May 16/Gold advances $6.10 and silver is up 15 cents/ For the 12 consecutive trading day, the amount of silver ounces standing increases!!/so far this month: 22.61 million oz standing for delivery/Noble Group, a huge commodity trader in trouble financially/Seth Rich , the murdered DNC employee shared 44,000 emails with Wikileaks/Fallout from yesterday’s Washington Post story

GOLD: $1236.75  UP $6.10

Silver: $16.77  UP 15  cent(s)

Closing access prices:

Gold $1228.60

silver: $16.47

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

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

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

SHANGHAI FIRST GOLD FIX: $1247.71 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  1234.40

PREMIUM FIRST FIX:  $13.31

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SECOND SHANGHAI GOLD FIX: $1248.23

NY GOLD PRICE AT THE EXACT SAME TIME: 1235.40

Premium of Shanghai 2nd fix/NY:$12.83

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1234.05

NY PRICING AT THE EXACT SAME TIME: $1234.25

LONDON SECOND GOLD FIX  10 AM: $1234.20

NY PRICING AT THE EXACT SAME TIME. $1234.15

For comex gold:

MAY/

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

 TOTAL NOTICES SO FAR: 491 FOR 49100 OZ    (1.5272 TONNES)

For silver:

For silver: MAY

0 NOTICES FILED TODAY FOR nil  OZ/

Total number of notices filed so far this month: 4439 for 22,195,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

END

For 12 consecutive days, the amount standing for physical has risen.  On First day notice 16.8 million oz were standing; tonight 22.56 million oz. It looks to me that sovereign China wants its silver back.

stay tuned on this development..

 

Let us have a look at the data for today

.

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In silver, the total open interest  ROSE again BY a HUMONGOUS 2863  contracts UP to 215227  WITH THE  RISE IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (UP  20 CENT(S). In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.076 BILLION TO BE EXACT or 154% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 0 NOTICE(S) FOR NIL  OZ OF SILVER

In gold, the total comex gold ROSE BY A HUGE 5152  contracts WITH THE RISE IN THE PRICE OF GOLD ($4.60 with YESTERDAY’S TRADING). The total gold OI stands at 438,508 contracts.

we had 8 notice(s) filed upon for 800 oz of gold.

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

GLD:

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

Inventory rests tonight: 851.89 tonnes

.

SLV

Today: inventory rose by 1.416 million oz!!!!

THE SLV Inventory rests at: 342.395 million oz

it is also strange that during these past two weeks of torment, no silver left the silver vaults and now from May 10 until today almost 8 million oz has been added. However this would be a “paper” addition.

end

.

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

1. Today, we had the open interest in silver ROSE BY 2863 contracts UP TO 215,227, (AND NOW CLOSER TO  THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21 AT 234,787), WITH THE GOOD SIZED  RISE IN PRICE FOR SILVER ON YESTERDAY  (20 CENTS).

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 22.74 POINTS OR .74%  OR / /Hang Sang CLOSED DOWN 35.65 POINTS OR 0.14% .  The Nikkei closed UP 49.97 POINTS OR 0.25%/Australia’s all ordinaires  CLOSED UP  0.24%/Chinese yuan (ONSHORE) closed UP at 6.8903/Oil DOWN to 49.09 dollars per barrel for WTI and 52.09 for Brent. Stocks in Europe OPENED MIXED    ..Offshore yuan trades  6.8847 yuan to the dollar vs 6.8903 for onshore yuan. NOW  THE OFFSHORE IS  STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A LITTLE BIT STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE  WEAKER DOLLAR. CHINA IS A MUCH HAPPIER THIS MORNING

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA

b) REPORT ON JAPAN

c) REPORT ON CHINA

China has had enough with the tightening bias.  They injected 25 billion USA into their banks

( zero hedge)

4. EUROPEAN AFFAIRS

What a joke!! European officials now threaten to end intelligence sharing with the USA re the disclosure to Russian officials on the whereabouts of iSIS terrorists:

why:” it could risk our sources!!”

the establishment will be doing everything in their power to cause the impeachment of Trump

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

We have another cyber attack using an NSA developed weapon:

( zerohedge)

7. OIL ISSUES

i)The author thinks that a 9 month cut extension might help but there are wild cards:

the shale boys and Iraq both increasing their production

(Nick Cunningham/OilPrice.com)

ii) Down goes oil and gasoline on huge crude builds

( zerohedge)

8. EMERGING MARKETS

9.   PHYSICAL MARKETS

i)John Embry talks about how central banks bombed gold and silver trying to keep the claims that inflation is low.  It is not as currencies are being debased
( John Embry/Kingworldnews)
ii)This is a riot:  The financial times (London) worries about a bubble in bitcoin( London’s financial Times/Kaminska/Murphy)

iii)An extremely important commentary today from James Turk.  He is pounding the table with respect to cash settlements at the comex with the use of off-exchange trades with entities called EFP’s or Exchange for Product which is essentially a trade whereby cash is given to the long holder plus a fiat bonus as well as a futures contract.  This is a private deal and held off exchange so we do not have details but I have provided to you what I believe is going on.  He points out correctly that both gold and silver are in backwardation both in London and at the comex because of these EFP settlements.

( James Turk/Kingworldnews)

iv)Hong Kong announces another plan for physically settled Chinese off shore yuan and uSA gold futures.  Gold will be settled in physical.

( GATA/HKEX)

iv b)Dave Kranzler talks about the new Hong Kong futures market and with this new exchange it will be harder to manipulate gold

( Dave Kranzler/IRD)

v)The following is an extremely important commentary.  The author notes that large commodity trade Noble Group is in big trouble. Its credit default swaps have been rising big time along with the fall in their stock.  This has coincided with the drop in silver prices for 15/16 days.  The author suggests that Noble Group may have been responsible for the paper selling of silver.  The important point to make on this is the fact that Noble is in trouble and a default will send shock waves throughout the derivative world

( Kevin Muir/Macro Tourist/zero hedge)

 

10. USA stories

i)The following story should put major doubt to you on Russian involvement with respect to the DNC leaks

( zeropointnow)

i b)Fox News releases a story that Seth Rich shared 44,053 emails with Wikileaks.  That is good reason for his murder and it will certainly take the heat away from “Russian involvement” in the USA election

( zerohedge)

ii)Yesterday as everybody knows, the Washington Post released a story that Trump has shared classified information with a Russian foreign Minister.  Later in the day General McMaster  and Sec of State Tillerson both refuted the story as nonsense because they were in the room and no classified information was released. It turns out that the information was on ISIS related matters and Trump had every right to tell the Russians to secure the USA against terrorism

( zero hedge)

iii)Mish Shedlock also comments that Trump had every right to to talk to the Russians on ISIS related matters

( Mish Shedlock/Mishtalk)

iv)Seems that the USA housing recovery is stumbling as both starts and permits plung in April

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 5,152 CONTRACTS UP to an OI level of 438,508 WITH THE  RISE IN THE PRICE OF GOLD ( $4.60 with YESTERDAY’S trading).   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 8 contract(s) LOWERING TO  33. We had 10 notices filed yesterday so we GAINED 2 contracts or an additional 200 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 SURPRISINGLY GAINED 826 contracts UP to 212,983.  The non active July contract GAINED another 67 contracts to stand at 751 contracts. The next big active month is August and here the OI gained 4,302 contracts up to 127,508.

To give you a good idea of the devastation of open interest contracts, last year on May 16 2016 we had at this exact time:    338,908 contracts of JUNE 2016 CONTRACTS OPEN.( compared to JUNE 2017: 212,983)

For the June 2016 contract month initially 48.189 tonnes stood for delivery. Eventually a huge 48.552 tonnes stood.

We had 8 notice(s) filed upon today for 800 oz

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And now for the wild silver comex results.  Total silver OI ROSE BY A HUGE 2,863 contracts FROM  212,364 up to 215,227  WITH YESTERDAY’S 20 CENT PRICE GAIN. It seems that the EFP’s calls are now being exercised for July contracts and thus the reason for the huge OI gain in the silver complex.
We now know for certainty that private EFP contracts are given by the bankers when faced with an upcoming active delivery month.  We just do not know the makeup of that private deal.  It is my contention that the longs in silver at the end of April were given a fiat bonus plus a long “in the money” call for a  future May contract or a July contract. They were told not to exercise for a new contract until at least the first week of May is over so it would not look like a paper settlement which in reality it surely is.
So now everything makes sense: the obliteration of OI as we enter first day notice has not really occurred but replaced with a future contract with some bonus money for their effort. No doubt by the end of May, the open interest in the silver contract month will be close to the OI we had around mid April/2017.
We are in the active delivery month is MAY  Here the open interest LOST 12 contracts FALLING TO 83 contracts. MY GOODNESS!! IT HAPPENED AGAIN!! We had 22 notices filed yesterday, so we gained another 10 notices or an additional 50,000 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 12 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 138 contracts to stand at 1092. The next big active month will be July and here the OI  gained 1842 contracts up to 163,554.

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 0 notice(s) filed for NIL oz for the MAY 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 207,872 contracts which is good

Yesterday’s confirmed volume was 202,392 contracts  which is  good.

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for MAY
 May 16/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
9998.95  oz
HSBC
Scotia
( INCL 300 kilobars)
Deposits to the Dealer Inventory in oz nil oz

 

Deposits to the Customer Inventory, in oz 
nil oz
No of oz served (contracts) today
 
8 notice(s)
800 OZ
No of oz to be served (notices)
25 contracts
2500 oz
Total monthly oz gold served (contracts) so far this month
491 notices
49100 oz
1.5272 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   214,922.2 oz
Today we HAD  1 kilobar transaction(s)/
total dealer deposits: nil oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had no dealer deposits:
total dealer deposits:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 2 customer withdrawal(s)
i) out of Scotia: 353.65 oz
ii) Out of HSBC: 9645.300 oz
(300 kilobars)
total customer withdrawal: 9998.95 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 8 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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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 (491) x 100 oz or 49100 oz, to which we add the difference between the open interest for the front month of MAY (33 contracts) minus the number of notices served upon today (8) x 100 oz per contract equals 51,600 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 (491) x 100 oz  or ounces + {(33)OI for the front month  minus the number of  notices served upon today (8) x 100 oz which equals 51,600 oz standing in this non active delivery month of MAY  (1.6049 tonnes).  We gained 2 contracts or an additional 200 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.
 
 
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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/  1.5980 TONNES
total for the 17 months;  249.517 tonnes
average 14.677 tonnes per month
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Total dealer inventory 877,817.092 or 27.303 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,762,195.982 or 272.54 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 272.54 tonnes for a  loss of 30  tonnes over that period.  Since August 8/2016 we have lost 81 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 12 MONTHS  81 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE APRIL DELIVERY MONTH
MAY INITIAL standings
 May 16. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
170,928.85 oz
Scotia
Brinks
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 1,196,125.35 oz  oz
Scotia
CNT
Delaware
No of oz served today (contracts)
 0 CONTRACT(S)
(NIL OZ)
No of oz to be served (notices)
83 contracts
( 415,000 oz)
Total monthly oz silver served (contracts) 4439 contracts (22,195,000 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  5,842,646.9 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil  oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of Scotia: 60,246.95 oz
ii) Out of Brinks:  110,681.900 oz
TOTAL CUSTOMER WITHDRAWALS: 170,928.85  oz
 We had 3 Customer deposits:
i) Into Scotia: 595,876.850 oz
ii) Into CNT: 599,182.300 oz
iii) Into Delaware: 1066.200 oz
***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  1196,125.35 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the MAY. contract month is represented by 0 contract(s) for NIL 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 4439 x 5,000 oz  = 22,195,000 oz to which we add the difference between the open interest for the front month of MAY (83) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing

 

.
 
Thus the initial standings for silver for the MAY contract month:  4439(notices served so far)x 5000 oz  + OI for front month of APRIL.(83 ) -number of notices served upon today (0)x 5000 oz  equals  22,610,000 oz  of silver standing for the MAY contract month.
We actually gained another 10 contracts or an additional 50,000 oz will stand for delivery and again nobody wished to accept an EFP contract for a fiat bonus. It probably means that the entire 22.61 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 12 trading 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 and the attacker is Sovereign China. 
 
 
Volumes: for silver comex
 
Today the estimated volume was 67,131 which is huge
Yesterday’s  confirmed volume was 84,768 contracts which is also huge
YESTERDAY’S CONFIRMED. VOLUME OF 84,768 CONTRACTS EQUATES TO 423 MILLION OZ OF SILVER OR 61% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.  
 
Total dealer silver:  33.986 million (close to record low inventory  
Total number of dealer and customer silver:   200.051 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
 
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.1 percent to NAV usa funds and Negative 6.1% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.9%
Percentage of fund in silver:37.9%
cash .+0.2%( May 16/2017) 
 
2. Sprott silver fund (PSLV): Premium FALLS TO   -.15%!!!! NAV (May 16/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS to -0.60% to NAV  ( May 16 /2017)
Note: Sprott silver trust back  into NEGATIVE territory at -.15% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.60%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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

 Section: Daily Dispatches

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

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

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

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

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

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

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

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

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

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

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

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

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

end

And now the Gold inventory at the GLD

May 16./ no change in the GLD inventory/inventory rests at 851.89 tonnes

May 15/no change in the GLD inventory/inventory rests at 851.89 tonnes

May 12/no changes in GLD/inventory rests at 851.89 tonnes

may 11/no changes in GLD inventory/inventory rests at 851.89 tonnes

May 10/no changes in GLD inventory/inventory rests at 851.89 tonnes/

May 9/a withdrawal of 1.19 tonnes from the GLD/Inventory rests tonight at 851.89 tonnes

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 25/2017/A WITHDRAWAL OF 5.92 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 854.25 TONNES

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

April 21/A DEPOSIT OF 4.44 TONNES OF GOLD INTO THE GLD/INVENTORY RESTS AT 858.69 TONNES

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

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

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

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

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

this no doubt is a paper deposit/

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

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

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

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

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

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

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

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

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

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

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

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

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May 16 /2017/ Inventory rests tonight at 851.89 tonnes
*IN LAST 152 TRADING DAYS: 96.24 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 95 TRADING DAYS: A NET  31.19 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET  56.53 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

May 16./we had a huge addition of 1.416 million oz of silver into the SLV/inventory rests at 342.395 million oz

May 15/no changes in silver inventory/inventory rests at 340.979 million oz/

May 12/a huge change in silver: a deposit of 2.369 million oz/inventory rests at 340.979 million oz

May 11/no changes in silver inventory at the SLV/Inventory rests at 338.610 million oz

May 10/ a gigantic 3.833 million oz of silver added to the SLV and this occurred with the constant whacking of silver for the past 17 trading sessions/inventory rests at 338.610 million oz

may 9Again, no movement of inventory at the SLV. Inventory rests at 334.777 million oz

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

APRIL 20/NO CHANGES IN INVENTORY AT THE SLV/INVENTORY RESTS AT 326.308 MILLION OZ

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

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

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

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

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

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

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

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

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

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

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

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

million oz/

March 31/no change in inventory at the SLV/Inventory rests at the SLV/Inventory rests at 330.894 million oz/
March 30/a huge withdrawal of 2.746 million oz from the SLV/inventory rests at 330.894 million oz/
March 29/a deposit of 1.136 million oz into the SLV/Inventory rests at 333.640 million oz
May 16.2017: Inventory 342.395  million oz
 end

Major gold/silver trading/commentaries for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Cyber Wars Could Crash Markets and Threat To Humanity – Rickards and Buffett

Cyber wars are a bigger threat to humanity than nuclear weapons, the world’s richest and most famous investor Warren Buffett, presciently warned a few days ago.


“I do think that’s the number one problem with mankind,” Warren Buffett warned during Berkshire Hathaway’s annual shareholder meeting on May 6th.

“I’m very pessimistic on weapons of mass destruction generally although I don’t think that nuclear probably is quite as likely as either primarily biological and maybe cyber,” Buffett said during Berkshire Hathaway’s annual shareholders’ meeting. Unlike most of Buffett’s pronouncements, this clear and very strong warning was not reported widely.

“I don’t know that much about cyber, but I do think that’s the number one problem with mankind” said Buffett as reported by Business Insider UK.

Last year, Buffett told CNBC — cyber, nuclear, biological and chemical attacks — posed a major threat to the economic well-being of Berkshire shareholders.

Echoing Buffett’s cyber concerns, today one of the world’s leading experts on currency wars, financial warfare, cyber terrorism and cyber war, James Rickards has again warned that cyber attacks may have already compromised the U.S. national security  and could turn a “bad day on Wall Street into a full blown crash”.

According to Rickards writing in the Daily Reckoning today:

“Friday’s cyberattack just highlights the growing nature of the threat, and the need for much greater security.

WikiLeaks’ March release of 7,818 web pages, called the “Vault 7,” was a major development. This collection amounted to more than several hundred million lines of code, and gave away the entire hacking capacity of the CIA.

It was by far the largest release of CIA intelligence documents in history.

And the WikiLeaks’ released documents proved that U.S. intelligence agencies have lost control of their hacking tools.

This is part of a much larger problem.

Barely a day goes by without some company or government agency announcing that one of its systems has been compromised or attacked …

In 2010, the FBI and Department of Homeland Security discovered an attack virus in the computer systems of the Nasdaq stock market. That virus was disabled, but others may remain.

On Aug. 22, 2013, the Nasdaq was mysteriously shut down for over three hours, disrupting trading in Apple, Google, Facebook and other investor favorites.

Military planners make use of a fighting doctrine called the “force multiplier.” The idea is that any given weapon can be used with greater-than-normal effect when combined with some other state or condition that gives the weapon greater impact.

For example, if Russia wanted to disrupt a U.S. stock exchange, they might wait until the market is down over 3%, say, 500 points on the Dow Jones index, for reasons unrelated to the cyberattack.

Launching the attack on a day when the market is already nervous would “multiply” the impact of the attack and possibly result in a drop of 4,000 Dow points or more, comparable in percentage terms to the one-day drop on Oct. 19, 1987.

All of these scenarios are worrying enough, but a couple years ago the U.S. government suffered a cyberattack even worse than shutting a stock exchange or opening the floodgates on a dam.

Chinese hackers had gained access to the files of the U.S. Office of Personnel Management (OPM). Estimates of individuals affected range from 4 million up to 32 million. The Chinese hackers actually obtained credentials to gain access to the system, and once inside systematically downloaded the database.

If the stolen information were limited to names, addresses, Social Security numbers and the like, the damage would be immense and the affected individuals would be at constant risk of harassment and identity theft.

But the damage was far worse.

Many of the files consisted of responses to a questionnaire called Standard Form 86, or SF-86. This is the form used to apply for security clearances up to and including the top-secret level.

The form itself is 127 pages long, which is daunting enough.

But the attachments and documentation required to support the information on the form, including tax returns, personal net worth statements, explanations of answers to certain questions, etc., can run to hundreds of pages more.”

Our modern financial system and investment and savings providers with their massive dependency on single interface websites, servers and the internet face serious risks that few analysts have yet to appreciate and evaluate.

These also pose risks to digital gold providers who do not allow clients to interact and trade on the phone and are solely reliant for pricing and liquidity from online portals and online trading platforms.

Those who have outright legal ownership of physical gold and silver coins and bars outside the banking system will weather the cyber storm better than those who do not.

The hope is that these risks will not materialise. Hope is never a strategy. We believe it is prudent to be aware of and take appropriate measures – sooner rather than later – to protect your wealth.

Related Content

Ransonware Attacks Show Vulnerability of Digital Financial System

Cyber Attacks Growing In Frequency – Entire Financial System Is Vulnerable

Cyber Fraud At SWIFT – $81 Million Stolen From Central Bank

“Cyber Security Loophole”- Bank Hackers “Unfettered Access” To Accounts

Number One Reason To Buy Gold and Silver Is “Cyber Financial Warfare”

News and Commentary

Wall Street hit records as technology, energy stocks rise (Reuters.com)

Oil Rally Lifts Stocks as Dollar Slips With Bonds (Bloomberg.com)

White House says Trump did not reveal classified intel to Russians (MarketWatch.com)

Hedge Funds Are Dumping Gold Bets at Fastest Rate Since 20 (Bloomberg.com)

Bitcoin’s Surge Fuels Fears of Asset Bubble – FT via GATA (Gata.org)

$25 Billion in 30 Days: Are Cryptocurrencies in a Bubble? (CoinDesk.com)

Cyber attacks a bigger threat to humanity than nuclear weapons – Buffett (TheHill.com)

Cybersecurity Kicks Into High Gear – Rickards (DailyReckoning.com)

U.S. policy to drive gold out of financial system – State Dept. memo (Gata.org)

This Is The Terrifying Thing About This Mania – Fleckenstein (KingWorldNews.com)

Was Noble Group the Silver Seller? (TheMacroTourist.com)

Gold & Silver Shorts at “Tipping Point” and Short Squeeze Coming – Turk (KingWorldNews.com)

end
John Embry talks about how central banks bombed gold and silver trying to keep the claims that inflation is low.  It is not as currencies are being debased
(courtesy John Embry/Kingworldnews)

In KWN interview, Embry scoffs at claims that inflation is low

Section:

12:26p ET Monday, May 15, 2017

Dear Friend of GATA and Gold:

Sprott Asset Management’s John Embry, interviewed today by King World News, scoffs at assertions that inflation is low.

Embry says: “Aside from the fact that inflation numbers are severely doctored by governments to understate the inflation and thus overstate real growth, with the U.S. being a leading offender in this regard, the true manifestation of inflation is seen in the value of the financial assets — stocks and bonds and global real estate. The prices in these markets bear no resemblance to what is really going on fundamentally, but rather reflect the staggering liquidity that has been introduced in the global system over the past seven years. This is an example of financial asset inflation at its finest.”

Embry’s comments are excerpted at KWN here:

http://kingworldnews.com/john-embry-the-cracks-are-showing-everywhere-in…

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

 

 

END

This is a riot:  The financial times (London) worries about a bubble in bitcoin

(courtesy London’s financial Times/Kaminska/Murphy)

FT worries about a bubble in … bitcoin

Section:

Bitcoin’s Surge Fuels Fears of Asset Bubble

By Izabella Kaminska and Paul Murphy
Financial Times, London
Sunday, May 14, 2017

Sky-high valuations for bitcoin have helped the value of crypto-currencies burst through $50 billion, raising fears of an asset bubble in the unregulated market.

A growing number of alternative digital currencies — or “alt-coins” — is feeding the speculative frenzy with values in some rocketing as much as 500 percent in the past week.
A sharp spike in the price of bitcoin, which has risen 55 percent this month and is worth more than gold, pushed it past $1,900 on the Bitfinex exchange on Friday.

The speculation has benefited anonymous payment systems, which are being used by cyber criminals executing widescale attacks such as the “ransomware” hack that spread across the world on Friday.

Aside from bitcoin, there are more than 830 alt-coins ranging from Litecoin, a challenger to bitcoin, to MiketheMug, a coin that promises to make weekly payouts to holders. …

… For the remainder of the report:

https://www.ft.com/content/ce3ef54e-371b-11e7-bce4-9023f8c0fd2e

 

 

 

END

 

An extremely important commentary today from James Turk.  He is pounding the table with respect to cash settlements at the comex with the use of off-exchange trades with entities called EFP’s or Exchange for Product which is essentially a trade whereby cash is given to the long holder plus a fiat bonus as well as a futures contract.  This is a private deal and held off exchange so we do not have details but I have provided to you what I believe is going on.  He points out correctly that both gold and silver are in backwardation both in London and at the comex because of these EFP settlements.

(courtesy James Turk/Kingworldnews)

Off-exchange settlement of gold futures hints at short squeeze, Turk tells KWN

Section:

6:24p ET Monday, May 15, 2017

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk, interviewed today by King World News, describes indications of a short squeeze in gold, starting with an increase of off-exchange settlement of futures contracts. “It now looks like we are very close to the tipping point,” Turk says. His comments can be found at KWN here:

http://kingworldnews.com/james-turk-gold-silver-shorts-took-a-big-gamble…

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

 

And here is the discussion in full..extremely important:

Today James Turk told King World News that the gold and silver shorts took a big gamble and might lose their ass.

“The Shorts Are Stuck”
James Turk:  “I think the precious metal markets are going to get very interesting over the next few weeks, Eric…


 


James Turk continues:  “You will recall our discussion a few weeks ago, just after the April gold options expired, about Exchange of Futures for Physicals (“EFPs”). I noted back then the abnormal EFP activity that had occurred and said:

“If my interpretation is correct, gold is getting set up for a potentially mammoth short squeeze” (when the June gold option contracts expire at the end of May). I went on to add that “the shorts are stuck.”

It is this event – a potential short squeeze – that could make the next few weeks so interesting. But I have to explain what I mean by “short.” When trading gold, it is possible to be “short” in two different ways. The common use of the term “short” means that you sold something you don’t have and can therefore lose money when the price rises as you buy to cover your position. One can be badly injured financially by getting caught short in this way.

But there is another way to be short gold that is worse than being injured. It can kill you financially when you are obligated to deliver physical gold and you don’t have it and can’t buy it, which is the kind of short squeeze I am talking about. It used to be that all types of derivative contracts for gold and silver enabled physical delivery. So, for example, if you were long a gold futures contract and asked for physical delivery, the short was required to deliver metal to you.

This Scheme Has Worked For Years…
In recent decades a new type of derivative began trading. These allowed cash settlement. 
In other words, no metal crossed hands when the derivative contract expired. The losing side of the contract simply paid cash to the winning side, which, along with the high degree of leverage that is allowed, has turned precious metals trading into a gambling casino. But it did more than that. Cash settlement of derivative contracts made it easy for governments to cap the gold price. They could sell all the derivatives they wanted in order to depress the gold price knowing that they would not have to deliver metal. Instead they could get their central banks to simply print up some cash. This scheme has worked for years. 

But We Are Now Close To A Tipping Point
In the early part of this century when there were relatively few cash settled derivatives, central banks were forced to accept the reality that the debasement of their currencies would lead to higher gold price, and it did. Gold rose twelve years in a row from 2000 to 2012. I used to call it a “managed retreat” by central banks. S
ince then, as cash settlement derivatives became more widely available and accepted, we all know how tough it has been for gold bulls. But it now looks like we are very close to the tipping point.

What seems clear is that governments are now carrying an offside short position that has accumulated to massive proportions. By that I mean their position has become so large, they are unable to cover on those contracts that still enable delivery of physical metal like Comex futures. When you buy a Comex futures contract, you have the right to take delivery of physical metal, and that is where the ‘offside’ point arises. What I am saying here is that EFPs are being used to try juggling what has become an unmanageable position and commitment to deliver physical metal.

There are no doubt a lot of games being played with EFPs and other off-exchange private contracts, particularly with both precious metals in backwardation. You can’t see this backwardation on the Comex because spreads there are artificial and crafted and published in end-of-day settlement prices to paint the tape. Unfortunately, we don’t know much about these transactions because they are off-exchange. So we don’t know anything about the terms by which they are concluded. My sense of it is that the shorts are massively offside and struggling to keep their head above water because the longs want delivery for metal the shorts don’t have.

The Shorts Took A Big Gamble And May Lose Their Ass
This struggle has resulted in the abnormally high EFP activity. The shorts have used EFPs to move their position off the exchange so that governments can settle contracts with cash instead of metal. The size of this imbalance is growing, not shrinking, Eric. 
I think the shorts took a big gamble with this latest engineered takedown of metal prices over the past few weeks. They were probably hoping to shake out weak hands holding physical metal, but it hasn’t worked. After six years of depressed metal prices since the 2011 peaks, everyone still left in the market is a believer. And with the growing recognition that gold is exceptionally undervalued, more buyers of physical metal are entering the market.

Is The Game Finally Over?
The upshot of this Eric, is that physical metal today is in strong hands. Every weak hand who could be flushed out of their position has been flushed out. So we are at crunch time for the shorts because they don’t have the physical metal they are being asked to deliver, and they have juggled their short position to the point where it is becoming unmanageable. 
So is the game finally over for governments capping the gold price? We’ll soon find out the answer to that question.”

 

 

end

 

Hong Kong announces another plan for physically settled Chinese off shore yuan and uSA gold futures.  Gold will be settled in physical.

(courtesy GATA/HKEX)

HKEX Announces Plan for Physically Settled CNH and US$ Gold Futures

 

  • First of their kind gold futures contracts denominated in CNH and US$ and traded on the same platform
  • Physical kilobar (1 kilogram) contract ideal for Asia
  • After-hours as well as day trading (nearly 16 hours of trading per trading day)

 

Hong Kong Exchanges and Clearing Limited (HKEX) plans to introduce physically settled CNH (offshore Renminbi, or RMB) and US dollar (US$) Gold Futures contracts in the third quarter of this year, subject to regulatory approval.

HKEX’s aim is to offer its market participants more choices and to provide more options for investors with offshore RMB.

“Our Offshore Renminbi and US dollar Gold Futures contracts will be the first such pairing on the same exchange platform anywhere in the world,” said Li Gang, HKEX’s Co-head of Market Development.  “Our new Gold Futures will be helpful to gold users, from refiners and fabricators to jewellers, who need to hedge gold price risk.  We also think they will be attractive to banks, fund managers and traders in the precious metals market.

“The CNH contract will be a valuable addition to our expanding portfolio of Renminbi products.  The contract’s synergy with our USD-CNH Futures and other Renminbi derivatives will create arbitrage opportunities.”

The underlying asset for HKEX’s planned Gold Futures, a 1 kilogram gold bar of at least 0.9999 fineness, makes them ideal for Asia.

HKEX took advantage of Hong Kong role as a gold trading hub with storage facilities, and the leading offshore RMB centre, when it developed the planned physically settled CNH and US$ contracts.

HKEX expects to invite applications from firms interested in serving as liquidity providers in due course.

The London Metal Exchange, a wholly-owned subsidiary of HKEX, plans to introduce gold futures in London in July of this year as part of its LMEprecious initiative. 

Contract Specifications

Contract

US$ Gold Futures

CNH Gold Futures

Underlying

1 kilogram gold of not less than 0.9999 fineness, bearing a serial number and identifying stamp of a Recognised Refiner

Contract Size

1 kilogram

Trading Currency

USD

RMB

Settlement Currency

USD

RMB

Contract Months

Spot Month and the next 11 calendar months

Quote

USD per gram

RMB per gram

Minimum Fluctuation / Tick Size

US$0.01 per gram

RMB0.05 per gram

Trading Hours
(Hong Kong Time)

8:30 am to 4:30 pm (day trading session) and 5:15 pm to 1:00 am the next morning (after-hours trading session)

Last Trading Day

The third Monday of the Contract Month
Postponed to the next business day if it is a Hong Kong public holiday

Final Settlement Day

The second Hong Kong Business Day after the Last Trading Day

Settlement Type

Physical settlement

Details of the contract specifications are in a circular on the HKEX website.

 

End

 

Dave Kranzler talks about the new Hong Kong futures market and with this new exchange it

will be harder to manipulate gold

 

(courtesy Dave Kranzler/IRD)

Is China Intentionally Making It Harder To Manipulate Gold?

A new gold futures contract is being introduced by the Hong Kong Futures Exchange (two contracts actually).  The two contracts will be physically settled $US and CNH (offshore renminbi) gold futures contracts.   The key to this contract is that it requires physical settlement of the underlying gold, which is a 1 kilo gold bar.

The difference between this contract and the Comex gold futures contract is that the Comex contract allows cash (dollar aka fiat currency) settlement. The Comex does not require physical settlement.  In fact, there are provisions in the Comex contract that enables the short-side of the trade to settle in cash or GLD shares even if the long-side demands physical gold as settlement.

With the new HKEX contract, any entity that is long or short a contract on the day before the last trading day has to unwind their position if they have not demonstrated physical settlement capability.

The new contract also carries position limits.  For the spot month, any one entity can not hold more than a 10,000 contract long/short position.   In all other months, the limit is 20,000 contracts.   A limit like this on the Comex would pre-empt the ability of the bullion banks to manipulate the price of gold using the fraudulent paper gold contracts printed by the Comex.  It would also force a closer alignment between the open interest in Comex gold/silver contracts and the amount of gold/silver reported as available for delivery on the Comex.

To be sure, the contract specifications of the new HKEX contracts leave the door open to a limited degree of manipulation.  But at the end of the day, the physical settlement requirement and position limits greatly reduce the ability to conduct price control via naked contract shorting such as that permitted on the Comex and tacitly endorsed by the Commodity Futures Trading Commission.

You can read about the new HKEX contract here – HKEX Physically Settled Contract – and there’s a link at the bottom of that article with the preliminary term sheet.

Will this new contract help moderate the blatant price manipulation in the gold market by the western banking cartel?  Maybe not on a stand-alone basis.  But several developments occurring in the eastern hemisphere and among the emerging bloc of eastern super-powers – as discussed in today’s episode of the Shadow of Truth – will begin to close the window on the ability of the west’s efforts to prevent the price of gold from transmitting the truth about the decline of the U.S. dollar’s reserve status and the rising geopolitical instability:

 

 

END

 

 

My goodness, now we see India is working with the World Gold Council to create a physical gold exchange

 

(courtesy Bloomberg news/GATA)

 

India is working with World Gold Council to create a spot exchange

Section:

By Eddie Van Der Walt and Swansy Afonso
Bloomberg News
Monday, May 15, 2017

The World Gold Council is working with the Indian government on plans to create a local physical spot-gold exchange that may start up as soon as next year.

“We are working on a gold exchange for India,” P.R. Somasundaram, managing director for the World Gold Council in India, said in an interview in London today. “The finance ministry has formed a gold committee. And the committee has taken this as one of the things to do.”

The plans still face many hurdles including that the state-level rather than central government has responsibility for gold-related matters in India, he said. Increased infrastructure such as gold vaults and reliable receipts for metal are also needed.

The new exchange would bring more order and structure to the market, “which is what the government would love,” Somasundaram said. “It is not going to be a gold exchange like you see here, with bullion banks backing liquidity. It’s going to be very different.” …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-05-15/india-working-with-wo…

END

 

 

The following is an extremely important commentary.  The author notes that large commodity trade Noble Group is in big trouble. Its credit default swaps have been rising big time along with the fall in their stock.  This has coincided with the drop in silver prices for 15/16 days.  The author suggests that Noble Group may have been responsible for the paper selling of silver.  The important point to make on this is the fact that Noble is in trouble and a default will send shock waves throughout the derivative world

(courtesy Kevin Muir/Macro Tourist/zero hedge)

Was Asia’s Largest Commodity Trader The Big Silver Seller?

We first brought the world’s attention to Noble Group in 2015, as commodity markets crashed and what was Asia’s largest commodity trader faced near-bankrutpcy as trading partners lost faith, bonds were dumped, and CDS protection was bid. In the months since, panic subsided and everything  – as it always seems to have been – was fine… until last week!!

Which brings us to the recent price action in Silver (as well as various other commodities). As The Macro Tourist’s Kevin Muir asks (and answers)

Was Noble The Big Silver Seller?

I don’t want to goocher it, but it looks like I might have fluked into picking up some silver last week near the bottom (Wallace prepares to buy some silver). That post is just proof that some of us were lucky enough to be born smart, while others, were smart enough to be born lucky. I count myself firmly in the latter camp, just without the foresight to chose that group. But rather than focusing on trying to time the short term squiggles, I would like to discuss the cause of the absolute drubbing the commodity markets took over the past month.

The easiest, and most obvious, explanation centers around the rise in US dollar real yields. A month ago, the US 5 year real yield (as measured by the TIPs market) was almost negative 30 basis points. Last week, at its worst, the real yield had pushed up to just a hair under positive 20 basis points. That’s almost 50 basis points of real tightening.

https://i2.wp.com/themacrotourist.com/images/2017/05/TIPMay1517.png

This occurred during a period of US economic underperformance versus expectations.

https://i1.wp.com/themacrotourist.com/images/2017/05/CESIMay1517.png

I am unsure if the poor economic performance was coincidental or causal, but it doesn’t really matter. Higher real rates, combined with an economy rolling over, are a poor environment for commodities.

The cause of the rise in real rates is more difficult to ascertain (whether it is an overly tight Fed, or Chinese withdrawal of liquidity, is up in the air), but its effect on our precious metal friends cannot be argued. Precious metals hate rising real yields. In fact, given the backup in real yields, gold actually hung in there pretty well.

https://i0.wp.com/themacrotourist.com/images/2017/05/GoldMay1517.png

But, silver traded tick for tick with the US 5 year real yield.

https://i0.wp.com/themacrotourist.com/images/2017/05/SilverMay1517.png

It could be there is nothing more to this story. Real rates rose (for whatever reason), and commodities sold off. Nothing more, nothing less.

Yet when I look at the silver chart, it seems less than random. For the period of mid-April until last week, the trading action consisted of a persistent, steady decline.

https://i0.wp.com/themacrotourist.com/images/2017/05/SilverGIPMay1517.png

The selling was relentless, and much too uniformed. Although I know fundamentals were helping the decline, I contend there might be more lurking behind the scenes.

I am late to this news, but over the past couple of weeks, Hong Kong based commodity conglomerate, Noble Group, has gotten themselves into some serious trouble. Actually, serious trouble is probably understating the situation. It’s more like grave danger (like there is any other kind?)

First up, let’s have a look at the equity price of Noble Group:

https://i0.wp.com/themacrotourist.com/images/2017/05/NobleMay1517.png

Strangely, the decline in Noble’s stock price started the same time as silver, almost to the day.

And lest you think Noble is simply experiencing a share price decline that might be recouped, have a look at their most liquid bond issue:

https://i2.wp.com/themacrotourist.com/images/2017/05/NobleBondMay1517.png

At the beginning of May, this bond was still trading at slightly under par. Over the past week, it has declined to just over 50 cents on the dollar.

The bond market has abandoned Noble. Something’s wrong. Really, really, wrong.

When I was researching this situation, I stumbled upon this great blog from Iceberg Research. In their research, they outline the short thesis for Noble. I am not judging the merits of their case, but I trust the bond market. And the bond market is screaming that Noble is in trouble.

And what do you trading companies do when they are in trouble? They sell stuff to get liquidity. Inevitably they don’t sell the stuff they should, they sell the stuff they can. It’s a tale as old as time. We saw it with Long Term Capital Management, with the Bear Stearns real estate credit hedge funds, and even with Lehman.

In Iceberg’s research, they outline a whole host of illiquid commodity assets they claim Noble is marking too high. If this analysis is correct, then these assets will be the last thing Noble pitches. Instead, liquid commodities, like say, silver, will be given the boot…

I could be whistling in the wind, but I wonder if silver’s decline over the past month has been a desperate attempt to shore up some liquidity at Noble. Although we probably will never know for sure, I take solace in the fact that if I am correct, then most likely Noble will have no more silver to sell. If the grim reaper of bankruptcy comes for Noble in the coming weeks, then all the good positions will have most likely already been sold. Don’t get too bearish on any Noble Group bad news, it’s most likely already in the price of all but the most illiquid commodities.

 

end

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

 
 

1 Chinese yuan vs USA dollar/yuan A LOT STRONGER  6.8903(REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES A LOT STRONGER TO ONSHORE AT   6.8847/ Shanghai bourse CLOSED UP 22.74 POINTS OR .74%   / HANG SANG CLOSED DOWN 35.65 POINTS OR 0.14% 

2. Nikkei closed UP 49.97  POINTS OR 0.25%   /USA: YEN RISES TO 113.67

3. Europe stocks OPENED ALL MIXED        ( /USA dollar index FALLS TO  98.48/Euro UP to 1.1064

3b Japan 10 year bond yield: RISES TO   +.046%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.67/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  49.09 and Brent: 52.09

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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.432%/Italian 10 yr bond yield DOWN  to 2.235%    

3j Greek 10 year bond yield RISES to  : 5.69% ???  

3k Gold at $1234.95/silver $16.73 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 3/100 in  roubles/dollar) 56.33-

3m oil into the 49 dollar handle for WTI and 52 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 GOOD SIZED REVALUATION NORTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.67 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9891 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0945 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +0.432%

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 2.347% early this morning. Thirty year rate  at 3.013% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Euro Surges As Trump Fears Slam Dollar; Futures Poised For New Records

In a replica of Monday’s early trading, European shares are down, this time led by health-care stocks even as the Euro surges above 1.1050, the highest level since the US election. Asian equities rose, while S&P futures were unchanged although we expect the ramp to kick in any second, and take the NASDAQ to another all time high. Meanwhile, the US dollar weakened for a fifth day after a WaPo report cited anonymous sources who said President Trump revealed classified information to Russia’s top diplomat.

The dollar fell against all its major peers after the Washington Post reported the president last week shared closely held intelligence with Russia’s foreign minister and ambassador. The greenback’s weakness translated to gains for precious metals, while crude rose a fifth day as Goldman Sachs released not one but two bullish reports on oil Monday, saying the willingness by Saudi Arabia and Russia to extend output cuts will likely sway other countries; of course the one that matters most, the US, was not mentioned.

According to Bloomberg, the market’s reaction to the latest in a string of controversies to dog Trump highlights growing uncertainty that the president will be able to deliver on plans to boost infrastructure spending and cut taxes. “That could prove key to investors, who are weighing historically pricey equities and ominously low volatility just as data from both China and the U.S. casts a shadow on global growth.” And yet we have yet to see any actual adverse impact on the S&P from these “controversies”, with E-minis trading 2,398.75, one tick in the green at this moment, essentially a new all time high..

“This sort of discussion is very new indeed and has caused a lot of U.S politicians to raise more concerns and that has clearly rippled into the markets,” said Andrew Milligan, head of global strategy at Standard Life Investments Ltd. in Edinburgh. “We can still buy into the interest-rate differentials arguments for the dollar but the arguments about fiscal stimulus and cross-border flows look more tenuous and have made us neutralize our bets on the dollar.”

In equity markets, Asian stocks climbed to a fresh-two year high on the back of an overnight rise in Wall Street, while oil extended gains after major producers Saudi Arabia and Russia pledged to push for an extension of supply cuts into 2018. Investors in regional equities, however, are growing increasingly wary as valuations look stretched and with the latest rally taking place in thin volumes and led by just a few sectors. Asian regional stock markets were largely  mixed with Chinese stocks leading laggards and Thailand among the best performing stock market of the year.

Europe is set to follow with index futures pointing to a mixed start. Concerns are rising that as some may be shunning the US, Europe is getting increasingly expensive in line with JPM’s recommendation to clients to start shoring European stocks.

“We are approaching a short-term resistance as the breadth of this rise is very unhealthy and the market momentum looks tired,” said Alex Wong, a fund manager at Ample Capital Ltd in Hong Kong, with about $130 million under management. In Hong Kong, the broader market rose to its highest level since June 2015 on the back of extended buying into Chinese lenders and market heavyweight Tencent before declining 0.3 percent.

With overall volumes declining and share valuations looking extremely stretched, investors are growing cautious. Hong Kong’s technology sector, for example, is the most expensive, trading at a price-to-earnings multiple of more than 42 times. The MSCI index of Asia-Pacific shares ex-Japan was flat after hitting its highest level since June 2015 in opening trades.

But going back to the big story overnight, it was all about FX, and specifically the surge in the euro, which extended its recent gains to levels last seen during the US presidential election amid concerns by dollar bulls that political turmoil over the Atlantic will push back the implementation of much-anticipated reforms by the Trump administration.

The dollar, as measured by the Bloomberg Spot Index, dropped for a fifth day, its longest losing streak in almost two months. The euro rose above the high seen after the final round of the French presidential elections as hedge funds and macro investors added fresh longs, according to foreign-exchange traders in Europe. The common currency gained as much as 0.7 percent to $1.1050 as of 11:00 a.m. London time, its strongest level since the aftermath of the U.S. elections.

The common currency has risen by 1.7 percent since Friday, and given one-week realized volatility traded near a 2 1/2 year low hit on April 19, further gains may take longer to materialize. Take-profit offers were seen near $1.1050 and $1.1100, said the traders. Interbank desks were looking to fade a move below $1.10 instead of chasing the market higher. Still, the short-to-medium term remains constructive for euro bulls. Volatility smile analysis on the one-week tenor shows how a rise in demand for euro calls has outweighed that for puts since the release of U.S. soft data on Friday. With a lack of hefty nearby expiries up to Wednesday, focus could be drawn toward options worth 4 billion euros rolling over at $1.10 on Thursday. The dollar fell against most of its G-10 peers as U.S. President Donald Trump’s top foreign policy advisers raced to contain political damage from a report saying he revealed sensitive classified information to Russia’s top diplomat during an Oval Office meeting last week

Oil steadied around the $52 per barrel level after hitting its highest level in more than three weeks on Monday, after Saudi Arabia and Russia said that supply cuts needed to last into 2018, a step towards extending an OPEC-led deal to support prices for longer than first agreed. [O/R] Global benchmark Brent crude rose 0.4 percent to $52 per barrel. U.S. West Texas Intermediate (WTI) crude futures were up 0.4 percent at $49.03 per barrel.

Brent crude has gained nearly 9 percent over the last week though some analysts were skeptical about the durability of the rally despite the proposed supply curbs. “That is going to be easier said than done, it appears, with U.S. production running at its fastest pace since August 2015 and data yesterday confirming that Chinese growth momentum continues to moderate,” ANZ strategists wrote in a daily note.

Economic data include housing starts. Home Depot, Staples are among companies scheduled to publish results.

Global Market Snapshot

  • S&P 500 futures down 0.01% to 2,398.25
  • STOXX Europe 600 down 0.2% to 395.28
  • MXAP up 0.2% to 151.42
  • MXAPJ up 0.2% to 495.95
  • Nikkei up 0.3% to 19,919.82
  • Topix up 0.3% to 1,584.23
  • Hang Seng Index down 0.1% to 25,335.94
  • Shanghai Composite up 0.7% to 3,112.96
  • Sensex up 0.7% to 30,547.70
  • Australia S&P/ASX 200 up 0.2% to 5,850.52
  • Kospi up 0.2% to 2,295.33
  • Brent Futures up 0.8% to $52.24/bbl
  • Gold spot up 0.3% to $1,233.94
  • U.S. Dollar Index down 0.4% to 98.50
  • German 10Y yield rose 1.3 bps to 0.433%
  • Euro up 0.6% to 1.1042 per US$
  • Brent Futures up 0.8% to $52.24/bbl
  • Italian 10Y yield rose 2.5 bps to 1.982%
  • Spanish 10Y yield fell 2.6 bps to 1.606%

Top Overnight News from Bloomberg

  • President Trump’s top foreign policy advisers raced to contain political damage from report saying he revealed sensitive classified information to Russia’s top diplomat during an Oval Office meeting last week
  • Multispeed euro-area recovery, with 0.5% growth in 1Q confirmed on Tuesday, underpins ECB’s call for caution
  • The pound fell against the dollar, declining from a one-week high, after data showing the fastest inflation since 2013 wasn’t enough to convince investors of an imminent tightening of policy from the Bank of England.
  • Russia says OPEC deal may be expanded to 3-5 more countries
  • Elliott Demands BHP Oil Review, Drops Call on Listing Shift
  • HSBC Agrees to Settle Bondholder Group Suit Over Libor- Rigging
  • Oil Market Is Rebalancing Yet OPEC’s Work Not Finished, IEA Says
  • New South Korean President Seen Hindering Nuclear Ambitions
  • Saudi Aramco said to make leadership changes ahead of IPO
  • Aramco said to plan at least 10 agreements during Trump visit
  • Nigeria warning strike includes workers from Shell, Eni, Total
  • Facebook Violates Dutch Data Protection Law, Dutch Agency Says
  • Ford Making Some Voluntary Job Buyout Offers in Germany: Union
  • Netflix Can’t Dodge Relativity Suit Over Pre-Release Streaming
  • Wal-Mart Launches Sam’s Club Global Flagship Store on JD.com
  • JPMorgan Names Brian Gu Chairman of APAC Investment Banking
  • Arconic Urges Holders to Vote for All Five of Company Nominees
  • Cisco, Emory, Texas A&M, Back $140 Million European Tech Fund

Asian equity markets traded mixed after the region failed to sustain the impetus from the positive US lead, where broad-based sentiment was underpinned by a 2% jump in oil prices after Russia and Saudi Arabia agreed to extend output cuts. ASX 200 (+0.2%) and Nikkei 225 (+0.1%) were buoyed at the open following the Wall St gains in which the S&P 500 and Nasdaq posted fresh record highs. However, Nikkei 225 then stalled just shy of 20,000 as China markets entered the fray and dampened risk tone in the region, with Shanghai Comp. (+0.7%) and Hang Seng (-0.1%) reeling on continued regulatory concerns. 10yr JGBs were lower with demand dampened amid mild gains in Japanese stocks, while today’s 5yr JGB auction also failed to provide support as the results were mixed with accepted prices lower than prior.

Top Asian News

  • ‘Chili Mafia’ Hunted by Bank Indonesia for Stoking Inflation
  • Noble Climbs Even as Moody’s Flags $900 Million Funding Gap
  • One Belt, One Road, One Man: Xi Looms Large at China Summit
  • World’s No.1 Money Fund Said to Face Pressure to Cut Inflows
  • Hong Kong’s Link REIT CEO Says Was Approached to Sell 10% Stake

In European bourses, with macro newsflow once again relatively light, all eyes were largely on the latest inflation report from the UK which saw firmer than expected CPI (Y/Y 2.7% vs. Exp. 2.6%) for all three main metrics. With GBP/USD already heading higher into the release, the pair saw a further boost of around 20 pips to move back above 1.2950. However, markets then saw a reversal of this move, given the potential concerns around the UK economy of higher inflation if we get a disappointing jobs/retail report this week which could place further pressure on households. Furthermore, GBP was also hampered by news that the ECJ will require all EU members to ratify their trade deal with Singapore which could have ramifications for future Brexit negotiations. From an equity standpoint, trade has been particularly directionless after taking a similar lead from Asia-Pac trade. The FSTE has been supported by index-heavy weight Vodafone (+3.9%) who reported earnings pre-markets with performance across the sectors relatively broad-based. Elsewhere, the CAC 40 has been modestly hampered by some ex-div companies in the index but moves have been relatively modest. The energy sector has been relatively stable after yesterday’s gains with the latest !EA monthly report not providing markets with any traction. In fixed income markets, paper across the continent trade modestly lower with some of the downside led by Gilts in the wake of the aforementioned UK data while the long-end has been hampered by impending supply. More specifically, France have opened books on their longer duration OAT after mandating banks yesterday, while the UK are expected to come to market with a 2057 syndication. Some market participants have also suggested that Italy could come to market within the next month with their own-longer-dated syndication which has subsequently led to steepening of the BTP curve.

Top European News

  • German Investor Optimism Rises After French Elect Pro-EU Leader
  • U.K. Inflation Resumes Ascent as Air Fares, Energy Prices Rise
  • Glencore Says Electric Car Boom Is Coming Faster Than Expected
  • Deutsche Bank Shakes Up Investment Banking Management in Spain
  • Hungary Will Probably Issue Panda Bonds This Year, Varga Says
  • Italian Bonds Outperform Bunds While 30-Year Sector Lags Rally
  • Italian Growth Pace Fails to Speed Up Amid Weak Industry Output

In currencies, the Bloomberg Dollar Spot Index slid 0.3 percent as of 10:06 a.m. in London, falling for a fifth day to the lowest since April 26. The euro climbed 0.7 percent to $1.1048, the most since Nov. 9. The yen rose 0.2 percent to 113.59 per dollar, after dropping 0.4 percent Monday. The focus this morning has been on GBP, with traders looking to the inflation data up on expectations as the yoy CPI rate rose from 2.3% to 2.7%. This initially gave the Pound a bid, with Cable testing above 1.2950, but this was short lived as it was not long before the market started refocusing on Brexit matters. News that the EU 28 will have to ratify the Singapore trade pact now sets precedent for the negotiations ahead for the UK, and this does not bode well for a deal to concluded inside 2 years. This has greater implications for EUR/GBP, which has now taken out a series of resistance levels through 0.8500, but we suspect pre-0.8600 will be a challenge in the near term, but dips proving shallow for now. Cable now sub 1.2900. EUR/USD gains are largely seen to be on the back of USD weakness, but we also have to factor in future expectations of a change in ECB stance which are being front run yet again. That said, the Q1 GDP read was confirmed at 0.5%, with the trade balance higher and ZEW sentiment across the EU better than expected. Next key area higher up is at 1.1120-30.

In commodities, oil prices are in consolidation mode after WTI rallied into the mid USD49.00’s and Brent through USD52.00. This was a direct result of Saudi Arabia and Russia agreeing in principle to extend the current output deal by another 9 months. We have highlighted USD50.00 as a notable resistance level for WTI, so we watch from here. Metals, led by Copper have coat-tailed the recovery, but we would expect China’s Silk Road proposals will have lent a helping hand. Copper now holding the lower end of the USD2.50-2.60 range, but on the day, Platinum and Palladium showing gains. Gold following Treasuries, with geopolitical risk adding support, but little traction seen on the upside as US yields have ticked higher this morning. Silver is back in the upper half of the USD16.00’s. !EA Monthly Report shows that global oil supply fell by 140K BPD in April as non-OPEC, and especially Canada, pumped less, OPEC crude production rose by 65K BPD in April to 31.78m1n BPD as higher output from Nigeria and Saudi Arabia more than offset lower flows from Libya and Iran.

Looking at the day ahead, we’ll get April housing starts and building permits (expected to climb +3.7% mom and +0.2% mom respectively) followed then by the April industrial production report (+0.4% mom expected). Away from the data there’s some ECB speak scheduled with Nowotny and Coeure both due to speak this afternoon. Finally it’s worth keeping an eye on some of the earnings releases scheduled for today, particularly in the US where the retail sector will once again be under the spotlight with Home Depot, TJX and Staples amongst those due up.

US event calendar

  • 8:30am: Housing Starts, est. 1.26m, prior 1.22m; MoM, est. 3.7%, prior -6.8%
  • 8:30am: Building Permits, est. 1.27m, prior 1.26m; MoM, est. 0.24%, prior 3.6%
  • 9:15am: Industrial Production MoM, est. 0.4%, prior 0.5%; Capacity Utilization, est. 76.3%, prior 76.1%
  • 9:15am: Manufacturing (SIC) Production, est. 0.4%, prior -0.4%
  • 10am: MBA Mortgage Foreclosures, prior 1.53%; Mortgage Delinquencies, prior 4.8%

DB’s Jim Reid concludes the overnight wrap

Any lingering concerns that the weekend North Korea missile launch, a softening in China activity indicators and a global hacking epidemic would see markets struggle on Monday were laid to rest fairly on yesterday. Instead it was the decent rally across the commodity complex and particularly for energy which helped risk assets start the week on the front foot. WTI Oil (+2.11%) closed in on $49/bbl again following those comments from the Saudi and Russian energy ministers calling for an extension of the supply cut agreement to Q1 2018. Metals also got a boost following China President Xi’s infrastructure spending comments over the weekend with Aluminium (+0.77%), Copper (+0.96%) and Zinc (+0.67%) all up.

Commodity sensitive sectors rallied in sync and the S&P 500 (+0.48%) saw its biggest rise in just under 3 weeks, closing above 2,400 for the first time ever and also notching up its 17th record high of the year. It’s still got some way to go to catch the Nasdaq (+0.46%) though which finished with a new record high for the 33rd time this year. Gains weren’t quite as impressive in Europe but the Stoxx 600 (+0.09%) still edged higher. The DAX (+0.29%) also made a new record high, no doubt boosted by Chancellor Merkel’s state election win on the weekend. Not to be left out, the FTSE 100 (+0.26%) was another to hit a new record high yesterday. It is interesting to see that these record highs for equity markets are happening as measures of global data surprises plummet to multi-month lows. Indeed a closely followed global measure has fallen to the lowest level since November last year while a US-only measure is at the lowest since last May and well into negative territory now. A strong earnings season has undoubtedly been a big driver recently and the overriding trend, although it also perhaps reflects how far expectations for economic data have come in recent times.

Staying with markets, measures of volatility tried their best to push higher early on yesterday but ultimately collapsed again into the close with the VIX finishing at 10.42 and more or less where it finished on Friday. That now makes it 16 sessions in a row that it has closed below 11.00, stretching the record run. Meanwhile EM currencies had a strong day with the Colombian Peso (+1.40%), South African Rand (+1.39%) and Russian Ruble (+1.34%) amongst those sharply higher. The MSCI EM equity index also rallied +0.78% and has now closed higher for six sessions in succession.

Elsewhere bond markets were weaker which wasn’t a great surprise in the context of a positive day for risk and rising Oil prices. 10y Treasury yields finished 1.8bps higher at 2.344% while 10y Bund yields were 3.1bps higher at 0.417%. The ECB’s Praet spoke and said that the last ECB meeting showed that “growth still needs a high degree of accommodation” and that “risks are more balanced but still tilted to the downside”. Also in Europe, Germany’s Merkel and France’s Macron met yesterday but there wasn’t much significant news to come from the meeting with both leaders pledging to create a new “road map” for reviving the EU and medium-term co-operation. Speaking of Macron, yesterday the new French President named centre-right MP Edouard Philippe as the new French PM. It’ll be interesting to see if the appointment attracts more moderate centre right politicians who had supported Juppe, with the legislative elections in June not far off.

Before we look at how markets are doing this morning, the most significant news since the closing bell last night is that of a Washington Post article suggesting that President Trump revealed highly classified information in a White House meeting last week to both the Russian foreign minister and ambassador. The article goes on to say that the information was considered so sensitive that the details of which were withheld from allies and tightly restricted even within the White House itself. Remember that this story is emerging just after the President fired FBI Director James Comey last week in the middle of a bureau investigation involving links between Russia and the Trump campaign. Safe havens like the Yen (+0.25%) and Gold (+0.24%) are firmer post the report going out.

Equity bourses in Asia are a bit more mixed this morning however. While the Nikkei (+0.19%), Kospi (+0.20%) and ASX (+0.11%) are modestly higher, both the Hang Seng (-0.25%) and Shanghai Comp (-0.34%) have weakened. US equity futures are also modestly in the red, while Treasuries have undone most of yesterday’s move higher in yield. Oil has built on yesterday’s rally with another +0.30% move up.

Staying with Asia, shortly after we went to print yesterday our economists in China published a note summarising the April activity indicators which were released yesterday morning. In addition to the headline indicators, they also highlight that the government’s tightening measures have slowed property transactions down with growth of property sales in April dropping to +7.7% yoy from +14.7% yoy in March in volume terms and from +24.4% yoy to +10.0% yoy in value terms. However, they also made the point that property developers seemed to maintain their sanguine expectations, at least for the moment. This is  reflected in land sales where volume growth over the three months to April picked up to +1.8% yoy from -11.7% yoy in the three months to March. The latest credit aggregates data also revealed strong growth in mortgage credit. In their view the strong property markets will provide a cushion to the economy through the fiscal channel. Summing it up, the latest round of data in April is consistent with their view that  real GDP will likely slow but, cushioned by the property sector, not collapse in 2017. They expect real GDP to grow 6.8%, 6.6% and 6.5% in Q2, Q3 and Q4 respectively, and 6.7% in 2017 as a whole.

Speaking of data, the ECB’s latest CSPP holdings data was released yesterday. It showed that the average daily run rate last week was €303m which compares to €356m since the programme started. The  average monthly run rate since April 2017 (after QE trimmed) is also €7.37bn (assuming 21 business days per month) which compares to €7.56bn in an average month between July 2016 and March 2017. So the absolute pace of purchases has come down only moderately since the overall QE was trimmed in April. The CSPP/PSPP ratio was 11.6% between July and end-March while it’s been 12.3% since April. So in conclusion the best we can say so far is that we’ve only seen a mildly less than proportional CSPP trimming so far.

The other data yesterday was reserved for the US. It was a bit of a mixed bag. The empire manufacturing print came in at -1.0 in May (vs. +7.5 expected) which was down over 6pts from the April reading. The details also revealed that the new orders component tumbled 11.4pts to -4.4. That is the first regional report we’ve seen for May although it is worth noting that the decline in new orders follows similar weakness for components is the ISM manufacturing and Philly Fed surveys in April. The other data in the US yesterday was the NAHB housing market index print for May which rebounded 2pts to 70 and to the second highest reading since 2005.

Before we move onto today’s calendar, it’s worth updating for the latest opinion polls in Italy where, in recent days, polls have swung back in favour of the Democratic Party over the euro-sceptic 5SM Party. The last three opinion polls (Demos, Ixe and SWG) show average support for the PD of 29.1% compared to 27.7% for 5SM, and therefore an average lead of 1.4%. The 3 polls prior to this showed average support of 27.6% for PD and 30.1% for 5SM, implying an average lead of 2.5% for 5SM. So a decent swing but it’s worth noting that polls remain fairly volatile and the overall difference between the two parties is still very small. Looking at the day ahead, this morning in Europe the early data is out of France where we’ll get the final revisions to the April inflation data. Shortly after that the focus turns over to the UK where the April CPI/RPI/PPI data docket is due out.

Market expectations is for a +0.4% mom headline CPI print which would lift the annual rate to +2.6% yoy, while the core is expected to print at +2.3% yoy, up from +1.8% in March. Shortly after that we’ll get the second reading on Euro area growth for Q1 where the initial flash estimate came in at +0.5% qoq. Also due out is the May ZEW survey in Germany. This afternoon in the US we’ll get April housing starts and building permits (expected to climb +3.7% mom and +0.2% mom respectively) followed then by the April industrial production report (+0.4% mom expected). Away from the data there’s some ECB speak scheduled with Nowotny and Coeure both due to speak this afternoon. Finally it’s worth keeping an eye on some of the earnings releases scheduled for today, particularly in the US where the retail sector will once again be under the spotlight with Home Depot, TJX and Staples amongst those due up.

END

3. ASIAN AFFAIRS

i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 22.74 POINTS OR .74%  OR / /Hang Sang CLOSED DOWN 35.65 POINTS OR 0.14% .  The Nikkei closed UP 49.97 POINTS OR 0.25%/Australia’s all ordinaires  CLOSED UP  0.24%/Chinese yuan (ONSHORE) closed UP at 6.8903/Oil DOWN to 49.09 dollars per barrel for WTI and 52.09 for Brent. Stocks in Europe OPENED MIXED    ..Offshore yuan trades  6.8847 yuan to the dollar vs 6.8903 for onshore yuan. NOW  THE OFFSHORE IS  STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A LITTLE BIT STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE  WEAKER DOLLAR. CHINA IS A MUCH HAPPIER THIS MORNING

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA

b) REPORT ON JAPAN

c) REPORT ON CHINA

China has had enough with the tightening bias.  They injected 25 billion USA into their banks

(courtesy zero hedge)

China Capitulates: Injects $25 Billion Into Liquidity-Starved Banks To “Appease Investors”

Is China’s push to deleverage its financial system over?

That is the question following last night’s dramatic reversal in recent PBOC liquidity moves, when after weeks of mostly draining liquidity, the central bank injected a whopping 170 billion yuan (net of maturities), or $24.7 billion, the biggest one-day cash injection into the country’s financial markets (and contracting shadow banking system as first reported here last week, when we showed the first drop in China Entrusted Loans in a decade) in four months. The surprising move was “a fresh sign that Beijing is trying to mitigate the damage to investor confidence inflicted by its recent campaign to tamp down speculation fueled by excessive borrowing” according to the WSJ.

Today’s injection was the the largest since just before the Lunar New Year holiday in January, when Chinese banks traditionally stock up on liquidity.

Why the sudden shift?

On one hand it is possible that the PBOC is simple concerned about the sharp decline, and in fact contraction, in China’s shadow banking system, where as we showed last week Entrusted Loans posted their first decline since 2007 even as China’s M2 continued to decline.

 

The huge cash injection followed comments from Chinese officials in recent days which hinted they are getting concerned that recent moves to tighten market regulation have caused too much disruption. As a reminder, in recent weeks money market rates and yields on corporate bonds had all shot up to multi-year highs.

The real reason may be simpler: with a major leadership shuffle due later this year, the central bank is not taking even the smallest chances of turmoil in the banking sector. and as such admitted that – once again like in 2013 – its posturing to delever the world’s most leveraged financial system was just that. The WSJ has more:

President Xi Jinping’s call for financial stability ahead of a major leadership shuffle later this year led regulators to unleash a blitz of new rules. The banking regulator under new chief Guo Shuqing has cracked down on speculative investment practices that relied on borrowed money and has also imposed sharply higher fines for irregularities.

 

But the new regulations, alongside tighter monetary conditions in China, have proven hard for investors to absorb. China’s main stock market has dropped 5.4% in just over a month, while yields on Chinese government bonds have risen to more-than two-year highs. Bond yields rise as their prices fall.

Predictably, China throwing in the towel on deleveraging immediately raised animal spirits: the Shanghai stock market rose 0.7% on Tuesday, having earlier fallen by nearly 1%. The yield on China’s benchmark 10-year government bond, meanwhile, fell back to 3.62% from 3.64%.

Ultimately, what the PBOC did is just what every other developed central bank when faced with declining markets: it capitulated.

The timing of PBOC’s move does point to an intention to appease investors,” said Ding Shuang, an economist at Standard Chartered Bank.

As Goldman noted over the weekend, the first sign of Beijing’s desire to soften its tone emerged last Friday, when the PBOC said in its latest monetary-policy report that regulators should carefully handle the timing and pace of introducing their policies and solve financial risks in an orderly manner. The central bank also pledged to provide necessary liquidity to ensure “reasonable” credit growth. It waited just 2 days to do just that.

Also Friday, China’s banking regulator said in a briefing it was trying to “avoid creating new risks in the process of resolving existing risks” and that it would give banks time to adapt, applying tougher standards only on new investment products while allowing existing ones to expire intact.

Then on Sunday, an editorial from the official Xinhua News Agency urged financial regulators to refrain from turning the recent campaign of risk prevention into a fresh risk itself. The same day, Chinese Premier Li Keqiang stressed at a cabinet meeting the importance of “striking a balance” between maintaining financial stability, “gradual deleveraging” and stabilizing economic growth.

“There were indeed worries that if the market volatility induced by the regulatory crackdown worsened, it could lead to systemic risk and hurt the real economy further,” said Liu Dongliang, senior analyst at China Merchants Bank. And with a critical for Xi Jinping Congress later this year, the risk of overshooting the tightening was just too high.

The Chinese central bank’s cash injection came a day after data showed the world’s second-largest economy weakened more than expected last month on flagging consumer demand and slowing investment levels. Borrowing costs for businesses, including bond yields, have risen sharply since China’s central bank raised a suite of key short-term interest rates twice since early February.

 

As a result, new corporate bond issuance in China has plunged in recent months, making life difficult for struggling private firms that have limited access to a banking sector designed to favor inefficient but politically influential state-run enterprises. Chinese companies have raised a total of 674 billion yuan via bond issuance since this year, down from 1.8 trillion yuan during the same period a year ago.

But the single biggest catalyst may have been an all too familiar one: China’s stocks had failed to keep up with the rest of the world, prompting analysts and traders to ask just how bad is the true situation behind the scenes.

Losses in China’s stock markets have also worried securities regulators, prompting them to issue secret and usually verbal instructions, known as window guidance to market participants, to avoid large amounts of selling in recent weeks.

The punchline: “such covert market intervention reached a climax on Friday, when brokerages and fund managers received fresh warnings from securities officials against placing large sell orders ahead of an important international summit in Beijing.

And just like that, China confirmed that when facing a declining market, and rising worries that China’s fading credit impulse will drain the global punchbowl, it will do everything in its power to restore the status quo.

end

4. EUROPEAN AFFAIRS

What a joke!! European officials now threaten to end intelligence sharing with the USA re the disclosure to Russian officials on the whereabouts of iSIS terrorists:

why:” it could risk our sources!!”

the establishment will be doing everything in their power to cause the impeachment of Trump

(courtesy zerohedge)

European Officials Threaten To End Intel-Sharing With US: “Could Be Risk For Our Sources”

With the US mainstream media in manic finger-pointing speculation mode over President Trump’s discussions with Russian foreign minister Lavrov, a senior European intelligence official tells AP that his country might stop sharing information with the United States if it confirms President Donald Trump shared classified details with Russian officials.

 

As AP reported earlier, a senior German lawmaker has expressed concern about reports that President Donald Trump revealed highly classified information about the Islamic State group to Russian officials.

Burkhard Lischka said in a statement to The Associated Press that “if it proves to be true that the American president passed on internal intelligence matters that would be highly worrying.”

 

Lischka, who sits on the German parliament’s intelligence oversight committee, noted that Trump has access to “exclusive and highly sensitive information including in the area of combating terrorism.”

 

The Social Democratic Party lawmaker said that if the U.S. president “passes this information to other governments at will, then Trump becomes a security risk for the entire western world.”

Germany is heavily dependent on U.S. intelligence, and now, a senior European intelligence official tells The Associated Press that his country might stop sharing information with the United States if it confirms President Donald Trump shared classified details with Russian officials.

The official said Tuesday that doing so “could be a risk for our sources.”

 

The official spoke only on condition that neither he nor his country be identified, because he was not authorized to discuss the matter publicly.

And all of this over an anonymously-sourced report that has been denied on the record?

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

We have another cyber attack using an NSA developed weapon:

(courtesy zerohedge)

Hackers Unleash Second NSA-Developed Cyber-Weapon On Dark Web

While a second variant of the WannaCry(pt) ransomware (based on NSA’s EternalBlue exploit) was spreading across the globe yesterday, The FT reports criminal hacking groups have re purposed a second classified cyber weapon stolen from US spies and have made it available on the so-called dark web.

On Monday, the WannaCry attack, which hit 370,000 computers across 150 countries, appeared to slow. Europol, the European police agency, said the spread of the virus had stalled in Europe. But while infection rates have slowed, a Europol spokeswoman warned, “we do not think this is the end of the crisis. The hackers have already evolved the malware, and will probably continue to do so.”

Notably as Europe woke up (and US opened), the infection rate started to rise once again…

But as The FT reports,intelligence and law-enforcement officials said they fear WannaCry may foreshadow a wave of similarly damaging attacks, as criminals and others race to make use of digital weapons that for years were only available to the most technologically sophisticated nation states.

At least a dozen other NSA tools are currently being discussed and worked on as the basis of potential new cyber weapons on hacking forums on the dark web, parts of the internet not accessible via normal search engines.

The hacking tool, developed by the US National Security Agency and called EsteemAudit, has been adapted and is now available for criminal use, according to security analysts.

 

As with the NSA’s EternalBlue, the tool on which WannaCry was based, EsteemAudit exploits a vulnerability in older versions of Microsoft’s Windows software in the way in which networked machines communicate with each other.

Ciaran Martin, director of the UK’s National Cyber Security Centre, said:

“There is a global ecosystem of cyber criminals and sophisticated hackers which are putting a lot of attack methodology into open-source.

 

“It gets modified and reused and upgraded. The volume of open-source exploits and that ecosystem are getting bigger.”

This is far from over.

end

7. OIL ISSUES

The author thinks that a 9 month cut extension might help but there are wild cards:

the shale boys and Iraq both increasing their production

(Nick Cunningham/OilPrice.com)

Will A 9-Month Crude Production Cut Extension Be Enough?

Authored by Nick Cunningham via OilPrice.com,

Oil prices surged on Monday after Russia and Saudi Arabia said they support an extension of the OPEC/non-OPEC production cuts. Oil prices have clawed back a lot of the losses exhibited over the past month, with Brent now safely in the low-$50s and WTI on its way toward those levels.

The joint announcement from Saudi Arabia and Russia, the two most important negotiators, effectively extends the cuts, although the official move won’t come until the May 25 meeting. While it is possible that other OPEC or non-OPEC members might balk at the move, it remains highly unlikely given that most are anxious for higher oil prices. And in any event, Saudi Arabia has always been the one to take on the lion’s share of the burden.

The extension was widely anticipated and the announcement merely squashed some of the uncertainty ahead of the Vienna meeting later this month.

However, what really took the markets by surprise on Monday was the support for a nine-month extension rather than just an extension through the end of the year. “The agreement needs to be extended, as we will not reach the desired inventory level by end of June,” Saudi energy minister Khalid al-Falih said in a statement. “Therefore we came to the conclusion that ending will probably be better by the end of first quarter 2018.”

And in an effort to bolster the production cuts, the OPEC/non-OPEC coalition is working on bringing new countries into the fold, including Egypt and Turkmenistan, although it is unclear if they will be successful. To be sure, some contributions from Egypt and Turkmenistan – with a combined total output of 700,000 bpd – would not significantly alter the pace of adjustment, but their participation would add a psychological jolt to the market.

“I think OPEC and Russia recognize that in order to get the market back on their side they will need ‘shock and awe’ tactics where they need to go above and beyond a simple extension of the deal,”Virendra Chauhan, Singapore-based analyst at Energy Aspects, said in a Reuters interview.

Although the markets were generally ebullient, questions remain. Let’s assume that everyone is on board and continues to rather impressive level of compliance. The reason for the nine-month extension is that the cuts are bringing inventories down at a much slower rate than originally anticipated. Bloomberg Gadfly notes that even extending the cuts through December would only bring inventories down by just 722,000 bpd for a total reduction of about 120 million barrels. That is less than half of the 276 million barrel surplus that existed just in OECD countries at the end of the first quarter.

Much of the reason for that is higher U.S. shale production – which is coming back much quicker than expected. Last week OPEC itself revised its estimate for U.S. shale production in 2017. OPEC now expects the U.S. and other non-OPEC countries to add 950,000 bpd this year, an upward revision of 64 percent compared to the previous month’s projection. It is hard to overstate how shell-shocked the group has been by the swift return of oil supply in the U.S. As recently as January, OPEC only expected the U.S. and other non-OPEC countries to add around 100,000 bpd this year. Four months later, after strong gains from the Texas shale patch, it revised that figure up to 950,000 bpd. No wonder it now sees an extension of its cuts as necessary.

Perhaps nine months will do the trick. But one problem is that keeping everybody in compliance with the cuts will grow more difficult over time. Russia typically ramps up production in summer months as operations can resume following cold winters. “[W]e are skeptical about Russia’s willingness to actively participate in any extended cuts,” Carsten Fritsch, an analysts at Commerzbank, told Reuters.

Also, Iraqi officials have suggested that they will be able to ramp up their production capacity to 5 million barrels per day later this year as new fields come online. Then there are the exempt countries – namely, Libya and Nigeria – that have no barriers in their way (aside from serious domestic troubles) to ratcheting up output this year. So, while extending the OPEC/non-OPEC cuts for nine months is a welcome development, some are wondering whether the cuts need to also be deeper.

But that isn’t in the cards for now. Saudi Arabia and Russia are betting that an extension through the first quarter of 2018 will do enough to chip away at inventories, providing a floor beneath prices, but not boosting them so much that U.S. shale comes back even quicker than it already is. It’s a difficult needle to thread, but that is arguably OPEC’s least bad option.

end

Down goes oil and gasoline on huge crude builds

(courtesy zerohedge)

WTI/RBOB Exteneds Losses After Unexpected Crude Build

After last week’s API (and subsequent DOE) inventory data sparked the latest hopeful pump higher in the energy complex, this week’s API data disappointed. WTI and RBOB porices slipped lower after an unexpected crude build (+882k vs -2.67mm exp).

 

API

  • Crude +882k (-2.67mm exp)
  • Cushing -539k
  • Gasoline -1.7mm (-1mm exp)
  • Distillates +1.787mm

After last week’s across the board inventory draws, Crude’s build is a big surprise (the biggest since March)

 

And after bouncing on last week’s inventory data and the weekend’s Saudi/Russia jawboning, WTI fell for the first time in 5 days today ahead of API data and kneejerked lower on the print…

“With a weak dollar this morning and supportive data coming out of OPEC, I’d think the market would be stronger but it seems to be struggling,” warned Phil Flynn, senior market analyst at Price Futures Group.

8. EMERGING MARKETS

end

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

Euro/USA   1.1064 UP .0084/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RAISING INTEREST RATES/EUROPE BOURSES MOSTLY mixed

USA/JAPAN YEN 113.67 UP 0.139(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2889 DOWN .0011 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

USA/CAN 1.3637 UP .0007 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS TUESDAY morning in Europe, the Euro ROSE by 84 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1064; 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 UP 22.74 POINTS OR .74%     / Hang Sang  CLOSED  DOWN 35.65 POINTS OR 0.14% /AUSTRALIA  CLOSED UP .24% / EUROPEAN BOURSES OPENED MIXE

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED UP 49.97 POINTS OR 0.25%

Trading from Europe and Asia:
1. Europe stocks  OPENED MIXED 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 35.65 POINTS OR 0.14%  / SHANGHAI CLOSED UP 22.74 POINTS OR .74% /Australia BOURSE CLOSED UP .24% /Nikkei (Japan)CLOSED  UP 49.97 POINTS OR 0.25%    / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1234.40

silver:$16.71

Early TUESDAY morning USA 10 year bond yield: 2.347% !!! UP 2 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  3.013, UP 3  IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 98.48 DOWN 43  CENT(S) from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

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And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.299%  DOWN 7 in basis point(s) yield from MONDAY 

JAPANESE BOND YIELD: +.046%  UP 2/10   in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.628%  DOWN 1/2  IN basis point yield from MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.237 DOWN 4   POINTS  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 61 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.435% UP 2 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR TUESDAY

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

Euro/USA 1.1072 UP .0093 (Euro UP 93 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.21 DOWN  .432 (Yen UP 43 basis points/ 

Great Britain/USA 1.2911 UP 0.0010( POUND UP 10 basis points)

USA/Canada 1.3592 DOWN 0.0038(Canadian dollar UP  38 basis points AS OIL FELL TO $48.84

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 93 basis points to trade at 1.1072

The Yen ROSE to 113.21 for a GAIN of 43 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE BY 10  basis points, trading at 1.2911/

The Canadian dollar ROSE by 38 basis points to 1.3592,  WITH WTI OIL FALLING TO :  $48.84

The USA/Yuan closed at 6.8867/
the 10 yr Japanese bond yield closed at +.046% UP 2/10  IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 1  IN basis points from MONDAY at 2.324% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.988  DOWN 2 in basis points on the day /

Your closing USA dollar index, 98,28 DOWN 63  CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 18.98 POINTS OR .26%
German Dax :CLOSED DOWN 2.51 POINTS OR .02% 
Paris Cac  CLOSED DOWN  11.20 POINTS OR 0.21% 
Spain IBEX CLOSED  UP 24.60 POINTS OR 0.22%

Italian MIB: CLOSED  UP 83.44 POINTS/OR 0.38%

The Dow closed DOWN 2.19 OR 0.01%

NASDAQ WAS closed UP 20.20 POINTS OR 0.33%  4.00 PM EST
WTI Oil price;  48.84 at 1:00 pm; 

Brent Oil: 51.84 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  56.42 DOWN 6/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD RISES T0  +0.435%  FOR THE 10 YR BOND  4.PM EST EST

END

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

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

WTI CRUDE OIL PRICE 5:00 PM:$48.37

BRENT: $51.28

USA 10 YR BOND YIELD: 2.326%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.991%

EURO/USA DOLLAR CROSS:  1.1084 up .0104

USA/JAPANESE YEN:113.07  down 0.578

USA DOLLAR INDEX: 98.15  DOWN  76  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2916 : up .0015  OR 15 BASIS POINTS.

Canadian dollar: 1.3604  down .0026(CAN DOLLAR up 26 BASIS PTS)

German 10 yr bond yield at 5 pm: +.435%

END

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

TRADING IN GRAPH FORM FOR THE DAY

 

Dollar Slumps To 6-Month Lows As Stocks Do Something They Haven’t Done Since 1969

Anyone get the feeling we are at 45 seconds into this clip?

 

The Dollar is down 5 days in a row – today’s drop is the biggest since Trump commented on the “too-strong” dollar two months ago. This move has now erased all the gains since the election…

 

This is the longest period of calm for the S&P 500 since 1969…

 

And that is happening as US macro data crashes to one-year lows… This is the biggest crash in macro data since March 2015

 

It appears we’re gonna need more OPEC/Russia jawboning… (ahead of tonight’s API inventory data)

 

and that weighed down stocks today…

 

NASDAQ outperformed (new record highs), Small Caps were panic-bid into the close and The Dow clung to unch… Buy The F**king Shitty Data Dip?

Who could have seen that coming?

Wall Street admits Long Nasdaq is the most crowded trade… takes Nasdaq to new all time highs

Year-to-Date… presented with no comment…

 

Notably we dipped pretty hard in stocks after weak hoiusing data and McConnell comments sent the USD lower (USDJPY lower) but dip-buyers rejoiced..

 

 

VIX closed higher (marginally) as every effort was made to keep S&P above 2,400… The VIX range for the last 4 weeks has been 11.2 to 9.6 and S&P 500 range from 2380 to 2405.

 

The 17th day in a row that VIX closed below 11…NEVER HAPPENED BEFORE

 

Ford managed only modest losses despite announcing a 10% gutting of its workforce…

 

Treasury yields dropped – erasing yesterday’s moves…

 

With 30Y back below 3.00% again…

 

EUR strength was the big drag on the USD index…

 

With EURUSD now at its highest since Trump was elected…

 

USD weakness spurred another up-day for precious metals (up 5 days in a row)…

 

end

Early NY trading:

USA/Yen tumbles (and gold and silver gains)  stocks give up yesterday’s gains

(courtesy zero hedge)

Something Snapped – USDJPY Tanks As Stocks Give Up Yesterday’s Gains

Having reached new record highs at the open amid yet another panic-buying scramble, stocks have turned down dramatically this morning (seemingly around the Industrial Production data). VIX is up modestly but as the dollar index weakens, USDJPY has tumbled back below 113.00…

 

 

As stocks rapidly erase yesterday’s gains…

 

Some are arguing that McConnell’s comments may have been the catalyst… Perhaps signaling that none are working on tax reform?

 

The following story should put major doubt to you on Russian involvement with respect to the DNC leaks

(courtesy zeropointnow)

Murdered DNC Staffer Seth Rich Was In Contact With Wikileaks Says Former DC Homicide Detective

Submitted by ZeroPointNow

It’s been close to a year since Seth Rich, the 27 year old computer expert who worked for the DNC, was murdered – shot twice in the back without anything of value taken from him.  Rich was found alive and in shock before he bled out – his death ruled nothing more than a botched robbery.

Many believe Rich was a victim retaliation for being the source who provided Wikileaks with a trove of DNC emails. Rumors were fueled by the odd circumstances surrounding his death, the sudden retirement of D.C. Police Chief Cathy Lanier five weeks after the murder, and an email John Podesta sent to Hillary’s inner circle about making an example of a suspected leaker.

Podesta: “I’m definitely for making an example of a suspected leaker whether or not we have any real basis for it.” https://www.wikileaks.org/podesta-emails/emailid/36082#efmAGSAH- 

In the aftermath of the shooting, the Rich family hired a private investigator – Rich Wheeler, a former D.C. homicide detective who says evidence on Seth Rich’s laptop suggests he was in contact with WikiLeaks prior to his death. Of note, Wheeler does not have possession of the laptop in question – however he said specific information will be released on Tuesday (5/16).

Furthermore, Wheeler believes there has been a cover-up:

“The police department nor the FBI have been forthcoming,” said Wheeler. “They haven’t been cooperating at all. I believe that the answer to solving his death lies on that computer, which I believe is either at the police department or either at the FBI. I have been told both.”

 

When we asked Wheeler if his sources have told him there is information that links Rich to Wikileaks, he said, “Absolutely. Yeah. That’s confirmed.”

 

“I have a source inside the police department that has looked at me straight in the eye and said, ‘Rod, we were told to stand down on this case and I can’t share any information with you.’ Fox5

So a former D.C. homicide detective, hired by the Rich family, claims he was told directly by a source within D.C. police that they were told to stand down.

It also casts doubt on the Russian hacking narrative…

Furthermore, Wheeler said there’s more to come:

I don’t think it comes from the chief’s office, but I do believe there is a correlation between the mayor’s office and the DNC and that is the information that will come out [Tuesday].

Assange

Let’s not forget Julian Assange heavily implied that Seth Rich was a source, and Wikileaks offered a $130,000 reward for information leading to the murderer:

Tying together with Dr. Pie’s narrative

Right before the election Dr. Steve Pieczenik – ex deputy Sec. of State under Kissinger – told the world that the Wikileaks releases were part of a ‘counter-coup’ in which elements within the US Intelligence community decided Hillary Clinton and the globalist interests she represented couldn’t be allowed to reach the Oval Office. In response, US citizens – not Russia, gave the DNC / Podesta / Hillary emails to Wikileaks for a timed release schedule during the 2016 Presidential race.

.

How Wikileaks changed the course of history

When the Wikileaks were released, there was no table of contents or any other guide. Instead, these were raw – DKIM verified emails, which would take nothing short of a massive crowd-sourced effort to process and decipher. Within days however, dots were rapidly being connected across various message boards – mostly 4chan and Reddit’s “The_Donald”. New discoveries reached massive audiences through digital megaphones provided by social media giants Twitter and Facebook, and eventually made it into the mainstream.

The results of the online efforts were staggering, as the world witnessed revelations of “Pay for Play” by Clinton Foundation donors who funded ISIS, the DNC cheating against Bernie Sanders, MSM collusion with the Clinton campaign, Hillary’s dreams of open borders, “unaware and compliant” citizens, #SpiritCooking, Wet Works, and evidence of Aliens and Zero Point Energy – (either that or a completely insane Edgar Mitchell (15052)).

Back to detective Wheeler and Seth Rich

If Seth Rich was in fact one of Wikileaks’ sources, it’s far less of a stretch to conclude that he was murdered. Moreover, what’s left of the Russian hacking narrative is now – in my opinion, moot. More to come Tuesday, when this could get even more interesting.

 

 

END

 

Fox News releases a story that Seth Rich shared 44,053 emails with Wikileaks.  That is good reason for his murder and it will certainly take the heat away from “Russian involvement” in the USA election

(courtesy zerohedge

Murdered DNC Staffer Seth Rich Shared 44,053 Democrat Emails With WikiLeaks

For the past several months, Democrats have based their “Resist 45” movement on unsubstantiated assertions that the Trump campaign coordinated with Russian intelligence officials to undermine the 2016 Presidential Election thereby ‘stealing’ the White House from Hillary Clinton.  Day after day we’ve all suffered through one anonymously sourced, “shock” story after another from the New York Times and/or The Washington Post with new allegations of the ‘wrongdoing’.

But, new evidence surfacing in the Seth Rich murder investigation may just quash the “Russian hacking” conspiracy theory.  According to a new report from Fox News, it was former DNC staffer Seth Rich who supplied 44,000 DNC emails to WikiLeaks and not some random Russian cyber terrorist, as we’ve all been led to believe. 

According to Fox News, though admittedly via yet another anonymous FBI source, Rich made contact with WikiLeaks through Gavin MacFadyen, an American investigative reporter and director of WikiLeaks who was living in London at the time.  According to Fox News sources, federal law enforcement investigators found 44,053 emails and 17,761 attachments sent between DNC leaders from January 2015 to May 2016 that Rich shared with WikiLeaks before he was gunned down on July 10, 2016. 

The Democratic National Committee staffer who was gunned down on July 10 on a Washington, D.C., street just steps from his home had leaked thousands of internal emails to WikiLeaks, law enforcement sources told Fox News.

 

A federal investigator who reviewed an FBI forensic report detailing the contents of DNC staffer Seth Rich’s computer generated within 96 hours after his murder, said Rich made contact with WikiLeaks through Gavin MacFadyen, a now-deceased American investigative reporter, documentary filmmaker, and director of WikiLeaks who was living in London at the time.

 

“I have seen and read the emails between Seth Rich and Wikileaks,” the federal investigator told Fox News, confirming the MacFadyen connection. He said the emails are in possession of the FBI, while the stalled case is in the hands of the Washington Police Department.

Then, on July 22, just 12 days after Rich was killed, WikiLeaks published internal DNC emails that appeared to show top party officials conspiring to stop Bernie Sanders  from becoming the party’s presidential nominee. As we’ve noted before, the DNC’s efforts to block Sanders resulted in Debbie Wasserman Schultz resigning as DNC chairperson.

Rich

 

These new revelations seem to be consistent with the findings of Rod Wheeler, a former DC homicide detective and Fox News contributor, whose private investigation firm was hired by Rich’s family to probe the case.

“My investigation up to this point shows there was some degree of email exchange between Seth Rich and WikiLeaks,” Wheeler told Fox News. “I do believe that the answers to who murdered Seth Rich sits on his computer on a shelf at the DC police or FBI headquarters.”

 

“My investigation shows someone within the D.C. government, Democratic National Committee or Clinton team is blocking the murder investigation from going forward,” Wheeler told Fox News. “That is unfortunate. Seth Rich’s murder is unsolved as a result of that.”

 

The botched robbery theory, which police have pursued for nearly a year, isn’t panning out, Wheeler said. Two assailants caught on a grainy video tape from a camera posted outside a grocery mart, shot Rich twice in his back, but did not take his wallet, cell phone, keys, watch or necklace worth about $2,000.

As you’ll recall, Rich’s death has been shrouded in mystery from the
start as was shot from behind in the wee hours of the morning but was not robbed.

Shortly thereafter, Julian Assange implied that Seth Rich was, in fact, a source for WikiLeaks and offered a $130,000 reward for information leading to his killer.

 

Seems that not everyone within the FBI is on board with the “Russian hacking” narrative and are finally starting to come forward.

end

 

Yesterday as everybody knows, the Washington Post released a story that Trump has shared classified information with a Russian foreign Minister.  Later in the day General McMaster  and Sec of State Tillerson both refuted the story as nonsense because they were in the room and no classified information was released. It turns out that the information was on ISIS related matters and Trump had every right to tell the Russians to secure the USA against terrorism

(courtesy zero hedge0

Trump Responds To WaPo Story: “I Had Absolute Right To Share Facts With Russia”

In the aftermath of the WaPo story accusing Trump of improperly sharing highly confidential information with Russia’s foreign minister Peskov during their meeting one week ago (and one day after the firing of James Comey), Donald Trump took to Twitter to defend his Russia comments amid mounting criticism he may either have broken the law or acted inappropriately in divulging secret information.

In two tweets, Trump said “As President I wanted to share with Russia (at an openly scheduled W.H. meeting) which I have the absolute right to do, facts pertaining to terrorism and airline flight safety. Humanitarian reasons, plus I want Russia to greatly step up their fight against ISIS & terrorism.”

As President I wanted to share with Russia (at an openly scheduled W.H. meeting) which I have the absolute right to do, facts pertaining….

…to terrorism and airline flight safety. Humanitarian reasons, plus I want Russia to greatly step up their fight against ISIS & terrorism.

According to the WaPo and other media, all citing unnamed sources, Trump allegedly revealed “code-word information” related to threats from ISIS in Iraq and Syria that had been provided by a U.S. ally in the region, supposedly Israel. One official told The Post that the information was so sensitive it had not been provided to U.S. allies.

On Monday afternoon, National Security Advisor H.R. McMaster defended Trump’s disclosure saying “There is nothing that the President takes more seriously than the security of the American people” and added that “the story that came out tonight as reported is false.  The president the foreign minister reviewed a range of common threats to our two countries, including threats to civil aviation. At no time, at no time were intelligence sources or methods discussed.  And the president did not disclose any military operations that were not already publicly known. Two other senior officials who were present, including the Secretary of State, remembered the meeting the same way and have said so.  Their on-the-record accounts should outweigh those of anonymous sources.”

Russia also reacted this morning, with Kremlin spokesman Dmitry Peskov telling that “we don’t want anything to do with this nonsense,” in response to question on report that U.S. President Donald Trump disclosed sensitive classified information at White House meeting with Russian Foreign Minister Sergei Lavrov.

It is doubtful either of these denials will mute the rising chorus amid the press and Democrats demanding an official hearing, as well as full disclosure of what was said and whether Trump broke laws when speaking to the Russians.

Meanwhile, the infamously fired former acting AG Sally Yates raised the stakes on Tuesday morning when discussing the Trump story, she told CNN There’s certainly a criminal statute that was implicated by his conduct“…

 

Yates on CNN suggests Flynn broke law: “There’s certainly a criminal statute that was implicated by his conduct.”

… potentially laying the ground for future impeachment proceedings.

 

END

 

Mish Shedlock also comments that Trump had every right to to talk to the Russians on ISIS related matters

(courtesy Mish Shedlock/Mishtalk)

Classified Bombshell Hyperventilation

Submitted by Mike Shedlock via MishTalk.com,

Some people I would normally expect not to lose their minds following anti-Trump hype did lose their minds. Of course, the standard nutcases one might expect would lose their minds did so as well.

The result is has been a steady stream of nonsense all day regarding Trump’s alleged disclosure of highly classified information to Russia.

It took a collaboration of six (Jack Goldsmith, Susan Hennessey, Quinta Jurecic, Matthew Kahn, Benjamin Wittes, Elishe Julian) to come up with Bombshell: Initial Thoughts on the Washington Post’s Game-Changing Story.

The article starts out …

The Washington Post this afternoon published a stunning story reporting that President Trump disclosed highly-classified information to Russian Foreign Minister Sergei Lavrov and Ambassador Sergey Kislyak during their visit to the Oval Office last week.

After firing off rounds of innuendo from BuzzFeed, the New York Time, the Washington Post, and Reuters, the authors admit “the President did not ‘leak’ classified information in violation of law. He is allowed to do what he did.”

In a very long-winded synopsis, the article discusses six points.

  1. First, this is not a question of “leaking classified information” or breaking a criminal law.
  2. Second, this is not a garden variety breach, and outrage over it is not partisan hypocrisy about protecting classified information.
  3. Third, it is important to understand the nature of sources and methods information in order to fully understand the gravity of the breach.
  4. Fourth, it really matters why Trump disclosed this information to Russian visitors.
  5. Fifth, this may well be a violation of the President’s oath of office.
  6. Sixth, it matters hugely, at least from an atmospheric point of view, that the people in the room were Russian and one of them was Sergey Kislyak of all people.

Conjecture and Hype

Point number 1 is correct. So is point number 4.  The rest is conjecture and hype.

In regards to point number four, Trump may very well have decided it was in the US’s best interest to cooperate with Russia. If so, I would agree wholeheartedly.

In points 2-6 the authors spew out hype about what Top Secret means and whether the president violated his oath of office.

Top Secret

I like this tidbit: “In general, a Top Secret classification is applied to information the unauthorized disclosure of which could be expected to cause exceptionally grave damage to national security…”

Does anyone believe that? I don’t. Stuff is kept top secret for years to cover up lies, false flag events, support for corrupt regimes, illegal operations, and in general “cover my ass” kind of stuff that would be embarrassing but would constitute no real threat to national security.

Double Standard

The New York Times joins the BS parade with its take Trump Revealed Highly Classified Intelligence to Russia, in Break With Ally, Officials Say.

The revelation also opens Mr. Trump to criticism of a double standard. The president made Hillary Clinton’s mishandling of classified information through her private email server central to his campaign, leading chants of “lock her up” at rallies. But there was never any indication that Mrs. Clinton exposed sensitive information from an ally or gave it to an adversary.

There is no “double standard”. The president gets to decide what is classified and what isn’t.

Does the NY Times presume everyone gets to decide for themselves?

What Did Trump Disclose?

The answer is “information about an Islamic State plot” of some sort.

Good grief. After all the above hyperventilation, I have a simple question: Why shouldn’t we disclose to Russia pertinent facts regarding Islamic state plots?

Do we want to keep this information to ourselves as happened on numerous occasions in Europe? As happened more recently with the NSA developing and using loopholes in Microsoft code?

If the US has information on an alleged plot by ISIS we absolutely should disclose that fact to other governments unless we believe they may be involved or compromised.

Off the Deep End

Nancy Pelosi asks ‘What do the Russians have on Donald Trump?’

In another clickbait article Harvard law professor Alan Dershowitz hypes ‘This is the most serious charge ever made against a sitting president’

When you write bullsheet like that, expect to be mocked, not taken serious, at least by any rational person.

WTF? Is there anyone who seriously approves of this man? Or are Trump’s supporters just trolling America? https://twitter.com/washingtonpost/status/864224477693005826 

@RexNutting Let the impeachment proceedings begin.

Nutting was expected. I replied to Baum …

@RexNutting Let the impeachment proceedings begin.

@cabaum1 @RexNutting Are you serious or are the both of you drinking way too many tonight?

Impeachment?! Over What?

Hopefully, Baum was joking and I failed to catch it.

For the record, I disagree withy Trump on NAFTA, free trade in general, the Wall, his immigration order, and numerous other things.

However, talking with Russia makes sense, warmongering with Russia over Syria doesn’t.

Question of the Day

Would we be better off if we declassified everything but ongoing criminal and terrorist investigations?

Classified Bombshell Hyperventilation:Should we declassify everything but ongoing criminal/terrorist investigations? http://mishtalk.com/2017/05/16/classified-bombshell-hype/ 

Housing ‘Recovery’ Stumbles As Starts, Permits Plunge In April

After a big plunge in March (it’s the weather, stupid), Housing Starts were expected to rebound in April… but did not! Starts dropped 2.6% in April, after March’s 6.6% drop. Building Permits also tumbled 2.5% MoM – also multiple standard-deviations below expectations.

 

Single family permits dropped to 789K, the lowest since November (and multi-family is also at its lowest since Nov)

Starts drop for second month in a row to 1.172MM, lowest since November 2016…

 

Housing Starts are now lower than they were two years ago…

 

So this is probably transitory of course.

One out of eight retailers highlighted by Fitch as potential candidates to file for bankruptcy, actually filed last night:  Rue 21 and there many more on deck as bricks and mortar operations falter.

(courtesy zero hedge)

 

Clothing Retailer Rue21 Files For Bankruptcy, Many More On Deck

This time Fitch was right. One month ago the rating agency listed 8 retail names that were most likely to file for bankruptcy next, just over a month later 1 out of the 8 was down, when teen clothing retailer Rue21 filed a prepackaged bankruptcy on Monday night in Pennsylvania bankruptcy court.

In its bankruptcy petition, the company which retained Kirkland & Ellis as legal advisor, Rothschild as financial advisor, and Berkeley Research as its restructuring advisor, listed both assets and liabilities in the range of $1 to $10 billion.

The restructuring process, during which the company will operate as normal, will lead to company’s “transformation into a more focused and highly performing retailer” the company announced in a press release, and added that as part of its restructuring process, it had “entered into a Restructuring Support Agreement (RSA) with certain of its stakeholders that confirms the support of the Debtors’ key constituents for the Debtors’ restructuring process and contemplates, among other things, an emergence from chapter 11 proceedings in the fall of 2017 with a significantly deleveraged balance sheet.  In particular, lenders holding 96.8% of the Company’s secured term loan, bondholders representing 60.2% of the Company’s issued and outstanding unsecured notes, and the Company’s majority shareholder each executed the Restructuring Support Agreement.”

The Company has also reached agreements, subject to the approval of the Court, to obtain up to $125 million in ABL debtor-in-possession financing from its existing ABL lenders and up to $50 million in new money term loan debtor-in-possession financing from a subset of its existing term loan lenders.  This financing is intended to provide the Company with the liquidity necessary to support its ongoing business operations during the financial restructuring process

Melanie Cox, Chief Executive Officer of rue21, said “These actions are being undertaken with the goal of strengthening the Company’s balance sheet, achieving a more efficient cost structure, and concentrating resources on a tighter retail footprint in order to pave the best path forward for rue21. Even in a challenging environment, we are fortunate that rue21 has highly relevant brands, an enthusiastic and loyal customer base, and hundreds of highly performing stores. The agreement with our lenders represents their confidence in rue21’s future success even at a time of significant retail industry change. Looking ahead, I am confident that the outcome of this process will be a stronger and more sustainable rue21 for our customers, vendors and business partners.”

The company also noted that last month it began the process of closing approximately 400 underperforming stores in its 1,179 store fleet in order to streamline operations, however it warned that it “may evaluate additional store closings as it continues to manage its real estate lease portfolio.

Rue21’s bankruptcy filing lifts Fitch’s U.S. retail trailing 12-month institutional leveraged loan default rate to 1.7% from 0.9%. An impending bankruptcy from Gymboree would further lift the retail TTM to 2.7%, Fitch said. The rating agency expects a flood of future defaults, and forecasts the retail loan default rate at 9% on roughly $6 billion of defaults, though it concedes that “the fate of Sears Holdings and the resolution of J. Crew Group’s bond exchange could materially alter the projection.”

It also noted that the high yield retail default rate is also expected to finish 2017 at 9%, with more than $4 billion of likely defaults

Additional Fitch revised its retail concern list, which now lists eleven retailers on Fitch’s loans and/or bonds of concern lists, which compile issuers with a significant risk of default within the next 12 months, including:

  • Sears Holdings
  • Gymboree
  • Nine West Holdings
  • 99 Cents Only Stores
  • True Religion Apparel
  • Charlotte Russe
  • Charming Charlie
  • NYDJ Apparel
  • Vince.A
  • Claire’s Stores
  • Chinos Intermediate Holdings (J Crew Group)

Finally putting the 2017 announced store closings in context, here is a chart we showed one month ago. We expect many more names will soon be added to this running total.

Strange:  hard data industrial production surges by .96% in April.  However when you look to see which component was the big gainer it was automobiles and you know that these industry is stockpiling its inventories all over the place.

do not look too much into this data point

(courtesy zero hedge)

Industrial Production Surges Most Since Feb 2014 As Auto Assembly Spikes

Industrial Production rose 0.96% in April – the biggest MoM move since Feb 2014 – dramatically better than expected (and one of the first ‘hard’ data beats this month). Year-over-year, IP is up over 2% (the fastest growth since Jan 2015).

The increase in durables was spearheaded by a large advance for motor vehicles and parts, while the improvement for nondurables was led by gains for food, beverage, and tobacco products, for textile and product mills, for printing and support, and for chemicals.

What is most ironic is the 5.1% surge in Automotive production – we suspect that will not be sustained (given Ford’s massive layoffs). Ex-Autos IP rose just 0.6%.

So with “used car prices will drop for years” and amid near-record inventories,  a so-called ‘plateau’ in car sales, and soaring auto-loan losses, Automakers decided to increase production massively in April??

Oil & Gas Drilling also rose 9.0% in April.

Notably Industrial Production is still 1.4% below its peak in Nov 2014…

 

And still below its peak in 2007… but stocks aren’t…

 

It’s different this time.

END

Well that about does it for tonight

I will see you tomorrow night

h

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