May 8/For 6 straight days, the amount of silver ounces standing for delivery increased: first day notice started at 16.8 million oz/today: 21.5 million oz/China’s economy slowing down dramatically/Oil drops back into the 45 dollar column for WTI/Chaos intensifies in Venezuela: many army officials are joining the protesters/

Gold: $1227.70  UP $.50

Silver: $16.27  DOWN 1  cent(s)

Closing access prices:

Gold $xxxx

silver: $xxx










Premium of Shanghai 2nd fix/NY:$10.20


LONDON FIRST GOLD FIX:  5:30 am est  $1229.70




For comex gold:



 TOTAL NOTICES SO FAR: 374 FOR 37400 OZ    (1.1632 TONNES)

For silver:

For silver: MAY


Total number of notices filed so far this month: 4107 for 20,535,000 oz



For 6 consecutive days, the amount standing for physical has risen.  On First day notice 16.8 million oz were standing.  Tonight 21.5 million oz.  It sure looks like a sovereign is after physical silver and the comex is the place being raided.

stay tuned on this development..


Let us have a look at the data for today



In silver, the total open interest SURPRISINGLY ROSE BY 1,778  contracts UP to 190,305  DESPITE THE SLIGHT RISE IN PRICE THAT SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING (UP ONLY 4 CENTS). In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.951 BILLION TO BE EXACT or 136% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold FELL BY A MONSTROUS 15,183 contracts DESPITE THE SLIGHT RISE IN THE PRICE OF GOLD ($0.10 with FRIDAY’S TRADING). The total gold OI stands at 443,343 contracts.

we had 15 notice(s) filed upon for 1500 oz of gold.


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


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

Inventory rests tonight: 853.08 tonnes



Strange!!! We had no changes in silver inventory at the SLV today.

THE SLV Inventory rests at: 334.777 million oz



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

1. Today, we had the open interest in silver ROSE BY 1,778 contracts UP TO 190,305, (AND NOW CLOSER TO  THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21 AT 234,787), DESPITE THE SMALL RISE IN PRICE FOR SILVER ON FRIDAY (4 CENTS).

(report Harvey)


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) Federal Reserve Bank ear marked gold movement




i)Late SUNDAY night/MONDAY morning: Shanghai closed DOWN 24.45 POINTS OR .79%  OR / /Hang Sang CLOSED UP 101.56 POINTS OR .41% .  The Nikkei closed UP 450.00 POINTS SOR 2.31%/Australia’s all ordinaires  CLOSED UP .58%/Chinese yuan (ONSHORE) closed DOWN at 6.9048/Oil UP to 46.27 dollars per barrel for WTI and 49.18 for Brent. Stocks in Europe OPENED IN THE RED EXCEPT LONDON   ..Offshore yuan trades  6.9068 yuan to the dollar vs 6.9048 for onshore yuan. NOW  THE OFFSHORE IS A LOT WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS  MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT HAPPY



North Korea arrests another American and threatens to nuke the White House as well as other Americans

( zero hedge)



The following is a very important read as we learn that China is slowing down on all fronts.  Imports fall, exports fall, commodities fall and bond issuance almost disappears as their economy severely falters

( zero hedge)



An in depth look at the problems facing France, once  Macron is elected:

( zero hedge)

ii)A Macron victory with 65% of the votes cast went to the youngest ever elected President of France:

( zero hedge)


Volkswagen quietly stashed away 500,000 rigged cars and so far they have not found a solution to fix the emissions cheating:

( zero hedge)

( Mish Shedlock/Mishtalk)


Iran over the weekend threatens to destroy Saudi Arabia after the Saudi Prince warns that he will be moving the battle to Iran.  I doubt that Saudi Arabia will give an  exemption on Iranian oil production cuts when they meet next

( zero hedge)


i)Globally, the world’s central banks have provided huge liquidity which keeps asset prices higher.  From the beginning of 2017 the world’s central banks have provided 1 trillion dollars worth of liquidity which has kept stocks afloat. Deutsche bank;s Costam explains why this is not enough.

( Domenic Kostam./zero hedge)

ii) The Canadian dollar is the worst trading currency this year:

(courtesy zero hedge)


i)Jawboning does not seem to work as oil moves back to the low 49 dollar column for Brent.  Morgan Stanley warnsof rosk to the 2018 oil price

(courtesy zero hedge/MorganStanley)

ii)WTI falls into the 45 dollar column:

(courtesy zero hedge)


i)Saturday: Venezuela

Chaos inside Venezuela:

ii)Sunday : Venezuela
ii)Now we are witnessing some of Venezuela’s military defect and march with the protesters:
( zero hedge)


i)A must view..

Andrew talks about the huge volumes of paper gold and silver that have been thrust upon the market smashing metal prices. The key to glean from this;  silver is backward now to July in silver:  a huge 3 months.

( Andrew Maguire/Kingworldnews)

ii)George Gilder writes in the Dallas new that currency trading is in chaos and thus we must reconsider going back to the gold standard.

( George Gilder)

iii)The whacking of gold was causing demand to rise and Reuters is witnessing premiums over spot to rise in both India and China

( Reuters)

iv)More and more countries are welcoming the proposal to reduce their dependence on the uSA dollar

( zero hedge)

v)Chris Powell notes how ludicrous the analysis of Adam Hamilton is becoming:  “speculators” are causing gold futures shorting attacks”…give me a break

(Chris Powell./GATA)

vi)Hong Kong will be trying for the third time on a futures contract but this time with physical delivery.  They must succeed finally.

( YIU/South China Morning Post)

vii)A commentary on gold manipulation

(Dave Kranzler/Stewart Dougherty/IRD)

10. USA stories

i)Simply mind boggling; a court case stops the collection from students with the fact that there is no one assigned to collect on what is owing

the crisis surely has now become “pandemic”:

( zero hedge)

ii)Not good: household spending growth expectations crash;

( zero hedge)


Let us head over to the comex:

The total gold comex open interest FELL BY A HUGE 15,183 CONTRACTS DOWN to an OI level of 443,343 DESPITE THE SLIGHT RISE IN THE PRICE OF GOLD ( $0.10 with FRIDAY’S trading).   The longs I guess had had enough  as they finally liquidated some of their contracts with the constant torment they received over the past two weeks.  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 22 contract(s) FALLING TO 62. We had 27 notices filed yesterday so we GAINED 5 contracts or an additional 500 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 A WHOPPING 24,778 contracts DOWN to 272,648.  The non active July contract gained another 22 contracts to stand at 268 contracts. The next big active month is August and here the OI gained 8054 contracts up to 80,946.

We had 15 notice(s) filed upon today for 1500 oz

And now for the wild silver comex results.  Total silver OI ROSE BY A HUGE 1,778 contracts FROM 188,527 UP TO 190,305  DESPITE FRIDAY’S SLIGHT 4 CENT PRICE RISE. We again  probably had  some attempted short covering by the banks which did not succeed much.
We are in the active delivery month is MAY  Here the open interest LOST 307 contracts FALLING TO 299 contracts. MY GOODNESS!! IT HAPPENED AGAIN!! We had 382 notices filed on today, so we gained another 75 notices or an additional 375,000 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 for 6 straight days of the delivery cycle starting immediately after first day notice. No wonder JPMorgan is getting ready for a physical attack at the comex. I have never seen anything like this!!

The non active June contract gained 10 contracts to stand at 922. The next big active month will be July and here the OI strangely gained 1306 contracts up to 146,315.

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 99 notice(s) filed for 1,910,000 oz for the MAY 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 196,883 contracts which is fair

Yesterday’s confirmed volume was 310,019 contracts  which is excellent.

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for MAY
 May 8/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 6,462.247 oz
Deposits to the Dealer Inventory in oz 1699.98 oz


Deposits to the Customer Inventory, in oz 
nil oz
No of oz served (contracts) today
15 notice(s)
1500 OZ
No of oz to be served (notices)
47 contracts
4700 oz
Total monthly oz gold served (contracts) so far this month
374 notices
37,400 oz
1.1632 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   47,788.3 oz
Today we HAD  1 kilobar transaction(s)/
Today we had 1 deposit(s) into the dealer:
i) Into Brinks: 1699.98 oz
total dealer deposits: 1699.98 oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 2 customer withdrawal(s)
i) Out of  Brinks:  6333.747 oz
ii) Out of Scotia:  128.60 oz  (4 kilobars)
total customer withdrawal: 6462.347 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 15 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the MAY. contract month, we take the total number of notices filed so far for the month (374) x 100 oz or 37400 oz, to which we add the difference between the open interest for the front month of MAY (62 contracts) minus the number of notices served upon today (15) x 100 oz per contract equals 42,100 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 (374) x 100 oz  or ounces + {(61)OI for the front month  minus the number of  notices served upon today (15) x 100 oz which equals 42,100 oz standing in this non active delivery month of MAY  (1.309 tonnes).  We gained 5 contracts or an additional 400 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.
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/  1.309 TONNES
total for the 17 months;  248.918 tonnes
average 14.642 tonnes per month
Total dealer inventory 915,933.163 or 28.489 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,928,728.793 or 277.72 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.72 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
MAY INITIAL standings
 May 8. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
30,089.45 oz
30,089.45 oz
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 nil oz
No of oz served today (contracts)
(495,000 OZ)
No of oz to be served (notices)
200 contracts
( 1,000,000 oz)
Total monthly oz silver served (contracts) 4107 contracts (20,535,000 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  3,782,505.0 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 1 customer withdrawal(s):
i) Out of Scotia: 30,089.45 oz
 We had 0 Customer deposits:
***deposits into JPMorgan have now stopped 
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits  nil oz
 we had 0 adjustment(s)
The total number of notices filed today for the MAY. contract month is represented by 99 contract(s) for 1,910,000 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 4107 x 5,000 oz  = 20,535,000 oz to which we add the difference between the open interest for the front month of MAY (299) and the number of notices served upon today (99) x 5000 oz equals the number of ounces standing


Thus the initial standings for silver for the MAY contract month:  4107(notices served so far)x 5000 oz  + OI for front month of APRIL.(299 ) -number of notices served upon today (99)x 5000 oz  equals  21,535,000 oz  of silver standing for the MAY contract month.
We actually gained another 75 contracts or an additional 375,000 oz will stand for delivery and again nobody wished to accept an EFP contract for a fiat bonus. It probably means that the entire 21.52 million oz that are 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 6 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 52,248 which is excellent
Yesterday’s  confirmed volume was 92,974 contracts which is gigantic
Total dealer silver:  33.541 million (close to record low inventory  
Total number of dealer and customer silver:   196.953 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
 data will be updated later tonight on Sprott and Central Fund of Canada

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.5 percent to NAV usa funds and Negative 7.6% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.3%
Percentage of fund in silver:37.5%
cash .+0.2%( May 8/2017) 
2. Sprott silver fund (PSLV): Premium FALLS TO   +.44%!!!! NAV (May 8/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS to -0.53% to NAV  ( May 8/2017)
Note: Sprott silver trust back  into POSITIVE territory at +.44% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.53%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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

 Section: Daily Dispatches

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

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

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

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

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

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

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

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

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

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

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

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


And now the Gold inventory at the GLD

May 8/no change in inventory at the GLD/Inventory rests at 853.08 tonnes

May 5/no changes in inventory at the GLD/Inventory rests at 853.08 tonnes

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




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

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

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

this no doubt is a paper deposit/

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

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

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

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

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

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

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

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

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

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

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

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



May 8 /2017/ Inventory rests tonight at 853.08 tonnes


Now the SLV Inventory

May 8/no change in silver inventory at the SLV/inventory rests at 334.777 million oz/

May 5/Strange!! no change in silver inventory at the SLV/Inventory rests tonight at 334.777 million oz

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 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
May 8.2017: Inventory 334.777  million oz

Major gold/silver trading/commentaries for MONDAY



Gold Coins, Bars In Demand – +9% In Q1, 2017

By Mark O’ByrneMay 8, 2017

Gold Coins and Bars Demand Rises 9% In Q1, 2017

– Global gold demand in Q1 2017 was 1,034.5t
– Total demand -18% from record high levels in Q1, 2016
– Demand for coins and bars up 9% yoy to 290 t
– UK demand for coins, bars at highest since Q2 2013
– ETF inflows fell by 2/3, account for overall -18% fall in demand
– European uncertainty brings gold investors to market
– Innovation continues to drive gold demand in China
– Peak Gold: Mine production likely to drop

Global gold demand driven by climb in bar and coin investment

Uncertainty in Europe increased demand for gold investment products in the first quarter of the year, according to the World Gold Council’s Gold Demand Trends Q1, 2017 report.

Across the globe a mixture of festivities and renewed safe haven buying saw demand for gold bars and coins climb by 9%.

Demand for physical investment products helped to reduce the the overall fall in gold demand, which came in at 18% yoy, across investment, jewellery and central bank demand.

In all, global gold demand across a number of measures points towards a world that is uncertain and to ongoing safe haven demand. In some cases such as in the US, EU and China, demand remains robust whereas in the likes of Turkey demand is down from record levels.

Much of this is thanks to geo-political uncertainty and political upheaval.

Political uncertainty in Europe has helped to increase demand for gold bullion. Elections (upcoming and past) in the UK, Netherlands, France and Germany have helped to buoy investment in safe haven gold.  German gold bar and coin demand had its strongest first quarter since 2011 – 13% y-o-y to 34.3t, but this must not take away from the UK which hit its highest level since Q2 2013.

China (discussed in full below) was a major contributor to the uptick in demand for gold bars and coins, posting a 30% gain. As with its European counterparts, there is much uncertainty over the economic situation of the country and both investors and retailers alike are able to match these feelings with gold purchases.

Politics, uncertainty and gold prices make for a mixed bag of jewellery

When it comes to jewellery, demand was mixed across the board but overall very low, compared to recent years. Demand was 18% below the 587.7t five- year quarterly average. The 9% climb in the USD gold price, meant that there is overall long-term weakness in the sector.

Whilst uncertainty can be a positive driver for gold demand, this combined with a high gold price in Turkey saw demand for jewellery sink to a four year low of 7.7t. The looming referendum (held in April) combined with the fact that the price of gold in lira rose more than in any other currency during Q1 (+12%), meant that the fragile political and economic conditions continued to impact the sector.

The WGC state that GÇ£The outlook for the [Turkish] market is weakGÇ¥ and this is expected to continue as both economic and political reforms keep both uncertainty and the gold price high.

In the United States however, a feeling of relief following the US election propelled jewellery demand to its strongest Q1 since 2010 –  it rose 3% to 22.9t. The WGC refers to a climb in ‘clicks and mortar’ (online) purchases. There is little doubt that the election hasn’t increased uncertainty, but it seems there is a calm before the storm element to purchasing decisions.

In Europe, both the UK and France let the side down when it came to jewellery demand, which fell 6% in the Fifth Republic. Much of the fall was down to uncertainty in the run-up to elections and a spate of terrorist attacks.

It seems many buyers are favouring ‘branded silver’ in their jewellery purchases. In the same way that silver coin and bar buyers see silver as better value than gold – it seems that jewellery buyers also may be attracted to getting better value with silver.

Investment is better than jewellery – even for romantics

On Valentine’s Day we discussed the problems with buying jewellery as an investment. Jewellery is a terrible investment due to the significant mark-up at the point of sale, ‘valued added’ (VAT) and sales taxes and it’s very poor resale value. We suggested that romantics buy gold coins and bars for their loved ones instead.

This advice was perhaps heeded even after Valentine’s Day as gold bars and coins had an excellent quarter, with 289.8t of demand (+9% y-o-y). Much of this was thanks to China, where safe haven flows, tech innovation and Chinese New Year is helping to push demand (see below).

The WGC accounts much of the increase in coin and bar demand to the ‘strength of the retail investment market’ internationally. Companies such as GoldCore are seeing very strong demand – particularly for allocated and segregated storage for risk averse investors looking to own in gold bars and coins.

The feeling of uncertainty  and uncertain outlook does appear to be driving demand and this is a trend we suspect we will continue to see. Whilst elections have been, or will soon be decided, that does not guarantee the economic result, investors are aware of this and stocking up on gold accordingly.

Gold ETFs failed to benefit as much as physical gold

Whilst ETF inflows did not experience the same surge as gold bar and coin demand, US demand was strong. As the WGC points out, geopolitical tensions were ‘more of a concern for European -based investors than for their US counterparts.’

The report refers to the positivity in the US towards gold, and that the speculative buying seen in 2016 has been ‘reversed in the November/December washout’ leaving strategic investors behind. Having said that the only net inflows were in February, ‘sandwiched between’ outflows in January and March.

Collectively in Europe we make for a worried bunch. Europeans increased inflows in gold ETFs, as we saw with gold bar and coin demand.

As summarised by the WGC, we are surrounded by both economic and political uncertainty which, with some dips in the gold price, meant we could increase our exposure to gold:

‘On top of a fragile political environment, conditions in financial markets gave investors a further incentive to build their positions in gold–backed ETFs. Safe- haven flows pushed two- year German yields further into negative territory, reaching a record low of -0.95% in February. And European equity markets were subdued with volatility at multi-year lows. Negative real and nominal yields coupled with a period of relative calm in regional stock markets improved the appeal of gold, particularly as its price strengthened through the quarter. The dips in the euro- denominated price of gold in January and March were also taken as a good opportunity to add it to portfolios.’

Gold ETF holdings grew tremendously in 2016. 2017 has failed to keep up as of yet. Inflows were just one-third of those seen in Q1 2016. Unsurprisingly the WGC do not seem unduly worried, despite pointing towards the fact that Q1’s figures might be pointing to a wider financial issue, ‘inflows of 109.1t are in line with quarterly average between Q1 2009 and Q4 2011 (108.7t), a period that encompassed the global financial crisis.’

Whilst calm is often seen settling across a market after a surge such as that seen in 2017, we wonder if we will continue to see a slow-down in ETF inflows, especially if averages such as these have not been since since the financial crisis.

Earlier this week we wrote about the tenuous London property market and asked if this was an indicator of a bubble about to burst, setting off a domino affect around the world. This would obviously lead to even greater safe haven flows and demand.

Innovation holds key to future of China’s gold market

Whilst the gold market is one of the oldest in the world, it is markedly different from how it once began.

Gold bullion dealers and jewellery sellers have made a concerted effort to keep up with innovations across the technological, investment and retail spaces. This is more important today than it has ever been.

In China, there has long been concern that China’s millennial population will not look at gold in the same way as their elders do. The WGC cites research from Agility Research & Strategy which shows the top three priorities for young Chinese are ‘health, travel and spending time with the family’. This, combined with concerns over the economy, has prompted worries for the future of the world’s largest gold market.

However, innovation both technological and in marketing suggests that the Chinese gold market has a resilient and fruitful future. As the WGC writes, GÇ£the industry is keen and determined to adapt – an attitude that should help stem any weakness.GÇ¥

In the jewellery space, where demand was slightly down by 2% thanks to high gold prices following Chinese New Year, sellers are providing services and products to keep up with today’s younger generations – such as more modern 18k gold jewellery pieces, rather than the traditional 22k gold designs. In a perhaps more reflective sign of the times, sellers of bridal jewellery are ‘offering customers a no–cost exchange option on jewellery from its bridal range.’

Jewellery demand may have experienced a small decline, but gold bars and coins saw a 30% increase (yoy), its fourth best quarter on record. We would generally expect the first quarter of the year to be a strong one for China, given their New Year, however it was this combined with concerns regarding the economy (falling yuan and property market) that drove demand to 105.9t.

Some of this stellar demand can be attributed to the innovation appearing in the local gold market, namely interest-paying gold accounts, benchmarked on the Shanghai Gold Exchange (SGE)’s AU9999 contract with a minimum entry point of one gram. It is traded online, with an option for physical delivery – all important for Chinese investors.

Online developments continue with 800 million WeChat users being given access to MicroGold, a physical gold-backed product offered by ICBC. Digital gold can be traded between individuals, online, supporting festivals and culturally significant events with ‘red envelopes.’

These moves, combined with recent changes supported by the government have lead to an imbalance between supply and demand. Premiums have shot up over global gold price in recent month, they averaged $17/oz in Q4, 2016, and averaged down to US$14.2/oz.

India, cashless push was merely a setback but innovation required

India had a tumultuous year last year, the second-half of 2016 saw Modi take the country by surprise when he announced the removal of old Rs 500 and Rs 1,000, throwing millions of people into financial chaos. The announcement was particularly badly timed due to wedding season which is vital to the country’s gold industry.

Since then gold demand has managed to find some calm. Whilst global jewellery demand remains weak with just a 1% increase in Q1 India has propped it up, despite rising gold prices, posting a 16% gain.

The 16% gain isn’t really much to shout about, given it is only the third quarter this decade where demand has come in at less than 100t (92.3t). There is still some wariness in terms of how the next phase of remonetisation will play out, combined with uncertainty over the forthcoming Goods & Service Tax (GST), which is dampening demand somewhat.

We would suggest that there is something to be learnt both at the business and political level when it comes to innovation in the gold market. This is perhaps coming to pass as the WGC’s field research found that not only are consumers gradually adopting cashless payments, but cashless transactions are ‘gathering momentum’. Retailers such as Tanishq reported a ‘quite significant recovery’ in Q1, on account of cashless transactions.

At this point we should issue a word of warning, as we did when India announced its move to cashless and the topic became the point of discussion in economic circles. Whilst cashless is publicised as a way to make economies more efficient, to reduce tax evasion and to prevent other criminal activities it is also there to serve an ulterior motive – as we wrote a few month’s ago:

GÇ£A cashless world means a transparent world, which is great if terrorists were the only ones using cash. But they’re really not, so a cashless world means transparent bank accounts which means restricted banks accounts.GÇ¥

This is perhaps yet another reason why gold demand is recovering in India.

Trivial sales in Central Bank demand

Whilst purchases buy central banks slowed, they remained robust – especially from Russia and China – and central bank sales remain nearly non existent and are set to do so.

Quarterly net purchases were 76.3t (a six year low) and a 27% fall yoy. Russia and Kazakhstan were the main buyers in the quarter.

China’s gold reserves still represent just 2% of their total reserves, despite not adding to the reserves since October 2016. The ratio hit 2.4% in Q1, its highest point since the early 2000s and the reason perhaps for no further purchases since 2016. It is also worth noting the pressure their FX reserves have felt for some time having dropped from US$3.2 trillion in January 2016 to US$3 trillion in January 2017.

Peak Gold: Mine production likely to drop

There are many tidbits of information in the WGC’s report about overall mine production in Q1 2017.

Indonesia accounted for the largest impact on the fall in production, thanks to a fall on 8t from its Grasberg region. There were also some areas of growth, however physical gold investors mainly need to be aware of the following summary from the WGC:

GÇ£Having plateaued in recent years, mine production will soon enter a period of decline. The production profile of currently operating mines shows a relatively steep drop–off over the next 5 to 10 years. Even factoring in high- probability projects (those highly likely to reach commercial production), the fall in production is still significant.GÇ¥

The negative feeling from the WGC is attributed to cuts in capital expenditure but most importantly the fact that there just aren’t that many new discoveries of gold.

GǣInevitably, the supply pipeline will be squeezedGǪThe speed at which production will fall is uncertain. As existing reserves are depleted, the current project pipeline will be unable to replace them fully.

Over the long-term, the global production profile will depend on the trajectory of the gold price and potential exploration upside, particularly the speed with which brownfield exploration can be brought into productionGÇ¥

Conclusion: Buy physical gold – not making much more of it

The news that gold production is falling and the near certainty that production levels will fall in the coming months and years should be enough to encourage investors to buy gold.

Even if political and economic turmoil weren’t a factor in every major country, gold demand would still be pertinent thanks to the issue of peak gold.

However, it is the imminent feeling of uncertainty and growing instability which is driving investors to allocate more of their investment and pension portfolios to gold bars, coins and ETFs.

The motto ‘Stay calm and carry on’ is no longer relevant, it should be ‘stay calm and buy gold’.



A must view..

Andrew talks about the huge volumes of paper gold and silver that have been thrust upon the market smashing metal prices. The key to glean from this;  silver is backward now to July in silver:  a huge 3 months.

(courtesy Andrew Maguire/Kingworldnews)

Astounding volumes of paper gold and silver sales detailed by Maguire at KWN


1:25p ET Friday, May 5, 2017

Dear Friend of GATA and Gold:

London metals trader Andrew Maguire, interviewed today by King World News, details the astounding notional volumes of paper gold and silver that have been sold in the latest smashing of monetary metals prices. An excerpt from the interview is posted at KWN here:…

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





George Gilder writes in the Dallas new that currency trading is in chaos and thus we must reconsider going back to the gold standard.

(courtesy George Gilder)



George Gilder: Currency trading is in chaos, so reconsider the gold standard


By George Gilder
Dallas Morning News
Friday, May 5, 2017…

Trade theorist Paul Krugman, imperious in his Nobel crown; Christine Lagarde of the International Monetary Fund; some 370 economists including 19 Nobel Laureates; and even David Stockman, formerly of the Reagan White House, all agree: President Donald Trump is a menace to world trade and prosperity.

As a free-trading supply-sider, I once shared these fears. However, I was wrong. I underestimated the significance of the chaos of currency trading.

According to the Bank of International Settlements, this market has swelled to some $5.1 trillion a day, 25 times global GDP and 73 times all trade in goods and services. Yet all the vast shuffle of money fails to achieve the crucial function of money and markets: to yield a reliable guide for international transactions.

The Theory of Information holds that an economy is an information system governed by entrepreneurial knowledge and learning, guided by sound money. In an information economy, learning and growth depend on money to transmit the significance of prices. When money becomes merely a reflection of the policies of central banks, it can no longer guide enterprise or international trade.

In the years after NAFTA took effect in January 1994, the Mexican peso lost 87 percent of its value, dropping from nearly 35 cents American to under a nickel. The peso has dropped 5.8-fold while Mexican exports have risen 6.6-fold.

The impact of this drastic relentless change has emitted — as Ross Perot put it — a “giant sucking sound” symbolizing a significant reorganization of North American manufacturing. Yet that has had nothing to do with free trade. With all prices always in play, the arbitrageurs and high-frequency-trading “flash boys” rule, shrinking the time horizons of economic activity from decades to microseconds.

With incomes in the financial sector nearly tripling as a share of all corporate income since 1971, the economy suffers from a bloat of banking. Yet as gold prophet Nathan Lewis observes in a forthcoming book, Gold: The Final Standard, the banks’ “old roles had actually become even less profitable … eroded by competition and advances in information technology” and should have become less obtrusive.

Instead, financial profits have risen to 30 percent of all corporate profits, mostly through the shuffling of currencies and derivatives.

The chief alternative to floating currencies historically has been currencies fixed to gold. The gold standard has accompanied all of humanity’s greatest industrial and economic accomplishments. After World War II, the Bretton Woods gold-exchange standard sustained another 27 years of unparalleled world economic growth at 2.5 percent per year.

According to the conventional wisdom, though, the gold standard led to gold hoarding and the Great Depression. But that hoarding was not an effect of irrational panic. Gold was signaling a tragic breakdown of civilization and a global turn against free markets.

Gold always guided entrepreneurs better than did politicians who believed that business could thrive under price controls, confiscatory taxes, tariff gouges, communist and fascist labor movements, and abrupt currency shifts.

Even during the Great Depression, the gold signal was right. Its critics merely want to shoot the messenger. The success of the Trump administration will depend on recovering our cultural memory of stable money.


George Gilder is author of the book “The Scandal of Money: Why Wall Street Recovers but the Economy Never Does” and a member of the Board of Advisors for the Independent Institute in Oakland, Calif. He wrote this column for The Dallas Morning News. Gilder will speak in Dallas at Southern Methodist University on May 9 at the “Advancing Liberty & Prosperity in a Divided America” event. Website:





The whacking of gold was causing demand to rise and Reuters is witnessing premiums over spot to rise in both India and China

(courtesy Reuters)


Lower prices bolster gold demand; premiums rise in India, China


By Koustav Samanta
Friday, May 5, 2017

Gold demand in Asia rose this week, helped by a correction in prices, but traders said some buyers have held back from purchases while they wait for bullion prices to drop further.

Analysts said gold buyers were expecting prices to dip in the upcoming days, banking on the possibility of the U.S. Federal Reserve hiking interest rates in June. Higher rates increase the opportunity cost of holding non-yielding bullion. Futures traders are pricing in a 74 percent chance of a June hike.

Gold prices in India have been at a premium over the last couple of weeks due to stronger demand for the annual Hindu and Jain holy festival of Akshaya Tritiya and the recent dip in global rates have further boosted the appetite.

“The price correction is attracting retail buyers. Jewellery demand is good for wedding season. At this price level even investment demand is emerging,” said Mukesh Kothari, director at bullion dealer RiddiSiddhi Bullions in Mumbai. …

… For the remainder of the report:





More and more countries are welcoming the proposal to reduce their dependence on the uSA dollar

(courtesy zero hedge)

Thai central bank chief welcomes proposal to reduce U.S. dollar transactions


By Shotaro Tani
Nikkei Asian Review, Tokyo
Sunday, May 7, 2017

YOKOHAMA, Japan — Thailand’s central bank chief said Saturday he welcomed moves to wean Southeast Asia off its reliance on the U.S. dollar, as Japanese representatives put forward a bilateral currency swap proposal on the sidelines of the Asian Development Bank’s annual summit.

Japan’s proposed framework, if realized, would allow the 10 members of the Association of Southeast Asian Nations to withdraw up to 4 trillion yen ($40 billion) during times of financial crisis.

Although Bank of Thailand Governor Veerathai Santiprabhob declined to comment on specifics, saying the proposal was still in its preliminary stage and there remained “a lot of discussion that needs to be done,” he said he “very much welcomes initiatives” where “ASEAN countries and the Japanese government are working together to strengthen the region’s financial safety net.” …

… For the remainder of the report:…





Chris Powell notes how ludicrous the analysis of Adam Hamilton is becoming:  “speculators” are causing gold futures shorting attacks”…give me a break

(Chris Powell./GATA)

Those attacks on gold don’t come from Adam Hamilton’s mere ‘speculators’


10a ET Sunday, May 7, 2017

Dear Friend of GATA and Gold:

Every day it seems that the manipulation of the monetary metals markets can’t get any more obvious, and every day it does. But at least the manipulation is starting to aggravate certain mining stock touts who have paid little heed to it.

This week one of those touts, Adam Hamilton of Zeal LLC, wholeheartedly acknowledged what he called “gold futures shorting attacks.”

“The only reason to sell 20,000-plus gold futures contracts within minutes is to brazenly attempt to manipulate gold’s price lower,” Hamilton wrote in commentary posted at GoldSeek, 24hGold, and 321Gold, among other internet sites:…

Hamilton added: “Long-side speculators who want to exit positions never sell so fast, since it blasts gold lower, wrecking their exit prices. And the same is true for normal short-side speculators. If they expect gold to drop and want to establish shorts, they execute their selling gradually for the best entries.

“Long-side and short-side speculators alike want to sell gold futures at the highest gold price possible. So they don’t sabotage their own exits and entries by unleashing far more selling than the market can bear. Normal rational speculators enter and exit large positions relative to market volume gradually, over hours. A 20,000-plus contract buy or sell order broken into pieces and spread across hours will have a far-smaller price impact.”

Indeed. But who undertakes these strange attacks? Hamilton can attribute them only to “speculators” who hope to profit by provoking panic selling by ordinary gold investors, through which the “speculators” can cover their shorts. Hamilton adds that these attacks are “always short-lived.”

Yet these attacks often require access to billions of dollars, money available only to the world’s biggest financial institutions, particularly central banks. And while these attacks may be “short-lived” in their individual manifestations, of course they have been happening for years, ever since the gold futures market opened in the United States in 1974, just after the U.S. government sought and received assurances from bullion banks in London that a gold futures market would facilitate the injection of so much volatility that ordinary investors would be scared out of gold:

Hamilton doesn’t seem to have noticed that there are never “gold futures buying attacks,” which, like Sherlock Holmes’ observation about “the dog that didn’t bark,” is a powerful clue about what is really happening in gold. If “speculators” can make money by triggering panic selling in gold, couldn’t they, if they wanted to, also make money triggering panic buying every once in a while? So why don’t they want to?

The answer, of course, is that the attacks are not being undertaken by mere “speculators” at all but by central banks, as GATA long has documented:

But if central banks are ever acknowledged as the manipulators of the monetary metals market, defending their currencies and bonds against a potentially independent world reserve currency, gold and silver mining stocks would have the world’s most powerful enemies and touting them to unwary investors would become much more difficult.

So Hamilton cheerfully assures his readers that “gold stocks are wildly oversold today, poised for a major surge,” and urges them to subscribe to his newsletter, where he will help them invest in a sector that is priced at half of what it was five years ago and even 10 years ago:

Yes, gold and gold stocks are “wildly oversold,” but no amount of touting is going to get them up until the sector and the people who write about it have the wit, integrity, and courage to identify just who is keeping them down and why.

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





Hong Kong will be trying for the third time on a futures contract but this time with physical delivery.  They must succeed finally.

(courtesy YIU/South China Morning Post)




Hong Kong exchange tries gold futures again, with physical delivery this time


By Enoch Yiu
South China Morning Post, Hong Kong
Sunday, May 7, 2017

Hong Kong Exchanges and Clearing will undertake in the third quarter its third attempt to launch a gold futures contract after two previous failures, but traders have mixed views on its chances for success.

HKEX, which operates the local stock and futures markets, on Monday will kick off promotional efforts for a range of workshops and seminar for brokers, investors, and media as part of its plan to launch two new gold futures contracts — one in US dollars and one in yuan — with physical delivery.

This will be the third attempt by the local bourse to launch a gold futures contract. The exact launch date will be subject to regulatory approval by the Securities and Futures Commission, HKEX said on Friday. It also said its London subsidiary London Metal Exchange will launch a gold futures contract in July. …

However, HKEX is confident of success with the new launch. Li Gang, HKEX’s co-head of market development, said the new version will be the first gold futures contracts to be denominated in yuan and US dollars and traded on the same electronic platform operated by HKEX. This is different from the 2008-2015 period when it was only traded in U.S. dollars. …

The new contract will be for a 1 kilogram gold bar with physical delivery, also different from the previous time when contracts were only settled in cash. …

… For the remainder of the report:…



A commentary on gold manipulation

(Dave Kranzler/Stewart Dougherty/IRD)

The Traitors Who Enable The Deep State’s Dying War On Gold

Stewart Dougherty returns with another guest post. I am grateful for the time and effort Mr. Dougherty puts into his articles for the purpose of shining a light on the truth.

Evidence is mounting that the Deep State (DS) is starting to lose the dirtiest financial war in history: their War on Gold. More deeply, it is a war against something the Deep State profoundly loathes: personal financial liberty. The War on Gold, which has raged for 37+ years, has generated more than $1 trillion in criminal profits for the Deep State plunderers, while costing the worldwide owners of physical gold multiple trillions of dollars. All of this is coming to an end.

Due to its criminal hyper-manipulation, gold’s price has become a paradox: its weakness actually reflects its strength. With everything that has been thrown at it, it is astounding that its price is anything north of zero. The fact that it has been resilient at around $1,200.00 per ounce should concern the manipulators, because if this is as low as they can take it despite their full-spectrum, multi-billion dollar assault against it, then it is defeating them. Which is not surprising. By every conceivable, objective financial and monetary measure, gold is one of the most underpriced assets on earth. It is not going to stay that way. (Most of the dynamics we will discuss also apply to silver, but to streamline this article, we will focus on gold.)

The Deep State’s first strategic objective in the War on Gold has been to steal as much money as possible by conspiratorially rigging its price. They have perpetrated this crime in the full knowledge that it will never be investigated or prosecuted, because it is state sponsored. The Deep State is the state, and never prosecutes itself for its own crimes, no matter how flagrant and egregious they are.

The second, broader strategic objective has been to discredit gold as a monetary asset and safe financial haven throughout the west. The Deep State realized at the outset of the war that it would be impossible to achieve this in the east, which has a deep, cultural affinity for gold, so they have confined this gambit the west.

There are eight primary tactics in the War on Gold.  TO CONTINUE READING CLICK HERE: TRAITORS/GOLD



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


1 Chinese yuan vs USA dollar/yuan A LOT WEAKER  6.9048(DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES MUCH WEAKER TO ONSHORE AT   6.9068/ Shanghai bourse CLOSED DOWN 24.45 POINTS OR .79%   / HANG SANG CLOSED UP 101.56 POINTS OR .41% 

2. Nikkei closed UP 450.00 POINTS OR 2.31%   /USA: YEN RISES TO 112.59

3. Europe stocks OPENED ALL IN THE RED EXCEPT LONDON       ( /USA dollar index RISES TO  98.87/Euro DOWN to 1.0949


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  46.27 and Brent: 49.18

3f Gold UP/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.394%/Italian 10 yr bond yield UP  to 2.201%    

3j Greek 10 year bond yield FALLS to  : 5.734% ???  

3k Gold at $1232.40/silver $16.36 (8:15 am est)   SILVER ABOVE  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 22/100 in  roubles/dollar) 58.26-

3m oil into the 46 dollar handle for WTI and 49 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 A SMALL DEVALUATION SOUTHBOUND 


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  .9937 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0880 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.394%

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 2.340% early this morning. Thirty year rate  at 2.974% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Macron Victory Leads To “Risk Macr-Off” In Europe, Poor China Trade Data Doesn’t Help

It was supposed to be Risk Macr-ON after Emmanuel Macron’s avalanche victory in Sunday’s French presidential elections; instead as some banks cautioned and as we showed early in the overnight session, the market reaction has been the opposite with the victory fully priced in (and more) and especially in the European currencies and stocks, as well as S&P futures, we have seen a modest episode of Risk Macr-Off. Treasury yields are falling 1-1.5bps in flattening fashion with the 10y at 2.33%. WTI crude oil has largely traded sideways and was modestly lower in early morning trade despite another monster jawboning session from the Saudi energy minister as well as Russia, both signaling they could extend production cuts into 2018, indicating that what little credibility OPEC may have had is virtually gone.

After climbing for five of the past six days in the buildup to the election of Emmanuel Macron, overnight the euro succumbed to “selling the news” and after climbing above the “psychological” 1.10 level after Macron’s victory investors booked profits. While the common currency rose to $1.1023 during early Asia trading, further filling the gap following the U.S. elections in November, with that move taking it more than 2.7% higher since the first round of the French elections, subsequent fast-money names unwound part of their longs. That saw the currency fall as much as 0.6 percent to $1.0936 in the European morning.

Discussing the Euro move, SocGen’s Kit Juckes said that “the Euro went up a bit, down a bit and ended pretty much where it was last week. It faces two short-term challenges. The first is that the FX market has moved a good way further in recent days than the bond market, with the Treasury/Yield spread not very different from where it was when EUR/USSD was under 1.08. Bunds need to catch up with the currency. The second hurdle is positioning. CFTC data show the smallest speculative Euro short in 3 years. That’s still a short position, of course, so much more of a short-term hurdle than a reason for a deep correction to lighten positions. A period of choppy trading is likely for now.”

While the Euro’s reaction was perhaps predictable, Macron’s decisive triumph over Marine Le Pen will strengthen the EU, according to Bloomberg,
and deal a blow to the populist wave that has roiled western
democracies for the past year. But the scope for a relief rally was
limited after market gains in the buildup to Sunday’s vote. Global
stocks are trading at the highest ever, and U.S. equities also closed at
a record last week after better-than-forecast data on American jobs.

The unwind in the Euro prompted concerns about broader risk assets, and as a result the initial kneejerk reaction in European stocks and US equity futures, has faded entirely and while Asian stocks rose, European equities and S&P futures fell with investors having more than fully priced the result in.

With the political risks that have dominated European markets in a year packed with elections seen receding, the European Central Bank is expected to have more room to tighten policy as the euro zone economic recovery gathers pace. Poor Chinese trade data released overnight hurt risk sentiment.

Following a strong start in Asia, European equities began on the front-foot, before slipping into negative territory in a ‘buy the rumour, sell the fact’ fashion with the CAC 40 trading lower by 0.5%. In terms of broader performance across the continent, material names underpefrom in the wake of disappointing Chinese trade data which saw imports and exports fall short of expectations (Copper imports –    22.9% Y/Y).

  • Exports (CNY)(Apr) 14.3% vs. Exp. 16.8% (Prey. 22.3%)
  • Imports (CNY)(Apr) 18.60% vs. Exp. 29.30% (Prey. 26.30%)
  • Exports (USD)(Apr) Y/Y 8.00% vs. Exp. 10.40% (Prey. 16.40%)
  • Imports (Apr) Y/Y 11.9% vs. Exp. 18.0% (Prey. 20.3%)

“Investors will now go back to the basics of watching the underlying euro zone economic and inflation data and what implications it may have for monetary policy,” said Iain Stealey, a fixed income portfolio manager for JPMorgan Asset Management.

Eslewhere, the dollar strengthened, Treasuries held steady and futures for U.S. stocks pointed lower. Oil swung as the Saudi oil minister said OPEC’s supply cuts will be extended into the second half of the year and possibly beyond. Energy names have been lifted by further OPEC and non-OPEC jaw-boning as Russian and Saudi rhetoric has revealed a desire to extend output cuts beyond 2017 if needed, even as China’s oil imports dropped from a record as independent refiners slow buying and both WTI and Brent trading modestly lower at publication time.

Looking at global equity markets, Japan’s Topix soared 2.3% to the highest since December 2015 as investors played catch-up after a three-day holiday. South Korea’s Kospi jumped 2.3% to a fresh record ahead of Tuesday’s election. Meanwhile, the selloff in China continued, with the Shanghai Composite Index dropping 0.8% to the lowest level since October, despite data showing overseas shipments held up in April.  The Stoxx Europe 600 slipped 0.2 percent in London, dragged down by miners. Futures on the S&P 500 were down 0.2% .

The yield on 10-year Treasury notes was flat at 2.35 percent. French benchmark yields fell two basis points to 0.82 percent.

Oil prices, which hit almost six-month lows last week on worries about a global glut of crude, edged up on prospects of output cuts agreed by the OPEC producers group and others could be extended. Brent futures rose 38 cents to $49.48 a barrel.

Gold rose 0.3 percent to $1,231 an ounce. Copper prices fell 1.4 percent to four-month lows around $5,015 a tonne as Chinese trade data showed April imports of the metal dived 30 percent from a month earlier.

Bulletin headline Summary From RanSquawk

  • French Presidential Candidate Macron became the President Elect after he won the 2nd round run-off
  • Oil up as Russian and Saudi rhetoric has revealed a desire to extend output cuts beyond 2017 if needed.
  • Looking ahead, highlights include comments from Fed’s Bullard and Mester.

Global Market Snapshot

  • S&P 500 futures down 0.1% to 2,395.25
  • STOXX Europe 600 down 0.2% to 393.60
  • MXAP up 1.4% to 150.67
  • MXAPJ up 0.8% to 488.52
  • Nikkei up 2.3% to 19,895.70
  • Topix up 2.3% to 1,585.86
  • Hang Seng Index up 0.4% to 24,577.91
  • Shanghai Composite down 0.8% to 3,078.61
  • Sensex up 0.4% to 29,966.27
  • Australia S&P/ASX 200 up 0.6% to 5,870.89
  • Kospi up 2.3% to 2,292.76
  • Brent Futures up 0.7% to $49.46/bbl
  • Gold spot up 0.2% to $1,230.83
  • U.S. Dollar Index up 0.1% to 98.78
  • German 10Y yield fell 1.1 bps to 0.407%
  • Euro down 0.3% to 1.0961 per US$
  • Brent Futures down 0.1% to $49.06/bbl
  • Italian 10Y yield fell 8.6 bps to 1.872%
  • Spanish 10Y yield rose 2.9 bps to 1.587%

Top Global News From Bloomberg

  • Emmanuel Macron pledged to heal France’s rifts after his victory over Marine Le Pen in the presidential election, saying that he’ll work to address the concerns that were exposed during one of the most divisive campaigns of recent history
  • Saudi Arabia and Russia signaled they could extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus just as its impact on prices wanes
  • Sinclair Broadcast Group Inc. is close to buying Tribune Media Co., a deal made possible after the Federal Communications Commission voted last month to ease a limit on TV-station ownership in the U.S.
  • KKR & Co. is in talks with Toshiba Corp. about a preemptive bid for the Japanese company’s memory chips business that would accelerate completion of a sale and end negotiations with other potential acquirers
  • Akzo Nobel NV rejected PPG Industries Inc.’s third takeover bid, saying its own breakup strategy is superior and raising the prospect that the U.S. rival will take the $29.5 billion offer directly to the Dutch coating and chemical company’s shareholders
  • Posts Surprise Profit as Chinese Consumption Strengthens
  • Buffett Confronts Search for Next Big Thing After Missed Chances
  • Malone’s Liberty Global Pares Growth Target on U.K. Slowness
  • Western Digital CEO Said to Plan Japan Trip for Toshiba Chip Bid
  • S. Africa Approval of Bayer-Monsanto Deal Rests on Liberty Sale
  • Einhorn, Gundlach to Speak at Sohn Investment Conference Monday
  • Sinclair Said Close to Buying Tribune for About $45 a Share
  • TPG Group Bids $2.1 Billion for Sydney Morning Herald Owner
  • Southwest Braces for Upgrade of 30-Year-Old Reservations System
  • Delta Is Said to Consider Delaying $3 Billion Airbus Order

Asia equity markets traded mostly higher following digested mixed US jobs data and the French Presidential election results where Macron triumphed as expected. ASX 200 (+0.5%) was led by commodity-related sectors after oil rebounded from last Friday’s lows to approach USD 47/bbl to the upside, while Nikkei 225 (+2.4%) surged as it made up for lost ground following its 5-day weekend. Elsewhere, Shanghai Comp (-0.8%) and Hang Seng (+0.3%) were mixed as the mainland underperformed after the PBoC refrained from open market operations and following the latest Chinese trade data in which Exports and Imports fell short of expectations. Finally, 10yr JGBs were lower amid a mostly positive risk sentiment in the region, while the BoJ’s Rinban announcement was also for a relatively paltry total amount of JPY 370bn.

Top Asian News

  • Tycoons From China Plant Money Management Flags on Wall Street
  • KKR Said in Talks With Toshiba for Preemptive Bid for Chips Unit
  • China End-April Forex Reserves at $3.0295t; Est. $3.0200t
  • China Said to Consider Merging 8 Companies Into 3 Power Giants
  • India Said Poised to Unveil New 10-Year Bond This Week

Focus in European trade has largely centred around the materialisation of the expected victory for Emmanuel Macron in the second round of the French Presidential election. European equities began on the front-foot, albeit modestly so, before slipping into negative territory in a ‘buy the rumour, sell the fact’ fashion with the CAC 40 trading lower by 0.5%. In terms of broader performance across the continent, material names underpefrom in the wake of disappointing Chinese trade data which saw imports and exports fall short of expectations (Copper imports –    22.9% Y/Y). Elsewhere, energy names have been lifted by further OPEC and non-OPEC jaw-boning as Russian and Saudi rhetoric has revealed a desire to extend output cuts beyond 2017 if needed. In fixed income markets, Bunds have been supported throughout the session alongside the downtick in equities while French paper benefitting from yesterday’s election result. Recent talk has suggested that OATs are likely to see a return of cash back into OATs from Asian investors. Additionally, the FR/GE spread has been relatively stable at this stage of the session with not much left on the data docket for investors to digest.

Top European News

  • Buy Bayer Before Rights Issue, Co. May Raise Forecast: Jefferies
  • European Miners Lead Stoxx 600 Lower; Macquarie Sees Opportunity
  • U.K. House Prices Post First Quarterly Decline Since 2012

In currencies, it has been a rather uninspiring morning in FX, but one which highlighted the fact that much of the EUR buying towards the end of last week was on the anticipated French election result. We may have seen 1.1000 breached, but life above this level will be hard-fought until we get some fresh drivers to inspire fresh longs against short term differentials From the USD perspective, some will argue that moderation may take us lower than 1.0900-1.0850, some of the EU data run of late suggests ECB policy change is perhaps a little sooner than communicated by Draghi and his colleagues — Germany would agree. GBP has had a positive morning, maintaining pressure on 1.3000 against the USD, but watching EUR/GBP strong interest to sell above 0.8500 now sees a fresh push for the low 0.8400’s. House price data this morning was of little consequence, but Super Thursday is the focus from here.

Commodity prices are lower across the board, but this does not paint the whole picture. From a risk perspective, one does not have to go too deep into the impact of the Macron victory in the French elections this weekend, further dampening precious metals. Losses in Gold on the modest side, but we are closer to USD1200 than the highs seen in mid Apr. The next support we see is just under USD1210.00. Silver has already tested its respective support point at USD16.20 and holds so far. Base metals still trading off China data and supply concerns, with Copper now delving into the support zone at USD2.45-50. Oil prices recovered sharply off their lows seen last week, but have eased off better levels despite more encouraging talk of an output cut extension. The pick-up in activity in the US and rising rig count temper this.

Looking at the US this afternoon is the April labour markets conditions index.  Bullard and Mester will be today’s Fed speakers.

US Event Calendar

  • 10am: Labor Market Conditions Index Change, est. 1, prior 0.4
  • 8:45am: Fed’s Mester Speaks at Chicago Council on Global Affairs

DB’s Jim Red concludes the overnight wrap

Europe’s ability to maintain a healthy relationship was enhanced last night by Macron’s large 66.1%-33.9% victory over Le Pen. Turnout was around 75% which is lower than previous  elections but the result was decisive. Le Pen conceded defeat shortly after the exit polls were released while world leaders including UK PM May, German Chancellor Merkel and US President Trump have been quick to congratulate Macron on his victory. The new President-elect – who will be the youngest ever elected French president – has also addressed his supporters outside his campaign headquarters in which he pledged to unite the rifts in France and do “everything in the next five years so that they have no more reason to vote for extremes”.

In terms of the next steps, Macron will now have to name a Prime Minister with parliamentary experience, who will lead the lower-house election campaign and then manage the daily business of parliamentary politics. Macron mentioned that his PM and government will be revealed after the inauguration that needs to happen by May 14th. Our economists in France highlighted in their Focus Europe piece on Friday that recent electoral results and polls suggest that Macron’s party could be the main party in the French lower house post the June elections (held from the 11th to 18th). An outright majority for his new party “En Marche!” appears numerically possible. If not, they also suggest that a majority could be reached with the participation of moderate centre-left and/or centre-right MPs who have already expressed their preparedness to govern with Macron in such a situation.

The reaction in FX markets this morning has been muted for the most part which isn’t hugely surprising following the first round result and the extent to which last night’s outcome was already priced in. The Euro was at best up +0.23%, touching an intraday high of 1.102, but it’s since fallen back to 1.098 as we go to print and about -0.20% versus Friday’s close. In Asia equity markets with the exception of China are firmer. The Nikkei is +2.25% (although that reflects some catch up from last week after markets were shut in Japan on Friday), with the Hang Seng +0.37%, Kospi +0.674% and ASX +0.41%. The Shanghai Comp is -0.92% after export growth was reported as slowing more than expected in April. Gold is little changed while WTI Oil is +1.38% and extending Friday’s rally with the boost this morning coming after Saudi’s oil minister said OPEC production cuts will likely be extended into the second half of the year. Futures are little changed. It’s worth noting also that today is a national holiday in France.

Coming back to the election theme, as it stands right now, the margin of victory for Macron is even greater than that suggested by the recent polls. In fact this has been a bit of a recurring theme for European elections of late. Indeed if you include the two French presidential elections (rounds 1 and 2), then the last six elections in Europe have all seen the nationalist candidate underperform relative to what the polls suggested. We’ve obviously seen this with Le Pen in the two French elections, while the Dutch General election back in March saw Geert Wilders’ Party for Freedom movement perform worse than expected (taking home 13.1% of the votes compared to the polling average of 14.1%). The same can also be said for the Freedom Party in Austria back in the December Presidential election, as well the recent Finland Municipal Election (in which the Finns Party underperformed relative to polls) and Bulgaria’s Parliamentary Election (in which the United Patriots Party underperformed). An interesting trend.

Meanwhile, much of the other weekend news concerns other European politics. Over in Germany Chancellor Merkel’s CDU party was given a big boost following victory over Schulz’s SPD party in the Schleswig-Holstein state election (had been an SPD-led coalition since 2012). The result was a surprise victory for the CDU with preliminary counts estimating the party to have taken 33% of votes (from 30.8% in 2012) versus 26% for the SPD (from 30.4%). Significantly, this makes for positive momentum for the CDU going into next weekend’s big North-Rhine Westphalia state election (the most populous state and SPD- coalition run). Recent polls for this state election have proven to be too close to call. Elsewhere, in Italy two of the last three opinion polls have shown the 5SM party to again have fallen behind the PD (Democratic Party). The polls, covering May 2nd-4th from Ipsos, Ixe and SWG show the average lead for PD of 0.9%. Clearly it’s extremely tight however and well within the margin of error but go back to mid-March to early April and the 5SM was holding a lead or anywhere from 2%
to 7% over the PD so there has been a bit of a shift.

Moving on. Before we look at the week ahead, a quick wrap-up now of Friday’s session. For those that missed it, the main focus of attention was the NFP print in the US which came in at a better than expected 211k (vs. 190k expected). Revisions to prior months were fairly insignificant at just a cumulative -6k over the last two months. Private payrolls also rose 194k in April, partly due to a rebound in employment growth in the previously weather-impacted leisure and hospitality sector. Away from that the labour force participation rate nudged down one-tenth to 62.9% while the U-3 unemployment rate was the biggest surprise after falling to 4.4% (from 4.6%) compared to expectations for a rise to 4.6%. That is now the lowest rate since May 2007 and a tenth below the Fed’s most recent year-end target. The broader U-6 measure also declined, by three-tenths to 8.6%. In terms of wages, average hourly earnings were up +0.3% mom in April as expected however the combination of base effects and downward revisions to earlier data saw the annual rate fall one-tenth to +2.5% yoy.

Markets weren’t hugely moved by the data. Treasury yields spiked and then dropped in the moments following the report but by the end of the day were pretty much flat at 2.350%. The Greenback was a shade weaker with the US Dollar index finishing -0.15%. Meanwhile in equity markets the S&P 500 closed +0.41% but this was more to do with the rebound that we saw across the commodity complex than anything else. After we had reported WTI Oil plummeting below $44/bbl in the Asia session on Friday, energy prices staged an impressive rebound into the close with WTI actually ending the day up +1.54% at $46.22/bbl – an intraday high-to-low swing of well over 6%. That rebound appeared to be technically driven rather than from any fundamental data or news. Industrial metals were also better off for the most part on Friday with Copper (+0.76%), Zinc (+0.51%) and Nickel (+1.39%) all firmer, although Iron Ore was again the exception after suffering its second consecutive 5% daily decline. Prior to this in Europe we’d seen equity markets finish firmer heading into Sunday’s election with the Stoxx 600 +0.65% and CAC +1.12%. Peripheral bond yields were also 4-9bps lower which compared at a 2.4bps rise for 10y Bund yields to the highest (at 0.418%) since March 21st.

Finally there has also been a decent amount of Fedspeak to sift through. On Saturday San Francisco Fed President Williams reiterated his view that 3 to 4 rates hikes this year remains appropriate while at the same time noting that the April employment report was further confirmation that Q1 GDP was an “aberration”. St Louis Fed President Bullard said that he wouldn’t oppose one more rate hike this year and that the Fed should start trimming its balance sheet “maybe sometime in the second half of the year”. The Boston Fed’s Rosengren emphasised  also his desire to start shrinking the Fed’s balance sheet “relatively soon”. There was nothing particularly relevant from Fed Chair Yellen’s speech.

Looking at the week ahead now, this morning in Europe the early release comes from Germany where we’ll get March factory orders data, followed then by house prices data in the UK and the Sentix investor confidence reading for the Euro area in May. The only data in the US this afternoon is the April labour markets conditions index. Kicking off Tuesday will again be Germany where March trade and industrial production data is due. In France we’ll also get the Bank of France business sentiment reading while in the US in the afternoon it is quiet again with the April NFIB small business sentiment reading, March JOLTS job openings and March wholesale inventories the only data due. Kicking off Wednesday is China where we’ll get April CPI and PPI prints. In France trade data and industrial and manufacturing production reports are due. Over in the US on Wednesday we will get the April import price index reading and April monthly budget statement. In Asia on Thursday the lone release is from Japan where we get the March trade balance. In the UK we then get industrial and manufacturing production for March along with the latest trade balance. The Economic Commission is also due to release its latest economic forecasts while around lunchtime we’ll get the BoE policy meeting outcome and latest inflation report. In the US on Thursday we are due to get PPI and initial jobless claims data. It’s a busy end to the week on Friday. In Germany we get Q1 GDP and April CPI while Euro area industrial production for March is also scheduled. We finish the week in the US with the April CPI report, April retail sales figures and first look at the May University of
Michigan consumer sentiment reading.

Away from the data this week’s Fedspeak consists of Bullard and Mester today, Kashkari, Rosengren and Kaplan on Tuesday, Rosengren on Wednesday Dudley on Thursday and Evans and Harker on Friday. ECB President Draghi is also due to speak on Wednesday while the BoJ minutes from the April meeting are also due Wednesday. BoE Governor Carney speaks after the BoE meeting. Away from this US Secretary of State Rex Tillerson is due to meet Russia Foreign Minister Sergei Lavrov on Wednesday. G7 finance ministers also meet on Thursday for a threeday meeting. Earnings wise we’ve got 39 S&P 500 companies due to report and 100 Stoxx 600 companies scheduled.


i)Late SUNDAY night/MONDAY morning: Shanghai closed DOWN 24.45 POINTS OR .79%  OR / /Hang Sang CLOSED UP 101.56 POINTS OR .41% .  The Nikkei closed UP 450.00 POINTS SOR 2.31%/Australia’s all ordinaires  CLOSED UP .58%/Chinese yuan (ONSHORE) closed DOWN at 6.9048/Oil UP to 46.27 dollars per barrel for WTI and 49.18 for Brent. Stocks in Europe OPENED IN THE RED EXCEPT LONDON   ..Offshore yuan trades  6.9068 yuan to the dollar vs 6.9048 for onshore yuan. NOW  THE OFFSHORE IS A LOT WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS  MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT HAPPY



North Korea arrests another American and threatens to nuke the White House as well as other Americans

(courtesy zero hedge)

North Korea Arrests Another US Citizen, Threatens To Nuke White House And Destroy “Murderous American Ogres”

Exactly two weeks after North Korea arrested Tony Kim, a Korean-American professor in his 50s at Pyongyang International Airport as he was leaving North Korea, Kim Jong-Un has again provoked the US and overnight North Korea detained another U.S. citizen tied to the Christian-backed university in Pyongyang. According to the report issued on Sunday by North Korea’s official Korean Central News Agency, Kim Hak-song was arrested for committing “hostile acts”, and works for the Pyongyang University of Science and Technology (PUST), a university founded in 2010 by James Kim, a Korean-American Christian businessman.

“A relevant institution of the DPRK detained American citizen Kim Hak Song on May 6 under a law of the DPRK on suspension of his hostile acts against it,”KCNA said.

PUST, while not officially Christian, hires largely Christian faculty, and says on its website that “churches can support PUST through prayer and through spreading the news about this project among congregation members.” According to Reuters, the volunteer faculty of PUST, many of whom are evangelical Christians, has a curriculum that includes subjects once considered taboo in North Korea, such as capitalism. The college is an unlikely fit in a country that has been condemned by the U.S. State Department for cracking down on freedom of religion.

Over the past few years, North Korea has arrested a number of U.S. citizens doing Christian-related work in the isolated country. Kenneth Bae, a Korean-American missionary, was sentenced to 12 years’ hard labor for “hostile acts,” and was freed after two years in November 2014. In 2014, American Jeffery Fowle was detained and held for six months after leaving a Bible in a nightclub bathroom, according to the WSJ.

In addition to the two Kims from PUST, North Korea last year sentenced Otto Warmbier, a University of Virginia undergraduate arrested for allegedly trying to steal a political poster from a hotel, and Kim Dong-chul, a Korean-American businessman, to terms of 15 years and 10 years of hard labor, respectively.

White two weeks ago the White House acknowledged it was aware of the US citizen detention in North Korea, it has so far failed to even lodge even a formal demand for his release. It has yet to make a statement on the latest arrest.

Separately, and in keeping up with the recent belligerent rhetoric out of N.Korea, the country again threatened to nuke the White House and reduce it to ashes as Kim Jong-un’s regime bragged the days of the US are now “over” adding “this is a stern warning to the US imperialists and their stooges running amuck for aggression and war moves.”

The threat was unveiled in an editorial published by KNCA, in which Pyongyang slammed President Donald Trump’s decision to dispatch its naval fleet to the Korean Peninsula. The op-ed vowed it would be victorious over an enemy made up of “murderous ogres”, “robbers”, “air pirates” and “warriors who master the occult arts”, according to the Express.

“The world will clearly witness how the crime-woven history of the US imperialists will be over, how the despicable remaining days of the south Korean puppet forces will come to an end and how national reunification, the cherished desire of the Korean nation, will be achieved.” North Korea’s military commander also said the White House would be “reduced to ashes”, even as the US was planning to destroy Pyongyang the op-ed claimed.

The article claimed 330,000 US soldiers took part in military drills designed to rehearse an “all-out war” with North Korea and pledged that Pyongyang “will retaliate” and “the crime-woven history of the US imperialists will be over”. North Korea also accused the US of being a “hotbed of evil” which needed to be hit with an “indiscriminate preemptive nuclear strike” to transform the superpower into “something that cannot come back to life again”.

The ongoing threats come as State media said Kim Jong-un has inspected his military’s new battle plans and bragged his forces are “fully ready for combat and to go into action.” Chris Douglas of the Australian Strategic Policy Institute warned that “a fanatical regime facing extinction wouldn’t think twice about sending a container bearing a nuclear device to the US or an allied country and detonating it.” Luckily, the desperation of the “fanatical regime” has not yet reached peak levels.




The following is a very important read as we learn that China is slowing down on all fronts.  Imports fall, exports fall, commodities fall and bond issuance almost disappears as their economy severely falters

(courtesy zero hedge)


“A Complete Mess” – China Stocks, Bonds, Commodities Crumble As Trade Data Disappoints

The forced deleveraging of China’s WMP-driven excess was not helped overnight by disappointing trade data as both import and export growth slumped.

April Imports grew at just 11.9% YoY (in USD terms), dramatically less than the 18.0% expectations and well down from March’s 20.3% growth.

April Exports grew at 8.0% YoY (in USD terms), less than half the growth of March (16.4% YoY) and well below the 11.3% expectations.


Bad news also hit the energy space after Saudi officials desperately triued to talk up OPEC production cut deal extensions, China’s trade data showed a collapse in oil demand in April (down almost 12%)...


And the result was clear…

As Bloomberg details, April trade data add to the impression of a deceleration in China’s economy heading toward 2H. Export and import growth slowed, and missed expectations, despite a lower base for comparison. Trade data are volatile, but the latest numbers are consistent with signs of a slowdown from April business surveys. If the peak for 2017 growth is already in the past, China’s space for progress on a challenging deleveraging agenda will be limited. Diminished scope for higher interest rates will also add pressure for yuan weakness.

This piled on the pressure across the entire China capital markets space with commodities (4 month lows), stocks (7 month lows), and bonds (22 month high yields) all tumbling further…


The soaring cost of debt has created yet another vicious circle as China bond issuance has collapsed. In April, the number of aborted issues rose to 154, up from 94 in March, 32 in February and 31 in January.

These signs of mounting stress in China’s $9.3tn bond market come less than a month after the country’s banking regulator, Guo Shuqing, was quoted as supporting a campaign to sort out chaotic practices, and threatening to resign if the banking system became “a complete mess”.

As The FT concludes, April’s increase in cancelled bond issues continues a trend of collapsing bond issuance volumes in the first four months of the year:

“The collapse in domestic bond issuance is a clear consequence of efforts to rein in shadow banking generally and wealth management products specifically,” said Gene Frieda, global strategist for Pimco, the US investment management firm.


“This adds to an already sizeable credit tightening impulse baked into the cake for the second half of this year.”


“The question now is not if China’s economy will slow, but rather how fast,” Mr Frieda added.

As we noted previously, one wonders how long implied vol for the Yuan can decline (and spot remain stable)…

And we know what happens after that.




An in depth look at the problems facing France, once  Macron is elected:

(courtesy zero hedge)

Why Charles Gave Expects “Total Mayhem” In France Even If Macron Is Elected

Venerable French investor Charles Gave has been managing money and researching markets for over 40 years; as such France’s elder statesman of asset allocation perhaps best captures the mood ahead of the most crucial Presidential election in a generation. In conversation with Dr. Pippa Malmgren, Charles breaks down national politics to understand why voters have rejected the establishment and the market impact of both outcomes, and what to expect from tomorrow’s election.

First, Gave, who says “I’m not so sure that Macron will win”, is asked by Malmgren to walk RealVision viewers through what Macron’s agenda would look like in case of a victory. Gave is unable to do so for several simple reasons:

Well, first, nobody knows. Because during the whole campaign, all these talks were on one hand, on the other. I’m in favor of apple pie, and motherhood, you see. Basically he has, to my knowledge, very little program. So he’s running. That is what Hollande said. That he was going to make some fundamental changes without hurting people. And so Macron is a big, empty suit. That’s what he is. You did the right curriculum vitae, he went to the right schools. And you have the feeling that the guy never had an original idea in his life. He was always a good student.


And moreover, there is a strong suspicion that he’s a kind of golem created by Hollande and all these guys. So since they knew they were going to lose the election, they created a guy in a hologram that would run for them and prevent them from losing power. So to a certain extent, the French political system has been captured by what you can call the Technocratic class. And whether from the left or the right, it didn’t make any difference. And this Technocratic class is presenting Macron as a brand new fellow. He is nothing brand new. These guys have been in power for 50 years for God’s sakes. So this is basically nothing.

Gave is then asked for his take on the market’s reaction, first to the outcome which now appears to be fully priced in, i.e., a Macron victory. The French investor’s response should be concerning to those who believe France is in for a period of calm and stability.

If Macron is elected, as I already said, I’m not sure it’s not going to be a triumphant election. So I’m not sure they will have that much legitimacy at first. And second thing is that just after, we have the election for the French Parliament. And then it’s going to be a total mayhem. Because you have four main different currents in France. The extreme left, the Macron left, you see? You have the Fillon right, and you have Le Pen’s right. So you have four. The way it’s done before is that you had only three. Extreme left and the left were joined. And you had the election, you had three guys, and if anyone from the Front National had any chance of being elected, then the worst position of the other two retired. Right away. And said, you must vote for my usual enemy, but we don’t want to. It’s what’s called the Front Republic.


But you see, it’s kind of easy to organize if the organization of the parties are very strong and can force people to retire and to stop running. But if you have four, the organization of the parties having lost all credibility, then nobody is going to retire. Until we are going to have elections. And you could have a majority of MP’s from the Front National The majority of MP’s from Melenchen. Anything is possible. So the fact that Macron is elected doesn’t reduce at all. Not at all. The political risk in France. It may reappear at the election time, big time. So anybody who buys on the idea that the problem is solved in France, let’s move to the next one will have to wait till the middle of June.

Alternatively, what if Le Pen wins:

If Le Pen wins, it’s pretty simple. The bond market in France, Italy, Spain cannot open on Monday morning. And I suppose the euro is dead in the following week. And then you have to buy Europe like crazy. Southern Europe.

Why Southern Europe? Because it is Germany’s markets that would bear the brunt of the selloff, as the dissolution of the euro and European Union would effectively bring about the end of Germany’s economic hegemony (while at the same time benefitting France).

The Germans have made a colossal mistake, which is that they have all the production in Germany. So they’re extremely efficient, well-organized, and they have developed massive current account surpluses. Half of that surplus is in cars. The margin on cars is around 4%. Imagine that the euro breaks down. The deutschmark comes back. The deutschmark goes up 15, 20%. And the whole German industry, all the production base in Germany, becomes bankrupt in no time at all. Compare that to France. France we have magnificent big companies that have been intelligent enough to produce everywhere in the world, to operate from everywhere in the world, and be totally independent from what’s happening in France. What they have in France is their headquarters. And that’s about it. So if Europe breaks, you should be long France on the stock market, and short Germany. Big time.

Would a Le Pen victory also mean the end of the EU? Gave answers:

I wrote a book in 2002, sometime around then, called “Lions Led by Donkeys in France.” It was kind of a bestseller. And I made the point in the book that the euro is going to destroy Europe, the European institutions. And I said, we must get rid of the euro to save Europe. So name of the game, if we have some kind of a crisis like that, is to basically close the market for three weeks and organize an orderly dismembering of the euro. But to maintain what has been good so far, which is the kind of common market. And it’s a difficult call because the movement towards the euro was also a movement to create a European nation.


And so the institutions today are basically federal in nature. But nobody in Europe has ever voted for them. So to a certain extent, the guys with power in Brussels have not been elected by anybody, and you cannot fire them. So it’s totally Technocratic. So we have a hell of a problem. We should not only destroy the euro, but should move back to what Europe was in 1988 or 1987 before they put all these Federalist legislations in. That is going to be a tall order. But if the euro disappears and Europe has a problem, then the negotiating between the UK and Europe is going to be amusing. Because UK is going to say, look, who are we going to negotiate with?

Finally, on his big picture thoughts ahead of tomorrow’s decisive election:”it’s going to be a close call, a lot closer than people think. And then we have the elections afterwards, which are going to be a total gamble.” Gave adds that in a sense Le Pen has already won because the “worst case scenario” for her, the 2022 elections, is still achievable. As for the parliamentary elections, “Le Pen could have anywhere between 40 to 100 MP’s (she currently has two)…. which would be a total disaster for the ruling class.”

In other words, even if Macron triumphs on Sunday, “the National Front isn’t going anywhere.” Furthermore, Le Pen’s niece Marion Le Pen is poised to inherit the mantle of party leadership in time for the next presidential election in 2022. The younger Le Pen, already a French MP, would have a distinct advantage over her astringent aunt:

Marion, she’s very young. She’s 27, 28. She’s an MP in the French Parliament. She’s extremely pretty. And she represents what’s probably very good in the French Catholic Right. She’s very much a Christian person. Very much so. So a lot of people have problems voting for Mrs. Le Pen today. A lot of the Fillon’s elector would have absolutely no problem voting for Marion, you see what I mean? So she has a big appeal on the Classical French Right. Big one. Big one.

His parting words:”be careful. If she wins, you will have a disaster in the lot of the European bond market. Doesn’t mean a total disaster for the good quality companies. But the risk is not on the stock market. The risk is on the bond market. So be careful. Don’t overstay on the bonds in Europe.”

While these are the core excerpts from the interview with Charles Gave, there is much more in the full 40 minute version found on RealVision TV.



A Macron victory with 65% of the votes cast went to the youngest ever elected President of France:

(courtesy zero hedge)

Emmanuel Macron Elected President Of France With 65% Of The Vote: Live Feed

Live Feed from France 24:

After an extraordinary election campaign full of twists and turns, Emmanuel Macron won a dramatic victory over Marine Le Pen in the French presidential election, taking 65% of the vote, with Le Pen collecting just over a third according to estimates from four separate French pollsters. Macron, 39, will become the youngest president of France’s Fifth Republic.

As BBG notes, the firms sampled real votes as they were being counted and weighted their results to reflect the composition of the French electorate. Their projections were all within 1 percentage point. Indeed, all early polls all show Macron with at least 65% of the vote:

  • Elabe: 65.9%
  • Ifop: 65.5%
  • Ipsos: 65.1%
  • Kantar: 65.0%

Estimation @IpsosFrance / @SopraSteria_fr du vainqueur à la Présidentielle :
E. MACRON : 65,1% – M. LE PEN : 34,9%


Abstention in Sunday’s election was expected to hit 26%, the highest rate since 1969, reflecting a lack of enthusiasm among many voters for the choice on offer.

Moments after the results were announced, Le Pen conceded to Macron in a phone call and vowed to become major force of opposition,

“The French have elected a new president and opted for continuity,” Le Pen told supporters just outside Paris. “I wish him success in the face of great challenges,” she said.

The AFP reports that it has spoken to Macron since the election results. France’s president-elect says “a new page has turned, that of hope and of restored confidence”.

The reactions to Macron’s win are coming in fast and hard: French President François Hollande, former Prime Minister Manuel Valls, German Chancellor Angela Merkel, British PM Theresa May are just some of the major political figures and leaders who have been congratulating modern France’s youngest president-elect over the past few minutes.


.@sigmargabriel: Félicitations @EmmanuelMacron! Allemagne sera aux côtés du nouveau Président de la République! Vive la France,vive l’Europe


At the same time, Geert Wilders, who stood as a Right-wing populist in the Dutch elections but lost out to Mark Rutte, has offered his commiserations to Ms Le Pen. He went on to predict both of them would win in the next election.

As the FT adds, Macron’s victory is a “phenomenal achievement” for the 39-year-old former Rothschild banker, who has never before held elected office and whose political movement En Marche! was set up barely a year ago. He becomes the youngest ever French president.

As for, Le Pen, she fell short of the 45% that she was projected to win at one point earlier in the year. But her score of 34.9% is almost twice the 18% won by her father Jean-Marie Le Pen in 2002, and points to a depth of disaffection and anger towards France’s political elite that could nourish the far-right for years to come, especially if President Macron fails to deliver on his promises.


Macron, a former government adviser and economy minister in the Hollande administration, will now turn his attention to elections for the National Assembly on June 11 and 18. He needs to build a stable majority from a party that as yet has no MPs. On Friday, he said he already had in mind his nominee for prime minister, a choice that could help him build alliances with MPs from other parties.

Shortly after the results were announced, BuzzFeed reported that LePen’s Front National is going to re-brand, and change its name after the election result. Le Pen said that “The National Front … must deeply renew itself in order to rise to the historic opportunity and meet the French people’s expectations. I will propose to start this deep transformation of our movement in order to make a new political force.”

Sur @TF1, Florian Philippot annonce que le va changer de nom

Meanwhile, the Leave EU campaign, which presumably preferred a Le Pen victory over Macron, has just tweeted the following picture and message:

* * *


Macron’s victory is in line with expectations, which according to several banks carries a “sell the news” risk, especially in EURUSD.

In a note released earlier on Sunday, Barclays’ Giovanni Paci writes that “a Macron victory, in line with current polls, in the second round of the French Presidential election, carries risk of a “buy the rumor, sell the fact” downside move in EURUSD, given the current long EUR pre-positioning.” On the other hand, “this outcome would also likely bring temporary relief and a further reduction in volatility.” Because a VIX of 10 is high?

Some further details below:

Macron victory in line with polls carries risk of a “buy the rumor, sell the fact” downside move in EURUSD, given the current long EUR pre-positioning. The EUR political-risk premium was reduced significantly by the “benign” first round outcome, which supported a c.2% EUR NEER appreciation. EURUSD should depreciate mildly over the remainder of this year, as monetary policy divergence and some residual political-risk premia weigh on the common currency.


With market attention to the ‘Politics of Rage’ likely to fade after the French election, and no other clear themes visible, we see risk of a significant decline in market volatility. Implied volatility is low across asset classes (Figure 1) and, for most major currencies, realized and implied volatility measures are well below their yearly averages (Figure 2). Although we do not believe the Politics of Rage has yet crested, the outcome of the Dutch elections and the expected victory of Emmanuel Macron in France, are likely to assuage market fear of radical political change, at least for the near term, as no other clear risk events are visible. Risk-taking began to deteriorate earlier this year as ambiguity brought about by the ‘Politics of Rage’ dampened strategic risk taking. However, the resolution of near-term risks, with no other clear themes or major risk events to trade tactically, is likely to take activity and volatility further down.



… the election of Mr. Macron as president, combined with a potential hung parliament would leave in place long-held concern about reform, but remove acute risks that provided shorter-term trading opportunities. As long as short-term events bring about temporary relief and long-term risks, volatility is likely to remain depressed, but prone to sudden bursts.

* * *

Deutsche Bank’s director of FX strategy, Sebastien Galy, has chimed in with a similar tak saying that while EUR/USD will likely gap higher, looking to clean out the stop losses,  before eventually consolidating lower. Her adds that equity flows are likely to increase into the euro zone,‎ but that will take time as much is already priced in.

* * *

Expect more sellside commentary as analysts react to the initial results.


Volkswagen quietly stashed away 500,000 rigged cars and so far they have not found a solution to fix the emissions cheating:

(courtesy zero hedge)

How Volkswagen Quietly Stashed Half A Million Rigged Cars Around The Country

Volkswagen bought back hundreds of thousands of emissions-cheating cars. We just discovered what it has done with them all


As Bloomberg reports, the German automaker agreed last year to buy back about 500,000 diesels that it rigged to pass U.S. emissions tests if it can’t figure out a way to fix them. Except for a handful of 2015 models, VW dealers can’t sell the cars until – and unless – the company comes up with repairs to satisfy regulators. The question they face then is – what to do with the hundreds of thousands of diesel cars it is being forced to buy back?

Well, now we know… the company is hauling them to storage lots across America…

VW spokeswoman Jeannine Ginivan said the program is unprecedented in terms of its size and scope and we have devoted significant resources and personnel to help ensure that it is carried out as seamlessly as possible.”

As Jalopnik’s David Tracy reports, after a bit of hunting on forums, and a couple of tips from readers and friends, I seem to have found three such “regional facilities”: one in Pontiac, Michigan; one in San Bernardino, California; and one in Baltimore, Maryland.

The Pontiac Silverdome is a bit of a shitshow in southeast Michigan. It used to be the proud home of the Detroit Lions and the Pistons, and it was even the venue for Super Bowl XVI, multiple NCAA tournament games and some FIFA World Cup matches. But now the huge building lies dormant, with its interior decaying and its parking lots cracking after years of neglect. This makes it the perfect place for VW to stash their bought-back TDIs.

See here for more images…

On a remote part of Norton Air Force Base (in San Bernardino, California), which has been decommissioned for over 20 years now, as is now part of the San Bernardino International Airport, lie thousands of California-plated Volkswagens and Audis awaiting their fate…


Google Street View even has the images..

See here for more images…

The Port of Baltimore is stuffed full of Volkswagens waiting to die. As one Jalopnik readers noted “a total of five storage lots with what had to be thousands of cars, ranging from older Mk5 Jetta models to high line Audi A3s, Passats and MQB Mk7 Golfs and a huge quantity of Jetta Sportwagens… Several of the lots stretched much farther than I could see.”

See here for more images…

The images above bring to mind the apocalyptic scenes from ‘where cars go to die’ during the last crisis in America, but for VW, this seemed to sum it all up nicely…

“The public doesn’t realize the monumental undertaking that they’ve pulled off to do this in a year and a half,” said Matthew Welch, general manager of Auburn Volkswagen near Seattle.


“Nothing like this has ever been done.”

And while VW has only itself (and government regulations) to blame for this scene, we wonder how long before we see the same images for GM vehicles… after all, with inventories at 10-year highs as sales start to collapse, we are feeling a terrible sense of deja vu all over again…

(courtesy Mish Shedlock/Mishtalk)


Iran over the weekend threatens to destroy Saudi Arabia after the Saudi Prince warns that he will be moving the battle to Iran.  I doubt that Saudi Arabia will give an  exemption on Iranian oil production cuts when they meet next

(courtesy zero hedge)


Iran Threatens To Destroy Saudi Arabia After Saudi Prince Warns Of “Moving Battle To Iran”

An unexpected war of words erupted between two sworn Middle-Eastern rivals over the weekend, when Saudi Arabia and Iran threatened each other with military action, if not outright destruction.

It started on Tuesday, when in “unusually blunt comments” delivered during a nationally-televised interview Saudi Deputy Crown Prince Mohammed bin Salman – the man who is now effectively in charge of Saudi oil policy – ruled out any dialogue with Iran and pledged to protect his conservative kingdom from what he called “Tehran’s efforts to dominate the Muslim world.”

“We know that we are a main goal for the Iranian regime,” he said. “We will not wait until the battle comes to Saudi Arabia but we will work to have the battle in Iran rather than in Saudi Arabia.”

Iran, never one to leave a lingering belligerent comment by its Saudi nemesis unanswered, responded when its defense minister said on Sunday that Iran would hit back at most of Saudi Arabia with the exception of Islam’s holiest places if the kingdom does anything “ignorant” according to Reuters.

“If the Saudis do anything ignorant, we will leave no area untouched except Mecca and Medina,” Defence Minister Hossein Dehghan was quoted by the semi-official Tasnim news agency as saying. Taking a jab at the Saudi war in Yemen, the iranian said that “they think they can do something because they have an air force,” referring to Saudi attacks on Iran-aligned Houthi forces in control of the capital Sanaa.

Dehghan, speaking to Arabic-language Al-Manar TV, was commenting on remarks by Saudi Deputy Crown Prince Mohammed bin Salman, who said on Tuesday any contest for influence between the Sunni Muslim kingdom and the revolutionary Shi’ite theocracy ought to take place “inside Iran, not in Saudi Arabia”.

Was this just more “run off the mill” jawboning and theatrics, or a prelude to a more serious escalation between the two nations which periodically trade verbal barbs even if neither has been willing to test overt military action against its counerpart? The answer will be revealed in the upcoming OPEC negotiation on production cut extensions, and specifically whether the Saudis will grant Iran – which has been steadily gaining market share at Saudis’ expense during 2017 – another waiver from participation in the mandatory output cuts. Because when it comes to Saudi Arabia, while nationalistic verbal pyrotechnics are for popular consumption, when it comes to oil, and associated revenues – especially ahead of the critical Aramco IPO – nothing could be more serious.


Globally, the world’s central banks have provided huge liquidity which keeps asset prices higher.  From the beginning of 2017 the world’s central banks have provided 1 trillion dollars worth of liquidity which has kept stocks afloat. Deutsche bank;s Costam explains why this is not enough.

(courtesy Domenic Kostam./zero hedge)

A Problem Emerges: Central Banks Injected A Record $1 Trillion In 2017… It’s Not Enough

Two weeks ago Bank of America caused a stir when it calculated that central banks (mostly the ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record.” 


BofA’s Michael Hartnett noted that supersized central bank intervention which he dubbed a “liquidity supernova” is “the best explanation why global stocks & bonds both annualizing double-digit gains YTD despite Trump, Le Pen, China, macro…”

To be sure, Hartnett’s “discovery” did not come as a surprise to regular readers: back in October 2014, Citi’s Matt King calculated that it costs central banks $200 billion per quarter to avoid a market crash, or as he put it:

For over a year now, central banks have quietly being reducing their support. As Figure 7 shows, much of this is down to the Fed, but the contraction in the ECB’s balance sheet has also been significant. Seen from this perspective, a negative reaction in markets was long overdue: very roughly, the charts suggest that zero stimulus would be consistent with 50bp widening in investment grade, or a little over a ten percent quarterly drop in equities. Put differently, it takes around $200bn per quarter just to keep markets from selling off.

Today we showed just what central bank buying looks like in practical terms when we demonstrated that the Swiss national Bank had purchased a record $17 billion in US equities in just the first quarter, bringing its total US equity long holdings to an all time high above $80 billion…

… in the process soaking up nearly 4 million AAPL shares in the first 3 months of the year.


On the surface, these sums appear vast; however in the latest weekly report by Deutsche’s Dominic Konstam, the credit strategist finds something even more troubling: $1 trillion in central bank liquidity YTD – or roughly $250 billion per month –  is not enough.

The reason is two-fold: on one hand there is the stock of existing central bank assets that keeps growing at an exponential pace, which implies that central banks have to monetize ever more assets just to keep the system from becoming unstable, or “running to stand still” as Citi recently framed the growing problem; on the other hand, offsetting the “organic” expansion of central bank balance sheets is the decline in FX reserves among liquidity managers, the most famous recent episode of which is China’s $1+ trillion drop in reserves which started in mid-2014 and has yet to conclude. Recall that global liquidity is defined in dollar termsas the sum of all FX reserves, the fed’s balance sheet and the central bank balance sheets of the Eurozone, Japan, UK, China, India, Russia, Saudi, South Africa and Brazil.

So what happens when in addition to central bank liquidity one adds various other global liquidity components? Here is Konstam’s troubling discovery:

Having accelerated for four straight quarters from 2015/Q4 to a local peak of +5.0 percent in 2016-7/Q4, Q1 saw the first slowing to a year over year growth rate of just 2.23 percent. In absolute terms it was $29.5 trillion, almost unchanged from 2016/Q3. The main culprit (again) was FX reserves that sharply dropped by almost 1 percent versus a year ago, based on February data.

Worse, the Deutsche Banker forecasts that “the weak patch for global liquidity growth is likely to extend through to 2017/Q4 where even based on flat FX reserves ahead of ECB or Fed balance sheet changes, the current rate of ex Fed central bank liquidity growth should lift liquidity growth back to slightly over 5 percent year over year.

This is a problem because “5 percent is not a lot at a global level. It doesn’t accommodate faster nominal growth. And as the chart below indicates is consistent with relatively subdued bond yields. In 5y5y US Treasury terms a 3 percent rate seems a little elevated as is and is pretty much discounting liquidity growth closer to 10 percent, a level last seen in 2013.”

But the biggest disconnect between liquidity and implied “fair value” is once again to be found in stocks:

Global equities tell a similar story but even more starkly; they appear to be discounting liquidity growth over 10 percent. This is another example of how the equity market seems to be discounting something very different from the bond market.

Why did Konstam make this analysis? Because, as he writes in his intro, “more than ever before in this tightening cycle we would suggest that the Fed faces the most delicate of balancing acts. There seems to be an almost automatic convergence on a June tightening with September also a possibility and then some kind of balance sheet adjustment. The ECB is widely viewed to be not far behind in terms of another taper and the possibility of an eventual depo rate increase (we think 15 bps priced by August 2018) as a quid pro quo for QE extension.”

In other words, just like Hans Lorenzen from Citi warning one week ago, the market is blissfully ignorant of the threat that imminent global central bank tightening poses on risk assets, a risk neither ETFs, nor algos, nor CTA have considered.

Konstam’s conclusion is that there are two outcomes: either asset prices drops, or central banks will ultimately be forced to inject even more liquidity. Here is his take on the former:

There are a couple of ways in which these disconnects can be resolved. But until they are, global central banks need to tread warily. One resolution is of course equities retreat and yields decline, recognizing the dearth of liquidity. Recently we have used broader liquidity indicators in the context of nominal output for the US, Europe, China and OECD in general to demonstrate that there is falling “excess” liquidity that always implies some kind of loss in real output momentum with a lag. This doesn’t necessarily mean outright declines in output growth but it would, for example, be consistent with weaker PMIs and typically puts a ceiling of where longer term yields can rise to. Specifically we find that yield momentum tends to decline implying, specifically for the US that 10s might be capped around the 2 ½ percent level with downside potential closer to 2 percent on a moderate loss of upward yield momentum.

And then the latter, which can be resolved by either QE4 (or more) or a sharp drop in the USD.

Another way we could see resolution would be an accelerated move higher in liquidity. This seems unlikely in terms of positive new accommodation by central banks, absent deterioration in observed growth or inflation. However it is possible if the dollar were to weaken which would reflate the dollar value of existing liquidity but also probably contribute to a faster recovery in FX reserves. The problem is that dollar rate correlation has remained stubbornly tight although as we have argued since Trump’s election, one senses that that correlation is less assured…. Recent weakness in the likes of iron ore, copper and oil are concerning. The weakness that we have seen in DXY, especially reflecting the European currencies, seems more to do with better growth expectations in Europe and relief around France politics. This will help global liquidity at the margin but Europe can ill afford a very strong euro and we think of this as more an idiosyncratic adjustment to the dollar rather than a US policy induced regime shift that sustains higher inflation.”

The bottom line, however, boils down to the following chart first shown by Citi last September, demonstrating that the marginal cost of central bank liquidity injection is now negative…

… and is located in the lower right quadrant, something both markets and policy makers realize.

Which means that when stocks realize just how insufficient the record $1 trillion in central bank liquidity has become, central banks – which have stepped into every single market correction over the past 7 years with some “liquidity supernova” – will, for the first time since the financial crisis – be out of tools… something Janet Yellen appears to have realized some time ago.

(courtesy zero hedge)


Jawboning does not seem to work as oil moves back to the low 49 dollar column for Brent.  Morgan Stanley warnsof rosk to the 2018 oil price

(courtesy zero hedge/MorganStanley)

Market Mocks OPEC Crude Jawboning; Morgan Stanley Warns Of Risks To 2018 Oil Price

In the clearest indication yet that OPEC jawboning no longer has an effect on markets, and especially headline scanning algos, following numerous headlines from Saudi energy minister Khlaid Al-Falih overnight warning that the oil rebalancing is imminent, and in case it isn’t, it will come in 2018 when OPEC and Non-OPEC producers may extend their production cuts, this morning oil is firmly hugging the flatline after a failed attempt to push higher earlier in the session.

As Bloomberg reports, Saudi Arabia and Russia signaled they may extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus as oil prices continue to drop.

In separate statements just hours apart on Monday, the world’s largest crude producers said publicly for the first time they would consider prolonging their output reductions for longer than the six-month extension widely expected to be agreed at the OPEC meeting on May 25. “We are discussing a number of scenarios and believe extension for a longer period will help speed up market rebalancing” the Russian Energy Minister Alexander Novak said in a statement.

Speaking in Kuala Lumpur earlier Monday, Saudi energy minister Khalid Al-Falih said he was “rather confident the agreement will be extended into the second half of the year and possibly beyond” after talks with other nations participating in the accord.

“The producer coalition is determined to do whatever it takes to achieve our target of bringing stock levels back to the five-year average,” Al-Falih said. While U.S. shale output growth and the shutdown of refineries for maintenance have slowed the impact of cuts by OPEC and its partners, the Saudi minister said he’s confident the global oil market will soon rebalance and return to a “healthy state.”

The response was less than enthusiastic however, with Brent and WTI giving up earlier, while a drop in Chinese crude imports suggested that the demand side of the equation is becoming a growing concern.

“It hasn’t moved that much on those statements, I’m not sure we’ll get a meaningful upturn unless we see stocks drawing down,” says Torbjorn Kjus, chief oil analyst at DNB Bank. “Maybe it’s not possible to talk the market up anymore.”

A major hurdle for the oil bulls, as discussed here often, is that s OPEC and its allies curbed supply, U.S. production has risen to the highest level since August 2015 as drillers pump more from shale fields. “Given the extent of the over-hang I think they always knew the market was not going to rebalance in six months which is why our base case was always for a deal lasting at least one year, and if not longer,” said Virendra Chauhan, an analyst at industry consultant Energy Aspects Ltd. “Market expectations were lofty, and so OPEC will need to surprise the market with either a deeper cut, or possibly a longer than six-month extension to get prices to move higher.”

Adding to the downbeat sentiment, was a note overnight from Morgan Stanley’s Martjin Rats, in which he warned that Market while the “balance looks favorable” for the rest of 2017, the oil price outlook for 2018 is now at risk, adding that “if stocks build rather than draw next year, 2018 futures do not need to be in backwardation. Recently, the market has priced this in, moving 2018 into contango, and putting pressure on front-month prices too.”

More details from his full note:

The Mechanics of the Oil Price

Oil prices have come under pressure despite a robust 2017 outlook:

Notwithstanding the recent oil price decline, our analysis continues to suggest a tightening market over the next few months. Lower OPEC production is still to have its full impact on OPEC shipments, imports into consuming countries, and subsequently on visible inventories. Although demand has gone through a soft patch early in the year (see Exhibit 2), it is still set to strengthen seasonally into 2H. As these two effects combine, a period of inventory draws this year is still in the cards.

However, risks are emerging to 2018 balances: It appears however that oil markets are already looking beyond this, and into 2018. Our base case expectation for 2018 is for a balanced market with stable prices around end-2017 levels. Yet, the risks to that outlook are becoming skewed to the downside.

  • First, the US rig count continues to surprise, and this has production implications.  As shown in Exhibit 3, the US rig count recovery has recently overtaken even the stellar rebound after the 2008/09 downturn, which was supported by oil prices rallying from ~$45 to ~$85/bbl within a year. Yet, the US rig count has increased by 7.3 rigs/week over the last 52 weeks, making this the strongest recovery of the last 30 years. As a rule of thumb, an increase in the rig count of 10 units boosts production by ~40 kb/d a year later. With ~390 rigs added since the trough in
    May 2016, the US is set up for strong supply growth next year, that could exceed 1 mb/d.
  • On top, we expect the current OPEC agreement to be extended in May but it is unlikely to be extended again by December. Exhibit 4 highlights the shift in market share away from OPEC towards US producers. We doubt OPEC will allow this to go on for long. If the OPEC/Non-OPEC production agreement comes to an end by late-2017, the cartel’s cut of ~1.2 mb/d, as well as Russia’s cut of 0.3 mb/d, could be reversed next year.
  • In total, these three sources could bring 2.5 mb/d of extra supply back onto the market, which would need to be absorbed by demand growth of 1.3 – 1.4 mb/d and declines elsewhere. The latter may not be sufficient, as declines in countries like Mexico, China and Colombia are likely to be canceled out by growth in Brazil, Canada, Kazakhstan and elsewhere. If OPEC’s production cuts fail to create an under- supplied market in 2017, the oil market may be oversupplied in 2018. It appears this is creeping into investors’ expectations and time horizons.

As 2018 futures moved back into contango, front-month prices have come under pressure: Until a few weeks ago, 2018 futures were in backwardation, indicating that investors foresaw per period of market tightness during that period. However, if inventories build rather than draw next year, this part of the forward curve does not need to be backwardated.

This is precisely what has happened: over the last few weeks, oil markets have started to discount a weaker 2018, driving 2018 futures into contango. Although the market balance for 2017 is still robust, this has put substantial pressure on the front part of the curve too.

Looking ahead: Our thesis for 2017 remains unchanged. As mentioned, our analysis still suggests inventory draws in the balance of 2Q and into 3Q. With oil prices sold off, and still a potential positive catalyst from an OPEC deal extension, this should provide support for prices in the short term. However, prospects for 2018 are looking more uncertain


WTI falls into the 45 dollar column:

(courtesy zero hedge)


Oil Slumps To $45 Handle As Saudi Jawboning Fails

WTI Crude is back to a $45 handle after the overnight exuberance of a Macron win (“victory for the world”) and desperate Saudi Jawboning about OPEC production cut extensions was stymied by dismal China trade data…



Saturday: Venezuela

Chaos inside Venezuela:

Shocking Footage: Venezuelan National Guard Truck Drives Through Crowd Of ‘Dissidents’

Authored by Daniel Lang via,

For several weeks Venezuela has been rocked with protests and riots as the Maduro regime increasingly tightens its grip on the population. It seems as if security forces are brutally cracking down on dissidents on a daily basis now. Wednesday in particular, saw some incredibly tense clashes between protesters and government forces in the capital city of Caracas. According to Bloomberg:

Injuries throughout the city included 134 traumas and 17 cases of people overcome by gas, Mayor Ramon Muchacho of the opposition-dominated Chacao municipality said in a post on his Twitter account. Those hurt included lawmakers Freddy Guevara and Julio Montoya. The opposition coalition, known as MUD, said in a statement that more than 300 people were injured in today’s clashes.


The South American nation has been riven by protests for weeks, and President Nicolas Maduro has called for a popular assembly to write a new constitution, a fresh attempt to consolidate control. Hundreds of thousands have taken to the streets to protest what they say is a plummet into autocracy. Protests over the past month have resulted in at least 30 deaths, and opposition politicians have vowed to continue street actions.

Of course, those are just statistics. To really appreciate the human costs of these events, you have to see it with your own eyes rather than just read about it. Take a look at what happened yesterday in Caracas, after an armored vehicle owned by the Venezuelan National Guard caught fire.

This is what civil unrest really looks like. It’s dirty, chaotic, and bloody. Let’s hope it never escalates to this point on our streets.


Sunday : Venezuela
Now we are witnessing some of Venezuela’s military defect and march with the protesters:
(courtesy zero hedge)

The Inflection Point: Venezuela’s Military Begins To Defect, March With Protesters

One month ago, when discussing the latest “explosive” turn in Venezuela’s political situation, we predicted that the worst case for president Nicolas Maduro who has so far managed to keep the army on his side even as Venezuela faces now daily violent and in some cases deadly protests, would be the start of the local army turning on the regime, and defecting to join the protesters. Overnight, according to Thor Halvorsen of the Human Rights Foundation, this “inflection point” appears to have arrived when he observed in a Tweet that “the military in parts of Venezuela has begun to defect. They are now marching *with* the protesters. Dozens of soldiers are under arrest.”

The military in parts of has begun to defect. They are now marching *with* the protesters. Dozens of soldiers are under arrest

Touching on this topic, overnight the NYT mused why have Venezuela’s “powerful political and military elites stuck by President Nicolás Maduro”, noting that “the country would seem to be a prime candidate for something scholars call an “elite fracture,” in which enough powerful officials break away to force a change in leadership.”

“The fact that it hasn’t happened in the last two years is the biggest puzzle of all,” said Steven Levitsky, a Harvard University political scientist. “If it happens next week, all of us will say, ‘Yeah, it was bound to happen.’”

The NYT further notes that the government has been preparing its defenses since 2002. That year, amid major protests, Hugo Chávez, Mr. Maduro’s predecessor, ordered the military to impose order.

It instead removed him in a coup that was quickly reversed. After that, Mr. Chávez packed the military with allies. The military also gained vast patronage streams, which some local officials say include control over gold mining.


The impossibility of fully predicting how the military might decide in another crisis, along with growing unrest that could again test it, has left the government nervous.

All that may now be changing. In March, a video spread on social media showing three lieutenants who said they no longer recognized Mr. Maduro’s authority. The next month, they turned up in Colombia, where they requested asylum. The Venezuelan government has publicly demanded their return, which Mr. Levitsky called “pretty clear evidence that the government is worried about some sort of conspiracy” within the ranks.

The latest open army defections threaten to further splinter what until recently was a united front among the “elites” supporting the crumbling Maduro regime.

Meanwhile, as the death toll from the recent protests approaches 40, women banged on pans and some stripped off their shirts on Saturday protesting Venezuela’s government in an event the opposition billed as a “women’s march against repression.”

Thousands of women marching in Caracas today. Feels like people are prepared to keep protesting almost indefinitely 

As they marched, local media carried a video showing people toppling a statue of the late President Hugo Chavez the day before in the western state of Zulia, the Associated Press reported. The local media reported that students destroyed the statue as they vented their anger with the food shortages, inflation and spiraling crime that have come to define life here.

“Several young men could be seen bashing the statue that depicted the socialist hero standing in a saluting pose, as onlookers hurled insults as the late president.”

Describing the women’s protest, AP writes that thousands of women took over streets in major cities all around the South American country.

Wearing the white shirts of the opponents of country’s increasingly embattled government, the women sang the national anthem and chanted, “Who are we? Venezuela! What do we want? Freedom!”


Some sported makeshift gear to protect against tear gas and rubber bullets. Others marched topless. One woman came in her wedding dress.

Meanwhile, as has been the case almost every day for the past five weeks, police in riot gear again took control of major roads in the capital city. Clashes between police and protesters have left some three dozen dead in the past month.

And as has also been the recurring case, on Friday Defense Minister Vladimir Padrino Lopez denounced the protest movement, and said opposition “terrorists” were attempting a kind of nonconventional warfare.

For now, the protest movement, which has drawn masses of people into the street nearly every day since March, shows no sign of slowing. On Saturday, some of the women marchers approached soldiers in riot gear to offer them white roses and invite them to join the cause. “What will you tell your kids later on?” one woman asked.

As Reuters reported earlier in the week, embattled Venezuelan President Nicolas Maduro on Monday announced the creation of a new popular assembly which demonstrators decried as a power grab aimed at sidelining the National Assembly. Borges responded by calling on Venezuelans to rebel.

According to Bloomberg, on a call with the president of Peru, U.S. President Donald Trump addressed the deteriorating situation in Venezuela. A statement from the White House’s Office of the Press Secretary said Trump underscored to President Pedro Pablo Kuczynski that “the United States will work together with Peru in seeking to improve democratic institutions and help the people of Venezuela.” The administration added that it is monitoring Venezuelan instability, and believes there is a strong need to bring weeks of anti-government protests in the country’s capital Caracas to a quick and peaceful conclusion.

“We are deeply concerned about the Maduro government’s violent crackdown on protestors in Venezuela. President Maduro’s disregard for the fundamental rights of his own people has heightened the political and economic crisis in the country,” said Nikki Haley, the U.S. Ambassador to the United Nations in a statement. “The Maduro regime must respect Venezuela’s constitution and the voice of its people. We are particularly concerned that the government is failing to provide basic food and medical needs to the Venezuelan people,” Haley said.

H.R. McMaster, U.S. President Donald Trump’s national security adviser, met on Friday with Julio Borges, the president of Venezuela’s opposition-led National Assembly, about the civil unrest which has been near-daily for five weeks, the White House said on Saturday.

Finally, assuring that daily protests are only set to escalate further, on Saturday Borges, the leader of the left-wing party in Venezuela called for open rebellion as well as Maduro’s resignation, while rejecting any “dialogue” with the administration.



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



GBP/USA 1.2956 DOWN .0014 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED


Early THIS MONDAY morning in Europe, the Euro FELL by 38 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.0949; 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 24.45 POINTS OR .79%     / Hang Sang  CLOSED  UP 101.56 POINTS OR .41% /AUSTRALIA  CLOSED UP .58% / EUROPEAN BOURSES OPENED IN THE RED EXCEPT LONDON

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

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

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

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

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

The NIKKEI: this MONDAY morning CLOSED UP 450.00 POINTS OR 2.31%

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 101.56 POINTS OR .41%  / SHANGHAI CLOSED DOWN 24.45 POINTS OR .79% /Australia BOURSE CLOSED UP .58% /Nikkei (Japan)CLOSED  UP 450.00 POINTS OR 2.31%    / INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1233.40


Early MONDAY morning USA 10 year bond yield: 2.340% !!! DOWN 1 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.974, DOWN  1  IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 98.88 UP 23  CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING


And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 3.404%  UP 1  in basis point(s) yield from FRIDAY 

JAPANESE BOND YIELD: +.027%  UP 3/5   in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.588%  UP 3  IN basis point yield from FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.243 UP 9  POINTS  in basis point yield from FRIDAY 

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





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

Euro/USA 1.0926 DOWN .0061 (Euro DOWN 61 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.01 UP  .321 (Yen DOWN 32 basis points/ 

Great Britain/USA 1.2929 DOWN 0.0040( POUND DOWN 40 basis points)

USA/Canada 1.3723 UP 0.01010(Canadian dollar DOWN 101 basis points AS OIL FELL TO $45.94


This afternoon, the Euro was DOWN by 61 basis points to trade at 1.0926


The POUND FELL BY 40  basis points, trading at 1.2929/

The Canadian dollar FELL by 101 basis points to 1.3706,  WITH WTI OIL FALLING TO :  $45.94

The USA/Yuan closed at 6.945/
the 10 yr Japanese bond yield closed at +.027% UP 3/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 4  IN basis points from FRIDAY at 2.381% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.017 UP 3  in basis points on the day /

Your closing USA dollar index, 99,09 UP 45  CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 3.45 POINTS OR .05%
German Dax :CLOSED DOWN 22.34 POINTS OR .18% 
Paris Cac  CLOSED DOWN 49.45 POINTS OR 0.91% 

Italian MIB: CLOSED  DOWN 55.76 POINTS/OR 0.26%

The Dow closed UP 5.34 OR 0.03%

NASDAQ WAS closed UP 1.90 POINTS OR 0.03%  4.00 PM EST
WTI Oil price;  45.94 at 1:00 pm; 

Brent Oil: 48.65 1:00 EST




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

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


BRENT: $49.35


USA 30 YR BOND YIELD: 3.017%


USA/JAPANESE YEN:113.19  UP 0.610

USA DOLLAR INDEX: 99.08  UP  44  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2943 : DOWN .0026  OR 26 BASIS POINTS.

Canadian dollar: 1.3691  DOWN .0069(CAN DOLLAR DOWN 69 BASIS PTS)

German 10 yr bond yield at 5 pm: +.418%


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


US Equity Markets “Most Euphoric” In 23 Years Despite Commodity Carnage

Overheard at The SNB today…


“Sell The News” was the narrative after Macron’s “victory for the world”…


The Dow desperately tried to hold 21,000 and unchanged…


but broadly US equities were ‘meh’ with Trannies and Small Caps were notably worst…


Based on the Panic-Euphoria model, the S&P 500 has not been this “euphoric” since Jan 1994 (and historically has never stayed here long).

NOTE: From Jan to March 1994, the S&P 500 fell 10% and VIX jumped from 9.59 to over 28

As a reminder, US equity ETF outflows hit their highest level in 16 months last week…


VIX traded back below 10 for the 3rd time in a week…


To close at its lowest close since Dec 1993…


Sohn Conference moved some stocks – Ackman peddled HHC (and it jumped) and Palihapitiya punted Tesla Converts (and the gains didn’t hold)…


AAPL shot up 3% today – breaking $800 billion market cap – adding around 30 points to The Dow (which IBM and Goldman removed)…


EURUSD suffered it biggest drop since March today as traders “sold the news”…


Which sent the USD Index surging to last week’s highs… best day for the dollar since Jan 26th


Treasury yields were higher on the day… (but notice the flip at the start of US trading)


With the 30Y back above 3.00%…



Bitcoin soared to another record highs as gold trod water…


Crude ended the day modestly higher as China Trade data (big drop in China oil demand) battled with incessant jawboning from the Saudis about extending production cuts…


Once again Gold was hammered lower into the London Fix (note the mini flash crash at the open last night after Macron’s victory)


Commodities continued to tumble (down 3 of the last 4 days) to the lowest levels 2016…erasing all of the gains since the election…


The reason we note this is because it seems the industrial metals are the lead indicators for ‘reflation’ – or more simply the China credit impulse…


Finally, we note NYFed Recession Indicator is trending one way only…





Simply mind boggling; a court case stops the collection from students with the fact that there is no one assigned to collect on what is owing

the crisis surely has now become “pandemic”:

(courtesy zero hedge)

“The Crisis Has Become Pandemic” – System To Collect Defaulted Student Loans Is No Longer Functioning

The system used by the Dept. of Education to collect on defaulted student loans came to a standstill in the last month, leaving an estimated 91,000 accounts in limbo, when the agency ordered debt collectors under contract to stop making collections on accounts.

As Consumerist’s Ashlee Kieler reports, consumers who expected their student loan payments to be deducted from their bank accounts this month have reportedly found the funds untouched, and their calls to the companies unanswered thanks to a Department of Education’s order prohibiting the debt collection companies from working on default accounts in response to two lawsuits against the agency.

The strange turn of events began with a lawsuit filed by two debt collection companies, who claim they were unfairly were fired by the Obama-era Education Department for poor performance. On March 29, the judge issued a temporary restraining order that prevented any new defaulted borrowers from being assigned to debt collectors and put into rehabilitation programs. Instead, the borrowers have piled up inside the department’s system, waiting.

On April 21, the government ordered the debt collectors involved in the suit to stop work altogether on defaulted accounts: no phone calls, no withdrawals from student accounts, nothing.

The Education Department and the Justice Department are partly to blame for “unnecessarily” throwing a wrench into the entire defaulted loan system, one attorney with knowledge of the case told BuzzFeed News, because they’ve been unable to come to a resolution that allows the loan system to kick back into gear. “There’s no fix in sight.”

Judge Susan Braden has extended the emergency order [PDF] several times since then, noting that it was made to “preserve the status quo to protect the interests of all parties and to afford the government an opportunity to reach a global solution” to two lawsuits against the Dept. of Education.

The cases, filed separately by several debt collection firms, claim that the Dept. of Education unfairly terminated their contracts with the companies.

More recently, the Dept. of Education ordered servicers to stop work on defaulted accounts. The actions, the companies argued in court filings [PDF], “fundamentally alter the status quo and are not fiscally responsible to the borrowers or to the federal taxpayers.”

“Thus, the well-documented student loan crisis will become a pandemic not because this Court ordered that result, but because [Dept. of Education] thinks that is what this Court expects,” the companies argue.

This week, the Dept. of Education submitted a court filing detailing how the Judge’s order and its subsequent suspension of collection activities has affected consumers, Career Education Review reports.

The Dept. claims that the action “has effectively shut down the Government’s defaulted student loan collection program,” with an estimated 91,000 borrowers now stuck in limbo because their accounts weren’t assigned to a debt collector in April.

Additionally, the Dept. argues that by not assigning borrowers to collectors “tens of thousand of borrowers have been prevented from gaining access to rehabilitation programs” and other benefits.

BuzzFeed News reports that debt collection agencies say that since the Department ordered a stop to collection activities they have been inundated with calls from borrowers.

However, the companies can’t help the customers. This, they claim, has resulted in thousands of messages and complaints from borrowers.

The collectors, BuzzFeed reports, claim that because of this borrowers will re-default and those enrolled in repayment programs could lose their eligibility.

Suzanne Martingale, policy staff attorney for our colleagues at Consumers Union, tells Consumerist that the stop in collections and payments could do “untold damage to borrowers.”

“Meanwhile, they’re going to rack up a ton of charges as more interest accrues on their loans,” she adds.

As the work stoppage drags on, consumer protection advocates are confused about where borrowers stand, especially given a tangle of other lawsuits involving the loan companies and the government. “The whole process has been completely mind-boggling,” said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, who called the standstill “mystifying from a consumer protection standpoint.


Not good: household spending growth expectations crash;

(courtesy zero hedge)

Household Spending Growth Expectations Crash To Cycle Lows

Despite record high stock prices, soaring consumer sentiment measures, and the constant Fed-spun narrative that incomes will rise amid ‘full-employment’, the latest survey of Americans by The New York Fed signals hope is collapsing for a spending renaissance

Median household spending growth expectations tumbled from 3.29% in March to 2.58% in April, lowest level in data going back to June 2013..


Still, as long as NFLX, AAPL, AMZN, and GOOG are rallying, this is nothing to worry about, right?



Let us close this evening, with this great offering from the Daily Reckoning and David Stockman

(courtesy David Stockman)

Stockman: This Bond Market is One Giant Bubble


David Stockman joined Greg Hunter of USA Watchdog to discuss what he views as a fiscal bloodbath and the biggest bond market bubble to ever hit the global economy.


To begin the discussion, the Washington insider was asked about the cash on hand in the United States federal budget and the fiscal conditions that Donald Trump faced where he unloaded, “I think it is a total calamity. They capitulated entirely.”

While speaking on what cuts Trump proposed, Stockman pressed, “He wants to cut $18 billion in order to ‘balance it out’ from domestic programs like the the National Institute of Health (NIH), Public Broadcasting Service (PBS) and a lot of things in between… and that’s just a down payment for the big reduction proposed for the full fiscal year that starts in October. That proposal is looking for $54 billion for defense and other domestic priorities, met with $54 billion of cuts on the domestic side… the problem is, Trump went to the Hill and they got totally fleeced. They ended up with most of the increases they wanted because that is the way Washington works. More money for the defense and border pork barrel.”

With contrarian style, David Stockman then pointed out, “He ended up with no cuts at all. He now has $30 billion in increases and a statement from Congress, that was on a bipartisan basis, allowed that we’re in control – you can have your defense and other priorities but we’ll march the budget higher together. I think that’s the opening gambit for what’s going to happen in the full year as the Congress struggles to try to pass bills for fiscal year 2018. They’re going to raise defense and all the priorities, they’ll cut nothing domestically…”

“The whole thing is headed for a real fiscal bloodbath sometime this summer or fall when they run out of debt ceiling (money) and can’t borrow any more to pay for all of this. When they use up the cash on the balance sheet right now… we’re going to be in a huge shutdown mode.”

Greg Hunter inquired with Stockman over what budget deals he would feel Trump and GOP leadership could make that would signal serious change. The former Reagan Budget Director argued, “First, he would need to rethink making defense great again. It is already far greater than we need. We don’t need that $54 billion for defense. Second, he promised he wouldn’t touch social security or medicare… A lot of people need them, I recognize that, but there are millions of affluent retirees who never earned all of the benefits they’re getting.”

When asked what his view on a Congressional budget deal is and what it could mean for jobs and the economy Stockman relayed, “There will be panic in the financial markets. This is not priced in. The market isn’t expecting anything. I think it will cause some very difficult times.” The interviewer then asked what his expectations on a government shutdown would look like with Trump.

The author noted, “I doubt he’ll go for a shutdown by choice. The leadership is not going to stand for it. They have a false idea that Republicans can govern by keeping the Washington Monument open even if we’re bankrupting the country by piling spending. I don’t think they’re going to elect to have a shutdown. What I think is going to happen instead is they’re going to run out of borrowing authority with the debt ceiling, it is now frozen on March 15. We’re locked in at $19.8 trillion so when they run out of cash in a few months, they’ll need a majority in both houses to vote through a multi-trillion bill in both houses. They won’t have the votes.”

Stockman sounded the alarm, “This isn’t speculation, this is what is coming down the pipe. I don’t think it is even remotely anticipated by the markets. It is not priced in at all. That’s when you get huge disruptions in the financial markets. When they’re hit by surprise or black swans, that’s where we’re heading in a matter of few months.”

After the host pushed for clarity over his bubble forecast Stockman urged, “The market is insanely valued right now. They were trying to tag 2,400 points to close out last week. The point is, that represents about 25 times the trailing earnings for 2016 at a point where we’re already into a “recovery” that’s lasted 96 months. Almost the longest in history. What the market is saying is that we’ve reached a point of full employment, forever. [They appear to be behaving] as though there will never be another recession or economic surprise.”

“The market is pricing itself for perfection for all of eternity. This is crazy. We’ve got headwinds everywhere. The auto industry is now starting to roll over. The red ponzi in China has only a matter of time before it explodes. We now have debt for the household sector above where it was for the 2008 crisis. I think the market could easily drop to 1,300-1,600 by 30% or more once the fantasy ends. The government will show its true colors. We are headed for a fiscal bloodbath.”

Stockman voiced his concern for clarity remarking, “This crazy notion that there is going to be a Trump tax cut and fiscal stimulus must be put to rest once and for all. It’s not going to happen. They can’t pass a tax cut that big without a budget resolution that incorporates $10 or $15 trillion of debt over the next decade. Week by week, slowly the market is beginning to figure this out. What it means is, all of the corporate insiders are selling stock like there is no tomorrow… where institutional sales of stock have been going up since the election and what we have is the usual end of the cycle. This is the greatest suckers rally we’ve ever seen.”

When asked what he would recommend to protect yourself he urged, “The main thing is, get out of the markets. These markets are unstable. They’re rigged and unsustainable… there is no reason to own stocks at this point in the game. It is so overvalued that maybe you can get another two or three out but you’re facing a 30% or 40% down. The risk versus reward is horrible. The bond market is one giant bubble because the central bank’s have been buying bonds worldwide. They’re buying trillion and still buying a trillion or so on an annual basis. All of that is coming to a halt.”

In offering his bond market and central bank analysis he urged, “The Fed has finally run out of dry powder. They’re out of the bond buying business and even talking about initiating shrinking of their balance sheets. The European Central Bank (ECB) is near the end of its money printing spree. Even in Japan, which has gone off the deep end with quantitative easing, is beginning to have second thoughts.”

“Everywhere in the world, the central banks are finally getting to the end of the road. There isn’t going to be anymore money printing. That’s going to leave a giant mess on the doorstep of the fiscal authority. It is going to make the bond market a particularly dangerous place. Bonds are totally mispriced. If the central banks had not bought $20 trillion worth of government bonds worldwide over the last two decades, the yield on debt everywhere would be much higher.”

Stockman warned on the bond market environment that, “We have, what is roughly a $100 trillion global bond market (corporate and government) that is the biggest bubble ever seen. The advice is, get out of the bond market and stock market. Buy gold. Not all at once. When the financial system finally unwinds and the monetary authorities are discredited the one hard asset in the world is going to have another day in the sun.”

He reminded viewers, “The gold market is relatively small in comparison to the size of the equity market or bond markets. The gold markets are only a fraction of that. When the panic comes… the price of gold will rise dramatically.”

If you’d like to learn how to score your FREE copy of David Stockman’s book – CLICK HERE.

To catch the full interview on the bond market bubble and more with David Stockman and Greg Hunter – CLICK HERE.

Thanks for reading,

Craig Wilson, @craig_wilson7
for the Daily Reckoning



The Greg Hunter interview with David Stockman

(courtesy David Stockman/Greg hunter)

Fiscal Bloodbath Coming this Fall-David Stockman

By Greg Hunter On May 7, 2017 In Market Analysis

By Greg Hunter’s (Early Sunday Release)

Sky high stock and bond prices have former Reagan Administration White House Budget Director David Stockman worried because we are on our way to a big financial crash. Stockman explains, “Yes, absolutely. The market is insanely valued right now. They were trying to tag, the robo machines and day traders, they were trying to tag 2,400 on the S&P 500. They ended up at 2,399, I think, but the point is that represents about 25 times trailing earnings for 2016. We are at a point in the so-called recovery that has already lasted 96 months. It’s almost the longest one in history. What the market is saying is we have reached the point of full employment forever. There will never be another recession or any kind of economic surprise or upset or dislocation. The market is pricing itself for perfection for all of eternity. This is crazy. . . . I think the market could easily drop to 1,600 or 1,300. It could drop by 40% or even more once the fantasy ends. When the government shows its true colors, that it’s headed for a fiscal blood bath when this crazy notion that there is going to be some Trump fiscal stimulus is put to rest once and for all. I mean it’s not going to happen. They can’t pass a tax cut that big without a budget resolution that incorporated $10 trillion or $15 trillion in debt over the next decade. It’s just not going to pass Congress. . . . I think this is the greatest sucker’s rally we have ever seen.”

So, when is cold hard reality going to set in? Stockman contends, “There will be no bid for the stock once the panic sets in. We’re going to an hit and air pocket. The S&P 500 is going to drop by hundreds and hundreds of points sometime over the next few months as we drift into this unexpected crisis. . . . I would target sometime between August and November because that’s when the rubber is going to meet the road on a debt ceiling increase when they are out of cash. Washington is going to end up in vicious political conflict over what to do about the debt ceiling. . . . It is going to be one giant fiscal bloodbath the likes of which we have never seen.”

So, what should you do right now? Stockman says, “The main thing is get out of the markets. These markets are unstable. They’re rigged, and there is no reason to own stock at this point of the game. It is so overvalued. Maybe you can get another two or three percent up, but you are facing another 30% or 40% down. The risk/reward is horrible. . . . The bond market is one giant bubble because the central banks have been buying all these bonds worldwide. They’ve been buying trillions of dollars’ worth, and they are still buying a trillion dollars’ worth on an annual basis. All that is coming to a halt. The Fed has finally run out of dry powder. They are out of the bond buying business. They are even talking about the initiation of the shrinkage of their balance sheet. That clearly needs to happen . . . . The central banks are finally getting to the end of the road. There isn’t going to be any more money printing, and that is going to leave a giant mess on the doorstep of all the fiscal authorities. It’s going to make the bond market a particularly dangerous place. There is a $100 trillion global bond market, and this is the biggest bond bubble the world has ever seen.”

In closing, Stockman recommended, “Get out of the stock market. Get out of the bond market and buy some gold.”

Join Greg Hunter as he goes One-on-One with best-selling author David Stockman

Video Link david-stockman/


See you tomorow night



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