold FELL BY 4392 contracts DESPITE THE RISE IN THE PRICE OF GOLD ($2.40 with FRIDAY’S TRADING). The total gold OI stands at 470,787 contracts.

we had 12 notice(s) filed upon for 1200 oz of gold.


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


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

Inventory rests tonight: 853.36 tonnes



Strange!!! We had a huge change in silver inventory at the SLV today..a massive deposit of 1.136 million oz (with the huge fall in silver these past few trading days???)

THE SLV Inventory rests at: 331.419 million oz



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

1. Today, we had the open interest in silver FELL BY 3,746 contracts DOWN TO 196,015, (AND FURTHER FROM  THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21 AT 234,787), WITH THE  FALL IN PRICE FOR SILVER ON FRIDAY (11 CENTS). We may have witnessed short covering by the bankers or we may again have witnessed the power of that obscure EFP contract.  For the past few years, strangely we have seen the open interest collapse as we enter first day notice. The EFP allows the longs to liquidate his delivery contract month for a fiat bonus and the receipt of a future contract month once first day notice has occurred. That may have happened again WITH TODAY’S READING.

(report Harvey


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) Federal Reserve Bank ear marked gold movement




i)Late  SUNDAY night/MONDAY morning: Shanghai closed  OR / /Hang Sang CLOSED .  The Nikkei closed UP 111.78 OR 0.59% /Australia’s all ordinaires  CLOSED UP .48%/Chinese yuan (ONSHORE) closed UP at 6.8935/Oil DOWN to 49.08 dollars per barrel for WTI and 51.73 for Brent. Stocks in Europe CLOSED OR IN THE RED   ..Offshore yuan trades  6.9000 yuan to the dollar vs 6.8935 for onshore yuan. NOW  THE OFFSHORE IS A LITTLE STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN SLIGHTLY STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN  A LITTLE WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT HAPPY



Trump is angry at North Korea unsuccessful missile test as it warns the situation is bad.

( zero hedge)

( zerohedge)

iii)North Korea seems to be snubbing their noses at the West.  They are determined to orchestrate additional atomic tests. Strangely they will boost nuclear deterrence to “maximum”

( zero hedge)


i)Japan deploys a warship in support of the uSA armada.  For the first time since World War ii, Japan authorizes the use of weapons

( zero hedge)

ii)Japan is dumping a massive amount of uSA treasuries.  If the uSA treasuries at a positive yield compared to Japanese bonds i under why?

( zero hedge)

c) Report on China

The global reflation trade has just hit a brick wall’

( zero hedge)


i)The EU wants to punish the UK.

Theresa May should just walk away

( zero hedge/Mish Shedlock)

ii)The drunkard, Juncker reportedly slams the “constructive” meeting the UK’s Prime Minister May.  Probably totally intoxicated, we responds that May may be deluding herself and England will have to pay to leave the EU

( zero hedge)



i)There is a massive panic bank run at  Canada’s largest alternative Mortgage lender and it is on the edge of collapse

( zero hedge)

ii)A good commentary from Kaitlin Last as she describes Toronto’s subprime debt time bomb

(courtesy Last/


i)Oil breaks into the 48 dollar column again after Libya’s output surges

( zero hedge)

Oil will no doubt head southbound as OPEC countries are increasing production not cutting back

( zerohedge)




Violent riots break out in Brazil over the weekend as it’s first general strike in 21 years paralyzed the nation

( zero hedge)


Maduro hands out free homes and hikes minimum wage to counter the angry protest sweeping the nation

( zero hedge)


i)Another whack when all the physical markets are closed

( zero hedge)

ii)The following is long but well worth the read:  The central bank of England shows how they control the gold price

( RonanManly/Bullionstar)

iii)A very usual chart and commentary where it shows how Russia, India and China have accumulated gold

(courtesy Nick Laird, BullionStar/RonanManly)

10. USA stories

i)So much for an increase in USA GDP:  spending growth stagnates.  Consumers refuse to spend as the savings rate climbs to 7 month highs

( zero hedge)

ii)Inflation targets are following below the levels wished by the Fed.  Then why is a rate hike in June still remaining at 70%

( zero hedge)

iii )Is this another joke:  The Atlanta Fed thinks that 2nd quarter GDP will be 4.3%

( zero hedge)


iii b)The second bit of bad news: ISM manufacturing hits 54.8 in April from 56.4 with construction spending down 0.2%.  That sent gold higher only to be repelled by the crooks.

( Lauren Thomas/CNBC)

( zero hedge)

( zero hedge)

vi)It seems that Congress has reached a deal to keep government going through September with 1 trillion dollars in spending.

( zero hedge)

vi b) The deal:

( zerohedge)

vii) After granting a temporary stay of execution of 1 year, it looks like this week, Puerto Rico will take its first steps towards bankruptcy and set off fire alarms in the muni market.

( zero hedge)


The USA is now deploying troops along the Syria-Turkey border

( zero hedge)

ix)Another indicator to show how the USA economy is crashing.  Nearly every major regional bank missed in their lending estimates

( Mish Shedlock/Mishtalk)

x)First we had Pepsi layoffs and now Coca Cola cuts 40 jobs amid a 32% plunge in sales in the Philadelphia area. Bureaucrats do not seem to understand that taxes can have a detrimental effect on the economy.

(c zero hedge)

xi)Only foreign banks subpoenaed?  What happened to the uSA banks who no doubt were engaged in the same criminal behaviour

( zero hedge)

xi)The banks will not like the following:  trump is “open to breaking up the big banks”

he doesn’t realize the derivative problems that this will create

(courtesy zero hedge)

xii) Baltimore mayor calls for FBI help as 2017 murders soar to a 20 yr high and it is basically out of control. Baltimore is set to vault into the no 1 spot ahead of Chicago in murder rates per 100,000 population ahead of St Louis. In absolute numbers, Chicago beats them all.

(courtesy zerohedge)

xiii) just in case you are complacent with worldly events:

Travel alert as there is “continued threat of terrorist attacks”

( zero hedge)


Let us head over to the comex:

The total gold comex open interest FELL BY 4,392 CONTRACTS DOWN to an OI level of 470,787 DESPITE THE  RISE IN THE PRICE OF GOLD ( $2.40 with YESTERDAY’S trading).   The longs still continue to remain stoic as they refused to liquidate any of their contracts despite the constant torment. However we may have had some banker short covering.  We are now in the contract month of MAY and it is one of the POORER delivery months  of the year. In this MAY delivery month  we had A LOSS OF only 44 contract(s) FALLING TO 435. We had 15 notices filed on Friday so we again lost 29 contracts or an additional 2900 oz were cash settled through the EFP route where they receive a cash bonus plus a future gold contract.

The next big active month is June/2017 and here the OI LOST 6162 contracts DOWN to 330,094.  The non active July contract gained its first 25 contracts to stand at 25 contracts. The next big active month is August and here the OI gained 1965 contracts up to 54,655.

We had 12 notice(s) filed upon today for 1200 oz

We are in the active delivery month is MAY  Here the open interest LOST 1,322 contracts FALLING TO 2038 contracts. OH OH!!!  We had 1421 notices filed on first day notice so we gained 99 notices or 495,000 oz. In over two years, I do not believe I have ever seen an active month increase in amount standing on day 2 of the delivery cycle. No wonder JPMorgan is getting reading for a physical attack at the comex. It is also interesting in that the amount of gain in the preliminary data was 49 contracts. The final data showed an increase to 99 contracts or an additional 495,000 oz will stand.

The non active June contract GAINED 16 contracts to stand at 814. The next big active month will be July and here the OI LOST ONLY 3,477 contracts DOWN to 153.120.

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)

The line in the sand is $18.50 for silver and again it has been defended by the criminal bankers.  Once this level is 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. THE NEW RECORD HIGH IN OPEN INTEREST WAS SET FRIDAY APRIL 21/2017 AT:  234,787.

We had 757 notice(s) filed for 3,785,000 oz for the MAY 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 194,151 contracts which is fair.

Yesterday’s confirmed volume was 184,233 contracts  which is fair.

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for MAY
 May 1/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 23,180.150 oz
721 kilobars
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
12 notice(s)
1200 OZ
No of oz to be served (notices)
423 contracts
42,300 oz
Total monthly oz gold served (contracts) so far this month
27 notices
2700 oz
.0839 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   23,338.2 oz
Today we HAD  1 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 1 customer withdrawal(s)
 i Out of Scotia; 23,180.15 oz
721 kilobars
total customer withdrawal: 23,180.15 oz
 we had 0 adjustments:
For MAY:

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

To calculate the initial total number of gold ounces standing for the MAY. contract month, we take the total number of notices filed so far for the month (27) x 100 oz or 2700 oz, to which we add the difference between the open interest for the front month of MAY (435 contracts) minus the number of notices served upon today (12) x 100 oz per contract equals 45000 oz, the number of ounces standing in this  active month of MAY.
Thus the INITIAL standings for gold for the MAY contract month:
No of notices served so far (27) x 100 oz  or ounces + {(435)OI for the front month  minus the number of  notices served upon today (12) x 100 oz which equals 45000 oz standing in this non active delivery month of MAY  (1.3716 tonnes).  We lost 29 contracts or an additional 2900 oz were cash settled through the EFP route where they received a fiat bonus plus a futures contract in a private deal with the bankers.
I have now gone over all of the final deliveries for this year and it is startling.
Here are the final deliveries for all of 2016 and the first 5 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
Nov.    8.3950 tonnes.
DEC/2016.   29.931 tonnes
JAN/2017     3.9004 tonnes
FEB/ 18.734 tonnes
March: 0.5816 tonnes
April/2017: 2.8678
MAY:2017/  1.3716 TONNES
total for the 17 months;  249.010 tonnes
average 14.676 tonnes per month
Total dealer inventory 914,233.183 or 28.43 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,930,998.688 or 277.70 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.70 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
MAY INITIAL standings
 May 1. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
40,175.02 oz
2154.610 oz
total:  42,329.630 oz
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
0 oz
and the rest 0
total:  0 oz
No of oz served today (contracts)
(3,785,000 OZ)
No of oz to be served (notices)
1281 contracts
( 6,405,000 oz)
Total monthly oz silver served (contracts) 2178 contracts (10,890,000 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  1,853,531.8 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: kil oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):

i) Out of Scotia:  40,175.02 oz

ii) Out of HSBC: 2,154.610 oz
 We had 0 Customer deposits:
***deposits into JPMorgan have now stopped for the first time in quite a while.
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  nil oz
 we had 1 adjustment(s)
Out of the CNT vault:
24,865.700 oz was adjusted out of the dealer and this landed into the customer account of CNT
The total number of notices filed today for the MAY. contract month is represented by 785 contract(s) for 3,785,000 oz. To calculate the number of silver ounces that will stand for delivery in MAY., we take the total number of notices filed for the month so far at 2178 x 5,000 oz  = 10,890,000 oz to which we add the difference between the open interest for the front month of MAY (2038) and the number of notices served upon today (757) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the MAY contract month:  2178(notices served so far)x 5000 oz  + OI for front month of APRIL.(2038 ) -number of notices served upon today (757)x 5000 oz  equals  17,295,000 oz  of silver standing for the MAY contract month.
We actually gained 99 contracts or an additional 495,000 oz will stand for delivery and nobody wished to accept an EFP contract for a fiat bonus. It may mean that the entire 17 million oz that is standing wants its physical metal and are willing to take on our bankers. Let us see how this will play out for the rest of the month!!  WE HAVE NEVER HAD AN INCREASE IN AMOUNT OF PHYSICAL SILVER STANDING ON DAY 2 OF THE DELIVERY CYCLE.
Volumes: for silver comex
Today the estimated volume was 70,947 which is very huge 
Yesterday’s  confirmed volume was 70,888 contracts which is huge
Total dealer silver:  32.506 million (close to record low inventory  
Total number of dealer and customer silver:   196.524 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44

NPV for Sprott and Central Fund of Canada

will update later tonight the central fund of Canada figures

1. Central Fund of Canada: traded at Negative 7.3 percent to NAV usa funds and Negative 7.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.2%
Percentage of fund in silver:37.7%
cash .+0.1%( May 1/2017) 
2. Sprott silver fund (PSLV): Premium FALLS TO   -.33%!!!! NAV (May 1/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS to -0.52% to NAV  ( May 1 /2017)
Note: Sprott silver trust back  into NEGATIVE territory at -.33% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.52%/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

May 1/ no changes in inventory at the GLD/inventory rests at 853.36 tonnes

April 28/no changes in inventory at the GLD/Inventory rests at 853.36 tonnes

April 27/a small withdrawal of .89 tonnes/Inventory is now at 853.36 tonnes

APRIL 26/we had no changes at the GLD/Inventory rests at 854.25 tonnes


April 24/a deposit of 1.48 tonnes of gold into the GLD/inventory rests at 860.17 tonnes




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


May 1 /2017/ Inventory rests tonight at 853.36 tonnes


Now the SLV Inventory

may 1/extremely strange/with silver being walloped these past several days, the inventory rises again by a huge 1.136 million oz/(maybe someone can explain this phenomena??)

April 28/Strange again!! no change in inventory at the SLV/Inventory remains at 330.283 million oz  (no liquidation with a drop in silver price??)

April 27.2017/Strange!! no change in inventory at the SLV/Inventory remains at 330.283 million oz  (no liquidation???)

APRIL 26/2017/another huge deposit of 2.934 million oz into the SLV/Inventory rests at 330.283 million oz

April 25/a huge deposit of 1.98 million of into inventory/inventory rests at 327.349 million oz/

April 24/no changes in inventory at the SLV/Inventory rests at 325.361 million oz/



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
May 1.2017: Inventory 331.419  million oz

Major gold/silver trading/commentaries for MONDAY


Goldcore on Holiday/May Day


Another whack when all the physical markets are closed

(courtesy zero hedge)

Gold Tumbles Below Key Technical Level

Thanks to a sudden billion-dollar-notional plus purge,


gold futures just snapped below their 200-day moving-average to $1255…


Is it a great rotation?

The following is long but well worth the read:  The central bank of England shows how they control the gold price

(courtesy RonanManly/Bullionstar)

Ronan Manly: Bank of England report shows how central banks control gold price


3:03p ET Friday, April 28, 2017

Dear Friend of GATA and Gold:

Gold researcher Ronan Manly writes today that the Bank of England’s new, more detailed gold vault holdings report shows how central banks control the gold market by providing “liquidity” and how the gold price is highly correlated with the dishoarding and addition of gold to the bank’s vault, the price falling as gold is dishoarded and rising as it returns.

Manly modestly declines to emphasize that the bank’s new report confirms that his recent estimates of the real metal supporting the London gold market were almost exactly correct.

While Manly welcomes the bank’s increased transparency, he adds: “It would be more useful if the bank published a breakdown of how much of this gold is held by central banks and how much is held by bullion banks, along with the number of central banks and number of bullion banks that the data represents. Two distinct sets of data would be ideal, one for central bank custody holdings and the other for bullion bank custody holdings. The bank most likely would never publish two sets of data as it would show bullion bank gold storage activity for the whole world to see.”

That is, if the markets — such as they are — knew the true location and disposition of central bank gold, trouble would be made for the surreptitious intervention of central banks in the gold and currency markets, just as was acknowledged by the secret March 1999 report of the staff of the International Monetary Fund:

Manly’s report is headlined “Bank of England Releases New Data on Its Gold Vault Holdings” and it’s posted at Bullion Star here:…

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


A very usual chart and commentary where it shows how Russia, India and China have accumulated gold

(courtesy Nick Laird, BullionStar/RonanManly)


Gold accumulation increases in April in China, India, Russia


7:08a ET Monday, May 1, 2017

Dear Friend of GATA and Gold:

Bullion Star’s gold market charts for April, drawn from Nick Laird’s Gold Charts R Us internet site, show increasing accumulation in China, India, and Russia, signified perhaps most notably in China by withdrawals through the Shanghai Gold Exchange. Bullion Star’s report is posted here:…

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


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



2. Nikkei closed UP 113.78 POINTS OR 0.59%   /USA: YEN RISES TO 111.73

3. Europe stocks CLOSED/OR IN THE RED        ( /USA dollar index RISES TO  99.09/Euro UP to 1.0896


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  49.38 and Brent: 52.21

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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.317%/Italian 10 yr bond yield DOWN  to 2.282%    

3j Greek 10 year bond yield FALLS to  : 6.34%   

3k Gold at $1264.00/silver $17.14 (8:15 am est)   SILVER ABOVE  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 4/100 in  roubles/dollar) 56.89-

3m oil into the 49 dollar handle for WTI and 51 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT 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  .9941 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0837 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.317%

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 2.30% early this morning. Thirty year rate  at 2.968% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Futures Rise On Government Funding Deal; Most Global Markets Closed For Holiday

With much of Europe and Asia, including the U.K., France, Germany and China markets closed for Labor Day, Asian stocks and the dollar rose buoyed by news that Congress had reached a deal to keep the US government funded through the end of September. S&P futures are up 4 points or 0.2%. Oil declined as rigs targeting crude in the U.S. rose for a fifteenth week and output from Libya rebounded.

What’s happening this morning? Not a whole lot. The two big incremental headlines concerned China (the Apr PMIs were underwhelming) and US gov’t spending (as was widely expected a deal was reached to fund the gov’t until Sept 30 although a shutdown this fall, along w/a debt ceiling battle, remain distinct possibilities). Otherwise it was a relatively quiet weekend/morning. Note that a lot of the world (other than the US) is closed Mon 5/1 for Labor Day/May Day holidays (including HK/mainland China and Europe/London).

The Yen declined for a fifth day in six, while Treasuries retreated with gold.

The MSCI All Country World Index edged higher, after capping a sixth straight month of gains on Friday. Japan’s Topix rose to the highest level since March after its best week of the year. Trading volumes were lower than average due to holidays in most of Europe, China, India and Mexico, and a forthcoming three-day break in Japan.

MSCI’s index of Asia-Pacific shares outside Japan rose 0.1%. Japan outperforming on upbeat earnings, with Japan’s Nikkei climbing 0.4%, with high-tech blue chips gaining on strong earnings.

Asian shares initially took their cue from Wall Street, which dipped on Friday after data showed the U.S. economy grew at its weakest pace in three years in the first quarter. The mood brightened however, on news that U.S. congressional negotiators hammered out a bipartisan agreement on a spending package to keep the federal government funded through Sept. 30, thus averting a government shutdown. Asian markets were little fazed by China’s official manufacturing survey on Sunday which showed growth in the country’s factories slowed more than expected in April to a six-month low.

Pointing to a higher open for the main market later in the day, E-minis gained about 0.2% while 10-year Treasury yields rose after three successive days of declines.

“It is hard for markets to make big moves with holidays in so many places today, and people are just waiting for more information to come out,” said Harumi Taguchi, principal economist at IHS Markit in Tokyo.

“The main focus of the broader markets this week will be on the United States, with the Fed’s May 2-3 policy meeting and the jobs report on Friday,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo. “While many of the indicators in the first quarter were weak, the jobs data could confirm that labor market conditions continue to improve and lift the dollar and U.S. yields.”

In currencies, the greenback was up 0.2 percent at 111.750 yen edging back towards a four-week peak of 111.780 reached last week. The euro handed back earlier modest gains and was flat at $1.0891. The common currency had been lifted on Friday after euro zone inflation data rose more than expected and returned to the European Central Bank’s target. The euro was still in range of the 5-1/2-month high of $1.0951 struck early last week on relief over the first round of the French presidential elections. The pound was 0.3 percent lower at $1.2907 after climbing to a seven-month high of $1.2957 on Friday, when traders were seen to have closed off bets against the pound ahead of Britain’s long bank holiday weekend.  The Australian and New Zealand dollars were slightly lower at $0.7483 and $0.6856, respectively.

In commodities, crude oil prices slipped amid lingering concerns that an OPEC-led production cut has failed to significantly tighten an oversupplied market.U.S. crude shed 11 cents to $49.22 a barrel, heading back towards a one-month low of $48.20 plumbed late last week and Brent LCOc1 was down 16 cents at $51.89 per barrel. Oil was weighed by news that US rigs targeting crude in the U.S. rose for 15th week while output from Libya rebounded. The number of oil rigs operating in U.S. fields advanced to most since April 2015, according to Baker Hughes. Libya’s crude production rebounded to more than 700k b/d as the OPEC member’s biggest oil field and another deposit in its western region resumed pumping after halt. “Higher prices will attract American producers to ramp up production, especially in profitable areas like the Permian basin, and the conflict in Libya was already winding down last week,” says Sheldon Laliberte, a Rotterdam-based crude oil analyst at commodities trader Cofco International Ltd. “I’m structurally bearish oil right now.”

DISH Network, Advanced Micro Devices, Cardinal Health among companies scheduled to publish results. It is another busy week for earnings with 131 S&P 500 companies reporting and 85 Stoxx 600 companies reporting. Amongst those reporting are Apple, BP, BNP Paribas, Facebook, Merck, Tesla, Time Warner, Pfizer, HSBC, BMW, Shell and VW.

Market Snapshot

  • S&P 500 futures up 0.2% to 2,385.00
  • STOXX Europe 600 down 0.04% to 386.92
  • MXAP up 0.2% to 149.12
  • MXAPJ up 0.1% to 487.23
  • Nikkei up 0.6% to 19,310.52
  • Topix up 0.5% to 1,539.77
  • Hang Seng Index down 0.3% to 24,615.13
  • Shanghai Composite up 0.08% to 3,154.66
  • Sensex down 0.4% to 29,918.40
  • Australia S&P/ASX 200 up 0.6% to 5,956.52
  • Kospi down 0.2% to 2,205.44
  • German 10Y yield rose 2.1 bps to 0.317%
  • Euro down 0.01% to 1.0894 per US$
  • Brent Futures down 0.6% to $51.72/bbl
  • Italian 10Y yield rose 3.7 bps to 1.987%
  • Spanish 10Y yield rose 2.2 bps to 1.648%
  • Brent Futures down 0.6% to $51.72/bbl
  • Gold spot down 0.4% to $1,262.81
  • U.S. Dollar Index up 0.08% to 99.13

Top Overnight News from Bloomberg

  • U.S. House and Senate negotiators reached a bipartisan deal on a $1.1t spending bill that largely tracks with Democratic priorities and rejects most of President Donald Trump’s wish list, including money to begin building a wall along the U.S.-Mexican border
  • The U.S. is considering a range of options, from expanded economic sanctions to military operations, as it reaches out to allies in confronting North Korea’s latest provocations, according to a senior Trump administration official
  • Marine Le Pen and Emmanuel Macron kick off the final week of the French presidential campaign with major rallies in Paris after weekend sparring on subjects ranging from the euro to the environment
  • The pound fell as Prime Minister Theresa May stuck to her guns in arguing that Britain should be allowed to line up a “comprehensive” free-trade deal with the EU at the same time as it negotiates its departure from the bloc
  • China’s official factory gauge declined on lower commodity prices, clouding the outlook for sustaining the past two quarters’ acceleration in economic growth
  • U.S. Looks at Sanctions, Military Action Against North Korea; N. Korea Says Will Speed Up Steps to Bolster Nuclear Deterrence
  • Fox, Blackstone Said Teaming to Make Competing Tribune Bid
  • China Manufacturing Gauge Declines From Almost Five-Year High
  • HSBC, RBS Saudi Arabian Ventures in Talks to Merge
  • Macquarie, Hastings-Led Groups Said to Bid for Endeavour Energy
  • First NBC Bank Fails; Deposits Assumed by Hancock’s Whitney Bank
  • U.S. Oil Output to Expand 400k B/D This Year: Continental’s Hamm
  • BNSF Says Track Outages in U.S. Midwest Impacting Operations
  • Coach Said Considering Takeover of Jimmy Choo: Telegraph
  • GSO Capital Partners Said to Buy More J. Crew Debt: Reuters
  • Elliott Said to Meet BHP’s Australian Holders This Week: Reuters

Most of Asia was closed Monday for holidays (HK, mainland China, Taiwan, Korea, India, and others, were closed). Japan was open and saw decent gains (TPX +0.52%, NKY +0.59%). Australia also ended higher (+0.55%). News was quiet in Asia other than some eco headlines – the China NBS Apr PMIs were mildly underwhelming while Macau Apr gaming revs and Japan’s manufacturing PMI were both about inline. Within the NKY, tech was by far the top performer (the Japanese info tech index ended up ~3.8%) while materials did well too (energy, discretionary, healthcare, and utilities lagged). Tokyo Electron and Nippon Electric Glass both surged on earnings (up ~13.3% and ~11.7%, respectively); note that Tokyo Electron is just the latest pos. data point for semi equipment (semi equipment stocks have posted very healthy results).

Top Asian News

  • Korea Exports Surge for Sixth Month on Ships and Semiconductors
  • North Korea Test-Fires a Ballistic Missile: Yonhap
  • China April Manufacturing PMI at 51.2; Est. 51.7
  • Japan Govt Considers Installing Aegis Defense System: Kyodo
  • Mongolia Expects IMF Bailout to Happen ‘Soon’ After Postponement
  • Lotte Chairman to Meet Hershey Chairman on U.S Trip: Yonhap
  • PBOC Official Says China Should Deleverage Properly: Caijing
  • Freeport Union Says About 8,000 Grasberg Workers Join Strike
  • Nakheel, Hilton Agree Partnership for Rooms, Apartments in Dubai
  • Macau Casino Revenue Gains for Ninth Month With High-Stakes Bets

Most European markets are closed due to the Labor Day/May 1 holiday.

Top European News

  • Le Pen Says Her Presidency Will Lead to the End of the Eur
  • Macron, Le Pen Kick Off Final Week With Major Paris Rallies
  • Britain’s May Sticks to Guns Seeking Parallel Brexit Talks
  • Renzi Faces Uphill Battle to Italy Premiership After Primary Win
  • Novo Settles U.S. Probe of Kickbacks, Disguised Salespeople
  • DLR Kredit Plans to Issue DKK1b in Senior Resolution Notes
  • Alitalia Bridge Loan to Be Higher Than EU500m, La Stampa Says
  • Luxottica 1Q Rev. Soft, Improving Trends May Be Supportive: RBC
  • AB Science FY Revenue Decreases to EU1.5m
  • Netherlands April Manufacturing PMI Unchanged at 57.8
  • Danske Bank Raised to Strong Buy at Jyske Bank, PT DKK300
  • Turkey’s Erdogan Says Need to Alleviate Exchange-Rate Pressure

In currencies, the yen fell as much as 0.4 percent to 111.92 per dollar to the lowest level since the end of March and traded at 111.74 in early morning trading. The currency last week had the biggest slide since the Fed raised U.S. rates in December. The Bloomberg Dollar Spot Index added 0.1 percent, while the broader dollar DXY index was up 0.2 percent at 111.750 yen edging back towards a four-week peak of 111.780 reached last week. The euro handed back earlier modest gains and was flat at $1.0891. The common currency had been lifted on Friday after euro zone inflation data rose more than expected and returned to the European Central Bank’s target. The euro was still in range of the 5-1/2-month high of $1.0951 struck early last week on relief over the first round of the French presidential elections. The pound was 0.3 percent lower at $1.2907 after climbing to a seven-month high of $1.2957 on Friday, when traders were seen to have closed off bets against the pound ahead of Britain’s long bank holiday weekend.  The Australian and New Zealand dollars were slightly lower at $0.7483 and $0.6856, respectively.

In commodities, crude oil prices slipped amid lingering concerns that an OPEC-led production cut has failed to significantly tighten an oversupplied market.U.S. crude shed 11 cents to $49.22 a barrel, heading back towards a one-month low of $48.20 plumbed late last week and Brent LCOc1 was down 16 cents at $51.89 per barrel. Oil was weighed by news that US rigs targeting crude in the U.S. rose for 15th week while output from Libya rebounded. The number of oil rigs operating in U.S. fields advanced to most since April 2015, according to Baker Hughes. Libya’s crude production rebounded to more than 700k b/d as the OPEC member’s biggest oil field and another deposit in its western region resumed pumping after halt. “Higher prices will attract American producers to ramp up production, especially in profitable areas like the Permian basin, and the conflict in Libya was already winding down last week,” says Sheldon Laliberte, a Rotterdam-based crude oil analyst at commodities trader Cofco International Ltd. “I’m structurally bearish oil right now.”

US Event Calendar

  • 8:30am: Personal Income, est. 0.3%, prior 0.4%; Personal Spending, est. 0.2%, prior 0.1%
    • Real Personal Spending, est. 0.3%, prior -0.1%
    • PCE Deflator MoM, est. -0.2%, prior 0.1%
    • PCE Deflator YoY, est. 1.9%, prior 2.1%
    • PCE Core MoM, est. -0.1%, prior 0.2%
    • PCE Core YoY, est. 1.6%, prior 1.8%
  • 9:45am: Markit US Manufacturing PMI, est. 52.8, prior 52.8
  • 10am: ISM Manufacturing, est. 56.5, prior 57.2
    • ISM Prices Paid, est. 67.5, prior 70.5
    • ISM New Orders, prior 64.5
    • ISM Employment, prior 58.9
    • Construction Spending MoM, est. 0.45%, prior 0.8%

DB’s Jim Reid concludes the overnight wrap

Welcome to May. Given that today is either a May Day or Labour Day public holiday in most European countries we’ll be holding back the usual monthly performance review for tomorrow’s EMR. As always though we’ve got the full run through of what is another reasonably busy week ahead at the end. For markets this week we’ve got the double header of a Fed meeting on Wednesday and US employment report on Friday. Barring a big surprise though it’s more than likely that the Fed meeting is a bit of non-event and it’s hard to see the FOMC statement really diverging off course for now. It’s worth noting that there is no scheduled press conference after the meeting either. In terms of payrolls, the emphasis for now in terms of the timing and pace of global hikes in recent months has shifted away from employment and over to inflation and so this release is probably less of a focal point than it has been in the past.

Away from that, this week we’ll also get the final revisions to the April global PMIs which will be closely watched as always. Meanwhile ahead of this Sunday’s second round presidential election in France the two candidates, Macron and Le Pen, are scheduled to take part in a live televised debate on Wednesday evening which is certainly worth keeping an eye on. The last 5 polls all released in the past few days show Macron as holding an average lead of 20pp over Le Pen. This is down marginally from the 24pp average in the first 5 polls after the first round result but still represents a pretty comfortable margin for Macron. As we said this time last week it would take a numerical shock perhaps 5-10 times larger than Brexit or Trump for Le Pen to win. Staying with politics, this week President Trump is scheduled to meet Palestinian Authority President Abbas on Wednesday and Australian Prime Minister Turnbull on Thursday. After Congress averted a government shutdown on Friday lawmakers are also expected to hammer out the necessary legislation this week to keep the government funded for the rest of this fiscal year. In fact overnight news has emerged that Congress has tentatively reached a deal on a $1.1tn bill so worth seeing how that develops today. Meanwhile the situation in North Korea is never too far from the front pages with US National Security Adviser McMaster telling Fox News that the US and its allies need to respond, whether that be through military operations or enforcement of UN sanctions, following the news of a ballistic missile launch in North Korea on Saturday.

Not to be outdone, this week is another fairly big one for earnings with 131 S&P 500 companies and 85 Stoxx 600 companies reporting. Amongst the big names are Apple (Tuesday), BP (Tuesday), Facebook (Wednesday) and Shell (Thursday).

We’ll see if they can continue what has been a decent start to earnings season to date. Indeed the trend so far is one of the strongest on record. In the US we have had reports from about 60% of the S&P 500 and 81% have beat at the earnings line, coming in 6.7% above consensus. This compares to the historical beat of 73% of companies and a median beat of 3.4%. This is made even more impressive by the fact that consensus estimates were not downgraded in the month leading up to earnings season compared to a typical 1% downgrade according to DB’s Binky Chadha. He notes also that the results so far point to 15% EPS growth in Q1 which is the fastest pace since 2011. Our European equity strategists note also that EPS growth of Stoxx 600 companies has accelerated to 23% with reported earnings being 13% above pre-season expectations.

Switching our focus now to the main weekend news. In terms of data, the main focus was on China where yesterday we got the official April PMIs. The data came in a little bit softer compared to March. The manufacturing PMI was reported as falling 0.6pts to 51.2 (vs. 51.7 expected) and the lowest level this year, while the non-manufacturing PMI declined 1.1pts to 54.0 and the lowest since October last year. The majority of markets in Asia are closed today including China so we might have to wait to see if there is much of a reaction tomorrow. Of those open however both the Nikkei (+0.50%) and ASX (+0.29%) have edged higher on thin volumes while US equity futures are also slightly firmer. The Greenback also rebounded from early losses following the spending bill headlines.

In terms of other news to report from the weekend, in Italy former PM Renzi was re-elected as the head of the ruling Democratic Party after securing more than 70% of votes. His reappointment was largely as expected however the margin of victory will likely be seen as giving Renzi a strong mandate ahead of a general election early next year. Meanwhile the latest Brexit development concerns the release of the European Council guidelines which are intended to govern the EU’s Brexit negotiations with the UK (you can find them here nW8NBO) which were unanimously backed following a gathering in Brussels on Saturday. EU President Donald Tusk said following the meeting that “we now have unanimous support from all the 27 member states and the EU institutions, giving us a strong political mandate for these negotiations”. EC President Juncker added that “the negotiations will be difficult and it will be even difficult to retain the unity that we were able to have today”.

A quick wrap-up now of how markets closed out last week. Following a strong run for most of the week, risk assets seemed to run out of steam a bit on Friday. Despite some decent earnings in the tech sector from Amazon and Alphabet the S&P 500 (-0.19%), Dow (-0.19%), Stoxx 600 (-0.18%) and DAX (-0.05%) all finished with what were fairly modest losses still as markets digested a huge amount of economic data released on both sides on the pond. Much of the focus was on the Q1 GDP report in the US which revealed growth of just +0.7% qoq (vs. +1.0% expected). A negative contribution from inventories was cited as significantly weighing on growth along with a decline in government consumption. Private consumption eked out a small +0.3% saar gain. Our US economists estimate also that one reason for the weakness is residual seasonality with government statisticians not properly adjusting the data for normal seasonal variation. They estimate this to be worth 110bps on Q1 real GDP. Rates markets were seemingly more distracted by the ECI print however which came in at a higher than expected +0.8% qoq (vs. +0.6% expected) and the largest quarterly increase since Q4 2007. 10y Treasury yields touched a high of 2.334% intraday following that before settling down to finish just over 1bp lower on the day at 2.281%.

Away from that, in the US we also got the April Chicago PMI which was up 0.6pts to 58.3 in the month (vs. 56.2 expected). The final University of Michigan consumer sentiment reading for April was revised down 1pt to 97.0. Measures of inflation expectations were left unchanged however.

Closer to home in Europe the main focus was on the April CPI report for the Euro area. Headline CPI rebounded four-tenths to +1.9% yoy last month (vs. +1.8% expected) while the core rebounded five-tenths to +1.2% yoy (vs. +1.0% expected) which is the highest since June 2013. Given the timing of Easter – with services inflation accounting for the big jump – we will need to see another month of data to assess how much of the move has been sustained in reality. Away from that, Q1 GDP in the UK came in at +0.3% qoq which was also the same for growth in France. Both were a tenth below expectations.

Over to this week’s calendar now. As highlighted earlier, with it being a public holiday in the UK, Germany and France amongst other countries today, the main focus will be on the US session where there are a number of important releases include the PCE core and deflator readings and personal income and spending reports for March, as well as the ISM manufacturing reading for April and construction spending in March. Tuesday kicks off in Asia with the Japan services and composite April PMIs and Caixin manufacturing PMI in China. Over in Europe all eyes will be on the final April manufacturing PMIs as well as a first look at the data for the periphery and UK. The Euro area unemployment rate will also be released. In the US tomorrow the only data due out is vehicle sales in April.

Kicking things off on Wednesday will be Germany where the April unemployment numbers are due to be released. Shortly after that we’ll get Euro area PPI for March and then the advanced Q1 GDP report for the Euro area. In the US on Wednesday we’ll get the ADP employment change report in April and the final April PMIs and ISM non-manufacturing reading. In the evening on Wednesday all eyes then turn over to the Fed meeting. In Asia on Thursday the early data is out of China with the remaining April Caixin PMIs. In Europe we’ll also get the remaining April services and composite PMIs as well as Euro area retail sales in March and UK money and credit aggregates data. In the US on Thursday the data includes initial jobless claims, Q1 nonfarm productivity and unit labour costs, March trade balance, March factory orders and the final revisions to March durable and capital goods orders. With little of note in Europe on Friday the main focus will be on the US where we’ll get the April employment report including nonfarm payrolls.

Away from the data, this week’s Fedspeak is reserved for Friday when we’ll hear separately from Fischer, Williams and Yellen, as well as a panel debate with Rosengren, Evans and Bullard. Over at the ECB this week we are due to hear from Nouy and Nowotny on Tuesday and Lautenschlaeger, Praet, Draghi and Mersch on Thursday. At the BoJ we are due to hear from Kuroda on Tuesday, as well as receiving the minutes from the BoJ meeting last month. Other important events this week include a Fox interview with US Treasury Secretary Steven Mnuchin today, a meeting between Germany’s Merkel and Russia’s Putin on Tuesday, Wednesday’s live televised debate between French presidential candidates Macron and Le Pen, Wednesday’s meeting between President Trump and Palestinian Authority President Abbas and UK local elections on Thursday. Finally, expect earnings to also be a big focus for markets this week with 131 S&P 500 companies reporting and 85 Stoxx 600 companies reporting. Amongst those reporting are Apple, BP, BNP Paribas, Facebook, Merck, Tesla, Time Warner, Pfizer, HSBC, BMW, Shell and VW.


i)Late  SUNDAY night/MONDAY morning: Shanghai closed  OR / /Hang Sang CLOSED .  The Nikkei closed UP 111.78 OR 0.59% /Australia’s all ordinaires  CLOSED UP .48%/Chinese yuan (ONSHORE) closed UP at 6.8935/Oil DOWN to 49.08 dollars per barrel for WTI and 51.73 for Brent. Stocks in Europe CLOSED OR IN THE RED   ..Offshore yuan trades  6.9000 yuan to the dollar vs 6.8935 for onshore yuan. NOW  THE OFFSHORE IS A LITTLE STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN SLIGHTLY STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN  A LITTLE WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT HAPPY




Trump is angry at North Korea unsuccessful missile test as it warns the situation is bad.

(courtesy zero hedge)

Trump Slams “Disrespectful” North Korea After Unsuccessful Missile-Test, Warns Situation Is “Bad”

Update: President Trump has responded…

North Korea disrespected the wishes of China & its highly respected President when it launched, though unsuccessfully, a missile today. Bad!

*  *  *


Update: President Trump has been briefed. Japanese Cabinet Secretary Yoshida Suga notes that one missile was test-fired and seen to drop within Korean territory – strongly protests the action. US Pacific Command confirms that the missile didn’t leave North Korean territory, didn’t pose a threat to North America. Furthermore, as AP adds, the launched missile was likely a medium-range KN-17 ballistic missile.

*  *  *

As we detailed earlier, South Korea’s Yonhap News reported that North Korea has provoked Trump with yet another ballistic missile test launch, just hours after the US pushed for for more pressure against the Kim Jong-Un regime.

However it did not fly far: the missile, fired from an area just north of Pyongyang toward the Sea of Japan, flew several minutes before breaking apart. AP reports that a US official says North Korean test was likely of a medium-range ballistic missile; it broke up minutes after launch.

The U.S. Pacific Command confirmed a launch took place at 10:30am Hawaii Time near Pukchang airfield, however the missile did not get to the Sea of Japan and never left North Korean territory, suggesting it failed shortly after launch..

This launch comes just hours after U.S. Secretary of State Rex Tillerson warned on Friday that failure to curb North Korea’s nuclear and missile development could lead to ‘catastrophic consequences,’ while China and Russia cautioned Washington against threatening military force.

Tillerson says North Korea “must dismantle its nuclear missile programs” before U.S. “can even consider talks” 

As Reuters reports, Washington has recently lavished praise on Beijing for its efforts to rein in its ally Pyongyang, but Chinese Foreign Minister Wang Yi made clear to the U.N. Security Council it was not only up to China to solve the North Korean problem.

“The key to solving the nuclear issue on the peninsula does not lie in the hands of the Chinese side,” Wang told the 15-member council in remarks contradicting the White House belief that it does wield significant influence.


The ministerial meeting of the council, chaired by Tillerson, exposed old divisions between the United States and China on how to deal with North Korea. China wants talks first and action later, while the United States wants North Korea to curtail its nuclear program before such talks start.


“It is necessary to put aside the debate over who should take the first step and stop arguing who is right and who is wrong,” Wang told the council. “Now is the time to seriously consider resuming talks.”


Tillerson responded: “We will not negotiate our way back to the negotiating table with North Korea, we will not reward their violations of past resolutions, we will not reward their bad behavior with talks.”

North Korea did not take part in the meeting.

It seems we just got one step closer to “a major, major conflict.”

(courtesy zerohedge)


Defiant North Korea Warns Of More Atomic Tests, Will Boost Nuclear Deterrence “To The Maximum”

North Korea’s regime defied an increasingly broader chorus of voices, including the US, Japan, China, South Korea and Russia, saying on Monday that it will continue its nuclear weapons tests, and warned it would “speed up to the maximum” its measures for bolstering its nuclear deterrence in response to the U.S. increasing “aggression and hysteria” against the country, a North Korea Foreign Ministry spokesman says in statement distributed by the official Korean Central News Agency.

“Now that the U.S. is kicking up the overall racket for sanctions and pressure against the DPRK, pursuant to its new DPRK policy called ‘maximum pressure and engagement’, the DPRK will speed up at the maximum pace the measure for bolstering its nuclear deterrence,” a spokesman for North Korea’s foreign ministry said in a statement carried by its official KCNA news agency. North Korea’s “measures for bolstering the nuclear force to the maximum will be taken in a consecutive and successive way at any moment and any place decided by its supreme leadership,” the spokesman said.

North Korea has carried out five nuclear tests and a series of missile tests in defiance of U.N. Security Council and unilateral resolutions. It has been conducting such tests at an unprecedented rate and is believed to have made progress in developing intermediate-range and submarine-launched missiles. The communist nation test-launched a missile on Saturday which Washington and Seoul said was unsuccessful, but which nevertheless drew widespread international condemnation.

U.S. President Donald Trump has said a “major, major conflict” with North Korea is possible over its nuclear and ballistic missile programs, while China said last week the situation on the Korean peninsula could escalate or slip out of control.

Over the weekend, Trump said a “major, major conflict” with North Korea is possible over its nuclear and ballistic missile programs, while China said last week the situation on the Korean peninsula could escalate or slip out of control. As preemptive deterrence, the US has sent the nuclear-powered USS Carl Vinson aircraft carrier group and the Michigan nuclear sub to waters off the Korean peninsula to join drills with South Korea.

A diplomatic row was averted over the weekend, when South Korea said the United States had reaffirmed it would shoulder the cost of deploying the Terminal High Altitude Area Defense (THAAD) anti-missile system to counter the North Korean threat, days after Trump said Seoul should pay for the $1 billion battery. As Reuters reports, in a telephone call on Sunday, Trump’s national security adviser, H.R. McMaster contradicted the president, and reassured his South Korean counterpart, Kim Kwan-jin, that the U.S. alliance with South Korea was its top priority in the Asia-Pacific region, the South’s presidential office said.

While the recent THAAD deployment has drawn protests from China, which says the powerful radar that can penetrate its territory will undermine regional security, and from residents of the area in which it is being deployed, the United States is seeking more help from China to rein in Pyongyang’s nuclear and missile development.

Trump, asked about his message to North Korea after the latest missile test, told reporters: “You’ll soon find out,” but did not elaborate on what the U.S. response would be.

“There is nothing right now facing this country and facing the region that is a bigger threat than what is happening in North Korea,” White House Chief of Staff Reince Priebus told ABC’s “This Week.”



Japan deploys a warship in support of the uSA armada.  For the first time since World War ii, Japan authorizes the use of weapons

(courtesy zero hedge)

Japan Deploys Warship To Support US ‘Armada’, Authorizes “Necessary Use Of Weapons” For First Time Since World War II

In a post-World War II precedent-setting move (under the country’s expanded military doctrine), the Japanese Navy has reportedly deployed a helicopter carrier (and authorized it to use weapons, if necessary), to escort and protect a US supply vessel.

Defense Minister Tomomi Inada ordered the Izumo Maritime Self-Defense Force helicopter carrier to protect a US Navy supply ship, which is heading towards the Pacific to resupply the American armada sent by Donald Trump to keep North Korean nuclear ambitions at bay, sources told Kyodo news.

The Japanese helicopter carrier is set to depart Yokosuka port in Kanagawa Prefecture to Monday to escort the US Navy supply ship from waters off the Boso Peninsula, near Tokyo, to the area off Shikoku, one of the four main islands of Japan. Japanese media reports that the US ship could be delivering supplies to the aircraft carrier – the USS Carl Vinson striking group, that is now conducting a joint exercise with South Korea’s navy in the Sea of Japan. To ensure success of their escort mission, the Japanese seamen have been authorized the “minimum necessary use of weapons,” to deter any attacks amid North Korean threats to sink US ships, the Japan Times reports.

As RT notes,Monday’s Izumo deployment will set a new milestone for the Japanese Navy which has not escorted any military vessels, outside of troop exercises, since the adoption of a pacifist constitution following Japan’s defeat in World War II.  In 2015, Japanese Prime Minister Shinzo Abe and the ruling Liberal Democratic Party passed legislation to allow the country’s military to participate in foreign conflicts, overturning its previous policy of fighting only in self-defense. Since the Japanese constitution only allowed Japanese armed forces to act in self-defense, the legislation reinterpreted the relevant passages to allow the military to operate with overseas allies in “collective self-defense.”

The latest Kyodo News survey showed the Japanese are divided over whether or not to amend the Article 9 of the Constitution, which outlaws war as a means to settle international disputes. According to the figures, 49 percent of some 3,000 mail-in respondents said Article 9 must be revised while 47 percent oppose the change. Some 75 percent of respondents who support the pacifist constitution claimed that Article 9 allowed the country to stay out of world conflicts since World War II.



Japan is dumping a massive amount of uSA treasuries.  If the uSA treasuries at a positive yield compared to Japanese bonds i under why?

(courtesy zero hedge)

Japan Is Dumping A Record Amount Of Foreign Bonds: Here Are The Implications

Back in February, around the time Bloomberg caught up to what we had been discussing for the past year, namely the historic dumping of US Treasurys by offshore official investors (such as central banks and reserve managers, just as the selling had in fact reversed and foreigners had resumed buying once more) we noticed that it was not China but Japan that had emerged as one of the most aggressive sellers of Treasuries following material Mark-to-Market losses on existing TSY holdings, prompting the foremost ex-Fed shadow banking expert Zoltan Poszar to declare the selling “a deer in the headlights moment”.

Fast forward two months, when according to the latest update from Deutsche Bank, Japan’s revulsion to fixed income products has accelerateed, and the Pacific island was a net seller of foreign bonds again in the past week, divesting another $12bn worth of securities. It was not only the third straight week of selling out of Japan, according to MOF data, but more remarkably, the the year-to-date divestment of $66bn in foreign bonds YTD is the biggest since 2002, the first full year of such data is available.

What is prompting the sudden liquidation? According to Deustche, “profit-taking most likely explains Japan’s selling.”

Ten-year Treasury yields declined in April to a lower level than any previous month since the Trump election. In the process, yen cross-currency basis has tightened to levels not seen since January 2016. Japanese investors use the yen basis (or more precisely, their derivative FX forwards) to hedge the currency risk of their coupon flows from non-yen bonds. The basis tightens when there is a drop in demand to swap yen for dollar.

The next chart, which shows the distinctive inverse relationship between cumulative Japanese purchases of foreign bonds and the 3m yen basis, should be useful to anyone still confused by what has been the biggest driver behind the gradual drop and sudden recent spike in the USD-JPY currency basis: it all has to do with Japanese TSY demand, and hedging costs (which we pointed out had risen so high last August it made TSYs and JGBs look equally priced to Japanese investors).

However, it’s not just the Yen basis (and thus relative USD shortage) that is impacted by the Japanese appetite (or lack thereof) for US paper. As the Deutsche fixed income team writes, the lack of love shown by Japanese investors for Treasuries might also be responsible for low 3m Libor fixings and the collapse in Libor/FF spreads.

The details:

In US money markets where Japanese banks also raise dollars, the rates they’ve been paying on commercial paper and certificates of deposit have narrowed vis-a-vis the rates they pay on repos. CP and CD rates are of course used by banks as the main input for daily Libor submissions. Three of the 17 contributing banks to USD Libor are also Japanese. The narrowing of rates Japanese banks pay to borrow dollar using CP/CDs versus repos is further evidence that unsecured funding costs have dropped, which is reflected in the tightening in Libor-FF spreads.

That said, the recent revulsion toward fixed income products out of Japan will probably not last for two reasons.

First, as DB notes, April typically tends to be a month when Japanese investors sell foreign assets as they take profits at the start of the fiscal year. Seasonality would suggest that Japan becomes a buyer again in May, with especially strong appetite for foreign bonds in the July to September period. Consequently, we would look for Libor-FF spreads to find some support in the coming month, especially if Treasury yields become attractive again.

The second reason comes from BofA.

In a recent report, the bank’s FX and rates strategists published a piece summarizing the investment plans of nine Japanese life insurance companies for the first half of their fiscal year (which began April 1st). This is what BofA found:

Over the past few years in particular, insurers have been amassing foreign bonds, and particularly US Treasuries, but that fund flow will probably change if US rate hikes continue. Foreign bond investment is increasingly dependent on yields, FX, and FX hedge costs, and will probably become more fluid. In the United States, rate hikes are expected to continue, so the USD/JPY hedge cost cannot be expected to decline much. As par the plans announced, many will likely be less active in hedging foreign bond than last year. Investment in unhedged foreign bonds is expected to be heavily dependent on levels of FX relative to assumptions (see below), and it is more likely to increase. Domestic yields have sunk due to the BoJ’s negative interest rate policy, making fund management in JGBs difficult and prompting the major insurers to stop selling a number of yen-denominated life insurance products.

In other words, the story remains largely the same in that domestic yields are too low for buying JGBs, and life insurers remain without any other option but to buy foreign bonds (Figure 1). However in a key change foreign bond purchases are likely to take place increasingly on a currency unhedged basis (Figure 2), which has two major implications for both Treasurys and US corporate bonds.

First it reduces the need to reach for yield, which means less buying of BBBs and BBs and longer maturities; however it also means that Treasurys across the curve are suddenly far more attractive to Japanese buyers as investors will no longer need to offset up to 80 bps in hedging costs.

Second Japanese life insurance buying is likely to be less steady and more tactical, depending on interest rates and FX. This means more (less) buying when rates vol is low (high). The FX assumption is that the USD/JPY is in the range 100-125 and will increase toward fiscal year end. That means currently at 111 we are in the middle of the range, but since the dollar is expected to appreciate buying will take place here and increase should the dollar weaken, decrease should it strengthen.

This dynamic, together with recent technicals (recall earlier we showed that Treasury futures traders had just experienced the biggest short squeeze in history), mean that the reflation trade could be further jeopardized due to yet another feedback loop linking a weaker dollar (and thus USDJPY), with lower yields, which in turn leads to even more weakness in the USD, and so n. Ultimately, it will be up to the Fed to break this latest adverse feedback loop, although with the US economy growing at just 0.7% in Q1, it will take a significant leap of faith by Yellen and the “data dependent” Fed that US output will recover by Q2 when the Fed is expected to hike by another 25 bps.


c) Report on China

The global reflation trade has just hit a brick wall’

(courtesy zero hedge)


Global Reflation Trade In Trouble: Chinese Economic Data Plunges To 6-Month Lows As New Orders Dry Up

New Orders for Manufacturing and Services sectors of the economy tumbled to their lowest levels in at least 6 months, weighing down both PMIs to their lowest levels since October 2016. After Q1’s record surge in new credit creation, it appears the rapid tightening in China’s financial conditions is already having an impact on the real economy (as well as the bond and stock market).

As a reminder, for the first quarter, TSF reached a new record high 6.93 trillion yuan – equivalent to the size of Mexico’s economy – and well above last year’s first quarter total. At today’s Yuan exchange rate, China’s credit creation in Q1 amounted to just over 1 trillion US dollars.


And since then PMIs have plunged from multi-year high to six-month lows… and it’s broad-based…


The manufacturing data shows and sudden sharp drop in New Orders, output prices (commodity crash), and


But Services data is even worse – the 4th month of contraction in employment and a drop in doemstic and export new orders…


The global engine of reflation just hit a wall...


The EU wants to punish the UK.

Theresa May should just walk away

(courtesy zero hedge/Mish Shedlock)


“We Are Ready, Together” – EU Leaders Proclaim First Brexit Victory, Agree “Firm” Negotiating Stance

European Union leaders have unanimously agreed the negotiating guidelines for Brexit talks with UK will be “firm and fair,” and will begin on June 8th after the UK general election. As The BBC reports, EU officials said leaders burst into applause as the negotiating stance was waved through, with the EU’s chief negotiator, Michel Barnier, proudly proclaiming: “we are ready… we are together.”

“Unity in action,” European Commission President Jean-Claude Juncker said on Twitter as he announced the 27 EU governments – UK PM Theresa May was not present – rubber-stamped the negotiating strategy in less than 15 minutes at a summit in Brussels.

Policy makers arrived declaring that they were united in their approach to Brexit and that Britain wouldn’t be allowed to be better off outside the bloc than inside it. Prime Minister Theresa May’s government was told it will have to agree to pay a financial settlement and resolve the rights of citizens before the EU allows discussions to turn to a future trade deal.

French President Francois Hollande said there would inevitably be “a price and a cost for the UK – it’s the choice that was made”.

We must not be punitive, but at the same time it’s clear that Europe knows how to defend its interests, and that Britain the UK will have a less good position tomorrow outside the EU than today in the EU.”

Which is very ironic given AFP reported German Chancellor Merkel earlier commented: “no one is allied against Britain.”

The UK response was quick – Brexit Secretary David Davis emailed that:

“There is no doubt that these negotiations are the most complex the U.K. has faced in our lifetimes. They will be tough and, at times even confrontational,”

And, as Bloomberg reports, to Iain Duncan Smith, a former leader of May’s Conservative Party who campaigned for Brexit, Europe’s approach is nothing more than posturing anyway:

“People go: ‘Oh look they are showing resolve and their strength.’ Well, what would you expect?” he told Bloomberg.


“They are about to head in to a negotiation. You know, I have been in business. You always start in your firm position.”

So what happens next?

Brexit timetable:

  • 29 April – EU leaders (excluding the UK) meet in Brussels to adopt Brexit negotiating guidelines
  • 7 May – French voters decide between Emmanuel Macron and Marine Le Pen as their next president
  • 8 June – UK parliamentary election – Brexit talks to start soon after the vote
  • 24 September – German parliamentary election, with Mrs Merkel seeking a fourth term
  • 29 March 2019 – Deadline for ending talks on UK exit terms (any extension requires agreement of all member states)
  • May or June 2019 – European Parliament election (without UK)
  • Ratification – Any Brexit deal requires ratification by all EU’s national parliaments and European Parliament

Of course, this whole charade raises a crucial question – as MishTalk’s Mike Shedlock asks “Brexit Negotiations – Why Bother?”

I keep asking the same question on Brexit and keep coming up with the same answer: Why bother? There is absolutely no reason the UK should start a negotiation given the repeated EU demands. Once again, on Thursday, German Chancellor Angela Merkel repeated the EU’s “not reversible” position.

I have read many articles in the Financial Times and on Eurointelligence expressing optimism on these talks. I fail to see why. Sure, we have been through countless 11th-hour deals with Greece. But the UK is not Greece.

In regards to NAFTA, a reader on my blog commented the other day “You would be surprised at how often parties could have reached a win-win agreement only to part ways fighting instead.”

I responded “I agree with you fully. A critical Brexit opportunity is coming up and I expect it to fail. There is an easy win-win compromise but the desire to punish the UK and set rules in the name of solidarity is too great.”

The EU’s first position is the UK has more to lose. The EU’s second position is that the time factor is on the EU’s side. Both are Fantasyland positions.

This is not a divorce where a one-sided judge sets alimony. This is a treaty that can be canceled at any time by walking away. Unless and until Theresa May lets it be known she will walk away, the EU has the upper hand.

The proper response from UK prime minister Theresa May is to inform the EU there will be no discussion as long as the EU insists on a divorce bill negotiated first.

Only by walking away – showing a willingness to let time expire – does the UK have a chance at reasonable negotiations. Even then, I am not sure what the chance is because the “EU’s desire to punish the UK and set rules in the name of solidarity” likely exceeds the desire to walk away with a win-win situation.



The drunkard, Juncker reportedly slams the “constructive” meeting the UK’s Prime Minister May.  Probably totally intoxicated, we responds that May may be deluding herself and England will have to pay to leave the EU

(courtesy zero hedge)

Juncker Reportedly Slams “Constructive” Meeting With UK’s May: “She’s Deluding Herself”

Having both flexed their rhetorical muscles over the weekend (EU proclaiming their negotiating stance would be “firm” and UK saying the talks would be “confrontational), it appears behind the scenes of the May-described “constructive” meeting with EU’s Juncker was a disaster.

While the UK Government described the meeting on Wednesday as “constructive,” saying the pair discussed other international issues in a “useful working dinner,” a very different account emerged in the Frankfurter Allgemeine (FAZ) newspaper’s report.

Britian’s Independent reports that the seemingly disastrous meeting between Theresa May and  Jean-Claude Juncker has been laid bare in a report that reveals the European Commission President told her: “I leave Downing Street 10 times more sceptical than I was before,” claiming Mrs. May had unrealistic expectations about the length and process of negotiations.

The PM reportedly insisted on discussing other world problems as well as Brexit and refused to accept that the UK owed the EU billions of euros, saying there was no such demand in EU treaties.


She was told in response that the EU was “not a golf club”.


She was told that would not be possible, because the UK would become worse off in the future as a “third country” – a country outside of the EU and the customs union.


The morning after the meeting, Mr Juncker called German Chancellor Angela Merkel and reportedly said Ms May “lived in another galaxy” and was “deluding herself”.

It prompted Ms Merkel to quickly amend a passage in her speech to the EU’s Brexit summit, a speech that would be described as her toughest yet.

“I have to put it in such clear terms because unfortunately I have the feeling that some in Britain still have illusions,” she said.


“But that would be a waste of time.”

Since the release of the FAZ report, a British government spokesperson has said that they do not “recognize the account of the May-Juncker meeting in a German Newspaper.” So it appears the games have begun.




There is a massive panic bank run at  Canada’s largest alternative Mortgage lender and it is on the edge of collapse

(courtesy zero hedge)

Panic Bank Run Leaves Canada’s Largest Alternative Mortgage Lender On Edge Of Collapse

After two years of recurring warnings (both on this website and elsewhere) that Canada’s largest alternative (i.e., non-bank) mortgage lender is fundamentally insolvent, kept alive only courtesy of the Canadian housing bubble which until last week had managed to lift all boats, Home Capital Group suffered a spectacular spectacular implosion last week when its stock price crashed by the most on record after HCG revealed that it had taken out an emergency $2 billion line of credit from an unnamed counterparty with an effective rate as high as 22.5%, indicative of a business model on the verge of collapse .

Or, as we put it, Canada just experienced its very own “New Century” moment.

One day later, it emerged that the lender behind HCG’s (pre-petition) rescue loan was none other than the Healthcare of Ontario Pension Plan (HOOPP). As Bloomberg reported, the Toronto-based pension plan – which represented more than 321,000 healthcare workers in Ontario – gave the struggling Canadian mortgage lender the loan to shore up liquidity as it faces a run on deposits amid a probe by the provincial securities regulator. Home Capital had also retained RBC Capital Markets and BMO Capital Markets to advise on “strategic options” after it secured the loan.

Why did HOOPP put itself, or rather its constituents in the precarious position of funding what is a very rapidly melting ice cube? The answer to that emerged when we learned that HOOPP President and CEO Jim Keohane also sits on Home Capital’s board and is also a shareholder. But how did regulators allow such a glaring conflict of interest? According to the Canadian press, Keohane had been a director of Home Capital until Thursday, but said he stepped away from the boardroom on Tuesday to remove the conflict of interest when it became clear HOOPP might step in as a lender.

Keohane further clarified on Friday that he doesn’t view the Home Capital investment as risky because the pension plan will be provided with $2 worth of mortgages as collateral for every $1 it lends to Home Capital.

“We take comfort from the underlying asset portfolio, so we are not looking at Home Capital as a credit,” said Mr. Keohane in an interview with Business News Network television. He added that a correction in the housing market is not of great concern, since the values of homes would need to plummet by more than 65 per cent for the fund to make no return beyond the value of its principal commitment.

Furthermore, it appears that Canada’s pensioners are priming all other company lenders: Keohane also said that the funding syndicate would rank above Home Capital’s other lenders.

“We have security interest in the collateral we’ve received, so we have the right to sell that collateral if we don’t get paid. And then the balance that’s left over would go to recovery for other creditors.”

The implication is that as long as HCG’s mortgages dont suffer greater than 50% losses, HOOPP’s pensioners should be money good. Of course, if this is indeed Canada’s “subprime moment”, any outcome is possible. As for other lenders, or the prepetition (because there will be a petition here, the only question is when and in what form) equity, that’s some $4 billion in assets that was just stripped from existing collateral.

“The Best Price May Come From Breaking Up The Company”

In any case, the company’s frenzied, emergency measures to stabilize the near-insolvent mortgage lender were not nearly enough, and despite HCG stock posting a modest rebound on Friday between hopes of a rumored sale and a short squeeze, those hopes may be dashed soon because as the Globe and Mail reports, the depositor bank run that gripped Home Capital Group in the past week, only got worse after the company revealed just how precarious its funding situation had become.

First, any hope the company, or rather its investors may have held of a sale, appear dashed. Investment banking sources cited by the G&M said “the best possible price may come from breaking up the company and selling portions of its mortgage portfolio to regional financial institutions.” Which also implies that aside from a few select assets, there is no equity value left, or in other words, any potential buyer is now motivated to wait until HCG liquidates, and then picks off the various assets in bankruptcy court.

There are structural limitations as well: Home Capital currently holds $18-billion in home loans outstanding, “a portfolio that would be difficult to swallow for rivals in the alternative mortgage sector, such as credit unions, small mortgage lenders, Montreal-based Laurentian Bank and Edmonton-based Canadian Western Bank.” These institutions, along with private equity firms, could still bid for pieces of Home Capital, the G&M admits. The only question is why they would do so before a bankruptcy filing.

While one prominent name features on the list of potential buyers, that of PE giant J.C. Flowers whose CEO J. Christopher Flowers earlier this year said he expected to expand the company’s Canadian real estate lending business, Canada’s six big banks are notable for their absence on a list of bidders. The reason is that Home Capital lends money to home buyers who have been turned down by the major banks and none of these institutions is expected to enter the alternative mortgage sector by acquiring the company.

National Bank of Canada proactively called the equity analysts who follow the company this week to say it would not bid on Home Capital after being asked if it was a potential buyer. Needless to say, the big banks would be quite delighted if one of their “bottom picking” competitors would suddenly go bankrupt.

“When you have a bank run people get spooked”

Which brings us to the most imminent risk facing Home Capital Group, and its subsidiary, Home Trust.

Recall, that on Thursday we observed that as concerns about HCG’s viability mounted, depositors were quietly pulling their funding from from savings accounts at subsidiary Home Trust. By Wednesday, when Home Capital revealed it was seeking a $2-billion loan to backstop its sinking savings deposits, shareholders ran for the exits, driving down the company’s share price by 65 per cent on Wednesday alone, and heightening the sense of panic.

On Friday, the company revealed that high-interest savings account balances fell another 36% to $521-million by Friday morning, down by a whopping $293 million from $814-million Thursday and more than $2-billion a month ago.

In other words, had it not been for the emergency HOOPP loan, the company would likely be insolvent as of this moment following what may be the biggest bank run in recent Canadian history; which also explains why the interest rate on the loan is above 20%.

“When you have a run on the bank, people get spooked and they sell and ask questions later,” said a Bay Street investment banker. “It’s investor psychology that takes over.”

As is usually the case, regulator appeared on the scene…. just one day too late.

Canada’s banking industry regulator, the Office of the Superintendent of Financial Institutions (OSFI), has gathered data from other financial institutions this week, both to monitor for signs of a broader depositor panic and to track where funds are moving as they leave Home Trust.


OSFI sent an urgent request Wednesday to several smaller and mid-sized financial institutions and credit unions to provide the regulator with up-to-date information about their savings accounts, according to a source. Specifically, OSFI wanted to know the institutions’ most recent account totals for high-interest savings accounts, as well as data on recent redemptions and current levels of high-quality liquid assets.

The request, which the OFSI said had to be fulfilled “as soon as institutions are able”, is seen as an attempt to take the pulse of the market by tracking where deposits flowing out of Home Capital may be going, and to gauge whether there is any contagion among other institutions. In recent days, some smaller and mid-sized institutions have also struck up early-stage discussions about whether multiple institutions could join together to explore a deal to buy some of Home Capital’s assets.

As for Canada’s big banks, they have already decided that HCG won’t survive. Several months ago, Canaccord Genuity Group Inc. told its financial advisers they could no longer steer investors to high-interest savings accounts at Home Capital or rival alternative mortgage lender Equitable Bank. Client money already placed with either bank had to be moved within 60 days.

Then, after Home Capital revealed in March it was under investigation by the Ontario Securities Commission over its disclosure practices, Canadian Imperial Bank of Commerce introduced a cap of $100,000 per client for purchases of Home Capital guaranteed investment certificates (GICs), which is the maximum level covered by Canada’s deposit insurer.

A spokesperson from Royal Bank of Canada said that, “several weeks ago” the bank introduced a $100,000 cap on Home Capital GICs bought through a full-service broker, although there were no limits for purchases through the firm’s discount brokerage. On Thursday, RBC also released the following entertaining price target scenario: it still has a price target of $8 but fear not, even if RBC is wrong, it promises at least $4/share in residual value. We are not quite as optimistic.

Additionally, late last week, Bank of Nova Scotia said it would stop selling all GICs sold by Home Trust, but said Monday that policy was amended to a limit of $100,000. Bank of Montreal’s brokerage unit also confirmed it has a $100,000 limit on Home Trust GICs but would not say when it went into force.

As G&M adds, the OSC news shook investors, but the panic was heightened as news of the banks’ moves to cap investor deposits slowly seeped through Bay Street in subsequent days, raising concerns that major financial institutions were pulling away from Home Capital.

“We Are Out Of The Position”

When asked if Home Capital could survive this run on its deposits, Keohane – formerly at HOOPP, and the company’s last remaining source of funding – said it was possible. “I think it’s a viable business,” he said. “Their cost of funding is going to go up, which may impact earnings… it’s always a possibility that some other institution may have an interest in taking the entity over. If you can have access to a lower funding cost, I mean, it’s quite an attractive purchase.”

Most disagree, and it is safe to assume that the depositor run won’t stop until every last dollar held at HCG has been withdrawn.

Meanwhile, late on Friday, Home Capital’s second biggest shareholder, Calgary-based QV Investors disclosed that it liquidated its position, selling 8.4 million shares. QV Investors previously held a 12.8% stake in Home Capital. Toronto-based Turtle Creek Asset Management is Home Capital’s biggest shareholder with 13.6% stake.

On Saturday another prominent investor bailed, when Calgary-based Mawer Investment Management sold 2.75 million shares of the alternative lender, CIO Jim Hall  told Bloomberg in a phone interview. “We are out of the position,” Hall said.  Mawer also has reduced holdings in Canadian alternative- lender Equitable Group.

All these investors will now be forced to explain to their LPs how they missed a ticking timebomb which so many, this website included, had warned about for year.

Home Without The Capital Group

As for Home Capital Group, or more aptly Home Without The Capital Group, the future is bleak, and a bankruptcy liquidation appears the most likely outcome. What impact such an event will have on the broader Canadian housing market remains to be seen. Last week, shortly after HCG’s rescue loan announcement stunned the otherwise sleep Toronto tape, the Canadian housing regulator warned of “strong evidence of housing-market problems.” Looking back in a few months, that may prove to be a vast understatement.



A good commentary from Kaitlin Last as she describes Toronto’s subprime debt time bomb

(courtesy Last/

Attention Turns To Toronto’s Subprime Debt Time Bomb

Authored by Kaitlin Last via,

Canadian real estate values continue to soar, and a record number of buyers are piling into risky loans. According to the Bank of Canada (BoC), and the Ministry of Finance (MoF), high ratio mortgage borrowers are extending themselves to the limit. While we covered how concerning this trend has become in Toronto, it’s not just isolated to that city. It’s a trend that’s growing across all Canadian urban centers.

High Risk Mortgages

People taking out high-ratio mortgages combined with incomes too low for the property value, is spreading across Canada. A high-ratio mortgage is defined as a mortgage where the buyer leaves less than a 20% downpayment. The BoC and MoF have both expressed concern when high-ratio mortgages are paired with high income-to-loan ratios. The amount of high risk buyers is increasing as markets reach dizzying heights, especially in urban areas.

Vulnerability isn’t just the buyer’s ability to keep devoting a high percentage of their income to carrying payments. Since the number of these buyers are accelerating as prices get higher, they’re at a greater risk during a correction (not even a crash). Something as small as a 5% drop in value and many of these mortgages would be underwater. Underwater is industry slang for the buyer has 0, or less than 0, equity in their home. If this happens it would mean already broke homeowners would have to pay to get rid of their home. Combine that with a higher interest rate at renewal, and you can imagine the mayhem that can unfold.

Toronto and Vancouver Have The Highest Totals

High-ratio mortgages with low income levels is a growing trend in Canada, but Toronto and Vancouver take it to the next level. Across Canada, 18% of high risk mortgages have extremely low incomes for the homes they’re in, an increase of 38% over two years. Despite Vancouver’s insanely high prices, Toronto still tops the risky business of subprime borrowers. Toronto takes the top spot with a 53% increase during the same period, bringing their total to 49%. Coming in second is Vancouver which had a 25% increase over the past two years, bringing their total to 39%. These two cities are moving much faster than the average for the country, and they’re getting to dangerously high levels.

Source: Ministry of Finance (Canada), Bank of Canada’s Calculations.

Trend Is Growing Across Canada

Although Toronto and Vancouver take the cake, this trend is also growing across Canada, albeit with a lower impact. Over the past 2 years, Calgary saw a 23% increase of high ratio mortgages with at risk-income ratios, totalling 32%. Montreal saw a 30% increase over the past two years, bringing their total to 13%. Ottawa-Gatineau saw a massive 62.5% increase, bringing their total to 13%. Meanwhile, quiet little Halifax saw a 40% increase, a total of 7%. So while the issue is growing across Canada, it hasn’t reached the crisis heights of Toronto and Vancouver yet.

While Toronto and Vancouver are leading the market for risky mortgage debt, they aren’t alone. Canada has dodged the real estate commodity cycle for almost 30 years. That has produced a whole generation of people that have no idea that real estate is a cyclical market. This irrational exuberance, and the thoughts that this market will never end is placing all homeowners in a precarious situation.


Oil breaks into the 48 dollar column again after Libya’s output surges

(courtesy zero hedge)

Oil Tumbles To $48 Handle Again After Libyan Output Surge

The dead cat bounce of early April is officially dead… again.

Following headlines proclaiming Libyan crude output exceeding 760k barrels per day – the highest since Dec 2014 – WTI prices have broken back beloe $49 and erased the entire move post-OPEC deal last year…

Oil will no doubt head southbound as OPEC countries are increasing production not cutting back

(courtesy zerohedge)

The Four Charts That Prompted An Oil Analyst To Declare The OPEC Deal A Failure

Two months ago we first suggested that OPEC may be fabricating data about its production cuts – and certainly overstating the “success” of the Vienna production cut deal – by looking at the rising Chinese oil imports, and by extension, rising oil deliveries by OPEC nations.

As JPMorgan wrote back in February, while IEA estimated the OPEC crude oil production fell by 1mbd to 32.06mbd in January, suggesting an initial compliance of 90% with the output agreement reached end 2016, the latest oil supply details released by China customs today suggest a reduction of supplies was not yet seen by China, the world’s largest oil importer.

In fact, quite the contrary: crude oil shipments from the 11 OPEC nations committed to a 1.2mbd output cut increased by 28% yoy, and more importantly, rose 4% from December 2016 – in a time when production was supposed to be declining – to 4.6mbd in January, accounting for 57% of China’s total oil imports.

Fast forward two months when Reuters analyst Clyde Russell looks at the same data and asks whether “it is time to call the crude oil output cuts by OPEC and its allies a failure?”

Echoing what we cautioned two months ago, Russell said that “certainly there is an increasing disconnect between the rhetoric of OPEC and other producers cutting output on the one hand and the reality of a well-supplied crude oil market and mixed signals on the level of global inventories on the other.”

The paradox: on one hand, OPEC and non-OPEC producer nations, including Russia, have been touting the high compliance with the agreement to reduce output by 1.8 million barrels per day (bpd) from January to June. Having failed to boost the price of crude sustainably above $50, OPEC is now set to prolong the deal for another six months, with the announcement expected at a meeting scheduled for May 25. Needless to say, Russell is skeptical that merely extending what (N)OPEC tried before for another six months, will succeed.

When the deal took effect from Jan. 1, Brent traded in a narrow range for two months, before falling sharply in early March, but the support level of $50 held, with only a brief foray to an intraday low of $49.71 on March 22.


But Brent is once again testing the bottom of the post-agreement range, dropping to as low as $51.42 a barrel on Monday, as scepticism mounts over the ultimate effectiveness of the OPEC measures.

And it is here that Russell notes that more important for determining the longer-term price outlook is to look at the amount of oil available and the levels of inventories, something we have been skeptical about since the Vienna summit, and certainly since our February article.

The math is simple: for OPEC and its allies to achieve their aim of sustainable higher prices, both global supplies and inventories have to be reduced, the so-called market re-balancing. Yet “it’s here that the main evidence of the failure of the OPEC agreement is to be found.

As the charts below demonstrate, oil shipments by tanker around the globe were at a record high in April, according to vessel-tracking data compiled by Thomson Reuters Supply Chain and Commodity forecasts. As of last week, the data shows that an average 50.3 million barrels per day (bpd) of crude is being shipped in April, up from the previous record 46.1 million bpd in January. While the data excludes crude moved by pipelines, it’s extremely unlikely that pipeline supplies have been cut by more than seaborne cargoes have increased.

Worse, the data also show that Saudi Arabia, which undertook to make the largest output cut among those producers party to the November deal, is actually increasing tanker shipments in recent months, to levels well above those that prevailed late last year.

In short, OPEC may be producing less – if only believes the OPEC-sourced data – but actual global deliveries of oil have never been higher!

And here are the four charts in question which prompted Russell to declare the OPEC deal a failure.

Some more details: Saudis are expected to ship 8.29 million bpd in April, up from 7.94 million bpd in March, 7.73 million bpd in February and 7.83 million bpd in January. Furthermore, Chinese customs data released last week showed that the world’s biggest crude importer received higher supplies from Saudi Arabia, Russia, Angola, Iran and Iraq in March than it did the previous month.

Repeating virtually verbatim what we said two months ago, Reuters then goes on to say that “the Chinese numbers don’t exactly fit in with the narrative of successful output cuts, rather they show the opposite.”

For those confused, what the above means is that a picture that emerges in which there is a gaping difference between reducing output and actually cutting supplies. As a result, while it is likely the case that OPEC and its allies have been in high compliance with their agreed output cuts, but this hasn’t necessarily translated into significantly lower shipments of crude oil.

Then there is, of course, the shale wildcard: US producers outside the agreement have been increasing production and shipments. The plentiful supply of oil can be seen in global inventories, with the International Energy Agency saying recently that inventories in industrialised countries were still 10 percent above their five-year average.”

There is some good news for oil bulls: “barrels stored in less visible places, such as in developing nations and in floating storage, do appear to be drawing down, but there is a question mark over whether this is happening fast enough to provide a basis for higher oil prices in future months. But for OPEC and its allies to achieve lasting success, they will actually have to reduce the amount of crude being shipped.”

So far, not only has that not happened, but the Vienna deal participants have been aggressively boosting deliveries in behind the scenes attempts to capture market share from each other.

In a separate report from Bloomberg, according to the head of research at Abu Dhabi Investment Authority, Saudi Arabia – the world’s biggest crude exporter – has been rapidly losing market share to Iraq and Iran as a result of OPEC’s agreement to curb supplies to bolster prices,  “If you’re talking about winners, you can count Iran and Iraq,” Christof Ruehl said Wednesday at a conference in Dubai.

OPEC agreed to production limits for most of its members at a meeting in November and brought 11 other nations on board with the deal in December. Saudi Arabia, OPEC’s biggest producer, agreed to cut output by 486,000 barrels a day while Iraq said it would cut 210,000 barrels a day. Iran was permitted to increase output by 90,000 barrels a day, according to the OPEC accord.

Ironically, US shale production has increased by almost exactly the amount that Saudi production has declined by, suggesting that Saudi Arabia is losing market share not only to Iraq and Iran, but also to US oil producers.

Saudi Arabia knew it would lose share because Iran’s production was on the rebound, said Robin Mills, founder of Dubai-based consultant Qamar Energy. “The Saudis agreed to production cuts at a time when Iranian production was at a high.”


The struggle over market share is most pronounced in Asia, according to Mills and Edward Bell, commodities analyst at Dubai-based lender Emirates NBD PJSC. Iran and Iraq increased crude sales to China last month, while Saudi Arabia slipped behind Russia and Angola as the largest suppliers to the nation, data released Tuesday by the General Administration of Customs show.


“The Saudis are losing out because other countries are able to squeeze out more production,” Bell of Emirates NBD said. Saudi Arabia is cutting crude pricing to Asia to hold on to its share, Bell said. The kingdom will likely release its official crude pricing for June next week, with most other regional producers following.

The bottom line, according to Russell, is that it doesn’t matter how much you talk about reducing output or drawing down producer inventories, what ultimately matters for the price is the amount of crude that buyers can access. And right now, the data on crude flows indicates that the OPEC deal is failing, even as Saudi Arabia is facing increasing market share losses, which will sooner or later prompt the kingdom to aggressive undercut its competition once prices fail to rebound materially, sending the price of crude tumbling once again, as OPEC goes back to square one in a world where the real question market is not the future of supply, but what happens to demand.




Violent riots break out in Brazil over the weekend as it’s first general strike in 21 years paralyzed the nation

(courtesy zero hedge)

Violent Riots Break Out In Brazil As First General Strike In 21 Years Paralyzes Nation

Less than a year after former president Dilma Rouseff was impeached and ousted for corruption, Brazil’s economy continues to deteriorate at an alarming pace, and on Friday Brazilian police tear-gassed demonstrators and rioters burned buses in the violent conclusion of a general strike – the first in 21 years – that shut down transport, schools and banks in protest against the government’s austerity reforms.

As Reuters reports, what started off as a peaceful protest by several thousand people in central Rio in the afternoon turned violent, with small groups smashing bank windows, erecting barricades and setting fires, including torching at least eight buses.

Buses burn during clashes between demonstrators and riot police in Brazil

The police responded with barrages of rubber bullets and tear gas, which covered Rio in a suffocating fog that reached all the way to the top floors of local office buildings.

Tram lines blocked in centre of Rio de Janeiro.


PM dispersa ato diante da residencia de Temer


Similar disturbances were observed in Sao Paulo, the country’s economic powerhouse, where a crowd attempted to march to the private residence of President Michel Temer and clashed with police, who also fired rubber bullets and stun grenades. Protesters hurled rocks, set fires, smashed street lamps and threw concrete blocks into the center of the avenue.

Rio de Janeiro: Na rua Primeiro de Março, um grupo de manifestantes ateia fogo em cadeiras e tapumes. (@erickdau)

While earlier in the day, Brazil reported that its labor market deteriorated even further in March, with the unemployment rate surging to 13.7%, resulting in a record 14.2 million unemployed workers and up from 11.1mn a year ago…

… what prompted the ugly scenes, associated more frequently with Brazil’s imploding neighbor Venezuela, were protests at the government’s proposed reforms, especially a steep cut to the generous pension system.

Rio de Janeiro: Policiais do Batalhão de Choque atiram bombas contra os manifestantes na Av. Rio Branco.

The protests came at the close of a day in which unions and leftwing groups managed to paralyze much of Brazil. The metro systems in Sao Paulo, the capital Brasilia and Belo Horizonte, another major city, were shut down. Curitiba, where Brazil’s huge “Operation Car Wash” anti-corruption investigation is based, was left without bus services, as was the big northeastern city of Recife, local media reported according to AFP.

A demonstrator takes part in a protest against Brazils proposed reform

According to the Forca Sindical union, at least 40 million people had responded to the call for a 24-hour nationwide strike which started after midnight on Friday, ahead of a long weekend with Labor Day on Monday. The strike had the greatest effect in heavily unionized parts of the economy, including transportation, banks, schools, the post office and some hospital staff. The metallurgical workers’ union said 60,000 members downed their tools.

The strike had a large impact on auto production in Sao Paulo, which concentrates the bulk of the industry in Brazil. General Motors, Ford Motor, Toyota and Daimler all halted production, according to company officials, unions and market analysts. Union officials said most workers at state-run oil producer Petroleo Brasileiro, known as Petrobras, joined the strike, but the company said the stoppage had no significant impact on output. Iron ore miner Vale SA said the strike did not affect its operations.

Although a spokesman for the National Civil Aviation Agency told AFP that operations at the airports are functioning normally, there were multiple reports of delayed and canceled flights.

“We can’t keep quiet anymore with a government that isn’t legitimate, which wasn’t elected to dismantle the rights of workers,” said Ricardo Jacques, a striking bank employee in Sao Paulo.

Assuring that things will get worse before (if) they get better, Temer’s center-right government has said that reforms are needed to save Latin America’s biggest economy from further damage after more than two years of deep recession. Temer criticized the “unfortunate and serious incidents” during the protests and the curtailing of “freedom of movement for citizens.”

Members of Brazil’s Movimento dos Sem-Teto (Roofless Movement) throw
wooden tables onto a burning barricade

Deeply unpopular President Temer also said Brazil’s economy faces a meltdown without severe fiscal discipline and belt tightening, and while he may be right, he also may not be around long enough to supervise the outcome of his just as unpopular reforms. As noted previously, his most controversial measure has been to curb pension costs by raising the retirement age to 65 for men and 62 for women, up from the current 60 and 55. The government is also pushing for a liberalization of labor laws and has succeeded in getting Congress to pass a 20-year freeze on spending increases.

Meanwhile, as we expected when discussing the Rouseff impeachment, the popular mood is fast turning against her replacement, Temer, whose days in charge may now be numbered.

As Reuters adds, Friday’s strikes were one of the biggest protests to hit the Temer administration since he took over from impeached president Dilma Rousseff last August.

Adding fuel to the fire, Rouseff’s predecessor and mentor, the former leftist president Luiz Inacio Lula da Silva, praised the strike, Valor Economico website said.


“This is a clear demonstration that people are determined to paralyze (the country) in protest against the government’s stripping away of their rights,” the site quoted him as saying.

Still, not all Brazilians agree. Marcelo Faisal, a landscape architect travelling from Sao Paulo to Rio, said “reforms need to take place” and that the general strike did not live up to the hype.

“They didn’t succeed in getting people to adhere to the strike, so they burned tires to block some points here and there, which just causes some disruption,” he said. The economy, for years reliant on China’s insatiable commodity appetite, shrank 3.8% in 2015 and is expected to have contracted a further 3.5 percent in 2016, the most painful recession on record; many have called it a depression.

: Main access road to Guarulhos Airport is blocked by protesters in . 📷@MidiaNINJA


And as the economic collapse accelerates, the political situation remains in turmoil as the economic depression is dovetailing with the country’s worst corruption crisis in history. The infamous “Car Wash” probe has uncovered a massive network of embezzlement and bribery at the heart of Brazil’s economic and political elite.

Having already taken down the previous regime, it threatens to do the same to the current government.

In a stark example of how the revolution eats its own, last month the former speaker of the lower house, Eduardo Cunha, who drove the successful impeachment of former President Rousseff and who was forced from his position as speaker in July and was arrested in October on accusations he received millions in bribes from the purchase of an oil field in Benin by state-controlled oil company Petróleo Brasileiro SA, was sentenced to more than 15 years in prison for corruption, making him the highest-profile political conviction yet in the “Operation Car Wash” scandal.

Former speaker of Brazil’s Lower House of Congress, Eduardo Cunha (C),
is escorted by federal police officers

Meanwhile, eight of Temer’s ministers – or nearly a third – are under investigation and the president himself has been accused of chairing a meeting in which his PMDB party negotiated a $40 million bribe from the Odebrecht engineering conglomerate. Temer and his allies deny any wrongdoing. Lula and a host of other leftist figures are also targets of anti-corruption prosecutors.



Maduro hands out free homes and hikes minimum wage to counter the angry protest sweeping the nation

(courtesy zero hedge)

Maduro Hands Out Free Homes, Hikes Minimum Wages To Counter Angry Protest Wave

Days after Venezuela was rocked by the worst riots in over a year, with nearly 30 people dying in April from violence related to protests demanding the departure of Maduro who has again been accused of violating democratic norms, Maduro responded by hiking salaries and handing out free homes as he tries to counter a strengthening protest movement calling for his removal.

According to AP, Maduro said on his Sunday TV show that the minimum wage will rise 60% starting May 1. Workers will earn at least 200,000 bolivars per month including food subsidies. Sadly, in light of Venezuela’s hyperinflation, that amount to less than $50 at the black market exchange rate.

It’s the third wage increase this year as triple-digit inflation erodes workers’ savings. AP also notes that Maduro watched as authorities in several states handed over the keys to hundreds of new apartments.

Separately, Bloomberg reported that Venezuelans were gearing for demonstrations to mark International Workers’ Day, even as last month’s clashes prompting Pope Francis to renew his call for a negotiated solution to the crisis embroiling the South American country. The opposition will rally from 26 points across Caracas on a hot, rainy day in a march being promoted on social media with the hashtag “the people rebel against the coup.”

Subway stations across Caracas were closed, as the government traditionally tries to prevent protesters from reaching the government center in the downtown area. President Nicolas Maduro will speak at a pro-government march there, and he has promised major announcements this afternoon.

As Bloomberg adds, opposition leaders are seeking to maintain momentum that brought over a million supporters into the streets in marches last month to protest what they said was an illegal power grab by the Supreme Court to curtail the power of the National Assembly they control.

Congress president Julio Borges warned Sunday that Maduro would try to further usurp Congress’ authority. “It would be a continuation of the coup, Cuba style” he said at a press conference, adding that the opposition had expressed their concerns to other countries in the region. “Maduro is trying to put out a fire with gasoline.”

Also on Sunday, Pope Francis appealed at a Mass in Vatican City for an end to violence that he said is “exhausting the people.” Previous marches and anti-government protests over the past month have resulted in a least 29 deaths. The papal statement comes after a Vatican-sponsored dialogue last year failed and many opposition leaders criticized the process, saying it merely bought the government time and extended the crisis.

The governments of Argentina, Brazil, Chile, Colombia, Costa Rica, Peru, Paraguay and Uruguay agreed with the pope’s call. Such a deal would end violence, uphold the rule of law, free political prisoners, restore the powers of the National Assembly and define an electoral schedule, according to a press release sent Sunday evening from Argentina’s Foreign Ministry.


Venezuela’s Foreign Minister Delcy Rodriguez, who last week said the country would pull out of the Organization of American States, slammed the statement from the regional bloc. “Every statement that supports opposition factors in Venezuela fuels the coup-plotting and violence and tries to not recognize a legitimate government,” she wrote in a post on her Twitter account.

Ahead of a potential clash between the two protests, the battle extended into social media, with the opposition alliance posting pictures of protesters facing tear gas-clouds. Pro-government accounts, meanwhile, showed supporters dressed in red attending rallies that featured an inflatable balloon of the deceased former President Hugo Chavez.

Jose Andres Rauseo, a 66-year-old lawyer from the largely anti-government Bello Monte area, said clashes erupted there, with tear gas and national guard troops blocking the way. Protesters chanted “Dictator out, Maduro out,” and waved flags, he said.


“We brought provisions including vinegar and Maalox to deal with the gas, because we know the repression will come. We don’t know where the march will end, but we’re prepared to keep going,” he said.

Last week opposition lawmakers unveiled demands that included the designation of an impartial electoral board, early presidential elections, an immediate date for overdue regional elections, government authorization to accept humanitarian aid shipments of food and medicine, respect for the autonomy of the opposition-controlled National Assembly, the release of all political prisoners, and the disarmament of pro-government groups known as colectivos. It is unlikely that Maduro will meet any of the demands.


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



GBP/USA 1.2914 UP .0053 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED


Early THIS MONDAY morning in Europe, the Euro ROSE by 5 basis points, trading now ABOVE the important 1.08 level  RISING to 1.0896; 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     / Hang Sang  CLOSED POINTS OR /AUSTRALIA  CLOSED UP .48% EUROPEAN BOURSES CLOSED OR IN THE RED 

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

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

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

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

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

The NIKKEI: this MONDAY morning CLOSED UP 113.78 POINTS OR 0.59%

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


Gold very early morning trading: $1262.57


Early MONDAY morning USA 10 year bond yield: 2.30% !!! UP 2 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.968, UP 1  IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 99.09 UP 4  CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING


And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 3.545%  up 0  in basis point(s) yield from FRIDAY 

JAPANESE BOND YIELD: +.014%  DOWN 2/5   in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.648%  UP 0  IN basis point yield from FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.282 UP 0  POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 63 points HIGHER than Spain.





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

Euro/USA 1.0912 UP .0021 (Euro UP 21 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.71 UP  .258 (Yen DOWN 26 basis points/ 

Great Britain/USA 1.2918 DOWN 0.0026( POUND DOWN 26 basis points)

USA/Canada 1.3665 UP 0.0013(Canadian dollar DOWN 13 basis points AS OIL FELL TO $48.67


This afternoon, the Euro was UP by 21 basis points to trade at 1.0912


The POUND FELL BY 26  basis points, trading at 1.2918/

The Canadian dollar fell by 13 basis points to 1.3666,  WITH WTI OIL RISING TO :  $48.67

The USA/Yuan closed at 6.8935/
the 10 yr Japanese bond yield closed at +.014% DOWN 2/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 2 IN basis points from FRIDAY at 2.325% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.01 UP 4  in basis points on the day /

Your closing USA dollar index, 99,05 UP  1  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 MONDAY: 1:00 PM EST

London:  CLOSED 
German Dax :CLOSED 
Paris Cac  CLOSED 
Italian MIB: CLOSED 

The Dow closed DOWN 27.05 OR 0.13%

NASDAQ WAS closed UP 44.00 POINTS OR 0.73%  4.00 PM EST
WTI Oil price;  48.67 at 1:00 pm; 

Brent Oil: 51.33 1:00 EST




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

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


BRENT: $51.38


USA 30 YR BOND YIELD: 3.000%

EURO/USA DOLLAR CROSS:  1.0899 up .0009

USA/JAPANESE YEN:111.81  UP 0.334

USA DOLLAR INDEX: 99.15  up 10  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2886 : down .0056  OR 56 BASIS POINTS.

Canadian dollar: 1.3679  UP .0030 (CAN DOLLAR DOWN 30 BASIS PTS)

German 10 yr bond yield at 5 pm: +.317%


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


Nasdaq Flies As Risk Dies And Traders Buy The Bank-Break-Up Dip

Remember this…


Volume was dismal as most of the world celebrated May Day…Lowest volume of 2017 (and 40% below 2016’s May Day volume)


The meltup in the biggest tech stocks continues, driving Nasdaq above 6,100 to record highs as The Dow sinks…ugly close for Dow and S&P… Dow closed -26pts (AAPL created +23pts today)


Just remember, it’s different this time…


It’s fun-durr-mentals…


Oh and AAPL earnings will help, right?


Since Trump spoke to Congress, The Nasdaq is the only major US index in the green as it has melted up in recent days…


And what sent Nasdaq soaring to 6,100 today? Simple – the death of risk…


As VIX crashed to its lowest intraday since Feb 2007…


Banks were briefly battered by Trump’s comments on breaking them up, but dip-buyers scrambled quickly…though failed to hold into the close


Treasury yields were all higher on the day, despite Friday’s terrible GDP data and today’s dismal spending and PMI/ISM data… (and steepened notably)


30Y Yields rallied back to 3.00% by the close…


Oh – and as a reminder of just how bad it is…this morning’s data, it has collapsed to the lowest level since Oct 2016.


The USD Index ended the day unchanged with AUD strength offsetting JPY and GDP weakness


WTI and RBOB tumbled further today…


Gold was hammered shortly after the London Fix (which did not occur because London is closed today)…


Gold broke below its 200DMA but perhaps more notable is Gold’s outperformance of silver to unwind all loses since Brexit…



So much for an increase in USA GDP:  spending growth stagnates.  Consumers refuse to spend as the savings rate climbs to 7 month highs

(courtesy zero hedge)

Despite Trumphoria, US Personal Spending Growth Stagnates As Savings Rate Hits 7-Month Highs

Despite the exuberant hype sourrounding Trump’s election, Americans appear to have once again turned to saving – not spending – as the savings rate jumps to 5.9%, the highest since August.


Income growth has slowed…


But Spending has now gone nowhere for 2 months…

But Americans’ spending habits are starky different…

  • Spending on goods down $28.3 billion
  • Spending on services up $34 billion

As the post-Trump world for Americans is one of saving… not spending…


Not exactly what the ‘soft’ data surge in sentiment predicted eh?

The second bit of bad news: ISM manufacturing hits 54.8 in April from 56.4 with construction spending down 0.2%.  That sent gold higher only to be repelled by the crooks.

(courtesy Lauren Thomas/CNBC)

ISM manufacturing index hits 54.8 in April; Construction spending down 0.2% in March

Lauren Thomas

Economists expected the U.S. manufacturing index to fall to 56.4 in April after hitting 57.2 in March, according to Thomson Reuters consensus estimates.

A reading above 50 percent indicates the manufacturing economy is generally expanding; below 50 percent indicates it’s generally contracting.

Elsewhere, the Commerce Department announced March U.S. construction spending on Monday, which economists expected to grow by 0.4 percentage points for the month, according to Reuters estimates. Spending last climbed by 0.8 percentage points in February, its highest level since April 2006.


Inflation targets are following below the levels wished by the Fed.  Then why is a rate hike in June still remaining at 70%(courtesy zero hedge)

Fed’s Favorite Inflation Indicator Slumps Back Below Mandate – What Now Janet?

Dear Janet, US economic growth is the weakest in 3 months and your favorite inflation indicator is below mandated levels – why are June rate-hike odds still at 70%?

So there’s this… (worst economic growth in 3 years)



And today there’s this… (inflation below your mandate)


So why are you still jawboning this?

After A Disastrous Quarter, Atlanta Fed Now Expects Q2 GDP To Hit 4.3%

Call it deja vu all over again.

Four months after the Atlanta Fed started off its Q1 GDP nowcast at 2.5%, then raised it just shy of 3.5% before eventually closing the books at 0.2%, slightly below where the BEA reported Q1 GDP, moments ago the Atlanta Fed released its initial GDP forecast for Q2, and it will probably not come as a surprise to anyone that it just happens to be a tad optimistic.

According to the regional Fed, best known for its initial euphoria, and subsequent tapering and accuracy, “the initial GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 4.3 percent on May 1. The advance estimate of first-quarter real GDP growth released by the U.S. Bureau of Economic Analysis on April 28 was 0.7 percent, 0.5 percentage points above the final GDPNow model nowcast released on the previous day.”

And this is how the Fed sees the breakdown in various components:

  • PCE contribution est. at 2.22%
  • Nonresidential equipment investment contribution est. at 0.58%
  • Nonresidential intellectual property products investment contribution est. at 0.17%
  • Nonresidential structures investment contribution est. at 0.15%
  • Residential investment contribution est. at 0.32%
  • Government contribution est. at -0.01%
  • Net exports contribution est. at -0.15%
  • Change in inventory investment contribution est. at 0.98%

Well, if the cheerful Fed hopes to be accurate this time around with its initial estimate, US consumers better start spending fast. Then again, if past is prologue, expect this number to end roughly 50% lower in three months when the first advance Q1 GDP report is released.


The banks will not like the following:  trump is “open to breaking up the big banks”

he doesn’t realize the derivative problems that this will create

(courtesy zero hedge)

Bank Stocks Tumble After Trump Says “Open To Breaking Up Big Banks”

What Treasury Secretary Mnuchin giveth, President Trump taketh away…




As Bloomberg reports, President Donald Trump said he is actively considering breaking up giant Wall Street banks, giving a push to efforts to revive a Depression-era law separating consumer lending and investment banking.

“I’m looking at that right now,” Trump said Monday in an interview with Bloomberg News in the Oval Office. “There’s some people that want to go back to the old system, right? So we’re going to look at that.”

The reaction is clear as the machines dump the Big banks…


(courtesy zero hedge)

Congress Reaches Deal To Keep Government Open Through September

Update: Senate Democratic Leader Chuck Schumer seems very positive on the bipartisan agreement too (but can’t resist a few jabs at President Trump)…

“This agreement is a good agreement for the American people, and takes the threat of a government shutdown off the table.


The Bill “ensures taxpayer dollars aren’t used to fund an ineffective border wall, excludes poison pill riders, and increases investments in programs that the middle-class relies on, like medical research, education, and infrastructure”


“Early on in this debate, Democrats clearly laid out our principles..” and the deal “reflects those principles.”

*  *  *

As we detailed eariler, one of the biggest political overhangs facing the market may have just been removed, when moments ago AP and other newswires reported that House Democrats and Republicans are said to have reached a $1 trillion spending deal to keep the government – which is currently operating thanks to a last minute one-week stopgap measure enacted on Friday – open until October 1.

One of the biggest political overhangs facing the market may have just been removed, when moments ago AP and other newswires reported that House Democrats and Republicans are said to have reached a $1 trillion spending deal to keep the government – which is currently operating thanks to a last minute one-week stopgap measure enacted on Friday – open until October 1.

BREAKING: Congressional Republicans, Democrats reach agreement on $1T measure to fund government until Oct. 1.



According to Washington Post, negotiators from both parties reached an agreement on a spending package to fund the government through the end of September, alleviating fears of a government shutdown later this week. Congress is expected to vote early this week on the package, with the bipartisan agreement expected to include increases for military spending and border security, a major priority for GOP leaders in Congress.

The agreement follows weeks of tense negotiations between Democrats and GOP leaders after President Trump insisted that the deal include funds to begin construction of a wall along the U.S. border with Mexico. Trump eventually dropped that demand, leaving Congress to resolve lingering issues over several unrelated policy measures.

There is a non-trivial chance the Sunday night announcement is merely a trial balloon, because as the WaPo adds “the details of the agreement were not yet clear on Sunday night” which would suggest that there is a high likelihood that whatever tentative deal was reached, ultimately falls through.

For now, however, this is good news, and it has sent both the pound and yen sliding, and the dollar rising on hopes that politics will not be a major risk factor for at least 5 months.

House Republicans have struggled in recent weeks to keep their members focused on spending as White House officials and conservatives pressed leaders to revive plans for a vote on health-care legislation. The health-care fight became tangled last week with the spending talks as leaders worried that forcing a vote to repeal the Affordable Care Act risked angering Democrats whose votes are necessary to avoid a government shutdown.

Another possible threat is that the GOP pushes on with Obamacare repeal, a gambit which may prompt Democrats to withdraw any support they voiced for Sunday’s “deal.”

GOP leaders worked last week to determine if there are enough votes in the House to pass a revised health-care bill brokered by the White House, the head of the conservative House Freedom Caucus and a top member of the moderate Tuesday Group. House Speaker Paul D. Ryan (R-Wis.) and his top lieutenants announced Thursday that they did not have sufficient votes to be sure the health-care bill would pass but vowed to press on.


“We’re still educating members,” House Majority Leader Kevin McCarthy (R-Calif.) told reporters after a late-night health care meeting last week. “We’ve been making great progress. As soon as we have the votes, we’ll vote on it.”

And now, in the spirit of trial balloons everywhere, we await the denial from yet other “unnamed sources.”


The deal:

(courtesy zerohedge)

Why Democrats Are Delighted With The Republican Spending Bill

Why were Democrats unable to hide their enthusiasm for the latest Omnibus spending bill proposed by House Republicans? Simple: because, as the Washington Examiner’s Philip Klein writes, “Dems basically got everything. It’s like they control House, Senate, & WH rather than the other way around.

Dems basically got everything. It’s like they control House, Senate, & WH rather than the other way around. 

Some big picture details:

  • Deal totals just over $1 trillion
  • Deal allows for an increase of $12.5bn in defense spending, which is 18bn less than Trump requested. However, if Trump makes strides with Isis, an addition 2.5bn will be made available.
  • Includes permanent fix to fund coal miners’ health care instead of a temporary extension.
  • Democrats win: There will be no wall funding; instead Trump will get $1.5bn in border security funds, which is half the original request; it will be used to support existing infrastructure.
  • Democrats win again: Puerto Rico will receive an emergency injection for Medicaid health insurance supports
  • Democrats win again2: Planned Parenthood, a key issue for Democrats, will be saved from cuts, while the National Institute of Health will see a $2bn hike in funding.
  • Democrats win again3: Cuts in the Environmental Protection Agency appear avoided for the remainder of the year.
  • Democrats win again4: The omnibus funds California high speed rail

Additionally as Bloomberg adds, “Republicans failed to get a number of conservative provisions in the bill, including one that would have blocked the Labor Department’s fiduciary rule limiting financial advice to retirees.”

Also snuck inbetween the cracks there’s also a new $100 million fund to counter Russian influence in Europe.

The deal also includes a 2% increase for national parks, including nearly $40 million in new funding to address deferred maintenance and construction needs. More than 70 anti-environmental policy riders in the bill were defeated.

Amusingly, the package would provide $68 million extra in local law enforcement funds to reimburse New York City and other localities for protecting Trump.

Democrats, predictably, loved the spending bill which is sure to add hundreds of billions to the US deficit: “This agreement is a good agreement for the American people, and takes the threat of a government shutdown off the table,” Senate Minority Leader Chuck Schumer said Sunday night in a statement. “The bill ensures taxpayer dollars aren’t used to fund an ineffective border wall, excludes poison pill riders, and increases investments in programs that the middle-class relies on, like medical research, education, and infrastructure.”

House Minority Leader Nancy Pelosi also praised the deal, saying that Democrats won the removal of about 160 partisan riders. “The bill also increases funding for wildfire and federal highway emergency relief, and for Puerto Rico’s underfunded Medicaid program,” she said in a statement. Under the tentative deal, the island would get some relief with $295 million in unspent money for territories for a limited time, said a congressional aide.

As expected, Republicans were just as eager to cover up the fact that they rolled over:  “We couldn’t be more pleased,” Vice President Mike Pence said in an interview on CBS “This Morning.” He called the deal “a bipartisan win for the American people” that included funding for a significant increase in military spending and a down payment on border security.

“We have boosted resources for our defense needs without corresponding increases in non-defense spending,” House Speaker Paul Ryan said in a statement. He said the measure will make the U.S. “stronger and safer.”

But not all: Republican Representative Jim Jordan, chairman of the House Freedom Caucus, was quoted by Reuters saying he and other conservatives likely would not back the measure because it does not fulfill their promises to voters. “I’m disappointed,” Jordan told CNN. “We’ll see how it plays out this week but I think you’re going to see conservatives have some real concerns with this legislation.”

Bloomberg’s summary:

Overall, the compromise resembles more of an Obama administration-era budget than a Trump one. The National Institutes of Health, for example, would see a $2 billion boost, reflecting the popularity of medical research among lawmakers. The deal includes $990 million for famine aid, along with a $1.1 billion boost for disaster recovery funds.

The House Rules Committee has scheduled a hearing for 3 p.m. Tuesday to consider advancing the bill, including setting procedures for a floor vote. That said, there does remain a chance for a government shutdown in October. Trump has sought $54 billion in defense increases paired with $54 billion in domestic cuts. Republican leaders may be less willing to bow to Democrats without the excuse of being more than halfway through the fiscal year.

Finally, as Bloomberg adds, Congress and the president will also need to agree on a debt ceiling increase in the fall, and White House budget director Mick Mulvaney has said he wants to use the debt ceiling to impose new spending restraints.



After granting a temporary stay of execution of 1 year, it looks like this week, Puerto Rico will take its first steps towards bankruptcy and set off fire alarms in the muni market.

(courtesy zero hedge)

Puerto Rico Takes First Steps Toward Bankruptcy-ish Filing

After what has been the slowest of slow-motion train wrecks, Puerto Rico’s federal overseers have finally taken the inevitable first step toward considering the use of bankruptcy-ish proceedings, known as Title III, to allow the island to escape it’s $70 billion debt burden.

Last year Puerto Rico was granted a 1-year temporary stay, courtesy of the so-called Promesa Act passed by Congress, that allowed protection from creditor proceedings in order to allow the debt-burdened island to negotiate a consensual agreement with bondholders.  That said, the stay expires on Monday and the government has struggled to make headway in negotiations with creditors.

With $70 billion of debt outstanding, Puerto Rico’s debt restructuring will be the largest ever for the $3.8 trillion municipal-bond market and is also expected to be among the most complicated as well with the commonwealth’s debt issued by more than a dozen agencies and backed by sometimes competing repayment pledges. 

As Bloomberg notes, the board also took steps to wind down the island’s government development bank which was used to finance multiple public projects but also defaulted on debt obligations.

Separately, the board approved winding down Puerto Rico’s government development bank, which financed public works on the island until it defaulted during the crisis, and increasing water rates as part of a plan to steady the Puerto Rico Aqueduct and Sewer Authority. Details of those fiscal proposals haven’t yet been released.


“This will provide a viable path for an orderly process for the Government Development Bank with the least impact for stakeholders involved,” said Elias Sanchez, Governor Ricardo Rossello’s representative on the federal board.

Of course, the shear size of bondholder losses are sure to make the restructuring process quite contentious.  The following $3.5 billion in 8% general obligation notes of 2035 were issued in March 2014 and have pretty much traded in one direction ever since.



And while GO bonds currently trade hands in the mid-60s, Desmond Lachman of the American Enterprise Institute sees the ultimate recovery for bondholders being much more bleak courtesy of an economy that has been contracting since 2006 and shows few signs of picking up anytime in the near future.

It is difficult to overstate how desperate the present state of the Puerto Rican economy is. In each of the past 10 years, its economy has been contracting, and it is now more than 10-percent smaller than it was in 2006. Over the same period, more than 10 percent of its population has left the island for the mainland and its unemployment rate has risen to over 12 percent of its workforce.


Even before the slew of costly and disruptive creditor lawsuits that will almost surely follow the expiry of the U.S. Congress’ temporary stay on such suits next week, the island’s economic outlook was nothing short of grim. According to the Puerto Rican government’s own 10-year budget plan, which was approved by its Oversight Board, the island’s economy is projected to decline by more than 3 percent a year in 2018 and 2019 and by around 10 percent over the next five years.


In this context, it is striking that in Puerto Rico’s recent 10-year budget plan, which had the approval of its Oversight Board, the island would only make around one quarter of the debt service payments falling due over the next 10 years.

But at least a bunch of lawyers and investment bankers will make out pretty well.






The USA is now deploying troops along the Syria-Turkey border

(courtesy zero hedge)

US Deploys Troops Along Syria-Turkey Border

Just three days after Turkish warplanes killed at least 20 US-backed Kurdish fighters along the Turkey-Syria border as well as several Kurdish peshmerga troops on Mount Sinjar in northwestern Iraq, footage posted by Syrian activists showed the US has deployed troops and APCs in the contested region, in a move that could potentially drag the US in a conflict where it already finds itself mediating between two so-called US ally forces in the proxy war against Syria.

The Turkish airstrikes also wounded 18 members of the U.S.-backed People’s Protection Units, or Y.P.G., were criticized by both the U.S. and Russia. The YPG is a close U.S. ally in the theatrical fight against the Islamic State (whose real purpose is destabilizing the Assad regime); it is seen by Ankara as a terrorist group because of its ties to Turkey’s Kurdish rebels. The problem is that Turkey is also an ally of the US, although over the past two years relations between Turkey and all western NATO allies have deteriorated substantially for numerous familiar, and extensively discussed in the past, reasons.

On one hand, further clashes between Turkish and Kurdish forces in Syria could potentially undermine the U.S.-led war on the Islamic State group. On the other, it risks taking an already unstable situation in Syria and escalating it substantially, should Turkey again find itself invading Turkey and/or Iraq.

Which is why the US appears to have deployed troops along the border: to serve as a deterrent to further Turkish attacks.

A senior Kurdish official, Ilham Ahmad told The Associated Press that American forces began carrying out patrols along the border Thursday along with reconnaissance flights in the area. She said the deployment was in principle temporary, but may become more permanent. Another Kurdish activist said the deployment is ongoing, adding that it stretches from the Iraqi border to areas past Darbasiyah in the largely Kurdish part of eastern Syria.

“The U.S. role has now become more like a buffer force between us and the Turks on all front lines,” he said. He said U.S. forces will also deploy as a separation force in areas where the Turkish-backed Syrian fighting forces and the Kurdish forces meet.

As noted above, the US intervention is meant to send a “a message of reassurance for the Kurds and almost a warning message” to the Turks, he said.

Navy Capt. Jeff Davis, a Pentagon spokesman, did not dispute that U.S. troops are operating with elements of the Syrian Democratic Forces (SDF) along the Turkish border, but he would not get into specifics. The SDF is a Kurdish-dominated alliance fighting IS that includes Arab fighters.

“We have U.S. forces that are there throughout the entirety of northern Syria that operate with our Syrian Democratic Force partners,” Davis said. “The border is among the areas where they operate.” He said the U.S. wants the SDF to focus on liberating the IS-held town of Tabqa and the extremist group’s de facto capital, Raqqa, “and not be drawn into conflicts elsewhere.”

* * *

Confirming that the proxy war in Syria is becoming ever less so, the U.S. has recently shifted from working quietly behind the scenes in Syria’s conflict toward overt displays of U.S. force in an attempt to shape the fight. Last month, about 200 Marines rolled into northern Syria backed with howitzers, significantly widening America’s footprint in a highly toxic battlefield. The Marines’ deployment came days after another intervention, when dozens of army troops drove outside the town of Manbij, riding Stryker armored vehicles, following an earlier conflagration of fighting between Syrian Kurdish troops and Turkish troops. The U.S. deployment in Manbij intentionally put Americans in the middle of that rivalry, hoping to cool it down.

The SDF retook Manbij from IS control, and Turkey said it won’t allow the town to be under Kurdish control, threatening to move on it. The American presence appears intended to reassure Ankara the Kurds don’t hold the town.

But the new deployment puts U.S. troops directly along the border with Turkey, another flashpoint, and immerses Washington into that increasingly hot fight. Should Erdogan happen to launch a strike against a zone containing US troops, he can simply say he was aiming elsewhere, although the retaliation by his NATO ally would be prompt.

It remains unclear if the US is now actively seeking to engage Turkey on the combat field, and is looking for a politically correct, and media friendly pretext to do so.  It is also unclear what a conflict between the US and Turkey would mean for the rest of NATO: it certainly would set a precedent, as never before has fighting broken out between two alliance members.



Another indicator to show how the USA economy is crashing.  Nearly every major regional bank missed in their lending estimates

(courtesy Mish Shedlock/Mishtalk)


Lender Loan Crash: Nearly Every Major Regional Bank Missed Lending Estimate

Authored by Mike Shedlock via,

In addition to a miserable performance in the auto sector and a very poor GDP report, the Trump Era Brings Rare Drop in Loans at America’s Regional Banks.

Bank stocks have climbed since Donald Trump was elected president as investors bet his pro-growth agenda and rising interest rates would help lenders generate huge profits. But this month, executives at some of the country’s largest regional banks said customers, especially corporations and small businesses, are instead waiting for details on the new administration’s proposals and results before seeking financing for expansion.


Total loans at the 15 largest U.S. regional banks declined by about $10 billion to $1.73 trillion in the first quarter, compared with the previous three-month period, the first such drop in four years, according to data compiled by Bloomberg. All but two of those banks missed analysts’ estimates for total loans, as a slump in commercial and industrial lending sapped growth.


“The optimism and the willingness is there, but it has not yet translated into actions or behaviors,” Beth Mooney, chief executive officer of KeyCorp, said of the Cleveland-based bank’s small and middle-market business clients. “We did not see ‘flip the switch’ sort of behavior that led to loan demand or making different capital decisions or investment decisions.”

Nonsensical Statement of the Day

The optimism and the willingness is there, but it has not yet translated into actions or behaviors,” said Beth Mooney, chief executive officer of KeyCorp.

Excuse me for pointing out the obvious, but if willingness was present, there would have been more loans.

Mainstream media and most economists are banking on consumer confidence sentiment, regional manufacturing sentiment, ISM sentiment, and now small business loan sentiment.

Sentiment Indicators

It’s time to throw the sentiment idea in the ash can where it belongs.





First we had Pepsi layoffs and now Coca Cola cuts 40 jobs amid a 32% plunge in sales in the Philadelphia area. Bureaucrats do not seem to understand that taxes can have a detrimental effect on the economy.

(courtesy zero hedge)


Philly Beverage Tax Blowback: Coca Cola Sales Plunge 32%

Just a month after PepsiCo said it would lay off 80-100 people due to the ‘unintended consequences’ of Philadelphia’s new soda-tax, Philly Coke, the local Coca-Cola bottler, has cut 40 jobs amid a 32% plunge in sales.

Since all of this is taking place as previewed in a recent post: “The ‘Soda Police’ Just Learned A Valuable Lesson About Taxes“, we doubt it would come as a surprise to anyone, although we are confident that Philadelphia city workers will be amazed by these unexpected developments.

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

What happened next? Precisely what most expected would happen: full blown sticker shock, and a collapse in purchases. According to reports, two months into the city’s sweetened-beverage tax, supermarkets and distributors are reporting a 30% to 50% drop in beverage sales and – adding insult to injury – are now planning for layoffs.

A month ago,PepsiCo slashed jobs, blaming the soda tax…

With sales slumping because of the new Philadelphia sweetened beverage tax, Pepsi said that it will lay off 80 to 100 workers at three distribution plants that serve the city.


The company, which employs 423 people in the city, sent out notices and said the layoffs would be spread over the next few months. The layoffs come in response to the  beverage tax, which has cut sales by 40 percent in the city, PepsiCo Inc. spokesman Dave DeCecco said.


“Unfortunately, after careful consideration of the economic realities created by the recently enacted beverage tax, we have been forced to give notice that we intend to eliminate 80 to 100 positions, including frontline and supervisory roles,” DeCecco said.


Outside of the North Philadelphia plant Wednesday, Ed Langdon, a 40-year employee  who shuttles products between warehouses, said the cuts are the most drastic he’s seen in his time at Pepsi. Langdon said the writing was on the wall: Some colleagues who are paid on commission were seeing drastic cuts in weekly pay. “The trucks are going out and they’re coming back with the soda on it,” he said. “No one’s buying it. It’s just not happening.”

And on Friday, as reports,Coke did the same…

Philadelphia’s new sweetened-beverage tax has led to the loss of 40 Coca-Cola jobs and a 32 percent drop in sales, the company said Friday.


Fran McGorry, president and general manager of Philly Coke, the local Coca-Cola bottler, said in a news release that the job losses are due to commission-based employees leaving the company, not layoffs.


“We are not able to replace those positions right now,” he said. “In total, we have fewer people working in the city while more people are now working outside Philadelphia due to increased demand there. We have also made the decision not to hire seasonal employees for the summer months due to the negative impact the tax is having on our business.”

Lauren Hitt, spokeswoman for Mayor Kenney, stressed that fact when responding to the job losses and said the industry is “looking for opportunities” to make the tax a scapegoat. The Kenney administration lambasted the news, pointing to the industry’s overall profits and the benefits of the expanded pre-K program that the 1.5-cent-per-ounce tax funds.

Anthony Campisi, a spokesman for a coalition of retailers, bottlers, and unions opposed to the tax, said it was unfair for the city to blame the companies for the job loss.

“It’s the mayor who’s to blame for the economic and human impact of the tax,” Campisi said. “And its offensive to blame the impact on Philadelphia businesses that are no longer sustainable because of it.”

The beverage industry is suing to strike down the tax.





Baltimore mayor calls for FBI help as 2017 murders soar to a 20 yr high and it is basically out of control. Baltimore is set to vault into the no 1 spot ahead of Chicago in murder rates per 100,000 population ahead of St Louis. In absolute numbers, Chicago beats them all.

(courtesy zerohedge)

Baltimore Mayor Begs For FBI Help As 2017 Murders Soar To 20-Year High

Unlike Chicago Mayor Rahm Emmanual, Baltimore’s mayor is basically begging for help from the FBI as her city’s murder rate spirals out of control ahead of what is typically the most violent months of the year.  Per CBS Baltimore:

“I’m calling on all the assistance we can possibly get because I can’t imagine going into our summer months with our crime rate where it is today, what that’s going to look like by the end of the summer,” says Mayor Catherine Pugh.


“Murder is out of control,” says Pugh.


“We are looking for all the help that we can get,” she says.

According to data from the Baltimore Sun, violence in the city has reached a crisis level, with the number of killings shattering a 20-year high for the first 4 months of 2017.  At the current run rate, 2017 homicides in Baltimore could surpass 400 for the first time since at least 1990.



And while the 800 murders recorded in Chicago in 2016 was a staggering figure, on a per capita basis, homicides in Baltimore were nearly double that of Chicago and looks set to vault into the number one spot nationwide in 2017.



Meanwhile, Baltimore public safety expert Rob Weinhold, who isn’t sure the FBI alone will be effective, has called on support from the U.S. Marshall Service as well.

“I don’t think relying on federal resources is a new strategy at all, in fact, I think the devil is in the detail. You can talk about the FBI and that’s fine, but I’d actually like to see more emphasis on drug enforcement administration, ATF, and the Marshall service to get these folks who are wanted on warrants off the street,” says Weinhold.

Of course, we’re almost certain that rising homicides in Baltimore, like in Chicago, are the direct result of racist cops and nothing more.

Only foreign banks subpoenaed?  What happened to the uSA banks who no doubt were engaged in the same criminal behaviour

(courtesy zero hedge)


(courtesy David Stockman/Daily Reckoning)



State Department Warns European Travelers Of “Continued Threat Of Terrorist Attacks”

In case you were starting to lose your fearmongered concerns, The US State Department has come to the rescue with a travel alert for visitors to Europe warning of “the continued threat of terrorist attacks.”

Travel Alert – Europe


May 1, 2017


The Department of State alerts U.S. citizens to the continued threat of terrorist attacks throughout Europe. This Travel Alert expires on September 1, 2017.


Recent, widely-reported incidents in France, Russia, Sweden, and the United Kingdom demonstrate that the Islamic State of Iraq and ash-Sham (ISIS or Da’esh), al-Qa’ida, and their affiliates have the ability to plan and execute terrorist attacks in Europe. While local governments continue counterterrorism operations, the Department nevertheless remains concerned about the potential for future terrorist attacks. \


U.S. citizens should always be alert to the possibility that terrorist sympathizers or self-radicalized extremists may conduct attacks with little or no warning.


Extremists continue to focus on tourist locations, transportation hubs, markets/shopping malls, and local government facilities as viable targets. In addition, hotels, clubs, restaurants, places of worship, parks, high-profile events, educational institutions, airports, and other soft targets remain priority locations for possible attacks. U.S. citizens should exercise additional vigilance in these and and other soft targets remain priority locations for possible attacks. U.S. citizens should exercise additional vigilance in these and similar locations, in particular during the upcoming summer travel season when large crowds may be common.


Terrorists persist in employing a variety of tactics, including firearms, explosives, using vehicles as ramming devices, and sharp-edged weapons that are difficult to detect prior to an attack.


If you are traveling between countries in Europe, please check the website of the U.S. embassy or consulate in your destination city for any recent security messages. Review security information from local officials, who are responsible for the safety and security of all visitors to their host country. U.S. citizens should also:

  • Follow the instructions of local authorities. Monitor media and local information sources and factor updated information into personal travel plans and activities.
  • Be prepared for additional security screening and unexpected disruptions.
  • Stay in touch with your family members and ensure they know how to reach you in the event of an emergency.
  • Have an emergency plan of action ready.
  • Register in our Smart Traveler Enrollment Program (STEP).


We continue to work closely with our European partners and allies on the threat from international terrorism. Information is routinely shared between the United States and our key partners to disrupt terrorist plotting, identify and take action against potential operatives, and strengthen our defenses against potential threats.

This follows on from a general alert issued in March.

Afraid? You should be!

(courtesy Greg Hunter/MikeMaloney)

Insane Bond, Stock and Real Estate Markets-Mike Maloney

By Greg Hunter On April 30, 2017 In Market Analysis

(Early Sunday Release)

Financial expert Mike Maloney says what is going on in the economy is like a mass mental illness, especially when you consider the geopolitical risks and extreme valuations across the board. Maloney explains, “We have a stock market and real estate market and a bond market that are all insane. We’ve got this crazy world where everything is at these valuations that are just impossible things. That will cause a peak, and we are at a point where we are way overdue for a recession. Recessions occur every four and a half years on average. Just two months ago, this became the third longest expansion in U.S. history. . . . In 11 months, it becomes the second longest in history. So, the chances of going into another recession sometime soon are very, very high. The chances are on the order of 90% or higher right now for another recession. When you couple this insane overvaluation of the stock markets, real estate is back in bubbles in most major cities . . . and this has been the perfect bull market for bonds, and at some time interest rates have to rise. . . . We are at the point now where we are going to hit big ruts and bumps in the economy, and the Fed has just taken the training wheels off of the bicycle. . . .This is the worst recovery in history.”

Maloney, who is an expert on gold and silver investing, says, “With all this geopolitical risk from North Korea, and we just dropped the ‘Mother of All Bombs’ (MOAB) in Afghanistan, which was most likely a threat to North Korea, we are at a very dangerous point in our history. . . . Since Kennedy . . . I can’t remember a time that was this dangerous.”

On gold, Maloney points at what large foreign countries are buying and says, “Between Russia, China and India, their purchases meet or exceed all worldwide production of gold. Whenever they exceed mining supply, the supply has to come from somewhere, and it’s coming from the West. When the dust settles, the East is going to be very wealthy, and the West is going to be poor.”

In closing, Maloney says that all the money printing and manipulation only pushed off the real crash into the future. Maloney explains, “These things bought us some time, but they made the eventual crash much, much worse. What we are going to see is that 2008 is going to be a speed bump on the way to the main event. 2000 was a stock market crash. 2007 was a real estate and stock market crash. This crash is going to be stocks, real estate and bonds. Bonds have been in a 32 year bull market, and no bull market goes forever. It’s just impossible.”

Join Greg Hunter as he goes One-on-One with best-selling author Mike Maloney of “Guide to Investing in Gold & Silver” and the founder of

(There is much more in the video interview.)

Video Link markets-mike-maloney/


Well that is all for today folks

I will see you tomorrow night


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