May 23/Terror attack in Manchester England with 22 dead and many children/Gold and silver whacked to commence options expiry week/For 17 consecutive trading days, the amount of silver standing at the silver comex increased: today 23.26 million oz stand!/Commodity giant Noble in trouble as the stock is halted: all rating agencies move their debt to junk/Trouble in the Chinese bond market: the 7 yr bond higher in yield than the 10 yr and the 5 yr!!/uSA manufacturing slumps/Richmond Fed collapses/New housing starts collapse/

GOLD: $1255.95  down $5.65

Silver: $17.14  down 6  cent(s)

Closing access prices:

Gold $1252.00

silver: $17.08

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: $1271.12 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  1262.20

PREMIUM FIRST FIX:  $8.92

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SECOND SHANGHAI GOLD FIX: $1264.02

NY GOLD PRICE AT THE EXACT SAME TIME: 1262.35

Premium of Shanghai 2nd fix/NY:$1.67

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LONDON FIRST GOLD FIX:  5:30 am est  $1259.90

NY PRICING AT THE EXACT SAME TIME: $1260.40

LONDON SECOND GOLD FIX  10 AM: $1260.20

NY PRICING AT THE EXACT SAME TIME. $1261.20

For comex gold:

MAY/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH:  2 NOTICE(S) FOR 200  OZ. 

 TOTAL NOTICES SO FAR: 521 FOR 52100 OZ    (1.6205 TONNES)

For silver:

For silver: MAY

2 NOTICES FILED TODAY FOR 10,000  OZ/

Total number of notices filed so far this month: 4575 for 22,875,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

END

For 17 consecutive days, at the silver comex the amount standing for physical silver has risen on each and every day.  On First day notice 16.8 million oz were standing; tonight 23.260 million oz.  It looks to me that sovereign China wants its silver back as it looks like we have a determined player with deep pockets willing to take silver away from the comex.

I wrote the following to you last night:

 

“However, be careful tomorrow, as the gold/silver equity shares are quite subdued in the afternoon  which may mean that the bankers are sending a signal to raid again tomorrow”

 

I guess  I was right as the raid was orchestrated but only past 12 noon, once London was put to bed.   I will be watching this closely tonight.  If gold/silver rebounds during physical times zones, you can bet that our banker friends will have some serious problems ahead of themselves.

We have now entered options expiry week:

options  expiry on the comex Friday: May 26.  Options expiry for the OTC/LBMA gold/silver contracts: May 31/2017 at around 12 noon.

 

 

 

 

 

Let us have a look at the data for today

.

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In silver, the total open interest FELL  BY 1,678  contracts DOWN to 207,403 DESPITE THE HUGE RISE IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (UP  38 CENT(S).  IT IS OBVIOUS THAT WE ARE GETTING SOME BANKER SHORT COVERING IN CONJUNCTION WITH BANKER DELTA HEDGING. In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.037 BILLION TO BE EXACT or 148% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 2 NOTICE(S) FOR 10,000  OZ OF SILVER

In gold, the total comex gold ROSE BY A HUMONGOUS 11,506  contracts WITH THE RISE IN THE PRICE OF GOLD ($7.70 with YESTERDAY’S TRADING). The total gold OI stands at 448,777 contracts. THE BANKERS SUPPLIED THE NECESSARY SHORT PAPER IN TOTAL CONTRAST TO SILVER. 

we had 2 notice(s) filed upon for 200 oz of gold.

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

GLD:

We had a big change in tonnes of gold at the GLD: a withdrawal of 5.03 tonnes.  This would be a paper withdrawal as they do not have any physical.

which no doubt was used in the paper raid today.

Inventory rests tonight: 847.45 tonnes

.

SLV

Today: no changes in inventory/

THE SLV Inventory rests at: 343.815 million oz

Here is a strange fact for the CFTC to price discover:

when the record OI occurred on April 21, the price of silver was at $18.42  (OI record 234,000 contracts.  Interestingly the SLV inventory on April 21 was 325 million oz and today it is 343 million dollars and  the price of silver is $1.28 less.  And the comex is a price discovery mechanism????

end

.

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

1. Today, we had the open interest in silver FELL BY 1678 contracts DOWN TO 207,403, (AND STILL CLOSE TO  THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), DESPITE THE GOOD SIZED  RISE IN PRICE FOR SILVER WITH YESTERDAY’S TRADING  (38 CENTS). NO QUESTION THAT WE HAD  SHORT COVERING BY THE BANKERS ALONG WITH SOME BANKER DELTA HEDGING

(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 DOWN 13.73 POINTS OR .45%   / /Hang Sang CLOSED UP 11.81 POINTS OR 0.05% The Nikkei closed DOWN 65.05 POINTS OR 0.33%/Australia’s all ordinaires  CLOSED DOWN  0.15%/Chinese yuan (ONSHORE) closed DOWN at 6.8902/Oil DOWN to 50.85 dollars per barrel for WTI and 53.66 for Brent. Stocks in Europe OPENED IN THE GREEN    ..Offshore yuan trades  6.8796 yuan to the dollar vs 6.8902 for onshore yuan. NOW  THE OFFSHORE IS A LITTLE WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A LITTLE WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS  HAPPY THIS MORNING

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA/SOUTH KOREA

South Korea fires warning shots on an unidentified object flying from the North:

( zero hedge)

b) REPORT ON JAPAN

c) REPORT ON CHINA

i)NOBLE GROUP HALTED

Noble Group is Asia’s largest commodity and derivative player  (Singapore based but trades on Hong Kong Market).  They no doubt have massive short position and derivative losses in our two precious metals gold and silver.  A default by Noble will create havoc and massive short squeeze.

( zero hedge)

ii)Chaos in China’s bond market with the 7 yr bond yield higher than both the 5 yr and the 10 yr.  This is coupled with a curve inversion of the 3 to 5 yr.  The 3 to 10 yield is the most negative ever:

( zero hedge)

4. EUROPEAN AFFAIRS

i)ENGLAND/MANCHESTER

Another terrorist attack..this time in Manchester England.  This was a suicide bomber  who detonated his bomb outside the concert hall.  22 dead and 59 injured

( zero hedge)

( zerohedge)

Germany and the IMF clash again on the Greek debt relief bill.  Germany cannot give relief as Deutsche bank will blow up if they have to take a hit on that debt relief!

( zero hedge)

IV)SPAIN
Sanchez is back as leader of the socialist party PSOE and this will cause massive headaches for the minority government of Rajoy who probably will cause a snap election;

( Mish Shedlock/Mishtalk)

v)UK/EU

Strange:  Cable  (short form for British Pound/USA dollar cross) rises despite Germany warning Britain that Brexit is a mistake.

No it is not.  Britain will prevail once she gets out of this horrible union

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Islamic State claims responsibility for the Manchester bombing:

( zero hedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

WTI oil drops on higher than expected inventory levels
( zero hedge)

8. EMERGING MARKET

They are one step away from Temer as the Brazilian police arrest special advisor to the President,Tadeu Filippelli
(courtesy zero hedge)

9.   PHYSICAL MARKETS

i)Craig Hemke believes (as do I) that the gold and silver future short positions have been washed out and both of these metals are ready for substantial gains

( Craig Hemke/ TFMetals)

ii)The following article explains why China will not be the reserve currency as they really desire an international currency of strength

( Epoch Times/GATA)

iii)James Turk talks about another failure by our friendly bankers in their control over the prices of gold and silver.  He expects a short squeeze and he gives us clues as to what to expect especially on the issuance of those phony EFP’s

a must read..

( James Turk/GATA)

iv)Part I

a must read..

Manly uncovers documents suggesting that central bankers wanted to suppress gold to keep oil flowing.  A lower price of gold meant a lower “inflation gauge”.  The deputy governor of the Bank of England in the late 60’s wanted gold revalued to 700 dollars per oz due to the high number of USA liabilities abroad.  Today that same valuation would put gold into the high thousands..

( Ronan Manly/GATA)

v)SGE reports  revised gold withdrawals (equals demand) lower

( Lawrie Williams/Sharp’s Pixley)

10. USA stories

i)The Comey hearing is delayed so that Comey can speak to new FBI director Mueller:

(to get his story straight??)

( zero hedge)

ii)Washington Post releases anonymously sourced information that Trump asked for help in the pushing back against the Russian probe
( Washington post)

iii)This is audacious: Trump plans to cut a massive 3.6 trillion USA in entitlements over 10 yrs including selling half of the USA strategic oil reserve. However it will be dead on arrival

( zero hedge)

iv)Washington Post releases anonymously sourced information that Trump asked for help in the pushing back against the Russian probe
( Washington post)

v)Services rebound but the all important national USA manufacturing slumps to 8 month lows. Costs rise( zero hedge)

vi)Then the Richmond Fed mfg index collapses.  This is a soft data entry.

( zero hedge)

vii) A lie: his historic budget will entail a taxpayer bailout in the hundred of billions:

( zerohedge)

viii)Another indicator that things are not doing well.; new home sales totally collapse in April.and Janet is going to raise rates??

(courtesy zero hedge)

 

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 11,506 CONTRACTS UP to an OI level of 448,777 DESPITE THE RISE IN THE PRICE OF GOLD ( $7.70 with YESTERDAY’S trading). THE BANKERS SUPPLIED THE NECESSARY SHORT PAPER AS LONGS STAMPEDED  INTO THE GOLD ARENA.  ON FRIDAY WE WITNESSED FROM THE COT REPORT CONSIDERABLE DELTA HEDGING TRYING TO OFFSET THE HUGE SHORT POSITION BY THE BANKERS.   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 GAIN OF 2 contract(s) RISING TO  25. We had 0  notices filed yesterday so we  gained 2 GOLD CONTRACTS OR AN ADDITIONAL 200 gold ounce will stand for delivery and no contracts were cash settled through the EFP route where they receive a cash bonus plus a future gold contract.

The next big active month is June/2017 and here the OI LOST 7041 contracts DOWN to 177,422.  The non active July contract LOST another 4 contracts to stand at 1041 contracts. The next big active month is August and here the OI gained 17,519 contracts up to 169,383.

We are catching up to last year’s huge open interest as on May 22 2016 we had at this exact time:    232,241 contracts of JUNE 2016 CONTRACTS OPEN.( compared to JUNE 2017: 177,422)

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

We had 2 notice(s) filed upon today for 200 oz

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And now for the wild silver comex results.  Total silver OI FELL BY 1678 contracts FROM 209,081 DOWN TO 207,403 DESPITE YESTERDAY’S 38 CENT PRICE GAIN.  IT SURE LOOKS LIKE OUR BANKERS HAVE CAPITULATED AGAIN AS THEY TRYING TO COVER THEIR SHORTS IN EARNEST. WE ALSO HAVE EVIDENCE OF SOME DELTA HEDGING BY THE BANKERS TRYING TO OFFSET THAT HUGE SHORT POSITION THEY HAVE BEEN BURGEONING OVER THE YEARS.
Below is a little background on the EFP contracts  initiated by our bankers:
(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 24 contracts FALLING TO 79 contracts. MY GOODNESS!! IT HAPPENED AGAIN!! We had 26 notices filed on yesterday , so we gained another 2 notices or an additional 10,000 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 17 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 LOST 42 contracts to stand at 681. The next big active month will be July and here the OI  LOST 1560 contracts DOWN to 151,088.

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 2 notice(s) filed for 10,000 oz for the MAY 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 129,899 contracts which is poor

Yesterday’s confirmed volume was 257,516 contracts  which is  good.

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for MAY
 May 23/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
nil  oz
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
nil oz
No of oz served (contracts) today
 
2 notice(s)
200 OZ
No of oz to be served (notices)
25 contracts
2500 oz
Total monthly oz gold served (contracts) so far this month
521 notices
52100 oz
1.6205 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   216,208.2 oz
Today we HAD  0 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 0 customer withdrawal(s)
total customer withdrawal: nil 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 2 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 (521) x 100 oz or 52,100 oz, to which we add the difference between the open interest for the front month of MAY (25 contracts) minus the number of notices served upon today (2) x 100 oz per contract equals 54,600 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 (521) x 100 oz  or ounces + {(25)OI for the front month  minus the number of  notices served upon today (2) x 100 oz which equals 54,600 oz standing in this non active delivery month of MAY  (1.698 tonnes).  We gained 2 contracts or an additional 200 oz will stand for delivery and 0 contracts were cash settled through the EFP route 
 
 
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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/  1.6980 TONNES
total for the 17 months;  249.618 tonnes
average 14.683 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) = 8,760,909.982 or 272.500 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 272.50 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 23. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
748,481.886 oz
Delaware
Brinks
CNT
HSBC
Scotia
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 nil  oz
No of oz served today (contracts)
 2 CONTRACT(S)
(10,000 OZ)
No of oz to be served (notices)
77 contracts
( 385,000 oz)
Total monthly oz silver served (contracts) 4575 contracts (22,875,000 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  6,693,692.9 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 1 customer withdrawal(s):
i) Out of CNT: 39,940.87 oz
TOTAL CUSTOMER WITHDRAWALS: 39,940.87  oz
 We had 0 Customer deposits:
***deposits into JPMorgan have now stopped 
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits  nil oz
 
 we had 1 adjustment(s)
i) Out of CNT:  632,074.943 oz was removed from the dealer account of CNT to the customer side
The total number of notices filed today for the MAY. contract month is represented by 2 contract(s) for 10,000 oz. To calculate the number of silver ounces that will stand for delivery in MAY., we take the total number of notices filed for the month so far at 4575 x 5,000 oz  = 22,875,000 oz to which we add the difference between the open interest for the front month of MAY (79) and the number of notices served upon today (2) x 5000 oz equals the number of ounces standing

 

.
 
Thus the initial standings for silver for the MAY contract month:  4575(notices served so far)x 5000 oz  + OI for front month of APRIL.(79 ) -number of notices served upon today (2)x 5000 oz  equals  23,260,000 oz  of silver standing for the MAY contract month.
We actually gained another 2 contracts or an additional 10,000 oz will stand for delivery and again nobody wished to accept an EFP contract for a fiat bonus. It probably means that the entire 23.260 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 17 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 and next month they may be after physical gold. 
 
 
Volumes: for silver comex
 
Today the estimated volume was 43,811 which is very good
Yesterday’s  confirmed volume was 84,329 contracts which is simply out of this world
TODAY’S ESTIMATED VOLUME OF 84,329 CONTRACTS EQUATES TO 421 MILLION OZ OF SILVER OR 60% 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:  32.535 million (close to record low inventory  
Total number of dealer and customer silver:   200.625 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
 
end

NPV for Sprott and Central Fund of Canada

 

1. Central Fund of Canada: traded at Negative 7.1 percent to NAV usa funds and Negative 6.9% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.9%
Percentage of fund in silver:38.0%
cash .+0.1%( May 23/2017) 
 
2. Sprott silver fund (PSLV): Premium FALLS TO   -.13%!!!! NAV (May 23/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES to -0.54% to NAV  (May 23/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.13% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.54%/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 23/a paper withdrawal of 5.03 tonnes of gold from the GLD/Inventory rests at 847.45 tonnes

May 22/A DEPOSIT OF 1.77 TONNES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 852.48 TONNES

May 19/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 850.71 TONNES

May 18/a withdrawal of 1.18 tonnes of gold from the GLD/Inventory rests at 850.71

May 17/no change in the GLD inventory/inventory rests at 851.89 tonnes

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
May 23 /2017/ Inventory rests tonight at 852.48 tonnes
*IN LAST 157 TRADING DAYS: 100.68 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 100 TRADING DAYS: A NET  26.75 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET  52.09 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

May 23/no change in silver inventory at the SLV/inventory rests at 343.815 million oz

May 19/no change in silver inventory at the SLV/Inventory rests at 343.815 million oz.

may 18/2017/another big deposit of 1.42 million oz added to the SLV/inventory rests at 343.815 million oz.

may 17/no change in silver inventory at the SLV/Inventory rests at 342.395 million oz/

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

May 23.2017: Inventory 343.395  million oz
 end

Major gold/silver trading/commentaries for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Manchester Attack Sees Asian Stocks Fall, Gold Firm

The appalling attack in Manchester overnight in which over 22 people have been killed has led to a slight uptick in risk aversion in markets.

Investors are cautious after police said they were treating a bombing at a concert in the Manchester Arena as a “terrorist incident”.

Gold in GBP (24 hours)

Asian stocks  gave up gains after the attacks and European indices had a subdued start.

Gold rose in the aftermath of the attacks to three week highs prior to giving up some of the gains by mid morning trading.

Sterling fell marginally and gold in sterling terms rose as high as £973.55 prior to consolidating near £970. Sterling was down 0.2 percent against the dollar to $1.2978 after falling 0.3 percent on Monday.

If the blast is confirmed as a terrorist incident, it would be the deadliest attack in Britain by militants since four British Muslims killed 52 people in suicide bombings on London’s transport system in July 2005.


The attack has come just two-and-a-half weeks before an election that British Prime Minister Theresa May is expected to win easily.

Polls showing that the contest was tightening had added to sterling’s woes recently. A terrorist attack will likely benefit the Tory Party and Theresa May as they are perceived to be tougher on terrorism than the Labour Party.

Terrorist events have not impacted markets globally in recent months and years. However, the concern is that with consumers indebted and consumer sentiment vulnerable, a spate of terrorist attacks or worse a terrorist ‘spectacular’ akin to ‘September 11’ could badly impact already fragile economies and increasingly frothy financial markets.

The UK’s counter-terrorism chief has said that terrorists want to inflict an “enormous and spectacular” terrorist atrocity on the UK.

The uncertain political climate in the UK and the United States is  weighing on the dollar and sterling. Concerns over U.S. political turmoil and the complete mess that is the current U.S. political situation will lead to continuing demand for safe haven gold.

This has led to gold’s recent gains and should contribute to gold eking out further gains in the coming weeks.

News and Commentary

Gold edges higher in Asia after deadly Manchester concert venue blast (Investing.com)

Gold prices tally highest settlement in 3 weeks (MarketWatch.com)

Gold prices steady despite Manchester blast, US political woes support (Reuters.com)

Trump Concern, Manchester Blast Spur Risk-Off Tone (Bloomberg.co)

Trump trouble and euro surge extend gold’s gains (Reuters.com)

Market crash that makes 2008 look like a picnic – Paul Interviews Taleb (YouTube.com)

Greek Authorities To Launch Mass Confiscation Of Safe Deposit Boxes In Tax-Evasion Crackdown (zeroHedge.com)

Dungeons of gold: Sex, booze and braais in underground mine cities (TimesLive.co.za)

Gold and silver futures shorts seem washed out (TFMetalsReport.com)

Gold’s golden cross: Metal just formed a chart pattern that can signal a breakout (CNBC.com)

 

 

END

 

Craig Hemke believes (as do I) that the gold and silver future short positions have been washed out and both of these metals are ready for substantial gains

(courtesy Craig Hemke/ TFMetals)

 

TF Metals Report: Gold and silver futures shorts seem washed out

Section:

9:28a ET Monday, May 22, 2017

Dear Friend of GATA and Gold:

According to the TF Metals Report, the latest “wash-rinse-repeat” cycle in Comex gold and silver futures contracts, in which the big investment banks with access to infinite money from central banks fleece speculators and hedge funds, seems just about completed. That makes the next move likely to be up, the TF Metals Report says. Its analysis is headlined “Some Perspective on the Latest Commitment of Traders Report” and it’s posted here:

https://www.tfmetalsreport.com/blog/8348/some-perspective-latest-commitm…

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

END

The following article explains why China will not be the reserve currency as they really desire an international currency of strength

(courtesy Epoch Times/GATA)

Why the Chinese yuan won’t be the world’s reserve currency

Section:

By Valentin Schmid
The Epoch Times, New York
Wednesday, May 17, 2017

Whenever someone gets too big and too important, the other players who can’t compete by themselves call for a challenger. This is true in sports, business, and even for currencies.

Because the dollar is so big and important, smaller countries were happy when the euro was launched to provide a counterbalance if not to challenge the dollar’s position outright.

The euro ultimately provided that counterbalance, but never managed to dethrone the dollar as the world’s foremost reserve currency. The euro is used in 30 percent of all global payments, according to payment provider SWIFT; the dollar is still No. 1 at 40 percent.

But what about the Chinese currency, the yuan, the one that investment bank HSBC predicted would become the third-largest global trade currency by 2015—is it the ultimate challenger to the dollar’s top status?

Not so much. …

… For the remainder of the report:

http://www.theepochtimes.com/n3/2250139-why-the-chinese-yuan-wont-be-the…

 

 

END

James Turk talks about another failure by our friendly bankers in their control over the prices of gold and silver.  He expects a short squeeze and he gives us clues as to what to expect especially on the issuance of those phony EFP’s

a must read..

(courtesy James Turk/GATA)

 

Central banks face another failure like the London Gold Pool, Turk tells KWN

Section:

8:59p ET Monday, May 22, 2017

Dear Friend of GATA and Gold:

Gold’s surprising resilience in recent days is another indication of a short squeeze, GoldMoney founder and GATA consultant James Turk tells King World News today. He adds that central banks today are shorter in gold than they were when they had to close the London Gold Pool amid overwhelming demand in 1968. Eventually, Turk says, the central banks will have to concede defeat as they did back then. His interview with KWN is posted here:

http://kingworldnews.com/turk-mother-of-all-short-squeezes-about-to-send…

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

 

 

END

Part I

a must read..

Manly uncovers documents suggesting that central bankers wanted to suppress gold to keep oil flowing.  A lower price of gold meant a lower “inflation gauge”.  The deputy governor of the Bank of England in the late 60’s wanted gold revalued to 700 dollars per oz due to the high number of USA liabilities abroad.  Today that same valuation would put gold into the high thousands..

(courtesy Ronan Manly)

 

Ronan Manly: Central bankers wanted gold suppressed to keep oil flowing

Section:

7:09a ET Tuesday, May 23, 2017

Dear Friend of GATA and Gold:

Western central banks conspired about controlling the gold price in the early 1980s because they realized that gold was an indicator of inflation and its rise helped push commodity prices up, according to the second set of archival documents published today by gold researcher Ronan Manly.

But, the documents show, the central bankers also sought to facilitate the flow of low-priced gold to oil-producing countries in exchange for their continuing to supply oil to the West at low prices

The latter objective, according to one central banker, was to “enable OPEC to acquire some modicum of the chief inflation-proof asset without an excessive rise in the price” and thereby “to prevent gold making its own particular contribution to inflation while the developed world was attempting to bring inflation down and so reduce gold’s own peculiar attraction.”

Manly reports that the deputy governor of the Bank of England was skeptical of trying to duplicate the effort of the London Gold Pool of the 1960s and instead believed that the U.S. government should raise official convertibility of the dollar to $700 per ounce. Manly explains: “This was based on a calculation of U.S. overseas dollar liabilities tallied in a separate document. A similar calculation today would put the U.S. dollar gold price in the many thousands.”

Manly also cites evidence, already called to your attention by GATA, that the Bank for International Settlements was actually running a second gold pool again by 1983 precisely for the purpose of appeasing OPEC — just what the famous “Another” postings at USAGold.com in 1997 and 1998 maintained:

http://www.usagold.com/goldtrail/archives/another1.html

This conspiring against gold by central bankers is especially significant because it occurred long after they had officially demonetized gold and had no formal reason in policy to be intervening in the gold market. That is, the conspiring took place in the same circumstances that prevail today.

GATA hopes that Manly’s research, which it has underwritten, will encourage participants in the monetary metals industry to face reality — to recognize that the monetary metals markets do not operate normally and that there is enormous proof that, as market analyst and geopolitical strategist James Rickards said on CNBC many years ago: “When you own gold you’re fighting every central bank in the world.”

Except, of course, the monetary metals industry and most of its analysts aren’t fighting at all but playing dead.

Part 2 of Manly’s report is headlined “New Gold Pool at the BIS Basle: Part 2 — Pool vs. Gold for Oil” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/ronan-manly/new-gold-pool-at-the-bis-b…

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

END

SGE reports  revised gold withdrawals (equals demand) lower

(courtesy Lawrie Williams/Sharp’s Pixley)

LAWRIE WILLIAMS: China’s SGE revises gold withdrawals lowerWe had previously noted some anomalies in the reported figures for China’s gold withdrawals from the Shanghai Gold Exchange (SGE) and are pleased to note that a recheck has shown that the monthly and cumulative figures as announced by the SGE now tally. Earlier the announced cumulative total appeared to have been substantially adrift from that suggested by the monyh-by- month reported figures.The principal change is a sharp downwards revision of the gold withdrawal figures for February – a month where figures tend to be somewhat anomalous anyway because of the Chinese New Year holiday. February figures have been revised downwards sharply from 179.24 tonnes to 148.24 tonnes, while the initially reported April figure of 171.17 tonnes has been adjusted downwards to 165.78 tonnes. This brings the cumulative total for the year to date to 690.68 tonnes –only marginally higher than at the same time a year ago, and well down on the record 2015 figure.Table: Revised SGE Monthly Gold Withdrawals (Tonnes)

Month 2017 2016 2015 % change 2016-2017 % change 2015-2017
January 184.41 225.08 255.42 – 18.1% -27.8%
February* 148.24 107.60 156.36 +37.8% -5.2%
March 192.25 183.24 213.35 +4.9% -9.9%
April 165.78 171.40 195.45 -3.3% -15.2%
May 147.28 162.15
June 138.51 195.67
July 117.58 285.50
August 144.44 265.27
September 170.90 259.98
October 153.25 176.29
November 214.72 202.71
December 196.37 228.21
Year to date 690.68 687.02 820.58 +0.5% – 15.8%
Full Year 1,970.37 2,596.37

Source: Shanghai Gold Exchange, Lawrieongold.com

The previous cumulative total had been substantially in excess of the revised figure which led us to speculate that demand could be higher than the stated monthly totals would have suggested, but in the event it appears that couple of the monthly totals – notably February – had been strongly overstated and we are now having to revise our own forecasts downwards. Given that the year to date cumulative figure is close to that recorded at the same time last year we would tentatively suggest that the overall figure for the year may well be similar to that for 2016 at less than 2,000 tonnes. Still substantial, but well below the 2015 annual total which was an all-time high close to 2,600 tonnes.

While some analysts dispute this we consider SGE gold withdrawals a proxy for total Chinese gold demand. If one adds together known gold imports (from countries which report their gold flows into mainland China – notably Hong Kong, Switzerland, the UK, the USA and Australia) plus a small estimate of non-reported imports from other gold producing countries, plus China’s own gold production, plus an estimated scrap supply – and the overall total comes out pretty close to the total annual SGE withdrawals figure. With Indian demand this year having picked up strongly too, the massive gold flows from West to East still come close to total global production of new-mined gold.

-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 LITTLE WEAKER  6.8902(DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES A LITTLE WEAKER TO ONSHORE AT   6.8796/ Shanghai bourse CLOSED DOWN 13.73 POINTS OR .45%   / HANG SANG CLOSED UP 11.81 POINTS OR 0.05% 

2. Nikkei closed DOWN 65.05  POINTS OR 0.33%   /USA: YEN RISES TO 111.22

3. Europe stocks OPENED IN THE GREEN        ( /USA dollar index FALLS TO  96.98/Euro DOWN to 1.1232

3b Japan 10 year bond yield: FALLS TO   +.049%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.22/ 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::  50.85 and Brent: 53.69

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.409%/Italian 10 yr bond yield DOWN  to 2.116%    

3j Greek 10 year bond yield RISES to  : 5.80% ???  

3k Gold at $1259.40/silver $17.12 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 20/100 in  roubles/dollar) 56.44-

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

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 111.22 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  0.9718 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0918 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +0.409%

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 2.2480% early this morning. Thirty year rate  at 2.908% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

S&P Futs Near All Time High On Strong Euro Data; Oil Drops On Trump’s SPR Sale Plans

 

S&P futures rose alongside European stocks as Asian shares posted modest declines. The euro set a new six-month high and European bourses rose as PMI data from Germany and France signaled that the ECB will have to tighten soon as Europe’s recovery remains on track, with the German Ifo business confidence printing at the highest level on record, and hinting at a GDP print in the 5% range. Oil declined after the Trump budget proposal suggested selling half the crude held in the US strategic petroleum reserve.

Strong economic survey data across the Eurozone supported EU bourses, despite a cautious start to trade after last night’s deadly terror attack in the UK. Alongside strong headline numbers, one of the most eye-catching details in the data was the biggest manufacturing sector job growth reading in the survey’s 20-year-history and overall employment gains were the second best in a decade.

“It’s a very good result and it’s broad based. We’ve got a good pace of growth here. The fact we have maintained this high level in May is great news for second quarter GDP,” said Chris Williamson, chief business economist at IHS Markit.”

Just like in the US, tech companies helped propell the Stoxx Europe 600 Index higher after Nokia Oyj settled a litigation with Apple. The U.K.’s FTSE 100 Index rose a third day, the pound pared declines and gilts were steady after the Manchester bombing. The dollar declined after the Washington Post reported Donald Trump asked intelligence chiefs to publicly deny collusion between his campaign and Russia, a potentially impeachable offense. The U.S. president in March asked Director of National Intelligence Daniel Coats and NSA Director Michael Rogers to publicly deny existence of any collusion between his campaign and the Russian government, the Washington Post reported, citing unidentified current and former officials.

Oil dropped, halting a four-day rising streak that took the price of crude above $51 a barrel.

It wasn’t just the German IFO surge: a euro-area Purchasing Managers’ Index showed manufacturing in the bloc expanded at the fastest pace in more than six years, bolstering the case for an ECB rate hike and further capital flows out of the US and into Europe as political wrangling in Washington rumbles on, diverting attention from President Trump’s spending and tax plans.

“Europe’s growth numbers aren’t knocking the skin off the ball, but they are less volatile and it’s doing relatively well compared to the U.S., U.K. and Japan,” said Bill Blain, head of capital markets at London-based Mint Partners. “More than a few global investors have lost faith in the U.S. recovery and Trump jump.”

There was some bad news: signs that euro zone authorities and the International Monetary Fund remain some way apart on Greece’s debt problems combined with the strong data to nag at bond markets. Greece’s short-dated government bond yields rose sharply as the IMF’s chief negotiator stuck to its stance that there needs to be more realism on what Athens can deliver. The prospect of the ECB scaling down its multi trillion euro stimulus program meanwhile nudged up yields on German Bunds DE10YT=TWEB and other higher-rated government debt.

“The risk-off environment is already erased and we are back to the levels we saw yesterday on the back of the very bright economic outlook,” said DZ Bank analyst Rene Abrecht.

The Stoxx Europe 600 Index gained 0.2 percent in early trading. The U.K.’s FTSE 100 Index added 0.1 percent. Futures on the S&P 500 climbed 0.1 percent after the underlying gauge rose 0.5 percent on Monday. The selloff in Brazilian assets resumed on Monday. The NEXT Funds Ibovespa Linked Exchange Traded Fund, an equity ETF that tracks Brazil’s benchmark index, slumped 3.9 percent in Tokyo trading Tuesday.

Asian trading had seen a modest pull back in risk appetite with MSCI’s broadest index of Asia-Pacific shares not including Japan dropping back from near two-year highs. Tokyo’s Nikkei closed down 0.3 percent as Japanese manufacturing activity expanded at the slowest pace in six months in May, while trading in China was choppy on concerns over a regulatory crackdown on risky lending practices. Japan’s Topix dropped 0.2 percent after swinging between gains and losses. South Korea’s Kospi rose 0.3 percent. Hong Kong’s Hang Seng fell 0.1 percent. The Shanghai Composite Index lost 0.5 percent.

The dollar remained in the doldrums too. It dipped to a 6-1/2-month low against a basket of other major currencies as low 10-year U.S. Treasury yields continued to underscore fading expectations for fiscal stimulus from the Trump administration.

Of note, today the White House will present Trump’s first full budget plan to lawmakers on Tuesday. Its proposals include a $3.6 trillion cut in government spending over 10 years, balancing the budget by the end of the decade. Congress holds the federal purse strings and often ignores presidential budgets, which are proposals and may not take effect in its current form. But the plan, which advocated selling half of strategic U.S. oil reserves, weighed on crude futuresaccording to Reuters, offsetting optimism over expectations that other major oil producers would agree to extend supply curbs this week.

Brent retreated 0.8 percent to$53.44 a barrel. U.S. crude futures gave up all their earlier gains to edge lower to $50.71, after hitting their highest level in more than a month earlier in the session. The weaker dollar, meanwhile, lifted gold slightly. Spot gold climbed 0.1 percent to $1,261.56 an ounce in its third straight session of gains.

This afternoon sees US new home sales and the much-ignored Markit manufacturing PMI. Neither is expected to be much-changed from last month. The big event for the US market is the FOMC Minutes tomorrow. “The big question for markets is how fast investors get back to the business of hunting carry” according to SocGen’s Kit Juckes. “I am watching USD/BRL which has stabilised after last week’s spike, and if this starts to edge down again while US equities move towards new highs, that would increase the likelihood of a June Fed rate hike rate, while also supporting all the higher-yielding currencies. That does, in G10FX, lead to NZD/JPY.”

Bulletin Headline Summary from RanSquawk

  • Strong PMI and IFO surveys across the Eurozone have supported EU bourses despite a cautious start to trade following last night terror attack in the UK
  • WTI and Brent crude futures enter the North American crossover in negative territory as concerns continue to mount regarding the factions within the cartel and whether all players are on board with output curbs
  • Looking ahead, highlights include Fed’s Kashkari, Harker and ECB’s Coeure

Global Market Snapshot

  • S&P 500 futures up 0.2% to 2,396.75
  • STOXX Europe 600 up 0.3% to 392.14
  • MXAP down 0.2% to 151.94
  • MXAPJ down 0.1% to 496.39
  • Nikkei down 0.3% to 19,613.28
  • Topix down 0.2% to 1,565.22
  • Hang Seng Index up 0.05% to 25,403.15
  • Shanghai Composite down 0.5% to 3,061.95
  • Sensex down 0.3% to 30,494.69
  • Australia S&P/ASX 200 down 0.2% to 5,760.19
  • Kospi up 0.3% to 2,311.74
  • German 10Y yield rose 1.6 bps to 0.413%
  • Euro up 0.2% to 1.1259 per US$
  • Brent Futures down 0.7% to $53.47/bbl
  • Italian 10Y yield unchanged at 1.845%
  • Spanish 10Y yield rose 0.7 bps to 1.63%
  • Brent Futures down 0.7% to $53.47/bbl
  • Gold spot down little changed at $1,260.08
  • U.S. Dollar Index down 0.1% to 96.84

Top Headline News

  • Britain is reeling from last night’s terror attack that killed 22 people at a concert by U.S. pop star Ariana Grande in the northern city of Manchester
  • OPEC and its allies were poised to continue their production cuts for another nine months after Iraq backed an extension, removing one of the last remaining obstacles to an agreement
  • President Donald Trump would dramatically reduce the U.S. government’s role in society with $3.6 trillion in spending cuts over the next 10 years in a budget plan that shrinks the safety net for the poor, recent college graduates and farmers
  • Noble Group Ltd.’s crisis deepened after S&P Global Ratings flagged a risk of default for the commodity trader within a year, triggering a rout in the company’s shares before they were suspended in Singapore ahead of a company statement
  • Nokia Oyj, the latest technology company to do battle with Apple Inc. over patents, secured a licensing agreement that is likely to boost its revenue in an underdog victory that sent the Finnish company’s shares soaring
  • Details of the closed-door discussion that Federal Reserve officials held during their most recent policy gathering are expected to keep the odds of a June interest-rate increase high

Asia equity markets traded with a cautious tone amid terror fears following the explosion in Manchester, UK where 19 people were confirmed dead and over 50 others injured, which police are treating as a terrorist attack. This dampened the risk tone in ASX 200 (-0.3%) and Nikkei 225 (-0.3%), although markets in Australia attempted to recover as gains in commodities-related sectors provided support. Hang Seng (+0.1%) and Shanghai Comp. (-0.5%) were mixed with downside stemmed after the PBoC conducted a firm liquidity injection of CNY 140bIn. Finally, 10yr JGBs were relatively flat with only mild upside observed despite the cautious risk tone observed in equities, while the enhanced liquidity auction also saw a muted reaction and failed to drive any significant demand.

Top Asian News

  • China Boosts Zinc Imports to 13-Month High on Local Shortage
  • Noble Group ‘Fighting for Its Life’ as S&P Sees Default Risk
  • Sun Pharma Weighs on Indian Drugmakers as U.S. Competition Bites
  • Fortescue CEO Says Iron-Ore Price May Need to Fall More: FT
  • Tongda Didn’t Get Oppo’s R11 Model Order, Tongda CFO Says
  • China Spins a Worldwide Web of Food From Mozambique to Missouri

In European markets, Strong PMI and IFO surveys across the Eurozone have supported EU bourses this morning to trade risk-on, following stellar readings from France and Germany in particular, where the Mfg. figure rose to 59.4, ahead of the exp. 58. Subsequently, offsetting the slip in crude oil futures which stemmed from comments by the Kuwait Oil Minister who stated that not everyone is on board with 9-month extension. This is somewhat of a contrast to rhetoric from the Saudi Energy Minister, who kept alive hopes by stating that there is no objection to a 9-month deal. Of note, equities have pulled off highs amid reports that South Korea have fired warning shots following an unidentified object flying south from North Korea. In credit markets, government bonds have reversed their in FTQ amid the risk on sentiment. Notable underperformance observed in the Greek short end after reports that Greece’s creditors failed to reach an agreement on Greek debt measures and held off releasing new funds to Greece. Additionally, Belgium have now opened books for their EUR 20yr with reports noting that demand has exceeded EUR 8.85b1n. Elsewhere, supply from the UK and Germany has been well digested.

Top European News

  • German Upswing Takes Business Sentiment to Highest Since 1991
  • Greek Deal on Debt Relief Founders as Talks Stretch to June
  • U.K. Began New Fiscal Year With Higher-Than-Forecast Borrowing

In currencies, the Bloomberg Dollar Spot Index dropped for a third day, falling 0.1 percent to head for the lowest level since Nov. 4. The yen rose 0.2 percent to 111.13 per dollar. The pound was little changed at $1.2996 after weakening as much as 0.4 percent. The euro rose 0.2 percent to $1.1258. Across FX markets, the news of the terror attack in Manchester has dominated the headlines, which prompted some mild GBP selling to trip below 1.30, although, bids layered in 1.2950 curbed further downside. EUR still feeling the upward momentum, now helped by the strong Eurozone PMI readings. NZD remains on the front foot off the back of optimistic expectations from the budget later this week. The local press have been shedding a positive light on some of the economy friendly measure. We have the Fonterra dairy auction later today, so this may test the NZD resolve which sees the spot rate above 0.7000 and AUD/NZD back in the mid 1.0600’s. As can be said of a number of pairings in the majors, there look to be over-extensions of note, and some will be justified in attributing this to USD/JPY given the marginal price action see in Treasury yields. Sub 111.00 looks to be running into demand as we cannot ignore the prospect of a Fed rate hike in June. As we have spoken of in recent weeks, the market is also looking at the longer term perspective of the US rate path, but in light of this, the data has faded at best, so we expect some consolidation in the USD at these levels as we await more data.

In commodities, WTI and Brent crude futures enter the North American crossover in negative territory as concerns continue to mount regarding the factions within the cartel and whether all players are on board with output curbs. More specifically, the Kuwait Oil Minister says that not everyone has agreed to a 9-month output extension but is agreed on a 6-month extension, while adding that deeper cuts are not being discussed. Crude oil prices also took a hit after the Chinese customs highlighted that China’s crude imports from Russia and Saudi Arabia fell 1.9% and 3.9% respectively in April. In metals markets, gold prices are mildly higher due to a weaker USD and safe-haven flows in the wake of the Manchester Arena explosion, while copper prices failed to maintain traction as risk sentiment in the region turned cautious.

Looking at the day ahead, in the US we’ll get the flash May PMIs along with April new home sales and May Richmond Fed manufacturing index. Away from the data, the Fed’s Kashkari is scheduled to speak again at two separate events while the Fed’s Harker speaks at 5pm ET. The other big focus for today will be the Trump’s administration budget request where we are expecting to get alot more details on the back of the skinny budget released back in March and some of the leaks this morning.

US event calendar

  • 9:45am: Markit US Manufacturing PMI, est. 53, prior 52.8; Services PMI, est. 53.3, prior 53.1; Composite PMI, prior 53.2
  • 10am: New Home Sales, est. 610,000, prior 621,000; MoM, est. -1.77%, prior 5.8%
  • 10am: Richmond Fed Manufact. Index, est. 15, prior 20
  • 9am: Fed’s Kashkari Speaks with Reporters in Minneapolis
  • 3pm: Fed’s Kashkari Speaks in Minneapolis
  • 5pm: Fed’s Harker Speaks in New York

DB’s Jim Reid concludes the overnight wrap

Awful news this morning for those of us in the UK after a suspected terrorist attack at a concert in Manchester late last night which has taken the lives of 19 people and left another 50 injured. If confirmed as a terrorist attack it will be the largest such atrocity on these shores since the 2005 London bombings. Safe haven assets are a little stronger this morning with 10y Treasury yields -1.7bps and Gold +0.15%. Sterling (-0.10%) is slightly weaker. The Nikkei (-0.12%) is a touch softer but most other markets in Asia are flat to slightly higher. Indeed the ASX is +0.03% while the Hang Seng (+0.30%), Shanghai Comp (+0.18%) and Kospi (+0.92%) are firmer.

Also worth highlighting overnight is the news that S&P had moved to place Brazil’s sovereign BB rating on credit watch negative. Brazilian assets had resumed their selloff yesterday with the Bovespa down -1.54%, Brazilian Real weakening -0.38% and local currency bond yields 30bps higher. Also Bloomberg is reporting that President Trump is to announce $3.6tn in tax cuts over the next 10 years at today’s much anticipated budget plan. The proposal will supposedly claim to balance the budget within a decade. As we’ve noted before however it appears that the Republican-led Congress is likely to largely ignore the proposal. Today’s main market story outside of the UK attack are the global flash PMIs. The strong YTD performance in equities has matched the strong recent performance of global PMIs so on this measure the rally is not out of line with the data. Of the main regions, China has perhaps seen the weakest PMI readings and it’s notable that whilst US/European equities are up around 10-25% YTD, Chinese equities are slightly down. With this in mind today’s flash PMIs from around the globe will give us an early sign to whether momentum is continuing at an elevated pace. In Europe the expectations are for broadly unchanged numbers for services and manufacturing with a 55 or 56 handle. In the US also broadly unchanged with a 53 handle for both. A sizeable move in either direction around this consensus would likely drive equities over the next few weeks. We’ll actually have to wait until next week to receive China’s PMIs but this morning Japan released its manufacturing PMI which came in at 52.0 for May versus 52.7 in April.

This comes after market sentiment continues to improve after the US political shocks of last week. The S&P 500 (+0.52%) rose for the third consecutive session yesterday and is now up 1.76% from last week’s intraday lows and also back to within half of a percent of the all time high mark again. The Dow (+0.43%), Nasdaq (+0.82%) and Russell 2000 (+0.72%) indices also had a decent session despite there not really being much news. In fact the lack of any Trump-related headlines was probably a positive for sentiment although some of the deals struck with Saudi Arabia over the weekend were seen as a boost for markets. The VIX also plunged over 9% and closed back below its YTD average at 10.93. Markets in Europe were a bit more benign (Stoxx 600 -0.09%) with banks down for the fourth time in five days.

Helping sentiment at the margin were higher Oil prices with WTI Oil (+0.91%) closing above $51/bbl for the first time since April 18th. This comes ahead of Thursday’s OPEC meeting where expectations are seemingly high for an extension to the supply cut agreement. In fact the rest of the commodity complex was generally firmer with Gold (+0.37%), Iron Ore (+0.80%), Copper (+0.37%) and Zinc (+0.67%) all edging up. The one asset which is struggling to recover from the Trump-inspired selloff from last week is the US Dollar (-0.16%) which fell for the 7th time in the last 8 sessions yesterday. That wasn’t helped by the strong day for the Euro though (+0.28%) which bounced after German Chancellor Merkel called the single currency “too weak” (albeit in the context of Germany’s trade surplus).

As a longer term aside on the current and future financing of government debt, yesterday the UK Conservative Party seemed to take a care policy U-turn on their campaign trail. The reforms announced in their manifesto last week basically meant that more people would have to use their home to fund future elderly care down to their last £100,000. However the backlash led to remarks from PM Mrs May yesterday that they would consult on having a maximum amount that any person would be forced to pay. This comes only a couple of months after the same government announced a U-turn on taxing self employees people slightly more to be closer to other employees in the economy. This follows the previous chancellor George Osborne reversing a cut in tax credits (announced in 2015) for millions of low-paid families after immense and very public criticism.

With the UK not seeing a budget surplus since 2001 (only very briefly after many prior years of big deficits) and with the Conservative Party last week delaying a return to a balanced budget to 2025 in their manifesto one wonders how budgets will ever balance again when any tax increases or welfare cuts are very quickly reversed when shown as unpopular. This is not a UK only phenomenon (well done Germany though) but this recent activity in the UK surely is reflective of a wider global issue of how to collect more in tax than you spend, especially as we get older, all have a vote and the working age population shrinks or growth stalls across the developed world. It’s one of the reasons we think that helicopter money will eventually be prevalent. Governments can’t cut deficits too much without major backlash. In the end it’ll be easier to monetise them.

On that note, following another set of marathon talks yesterday negotiations between Greece’s creditors failed to yield a deal on debt relief at last night’s Eurogroup meeting. The IMF and Germany were supposedly in disagreement over the amount of debt relief required to assure economic stability in Greece. Eurogroup Chair Jeroen Dijsselbloem said that it is still a priority to bring the IMF on board and that work will continue in the coming weeks with the hope that a deal can be concluded on June 15th at the next scheduled meeting for Eurogroup ministers. As a reminder Greece faces around €7bn of debt maturities in July. Onto credit, the latest ECB CSPP numbers were out yesterday and I was surprised to see the average daily corporate purchases at €401mn last week, notably above the average daily run rate of €365mn since the program started. So back in April and early May it looked like a broadly equal CSPP/PSPP split but last week’s numbers gives us the possibility that CSPP hasn’t been tapered as much after all.

Just wrapping up the remaining newsflow yesterday, with no significant data out there was a bit of focus on the Fedspeak yesterday. The Dallas Fed’s Kaplan said that he still favoured two more rate hikes this year and a balance sheet reduction to start later this year. On inflation Kaplan said that “recent readings are likely not indicative of a weakening trend…and as slack continues to be removed from the labour market, headline inflation should reach, or exceed, the Fed’s 2% longer-run objective in the medium term”. Over at the ECB the Bundesbank’s Weidmann reiterated that inflation pressures are currently “muted” but that they should increase “with the continued economic upswing and gradual decline in unemployment in the Euro area”.

Looking at the day ahead, we’ve got a fairly busy diary to get through in Europe this morning. Shortly after this hits your email we’ll get the final revisions to Q1 GDP in Germany (no change to the +0.6% qoq flash print expected) as well as details around the growth drivers. Shortly after that we get May confidence indicators out of France before all eyes turn to those flash May PMIs. Later on this morning we’ll get the May IFO survey out of Germany and public sector net borrowing data in the UK for April. This afternoon in the US we’ll also get the flash May PMIs along with April new home sales and May Richmond Fed manufacturing index. Away from the data, the Fed’s Kashkari is scheduled to speak again at two separate events (2pm BST and 8pm BST) while the Fed’s Harker speaks at 10pm BST. The ECB’s Coeure speaks this afternoon too. The other big focus for today will be the Trump’s administration budget request where we are expecting to get alot more details on the back of the skinny budget released back in March and some of the leaks this morning.

END

3. ASIAN AFFAIRS

i)Late MONDAY night/TUESDAY morning: Shanghai closed DOWN 13.73 POINTS OR .45%   / /Hang Sang CLOSED UP 11.81 POINTS OR 0.05% The Nikkei closed DOWN 65.05 POINTS OR 0.33%/Australia’s all ordinaires  CLOSED DOWN  0.15%/Chinese yuan (ONSHORE) closed DOWN at 6.8902/Oil DOWN to 50.85 dollars per barrel for WTI and 53.66 for Brent. Stocks in Europe OPENED IN THE GREEN    ..Offshore yuan trades  6.8796 yuan to the dollar vs 6.8902 for onshore yuan. NOW  THE OFFSHORE IS A LITTLE WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A LITTLE WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS  HAPPY THIS MORNING

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA/SOUTH KOREA

South Korea fires warning shots on an unidentified object flying from the North:

(courtesy zero hedge)

South Korea Military Fires “Warning Shots” At Unidentified Object Flying From The North

The South Korean fired warning shots Tuesday at an “unidentified object” flying across the heavily fortified border from North Korea Tuesday afternoon according to the Joint Chiefs of Staff. The military detected the object traversing the Military Demarcation Line (MDL) southward in the Chorwon area in the eastern province of Gangwon at around 4 pm.


South Korean army’s K-55 self-propelled howitzers fire during the annual
exercise in Paju, near the border with North Korea on Monday, May 22.

According to Yonhap News, a defense source said the military fired more than 90 K-3 machine gun rounds, adding it may have been a drone. The South’s military is analyzing the object and its route and has beefed up its air defense posture, said the JCS. The incident added to already-high tensions between the Koreas following the North’s continued ballistic missile launches.

In January last year, a North Korean drone flew over the MDL into the western section of the demilitarized zone. The South opened machine gun fire on it.

South Korea’s Joint Chiefs of Staff said in a statement that the South Korean military bolstered its air surveillance and broadcast a warning to North Korea in response to the object. It provided no other details.

The Koreas face off across the world’s most heavily armed border, and the two sides occasionally clash. In 2014, they traded machine gun and rifle fire after South Korean activists released anti-North Korean propaganda balloons across the Demilitarized Zone that bisects the Korean Peninsula, but no casualties were reported. Attacks blamed on North Korea in 2010 killed 50 South Koreans.

END

 

b) REPORT ON JAPAN

c) REPORT ON CHINA

NOBLE GROUP HALTED

Noble Group is Asia’s largest commodity and derivative player  (Singapore based but trades on Hong Kong Market).  They no doubt have massive short position and derivative losses in our two precious metals gold and silver.  A default by Noble will create havoc and massive short squeeze.

(courtesy zero hedge)

Enron 2.0? Asia’s Largest Commodity Trader Halted After Crashing To 16 Year Lows On S&P Downgrade

Once Asia’s largest commodity trader, Noble Group has been halted after crashing almost 30% this morning following S&P lowering its corporate credit rist rating to CCC+, citing continuing weak cash flows and profitability…

“We downgraded Noble because we believe the company’s capital structure is not sustainable,”

 

“The negative outlook on Noble reflects the potential that the company will face distress and a non-payment of its debt obligations over the next 12 months,”

This is the lowest prices for the Singapore-based firm since 2001

 

This has been coming for a while, as we warned a year ago… Noble’s “Margin Call” Part II – The Enron Moment

By Simon Jacques

“Our balance sheet – the strongest in recent history – represents a significant advantage as we continue to identify high value growth opportunities across the products and geographies we operate in. Maintaining our investment grade rating with the international rating agencies is a vital part of this strategy.”     

Noble Group 2014 Annual Report, p. 27

* * * * *

“Moody’s Investors Service has downgraded Noble Group Limited’s senior unsecured bond ratings to Ba1 from Baa3 and the provisional rating on its senior unsecured MTN program to (P)Ba1 from (P)Baa3.”

Moody’s, December 29, 2015

* * * * *

“Noble Group Downgraded To ‘BB+’ On Weakened Liquidity; Notes Lowered To ‘BB’; Ratings Still On CreditWatch Negative”

– Standard & Poors, January 7, 2016

The story of Noble is worth writing a book, mostly of how not to run your business. 

If they are in this mess, it is in large part because the management was comprised predominantly of traders who were predisposed to defend their books.

Noble has been desperately trying to revive their image by hiring former Goldman, JP. Morgan, Trafigura executives etc. By doing so they were looking for a form of credibility collateral.

It didn’t work well for the new employees as they rapidly found out that they inherited from the liabilities of one decade of Noble’s poor decision making of the hard-core asset guys like William J. Randall and ex-Goldman Sach banker Yusuf Alireza.

In the part II of this analysis we will review the gap between the liquidity headroom and the debt maturity profile of the trader and explain how Noble Group will have its Enron moment.

The fatal mistake that Noble Group did was apparently to mislead the market about their financial performance “presumably” by using accounting devices.

During last November, Noble Group’s chief financial officer Robert van der Zalm has stepped down from his position after taking a leave of absence for “health reasons”.

Two months later,  Moody’s downgraded Noble Group.

In a very awaited decision, Standard & Poor’s has finally lowered Noble Group’s to junk, placing Asia’s largest commodity trader on watch for further possible as the rating agency remains skeptical about the liquidity headroom of the trader.

According to Noble Group, on September 30th 2015, the company had  $15.5bn banking facilities and $1.669B in RMI (ready marketable inventories).

  • $11.1bn of these $15.5bn banking facilities is uncommitted and are contingent on ability of maintaining investment-grade rating in the future.
  • Noble claims to have $900M of cash and 1.669B$ in RMI (ready and marketable inventories).
  • Their 1.669B$ in RMI have claims on related- party notes that are under collateralized by their commodity merchant activity and therefore should be excluded from their liquidity headroom.
  • Noble Group currently uses $3.4B of borrowing facilities that are uncommitted.

Noble Group is left with only 1B$ of unutilized committed borrowing facilities and $900M of cash ready available to meet $2.966B of debt scheduled in the next 12 months.

Source: Noble Group MD&A Q-3 2015

Moreover, Noble Group counts on the completion of the Noble Agri stake divesture to reap $750M, a transaction which may not be completed by February 2016.

Adding the 1B$ of unused uncommitted borrowing facilities plus the $750M of Noble Agri and the $900M of cash that Noble claims to have, Noble is still short by $316M.

With the S&P downgrade, the total collateral margin call on Noble Group could be as much as $3.4B, banking facilities that are uncommitted and contingent on the ability of maintaining their investment-grade rating.

Noble will have its Enron Moment.

Enron’s bankruptcy occurred on November 2001 and was triggered by S&P’s downgrade of its debt below investment grade, activating a call provision in some loan indentures with principal amounts totaling $4 billion, cash and liquidity that suddenly Enron didn’t have.

After the quick sale of Noble Agri, Noble’s core business remains its coal & energy – two very depressed commodities for the foreseeable future, and with no cash-flows to pay its debt and a sudden tightening of the credit, the trader is a cancer patient on the forward curve.

 

 

END

Chaos in China’s bond market with the 7 yr bond yield higher than both the 5 yr and the 10 yr.  This is coupled with a curve inversion of the 3 to 5 yr.  The 3 to 10 yield is the most negative ever:

 

 

(courtesy zero hedge)

 

China’s Bond Market Chaos Continues – Yield Curve Double-Inverts

China’s $1.7 trillion government-bond market is turning curiouser and curiouser

In a fresh sign of the nerves among investors caused by Beijing’s campaign this spring to make Chinese markets less risky, the yield on seven-year government bonds rose to 3.79% on Monday, above the yield on both five-year and 10-year bonds.

The highly unusual move means that China’s government-bond yield curve now resembles a triangle, with the seven-year yield at its highest since October 2014. Furthermore, the Chinese curve has a double-inversion 3s to 5s and 7s to 10.

In fact the 3s10s spread is the most negative ever…

The shift comes less than two weeks after the government-bond yield curve became inverted for the first time on record, with 10-year yields–now at 3.65%–lower than those for five-year bonds, currently at 3.68%. Normally investors demand higher yields on bonds that have longer to go until maturity.

Intriguingly, 30Y US Treasuries and 3Y China Treasuries have traded very tightly coupled at the same level for 6 years…

“We are seeing a butterfly on our screen that we have never seen before, ” said a Shanghai-based senior bond trader at a local mutual fund.

The continued pressure on Chinese bonds (and stocks) is driven by both technical flows (China’s ongoing crackdown on leverage in the financial system spewing out into the shadow banking system and hitting retail), and expectations for growth in a lower credit growth world (which has crushed the yield curve).

Just last night brokerage shares slumped as Chinese authorities blocked off-‘channel’ operations, barring securities firms from helping banks take loans off balance sheets…

As The Nikkei Asian Review reported, Chinese authorities have begun cracking down on brokerages engaged in the profitable business of helping banks keep inconvenient loans or assets off the books, sparking a broad slide among Shanghai-listed securities firms Monday.

The China Securities Regulatory Commission on Friday banned so-called channel business helping banks convert on-the-books loans and notes into off-balance-sheet financial instruments, announcing the audit of an investment fund facilitating such transactions. The activities enable lenders to circumvent caps on loan-deposit ratios, for example.

Channel business is a significant source of fee revenue for brokerages but amounts to a firm abandoning its responsibility as an asset manager, the securities commission said.

The resulting murky wealth management products form a cornerstone of China’s shadow banking system, offering investors high returns in exchange for significant risk. The country’s banks handle some 29 trillion yuan ($4.21 trillion) in such products. Regulators fearing such risk factors as defaults have stepped up a crackdown on shadow banking since April.

end

4. EUROPEAN AFFAIRS

ENGLAND/MANCHESTER

Another terrorist attack..this time in Manchester England.  This was a suicide bomber  who detonated his bomb outside the concert hall.  22 dead and 59 injured

(courtesy zero hedge)

Police Confirm 22 Dead, 59 Injured After “Suspected Suicide Bombing” At Ariana Grande Concert In Manchester – Live Feed

 

What we know so far:

  • The Manchester Arena was hit by at least one explosion during a concert by Ariana Grande
  • Police confirm 22 Dead, around 59 injured
  • Police state it is ‘possible terrorist incident’
  • UK officials suspect it was caused by suicide bomber.
  • Senior counter-terrorism officials meeting in London
  • Police warn people to stay away from area
  • Emergency services rush to scene
  • Ariana Grande ‘Okay’ following the incident

Here is the summary: A man armed with an “improvised” bomb has killed at least 22 people and injured 59 outside a concert arena filled with teenagers in central Manchester on Monday night, in the worst terrorism incident in the UK since 2005. Police said the bomber, who died in the explosion, detonated the device shortly after the end of a concert by US pop star Ariana Grande at about 10.30pm. The incident adds the northern English city to the growing list of recent western targets that includes London, Paris, Stockholm and Berlin.

Quoted by the FT, Ian Hopkins, chief constable of Greater Manchester police, said they were still attempting to determine whether the attacker “was acting alone or was part of a network”.

“This has been the most horrific incident we have had to face in Greater Manchester and one that we all hoped we would never see,” Mr Hopkins said at a news conference on Tuesday morning. “Families and many young people were out to enjoy a concert at the Manchester Arena and have lost their lives… We believe, at this stage, the attack last night was conducted by one man,” Hopkins told reporters. “The priority is to establish whether he was acting alone or as part of a network.

British political leaders, who were in the middle of a general election race, halted all campaigning. Prime Minister Theresa May was scheduled to chair a meeting of the cabinet’s emergency Cobra committee on Tuesday morning.

“We are working to establish the full details of what is being treated by the police as an appalling terrorist attack,” Mrs May said. “All our thoughts are with the victims and the families of those who have been affected.”

Prime Minister Theresa May called an emergency meeting with intelligence chiefs on the deadliest militant assault in Britain since four British Muslims killed 52 people in suicide bombings on London’s transport system in July 2005. Witnesses related the horror of the blast which prompted a stampede just as the concert ended at Europe’s largest indoor arena.

“We ran and people were screaming around us and pushing on the stairs to go outside and people were falling down, girls were crying, and we saw these women being treated by paramedics having open wounds on their legs … it was just chaos,” said Sebastian Diaz, 19.

“It was literally just a minute after it ended, the lights came on and the bomb went off,” Diaz said.

U.S. President Donald Trump described the attack as the work of “evil losers”. German Chancellor Angela Merkel said it “will only strengthen our resolve to…work together with our British friends against those who plan and carry out such inhumane deeds.”

According to AP, there was no immediate claim of responsibility. Online, supporters of the extremist Islamic State group, which holds territory in Iraq’s Mosul and around its de facto capital in the Syrian city of Raqqa, celebrated the blast. One wrote: “May they taste what the weak people in Mosul and (Raqqa) experience from their being bombed and burned,” according to the U.S.-based SITE Intelligence Group.

“A huge bomb-like bang went off that hugely panicked everyone and we were all trying to flee the arena,” said concertgoer Majid Khan, 22. “It was one bang and essentially everyone from the other side of the arena where the bang was heard from suddenly came running towards us as they were trying to exit.” Added Oliver Jones, 17: “The bang echoed around the foyer of the arena and people started to run.” Video from inside the arena showed concertgoers screaming as they made their way out amid a sea of pink balloons.

British Prime Minister Theresa May said the government was working to establish “the full details of what is being treated by the police as an appalling terrorist attack.” May is due to chair a meeting of the government’s COBRA emergency committee later Tuesday. She and other candidates suspended campaigning for Britain’s June 8 election after the blast.

Police advised the public to avoid the area around the Manchester Arena, and the train station near the arena, Victoria Station, was evacuated and all trains canceled.

The Dangerous Woman tour is the third concert tour by 23-year-old Grande and supports her third studio album, “Dangerous Woman.” Grande’s role as Cat Valentine on Nickelodeon’s high school sitcom “Victorious” propelled her to teen idol status, starting in 2010.

*  *  *

 

 

Update 10: According to the Telegraph, the arena was packed with young children.

Jane Pearson, 46, a high school English language mentor from Chadderton, Greater Manchester, had gone to the concert with her daughter, Rachel, 21, as a birthday treat. She told PA the arena was packed full of young children. Mrs Pearson said: “It’s the worst kind of people who could even consider doing something like this and quite frankly those sort of people, they deserve the worst punishment ever.

“I can’t imagine what goes in to the heads of these people that want to hurt children? And families who have come together for such a happy occasion. It’s disgusting. It’s absolutely disgusting.”

Mrs Pearson said she was in the block of seats next to where the explosion occurred. She said: “Well it was just at the actual final moment of the concert. Then all of a sudden this loud explosion, followed by a ton of smoke was coming up from the left of me.

“Then just absolute chaos. Disbelief, everybody running over each other not quite knowing what had gone on. Mad chaotic rush to nearest exit, lots of people crying and wailing. Really upsetting for everyone concerned.

 

“There was people bleeding, and lots of people being separated, very scary, very upsetting but obviously we believe there has been fatalities.

 

“It’s just a terrible thing. Who could do this at a concert where there’s children and families? Its just unbelievable.” Mrs Pearson added: “I just feel for everybody that’s been injured and those that have been killed.”

Late on Monday night, Ariana Grande’s music label Universal Media Group put out the following statement:

We are deeply saddened to learn of tonight’s devastating event in Manchester. Our thoughts and prayers are with all those affected by this tragedy.

Update 9: UK PM Theresa May has confirmed her election campaign has been suspended, issues following statement:

“We are working to establish the full details of what is being treated by the police as an appalling terrorist attack.

 

“All our thoughts are with the victims and the families of those who have been affected.”

Update 8: A second suspect device has been found near the Manchester Arena, and the Greater Manchester Police have carried out a “controlled explosion” in the  Cathedral Gardens area near Manchester Arena.

There will be a controlled explosion in Cathedral gardens shortly if you hearing anything don’t be concerned.

Officers carrying out a precautionary controlled explosion in Cathedral Garden confirm that it was abandoned clothing, not a suspicious item

Update 7: From Mancester Police – 19 dead, around 50 injured…

 

Latest statement on incident at Manchester Arena

Update 6:NBC reports US officials briefed on Manchester incident say UK officials suspect it was caused by suicide bomber.

 

They used nail bombs at a kids concert in Manchester

Update 5: Shocking first person description of the carnage (via Facebook)

Just out of The Ariana Grande Concert in Manchester,I thought we would leave seconds before the last song finished in order too get home quicker instead of waiting longer for a taxi,As we where leaving a bomb or explosion went off centimetres infront of me.

 

Peoples skin/blood&Feces where everywhere including in my hair & on my bag,I’m still finding bits of god knows what in my hair.I am fine & back in my hotel I hope everyone involved and in front of me is okay.We are being told it was a balloon/sound system but I can assure you it was not,You never ever expect these things too happen too you but this proves it can happen too anybody.

 

That sound,The blood & those who where running around clueless with body parts & bits of skin missing will not be leaving my mind any time soon or the minds of those involved.

 

Again, Hope everyone is alright I am very,Very lucky too be where I am just now

 

I understand these images might be upsetting however I feel as though people should know what happened

Update 4: Sky News reports another bomb located at Manchester’s Victoria Metro Station – emergency units rushing. Bomb disposal units have arrived at the ‘active crime scene’ at Manchester Arena.

Manchester’s Victoria station, which backs onto the arena, has been evacuated and all trains cancelled. National Rail said in an online statement: “Emergency services are dealing with an incident at Manchester Arena. As Manchester Victoria is located near the arena, the station has been evacuated and all lines closed.

 

“Trains are currently unable to run to / from Manchester Victoria. Some trains will be cancelled throughout or start / terminate at alternative stations. Disruption is expected to continue until end of the day.”

British Transport Police confirmed the blast came from “within the foyer area of the stadium at 10.30pm this evening”.

*  *  *

Update 3: BBC is reporting that authorities are treating the explosion as a terror incident.

The North West Counter Terrorism Unit is treating the incident at as a possible terrorist incident.

“We were making our way out and when we were right by the door there was a massive explosion and everybody was screaming,” Catherine Macfarlane told Reuters.

 

“It was a huge explosion – you could feel it in your chest. It was chaotic. Everybody was running and screaming and just trying to get out of the area.”

*  *  *

Update 2: NBC News confirms the BBC’s report that there are at least 20 dead – Eye witness on BBC says 20 to 30 people injured and dead in the box office area of Manchester Arena.

Senior national Counter-Terrorism officers are assembling in London. Early estimates put fatalities at in double figures

 

BREAKING: At least 20 dead, hundreds injured following possible explosion at UK’s Manchester arena – NBC News http://www.cnbc.com/2017/05/22/serious-incident-at-uks-manchester-stadium-during-concert-where-loud-bang-heard.html 

Photo published for At least 20 dead, hundreds injured after reported explosion at Manchester stadium: report

At least 20 dead, hundreds injured after reported explosion at Manchester stadium: report

British police said on Monday they had responded to a serious incident at a venue in the northern English city of Manchester where U.S. singer Ariana Grande had been performing.

cnbc.com

*  *  *

Update 1: British trainlines out of Manchester Victoria station are currently blocked.

The explosions can be heard in the following clip… (around 7 seconds in – look to the far left and notice the sudden light also)

Members of the public have been advised to avoid the arena.

One Twitter user wrote: “Honestly worst night of my existence. Just kept running from Manchester Arena for my life.”

Another added: “Just got out of Manchester arena after seeing Ariana perform. There was a loud bang when the lights came on & everyone ran out screaming.”

(courtesy zerohedge)

Germany and the IMF clash again on the Greek debt relief bill.  Germany cannot give relief as Deutsche bank will blow up if they have to take a hit on that debt relief!

(courtesy zero hedge)

Greek Debt Relief Deal Fails In Last Minute, As Germany, IMF Clash Again

Stop us if you’ve heard this story before.

Insolvent Greece, having last week voted itself into even more austerity in hopes of unlocking some of the money promised it by Brussels so it can then use it to repay debt maturities owed to the ECB (whether it will actually follow through with said austerity measures remains unclear, though most likely not), is dragged to the finish line of yet another Euro finance minister negotiating session with promises that this time a debt relief deal is virtually guaranteed, and then… it all falls apart.

That’s what again happened today, when Euro-area finance ministers gathered in Brussels with hopes, at least for the Greek delegation, to come home with a signed agreement, only to fail to break the impasse on debt relief for Greece, delaying the conclusion of the country’s bailout review and the disbursement of fresh loans needed to repay obligations in July.

“The Eurogroup held an in-depth discussion on the sustainability of Greece’s public debt but did not reach an overall agreement,” said Jeroen Dijsselbloem, the Dutch finance minister who presides over meetings with his euro-area counterparts, and who again failed to reach a solution after another hardline stance by his German colleague, Wolfgang Schauble, prevented any potential concessions. As a reminder, ever since the 3rd Greek bailout in the summer of 2015, rhe IMF and Germany have been at odds over Greece’s economic outlook and the amount of debt relief required to assure economic stability: it was the same debate, that prevented a deal from being inked on Monday.

The big issue is what happens to the Greek economy after 2018, when the current bailout expires. The IMF, which has demanded debt haircuts in order to fund the ongoing bailout, has repeatedly raised doubts about Greece’s ability to maintain such an optimistic budget performance for decades – it’s like Bank of America’s forecast for US GDP through 2027 which anticipated precisely zero recessions; meanwhile, key creditors are pushing for a more positive outlook (guess who will be wrong). The reason is that less ambitious fiscal targets would increase the amount of debt relief needed, meanwhile the Greek population continues to suffer.

As Bloomberg explained after the latest meeting, the debt measures proposed by euro area finance ministers were not enough for the IMF to come on board the Greek bailout, and unequivocally say that Greece’s debt is sustainable, according to an official familiar with the discussion.

There was some movement, though not quite enough, official says, asking not to be named as Eurogroup meeting wasn’t public There’s some frustration with the IMF among euro area finance ministers, pressure on Fund to move will increase over the coming weeks

In any case, work will continue in the coming weeks with the aim of reaching a conclusion on June 15 at the next meeting of ministers, Dijsselbloem said.

Last May, Euro-area finance ministers committed to a set of measures to ease the repayment terms on Greek bailout loans after the end of the program in 2018, but the degree to which these measures will be implemented is still a subject of contention.

Among the options listed is the extension of maturities on euro-area loans to Greece, as well as the capping and deferral of interest payments. The IMF has said it wants these options to be specified further, so that numbers “add up” and annual Greek debt refinancing needs are kept below clearly defined thresholds

According to Bloomberg, after eight hours of talks and multiple draft compromises, Athens and its creditors couldn’t reach an accord that would ease Greece’s debt and that would convince the International Monetary Fund to agree to help finance the country’s bailout. The IMF has been seeking more debt relief for the country, pushing euro-area creditors to ensure the sustainability of Greece’s €315 billion ($354 billion) of obligations before it participates in the program. Some nations including Germany object to a debt restructuring while also insisting that the Washington-based fund join the program to lend credibility to the bailout.

The reason why the can was kicked again is that Greece doesn’t have a large maturity deadline until July, when €7 billion euros in obligations come due, and Europe has a habit of waiting until the last moment before disbursing the funds that Athens will then turn around and use to repay the ECB.

Delaying resolution of the program review adds to months of uncertainty that have taken their toll on the Greek economy – which has slipped back into recession –and kept the country from returning to the bond market.

Recession notwithstanding, Dijsselbloem also said the parties agreed on a target for Greece’s primary surplus, which excludes interest payments, of 3.5% of gross domestic product until 2022. Which is funny: it was Mario Draghi’s secret deals with Greece when he was still part of Goldman, that masked the Greek debt mountain, and made the country’s surplus appear artificially high. The eventual result was not one, not two, but three Greek bailouts.

“The Greek authorities are taking their responsibilities and I think the partners of Greece are also taking their own responsibilities,” European Union Economic and Monetary Affairs Commissioner Pierre Moscovici said. “There’s been a shared effort to narrow the gap between positions — we haven’t yet concluded but I hope under the guidance of the president of the Eurogroup it will possible three weeks from now.”

Additional debt relief is also needed for the ECB to include Greek bonds in its asset purchases program, which would ease the country’s access to bond markets, and is the reason why last week, Greek lawmakers approved more austerity measures in hopes of mollifying creditors, including pension cuts, tax hikes and other structural economic reforms. The resulting hope that Greece would be included in the ECB’s QE was the longest winning streak in Greek capital markets in years.

For now, however, Greece has to wait, most likely until the very last minute before the €7 billion in July obligations come due.

 

 

end

SPAIN

Sanchez is back as leader of the socialist party PSOE and this will cause massive headaches for the minority government of Rajoy who probably will cause a snap election;

(courtesy Mish Shedlock/Mishtalk)

Voters Slam Spain’s Political Leadership: Are Snap Spanish Presidential Elections Coming Up?

Authored by Mike Shedlock via MishTalk.com,

Last year, the socialist party (PSOE) leadership ousted Pedro Sánchez as its head when Sánchez refused to allow a minority government of Mariano Rajoy to form. Susana Díaz took over as party head.

Socialist party elections were held yesterday. Sánchez ran again as an outsider and shocked the POSE leadership winning an outright majority of votes in a three-way race. This was a clear smack in the face to the party leadership who backed Susana Díaz.

With Sánchez back at the helm in Parliament, Rajoy has little chance of getting his legislation passed. Rajoy now has his eye on calling snap elections.

The Guardian reports Spanish Socialists Re-Elect Pedro Sánchez to Lead Party.

Pedro Sánchez has regained the leadership of Spain’s bitterly divided socialist party seven months after being ousted in a coup that laid bare the faultlines within the PSOE and left its status as the main opposition party in jeopardy.

 

On Sunday night, Sánchez took 50% of the vote, sailing past his main rival, Susana Díaz, the president of the PSOE stronghold of Andalusia, who took 40%. The former Basque president Patxi López finished third with 10%.

 

The PSOE has been in the hands of a caretaker administration since October, when Sánchez stepped down after powerful factions within the party rebelled against his refusal to allow Mariano Rajoy’s conservative People’s party (PP) to form a government.

 

Following his resignation, the PSOE abstained from Rajoy’s investiture debate, returning the PP to office and ending the 10-month political stalemate that had left Spain without a government after two inconclusive general elections.

 

Díaz, who was backed by party heavyweights including former PSOE prime ministers Felipe Gónzalez and José Luis Zapatero, had called for a more pragmatic approach to dealing with the PP.

Snap Elections

Eurointelligence fills in the remaining pieces of the story with commentary on snap elections.

The party will now hold its congress over the weekend of June 18 to renew its executive committee and approve its political platform. The danger for the PSOE is that the party may emerge from the congress divided, or that MPs and regional premiers will actively undermine Sánchez’ leadership.

 

Sánchez, who was never particularly to the left of the PSOE, rode a wave of members’ discontent about the party’s decision to abstain last October to allow Rajoy to form a government, thus avoiding a third round of elections which would have fallen on Christmas Day. Rajoy has indicated that, if the 2017 budget does not pass the parliament next month, he would call early elections.

Spain is likely headed for a third presidential election, but it’s unclear if the results will be any different than the previous two elections that resulted in blocked governments with no party being able to form a coalition.

The problem with dissolving parliament now is the crisis in Catalonia. The region has threatened to declare independence immediately if the Spanish government does not allow a referendum

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Islamic State claims responsibility for the Manchester bombing:

(courtesy zero hedge)

Islamic State Claims Responsibility For Manchester Bombing

Following the horrific events last night in Manchester in which a bombing at an Ariana Grande concert, primarily attended by teenagers, claimed the lives of at least 22 people, we’re just now learning that the Islamic State is claiming responsibility for the attack.

BREAKING: Islamic State group says one of its members carried out the Manchester attack that killed 22 people.

: Islamic State says one of its members carried out deadly attack, with a device planted at the Ariana Grande concert

 

Here is the statement for those who can read Arabic:

1) BREAKING: claims responsibility for attack at concert

 

Of course, this is not a terribly surprising outcome given some of the disturbing messages posted to Twitter last night in which Islamic State supporters celebrated the attack.  Per Yahoo News:

“It seems that bombs of the British airforce over children of Mosul and Raqqa has just came back to #Manchester,” one user named Abdul Haqq said on Twitter, in reference to the Iraqi and Syrian cities held by the militants where a U.S.-led coalition, of which Britain is a member, is conducting air strikes.

 

Supporters posted messages encouraging each other to carry out “lone wolf” attacks in the West and shared Islamic State videos threatening the United States and Europe.

 

One user said he hoped Islamic State was responsible for the attack, although no claim has appeared on any of the militant’s group’s official social media channels.

 

“We hope that the perpetrator is one of the soldiers of the caliphate,” he wrote on a channel affiliated to the group hosted by messaging network Telegram.

 

Others posted banners saying “the beginning is in Brussels and Paris, and in London we form a state,” in reference to previous similar “lone wolf” attacks in Belgium and France for which the group has claimed responsibility.

* * *

A full overview of the attack can be found here.  Below is a summary:

  • The Manchester Arena was hit by at least one explosion during a concert by Ariana Grande
  • Police confirm 22 Dead, around 59 injured
  • UK officials suspect it was caused by suicide bomber.
  • Senior counter-terrorism officials meeting in London
  • Police warn people to stay away from area
  • Emergency services rush to scene
  • Ariana Grande ‘Okay’ following the incident

Here is the summary: A man armed with an “improvised” bomb has killed at least 22 people and injured 59 outside a concert arena filled with teenagers in central Manchester on Monday night, in the worst terrorism incident in the UK since 2005. Police said the bomber, who died in the explosion, detonated the device shortly after the end of a concert by US pop star Ariana Grande at about 10.30pm. The incident adds the northern English city to the growing list of recent western targets that includes London, Paris, Stockholm and Berlin.

Quoted by the FT, Ian Hopkins, chief constable of Greater Manchester police, said they were still attempting to determine whether the attacker “was acting alone or was part of a network”.

“This has been the most horrific incident we have had to face in Greater Manchester and one that we all hoped we would never see,” Mr Hopkins said at a news conference on Tuesday morning. “Families and many young people were out to enjoy a concert at the Manchester Arena and have lost their lives… We believe, at this stage, the attack last night was conducted by one man,” Hopkins told reporters. “The priority is to establish whether he was acting alone or as part of a network.

British political leaders, who were in the middle of a general election race, halted all campaigning. Prime Minister Theresa May was scheduled to chair a meeting of the cabinet’s emergency Cobra committee on Tuesday morning.

“We are working to establish the full details of what is being treated by the police as an appalling terrorist attack,” Mrs May said. “All our thoughts are with the victims and the families of those who have been affected.”

Prime Minister Theresa May called an emergency meeting with intelligence chiefs on the deadliest militant assault in Britain since four British Muslims killed 52 people in suicide bombings on London’s transport system in July 2005. Witnesses related the horror of the blast which prompted a stampede just as the concert ended at Europe’s largest indoor arena.

“We ran and people were screaming around us and pushing on the stairs to go outside and people were falling down, girls were crying, and we saw these women being treated by paramedics having open wounds on their legs … it was just chaos,” said Sebastian Diaz, 19.

“It was literally just a minute after it ended, the lights came on and the bomb went off,” Diaz said.

U.S. President Donald Trump described the attack as the work of “evil losers”. German Chancellor Angela Merkel said it “will only strengthen our resolve to…work together with our British friends against those who plan and carry out such inhumane deeds.”

According to AP, there was no immediate claim of responsibility. Online, supporters of the extremist Islamic State group, which holds territory in Iraq’s Mosul and around its de facto capital in the Syrian city of Raqqa, celebrated the blast. One wrote: “May they taste what the weak people in Mosul and (Raqqa) experience from their being bombed and burned,” according to the U.S.-based SITE Intelligence Group.

“A huge bomb-like bang went off that hugely panicked everyone and we were all trying to flee the arena,” said concertgoer Majid Khan, 22. “It was one bang and essentially everyone from the other side of the arena where the bang was heard from suddenly came running towards us as they were trying to exit.” Added Oliver Jones, 17: “The bang echoed around the foyer of the arena and people started to run.” Video from inside the arena showed concertgoers screaming as they made their way out amid a sea of pink balloons.

British Prime Minister Theresa May said the government was working to establish “the full details of what is being treated by the police as an appalling terrorist attack.” May is due to chair a meeting of the government’s COBRA emergency committee later Tuesday. She and other candidates suspended campaigning for Britain’s June 8 election after the blast.

Police advised the public to avoid the area around the Manchester Arena, and the train station near the arena, Victoria Station, was evacuated and all trains canceled.

The Dangerous Woman tour is the third concert tour by 23-year-old Grande and supports her third studio album, “Dangerous Woman.” Grande’s role as Cat Valentine on Nickelodeon’s high school sitcom “Victorious” propelled her to teen idol status, starting in 2010.

end

6 .GLOBAL ISSUES

7. OIL ISSUES

 WTI oil drops on higher than expected inventory levels
(courtesy zero hedge)

WTI/RBOB Pop-n-Drop After Mixed Inventory Data

More OPEC jawboning and continued (modest) draws in crude inventories beat production increases and SPR sales headlines heading into tonight’s API data and with inventory drawdowns across the entire crude complex sending both WTI & RBOB prices jumped higher. However, prices quickly reversed lower as traders realized the Crude draw was smaller than expected…

 

API

  • Crude -1.5mm (-2mm exp)
  • Cushing -210k
  • Gasoline -3.15mm (-1.08mm exp)
  • Distillates -1.85mm

The 7th weekly draw in crude inventories in a row (but it was smaller than expected). Gasoline continued to draw…

 

WTI rallied into the API print, shrugging off SPR-sales supply concerns, and after the data hit spiked higher, then crude dropped as the draw was less than expected.

 

With OPEC close to agreement to extend oil-supply cuts for 9 months, “Everything throughout the course of the week has set up an opportunity for the market to gradually increase,” Thomas Finlon, director of Energy Analytics Group in Wellington, Fla., told Bloomberg.

8. EMERGING MARKET

 They are one step away from Temer as the Brazilian police arrest special advisor to the President,Tadeu Filippelli
(courtesy zero hedge)

Brazil Police Arrest Special Advisor To President Temer

The noose around Brazil president Temer’s neck is getting tighter.

On Tuesday, local paper Observador reported that Brazilian police announced that in a separate probe from the ongoing Carwash scandal, they had arrested a presidential aide and two ex-governors as part of an investigation into the 2014 World Cup’s most expensive stadium. Tadeu Filippelli, a special adviser in Temer’s Cabinet, and former Federal District governors José Roberto Arruda and Agnelo Queiroz were arrested early on Tuesday, in what Reuters said was “another black eye for the country’s political establishment that adds pressure on beleaguered President Michel Temer.”

According to Reuters, renovation of the Brasilia stadium for the 2014 World Cup cost about 1.5 billion reais ($460 million), prosecutors and police said in a statement, and an auditing court has said the construction included rampant overbilling and corruption. It was the second-most expensive soccer arena in the world after the reconstruction of Wembley Stadium in London, according to the local World Cup committee’s documents on spending.

In a plea bargain last month, executives of construction group Odebrecht SA offered evidence that builders and politicians sought to fix contracts for World Cup arenas in at least six cities.

Suspicions that many of the 12 stadiums built or renovated for the 2014 World Cup were overpriced led to street protests before and during the tournament.

Today’s arrest will raise the pressure on Temer, who has resisted growing calls for his resignation after the disclosure of a recorded conversation in which he encouraged the payment of hush money to a jailed lawmaker in the Carwash corruption probe. The evidence provided by Odebrecht corroborated the testimony of three
executives of rival construction group Andrade Gutierrez, prosecutors
said in a statement.

And in a scramble to “wash his hands” of any ties to his now former aide, moments ago Reuters also reported that Temer announced he will fire Filippelli, as if that action will somehow wash away any potential corruption that links the two politicians.

The question is just what information Filippelli will disclose in his own “plea agreement” and whether he will be the one to drag down his now former boss.

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

Euro/USA   1.1232 DOWN .0005/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RAISING INTEREST RATES/EUROPE BOURSES IN GREEN 

USA/JAPAN YEN 111.22 UP 0.306(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 1.2974 DOWN .0017 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

USA/CAN 1.3456 DOWN .0036 (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 FELL by 5 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1122; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 13.73 POINTS OR .45%     / Hang Sang  CLOSED  UP 11.81 POINTS OR 0.05% /AUSTRALIA  CLOSED DOWN 0.15% / EUROPEAN BOURSES OPENED GREEN  

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED DOWN 65.05 POINTS OR 0.33%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 11.81 POINTS OR 0.05%  / SHANGHAI CLOSED DOWN 13.73 POINTS OR .45% /Australia BOURSE CLOSED DOWN 0.15% /Nikkei (Japan)CLOSED  DOWN 65.05 POINTS OR 0.33%    / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1259.75

silver:$17.11

Early TUESDAY morning USA 10 year bond yield: 2.248% !!! UP 0 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  2.908, DOWN 0  IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 96.98 DOWN 3  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: 3.171%  UP 2 in basis point(s) yield from MONDAY 

JAPANESE BOND YIELD: +.049%  DOWN 2/5   in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.618%  DOWN 1/2  IN basis point yield from MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.122 DOWN 1   POINTS  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 50 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.410% 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 1.1193 DOWN .0046 (Euro DOWN 46 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.68 UP  0.778 (Yen DOWN 78 basis points/ 

Great Britain/USA 1.2976 DOWN 0.0016( POUND DOWN 16 basis points)

USA/Canada 1.3502 UP 10 (Canadian dollar DOWN 10 basis points AS OIL ROSE TO $51.16

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This afternoon, the Euro was DOWN by 46 basis points to trade at 1.1193

The Yen FELL to 111.68 for a LOSS  of 78  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 FELL BY 16  basis points, trading at 1.2976/

The Canadian dollar FELL by 10 basis points to 1.3502,  WITH WTI OIL RISING TO :  $51.16

The USA/Yuan closed at 6.8852/
the 10 yr Japanese bond yield closed at +.049% DOWN 2/5  IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 3  IN basis points from MONDAY at 2.278% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.931  UP 2 in basis points on the day /

Your closing USA dollar index, 97,34 UP 24  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 DOWN 11.05 POINTS OR 0.15%
German Dax :CLOSED UP 39.69 POINTS OR 0.315% 
Paris Cac  CLOSED UP  25.28 POINTS OR 0.47% 
Spain IBEX CLOSED  UP 122.90 POINTS OR 1.14%

Italian MIB: CLOSED  UP 97.16 POINTS/OR 0.46%

The Dow closed UP 89.99 OR 0.43%

NASDAQ WAS closed up 49.91 POINTS OR 0.82%  4.00 PM EST
WTI Oil price;  51.16 at 1:00 pm; 

Brent Oil: 53.90 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  56.39 UP 24/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD RISES T0  +0.4100%  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:$51.42

BRENT: $54.21

USA 10 YR BOND YIELD: 2.282%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.942%

EURO/USA DOLLAR CROSS:  1.1178 DOWN .0061

USA/JAPANESE YEN:111.82  UP 0.919

USA DOLLAR INDEX: 97.38  UP 40  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2959 : down .0032  OR 32 BASIS POINTS.

Canadian dollar: 1.3513  UP .0020 (CAN DOLLAR DOWN 20 BASIS PTS)

German 10 yr bond yield at 5 pm: +.4100%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Stocks Near Record Highs As US Economic Data Crashes To 15-Month Lows

So the most deadly terror attack in Britain in 12 years, US economic data collapses, a terrible T-Bill auction, and Trump’s budget hits… sending stocks to record highs…

 

Stocks bounced back for the 4th day following the Trump Dump, reaching back near record highs…

 

On another short squeeze open…

 

And no volume…

 

As US macro data crashed to its weakest since Feb 2016 (when the world was worried about global recession)…

 

And while Hard data has been weak, it is the ‘soft’ data that is now collapsing (surprise!!)

 

But of course remember that The Fed is “data dependent” – oh wait!

 

VIX was smashed back to 10.5 as the S&P manage to briefly top 2400…

 

Homebuilders have been on quite a tear but new home sales may be a drag…

 

Treasury yields rose across the complex by a very consistent 5bps (while 2Y outperformed amid a solid auction)…

UST yields spiked to their highest level in a week after the weekly 4-week bill auction and the monthly 52-week bill auction both tailed by more than 1bp. This was the first 4-week auction to tail by more than 1bp since December and the first 52-week since September 2015, according to Stone & McCarthy.

 

30Y remains well below 3.00%…

 

The rise in yields prompted a USD rally, temporarily capping gains in equities as markets re-positioned before Wednesday’s FOMC meeting minutes. Crude prices held gains even as the U.S. mulled selling off portions of the Strategic Petroleum Reserve in fiscal 2018.

For just the 2nd day in the last two weeks, the dollar index rallied,

 

spiking higher as EURUSD dropped after Europe closed and the auction impact flowed through… (NOTE we saw the same price action last Wednesday and the FOMC Minutes are tromorrow)

EUR, JPY, and GBP all weakened notably as the yield spike flowed through…

 

The dollar spike sent precious metals lower – Gold testing 1250…

 

WTI held on to gains despite Trump budget talk of selling the Strategic Petroleum Reserve…

 

Bitcoin tumbled late on yesterday but, despite a stronger dollar, virtual speculators bought the dip sending the cryptocurrency to a new record high…

 

end

The Comey hearing is delayed so that Comey can speak to new FBI director Mueller:

(to get his story straight??)

(courtesy zero hedge)

Comey Hearing Delayed: Chaffetz Postpones Hearing So Comey Can Speak With Special Counsel

Last week, in a frenzied attempt to get to the bottom of the ‘Comey memos’ fiasco, Jason Chaffetz scheduled a hearing for the former FBI Director to appear before the House Oversight Committee this Wednesday at 9:30AM.  That said, per the tweet below, Chaffetz apparently scheduled the hearing before even tracking down Comey’s latest cell phone number.

Officially noticed a hearing for next Wed at 9:30am ET with former FBI Dir Comey. But I still need to speak with him…evidently has a new #

 

Now, it appears that Chaffetz was finally able to track down Comey’s new cell number but it only resulted in the meeting being postponed due to Comey’s desire to speak with Special Counsel Mueller before giving public testimony.

Spoke with Comey. He wants to speak with Special Counsel prior to public testimony. Hearing Wed postponed. @GOPoversight

 

Of course, Comey has also agreed to a hearing before the Senate Intelligence Committee though that meeting won’t be scheduled until after Memorial Day.

So is Comey getting cold feet or does he just need to get his story straight with the Special Counsel before speaking publicly…bit of both?

* * *

Below is our previous notes on Chaffetz’s efforts to obtain the now-infamous “Comey Memos.”

Update: Jason Chaffetz office just released the letter sent to the FBI’s Andrew McCabe demanding all Comey-Trump related memos…

Today, the New York Times reported former Federal Bureau of Investigation Director James Comey memorialized the content of phone calls and meetings with the President in a series of internal memoranda. At least one such memorandum reportedly describes a conversation in which the President referenced the FBI investigation of former National Security Advisor Lt. Gen. Michael Flynn and said to Comey, “I hope you can let this go.”

 

According to the report, “Mr. Comey created similar memos — including some that are classified — about every phone call and meeting he had with the president.” If true, these memoranda raise questions as to whether the President attempted to influence or impede the FBI’s investigation as it relates to Lt. Gen. Flynn. So the Committee can consider that question, and others, provide, no later than May 24, 2017, all memoranda, notes, summaries, and recordings referring or relating to any communications between Comey and the President.

 

The Committee on Oversight and Government Reform is the principal oversight committee of the House of Representatives and may at “any time” investigate “any matter” as set forth in House Rule X. An attachment to this letter provides additional information about responding to the Committee’s request. Thank you for your attention to this matter.

Original…

Trump and/or Comey are getting increasingly boxed in here – one or other is going to be proved a liar soon enough.

*  *  *

As we detailed earlier, following the New York Times latest Trump bombshell (see “Comey’s Revenge: Leaks Memo To NYT Saying Trump Asked Him To End Flynn Investigation“), the impeachment word seems to be getting tossed around a little more loosely this evening.  And, given the serious accusations levied by former FBI Director James Comey, the Chairman of the House Oversight Committee, Jason Chaffetz, has  just promised that he will “get the Comey memo, if it exists,” which was backed up by the not so thinly veiled threat: “I have my subpoena pen ready.”

.@GOPoversight is going to get the Comey memo, if it exists. I need to see it sooner rather than later. I have my subpoena pen ready.

Meanwhile, in the following Q&A with NBC, Chaffetz says his committee has already started “drafting the necessary paperwork” to get Comey’s memo to the extent it is not handed over voluntarily.

“If the memo exists, I need to see it and I need to see it right away.  We are drafting the necessary paperwork to get the mom so we will find out in a hurry if its out there.”

 

“I want to read the memo first but on the surface that seems like an extraordinary use of influence to try to shutdown an investigation being done by the FBI.  I don’t know if it’s true yet but I want to find out if that’s actually out there.”

View image on TwitterView image on Twitter

🚨Chaffetz to NBC:”If the memo exists, I need to see it and I need to see it right away. We are drafting the necessary paperwork to get [it]”

END
Washington Post releases anonymously sourced information that Trump asked for help in the pushing back against the Russian probe
(courtesy Washington post)

Trump Asked Intel Officials To Help “Push Back” Against Russia Probe: WaPo

President Donald Trump is in Israel, but back home, the Washington Post just released the latest anonymously sourced takedown. This time, the paper is alleging that Trump also asked two of his own appointees, National Security Agency head Mike Rogers and Director of National Intelligence Dan Coats, for help “pushing back” against the Russian investigation, in other word, obstructing justice.

Once again, the report relies on anonymous “current and former” officials who were writing down notes of their convesations with Trump in real time in personal notebooks. WaPo reports:

“Trump made separate appeals to the director of national intellifence, Daniel Coats, and to Adm. Michael S. Rogers, the director of the National Security Agency, urging them to publicly deny the existence of any evidence of collusion during the 2016 election.”

Trump sought their assistance after former FBI Director James Comey testified to the House Intelligence Committee on March 20 that the FB was investigating any links between the Trump campaign and Russian government, WaPo noted.

Trump’s conversation with Rogers was documented contemporaneously in an internal memo written by a senior NSA official, according to the officials.

 

It is unclear if a similar memo was prepared by the Office of the Director of National Intelligence to document Trump’s conversation with Coats. Officials said such memos could be made available to both the special counsel now overseeing the Russia investigation and congressional investigators, who might explore whether Trump sought to impede the FBI’s work.

Coats and Rogers both deemed the request “inappropriate” and “refused to comply,” WaPo noted, citing two current and two former officials – who spoke on the condition of anonymity to discuss private communications with the president.

The editors at WaPo are probably celebrating their latest scoop that will likely be confirmed by the NYT and CNN in short order, and it is clear that the implications of WaPo’s allegations are that Trump is impeachable.

But we maintain that these anonymously-sourced, second-hand stories are a problem, and just the other day Rolling Stone’s Matt Taibbi explained why in a compelling column for the magazine. There are some major inconsistencies in  terms of what the public knows about this investigation, Taibbi noted.

Whether or not Trump is guilty, somebody should come forward with more evidence, or at least some information from an identifiable and credible source about the exact nature of the charges being pursued, because the public deserves to know.

 

Our legal system was constructed with the aim of not allowing someone to linger under a cloud of suspicion, but remain uncharged. Trump deserves that much at least.

 

 

end

This is audacious: Trump plans to cut a massive 3.6 trillion USA in entitlements over 10 yrs including selling half of the USA strategic oil reserve. However it will be dead on arrival

(courtesy zero hedge)

Trump Seeks Historic $3.6 Trillion In Spending Cuts, Including Selling Half Of US Strategic Oil Reserve

More details of President Donald Trump’s first budget proposal were reported Monday by Bloomberg and Reuters. The leaks add to the picture of what we know about Trump’s budget, which also includes a flurry of leaks published by The Washington Post, the Associated Press and Bloomberg late Sunday, which fleshed out Trump’s plans to slash entitlement spending.

In total, the budget plans to trim $3.6 trillion in spending over 10 years across all discretionary spending and non-discretionary spending lines, in order to enable tax reductions across the board: if enacted – and remember that the president’s budget is just an initial blueprint which rarely passes in its original form – the Trump administration would implement the deepest cuts to government programs in a generation, delivering the opening salvo in a new round of budget battles in Washington.

This is key to balancing the budget by the 10th year.

It also relies on rather rosy growth economic projections,  estimating that U.S. gross domestic product will accelerate to 3% by fiscal year 2020. That’s compared with Bloomberg’s median projection of 2%, and the Congressional Budget Office’s long-term projection of 1.9%. It also expects the 10-year Treasury yield to rise to 3.8% in that time, while CPI increases to 2.3% and unemployment holds more or less steady at 4.7%.

Bloomberg also noted that Trump’s budget been declared dead on arrival by many of his Republican allies in Congress,” so Trump may be headed for another protracted legislative battle.

The full proposal, titled “A New Foundation for American Greatness,” is expected at 11 a.m. Eastern. The proposal relies on a mix of cuts to anti-poverty programs, optimistic economic forecasting and deep cuts to nondefense discretionary funding to meet its targets. It would not touch Social Security and Medicare, which Trump promised to leave alone during his campaign. The budget would also dramatically shift spending to the Pentagon from domestic programs. In 2018, the budget would shift $54 billion from nondefense discretionary spending to defense by enacting major cuts to the State Department, the Environmental Protection Agency, the Department of Agriculture and other agencies.

Here’s a rundown of the latest details to emerge:

  • The budget will include $200 billion in new funding over 10 years for Trump’s promised $1 trillion infrastructure investment program. The Trump administration has said the money will be used for loans, grants and other ways to secure investment by the private sector and state and local governments, Bloomberg noted. The $1 trillion target incorporates projects, like the Keystone XL Pipeline, that wouldn’t have happened if the administration hadn’t gotten involved.
  • It includes an additional $25 billion budgeted over 10 years to give parents six weeks of family leave.
  • budget also includes plans to sell off half the oil in the US Strategic Petroleum Reserve (SPR), an unexpected announcement which has pressured the price of crude on Tuesday.
  • The Department of Homeland Security’s budget would increase $3 billion, while the Pentagon’s budget would rise $6 billion.
  • Domestic agencies’ budgets will be cut by 10% in 2018 and 40% in 2027.
  • $2.6 billion for increased border security, including $1.6 billion earmarked for Trump’s promised border wall. The other $1 trillion is for aircraft, equipment and surveillance technology, Bloomberg noted.
  • The budget calls for steep cuts to federal workers’ retirement benefits. Per Bloomberg: “Eliminating cost-of-living adjustments for retirees would save $42 billion while increasing required employee retirement contributions would save $72 billion. And the budget would save $72 billion through cuts to Social Security Disability Insurance.”

Bloomberg notes that the budget relies on sweeping tax cuts to strengthen economic growth, offsetting some of the drop in tax revenue. But so far, the administration has provided few details beyond the broad strokes revealed by Treasury Secretary Steven Mnuchin and Chief Economic Advisor Gary Cohn.

Office of Management and Budget Director Mick Mulvaney said Monday that the proposal wouldn’t contain any new information about Trump’s tax-reform plans; even still, the math is a little vague.

The budget proposal, Bloomberg reports, also relies on “several other classic accounting gimmicks,” like this one:

The budget “assumes that the wars in Afghanistan and the Middle East will cause future Congresses to allocate $593 billion in extra war funding that won’t be needed and then claims to save that amount by not spending it.”

It also assumes that the repeal of a section of Dodd-Frank that gives regulators the power to wind down the big banks during a crisis will lead to a savings of $35 billion. The nonpartisan Congressional Budget Office projects savings of just $14.5 billion.

* * *

Finally, with the OPEC Vienna meetingin two days, here are some more details on the biggest surprise in the budget proposal, the sale of half the US SPR oil holdings. As Bloomberg writes, the White House plan to trim the national debt includes selling off half of the nation’s emergency oil stockpile. The sale would raise $500 million in fiscal year 2018 by draining the Strategic Petroleum Reserve, and as much $16.6 billion in oil sales over the next decade.

The Strategic Petroleum Reserve currently holds 687.7 million barrels of oil in salt caverns and tanks at designated locations in Texas and Louisiana. That allows for quick distribution when natural disasters or unplanned accidents occur, according to the Energy Department website.

Measures passed in 2015 and 2016 call for the sale of nearly 190 million barrels of oil from the reserve between 2017 and 2025, to raise money for unrelated government programs. Those sales would cut the reserve by about 27 percent. Slashing the stockpile by half would require further sales, and would risk breaching the legally required inventory threshold. The reserve must contain a minimum of 450 million barrels.

The budget summary document doesn’t indicate the scope or timing of potential oil reserve sales, or whether a $2 billion program to modernize the stockpile’s infrastructure would be affected.

 

 

end

Services rebound but the all important national USA manufacturing slumps to 8 month lows. Costs rise

(courtesy zero hedge)

 

 

“Somewhat Underwhelming” US Manufacturing Slumps To 8-Month Lows As Services Rebound Amid Soaring Costs

Weak Chinese PMIs and ‘steady’ European PMIs were trump by German IFO exuberance overnight ahead of US PMIs. Having tumbled to their lowest level since September, May preliminary US PMIs were mixed with Manufacturing slumping to 8-month lows and Services rebounding to 4-month highs.

The overall compoosite PMI rose modestly but the divergence betwen manufacturing and services is widening once again (and remember that has never ended well for services)

Measured overall, average cost burdens increased at a robust pace during May. This was driven by the steepest rise in service sector input prices since June 2015.

Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:

“Growth of US business activity gained a little momentum for a second successive month in May, but the upturn still looks somewhat underwhelming.

 

Historical comparisons of the PMI against GDP indicates that the PMI is running at a level broadly consistent with the economy growing at a 0.4% quarterly rate (1.5% annualized). Actual second quarter GDP numbers are likely to be considerably stronger, in part reflecting seasonality in the official data and the weak first quarter.

 

“May saw an encouraging upturn in service sector growth to the fastest so far this year, buoyed by rising domestic demand. Manufacturers, on the other hand, reported the smallest rise in production since last September amid lacklustre export sales.

 

“There were mixed signals for the outlook. Optimism about the year ahead fell slightly, but hiring remained reassuringly solid, thanks to a stepup in service sector recruitment. The survey is indicative of non-farm payroll growth of approximately 160,000.

 

“Average prices charged for goods and services meanwhile showed one of the largest rises in the past two years. The strengthening of business activity growth and rise in prices will add to expectations of the Fed hiking interest rates again in June.”

end

 

Then the Richmond Fed mfg index collapses.  This is a soft data entry.

(courtesy zero hedge)

Soft Data Collapse Continues – Richmond Fed Crashes

And just like that… hope was gone.

Having soared to post-crisis highs in the months after President Trump’s election, Richmond Fed’s Manufacturing Survey has crashed (by the second biggest drop ever) in May

New Order volume growth disappeared, capacity utilization shrank dramatically, Order backlogs disappeared, shipments plunged, and the average workweek tumbled.

Worse still, the expectations index also tumbled with every subcomponent dropping.

end

A lie: his historic budget will entail a taxpayer bailout in the hundred of billions:

(courtesy zerohedge)

Mnuchin Comments On Trump’s “Historic” Budget Proposal: “It Will Prevent Taxpayer Bailouts”

In a statement issued moments ago discussing Trump’s proposed, if completely impossible, budget proposal, Treasury Secretary Steven Mnuchin said that Trump’s “budget will achieve savings through reforms that prevent taxpayer bailouts and reverse burdensome regulations that have been harmful to small businesses and American workers.” Translation: taxpayer bailouts are imminent, especially now that the current economic cycle is the 3rd longest of all time and a recession grows likelier with every passing day.

Mnuchin also said that Trump’s proposed initiatives “coupled with comprehensive tax reform and other key priorities, will move America one step closer to sustained economic growth of 3 percent or higher.”

While we will clearly take the under, what we find most amazing about Trump’s budget proposal, is that it does not anticipated a recession until 2027. That would imply 18 years of economic growth since the 2009 recession, without a single contraction! Good luck with that.

Finally, Mnuchin said the budget focuses the Treasury “on main missions of collecting revenue and managing debt, while increasing efficiency to reduce operating expenditures” and puts the emphasis of “cybersecurity, maintains funding to implement sanctions as well as combat terror financing.”

In short: a big waste of time. Full statement below:

Statement from Secretary Mnuchin on President Trump’s Budget Proposal

 

Secretary of the Treasury Steven T. Mnuchin issued the following statement today in response to President Donald J. Trump’s budget proposal: 

 

“President Trump’s budget focuses Treasury on our core missions of collecting revenue and managing the nation’s debt, while modernizing, streamlining and increasing efficiencies to reduce operating expenditures. It prioritizes investments in cybersecurity, and maintains critical funding to implement sanctions, combat terrorist financing, and protect financial institutions from threats. The President’s budget will achieve savings through reforms that prevent taxpayer bailouts and reverse burdensome regulations that have been harmful to small businesses and American workers. These initiatives, coupled with comprehensive tax reform and other key priorities, will move America one step closer to sustained economic growth of three percent .

 

END

 

Another indicator that things are not doing well.; new home sales totally collapse in April.

and Janet is going to raise rates??

(courtesy zero hedge)

New Home Sales Collapse In April

If you’re surprised by the collapse in new home sales in April, then you’re not paying attention.

The 11.4% MoM plunge in new home sales in April was 5 standard deviations below expectations and the biggest since March 2015.

 

Year-over-year, new home sales have tumbled back to unchanged…

 

As the surge in mortgage rates (and tumble in affordability) filters through to actual sales (just as it did in 2013’s taper tantrum)…

 

New home sales fell 73k in April, with the Median new home price falling 3.8% y/y to $309,200

12% of new homes sold in April cost more than $500,000, down from 18% last month. Months’ supply at 5.7 in April compared to 4.9 in March.

And the biggest driver of new home sales collapse was in The West – which saw a 26.3% collapse – the most since Oct 2010…

 

Probably a good time to hike rates again Janet, eh?

END

Well that about does it for tonight

I will see you tomorrow night

H.

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