May 4/ANOTHER RAID ORCHESTRATED BY THE BANKERS/AT THE SILVER COMEX, OVER 20.3 MILLION OZ IS NOW STANDING AND MUCH GREATER THAN AT FIRST DAY NOTICE/COMMODITY CRASHES IN CHINA LED BY IRON ORE AND RUBBER/CHINESE INTERBANK RATES RISE AS DOES SHIBOR/RBCS CHARLIE MCELLIGOTT:SOMEBODY “JUST BLEW UP”/BLOODBATH IN OIL AS WTI BREAKS INTO THE 45 DOLLAR COLUMN/LAST MAJOR HEALTH PROVIDER PULLS OUT OF IOWA/

Gold: $1226.50  DOWN 19.90

Silver: $16.24  DOWN 28  cent(s)

Closing access prices:

Gold $1237.50

silver: $16.48!!!

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1252.89 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  1241.-0

PREMIUM FIRST FIX:  $11.89

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1245.35

NY GOLD PRICE AT THE EXACT SAME TIME: 1236.30

Premium of Shanghai 2nd fix/NY:$9.05

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1235.85

NY PRICING AT THE EXACT SAME TIME: $1235.80

LONDON SECOND GOLD FIX  10 AM: $1228.45

NY PRICING AT THE EXACT SAME TIME. $1228.60

For comex gold:

MAY/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH:  8 NOTICE(S) FOR 800 OZ. 

 TOTAL NOTICES SO FAR: 35 FOR 3500 OZ    (.1088 TONNES)

For silver:

For silver: MAY

535 NOTICES FILED TODAY FOR 2,675,000  OZ/

Total number of notices filed so far this month: 2713 for 13,565,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

FEDERAL RESERVE EAR MARKED GOLD REPORT for April

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.

END

The key event today is the rising amount of silver that is standing at the comex.  It has now risen above what was standing on day one, first day notice, April 30.  On that day 16.8 million oz stood for delivery and for 3 consecutive days it has risen to 19.1 million oz.  We have not seen that before.

As far as the raid today, most of the damage has been done in the access market.  They are afraid to whack during regular comex hours where physical transactions can occur.

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE BY 1,238  contracts UP to 190,478 DESPITE THE HUGE FALL IN PRICE ( 34 CENTS) SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING. NOBODY BUDGED!!.  In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.952 BILLION TO BE EXACT or 136% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 600 NOTICE(S) FOR 3,000,000  OZ OF SILVER

In gold, the total comex gold FELL BY ONLY 2,638 contracts DESPITE THE CONTINUAL FALL IN THE PRICE OF GOLD ($8.70 with YESTERDAY’S TRADING). The total gold OI stands at 459,267 contracts.

we had 166 notice(s) filed upon for 16,600 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had a tiny changes in tonnes of gold at the GLD: a withdrawal of .28 tonnes to pay for fees

Inventory rests tonight: 853.08 tonnes

.

SLV

Strange!!! We had a tiny change in silver inventory at the SLV today..despite the huge drop in silver price (to pay for fees)..the withdrawal 144,000 oz/

THE SLV Inventory rests at: 334.777 million oz

end

.

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

1. Today, we had the open interest in silver ROSE BY 1,238 contracts UP TO 190,478, (AND NOW CLOSER TO  THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21 AT 234,787), DESPITE THE FALL IN PRICE FOR SILVER ON YESTERDAY (34 CENTS). Again,  we must have had some considerable bank short covering.

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) Federal Reserve Bank ear marked gold movement

(Harvey)

3. ASIAN AFFAIRS

Late WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 7.97 POINTS OR .25%  OR / /Hang Sang CLOSED DOWN 12.25 POINTS OR .05% .  The Nikkei closed UP 135.15 POINT OR .70%/Australia’s all ordinaires  CLOSED DOWN .26%/Chinese yuan (ONSHORE) closed DOWN at 6.8958/Oil DOWN to 47.28 dollars per barrel for WTI and 50.15 for Brent. Stocks in Europe OPENED IN THE GREEN   ..Offshore yuan trades  6.8952 yuan to the dollar vs 6.8958 for onshore yuan. NOW  THE OFFSHORE IS A LITTLE WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN SLIGHTLY WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN: WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA/USA

b) REPORT ON JAPAN

c) REPORT ON CHINA

i)I brought this important commentary/video to you earlier in the week.  Kyle Bass warns that there are huge problems facing China especially with their WMP’s  (WealthManagementProduct).  In China these total over 4 trillion dollars worth of assets many of which are non performing.  The total of all assets:  34 billion so these products represent around 10% of total assets.  If you recall in the tape he warned us to watch for a rise in the overnight yuan inter banking rate.

lo and behold: it rose hugely last night

( Bloomberg/zero hedge)

( zero hedge

iii)The war of words continue! China blast North Korea’s”irrational logic”

( zero hedge)

iv)I brought this important article to you on the weekend but it is worth repeating

a must read.

(courtesy Alasdair Macleod/Mises Institute)

4. EUROPEAN AFFAIRS

There was a huge debate last night between marine le Pen and Macron.   Le Pen states that if she loses, France will be governed by Merkel. The polls seems to suggest a Macron victory on Sunday but he will not be able to pass much legislation

( Mish Shedlock/Mishtalk)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

I guess this is as good a reason for gold to fall as it gets:  Iran attempts a missile launch from a submarine but it too fails like China’s attempt

( zero hedge)

6 .GLOBAL ISSUES

i)This is getting a little scary for Canada:  BlackRock warns that it would be “folly” to ignore Home Capital woes

( Onosko/Bloomberg)

ii)RBC’s Charlie McElligott:  “someone is blowing up”

China’s tightening is causing massive dislocations all over the globe
( Charlie McElligott/RBC..zero hedge)

7. OIL ISSUES

i)Crude oil drops on Russian comments that they may not extend cuts to production.  Also noted is sliding demand

( zero hedge)

ii)Bloodbath in the oil sector as crude oil (WTI) drops into the 45 dollar handle;

( zero hedge)

8. EMERGING MARKETS

9.   PHYSICAL MARKETS

i)Are we witnessing “panic” selling at the retail level?
( Kingworldnews/GATA)
ii)An in depth look at the market for iron ore and why its prices are tumbling.( Axiom)iii)An excellent article from Steve St Angelo as he comments on the drying up of scrap gold.  Americans have pawned off their gold to pay off debt or going further into debt

The GFMS  reports that scrap metal is down to only 58 tonnes. You can probably discount that number further as these guys are perennially wrong in their numbers especially on world scrap.

a must read..

( Steve St Angelo/SRSRocco report)

iv)Bitcoin now over 300 dollars above gold  as we witness relentless Japanese buying frenzy

( zero hedge)

10. USA stories

i)this is bad for Janet and her data dependent data:  USA productivity plunges in Q1

( zero hedge)

ii)This is not necessarily a good thing as the March trade deficit shrank by a little over 1 billion dollars.  The reason was lower imports and less exports.  The lower dollar did not help the export sector much

( zero hedge)

( zero hedge)

( zero hedge)

v)The bill passed the House.  It is now up to the Senate to negate it

( zero hedge)

 

Let us head over to the comex:

The total gold comex open interest FELL BY ONLY 2638 CONTRACTS DOWN to an OI level of 459,267 DESPITE THE FALL IN THE PRICE OF GOLD ( $8.70 with YESTERDAY’S trading).   The longs still continue to remain stoic as they refused to liquidate any of their contracts despite the constant torment.  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 117 contract(s) FALLING TO 218. We had 131 notices filed yesterday so we GAINED 14 contracts or an additional 1400 oz are standing for delivery and no contracts 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 8305 contracts DOWN to 308,963.  The non active July contract gained another 48 contracts to stand at 144 contracts. The next big active month is August and here the OI gained 5821 contracts up to 63,071.

We had 166 notice(s) filed upon today for 16600 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
And now for the wild silver comex results.  Total silver OI ROSE BY 1,238 contracts FROM  189,240 UP TO 190,478  WITH YESTERDAY’S 34 CENT PRICE FALL. We had without a doubt had some attempted short covering by the banks which failed.
We are in the active delivery month is MAY  Here the open interest LOST 69 contracts FALLING TO 1,038 contracts. MY GOODNESS!! IT HAPPENED AGAIN!! We had 313 notices filed on today, so we gained another 244 notices or an additional 1,220,000 oz will stand for delivery. In the last few years, I do not believe I have ever seen an active month increase in amount standing on day 2, day 3  DAY 4 and today DAY 5 of the delivery cycle. No wonder JPMorgan is getting reading for a physical attack at the comex. I have never seen anything like this!!

The non active June contract GAINED 19 contracts to stand at 931. The next big active month will be July and here the OI lost 25 contracts down to 147,073.

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 600 notice(s) filed for 3,000,000 oz for the MAY 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 326,604 contracts which is very good

Yesterday’s confirmed volume was 268,418 contracts  which is good.

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for MAY
 May 4/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 13,262.22 oz
Manfra
Brinks
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
16,814.98 oz
Manfra
HSBC
No of oz served (contracts) today
 
166 notice(s)
16,600 OZ
No of oz to be served (notices)
52 contracts
5200 oz
Total monthly oz gold served (contracts) so far this month
332 notices
33,200 oz
1.0326 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   41,325.9 oz
Today we HAD  2 kilobar transaction(s)/
Today we had 0 deposit(s) into the dealer:
total dealer deposits: nil oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had 2  customer deposit(s):
i) Into Manfra: 803.75 oz (25 kilobars)
ii) In to HSBC: 16,011.198
total customer deposits; 16,814.948  oz
We had 2 customer withdrawal(s)
i) out of Manfra:  32.15 oz  1 kilobar
ii) Out of Brinks; 13,220.07 oz
total customer withdrawal: 13,262.22 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 166 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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 (332) x 100 oz or 33,200 oz, to which we add the difference between the open interest for the front month of MAY (218 contracts) minus the number of notices served upon today (166) x 100 oz per contract equals 38400 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 (332) x 100 oz  or ounces + {(218)OI for the front month  minus the number of  notices served upon today (166) x 100 oz which equals 38,400 oz standing in this non active delivery month of MAY  (1.1944 tonnes).  We gained 14 contracts or an additional 1400 oz are standing for delivery and 0 contracts were cash settled through the EFP route where they received a fiat bonus plus a futures contract in a private deal with the bankers.
 
 
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
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/  1.1944 TONNES
total for the 17 months;  248.81 tonnes
average 14.635 tonnes per month
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Total dealer inventory 914,233.183 or 28.43 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,933,491.160 or 277.86 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.86 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.
 
IN THE LAST 11 MONTHS  76 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE APRIL DELIVERY MONTH
MAY INITIAL standings
 May 4. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 602,600.671 oz
CNT
90,201.260 oz
Scotia
total:
692,801.931 oz
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
237,913.930 oz
JPMorgan
400,350.700 oz
Scotia
total:
638,264.630  oz
No of oz served today (contracts)
 600 CONTRACT(S)
(3,000,000 OZ)
No of oz to be served (notices)
438 contracts
( 2,190,000 oz)
Total monthly oz silver served (contracts) 3626 contracts (18,130,000 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  2,601,224.0 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil  oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of CNT: 602,600.671 oz
ii) Out of Scotia: 90,201.260 oz
TOTAL CUSTOMER WITHDRAWALS: 692,801.931  oz
 We had 2 Customer deposits:
 i) Into JPMorgan: 237,913.930. oz
 ***deposits into JPMorgan have now continued 
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
 ii) Into Scotia:  400,350.700 oz
total customer deposits  638,264.63 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the MAY. contract month is represented by 600 contract(s) for 3,000,000 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 3626 x 5,000 oz  = 18,130,000 oz to which we add the difference between the open interest for the front month of MAY (1038) and the number of notices served upon today (600) x 5000 oz equals the number of ounces standing

 

.
 
Thus the initial standings for silver for the MAY contract month:  3626(notices served so far)x 5000 oz  + OI for front month of APRIL.(1038 ) -number of notices served upon today (600)x 5000 oz  equals  20,320,000 oz  of silver standing for the MAY contract month.
We actually gained another 244 contracts or an additional 1,220,000 oz will stand for delivery and again nobody wished to accept an EFP contract for a fiat bonus. It probably means that the entire 20.3 million oz that is standing wants only physical metal and refuses a fiat bonus. This is identical to backwardation where the investor will not accept to roll to a futures month and receive a sure fiat profit (THROUGH THE EFP) but instead that investor holds onto his physical because he is not sure in the future he would receive his metal back if he engages in that future contract.  We have now had on 4 consecutive days, an increase in amount standing for silver.  For the past several years, this has never happened during an active silver delivery month.  Ladies and gentlemen:  the silver comex is being attacked for its physical metal!! 
 
 
Volumes: for silver comex
 
Today the estimated volume was 97,235 which is huge 
Yesterday’s  confirmed volume was 98,206 contracts which is huge
(TODAY’S CONFIRMED. VOLUME OF 98,206 CONTRACTS EQUATES TO 493 MILLION OZ OF SILVER OR 70% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.  
 
Total dealer silver:  34.045 million (close to record low inventory  
Total number of dealer and customer silver:   197.555 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
 
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.3 percent to NAV usa funds and Negative 7.1% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.1%
Percentage of fund in silver:37.7%
cash .+0.2%( May 4/2017) 
 
2. Sprott silver fund (PSLV): Premium FALLS TO   -.15%!!!! NAV (May 4/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS to -0.68% to NAV  ( May 4 /2017)
Note: Sprott silver trust back  into NEGATIVE territory at -.15% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.68%/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

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

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.

end

And now the Gold inventory at the GLD

May 4/A tiny change in inventory at the GLD /a withdrawal of .28 tonnes to pay for fees/inventory rests at 853.08 tonnes

May 3/no change in inventory at the GLD/Inventory rest at 853.36 tonnes

May 2/no change in inventory at the GLD/Inventory rests at 853.36 tonnes

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 25/2017/A WITHDRAWAL OF 5.92 TONNES OF GOLD FROM 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 21/A DEPOSIT OF 4.44 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 858.69 TONNES

APRIL 20/A WITHDRAWAL OF 6.51 TONNES FROM THE GLD/INVENTORY RESTS AT 854.25 TONNES

April 19/ A DEPOSIT OF 11.84 TONNES INTO THE GLD/INVENTORY RESTS AT 860.76 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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
May 4 /2017/ Inventory rests tonight at 853.08 tonnes
*IN LAST 144 TRADING DAYS: 95.05 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 87 TRADING DAYS: A NET  32,38 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET  57,72 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

May 4/a very tiny withdrawal of 144,000 oz to pay for fees/inventory rests tonight at 334.777 million oz/

May 3/strange!! with the drop in price of silver we had no change in inventory at the SLV/inventory rests at 334.921 million oz

May 2/extremely strange again/a huge 3.502 million oz deposit into the SLV despite silver being in the toilet for the past several trading days.Inventory 334.921 million oz

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 21/A WITHDRAWAL OF 719,000 OZ OF SILVER AT THE SLV/INVENTORY RESTS AT 325.361 MILLION OZ/

APRIL 20/NO CHANGES IN INVENTORY AT THE SLV/INVENTORY RESTS AT 326.308 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
May 4.2017: Inventory 334.777  million oz
 end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Irish Property Bubble – 38pc Believe Housing Market Will Crash

Irish Property Bubble? Central Bank Governor Denies Is Bubble

Central Bank of Ireland governor Philip Lane yesterday rejected suggestions of an Irish property bubble and that the economy is on the brink of another housing bubble and said the recent increase in house prices is not indicative of a property bubble forming.

Minister for Finance Noonan & Governor of the Central Bank Lane. Source: RTE

However, this optimism is not shared by a large part of the Irish people as there are very high levels of concern about the risk of another property bubble and property crash according to the latest Sunday Independent/Kantar Millward Brown poll:

“A quite astonishing 38pc of people believe that the housing market is destined to collapse as it did during the last recession. That is a much larger share than those who believe the contrary.

Growing fears about another property crash are reflected in another question put by the pollsters – “Is this a good time to buy a house?”

Five years ago, when the recovery hadn’t got going and property prices were on the floor, an overwhelming majority thought it a good time to buy. Now less than half do.

The fear of history repeating itself with another crash in house prices could well explain why, despite high and rising levels of optimism, spending in the shops is not rising at the same pace.”

The risks of a new Irish property bubble and another housing bubble comes at a time of considerable economic uncertainty due to the increasing likelihood of a ‘Hard Brexit.’ There are also the considerable risks from continuing uncertainty due to the Trump Presidency and contagion in the Eurozone.

Separately, news today comes that Irish executives increasingly expect a ‘Hard Brexit’ and are preparing accordingly.

The news comes on the same day that one of the largest retailers of food and meat in the UK, the Co-op, has announced it will sell only British beef and meat.

It publicly called on other UK retailers to “back home-grown goods” from the UK. Sainsbury and Tescos are major sellers of Irish beef and any knock-on change of policy would be hugely damaging to Irish farmers and the wider Irish economy.

The Dublin housing market is showing real signs of over heating and becoming a bubble again – particularly at the middle to higher end of the market.

Real diversification and an allocation to physical gold will protect from another new Irish property bubble and property crash.

Sources

Property crash in Ireland – 38pc believe housing market will collapse

No housing bubble – Central Bank of Ireland (RTE)

Central Bank governor rejects suggestions of new property bubble (Irish Times)

Brexit blockade: UK giant wants ban on Irish meat (Irish Independent)

Irish executives expect a hard Brexit  (Irish Times)

‘I hate people talking down the property bubble’ – Ross O’Carroll Kelly

Related Content

Property Bubble In Dublin Housing Market Developing

Property Bubble In Ireland Developing Again

London Property Bubble Vulnerable To Crash

 

end
Are we witnessing “panic” selling at the retail level?
(courtesy Kingworldnews/GATA)

Veteran coin and bullion dealer ‘shocked’ by ‘panic selling’

Section:

8:11p ET Wednesday, May 3, 2017

Dear Friend of GATA and Gold:

Accumulation may be taking place in Asia, but in North America there is “panic selling” of gold and silver at the retail level, veteran coin and bullion dealer Bill Haynes of CMI Gold & Silver in Phoenix, Arizona, tells King World News today. “I am shocked at how bad the sentiment is in the gold and silver space,” Haynes says. “It’s worse than what we saw at the end of the brutal five-year gold and silver bear market that bottomed at the beginning of 2016.” An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/alert-44-year-market-veteran-says-panic-selling…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

END

 

An in depth look at the market for iron ore and why its prices are tumbling.

(courtesy Axiom)

“A Nightmarish Picture For Iron Ore Prices” Has Emerged, Axiom Warns

As noted earlier, while European stocks and US equity markets have ignored the commodity crash in China, which in addition to iron ore plunging limit down, also saw rubber tumble 7% lower, and steel rebar, coke, coking coal plunge over 6% …

 

… Axiom’s Gordon Johnson warns (as we did a month ago) that the worst is yet to come, and in fact, the “backdrop of near-record/record iron ore inventories and aggressive domestic and seaborne iron ore supply, paints a nightmarish picture for iron ore prices over the coming months.

* * *

Here are the choice excerpts from his overnight note “Why We Feel Iron Ore Prices Are Slated For a Sharp N-Term Fall (Even From Here) & Why Iron Ore Stocks (FMG; RIO; CLF; X) Are Attractive Shorts Right Now

SUMMING THE BELOW ANALYSIS UP: With China’s April PMIs disappointing, suggesting China’s tightening measures are beginning to take hold (i.e., demand for steel in China is now weakening), we expect steel supply in China to begin to moderate imminently; stated differently, this suggests iron ore demand is in the process of waning, which, against a backdrop of near-record/record iron ore inventories and aggressive domestic and seaborne iron ore supply, paints a nightmarish picture for iron ore prices over the coming months. On this trend, we would be adding to shorts in FMG, CLF, RIO, and X.

SO WHY THE IRON ORE PRICE PESSIMISM & CONFIDENCE ON THE FMG, RIO, CLF, and X SHORTS?: We believe, when looking at the data, iron ore prices are on the precipice of a “spectacular decline”. As detailed below, iron ore imports into China were up 11.4% y/y to 95.6mt in March, and YTD were up 12.2% y/y to 271mt. In our view, due to what is expected to be a 1%-2%% fall in y/y crude steel production in China in 2017, which is below the +1.04% y/y growth seen in 2016, we believe elevated imports through March point to continued inventory build, as well as a lack of seaborne-supply-discipline to falling iron ore prices (iron ore prices fell 11.9% through March).

Exhibit 1: Despite Waning Crude Steel Output in China, Import
Growth Y/Y is Strong than Ever

Source: General Customs Administration, Axiom Capital Research.

Furthermore, moving to the domestic production of iron ore in China this year, it’s clear that momentum is picking up in a very rapid manner (a troubling trend if you’re an iron ore bull). That is, of the 266 domestic Chinese iron ore mines Mysteel tracks, capacity utilization has risen from 62% as of mid-April 2016, to 69.5% as of mid-April 2017; stated differently, domestic iron ore production is up 21.4% y/y to 45.6mt YTD. This stellar growth, we believe, is a byproduct of higher prices driven, we believe, not by fundamentals, but rather the “financialization” of the futures trading market in bulk commodity materials in China (where traders have to constantly speculate, in the overnight markets, on the daily directional shifts in commodity prices – due to the duration mismatch in assets vs. liabilities in the ~$4tn off-balance-sheet Wealth Management Products market). Yet, with the cash cost of iron ore production in China at ~$57.8/mt, until prices fall below this level, we would expect the “rising tide” of supply to continue to be a headache for the iron ore bulls.

Exhibit 2: Domestic China Iron Ore Supply is Growing Sharply Despite
Record Inventories and Record Seaborne Imports

Source: Mysteel.net, Axiom Capital Research.

WHAT ABOUT INVENTORIES? In addition to the above, as can be seen in Exhibits 3-4 below, inventories at both the Chinese ports and steel mills are at/near record highs. That is, looking first to major Chinese ports’ iron ore inventories, we note that inventory has increased by 15% thus far this year, and is 33% higher than at the same time last year; in fact, there is enough iron ore inventory sitting at the ports in China to construct 13,000 of Eiffel towers (that’s a hell of a lot of iron ore). Furthermore, while they have come down off their peaks experienced this year, steel mills’ iron ore inventories in China are also still high when compared to historical levels. Yet, despite these high inventory levels, iron ore prices remain above our $40/mt target for April; in short, we believe this dynamic is a byproduct of both: (a) stellar margins for steel mills earlier this year, pushing them to prefer higher-grade iron ore in the face of higher coking coal prices, and (b) the aforementioned preference for higher-grade iron ore, in the face of bloated coking coal prices, enabling elevated production rates at Chinese steel mills. However, based on the sharp fall in Chinese steel mill profitability (discussed below), we believe both of these dynamics have come to an abrupt end (a problem if you are an iron ore bull).

Exhibit 3: Chinese Ports’ Iron Ore Inventory is Sitting Near
Record Highs

Source: Shanghai Steelhome, Steel Business Briefing, Axiom Capital Research.

Exhibit 4: While Off Their Highs, Days of Imported Iron Ore Inventory
at China’s Steel Mills Remain High on a Relative Basis

Source: Mysteel.net, Axiom Capital Research.

AND SPREADS? Moving on to price trends, we note that steel prices in China have been in sharp correction territory for some time now; and, with Cyclone Debbie in Australia pushing coking coal prices higher, steel mill profit margins have deteriorated. This, in turn, caused a shift in approach from the steel mills in China. More specifically, instead of opting for the higher-grade version of iron ore, in an effort to shift costs lower, mills in China instead moved toward the lower-end version of iron ore (due to its ready supply at both the ports, and at the domestic mills in China) – this trend, which remains intact today (and is an outsized, yet underappreciated, in our view, risk to seaborne iron ore prices), is evidenced by the sharp fall in the premium of 62% Fe grade iron ore when compared to 58% Fe grade iron ore (see Exhibit 6).

Exhibit 5: China’s Blast Furnaces’ Cash Margins Have Come Down
Considerably From the Highs

Source: Bloomberg, Axiom Capital Research.

Exhibit 6: High-Grade Iron Ore Premium is in Full
Correction Mode

Source: Metal Bulletin, Beijing CUSTEEL E-commerce Co., Axiom Capital Research.


CONCLUSION:
With the above as a backdrop, as we have warned for some time now, the recent correction in steel prices in China should come as no surprise. Why? Well, as detailed below (Exhibit 7), with China continuing to pump out record levels of crude steel output (i.e., supply), despite an aggressive push by the PBoC to clamp down on property speculation, as well as elevated interbank lending rates (suggesting liquidity has tightened) – Exhibit 8 – it seems, currently, supply is outstripping demand (a recipe for disaster for prices). Furthermore, as detailed below in Exhibit 9, given expectations of steel demand coming into 2017 in China were elevated (on expectations of a Trump-driven rally, as well as reflation in China), aggressive inventory building defined the better part of C1Q17 in China. Consequently, with China’s April PMIs disappointing, suggesting China’s tightening measures are beginning to take hold (i.e., demand for steel in China is now weakening), we expect steel supply in China to begin to moderate imminently; stated differently, this suggests iron ore demand is in the process of waning, which, against a backdrop of near-record/record iron ore inventories and aggressive domestic and seaborne iron ore output, paints a nightmarish picture for prices over the coming months. On this, we would be adding to shorts in FMG, CLF, RIO, and X.

Exhibit 7: CISA Members’ Daily Crude Steel Output

Source: China Iron & Steel Association (CISA), Axiom Capital Research.

 

Exhibit 8: Interbank Lending Rates in China Have Moved Structurally
Higher… Suggesting PBoC Tightening is “On the Menu”

Source: Bloomberg.

end

An excellent article from Steve St Angelo as he comments on the drying up of scrap gold.  Americans have pawned off their gold to pay off debt or going further into debt

The GFMS  reports that scrap metal is down to only 58 tonnes. You can probably discount that number further as these guys are perennially wrong in their numbers especially on world scrap.

a must read..

(courtesy Steve St Angelo/SRSRocco report)

U.S GOLD SCRAP MARKET DRYING UP: Americans Pawned Off Their Best Asset To Go Further Into Debt

by SRSrocco, May 2, 2017

After the U.S. economy disintegrated in 2008, due to the Banking and Housing crisis, Americans pawned off a record amount of gold. How much gold? Nearly, 32 million oz (1,000 metric tons). That’s one heck of a lot of gold. Matter-a-fact, U.S. gold scrap supply at its peak of 160 metric tons (mt) in 2011, was more than any other country in the world, even India and China.

It is quite unfortunate that Americans have pawned off their best asset only to go further into debt. Thus, enabling them to buy more garbage and trinkets they really don’t need. This is quite the opposite of Americans who become being extremely frugal and financially responsible after the 1930’s Great Depression. Today, banks have made it easy for Americans to BUY NOW and PAY LATER.

The consequences of this “Buy now, pay later” economic model is explained in this recent zerohedge article, 45% Of Americans Spend Up To Half Their Income Repaying Credit Card Debts:

First, roughly 50% of Americans have debt balances, excluding mortgages mind you, of over $25,000, with the average person owing over $37,000, versus a median personal income of just over $30,000.

Therefore, it’s not difficult to believe, as Northwestern Mutual points out, that 45% of Americans spend up to half of their monthly take home pay on debt service alone….which, again, excludes mortgage debt.

Because 45% of Americans are paying up to half of their monthly income to pay down credit cards and debt, they can’t use this income to purchase new goods and services. Thus, a staggering amount of the U.S. Gross Domestic Product (GDP) has been brought forward… thanks to easy credit and credit cards.

And, This is what Americans spent the most money on in the first quarter:

But that doesn’t mean that Americans stopped spending completely, quite the contrary. According to the BEA’s “goalseeked” models, even as retail sales tumbled, as Obamacare continued to drain disposable income away from other discretionary purchases, Americans – who spent far less on cars, clothing and housing in the first quarter than in Q4 – were scrambling to buy… recreational vehicles!?

When I travel up and down on the interstate where I live, I see a lot of these Recreational Vehicles (RVs), especially on the weekends. What is even more hilarious, is to see a huge 4X4 truck pulling a large RV, which is also pulling a smaller trailer behind it with two ATV’s on it. All of these vehicles consume one hell of a lot of fuel.

This sudden motivation for Americans to get into a RV and leave the RAT RACE (for a weekend), makes perfect sense to me. This is an extremely important indicator showing how Americans would rather go further into debt up to their eyeballs…. just to GET AWAY from it all. Americans spending a record percentage of their funds on RV’s to escape the insanity, suggests that the economy is getting ready to roll over and fall off a cliff.

Of course, Americans always want to do everything BIG. So, if you have the money (or credit) and a very large truck, you can pull one of these babies down the highway:

Most of the RV’s I see, have two axles. However, this one has four axles and more square feet than some small homes in older areas surrounding big cities. Unfortunately, RV’s will be one of the first items that will go extinct in the United States when the domestic oil industry disintegrates.

Regardless, let’s get back to the drying up of the U.S. secondary gold supply market.

U.S. Gold Scrap Supply Declines To The Lowest Level In Recent History

According to the data put out in the GFMS 2017 World Gold Survey, U.S. gold scrap supply fell to a low of 58.7 metric tons (1.9 million oz) in 2016 versus a record 160 metric tons (5.1 million oz) in 2011:

What is interesting to see in this chart is that U.S. gold scrap supply in 2016 (58.7 metric tons) is nearly two and a half times less than it was in 2010 (143 metric tons) while the gold price was even higher. Thus, Americans pawned off a great deal more gold in 2010 when the price was lower at $1,225 compared to $1,267 in 2016. Which means, the U.S. gold scrap supply market is drying up.

This can be more clearly seen in the following chart below:

Not only has the U.S. gold scrap supply fallen 2.5 times from its peak in 2011, it is also less than it was in 2003 when the gold price was 3.5 times less. Americans pawned 67.6 metric tons (mt) of gold in 2003 when the price was $363 on ounce. However, with the gold price at a much higher level of $1,267 last year, U.S. gold scrap supply fell to a low of 58.7 mt.

Again, the data implies that the U.S. secondary gold scrap supply market is likely drying up.

As was stated in the beginning of the article, total U.S. gold scrap supply equaled nearly 1,000 mt from 2008 to 2016 (actual figure was 982 mt). What is even more interesting, is if we compare U.S. jewelry demand versus gold scrap versus China & India.

When the gold price reached a peak of $1,900 in 2011, U.S. jewelry demand was 60.3 mt. Again, this is the year U.S. gold scrap supply reached a record 160 mt. We must remember, most of gold scrap comes from recycled gold jewelry. Which means, Americans pawned 266% more gold than their gold jewelry demand in 2011.

Here are the 2011 Gold figures for the U.S., China & India:

2011 U.S. Gold Scrap 160 mt / 60.3 mt Gold Jewelry Demand = 266%

2011 Chinese Gold Scrap 144 mt / 547 mt Gold Jewelry Demand = 26%

2011 Indian Gold Scrap 58 mt / 667 mt Gold Jewelry Demand = 9%

As we can see, Americans pawned off 266% more gold than their annual gold jewelry demand in 2011, versus 26% for the Chinese and only 9% for Indians. While some Chinese and Indians were selling their gold jewelry as scrap in 2011, the majority were holding on to it, especially in India. Of course, this is no secret as India tradition is to build their wealth by acquiring gold jewelry.

Americans are in serous trouble as they have sold off the family’s gold jewels to go further into debt, while the Asians and Indians continue to acquire the yellow precious metal. When the markets finally crack, very few Americans will be holding gold. Unfortunately, the majority of Americans will see their highly inflated investments of STOCKS, BONDS and REAL ESTATE collapse while the value-price of gold skyrockets.

end

Bitcoin now over 300 dollars above gold  as we witness relentless Japanese buying frenzy

(courtesy zero hedge)

Bitcoin Soars Above $1,600 On Relentless Japanese Buying Frenzy

Four days ago we reported that bitcoin has surged above $1,400, hitting a new lifetime high, while rising above $1,500 on certain Chinese exchanges. Since then, bitcoin’s latest exponential rise has only accelerated, and moments ago the price of the cryptocurrency surged as high as $1,600 on the Coinbase exchange, rising as high as $1,655 on the troubled Bitfinex exchange.

What is prompting this relentless surge in Bitcoin?

Several things.

The first, as we noted on Monday,  was “plain old supply and demand.” While unclear if the result of a regulatory crackdown seen recently in Chinese-based exchanges, Hong-Kong based Bitfinex and some other crypto exchanges in the industry “have been dealing with liquidity and withdrawal issues the past few weeks.” Specifically, Bitfinex had trouble processing transactions after the Taiwanese banks that handle them started blocking requests. That’s part of a trend where some banks are pulling out of sectors they deem risky. A representative from the exchange had confirmed to the WSJ that the inability of investors to withdraw bitcoin is affecting the price. Perversely, instead of forcing the price of bitcoin lower, the liquidity squeeze was forcing traders to offer higher bids to get their bitcoin out, which is subsequently forcing the price up.

Then, there is Japan.

As we observed previously, according to Japan’s Nikkei more than 10 Japanese companies are launching exchanges for bitcoin and other virtual currencies, with an eye to tap growing demand after legal changes that make such trades cheaper and easier in the country. As discussed previously, starting July, Japan’s consumption tax will no longer apply to purchases of virtual currencies. Exchanges in Japan have also been required since April to obtain a special license, which has requirements for finances and asset management structures, from the Finance Ministry.

One example: SBI Holdings has set up SBI Virtual Currencies, an exchange between the yen and cryptocurrencies like bitcoin and that of the Ethereum platform. The GMO Internet group is also establishing its own company, with plans to increase the number of digital currencies it trades based on demand. Kabu.com Securities and foreign exchange trader Money Partners Group plan to enter the field as well.

While the Bitfinex issue my be localized, Japan’s demand has been clearly confirmed by capital flows on various exchanges. Alex Sunnarborg, a CoinDesk research analyst, pointed to a spike in global trading volume, especially from Japan and its bitFlyer bitcoin exchange.

As the chart below shows, Japan’s currency JPY has been responsible for more than half, or 52.35% of bitcoin trading volume in the recent 24 hours, followed by the USD at 28.12%, CNY 8.23%, EUR 4.92% and KRW 2.9%.  The rise in value shows a surge in trading activity, nearly $700 million in bitcoin according to CoinMarketCap. The trading is markedly led by Japanese markets

As Cryptocoinsnews adds, the Yen-bitcoin trading is all the more notable given that Japan continues to impose an 8% consumption rate tax on purchasing bitcoin through exchanges. Toward the end of 2016, Japanese officials took the call to formally end this tax tariff, a move that will go into effect in July this year.

Finally, there is the recent spike in demand for all other alt-coins.

As we further noted on Monday, there has been ongoing investor interest in other cryptocurrencies such as Ethereum which today also reached record highs, rising above $90, further boosting demand, according to Sunnarborg. These alternative digital currencies are usually bought and sold with bitcoin, requiring traders to buy bitcoin.

The Ripple network is experiencing adoption by a large number of financial institutions to process domestic and cross-border payments. This, in turn, has sparked interest in Ripple’s digital currency, which has had an impressive rally in the last two months, increasing from $0.0054 on March 1 to $0.054 on May 1.

We summarized the ongoing bitcoin frenzy as follows on Monday: “just as the Chinese bubble frenzy in bitcoin is fading, it may be replaced with a new one, in which thousands of Mrs. Watanabe traders shift their attention away from the FX market and toward digital currencies” and added that “If the transition is seamless, there is no telling just how far this particular bubble can grow.

Four days later and $200 dollar higher, we are observing first hand just how accurate this predication may have been.

end

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

 
 

1 Chinese yuan vs USA dollar/yuan SLIGHTLY WEAKER  6.8958(   DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.8952/ Shanghai bourse CLOSED DOWN 7.97 POINTS OR .25%   / HANG SANG CLOSED DOWN 12.25 OINTS OR .05% 

2. Nikkei closed UP 135.15 POINTS OR .70%   /USA: YEN RISES TO 112.87

3. Europe stocks OPENED ALL IN THE GREEN        ( /USA dollar index RISRS TO  99.11/Euro DOWN to 1.0908

3b Japan 10 year bond yield: RISES TO   +.021%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112871/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  47.28 and Brent: 50.15

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 RISES TO  +.377%/Italian 10 yr bond yield DOWN  to 2.254%    

3j Greek 10 year bond yield FALLS to  : 6.00%   

3k Gold at $1233.40/silver $16.46 (8:15 am est)   SILVER ABOVE  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 57/100 in  roubles/dollar) 57.84-

3m oil into the 47 dollar handle for WTI and 50 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 DEVALUATION SOUTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.87 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  .9926 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0844 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.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017 

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.377%

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 2.342% early this morning. Thirty year rate  at 2.983% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

S&P Futures Jump Ahead Of GOP Healthcare Vote, Ignore China Commodity Crash

 

S&P futures rose on hopes a successful Republican healthcare vote on Thursday will unlock the Trump fiscal agenda, while European shares jumped to a 20 month high on signs Macron is poised to win Sunday’s French election coupled with reassuring corporate results, including strong earnings from HSBC, even as Chinese and Australian stocks fell as commodities, and iron ore futures particularly, tumbled. Oil also declined while the Bloomberg Dollar spot index fell 0.1% in London morning trading, after gaining 0.4% Wednesday. It weakened against all but two of its Group of 10 peers.

As reported overnight, Iron ore traded in China plunged limit down (-8%) in the afternoon session, with Rubber also limit down (7% lower), and steel rebar, coke, coking coal tumbling over 6% on concerns a crackdown on Wealth Management Products and shadow banking in general – in addition to the worst service sector PMI print in nearly a year – could result in a hard-landing for the Chinese economy (something both PIMCO and Kyle Bass warned about in the past 24 hours). Of note: the drop in iron ore prices was the biggest so far this year.

Concerns about a crackdown of credit in China also dragged 10-yr treasury futures lower, down 0.44% at the close, while the 21st Century Business Herald reported that Chinese borrowing costs in April surged with the average coupon rate up near 200bp.

Chinese worries however were lost on Europe, if only for the time being, after Europe reported a stronger than expected Service PMI print, rising to 56.4 from 56.0, beating expectations of 56.2, the 46th consecutive month of expansion and the highest reading since April 2011. Of note: Italy posted a nearly 10 year ago on its composite PMI category.

Helping European risk sentiment, a poll showing Macron had outperformed far-right candidate Marine Le Pen in a televised debate sent short-term French bond yields to their lowest in five months, with encouraging euro zone data also helping the mood.  The most recent Oddschecker data showed that the market now gives Macron a 90% probability of victory.

Additionally, a flurry of stronger than expected earnings updates in Europe sent the STOXX 600 up 0.4% to its highest since August 2015, gaining for the day in a row, and included a smaller-than-feared fall in bank giant HSBC’s profits which sent its shares up more than 3%.  The Stoxx Europe 600 and FTSE 100 also headed higher. Oil and gas stocks were also up 1.1 percent following robust updates from both Statoil and Royal Dutch Shell, which rose 3 percent and 2.3 percent respectively.

A rebounding European economy and a string of upbeat earnings are prompting firms from Morgan Stanley to Deutsche Asset Management to boost allocations to the region’s stocks. After trailing for most of last year, the Stoxx Europe 600 Index has outpaced the S&P 500 Index.

“There are a number of things playing out at the moment. Traditionally in May there is a strong dollar effect and that is adding to the pressure on the commodity bloc,” said Unicredit’s head of FX Strategy Vasileios Gkionakis. “In Europe it is slightly different. There is what is going on with the French election and we have been seeing some strong data.”

“We see more value in Europe versus the U.S.,” Deutsche Asset’s global head of research Phil Poole said in an interview with Bloomberg TV’s Mark Barton. The investment arm of Deutsche Bank AG increased allocation to Europe in its multi-asset portfolios from the lowest on record in the past quarter, Poole said. “Valuations are attractive, the European economy is growing. We feel there’s too much optimism priced into the Trump stimulus program.”

In the US, S&P 500 futures climbed on hopes Obamacare will get repealed giving a fresh boost to the Trump fiscal agenda and as investors awaited earnings reports from companies including Kellogg and Chesapeake. Futures on the S&P 500 Index expiring in June climbed 0.3 percent ot 6.75 to 2.390 at 6:40 am in New York. The benchmark hasn’t posted gains or losses exceeding 0.2% for six straight sessions, and has struggled to top a record last seen on March 1. Contracts on the Dow Jones Industrial Average added 52 points to 20,931 on Thursday.

At the end of its two-day meeting, the Fed kept its benchmark interest rate steady, as expected, but downplayed weak first-quarter economic growth and emphasized the strength of the labor market, a sign it was still on track for two more rate increases this year. Futures traders are now pricing in a 72 percent chance of a June rate hike, from 63 percent before the Fed’s statement, according to the CME Group’s FedWatch Tool. Attention now turns to U.S. non-farm payrolls for March, due on Friday, after separate data showed private employers added 177,000 jobs in April. That was higher than expected but the smallest increase since October.

After the dollar had risen across the board after the Fed’s meeting on Wednesday, the dollar index which measures it against the top six world currencies, was modestly lower, erasing some gains. It was, however, well higher at 113.00 yen. The euro meanwhile drew some support from Macron’s performance ahead of Sunday’s election run-off, and was barely budged at $1.0876.

In commodities, oil fell for a third session in four to leave it near its lowest since late March at $50.50 after the China services wobble and supply data had shown a smaller than expected decline in U.S. inventories. Bellwether industrial metal copper was also teetering near a four month low on what traders said was China-based selling and on expectations that two U.S. rate rises this year could curb interest in dollar-denominated metals. Iron-ore futures slid 5.3 percent. Copper futures dropped 0.4 percent extending Wednesday’s worst tumble since 2015.  Oil declined 0.7 percent to $47.46 a barrel.

“Later today there is a mass of U.S. data including key employment numbers, durable goods and factory orders and if these also fall below expectations it would be reasonable to expect another wave of selling,” Kingdom Futures said in a note.

Occidental, Regeneron, Activision Blizzard among companies reporting earnings. Factory orders and durable goods orders due. U.S. MARKETS

Bulletin Headline Summary

  • European equities trade modestly higher with Shell leading energy names higher
  • EUR on the front foot as Macron clears TV hurdle, alongside firm Eurozone PMI figures
  • Looking ahead, highlights include US trade balance, factory orders and a slew of ECB speakers

Market Snapshot

  • S&P 500 futures up 0.2% to 2,387.75
  • STOXX Europe 600 up 0.3% to 390.62
  • MXAP down 0.4% to 149.04
  • MXAPJ down 0.3% to 487.33
  • Nikkei up 0.7% to 19,445.70
  • Topix up 0.7% to 1,550.30
  • Hang Seng Index down 0.05% to 24,683.88
  • Shanghai Composite down 0.3% to 3,127.37
  • German 10Y yield rose 3.8 bps to 0.364%
  • Euro up 0.3% to 1.0918 per US$
  • Brent Futures down 0.6% to $50.48/bbl
  • Italian 10Y yield fell 4.4 bps to 1.967%
  • Spanish 10Y yield fell 1.0 bps to 1.602%
  • Sensex up 0.8% to 30,132.08
  • Australia S&P/ASX 200 down 0.3% to 5,876.37
  • Kospi up 1% to 2,241.24
  • Gold spot down 0.2% to $1,236.22
  • U.S. Dollar Index down 0.04% to 99.17

Top Overnight News

  • China’s risk crackdown is rattling its municipal bond market, with yield premium over Chinese sovereign debt widening to a record
  • In ultra-long Treasury debate, bond analysts find little to like, with strategists say stick with 10- and 30-year auction process as TBAC floats 20-year bond, 50-year zero coupons as alternatives
  • Le Pen unleashed a barrage of attacks on Macron in TV debate as she tried to close a gap of some 20 percentage points in the only head-to-head debate of the French election campaign
  • HSBC Shares Rise on Surprise Revenue Gain as Trading Tops Rivals
  • Boeing to Start Production With JV Partner Tata This Year
  • General Motors China April Vehicle Sales Fall 1.9% on Year
  • Google Says Gmail Phishing Scam Affected Less Than 0.1% of Users
  • Tesla Assures Model 3 on Time as Musk’s Cash Burn Continues
  • WhatsApp Says Access Issue Fixed for Worldwide Users
  • Shell Pumps a Torrent of Cash as Takeover, Cost Cuts Pay Off
  • Big Beer Is Back as AB InBev, Carlsberg Beat Sales Estimates
  • Facebook’s Social Network Fuels Growth as Ad Slowdown Looms

Asian equity markets traded mostly lower after weakness across the commodities complex and as participants digested the latest FOMC which spurred expectations for a June hike. ASX 200 (-0.5%) declined as materials names felt the brunt of the losses in the metals complex, while Shanghai Comp. (-0.3%) and Hang Seng (-0.4%) were pressured as commodity prices in China slumped in which Dalian iron ore futures hit limit down shortly after the open. Downside was also attributed to recent deleveraging in shadow banking, an increase in Chinese short-term money market rates and after Caixin Services and Composite PMI data fell to 11-month and 10-month lows respectively. However, heading into EU trade, the Shanghai Comp staged a modest recovery. As a reminder, Japanese markets remained closed for Greenery Day.

Top Asian News

  • Asian Stocks Decline as Iron Ore Futures Tumble: Markets Wrap
  • China Bonds Seen Extending Drop as PBOC Keeps Tight Rein on Cash
  • China’s Belt-Road Plan May Top $500 Billion, Credit Suisse Says
  • China H Shares Drop Most in Two Weeks Amid Deleveraging Concerns
  • China’s Economy Shaping Up for Positive 2018, Rio Tinto Says
  • Glencore Sees Trading Profit Boost, Enhancing Dividend Outlook
  • Phone Betting Lifts Money Laundering Risk at Manila Casinos
  • Australian Equity Movers: Corporate Travel, Fortescue, Eclipx
  • Beijing Sandstorm Prompts Pollution Warning for Some 22 Million

European bourses are higher this morning as price action has been dictated by the latest slew of large cap earnings. The energy sector outperforms amid gains seen in Shell after they announced profits beat analyst estimates, however FTSE 100 slightly lags its counterparts despite the upside in Shell and HSBC shares, with the index hampered by the upside in GBP, while retail names slip following poor results from Next. In fixed income markets, EGBs trade lower amid the upside in equities, alongside the fall out of the FOMC meeting last night, while various issuance from the likes of Spain and France also kept prices subdued with Bund lower by 45 ticks. Elsewhere, the German/French spread is tighter after polls suggested Macron produced a stronger performance than Le Pen in the TV Presidential debate. The French Presidential candidates conducted a live TV debate in which Macron was seen to have performed better, as an Elabe poll showed that 63% thought Macron won the debate vs. 34% for Le Pen with the rest undecided.

Top European News

  • U.K. Economy Rebounds in April With Unexpected Services Strength
  • Euro-Area Growth Gathers Speed as Top Three Economies Converge
  • BNP Stock Sale Managers Said to Be Left Holding Unsold Shares
  • European Miners Drop to Lowest This Year as Iron Ore Tumbles
  • Buyout Funds in ‘Shock’ as Swedish Tax Nightmare Becomes Reality
  • Swiss Re Profit Drops to Lowest Since 2011 on Cyclone Claims
  • SocGen Profit Drops After $1 Billion Libya Legal Settlement
  • Siemens Is ‘Well-Advanced’ on Health-Care Unit Carve Out
  • Rosneft Claims May Force Sistema to Give Up MTS Control: Citi
  • Norges Bank to Raise Number of Policy Meetings, Publish Minutes

In currencies, the Bloomberg Dollar Spot Index fell 0.1 percent as of 10:33 a.m. in London, after gaining 0.4 percent Wednesday. It weakened against all but two of its Group of 10 peers; the euro added 0.4 percent to $1.0927, while the pound gained 0.3 percent; the yen lost 0.1 percent to 112.75 per dollar. It has been a choppy session seen in FX this morning, and we can assume the modest excitement in the aftermath of the FOMC statement release has played out. The USD saw a very modest rally after traders focused on the pricing for a Jun hike on what was effectively a `stand pat’ on policy, with the rate path still leaving room for 1 or 2 rate hikes this year. USD/JPY continues to run into resistance ahead of 113.00, and as Yellen and Co continually reiterate, constant data monitoring will determine the pace of rate move. As such, we may need a healthy jobs report tomorrow to see a sustained move above the figure, with techs pointing to resistance circa 113.25-30. USD/CHF has been notably quiet. EUR/USD is where the bulk of action is going through, and we see little sign of any defensive positioning ahead of this weekend’s election run off in France. Indeed, the market is still pushing for a move on 1.0950, as traders seen keen to take advantage of any gap should Macron win this weekend as the polls are suggesting, and a little more so in the wake of last night’s TV debate.

In commodities, further losses in Copper today to the detriment of the AUD, but the 2017 range is still intact as the lower band at USD2.50-45 holds for now. No disputing that the China PMIs have been a major contributor to this weakness, and to metals across the board, whilst supply concerns have been a constant weight through the year so far. This has also been an issue dampening Oil prices, where we now see Brent testing the USD50.000 mark, while WTI grapples with range traders coming in ahead of USD47.00 amid hopes of a production cut extension into H1 as OPEC and non OPEC members have been talking of late. Safe haven demand for Gold is minimal and this is all down to the heightened expectations/polls pointing to a Macron win this weekend. If he does, then Gold heads lower still. We have dipped under USD1235 this morning. Silver holding above mid USD16.00’s after recent slide.

Looking at today’s calendar, we’ll get a first look at the Q1 nonfarm productivity and unit labour costs data, as well as the latest weekly initial jobless claims print, March trade balance, March factory orders and final revisions to the March durable and capital goods orders data. Away from the data there are a number of ECB speakers on the cards for today including President Draghi at 4.30pm BST when he is due to speak in Switzerland. Lautenschlaeger, Praet and Mersch are also due. Away from this, UK local elections are scheduled today with polls closing at 10pm BST. We should have an idea of some of the results early tomorrow morning and they are worth keeping an eye given the proximity to next month’s General Election. Earnings wise today the headliners are AB Inbev, BMW and Shell.

US Event Calendar

  • 7:30am: Challenger Job Cuts YoY, prior -2.0%
  • 8:30am: Trade Balance, est. $44.5b deficit, prior $43.6b deficit
  • 8:30am: Nonfarm Productivity, est. -0.1%, prior 1.3%; Unit Labor Costs, est. 2.7%, prior 1.7%
  • 8:30am: Initial Jobless Claims, est. 248,000, prior 257,000; Continuing Claims, est. 1.99m, prior 1.99m
  • 9:45am: Bloomberg Consumer Comfort, prior 50.8
  • 10am: Factory Orders, est. 0.4%, prior 1.0%; Factory Orders Ex Trans, prior 0.4%
  • 10am: Durable Goods Orders, est. 0.7%, prior 0.7%; Durables Ex Transportation, prior -0.2%
  • 10am: Cap Goods Orders Nondef Ex Air, prior 0.2%; Cap Goods Ship Nondef Ex Air, prior 0.4%

Db’s Jim Reid concludes the overnight wrap

On your long but fulfilling DB powered commute this morning the main stories overnight revolve around the FOMC, the final French Presidential TV debate and plans to avoid the imminent potential US government shutdown. Overnight we can also report the breaking news that House Republicans will today vote on the GOP health care bill. Majority Leader Kevin McCarthy said that the Republican bill will have the votes required to push through so we’ll see how that goes today.

In terms of the Fed yesterday, as expected there were no real surprises to come from the decision to keep rates unchanged or out of the post meeting FOMC statement but there was just about enough for the market to ramp up the odds for another tightening next month. Indeed Bloomberg’s calculator (which overstates a little) now has the probability of a hike at 90% which compares to 67% this time yesterday. With regards to the statement itself the FOMC acknowledged the soft quarter for growth in Q1 and also softness in consumer spending but also emphasised the need to look through it and that the slowdown is likely to be transitory. There was a reference to fundamentals underpinning consumer spending remaining solid and the Committee generally sounded more upbeat on business fixed investment. On the labour market the Fed said that job gains were solid in recent months. The Committee also acknowledged the drop in core inflation in March and that while market-based measures of inflation compensation remain lower, survey-based measures of longer-term inflation expectations are little changed on balance. So all-in-all more of the same. Tomorrow’s Fedspeak could well be more interesting particularly for any snippets around the balance sheet. For now our US economists continue to expect the next rate hike to come in June with high conviction for this view.

A few hours after the Fed and post the US close we then learned that the House had finally approved a $1.17tn spending bill by a majority of 309-118 votes, moving a step closer to avoiding a government shutdown this Saturday. The bill will now pass over to the Senate where it is expected that a vote will be held today. According to the WSJ the bill supposedly excluded a number of Trump’s top priorities including a smaller than expected increase in military spending. The other main event after the US close was the live French presidential debate which finished up at 10.30pm BST last night having been going for about 2 hours. In terms of the outcome a snap Elabe poll out just after the debate showed that Macron won by a score of 63% to 34% over Le Pen. As expected there were the usual fiery exchanges but nothing that really moved the dial. Instead the general feeling was that Macron solidified his position and lead. Le Pen was questioned intensely about her plans for a dual-currency regime for the franc and euro while the FT also summarised that Macron focused routinely on the contradictions and inaccuracies in Le Pen’s plan to exit the EU. Le Pen on the other hand spent a great deal of time portraying Macron as an elitist. The Euro traded in a tight range through much of the debate and finished up little changed compared to where it was when the debate started.

With regards to markets yesterday, in what was another otherwise subdued day of price action, the most notable moves came in Treasuries following the FOMC. 2y and 10y yields ended the day up +3.6bps and +3.8ps respectively, although 30y yields ended up little changed with the US Treasury Borrowing Committee warning against possible issuance of long-dated bonds. The Greenback also firmed up with the Dollar index up about +0.45% versus this time yesterday. Gold and Silver sold off -1.48% and -2.14% respectively. Meanwhile price action in US equities remains incredibly dull. The S&P 500 did recover from Apple-driven heavier losses at the open but still finished down a small -0.13%. To put it in perspective the last six daily closing changes for the S&P have been -0.13%, +0.12%, +0.17%, -0.19%, +0.06% and -0.05%.

It wasn’t much more exciting in Europe yesterday where the Stoxx 600 closed -0.04%. European credit did outperform however led by financials with Senior and Sub Fins iTraxx indices ending 1bp and 7.5bps tighter respectively. One asset class which did see a decent move yesterday was base metals with Copper (-3.48%) in particular suffering its biggest-one day decline since 2015 following bearish stockpiles data.

That weakness in commodities coupled with further softening data in China this morning has seen most bourses in Asia edge lower in the early going. As we go to print the Hang Seng (-0.52%), Shanghai Comp (-0.25%) and ASX (-0.52%) are all in the red, although the Kospi (+0.57%) has gone against the grain. On that data, China’s Caixin services PMI in April declined 0.7pts to 51.5 which has left the composite reading at 51.2 versus 52.1 in March. The Aussie Dollar is also weaker this morning with the moves in commodities.

Moving on. In terms of the economic data in the US yesterday the April ADP print came in more or less in line with the consensus at 177k (vs. 175k expected). That follows a slightly downwardly revised 255k in March. It’s worth adding that the consensus for Friday’s NFP is hovering around 190k at present. Away from that the headline ISM non-manufacturing for April rose a solid 2.3pts to 57.5 (vs. 55.8) which is a smidgen below the YTD high made in February. At the same time the services PMI was also revised up 0.6pts to 53.1. Interestingly in the details of the ISM, the new orders component rose to a new 12-year  high of 63.2 however the employment component edged down another 0.2pts to a fairly low 51.4. Remember also that the employment component in the ISM manufacturing softened so that may sound some caution ahead of payrolls.

In Europe yesterday the main report of note was the Q1 GDP print for the Euro area which revealed that the economy grew +0.5% qoq in Q1 which was in line with the market and one-tenth ahead of what our European team had pegged. Away from that, PPI in the Euro area was reported as falling -0.3% mom in March, while unemployment in Germany held steady at 5.8% in April.

Before we look at the day ahead its worth noting that yesterday Puerto Rico officially filed for protection from its creditors in what is being called by numerous press outlets the largest debt restructuring filing by a local government or US state ever. According to Bloomberg the debt amount is around $74bn which the commonwealth is asking a federal court to force creditors to take losses on.

Looking at today’s calendar, this morning in Europe the main focus will be on the final April PMI revisions where we’ll get the services and composite readings and also a first look at the data for the UK and periphery. Also due out this morning is money and credit aggregates data for the UK for March, and retail sales data for the Euro area. In the US this afternoon we’ll get a first look at the Q1 nonfarm productivity and unit labour costs data, as well as the latest weekly initial jobless claims print, March trade balance, March factory orders and final revisions to the March durable and capital goods orders data. Away from the data there are a number of ECB speakers on the cards for today including President Draghi at 4.30pm BST when he is due to speak in Switzerland. Lautenschlaeger, Praet and Mersch are also due. Away from this, UK local elections are scheduled today with polls closing at 10pm BST. We should have an idea of some of the results early tomorrow morning and they are worth keeping an eye given the proximity to next month’s General Election. Earnings wise today the headliners are AB Inbev, BMW and Shell.

end

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 7.97 POINTS OR .25%  OR / /Hang Sang CLOSED DOWN 12.25 POINTS OR .05% .  The Nikkei closed UP 135.15 POINT OR .70%/Australia’s all ordinaires  CLOSED DOWN .26%/Chinese yuan (ONSHORE) closed DOWN at 6.8958/Oil DOWN to 47.28 dollars per barrel for WTI and 50.15 for Brent. Stocks in Europe OPENED IN THE GREEN   ..Offshore yuan trades  6.8952 yuan to the dollar vs 6.8958 for onshore yuan. NOW  THE OFFSHORE IS A LITTLE WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN SLIGHTLY WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN: WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

b) REPORT ON JAPAN

c) REPORT ON CHINA

I brought this important commentary/video to you earlier in the week.  Kyle Bass warns that there are huge problems facing China especially with their WMP’s  (WealthManagementProduct).  In China these total over 4 trillion dollars worth of assets many of which are non performing.  The total of all assets:  34 billion so these products represent around 10% of total assets.  If you recall in the tape he warned us to watch for a rise in the overnight yuan inter banking rate.

lo and behold: it rose hugely last night

(courtesy Bloomberg/zero hedge)

a must view

 

Kyle Bass Warns “All Hell Is About To Break Loose” In China

China’s credit system expanded “too recklessly and too quickly,” and “it’s beginning to unravel,” warns Hayman Capital’s Kyle Bass.

Crucially, Bass notes that ballooning assets in Chinese wealth management products are another sign of a looming credit crisis in the nation.

“Some of the longer-term assets aren’t doing very well,” Bass said on Bloomberg TV from the annual Milken Institute Global Conference in Beverly Hills, California. “As soon as liabilities have problems – meaning the depositors decide to not roll their holdings – all hell breaks loose.”

The wealth management products, or WMPs, have swelled to $4 trillion in assets in the last few years, he said., on a $34 trillion banking system…

“think about this – in the US, our asset-liability mismatch at the peak of our subprime greatness was around 2%!China’s mismatch is more than 10% of the system.”

Must Watch simplification of the next stage of the credit cycle in China…

https://www.bloomberg.com/api/embed/iframe?id=b00cebb6-70c5-455a-8d89-bd7551a30959

Timing the drop is hard, Bass notes, reminding Bloomberg’s Erik Schatzker that “in the US, the first bumps in the road hit in early 2007, and we didn’t start to really accelerate until mid 2008… even a large unraveling takes a while.

Bass has been sounding the alarm for some time that debt-burdened Chinese banks need to be restructured…

“What you see when the liquidity dries up is people start going down… and this is the beginning of the Chinese credit crisis.”

And judging by the collapse in both Chinese stocks and bonds, the deleveraging is accelerating…

 

And liquidity is getting desperate again…

 

(courtesy zero hedge

Chinese Commodities Crash Limit-Down As Wealth Management Product Issuance Collapses

It seems Kyle Bass’ warning was extremely timely. The deleveraging of China’s $4 trillion shadow banking system just accelerated massively as Bank Wealth Product Issuance crashes 15% month-over-month. With stocks and bonds already plunging, commodities joined the ugliness tonight with Dalian Iron Ore limit down (8%) at the open (not helped by tumbling auto demand).

As Bloomberg reports, China April Bank Wealth Product Issuance Falls 15% M/m

Number of wealth management products issued by banks fell to 10,038 from 11,823 in March, 21st Century Business Herald reports, citing citing Wind Info data. The decline came after regulator tightens regulation on macro-prudential assessment and interbank business. Among top ten banks by wealth product sales, nine sold less than previous month (with the Agricultural Bank coillapsing 48%) only Minsheng Bank issued more.

And it’s weighing on the economy al;ready as China PMIs are all plunging (with Caixin Services tonight) – Activity in China’s services sector grew at its weakest rate in 11 months, a survey sponsored by Caixin showed on Thursday, in a further sign the world’s second-largest economy is losing some steam. The Caixin China General Services Business Activity Index fell for the fourth straight month to 51.5 in April, down from 52.2 in March and the lowest since May 2016’s 51.2, according to the poll compiled by international information and data analytics provider IHS Markit.

As Bass concluded so ominously:

“What you see when the liquidity dries up is people start going down… and this is the beginning of the Chinese credit crisis.”

And that’s what we are seeing…

Commodities…

Are following Bonds…

 

And stocks…

 

And as PIMCO noted earlier, the China credit impulse is now running in reverse…

 

The question now is not if China slows, but rather how fast. Equally important perhaps is the extent to which commodity prices will correct lower, especially in light of the current enthusiasm about the potential strength of the global growth cycle. The impending slowdown in China could be compounded by ongoing government efforts to rein in shadow bank credit; the cost of policy mistakes rises once the credit impulse goes into reverse.

END

 

I brought this important article to you on the weekend but it is worth repeating

a must read.

(courtesy Alasdair Macleod/Mises Institute)

4. EUROPEAN AFFAIRS

There was a huge debate last night between marine le Pen and Macron.   Le Pen states that if she loses, France will be governed by Merkel. The polls seems to suggest a Macron victory on Sunday but he will not be able to pass much legislation

(courtsey Mish Shedlock/Mishtalk)

Marine Le Pen Slams Macron: “France Will Be Governed By A Woman… Either Me Or Madame Merkel”

Authored by Mike Shedlock via MishTalk.com,

The gloves came off in the final debate before the May 7 French presidential election.

It was a big mud-slinging affair, mostly by Le Pen, if one believes the mainstream media comments.

France24 had live coverage of the Acrimonious Final Debate translated into English.

France will be Governed by a Woman

The following France24 comments are in reverse order (last in, first out)

A poll conducted by Elabe says 63 percent of people polled found Macron more convincing than Le Pen in tonight’s debate.

 

In his closing remarks, Macron notes that Le Pen used up her very last minutes by filling them up with lies “without saying what she wants for this country”.

 

“France is in a deep crisis. It’s a crisis of morale linked to the failed politics of the past 20 years, the failure to create unity because some play on people’s anger. I have listened to this anger, doubts and grievances. I want to respond to it with courage.”

 

Le Pen also says the French deserve better than being thrown into a war based on chasing profits.

 

“That’s the France you want,” she tells Macron, accusing him of being a candidate representing the closure of factories, maternity wards, police stations, hospitals and says he’s ready to open France’s doors to “massive immigration”.

 

Le Pen charges Macron with being under German Chancellor Angela Merkel’s thumb. “In any case, France will be led by a woman: Either me or Mrs. Merkel,” Le Pen says.

 

“What a ridiculous phrase!” Macron retorts.

 

Macron is challenging Le Pen on whether she actually proposes France to leave the euro or not

 

“The euro is the currency of the bankers. It is not the currency of the people,” Le Pen says.

Winner?

I have no idea who “won” the debate if anyone. It’s unlikely that either party will be able to pass their legislation.

The election will probably be closer than most think, but France does not yet seem ready for Le Pen. Six years from now may be another story.

Italy in 2018 is far more likely than France to be willing to kiss the Euro goodbye.

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

I guess this is as good a reason for gold to fall as it gets:  Iran attempts a missile launch from a submarine but it too fails like China’s attempt

(courtesy zero hedge)

Iran Attempts Missile Launch From Submerged Submarine; Ends In Failure

According to reports from Fox News, Iran attempted to launch a cruise missile from a submerged Yono-class “midget” submarine in the Strait of Hormuz on Tuesday but the test ultimately failed.  Back in February, Iran claimed to have successfully tested a submarine-launched missile though it was not immediately clear if this week’s test was the first time the Iranians had attempted to launch a missile from a submerged submarine.

Of course, this missile test is the latest event in a long-running rivalry between Iran and the United States in and around the Strait of Hormuz, which guards the entrance to the Gulf. About 20% of the world’s oil passes through the waterway, which is less than 40 km wide at its narrowest point.

Iran

 

This incident comes on the heels of other recent provocations from Iran including yet another close encounter between a U.S. Navy Destroyer and an Iranian Revolutionary Guard vessel just a few weeks ago.

In April, the U.S. Navy’s guided-missile destroyer fired a warning flare after an Iranian Revolutionary Guard vessel came within 1,000 meters of the USS Mahan.

 

The USS Mahan “made several attempts to contact the Iranian vessel by bridge-to-bridge radio, issuing warning messages and twice sounding the internationally recognized danger signal of five short blasts with the ship’s whistle, as well as deploying a flare to determine the Iranian vessel’s intentions.”

According to the Foundation for Defense of Democracies, Iran has conducted as many as 14 ballistic missile launches since the landmark nuclear agreement in July 2015. A senior U.S. military official told Fox News that Iran had made great advances in its ballistic missile program over the past decade.

Late last month, Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford said Iran’s behavior had not changed since the White House put the Islamic Republic “on notice” following Iran’s successful intermediate-range ballistic missile test-launch in late January.

Meanwhile, this latest missile test comes just one day after members of the  Senate Foreign Relations Committee announced they’re working on a new Iran sanctions bill.

“The ranking member and I are in strong agreement on a pathway forward and that’s what we’re going to do. We’re going to do an Iran sanctions bill. It’ll be done toward the end of this work period. We’re also working together on a bill to push back against Russia in Europe and what they’re doing, and those are the two courses of action that we’re taking.”

Seems like it may be time to air drop some more Swiss Francs into Tehran…oh wait, the Obama guide to resolving foreign policy disputes with Iran no longer applies…

6 .GLOBAL ISSUES

This is getting a little scary for Canada:  BlackRock warns that it would be “folly” to ignore Home Capital woes

(courtesy Onosko/Bloomberg)

BlackRock Warns It Would Be ‘Folly’ to Ignore Home Capital Woes

Maciej Onoszko
May 3, 2017, 3:47 PM EDTMay 3, 2017, 4:44 PM EDT
  • The situation is isolated for now but it ‘can get messy’
  • Disorderly fallout could hurt credit markets and economy

The longer Home Capital Group Inc.’s woes continue, the bigger the risk of a disorderly fallout that could hurt credit markets and Canada’s economy, said Aubrey Basdeo, head of local fixed income at BlackRock Inc.

Home Capital has disclosed a run on deposits since April 19, when the securities regulator accused it of misleading investors. While the alternative mortgage lender has rebutted the allegations and is broadly viewed as small and unrepresentative of the property or financial sectors, its troubles forced a rival to seek a funding backstop and have sparked concern of a slowdown in lending. The Canadian dollar fell to a 14-month low this week.

“This could be just an isolated situation and that’s the higher-probability outcome at this point, but you cannot ignore the risk that this can get messy,” Basdeo said by phone. “At the moment it doesn’t appear to be a credit issue — it’s just a liquidity issue. But a liquidity issue can easily morph itself into a credit issue.”

The concern runs deep because real estate has been a key driver of Canada’s growth, and investors can’t dismiss the specter of the housing crash that triggered the 2008 global crisis. Home Capital’s troubles also coincide with policy makers’ attempts to curb runaway house prices in Toronto, Canada’s most populous city.

“The focus now is on the potential for a systemic issue across the economy and it would be folly just to ignore that,” Basdeo said.

The Canadian dollar has fallen 2.5 percent over the past month, the worst performance among Group of 10 currencies. It fell 0.2 percent to C$1.3729 per U.S. dollar as of 4:25 p.m. in Toronto, after sliding to the weakest since February 2016 on Tuesday. Shares in Home Capital fell 11 percent to C$6.90 in Toronto on Wednesday and are down about 70 percent since April 19.

The troubles Home Capital faces aren’t indicative of broader problems in the Canadian real estate market, while the country’s banking and regulatory system remains strong, Bruce Flatt, chief executive officer of Brookfield Asset Management Inc., said on Tuesday.

Local banks and financial firms have so far shown little interest in buying Home Capital. S&P Global Ratings has downgraded the company twice in six days, from investment grade to junk. Home Capital on Tuesday postponed the release of first-quarter earnings by about a week to May 11.

“It’s in the interest of the financial system to resolve this pretty quickly. This is not going to be a six-month exercise,” Basdeo said. “The risks of some negative feedback loop developing could make this very problematic and potentially becoming a more systemic issue.”

 

end
RBC’s Charlie McElligott:  “someone is blowing up”
China’s tightening is causing massive dislocations all over the globe
(courtesy Charlie McElligott/RBC..zero hedge)

“Someone Is Blowing Up” – RBC Warns China-Induced Unwinds Are Escalating

“Something is off,” warns RBC’s head of cross-asset strategy Charlie McElligott in the introduction to his latest market noting that the swing in US fiscal policy optimism is coming at a critical time as the China’s liquidity tightening is spooking the reflation story.

SUMMARY:

Movement on US fiscal policy is currently driving US rates and equities higher, counteracting the tremendous negative implications of this ‘Chinese tightening / deleveraging’ story and the impact this is having upon commodities (industrial metals & crude) and thus, ‘inflation expectations.’

 

‘Connecting the dots’ between the crude oil / commodities selloff and a strong (negative) reversal in ‘mean reversion strategies’ both cross- and inter- sector (energy) within equities, as well as notable drawdowns in ‘momentum’ market-neutral strategies over the past few weeks.

*  *  *

FISCAL POLICY OPTIMISM SWING COMES AT CRITICAL TIME, AS CHINA LIQUIDITY TIGHTENING STORY IS SPOOKING REFLATION:

The big +++ story overnight: Republicans are planning a ‘make or break’ vote on the ACA repeal today, as the GOP feels they now have the votes to pass the Trump campaign healthcare promise.  This sudden swing to ‘movement’ / optimism speaks to the ‘pessimistic overshoot’ seen across the Street with regards to the consensually negative view on ‘fiscal policy’ implementation, following the administration’s / Republicans’ self-inflicted wounds of the past few months.

NOW, this opens the door again to not just tax reform (as it creates a much more benign revenue ‘starting point’ for tax-cut offsets), but potentially infrastructure as well, which might too be bundled into the tax plan.  Yes, none of this is ‘imminent’ per se, but the sentiment-inflection here is swift and of extreme importance to the ‘reflation’ trade. 

As such, equity futures and US nominal rates are currently holding higher, despite what looks to be a total breakdown in crude oil and commodities turning outright ugly now.

 

And today is seeing the move extend with the biggest single day drop since Nov 2016…

 

This newly-found ‘US fiscal policy optimism’ could not have come at a better time for the ‘reflation’ camp, who have been sweating bullets in recent days because our much-discussed ‘Chinese tightening / deleveraging’ theme is playing-out real-time and wreaking havoc on global commodities–particularly with industrial metals (Dalian Iron Ore limit-down overnight -8.0% and reopening down another -5% today).  Look at the carnage on the Shanghai Futures Exchange, particularly in the MTD / QTD columns:

This comes following the total meltdown in copper (-4.0%, and another -1.7% move this a.m.) during yesterday’s US session, while too we see the breakdown in the crude oil complex accelerating with WTI making YTD lows this morning while falling through its trend-support line dating back to last August.  BHP and RIO are the proxy for the breakdown in the equities-complex (while a popular US equities ‘inflation’ basket is crushed a massive -4.3% over the past five days), while too we see China- / resources- levered AUD come unglued in the FX space, now -2.3% month-to-date despite a very ‘meh’ USD.  At the same time, we’ve now seen weaker Chinese Manu PMIs and Caixin Composite PMIs over the past week, in conjunction with an ISM Manufacturing misses in US.

All of this is tied-into the enhanced Chinese efforts to deleverage the economy via ‘measured tightening’ (higher money markets rates—see O/N SHIBOR again making new 2 year highs last evening) and reduced liquidity (net removals as MLF loans roll-off versus now-smaller / not offsetting RR cash injections and OMO’s).  In conjunction with these quantitative efforts, the Chinese are also ‘cracking down’ on shadow financing and wealth management products, both of which participate in the liquidity / commodity-price feedback daisy-chain (to my point yesterday and in the past on higher short-term rates acting as ‘margin calls’ on ‘commodities as collateral’ financing trades).

Mark Orsley and I have been working on a “Chinese Liquidity Monitor” which tracks the PBoC’s various measures (repos, reverse repos, OMOs, SLFs, MLFs, Pledged Supplementary programs)—see below.  The key point here: it’s not just the sharp decline in the ‘rate of change’ of PBoC ‘lending’ / ‘financing’ / ‘credit creation’….it’s that liquidity is being outright REMOVED.

It makes total sense too—the Chinese have recently used the ‘air-cover’ of the Fed’s own tightening to conduct their own–so the current timing is perfect, as a June FOMC hike became that much more of a ‘lock’ after yesterday’s hawkish message was successfully delivered (looking through the Q1 data softness as “transitory”).

The simple fact is that global liquidity–and thus, financial conditions as well–are tightening.

US real rates are gapping-tighter, as 5Y TIPS yields have swung from -24bps on April 12th to this morning’s +13bps.  3m LIBOR has MORE THAN DOUBLED since June and currently sits at highs since March 2009.  As mentioned earlier, overnight SHIBOR printed another new 2 year high, same for Chinese 10Y government bond yields.  US nominals are back approaching the upper end of their recent range as well.  Yes, if this was a pure reflection of growth, it would be an outright ‘risk-asset positive.’  But it’s much more nuanced than that, especially from the Chinese ‘demand driver’ impact on the global economy.  Tighter financial conditions à slower growth à lower inflation.

From a risk-perspective though, this is then counter-balanced via by-and-large ‘still expansionary’ global PMIs, BIG corporate earnings growth and now, into the aforementioned (and SUDDEN) positive uptick in sentiment around US fiscal policy movement.  If fiscal can re-jigger ‘animal spirits’ (especially on the ‘optimism’- / confidence- side), then it becomes much more attractive to put those ‘reflation trades’ back on (rates shorts, long cyclicals / banks / value factor, potential to re-load USD length as well).  To this point, I will continue watching that 2.40 / .45 level (smack-dab btwn 50- and 100-dma’s in UST 10Y yields and the overhead resistance level since late-March—H/T Mark Orsley)…while still feeling confidence that this ‘Chinese tightening’ story (and the impact it is have on commodities and thus, global inflation expectations) will keep US rates ‘anchored’ despite the Fed’s hiking intentions.

NOW LINKING THE ABOVE ‘COMMODITIES / CRUDE DISTRESS’ INTO A NOTABLE DEVELOPMENT IN EQUITIES FACTOR MKT NEUTRAL:

In yesterday’s note, I pointed-out particularly acute ‘unwind’ price-action in US equity 1m ‘momentum’ factor market neutral strategies seen on Tuesday—as ‘momo leaders’ were splattered, while ‘momo losers’ squeezed sharply-higher.  We have now seen a ‘clustering’ of 1.5- to 2.0- standard-deviation drawdowns in the strategy over the past few weeks (almost dating-back to the start of the quarter frankly), which is anecdotally quite atypical in a ‘flat to up’ intraday tape.  It would be safe to surmise that there is either signaling a rotation that is playing-out in the market, or conversely, an unwind of some sort.

Looking back to the start of the quarter though, we haven’t really seen that sector- or factor-level rotation generally-speaking, as thematically, ‘growth’ factors / sectors continue to lead, while at the bottom, we see cyclicals / value / anti-beta still lagging, as they have all year.   But if looking at a strategy such as ‘prior quarter mean reversion’ you begin to see something interesting.

This is crude, but using a simple ‘Q1 mean reversion’ proxy (deployed in Q2), where I go long Energy (worst perf S&P sector Q1) vs short Tech (best perf S&P sector Q1), I see significant signs of ‘stress’ or outright unwind in recent weeks.  The above portfolio run $-neutral has experienced a near 5% swing over the past 3 weeks, with the loss doubling over the past week alone–it’s likely this ‘rate of change’ that is the problem from the risk management perspective.  This of course correlates with the breakdown occurring in crude oil, as WTI is now -11.8% over the past three weeks.

Sector-specific within energy, you see signs as well.  Energy equities trader Ryan Businski noted the following ‘unwind’ behavior across Texas shale plays: “Seeing long sales across the Niobrara names today forcing unwinds/covering in Bakken names. WLL, OAS, CLR rallying with no news Bakken related.”

With the sector now -10.4% YTD within the S&P / -20.3% within the Russell, alongside a lot of talk in recent-weeks of a number of multi-manager shops shuttering energy books, I feel comfortable in stating that somebody’s ‘mean-reversion’ strategy (likely a stat arb / quant fund) has triggered ‘stop outs’ as the underlying commodities space now ‘catches down’ to the behavior already exhibited across the energy equities space throughout the course of 2017.

end

7. OIL ISSUES

Crude oil drops on Russian comments that they may not extend cuts to production.  Also noted is sliding demand

(courtesy zero hedge)

Brent Crude Drops Below $50 After Russian Comments, Sliding Demand Forecast

For the first time since mid-March, Brent Crude prices tumbled below $50 after Russia said no decision had been made yet on extending the oil output cut production deal. This came after the 11th weekly rise in US crude production and concerns from JBC that oil demand is declining rapidly.

Russia Says No Decision Yet on Extending Oil Output Cut W/ OPEC – Russia will make announcement if decision is taken, Kremlin spokesman Dmitry Peskov tells reporters on conference call.

US Crude production rose once again to August 2015 highs…

 

And demand forecasts are tumbling:

 

Andf the result… Brent back below $50…

A further decline to below $49.71/bbl would take Brent to lowest since Nov. 30, day of OPEC meeting where group decided on production cuts strategy. For WTI, a drop to below $47.01/bbl would take commodity to lowest since same date.

(courtesy zero hedge)

Black Gold Bloodbath – WTI Crude Crashes To $45 Handle, 9-Month Lows

“Someone’s liquidating” warns one veteran energy trader as the sudden heavy volume surge to the downside in WTI crude futures smashes oil prices back to the lowest since August 2016.

Surging US crude production (once again to August 2015 highs)…

 

And demand forecasts are tumbling:

 

And loss of faith from the hedge fund community..

and this is what OPEC gets…

8. EMERGING MARKETS

end

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

Euro/USA   1.0925 UP .0037/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RAISING INTEREST RATES/EUROPE BOURSES IN THE GREEN

USA/JAPAN YEN 112.87 UP 0.090(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2884 UP .0013 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

USA/CAN 1.3724 DOWN .0017 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 37 basis points, trading now ABOVE the important 1.08 level  RISING to 1.0925; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 7.97 POINTS OR .25%     / Hang Sang  CLOSED  DOWN 12.25 POINTS OR .05% /AUSTRALIA  CLOSED DOWN .26% / EUROPEAN BOURSES CLOSED IN THE GREEN

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED UP 135.15 POINTS OR .70% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 12.25 POINTS OR .05%  / SHANGHAI CLOSED DOWN 7.97 POINTS OR .25% /Australia BOURSE CLOSED DOWN .26% /Nikkei (Japan)CLOSED UP 135.15 POINTS OR .70%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1234.15

silver:$16.49

Early THURSDAY morning USA 10 year bond yield: 2.341% !!! UP 2 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.983, UP 1  IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 99.13 DOWN 8  CENT(S) from TUESDAY’s close.

This ends early morning numbers THURSDAY MORNING

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.425%  DOWN 4  in basis point(s) yield from WEDNESDAY 

JAPANESE BOND YIELD: +.021%  PAR   in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.60%  DOWN 1  IN basis point yield from WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.254 DOWN 1  POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 66 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.394% up 7 IN  BASIS POINTS ON THE DAY

END

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

Euro/USA 1.0970 up .0016 (Euro UP 83 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.49 DOWN  .289 (Yen UP 29 basis points/ 

Great Britain/USA 1.2916 UP 0.0045( POUND UP 45 basis points)

USA/Canada 1.3738 UP 0.0012(Canadian dollar DOWN 12 basis points AS OIL FELL TO $45.92

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 83 basis points to trade at 1.0970

The Yen FELL to 112.49 for a GAIN of 29 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE BY 45  basis points, trading at 1.2916/

The Canadian dollar fell by 12 basis points to 1.3738,  WITH WTI OIL FALLING TO :  $45.92

The USA/Yuan closed at 6.8958/
the 10 yr Japanese bond yield closed at +.021% PAR IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 6 IN basis points from WEDNESDAY at 2.356% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.005 UP 6  in basis points on the day /

Your closing USA dollar index, 98,79 DOWN 42  CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP  13.57 POINTS OR .19%
German Dax :CLOSED UP 119.94 POINTS OR .96% 
Paris Cac  CLOSED UP 71.42 POINTS OR 1.35% 
Spain IBEX CLOSED  UP 175.90 POINTS OR 1.62%

Italian MIB: CLOSED  UP 410.61 POINTS/OR 1.98%

The Dow closed DOWN 6.43 OR 0.03%

NASDAQ WAS closed UP 2.79 POINTS OR 0.05%  4.00 PM EST
WTI Oil price;  45.92 at 1:00 pm; 

Brent Oil: 48.83 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.34 DOWN 96/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD REMAINS AT  +0.394%  FOR THE 10 YR BOND  4.PM EST EST

END

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:

WTI CRUDE OIL PRICE 4:45 PM:$45.49

BRENT: $48.42

USA 10 YR BOND YIELD: 2.352%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.001%

EURO/USA DOLLAR CROSS:  1.0982 UP .0094

USA/JAPANESE YEN:112.41  UP 0.374

USA DOLLAR INDEX: 98.74  DOWN 47  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2923 : UP .0051  OR 51 BASIS POINTS.

Canadian dollar: 1.3748  DOWN .0021 (CAN DOLLAR DOWN 21 BASIS PTS)

German 10 yr bond yield at 5 pm: +.394%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Stocks Shrug As Obamacare Ouster Trumps Commodity Crash, Crude Carnage

It’s beginning to get hard to ignore the carnage coming from China…

 

So Macro data is collapsing…

 

Commodities are collapsing…

 

And earnings expectations are tumbling…

 

Obamacare repeal trump’d commodity carnage and then stocks clung to unch…

 

The Dow is unch post-Fed, bonds and stocks lower…

 

VIX was smashed lower after the Obamacare Repeal vote, desperate to keep Nasdaq green to show what a great thing this Bill is…

 

The S&P 500 has now closed within a point or so for 8 days…

 

USDJPY ended at the lows of the day…

 

Commodity carnage was the theme of the day as tightening Chinese financial conditions combined with collapsing WMP issuance are sucking the exuberance out of stocks, bonds, and industrial metals…

 

The Dollar Index tumbled, back below pre-French election levels..

 

And 30Y yields back below 3.00% (despite another kneejerk higher)…

 

For now, Trannies and Small Caps are the only ones seemingly aware of reality as Nasdaq tech malarkey remains open bid…

 

Brent broke below $50, WTI ended with a $45 handle and RBOB below $1.50… There will be blood…

 

Citi FX traders noted that as for WTI from here, we’ve noted that $47.00 is the level to watch on a weekly closing basis. Now testing $45.90, our oil colleagues warn that there’s “capitulation out there.”

Open interest has reached a record high. Directionally, in addition to unwinds, fresh selling has been noted since late April – even before players took focus on the (now distant) 200d MA.

That selling continues in this downturn. Psychological support is undoubtedly the $45 area and should that go, those constructive oil will likely get quite worried. Of course there’s OPEC but with the market now fully expecting a 6m extension, that announcement may have fleeting impact.

The crude carnage smashed the Ruble to 2-month lows (testing its 100DMA…

 

 

Meanwhile, Silver ETF is down 14 days in a row – and all-time record run…

 

END

this is bad for Janet and her data dependent data:  USA productivity plunges in Q1

(courtesy zero hedge)

US Productivity Plunges In Q1

US productivity has dropped for 4 of the last 6 quarters, plunging 0.6% in Q1 (dramatically worse than the 0.1% decline expected).

With unit labor costs up 3%, this is the biggest drop in productvity in 15 months and continues the stagnant trend within American workers.

(courtesy zero hedge)

(courtesy zero hedge)

Core Factory Orders Tumble Most In 13 Months

Another ‘hard’ data point disappoints (dramatically). While headline factory orders rose just 0.2% (half the expected 0.4% gain), it was the 0.3% tumble in core orders (ex transportation) that really stands out – the biggest MoM drop since Feb 2016 

(when the world was heading into global recession and only a coordinated global central bank intervention saved it).

The big factors helping in March:

  • Orders for Mining, oil field, and gas field machinery: +16.7%
  • Orders for Defense aircraft and parts: +31.0%

Probably nothing…

(courtesy zero hedge)

Obamacare Implosion: Last Major Healthcare Provider Pulls Out Of Iowa Leaving No Options In 2018

For the past several months we’ve observed in complete amazement as Democrats have repeatedly hailed the ‘great accomplishments’ of Obamacare while the system was literally, and quite tangibly, collapsing in epic fashion all around them.  The ability to blindly and shamelessly support a partisan cause irrestpective of overwhelming facts proving the ineffectiveness of that cause is truly a talent reserved only for politicians, on both sides of the aisle.

The latest evidence of Obamacare’s implosion comes from its stunning collapse in the state of Iowa in just a matter of a few weeks.  Early last month, 2 of Iowa’s 3 remaining healthcare providers, Aetna and Wellmark, announced they would not participate in the state’s exchange in 2018.  Per Bloomberg:

“Earlier today we informed the appropriate federal and state regulators that Aetna will not participate in the Iowa individual public exchange for 2018 as a result of financial risk and an uncertain outlook for the marketplace,” Aetna spokesman T.J. Crawford said in an email. “We are still evaluating Aetna’s 2018 individual product presence in our remaining states.”

On Monday, Wellmark Inc. said it planned to give up on the Iowa Obamacare market in 2018. Wellmark is one of the state’s largest insurers.

Iowa

 

Those decisions left the overwhelming majority of Iowans with just one insurance option for 2018, Medica.  That is, until today when Medica also announced that, “due to instability in the market,” they too would likely have to pull out of Iowa in 2018.  Per the Des Moines Register:

Medica, a Minnesota based health insurer, released a statement suggesting it was close to following two larger carriers in deciding not to sell such policies in Iowa for 2018, due to instability in the market.

 

“Without swift action by the state or Congress to provide stability to Iowa’s individual insurance market, Medica will not be able to serve the citizens of Iowa in the manner and breadth that we do today. We are examining the potential of limited offerings, but our ability to stay in the Iowa insurance market in any capacity is in question at this point,” the company’s statement said.

Medica’s exit is expected to leave roughly 70,000 Iowans without a single option to purchase a personal health insurance policy in 2018, even if they wanted to.  Unless a replacement carrier is found, the change also means moderate-income Iowans in most counties will not be able to use Affordable Care Act subsidies to help pay premiums for private insurance.

Medica is a relatively small carrier, which faced a daunting prospect in Iowa after Aetna and Wellmark announced they would no longer sell individual health insurance plans there. The two large carriers announced they had lost tens of millions of dollars in Iowa, largely because they covered too many older Iowans with chronic health problems and not enough young, healthy people. If Medica remains in the market, it would face the prospect of shouldering all of that risk by itself.

Of course, all of this should come as little surprise to our readers as we’ve been writing for years that the entire Obamacare system was on the “verge of collapse” as premiums were soaring, risk pools were deteriorating and insurers were pulling out of exchanges all around the country leaving many Americans with just a single ‘option’ for health insurance (see “Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017“).  In fact, the following charts provide a stunning illustration of that collapse (charts per Bloomberg):

Ocare

 

Unfortunately, things are likely to get even worse in 2018, even if Trump leaves subsidies in place.  Humana has already announced they won’t offer marketplace plans in 2018, a move which will result in 1,000s of people in Tennessee not having a single health insurance option starting 1/1/18.

 

Meanwhile, Anthem has also signaled they may exit all exchanges next year as well which would leave another 250,000 consumers with no health insurance options.

 

But sure, Republicans are trying to ‘ruin’ healthcare in America

 

 

end

 

The bill passed the House.  It is now up to the Senate to negate it

(courtesy zero hedge)

 

Republicans Pass Obamacare Replacement Bill; Let The Senate Bickering Begin

Update:

After a stunning defeat on March 24th, followed by over a month of back and forth bickering, Paul Ryan & Co. has finally passed an Obamacare replacement bill after just securing the required 216 votes.

Obamacare

 

And Republicans launched into song to celebrate:

“Na na na na, hey hey hey, goodbye!”

 

Per the Washington Post, here is what happens next:

Bill must pass Senate

Because Republicans hope to pass this legislation under the less-onerous budget reconciliation process, which would allow it to pass the Senate with only 51 votes, House leaders must make the bill comply with the Senate’s “Byrd Rule.” Generally, the rule says a reconciliation bill must relate to the budget, which means some of the Affordable Care Act’s provisions cannot be addressed via this process because they do not deal with taxes or spending. It also stipulates that the law cannot add to the deficit in the long term (10 years after it is implemented).

 

It will be up to the Senate parliamentarian to decide whether the legislation meets the Byrd Rule standards. Democrats have said that the bill does not meet the standard, something Republicans sacrificed in favor of a more complete repeal.

 

It’s likely that the Senate will do a significant rewrite of the legislation, modifying it but also setting up a showdown with House Republicans aiming for a more conservative approach.

 

If the House and Senate bills differ, a conference committee is formed

It’s almost certain that the Senate version of the legislation will look nothing like the conservative bill the House hoped to pass Thursday. If and when this happens, it’s common for a group of lawmakers from the two chambers to come together to iron out the differences between the bills. The result is then presented to both chambers for a final up-or-down vote.

 

President signs the bill into law

If Trump sours on the bill, he could decide to veto — effectively killing the legislation. Or he could sign it, kicking off the next phases of the Republican effort to dismantle Obamacare: further regulatory actions and additional legislation.

 

Last year, an Obamacare repeal bill cleared both houses but was promptly vetoed by President Barack Obama in defense of his signature policy accomplishment.

 

Administrative actions

 Beyond the AHCA, Republicans have outlined two other phases of health-care overhaul. The first of those is an easing of regulations, begun by Trump’s Jan. 20 executive order telling federal agencies to “minimize the unwarranted economic and regulatory burdens” of Obamacare. Regulatory reforms could include narrowing the list of benefits that Obamacare requires insurers to cover.

 

Additional legislation

 Because only budget-related items are allowed in a reconciliation bill, Republicans also plan to address other aspects of the replacement with at least one other piece of legislation. This bill would be subject to the filibuster, requiring 60 votes — and at least eight Democrats — to get to a Senate floor vote. It could include allowing people to buy insurance across state lines.

* * *

On March 24th, President Trump and Republicans suffered an embarrassing defeat, at the hands of their own party no less, when they failed to rally the Freedom Caucus around their Obamacare replacement bill.  Today, after nearly a month of back and forth bickering, Paul Ryan & Co. is ready to give it another try.

Tune in below for what will be President Trump’s first major legislative victory or second embarrassing defeat.

 

* * *

For those who missed it, below a preview of today’s vote that we posted earlier this morning:

It’s a big day for Paul Ryan and Republicans in the House.  With the stage set for another Obamacare repeal and replace vote later today, all eyes will be anxiously watching to see whether the day will end in another miserable, embarrassing defeat or whether a new healthcare bill will finally be sent to the Senate.

Republicans have become increasingly confident throughout he week that they have the votes after several moderate Republicans switched from ‘no’ to ‘yes’ after changes were made to allow for more funding to cover patients with pre-existing conditions.  According to Bloomberg, the Trump administration projected confidence about the outcome at a White House dinner last night after an aide joined the dinner late, saying the count had reached 218, two more than needed to guarantee passage. The aide added that he thought the final tally would top 220 votes, according to two people who attended.

Of course, no Democrats are expected to back the bill so Republicans can only lose 22 votes from their own party if everyone in the House casts a vote.

Meanwhile, Kevin McCarthy seemed somewhat confident as well after leaving Paul Ryan’s office last night.

“Would you have confidence? We’re going to pass it.”

 

“We will be voting on the health care votes tomorrow. Because we have enough votes. It’ll pass. It’s a good bill.”

 

That said, and to our great ‘shock’, House Minority Leader, Nancy Pelosi, continued to trash the new healthcare legislation, per CNN

House Minority Leader Nancy Pelosi blasted the bill and decision to vote Thursday.

 

“Forcing a vote without a CBO score shows that Republicans are terrified of the public learning the full consequences of their plan to push Americans with pre-existing conditions into the cold,” Pelosi said in a statement. “But tomorrow, House Republicans are going to tattoo this moral monstrosity to their foreheads, and the American people will hold them accountable.”

… even though, as we pointed out yesterday, Obamacare exchanges around the country continue fail in epic fashion with the latest casualty coming in Iowa where the last large insurer, Medica, just announced they’ll abandon the Iowa exchange in 2018 leaving pretty much the entire state without a single option for purchasing health insurance.  Per the Des Moines Register:

Medica, a Minnesota based health insurer, released a statement suggesting it was close to following two larger carriers in deciding not to sell such policies in Iowa for 2018, due to instability in the market.

 

“Without swift action by the state or Congress to provide stability to Iowa’s individual insurance market, Medica will not be able to serve the citizens of Iowa in the manner and breadth that we do today. We are examining the potential of limited offerings, but our ability to stay in the Iowa insurance market in any capacity is in question at this point,” the company’s statement said.

Of course, all of this should come as little surprise to our readers as we’ve been writing for years that the entire Obamacare system was on the “verge of collapse” as premiums were soaring, risk pools were deteriorating and insurers were pulling out of exchanges all around the country leaving many Americans with just a single ‘option’ for health insurance (see “Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017“).  In fact, the following charts provide a stunning illustration of that collapse (charts per Bloomberg):

Ocare

 

So, if the bill manages to pass the House, the real question becomes what happens in the Senate?

Assuming Republicans can pass the bill via the reconciliation process they’ll only need a simple majority and they control 52 seats.  That said, at least eight Senate Republicans are strongly opposed to different elements of the bill which means modifications will be required to flip at least 7 Republican votes.

But, even if they’re able to flip the votes required, Schumer has already threatened to throw up a procedural roadblock known as the “Byrd Rule.”  The rule governs legislation passed under the special budget rules Republicans are using to pass the healthcare legislation. To pass muster, legislation must be primarily focused on addressing the deficit, which is why only provisions that have a budgetary impact can be included.  That said, Senate Democrats will argue that changes like an amendment that allows states to opt out of certain elements of the bill would violate the Byrd Rule. Per The Hill:

“To my moderate Republican colleagues in the House, I ask, ‘Why would you risk a yes vote for a bill that is devastating to your constituents and has virtually a minuscule chance, virtually no chance of becoming law?’ “ Schumer asked on Wednesday.

 

He added that “the reality is TrumpCare cannot pass the Senate.”

 

“The amendment to allow states to drop pre-existing condition requirements, for instance, very possibly violates the Byrd rule. If the moderate group in the House gets an additional amendment to the deal with the very same issue, that may violate the Byrd rule as well,” Schumer said.

So what say you?  Does the Trump administration score it’s first major legislative victory today or will Republicans deliver themselves another embarrassing defeat?

end

 

Well that does it for tonight

I will see you tomorrow night

H.

Advertisements

One comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: