May 24/Gold and silver rebound in the access market as markets still cannot digest what on earth the Fed is doing/Strange data at the comex; gold open interest rises by 13000 contracts but the silver OI falls by 3,000 contracts/Moody’s downgrades sovereign China’s debt/Chaos on the streets of Brazil/

GOLD: $1253.45  down $2.50

Silver: $17.12  down 2  cent(s)

Closing access prices:

Gold $1258.50

silver: $17.23

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: $1260.70 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  1251.40

PREMIUM FIRST FIX:  $9.30

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SECOND SHANGHAI GOLD FIX: $1257.32

NY GOLD PRICE AT THE EXACT SAME TIME: 1248.91

Premium of Shanghai 2nd fix/NY:$8.41

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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: $1252.55

NY PRICING AT THE EXACT SAME TIME. $1252.70

For comex gold:

MAY/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH:  3 NOTICE(S) FOR 300  OZ. 

 TOTAL NOTICES SO FAR: 524 FOR 52400 OZ    (1.6298 TONNES)

For silver:

For silver: MAY

8 NOTICES FILED TODAY FOR 40,000  OZ/

Total number of notices filed so far this month: 4583 for 22,915,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

END

 

We have now entered options expiry week:

options  expiry on the comex Thurs: May 25. (corrected) Options expiry for the OTC/LBMA gold/silver contracts: May 31/2017 at around 12 noon. So far our crooks are losing control over the options expiry period.  Tomorrow is comex expiry but the big one is the London’s OTC expiry.  If the precious metal prices hold throughout the week, then I can safely say that the bankers are running for the hills.

 

 

Let us have a look at the data for today

.

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In silver, the total open interest FELL  BY 3,944  contracts DOWN to 203,459 DESPITE THE TINY FALL IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (DOWN  6 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.  1.017 BILLION TO BE EXACT or 145% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 8 NOTICE(S) FOR 40,000  OZ OF SILVER

In gold, the total comex gold ROSE BY A HUMONGOUS 13,795  contracts DESPITE THE FALL IN THE PRICE OF GOLD ($5.65 with YESTERDAY’S TRADING). The total gold OI stands at 462,572 contracts. THE BANKERS SUPPLIED THE NECESSARY SHORT PAPER IN TOTAL CONTRAST TO SILVER DESPITE THE FALL IN PRICE ON BOTH METALS. WE MAY HAVE WITNESSED SOME OF THOSE LONG CALLS HIDDEN IN THE EFP’S BEING EXERCISED FOR THE JUNE CONTRACT MONTH

we had 3 notice(s) filed upon for 300 oz of gold.

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

GLD:

We had no changes in tonnes of gold at the GLD

 

Inventory rests tonight: 847.45 tonnes

.

SLV

Today: big changes in inventory/a withdrawal of 1.893 million oz from the SLV

THE SLV Inventory rests at: 341.922 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 $1.19 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 3,944 contracts DOWN TO 203,459, (AND STILL CLOSE TO  THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), DESPITE THE  FALL IN PRICE FOR SILVER WITH YESTERDAY’S TRADING  (6 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 TUESDAY night/WEDNESDAY morning: Shanghai closed UP 2.13 POINTS OR .07%   / /Hang Sang CLOSED UP 25.35 POINTS OR 0.10% The Nikkei closed UP 129.70 POINTS OR 0.66%/Australia’s all ordinaires  CLOSED UP  0.15%/Chinese yuan (ONSHORE) closed DOWN at 6.8903/Oil UP to 51.51 dollars per barrel for WTI and 54.28 for Brent. Stocks in Europe OPENED IN THE RED EXCEPT LONDON    ..Offshore yuan trades  6.8786 yuan to the dollar vs 6.8903 for onshore yuan. NOW  THE OFFSHORE IS A LITTLE STRONGER 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 STRONGER DOLLAR. CHINA RECEIVED NEWS THAT ITS DEBT HAS BEEN DOWNGRADED AND THUS ARE NOT HAPPY CAMPERS 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)Last night, Moody’s downgrades China from Aa3 to A1 and warns about their worsening debt outlook.  However at the end of their trading session, Shanghai ignored the downgrade and finished higher.

( zero hedge)

ii)This is just the beginning:  Chinese banks are now in serious trouble

( zero hedge)

4. EUROPEAN AFFAIRS

i)UK/SUICIDE BOMBER

Britain is not happy with the USA leaks on the suicide bomber Abedi.  What we know is that he did not act alone and had proven links to ISIS

( zero hedge)

i b)The brother of Salman Abedi is arrested in Tripoli and 3 others has been detained

( zerohedge)

ii)SPAIN

If the Spanish government does not allow a regional referendum vote of independence, Catalonia threatens an immediate declaration of Independence.

( Mish Shedlock/Mishtalk)

iii)ECB/EUROPE

Amazing, the ECB’s own policies is creating this warning of  “excessive exuberance” in house prices.  The ECB ses financial instability due to higher yields which of course was fueled by their massive printing of money

(courtesy zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

i)The Canadian loonies surges to a 5 week high after the Bank of Canada surprises with hawkish statements that Canada is doing OK even with lower oil prices

( zero hedge)

ii)Inflation is totally understated in Canada

( National Bank/WolfStreet/WolfRichter)

 

7. OIL ISSUES

i)This is a very important read…originally estimated to have a SPR of 500 million barrels, it has now grown to over 700  million barrels and that should be close to maximum capacity.  For the first time, this month, China is slowing down its purchases of oil

( zero hedge)

a must read…

ii)We just had the 16th straight week of USA increased crude production and that sent both WTI and RBOB southbound;

( zero hedge)

8. EMERGING MARKET

Chaos in Brazil

( zero hedge)

 

9.   PHYSICAL MARKETS

i)Von Greyerz describes that bitcoin is surging because there is no government interference
(courtesy Von Greyerz/Kingworldnews/GATA)
ii)With the downgrade of China, Bitcoin explodes above $2400.00 per coin( zero hedge)

10. USA stories

i)For those of you who think that markets are not manipulated, we now have legendary investor Asher Edelman state that the entire market rally is the PPT

( zero hedge)

ii)The never ending witch hunt of Donald Trumps ties to Russia continues: today the House Democrats ask Deutsche bank for information of loans given to the President

( zero hedge)

iii)Existing home sales which includes many flippers, (double counting of home sales) records slumping sales despite prices soaring to record highs

( zero hedge)

iv) Nothing new in the FOMC minutes as the rate hike is “soon” and the economic weakness is probably “transitory”..  However the Fed did say it needs evidence before it rolls off the treasuries from its balance sheet

 

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 13,7995 CONTRACTS UP to an OI level of 462,572 DESPITE THE FALL IN THE PRICE OF GOLD ( $5.50 with YESTERDAY’S trading). THE BANKERS SUPPLIED THE NECESSARY SHORT PAPER AS LONGS STAMPEDED  INTO THE GOLD ARENA YESTERDAY WE MAY HAVE ALSO WITNESSED THE EXERCISING OF LONG CALLS IN THE JUNE GOLD CONTRACT MONTH.    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  27. We had 2  notices filed yesterday so we  gained 4 GOLD CONTRACTS OR AN ADDITIONAL 400 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 6951 contracts DOWN to 170,471.  The non active July contract GAINED another 46 contracts to stand at 1087 contracts. The next big active month is August and here the OI gained 16,609 contracts up to 185,992.

We are catching up to last year’s huge open interest as on May 22 2016 we had at this exact time:    185,746 contracts of JUNE 2016 CONTRACTS OPEN.( compared to JUNE 2017: 170,471)

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

We had 3 notice(s) filed upon today for 300 oz

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And now for the wild silver comex results.  Total silver OI FELL BY 3,944 contracts FROM 207,403 DOWN TO 203,459 DESPITE YESTERDAY’S TINY 6 CENT  LOSS.  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 8 contracts FALLING TO 71 contracts. We had 2 notices filed on yesterday , so we finally lost  6 notices or an additional 30,000 oz will not stand for delivery and these were settled through the EFP route.

The non active June contract LOST 11 contracts to stand at 670. The next big active month will be July and here the OI  LOST 4635 contracts DOWN to 146,453.

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 8 notice(s) filed for 40,000 oz for the MAY 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 230,586 contracts which is good

Yesterday’s confirmed volume was 341,064 contracts  which is excellent.

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for MAY
 May 24/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
6622.90  oz
206 kilobars
Manfra
Scotia
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
64,300.0000 oz
Scotia
2,000 kilobars
No of oz served (contracts) today
 
3 notice(s)
300 OZ
No of oz to be served (notices)
24 contracts
2400 oz
Total monthly oz gold served (contracts) so far this month
524 notices
52400 oz
1.6298 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   222,831.1 oz
Today we HAD  3 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 1  customer deposit(s):
 i) Into Scotia: 64,300.000 oz
(2,000 kilobars/  SUSPECT!!!)
total customer deposits; 64,300.000  oz
We had 2 customer withdrawal(s)
 i) out of Manfra:  192.90 oz  (6 kilobars)
ii) Out of Scotia:  6430.0000 oz (200 kilobars /suspect!!)
total customer withdrawal: 6622.90 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 3 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 (524) x 100 oz or 52,400 oz, to which we add the difference between the open interest for the front month of MAY (27 contracts) minus the number of notices served upon today (3) 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 (524) x 100 oz  or ounces + {(27)OI for the front month  minus the number of  notices served upon today (3) x 100 oz which equals 54,800 oz standing in this non active delivery month of MAY  (1.7045 tonnes).  We gained 7 contracts or an additional 700 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/  1.7045 TONNES
total for the 17 months;  249.624 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) = 8,818,587.082 or 274.29 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 274.29 tonnes for a  loss of 28  tonnes over that period.  Since August 8/2016 we have lost 79 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  79 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE APRIL DELIVERY MONTH
MAY INITIAL standings
 May 24. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
377,950.116 oz
CNT
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 1,218,993.890  oz
JPMorgan
Scotia
No of oz served today (contracts)
 8 CONTRACT(S)
(40,000 OZ)
No of oz to be served (notices)
63 contracts
( 315,000 oz)
Total monthly oz silver served (contracts) 4583 contracts (22,915,000 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  6,694,070.8 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: 377,950.116 oz
TOTAL CUSTOMER WITHDRAWALS: 377,950.116  oz
 We had 2 Customer deposits:
i) Into JPMorgan;  619,634.800 oz
ii) Into Scotia: 599,359.090 oz
***deposits into JPMorgan have now resumed 
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  1,218,993.89 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the MAY. contract month is represented by 8 contract(s) for 40,000 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 4583 x 5,000 oz  = 22,915,000 oz to which we add the difference between the open interest for the front month of MAY (71) and the number of notices served upon today (8) x 5000 oz equals the number of ounces standing

 

.
 
Thus the initial standings for silver for the MAY contract month:  4583(notices served so far)x 5000 oz  + OI for front month of APRIL.(71 ) -number of notices served upon today (8)x 5000 oz  equals  23,230,000 oz  of silver standing for the MAY contract month.
We finally lost 6 contracts or an additional 30,000 oz will not stand for delivery and somebody wished to accept 6 EFP contract for a huge fiat bonus.  
 
 
Volumes: for silver comex
 
Today the estimated volume was 70,313 which is huge
Yesterday’s  confirmed volume was 104,577 contracts which is simply out of this world
TODAY’S ESTIMATED VOLUME OF 104,577 CONTRACTS EQUATES TO 522 MILLION OZ OF SILVER OR 75% 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:   201.466 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
 
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.3 percent to NAV usa funds and Negative 6.5% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.9%
Percentage of fund in silver:38.0%
cash .+0.1%( May 24/2017) 
 
2. Sprott silver fund (PSLV): Premium FALLS TO   -.17%!!!! NAV (May 24/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS to -0.76% to NAV  (May 24/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.17% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.76%/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 24/no change in inventory at the GLD/inventory rests at 847.45 tonnes

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

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May 24 /2017/ Inventory rests tonight at 847.45 tonnes
*IN LAST 158 TRADING DAYS: 100.68 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 101 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 24./a “paper” withdrawal of 1.893 million oz from the SLV/inventory rests tonight at 341.922 million oz

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 24.2017: Inventory 341.922  million oz
 end

Major gold/silver trading/commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Gold and Silver Bullion Now Treated As Money In Arizona

By Mark O’Byrne May 24, 2017

Gold and Silver Bullion Now Treated As Money In Arizona

by Ron Paul Liberty Report staff

Undermining the Federal Reserve received a major boost yesterday.

Arizona Governor Doug Ducey signed into law a bill that eliminates capital gains taxes on gold and silver, thus allowing Arizona residents to use precious metals as currency instead of Federal Reserve notes.

Currency competition against the monopolist Fed is starting to unfold. Let’s hope that other states follow in Arizona’s heroic footsteps. There’s no reason to wait for another severe financial crisis to act.

?Read Ron Paul’s statement via The Campaign For Liberty below:

Campaign for Liberty Chairman Ron Paul and Campaign for Liberty President Norman Singleton issued the following statements regarding the Arizona Legislature’s passage — and Arizona Governor Doug Ducey’s signing — of HB 2014.
?
HB 2014 defines gold, silver, and other precious metals as legal tender and exempts them from capital gains taxes, thus allowing Arizona residents to use precious metals instead of Federal Reserve notes.

Dr. Paul testified before the Arizona Senate Finance Committee in support of the bill in March.

Every supporter of free-markets should cheer Arizona’s passage of HB 2014. There is no more justification for forcing individuals to use government-created money than there is for forcing them to drive government-manufactured cars. In fact, as the Federal Reserve’s 114 years of failure shows, giving monopoly control over our money supply to a secretive central bank is the most dangerous form of government intervention,” said Dr. Ron Paul.

“By allowing the people of Arizona to use an alternative to Federal Reserve-created fiat currency, HB 2014 will help the people of Arizona survive the next Federal Reserve-created recessions. Passage of this bill will also help make Arizona more attractive to the growing number of people seeking alternatives to fiat money in order to protect themselves, their families, and their business from the effects of Federal Reserve policy. Thus, this bill will help attract new investments and jobs to Arizona.

“I hope other states follow Arizona’s lead and pass legislation protecting the right of their citizens to choose to use precious metals instead of the Federal Reserve’s consistently depreciating fiat currency,” continued Dr. Paul.
?
“Congratulations to Arizona Campaign for Liberty for their successful efforts to pass HB 2014 through the Arizona Legislature and then convincing Governor Ducey to reverse positions and sign the bill into law,” said C4L President Norm Singleton. “Campaign for Liberty is planning to work with activists across the country to get more state legislatures to follow Arizona’s lead. We will also continue our critical work to change our nation’s money monopoly by getting Congress to vote on — and pass — Audit the Fed.”

Full article courtesy of Ron Paul Liberty Report

http://www.goldcore.com/us/gold-blog/gold-silver- bullion-now-treated-money-arizona/

 

-END-

Von Greyerz describes that bitcoin is surging because there is no government interference
(courtesy Von Greyerz/Kingworldnews/GATA)

Government intervention stalls gold but bitcoin escapes it, von Greyerz says

Section:

4:37p ET Tuesday, May 25, 2017

Dear Friend of GATA and Gold:

Gold fund manager Egon von Greyerz tells King World News today that bitcoin is surging and gold and silver are stagnant because governments can suppress the latter two in the futures markets, where physical gold accounts for less than two-tenths of 1 percent of the nominal gold traded. Still, von Greyerz expects reversals in the markets this year. His observations are posted at KWN here:

http://kingworldnews.com/greyerz-what-is-unfolding-right-now-is-unimagin…

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

END

With the downgrade of China, Bitcoin explodes above $2400.00 per coin

(courtesy zero hedge)

Bitcoin Explodes Above $2400 After China Downgrade, Scaling Agreement Reached

Following comments from DoubleLine’s Jeff Gundlach tieing the surge in virtual currencies to the demise of China (right before that nation is downgraded), Bitcoin surged overnight, breaking above $2400 for the first time. It is now up over 150% year-to-date.

Bitcoin is up fopr the 26th day in the last 29 sessions, doubling in price in that period…

 

Wednesday’s gain comes after a bitcoin scaling agreement was reached by the Digital Currency Group, representing 56 companies in 21 countries, at the Consensus 2017 conference in New York, which reduced some of the fears surrounding the so-called ‘hard fork’ in Bitcoin’s code. The agreement states:

“We agree to immediately support the following parallel upgrades to the bitcoin protocol, which will be deployed simultaneously and based on the original Segwit2Mb proposal:

 

  • “Activate Segregated Witness at an 80% threshold, signaling at bit 4
  • “Activate a 2 MB hard fork within six months”

The announcement is the latest bit of good news for the cryptocurrency.

At the beginning of April, Japan announced bitcoin had become a legal payment method in the country.

Additionally, Ulmart, Russia‘s largest online retailer, said it would begin accepting bitcoin even though Russia had said it wouldn’t explore the cryptocurrency until 2018.

The gains also seem to be boosted by speculation the US Securities and Exchange Commission could overturn its ruling on the Winklevoss twins’ bitcoin exchange-traded fund.

end

This is amazing.  In my USA section, I highlighted to you the story at no news organizations want to hear that the entire market is propped up by the plunge protection team

(courtesy GATA/Chris Powell/)

No major news organization wants the financial news story of the century

Section:

1:13a ET Wednesday, May 24, 2017

Dear Friend of GATA and Gold:

The indispensable ZeroHedge today calls attention to CNBC’s having just given extensive airtime to a prominent investor, Asher Edelman, as he asserted that the U.S. government is using the fabled “Plunge Protection Team” — Edelman called it “Plunge Protection Group” — to intervene surreptitiously in the stock market to prevent collapses and even merely disconcerting volatility:

http://www.zerohedge.com/news/2017-05-23/asher-edelman-says-i-have-no-do…

Yes, that market manipulation should be discussed at such length by a mainstream financial news organization is remarkable progress. But while at the conclusion of the interview with Asher a member of the CNBC panel wonders where records of the PPT’s interventions might be found, there is no suggestion that financial journalists should investigate possible interventions.

Little GATA often has shown how easy it is to devise questions about intervention that central bank and government officials refuse to answer, lest their surreptitious activities be exposed and lose effect.

So imagine what a major news organization could accomplish here. It could break the financial news story of the century. But nobody seems to want it.

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

Your early WEDNESDAY 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  6.8903(DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES A LITTLE STRONGER TO ONSHORE AT   6.8786/ Shanghai bourse CLOSED UP 2.13 POINTS OR .07%   / HANG SANG CLOSED UP 25.35 POINTS OR 0.10% 

2. Nikkei closed UP 129.70  POINTS OR 0.66%   /USA: YEN FALLS TO 111.81

3. Europe stocks OPENED IN THE RED EXCEPT LONDON        ( /USA dollar index RISES TO  97.36/Euro UP to 1.1187

3b Japan 10 year bond yield: RISES TO   +.053%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.81/ 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::  51.51 and Brent: 54.28

3f Gold DOWN/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.39%/Italian 10 yr bond yield DOWN  to 2.113%    

3j Greek 10 year bond yield RISES to  : 5.95% ???  

3k Gold at $1251.55/silver $17.08 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 13/100 in  roubles/dollar) 56.46-

3m oil into the 51 dollar handle for WTI and 54 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 111.81 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  0.9768 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0930 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +0.39%

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 2.280% early this morning. Thirty year rate  at 2.938% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

China Downgrade Forgotten As Asia Closes Higher, Futures Flat Ahead Of Fed Minutes

Not even last night’s Moody’s credit downgrade of China – the first since 1989 – could dent the global stock rally which has pushed global stock prices to all time highs. After initially sliding, regional stocks and emerging Asian currencies pared early losses following the unexpected downgrade of China, taking their cue from the “sudden reversal” of the Shanghai Composite Index, which some speculated saw the latest intervention of the “national team.”

Moody’s action on China briefly rattled Asian markets, but against a backdrop of strengthening global growth and the impending release of minutes from the Federal Reserve’s latest meeting, investors appeared to quickly move on. MSCI’s broadest index of Asia-Pacific shares outside Japan was unchanged while Japan’s Nikkei stock index ended 0.7 percent higher.

The Shanghai Composite gained 0.1% at the close, reversing an early decline of 1%, while the offshore yuan inched up. As reported last night, the major overnight catalyst in Asia was Moody’s downgrade of China’s credit rating to A1 from Aa3 in early Asia trading, citing a worsening outlook for the nation’s financial strength – in the end of the Chinese session it had little impact, aside from another steep selloff in iron ore, which traded nearly limit down. The downgrade impact on regional currencies was likewise limited as Asia’s economic growth is seen to be improving and there are still positive stories such as S&P’s upgrade of Indonesia’s rating last week.

By the end of the session, nobody even remembered China had been downgraded: the Shanghai Composite rose 0.1 percent, reversing a drop of 1.3 percent. The Hang Seng also ended higher after an earlier decline of 0.4 percent. Japan’s Topix index climbed 0.6 percent, while Indonesia’s benchmark index slumped 0.7 percent. The Australian dollar slipped 0.1 percent, paring a steeper drop of as much as 0.5 percent.

Away from Asia, European stocks rose and U.S. equity futures and the dollar both steadied. The Stoxx Europe 600 Index climbed a second day, but struggled to gain momentum as miners slumped after China’s downgrade. That triggered declines across copper, nickel, zinc and iron ore. The British pound strengthened after two days of losses, even as Prime Minister Theresa May warned that further terrorist attacks could be imminent.

“There’s been a cautious start in Europe this morning with stocks in the red following a downgrade in the Chinese credit rating from Moody’s,” said David Cheetham, chief market analyst at brokerage XTB. “After being very much at the front and center of global risk sentiment at the beginning of last year, the Chinese slowdown story has been almost forgotten, with politics throughout Europe and the U.S. taking the limelight.”

S&P500 futures were little changed as investors awaited economic data and earnings reports, while volatility dropped for a fifth day. S&P 500 contracts expiring in June added less than 0.1% to 2,398.5 at 6:30 a.m. in New York.

Crude extended gains a sixth day as OPEC prepared for Thursday’s key meeting in Vienna, and where an announcement of a 9 month productin cut extension now is fully priced in.

In currencies, the dollar was little changed against most of its peers and Treasury yields were steady before the U.S. Federal Reserve releases later Wednesday the minutes of its May 3 policy meeting. With Fed due to release its May meeting minutes, “markets are ready to catch any clue regarding the likelihood of an interest- rate hike at the FOMC’s June meeting,” writes Ipek Ozkardeskaya, senior analyst at London Capital Group. Fed Bank of Philadelphia President Patrick Harker said June “is a distinct possibility” for the U.S. central bank’s second interest-rate increase of 2017.

While equities quickly forgot the downgrade of China, the world’s top user of materials, industrial metals were far more bruised, as nickel slumped 1.9% and copper fell 0.6%. Iron ore futures dropped 4.7%.  West Texas oil rose 0.2 percent to $51.56 a barrel, adding to a five-day advance ahead of tomorrow’s OPEC meeting. old added 0.1 percent to $1,252.30 an ounce, after dropping 0.8 percent on Tuesday.

Elsewhere the Australian dollar fell and the yen pared losses against the U.S. currency after Moody’s Investors Service cut its rating on China’s debt for the first time in almost three decades. The euro was little changed ahead of the Fed minutes, even as ECB policy makers warned of the dangers of the ‘ripple effect’ from the house price boom and ‘significant’ bond risks spurring increased debt concerns.

In rates, the yield on 10-year Treasury notes fell less than one basis point to 2.27 percent. Bonds fell during the previous four days. Yields on benchmark French, German and British bonds all dropped two basis points.

Today investors await the minutes of the U.S. Federal Reserve’s latest policy meeting, scheduled to be released at 2pm. Fed funds futures show that traders now see a 75% chance that the U.S. central bank would will raise interest rates at its June meeting. “Our U.S. economists expect the minutes to come down on the hawkish side and continue to expect the Fed to hike in June and September and announce balance sheet reduction in December,” Citi analysts wrote on Wednesday.

Bulletin Headline Summary from RanSquawk

  • Equities fail to find firm direction and seemingly looking through China’s sovereign downgrade as Moody’s offers little in the way of any surprises.
  • A very quiet morning in FX with focus on the FOMC minutes, alongside the OPEC/Non-OPEC meeting.
  • Looking ahead, highlights include US Building Permits, Existing Home Sales, DoE Inventories, FOMC Minutes, BoC Rate Decision, ECB’s Praet and Draghi

Market Snapshot

  • S&P 500 futures little changed at 2,399.25
  • STOXX Europe 600 up 0.1% to 392.48
  • MXAP up 0.01% to 151.88
  • MXAPJ up 0.02% to 495.69
  • Nikkei up 0.7% to 19,742.98
  • Topix up 0.6% to 1,575.11
  • Hang Seng Index up 0.1% to 25,428.50
  • Shanghai Composite up 0.07% to 3,064.08
  • Sensex down 0.1% to 30,328.05
  • Australia S&P/ASX 200 up 0.2% to 5,768.98
  • Kospi up 0.2% to 2,317.34
  • German 10Y yield fell 1.1 bps to 0.399%
  • Euro up 0.1% to 1.1197 per US$
  • Brent Futures up 0.6% to $54.46/bbl
  • Italian 10Y yield fell 1.5 bps to 1.83%
  • Spanish 10Y yield fell 2.2 bps to 1.596%
  • Brent futures up 0.6% to $54.49/bbl
  • Gold spot little changed at $1,251.99
  • U.S. Dollar Index little changed at 97.30

Top Overnight News from Bloomberg

  • Moody’s Investors Service cut its rating on China’s debt for the first time since 1989, challenging the view that the nation’s leadership will be able to rein in leverage while maintaining the pace of economic growth
  • The European Central Bank said debt- sustainability concerns have risen in the past six months amid a potential increase in yields and political uncertainty in some countries
  • U.K. Prime Minister Theresa May warned that further terrorist attacks could be imminent. The country’s terrorism threat level has been raised to “critical” — the highest level — from “severe”, as police hunt for potential accomplices of the suicide bomber who killed 22 people at a Manchester pop concert
  • The White House said Trump’s request for fiscal 2018 would generate a fiscal surplus by 2027 after $3.6 trillion in spending reductions and $2.1 trillion in economic growth-induced revenue increases, but gave no details on how tax cuts would be paid for
  • Traders in the world’s biggest financial market are about to get a new list of do’s and don’ts. The FX Global Code, which the Bank for International Settlements will publish Thursday, aims to stamp out misconduct in foreign-exchange markets after a rigging scandal triggered about $10 billion in fines for banks
  • Glencore-Bunge Deal Would Add G to ABCD Dominating Grain
  • SoftBank Said to Take $4 Billion Stake in U.S. Chipmaker Nvidia
  • Troops Deployed in U.K. After Warning of Imminent Terror Attack
  • Fed’s Harker Calls June Rate Hike a ‘Distinct’ Possibility
  • Oil Holds Gain as Data Show U.S. Supplies Fall Before OPEC
  • Fiat Chrysler Stumbles Into U.S. Regulatory Crosshairs Again
  • Noble Group’s Wild Trading Day Demands ‘High Risk Appetite’

Asia equity markets traded mixed following the mildly positive US close, where indices eked a 4th consecutive daily gain and the S&P 500 briefly advanced above 2,400 to within close proximity of its all-time highs. This provided the initial impetus for the ASX 200 (flat) and Nikkei 225 (+0.3%), while JPY weakness also underpinned Japanese exporter sentiment. Conversely, Shanghai Comp. (+0.1%) and Hang Seng (flat) underperformed after Moody’s downgraded China’s sovereign credit rating amid expectations of a deterioration in China’s financial strength in the upcoming years. 10yr JGBs traded lower on spill-over selling from T-notes and alongside the increased risk sentiment in Japan, although downside was stemmed amid the BoJ’s presence in the market for a total JPY 1.03trl in 1yr-10yrs government debt. Moody’s downgraded China’s sovereign credit rating to Al from AA3; outlook revised to stable from negative. Moody’s commented that the rating reflects expectations that China’s financial strength will erode somewhat over the approaching years. PBoC injected CNY 40bIn in 7-day reverse repos and CNY 50bIn in 14-day reverse repos. The PBoC set CNY mid-point at 6.8758 (Prey. 6.8661)

Top Asian News

  • China State Firms Face Threat of Higher Debt Costs After Moody’s
  • Freeport Says Grasberg Output on Target as Union Extends Strike
  • Evergrande Climbs Most Since July 2015, Leading Gains on HSCI

European equities trade with little in the way of firm direction (Eurostoxx 50 flat) as earnings season continues to peter out and markets shrug of overnight news that Moody’s downgraded China’s sovereign debt rating. Chinese bourses were initially hit on the news given the surprise of the timing but ultimately the action taken is of little surprise given debt concerns and Moody’s bringing their rating in-line with that of Fitch and as such European traders have largely looked through the announcement. On a sector stand-point, energy names outperform ahead of this week’s OPEC meeting despite a lack of clarity on the duration of any potential extension. Material names underperform amid Dalian ore futures sliding over 5% over night. In fixed income markets, price action has been particularly uneventful with prices stuck in a somewhat narrow range. In peripheral markets, spreads are also relatively unchanged to their core counterparts with markets most likely looking for further direction from today’s speech by ECB’s Draghi and any further update on the Greek situation after the IMF and German Finance Minister Schauble reportedly struck an agreement on Greek bailout with the IMF willing to participate in the program if Greece proves debt is sustainable.

Top European News

  • Morgan Stanley to ‘Significantly Reduce’ Recruiting of Brokers
  • Constancio Says Brexit Won’t Materially Harm Euro-Area Recovery
  • Understanding Poland’s Retreat From Costly Swiss-Loan Fix
  • Wynnstay Shares Slump as Just for Pets Weakness Hits Profit
  • Safran, Zodiac Shares Halted Pending Press Release: Euronext
  • Ikea Names Brodin New CEO to Lead Asia Expansion, Online Growth

In currencies, the Bloomberg Dollar Spot Index was flat after climbing 0.3 percent Tuesday. The pound rose 0.1 percent to $1.2971 following a two-day loss. The euro fell by less than 0.1 percent to $1.1178. It has been a very quiet morning in FX and if anything stands out it is the resilience in the cross JPY rates. This is in the face of the Moody’s downgrade of China’s credit rating, which garnered brief attention in Asia, but little else. USD/JPY has tested 112.00, but good selling interest seen here despite a small tip over the figure level. EUR/USD is still in pullback mode, but fresh demand coming in already. The FOMC minutes ahead may underpin expectations of a Jun move, and this should see USD bids picking up dips — 1.1200 intact as a result. Not that this is deterring Cable buyers still intent on tripping stops through 1.3060-70. We see little other reason for the resilient bid tone in the Pound given what lies ahead, with some suggesting traders are pre-empting a Tory win in the elections. We doubt this would lead to a significant charge higher from current levels, but impulsive markets are here to stay.

In commodities, Iron ore led metals lower across the board today as the overnight markets reacted to the Moody’s downgrade of China’s credit rating. The DCE lost over 4.5% today, with the indices here requiring little to tip the balance these days. Copper has found some resistance at USD2.60 as many anticipated, but the pullback has been tame so far to suggest a more consolidative tone going forward. All eyes on Oil prices at the present time, and with the OPEC meeting not until tomorrow, but ongoing rhetoric supportive of an extension — though to what degree. 6 months is the minimum required to keep WTI above USD50.00, currently trading closer to USD52.00 while Brent is in the upper USD54.00’s. Precious metals are out of the spotlight, but Silver has crept back above USD17.00.

Looking at today’s calendar, we’ll get the March FHFA house price index reading and also April existing home sales data. This evening we then get the FOMC minutes from the meeting on May 3rd where most be will combing through for discussion on the Fed’s balance sheet strategy. It’s another busy day for Fedspeak today too with Kaplan (6pm ) and Kashkari (6.30pm ) both scheduled. ECB President Draghi also speaks in Madrid at 1.45pm BST.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior -4.1%
  • 9am: FHFA House Price Index MoM, est. 0.5%, prior 0.8%
  • 9am: House Price Purchase Index QoQ, prior 1.5%
  • 10am: Existing Home Sales, est. 5.65m, prior 5.71m
  • 10am: Existing Home Sales MoM, est. -1.05%, prior 4.4%
  • 2pm: FOMC Meeting Minutes
  • 6pm: Fed’s Kaplan Speaks in Toronto
  • 6:30pm: Fed’s Kashkari Speaks in Wisconsin

DB’s Jim Reid concludes the overnight wrap

Back in 1990 in an attempt to impress the young ladies on the school bus which we shared with the girls school next door I started watching Twin Peaks. I hated it but had to continue watching in case I could possibly be part of their arty, seemingly sophisticated conversation. They adored it (the show, not my input sadly). So it was some intrigue to me that a new series aired this week 25 years after the last one. I haven’t watched it yet but I wonder whether any of it will make sense. For the uninitiated it was a surreal, confusing supernatural drama that amongst other things included a red room where everyone spoke backwards. At 16 this was the height of cool and it was the most popular show of 1990. Thankfully the days of trying to impress a potential new partner are over. What impresses my wife most these days is me changing a nappy so I do that when I can instead.

Talking of twin peaks, US equities have again edged up towards the highs after the S&P 500 closed last night within 0.30% of the all time peak from intraday last Tuesday before all the political headlines hit. The index was up +0.18% yesterday which means it has now gained for four consecutive sessions. You’d have to go back to February to find the last time it did that. The Dow (+0.21%) also edged up while there was a similarly positive mood in Europe with the Stoxx 600 (+0.22%) also finishing in positive territory. Some decent PMIs on both sides of the pond seemed to be the catalyst (we’ll come to those shortly) and it didn’t hurt that Oil continues to solidify gains. Indeed WTI (+0.66%) was up for the fifth day in a row yesterday and is holding above $51/bbl ahead of tomorrow’s OPEC meeting where there was more chatter yesterday from energy ministers that a nine-month extension agreement appears likely. In bond markets Treasuries (+2.6bps) and Bunds (+1.3bps) were a little weaker while in currencies the US Dollar (+0.38%) was up for only the second time in the last nine sessions. Needless to say that the tragic events in Manchester dominated the front pages around the world with UK PM Theresa May subsequently raising the terror alert in the UK to ‘critical’ from ‘severe’. Sterling (-0.30%) was a touch weaker yesterday and is holding just below $1.300 this morning.

Before we go any further, the main news to report overnight is Moody’s cutting China’s sovereign credit rating by one notch to A1/Stable (was previously on Negative outlook). That is the first time Moody’s have cut China’s rating since 1989. The rating agency noted the likelihood of a “material rise” in economy-wide debt and expectations that China’s financial strength could “erode somewhat” as a result. China’s rating at Moody’s is now level with that of Japan and below other Asia economies of Taiwan and Macau.

While there were no real revelations in the Moody’s statement the timing appears to have caught markets by surprise a little. Equity markets in China initially fell sharply on the news and while having pared back some of the losses, are still underperforming this morning. The Shanghai Comp is currently -0.63% and at the lowest level in nearly 8 months. It was initially down as much as -1.28%, while the CSI 300 and Shenzhen are -0.75% and -0.19% respectively. The Hang Seng is now flat after being in the red. Both the onshore (-0.10%) and offshore (-0.05%) renminbi are a shade weaker, while China’s sovereign 5y CDS is 1bp wider. The China sensitive Aussie Dollar is also down -0.40%. Elsewhere in Asia bourses are firmer and seemingly following the lead from Wall Street. The Nikkei (+0.48%), ASX (+0.10%) and Kospi (+0.20%) are all up.

Away from markets, there were some interesting comments to come from the ECB’s Benoit Coeure yesterday. Speaking at a conference in Paris, Coeure said that “our current analysis of the secondary effects of negative rates suggest that there is no reason to change the indications we’ve given”. The board member also said that the ECB would start raising rates “well beyond the horizon” of asset purchases. Last week Coeure had said that the future path for rates was “not set in stone”. This suggests that the ECB is not about to change sequencing and is important as Coeure was previously seen as someone who had  suggested a change in sequencing previously. We should get more hints at next month’s ECB meeting.

Another focus for the market yesterday was Trump’s budget. Despite the wide acknowledgment that it stands little chance of being passed as proposed it was interesting to look at some of the details still. One questionable aspect is that the plan assumes that US economic growth would reach 3% by 2021 whereas the Fed and Congressional Budget Office project the US economy growing at an annual rate of just 1.8% and 1.9% in the coming years. In addition, the budget assumes to only balance in 10 years through strong growth. This follows the point we made in yesterday’s EMR about the UK not seeing a balanced budget  until 2025 in the Conservative Party’s manifesto. Indeed one wonders how budgets will ever balance again in most countries especially given the demographic headwinds. Staying with the US the White House issued a statement yesterday saying that it does not confirm or deny ‘unsubstantiated claims based on illegal leaks from anonymous individuals’ concerning the investigation of the links between Russia and Trump’s presidential campaign. A reminder that former FBI Director James Comey is likely to testify next week which will no doubt be a talking point for the market.

Back to those PMIs yesterday. In Europe the flash May composite for the Euro area came in at a fairly solid 56.8 which was modestly better than what the market was expecting and steady versus the April reading. The manufacturing reading edged up 0.3pts to 57.0 (vs. 56.5 expected) which offset a 0.2pt decline in the services reading to 56.2 (vs. 56.4 expected). In the country details there was a positive read-through in the data for both Germany and France. The former saw its composite rise 0.6pts to 57.3, driven by the manufacturing sector while the latter saw its composite rise 1pt to 57.6, driven by the  services sector. This does however imply a roughly 1.1pt decline in the average composite for the periphery. Taken as whole, the composite reading for the Euro area implies GDP growth in Q2 of +0.8% qoq according to our economists, compared to their forecast of +0.5% qoq.

Across the pond, the composite flash May reading in the US came in at 53.9 which was up 0.7pts from April. The details were a little more mixed however with the driver of the increase in the composite coming from the services sector where the PMI rose 0.9pts to 54.0. The manufacturing PMI actually edged down 0.3pts to 52.5.

Away from the PMIs, the rest of the data in the US was a tad disappointing. New home sales fell sharply in April (-11.4% mom vs. -1.8% expected) albeit from a March reading which was revised up to an almost 10-year high. Meanwhile the Richmond Fed manufacturing index tumbled 19pts to +1 (vs. +15 expected), confirming some of the weaker data in the factory sector. In Germany Q1 GDP was confirmed as growing +0.6% qoq while the IFO business climate reading in May was revealed as climbing 1.6pts to a better than expected 114.6 (vs. 113.1 expected). The present situation index actually hit a new multi- decade high while the expectations index rose to its highest since February 2014. Finally in the UK the CBI’s distributive trades survey was disappointing with a net 2% of respondents reporting higher sales in May, down from 38% in April.

Before we wrap up and look at the day ahead, it’s worth highlighting that German press outlet Handelsblatt was running a story yesterday suggesting that the IMF and German Finance Minister Wolfgang Schaeuble have reportedly reached an agreement on Greece. The article suggests that the IMF has signalled its willingness to participate in the program and would only provide money if Greece proves its debt is sustainable.

Looking at today’s calendar, the only data due out in Europe this morning comes from Germany where the flash June consumer confidence reading is due. This afternoon in the US we’ll get the March FHFA house price index reading and also April existing home sales data. This evening we then get the FOMC minutes from the meeting on May 3rd where most be will combing through for discussion on the Fed’s balance sheet strategy. It’s another busy day for Fedspeak today too with Kaplan (11pm BST) and Kashkari (11.30pm BST) both scheduled. ECB President Draghi also speaks in Madrid at 1.45pm BST while Praet  speaks this morning.

END

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed UP 2.13 POINTS OR .07%   / /Hang Sang CLOSED UP 25.35 POINTS OR 0.10% The Nikkei closed UP 129.70 POINTS OR 0.66%/Australia’s all ordinaires  CLOSED UP  0.15%/Chinese yuan (ONSHORE) closed DOWN at 6.8903/Oil UP to 51.51 dollars per barrel for WTI and 54.28 for Brent. Stocks in Europe OPENED IN THE RED EXCEPT LONDON    ..Offshore yuan trades  6.8786 yuan to the dollar vs 6.8903 for onshore yuan. NOW  THE OFFSHORE IS A LITTLE STRONGER 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 STRONGER DOLLAR. CHINA RECEIVED NEWS THAT ITS DEBT HAS BEEN DOWNGRADED AND THUS ARE NOT HAPPY CAMPERS THIS MORNING.

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA/SOUTH KOREA

b) REPORT ON JAPAN

c) REPORT ON CHINA

Last night, Moody’s downgrades China from Aa3 to A1 and warns about their worsening debt outlook.  However at the end of their trading session, Shanghai ignored the downgrade and finished higher.

(courtesy zero hedge)

Yuan Tumbles As Moody’s Downgrades China To A1, Warns On Worsening Debt Outlook

Offshore Yuan tumbled as Moody’s cut China’s credit rating to A1 from Aa3, saying that the outlook for the country’s financial strength will worsen, with debt rising and economic growth slowing. This leaves the world’s hoped-for reflation engine rated below Estonia, Qatar, and South Korea and on par with Slovakia and Japan.

“While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government,” the ratings company said in a statement Wednesday.

And the most obvious reaction was Yuan selling.

 

Full Statement: Moody’s Investors Service has today downgraded China’s long-term local currency and foreign currency issuer ratings to A1 from Aa3 and changed the outlook to stable from negative.

The downgrade reflects Moody’s expectation that China’s financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows. While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government.

The stable outlook reflects our assessment that, at the A1 rating level, risks are balanced. The erosion in China’s credit profile will be gradual and, we expect, eventually contained as reforms deepen. The strengths of its credit profile will allow the sovereign to remain resilient to negative shocks, with GDP growth likely to stay strong compared to other sovereigns, still considerable scope for policy to adapt to support the economy, and a largely closed capital account.

China’s local currency and foreign currency senior unsecured debt ratings are downgraded to A1 from Aa3. The senior unsecured foreign currency shelf rating is also downgraded to (P)A1 from (P)Aa3.

China’s local currency bond and deposit ceilings remain at Aa3. The foreign currency bond ceiling remains at Aa3. The foreign currency deposit ceiling is lowered to A1 from Aa3. China’s short-term foreign currency bond and bank deposit ceilings remain Prime-1 (P-1).

RATIONALE FOR THE RATING DOWNGRADE TO A1

Moody’s expects that economy-wide leverage will increase further over the coming years. The planned reform program is likely to slow, but not prevent, the rise in leverage. The importance the authorities attach to maintaining robust growth will result in sustained policy stimulus, given the growing structural impediments to achieving current growth targets. Such stimulus will contribute to rising debt across the economy as a whole.

RISING DEBT WILL ERODE CHINA’S CREDIT METRICS, WITH ROBUST GROWTH INCREASINGLY RELIANT ON POLICY STIMULUS

While China’s GDP will remain very large, and growth will remain high compared to other sovereigns, potential growth is likely to fall in the coming years. The importance the Chinese authorities attach to growth suggests that the corresponding fall in official growth targets is likely to be more gradual, rendering the economy increasingly reliant on policy stimulus. At least over the near term, with monetary policy limited by the risk of fuelling renewed capital outflows, the burden of supporting growth will fall largely on fiscal policy, with spending by government and government-related entities — including policy banks and state-owned enterprises (SOEs) — rising.

GDP growth has decelerated in recent years from a peak of 10.6% in 2010 to 6.7% in 2016. This slowdown largely reflects a structural adjustment that we expect to continue. Looking ahead, we expect China’s growth potential to decline to close to 5% over the next five years, for three reasons. First, capital stock formation will slow as investment accounts for a diminishing share of total expenditure. Second, the fall in the working age population that started in 2014 will accelerate. Third, we do not expect a reversal in the productivity slowdown that has taken place in the last few years, despite additional investment and higher skills.

Official GDP growth targets have also adjusted downwards gradually and the authorities’ emphasis is progressively shifting towards the quality rather than the quantity of growth. However, the adjustment in official targets is unlikely to be as fast as the slowdown in potential growth as robust economic growth is essential to fulfilment of the current Five Year Plan and appears to be considered by the authorities as important for the maintenance of economic and social stability.

As a consequence, notwithstanding the moderate general government budget deficit in 2016 of around 3% of GDP, we expect the government’s direct debt burden to rise gradually towards 40% of GDP by 2018 and closer to 45% by the end of the decade, in line with the 2016 debt burden for the median of A-rated sovereigns (40.7%) and higher than the median of Aa-rated sovereigns (36.7%).

We also expect indirect and contingent liabilities to increase. We estimate that in 2016 the outstanding amount of policy bank loans and of bonds issued by Local Government Financing Vehicles (LGFVs) increased by a combined 6.2% of 2015 GDP, after 5.5% the previous year. In addition to investment by LGFVs, investment by other SOEs increased markedly. Similar increases in financing and spending by the broader public sector are likely to continue in the next few years in order to maintain GDP growth around the official targets.

More broadly, we forecast that economy-wide debt of the government, households and non-financial corporates will continue to rise, from 256% of GDP at the end of last year according to the Institute of International Finance. This is consistent with the gradual approach to deleveraging being taken by the Chinese authorities and will happen because economic activity is largely financed by debt in the absence of a sizeable equity market and sufficiently large surpluses in the corporate and government sectors. While such debt levels are not uncommon in highly-rated countries, they tend to be seen in countries which have much higher per capita incomes, deeper financial markets and stronger institutions than China’s, features which enhance debt-servicing capacity and reduce the risk of contagion in the event of a negative shock.

Taken together, we expect direct government, indirect and economy-wide debt to continue to rise, signalling an erosion of China’s credit profile which is best reflected now in an A1 rating.

REFORMS WILL NOT FULLY OFFSET THE RISE IN ECONOMIC AND FINANCIAL RISK

The authorities are part of the way through a reform program intended to sustain and enhance the quality of growth over the longer term, as well as to reduce the risks to the economy and the financial system posed by high corporate and, in particular, SOE debt. One related objective is to contain, and ultimately reduce, SOE leverage.

The authorities’ commitment to reform is clear. It is quite likely that their efforts will, over time, improve the allocation of capital in the economy. Over the nearer term, the authorities have taken steps to contain the rise in SOE debt and to discourage some SOEs from further domestic and external investment, particularly in over capacity sectors.

However, we do not think that the reform effort will have sufficient impact, sufficiently quickly, to contain the erosion of credit strength associated with the combination of rising economy-wide leverage and slower growth. In particular, in our view, the key measures introduced to date will have a limited impact on productivity and the efficiency with which capital is allocated over the foreseeable future.

For example, one key set of reforms is the program of debt-equity swaps which aims to lower leverage in parts of the SOE sector, transferring the associated risks to the banking sector. At present, we estimate that the value of swaps announced is a very small fraction — around 1% — of SOE liabilities. Moreover, there is very little transparency about the terms of these transactions or their likely impact on SOEs’ and banks’ creditworthiness.

Other measures intended to improve investment allocation include negative lists on investment in excess capacity sectors and the introduction of mixed ownership. The former will likely reduce the major losses on investments of the past. However, excess capacity sectors only account for a small proportion of total investment. Only limited improvement in the allocation of capital would result from such measures. Meanwhile, mixed ownership is at a very preliminary stage, having been introduced in only a few dozen SOEs, and on too small a scale for now to have any impact on productivity in the economy as a whole.

Looking beyond the corporate sector, the financial sector remains under-developed, notwithstanding reforms introduced to improve the provision of credit; pricing of risk remains incomplete, with the cost of debt still partly determined by assumptions of government support to public sector or other entities perceived to be strategic. And with increased scrutiny of capital outflows, the capital account remains largely closed. While that insulates the economy and financial system from global volatility, it also constrains the development of domestic capital markets by limiting the flow of inward and outbound capital.

Overall, we believe that the authorities’ reform efforts are likely, over time, to achieve some measure of economic rebalancing and improvement in the allocation of capital. But we think that progress will be too slow to arrest the rise in economy-wide leverage.

 

 

END

This is just the beginning:  Chinese banks are now in serious trouble

(courtesy zero hedge)

 

“This Is Probably Just The Beginning” – Chinese Banks Are In Big Trouble

That’s not supposed to happen…

With the crackdown on financial system leverage underway, Chinese banks (and securities firms) are in big trouble. As we noted previously, China’s bond curve is inverted, yields are surging, and Chinese regulatory decisions shutting down various shadow-banking pipelines has crushed securities firms’ stocks. However, as Bloomberg points out, as China’s deleveraging efforts cut into banks’ profit margins, rising base funding costs and interbank credit risk concerns have pushed banks’ cost of borrowing beyond the rate they charge customers for loans for the first time in history.

As the chart above shows, the one-year Shanghai Interbank Offered Rate has exceeded the Loan Prime Rate, the first time this has happened since the latter was introduced in 2013.

“This is probably just the beginning” and interbank funding costs will rise further amid the drive to reduce leverage, said Xu Hanfei, chief fixed-income analyst at China Merchants Securities Co. in Shanghai.

4. EUROPEAN AFFAIRS

UK/SUICIDE BOMBER

Britain is not happy with the USA leaks on the suicide bomber Abedi.  What we know is that he did not act alone and had proven links to ISIS

(courtesy zero hedge)

Britain Slams US For Leaking Details About Suicide Bomber Who “Did Not Act Alone”, Had “Proven Links To ISIS”

Just hours after the UK raised its terror alert to Critical, or the highest possible, for the first time in ten years, Britain’s Interior minister Amber Rudd said that Salman Abedi, the Manchester suicide bomber who killed 22 people at a concert venue, and had recently returned from Libya had likely not acted alone and troops were being deployed to key sites across Britain to help prevent further attacks according to the FT.


Salman Abedi, the suspect in the Manchester attack

Rudd said on BBC radio that the bombing was “more sophisticated than some of the attacks we’ve seen before, and it seems likely, possible, that he wasn’t doing this on his own.” She said Abedi had been known to security services before the bombing. Asked about reports that Abedi had recently returned from Libya, Rudd said she believed that had now been confirmed.

Rudd said up to 3,800 soldiers could be deployed on Britain’s streets, taking on guard duties at places like Buckingham Palace and Downing Street to free up police to focus on patrols and investigation. An initial deployment of 984 had been ordered, initially in London, then elsewhere. The minister also scolded U.S. officials for leaking details about the investigation into the Manchester attack before British authorities were prepared to go public.

Separately Rudd’s French counterpart said Abedi had links with Islamic State and had probably visited Syria too. According to Reuters, French Interior Minister Gerard Collomb said British investigators had told French authorities Abedi had probably travelled to Syria as well.

“Today we only know what British investigators have told us – someone of British nationality, of Libyan origin, who suddenly after a trip to Libya, then probably to Syria, becomes radicalized and decides to carry out this attack,” Collomb told BFMTV.  Asked if he believed Abedi had the support of a network, Collomb said: “That is not known yet, but perhaps. In any case, (he had) links with Daesh (Islamic State) that are proven.”

The Islamic State promptly claimed responsibility for the Manchester attack, but there were contradictions in its accounts of the action and a lack of crucial detail.

As Collomb was speaking in France, Rudd was asked by the BBC about the fact that information about Abedi, including his name, had come out from the United States and whether she would look again at how information was shared with other countries. “Yes, quite frankly. I mean the British police have been very clear that they want to control the flow of information in order to protect operational integrity, the element of surprise, so it is irritating if it gets released from other sources and I have been very clear with our friends that should not happen again.”

Asked whether the U.S. leaks had compromised the investigation, she said: “I wouldn’t go that far but I can say that they are perfectly clear about the situation and that it shouldn’t happen again.”

According to Bloomberg, “it is rare for the U.K. government to publicly criticize the U.S. and in such blunt terms. The rebuke raises the risk that key allies could become more reluctant to share vital security information with the world’s superpower.”

The bomber’s name, Salman Ramadan Abedi, was first revealed early on Tuesday by CBS in the U.S. and hours later the U.K. authorities put out a statement refusing to confirm the information until a formal identification had been completed. The police said any speculation would be “unhelpful and potentially damaging” to the investigation. It was only much later in the day, that the U.K. confirmed his identity.

Separately, Manchester Police said on Wednesday morning three men had been arrested “after police executed warrants in south Manchester” in connection with the continuing investigation.

On Tuesday police raided the Abedi family home in the Fallowfield district of south Manchester, in one of three operations carried out as authorities tried to establish whether Abedi was working alone or as part of a network. Family friends and neighbours said Abedi’s parents were originally from Libya and recently returned to the country.

The son of Libyan immigrants, British-born Abedi, 22, blew himself up on Monday night at the Manchester Arena indoor venue at the end of a concert by U.S. pop singer Ariana Grande. His 22 victims included an eight-year-old girl, several teenage girls, a 28-year-old man and a Polish couple who had come to collect their daughters. The bombing also left 64 people wounded, of whom 20 were still receiving critical care for highly traumatic injuries.

end

The brother of Salman Abedi is arrested in Tripoli and 3 others has been detained

(courtesy zerohedge)

UK Police Launch Massive Manhunt For Suicide Bomber Accomplices; Brother Detained In Libya

Update: Having mobilized hundreds of soldiers to protect key landmarks across London, the British police launched a huge manhunt for accomplices who may have helped Salman Abedi build the suicide bomb and “who could be ready to kill again.”  Part of yesterday’s hike in the UK risk threat assessment is the fear that Abedi could have been working as part of a group of accomplices with possible links to militant groups who have the competence to plot and execute suicide bombings.

“The question is: Was he acting alone or was he part of a network of others who want to kill. That is what the investigation is focusing on,” a source told Reuters adding that “the concern is that there may be others out there who helped him to make the bomb. Making a bomb of this sort requires a certain level of expertise and competence,” the source said.

At an afternoon press conference, Manchester Chief Constable Ian Hopkins said it is clear “this is a network we are investigating.” He declined to give any further details on the investigation. British police have declined to provide many details about the suspect, but a U.S. official has said he was a British citizen of Libyan descent. British officials believe he had recently returned from Libya. Hopkins also wouldn’t comment on whether police had found anyone who made the explosive device used in the attack.

Moments ago Reuters reported that the younger brothers of the bombing suspect was arrested in Libya on suspicion of ISIS ties:

  • HASHEM ABEDI, YOUNGER BROTHER OF MANCHESTER ATTACKER, ARRESTED IN TRIPOLI BY COUNTER-TERRORISM FORCE ON SUSPICION OF ISLAMIC STATE LINKS
  • BROTHER OF MANCHESTER ATTACKER ARRESTED IN TRIPOLI WAS PLANNING “TERRORIST ACT” IN THE LIBYAN CAPITAL – COUNTER-TERRORISM FORCE

Meanwhile, in the UK the police arrested at least three more men as part of their investigation into the suicide bombing as authorities said they are pursuing a “network” in connection with the attack. The arrests in Manchester take the total currently in custody to four. Under British law, a person can be taken into custody in a terrorism investigation and held up to 14 days without charges.

As reported earlier (see below), U.K. investigators told French authorities that Abedi had probably also traveled to Syria, according to the French interior minister.

A leading theory is that the attacker may have received specialist training abroad or that there is a technician in the U.K. who constructed the bomb, the Western official said.

 

“To cause this many fatalities it has to be a viable device of a certain level of sophistication,” the official said, adding that it didn’t seem like something Abedi could have done by himself. Officials were still in the initial phase of the investigation, the person said.

Earlier, Home Secretary Amber Rudd earlier told the British Broadcasting Corp. Abedi that Abedi was previously known to security services “up to a point.” “When this operation is over, we will want to look at his background and what happened, how he became radicalized and what support he might have been given,” she said.

* * *

Earlier:

Just hours after the UK raised its terror alert to Critical, or the highest possible, for the first time in ten years, Britain’s Interior minister Amber Rudd said that Salman Abedi, the Manchester suicide bomber who killed 22 people at a concert venue, and had recently returned from Libya had likely not acted alone and troops were being deployed to key sites across Britain to help prevent further attacks according to the FT.


Salman Abedi, the suspect in the Manchester attack

Rudd said on BBC radio that the bombing was “more sophisticated than some of the attacks we’ve seen before, and it seems likely, possible, that he wasn’t doing this on his own.” She said Abedi had been known to security services before the bombing. Asked about reports that Abedi had recently returned from Libya, Rudd said she believed that had now been confirmed.

Rudd said up to 3,800 soldiers could be deployed on Britain’s streets, taking on guard duties at places like Buckingham Palace and Downing Street to free up police to focus on patrols and investigation. An initial deployment of 984 had been ordered, initially in London, then elsewhere. The minister also scolded U.S. officials for leaking details about the investigation into the Manchester attack before British authorities were prepared to go public.

Separately Rudd’s French counterpart said Abedi had links with Islamic State and had probably visited Syria too. According to Reuters, French Interior Minister Gerard Collomb said British investigators had told French authorities Abedi had probably travelled to Syria as well.

“Today we only know what British investigators have told us – someone of British nationality, of Libyan origin, who suddenly after a trip to Libya, then probably to Syria, becomes radicalized and decides to carry out this attack,” Collomb told BFMTV.  Asked if he believed Abedi had the support of a network, Collomb said: “That is not known yet, but perhaps. In any case, (he had) links with Daesh (Islamic State) that are proven.”

The Islamic State promptly claimed responsibility for the Manchester attack, but there were contradictions in its accounts of the action and a lack of crucial detail.

As Collomb was speaking in France, Rudd was asked by the BBC about the fact that information about Abedi, including his name, had come out from the United States and whether she would look again at how information was shared with other countries. “Yes, quite frankly. I mean the British police have been very clear that they want to control the flow of information in order to protect operational integrity, the element of surprise, so it is irritating if it gets released from other sources and I have been very clear with our friends that should not happen again.”

Asked whether the U.S. leaks had compromised the investigation, she said: “I wouldn’t go that far but I can say that they are perfectly clear about the situation and that it shouldn’t happen again.”

According to Bloomberg, “it is rare for the U.K. government to publicly criticize the U.S. and in such blunt terms. The rebuke raises the risk that key allies could become more reluctant to share vital security information with the world’s superpower.”

The bomber’s name, Salman Ramadan Abedi, was first revealed early on Tuesday by CBS in the U.S. and hours later the U.K. authorities put out a statement refusing to confirm the information until a formal identification had been completed. The police said any speculation would be “unhelpful and potentially damaging” to the investigation. It was only much later in the day, that the U.K. confirmed his identity.

Separately, Manchester Police said on Wednesday morning three men had been arrested “after police executed warrants in south Manchester” in connection with the continuing investigation.

On Tuesday police raided the Abedi family home in the Fallowfield district of south Manchester, in one of three operations carried out as authorities tried to establish whether Abedi was working alone or as part of a network. Family friends and neighbours said Abedi’s parents were originally from Libya and recently returned to the country.

The son of Libyan immigrants, British-born Abedi, 22, blew himself up on Monday night at the Manchester Arena indoor venue at the end of a concert by U.S. pop singer Ariana Grande. His 22 victims included an eight-year-old girl, several teenage girls, a 28-year-old man and a Polish couple who had come to collect their daughters. The bombing also left 64 people wounded, of whom 20 were still receiving critical care for highly traumatic injuries

end

SPAIN

If the Spanish government does not allow a regional referendum vote of independence, Catalonia threatens an immediate declaration of Independence.

(courtesy Mish Shedlock/Mishtalk)

Catalonia Threatens Immediate Declaration Of Independence If Spain Doesn’t Approve Referendum

Authored by Mike Shedlock via MishTalk.com,

The constitutional crisis in Spain may be coming to a head quickly according to a leaked document on a “Secret Law for Catalonia Independence” as reported by El Pais.
 

Spain’s Attorney General José Manuel Maza is set to examine the legality of a plan outlined by the regional government of Catalonia to activate immediate secession from Spain if the central government in Madrid stops it from holding a vote on independence – something it is planning on doing in September or October of this year.

 

The independence mechanism is detailed in a secret draft version of legislation being prepared by the Generalitat, the Catalan regional government, and to which EL PAÍS has had access.

 

The document aims to work as a provisional Catalan Constitution that, according to the text, would be in place during the two-month period that the parliament would have to begin a process that would culminate in the “parliamentary republic” of Catalonia.

 

“If the Spanish state effectively impedes the holding of a referendum, this law will enter into effect in a complete and immediate manner when the [regional] parliament has verified such an impediment,” the draft legislation reads.

 

The document has a section that covers the referendum itself and features the question that would be asked of voters: “Do you want Catalonia to be a state that is independent from Spain?” The intention in the text is that this part of the legislation would come into effect first in order to be able to hold the referendum, and indicates that a majority of votes in favor, no matter how slim, and with no minimum participation level, would ratify the decision and mean that it was binding.

 

The text makes a number of references to itself as being a “founding law,” and goes into exhaustive details – albeit with many legal loopholes and unknowns – about the breakaway: i.e. who would be a Catalan citizen, how it would be possible to obtain nationality, which Spanish laws would remain in force and which would not, what would happen to government workers currently employed by the state, among other details.

 

The authors of the text ignore legal and material elements that have enormous importance and complexity, such as the whether this new republic would continue to form part of Europe, or whether social benefits or pensions would be guaranteed, or whether all taxation – and fines for non-payment – would be the responsibility of the regional government.

 

Under the reasoning of the authors of the text, none of these issues would infringe the law because, as the second article reads, “national sovereignty resides with the people of Catalonia, from whom all powers of the State emanate.”

Expect Fireworks

The Catalonia independence threat is smack on top of a Spanish government crisis in which Mariano Rajoy has threatened to dissolve parliament and call snap elections if his budget does not pass.

The surprise results of Socialist Party (PSOE) leadership election on Sunday, in which Pedro Sánchez returned to power, makes it very likely Rajoy will not get his budget passed. For details, please see Voters Smack Spain’s Political Leadership: Snap Spanish Presidential Elections Coming Up?

* * *

As a reminder, Catalonia is not alone…

ECB/EUROPE

Amazing, the ECB’s own policies is creating this warning of  “excessive exuberance” in house prices.  The ECB ses financial instability due to higher yields which of course was fueled by their massive printing of money

(courtesy zerohedge)

ECB Warns Of “Excessive Exuberance” In House Prices; Sees Financial Instability Due To Higher Yields

In an unexpected two-part warning from the ECB, the European Central Bank warned of “excessive exuberance” in some European housing markets, driven by offshore buyers, that could spread to other areas in a “ripple effect.” Separately, the ECB also said “debt-sustainability concerns” have risen in the past six months amid a potential increase in yields and political uncertainty in some countries.

We start with the latter warning, which we find ironic as it is a function of the ECB’s own policies of keeping rates suppressed at record lows to promote inflation, and now that inflation has finally emerged, the ECB is worried about the spillover and unwind of its policies. “Risks to financial stability stemming from financial markets remain significant,” the ECB said in its Financial Stability Review. An abrupt bond-market repricing could “materialize via spillovers from higher yields in advanced economies, in particular the United States.”

The ECB also warned that euro-area banks remain vulnerable as low interest rates and a big stock of non-performing loans in some regions challenge profitability. It cited structural challenges in the industry, including overcapacity and too little income diversification.

In Italy, which has one of the euro region’s highest debt ratios and where the government is trying to finalize a plan to rescue Banca Monte dei Paschi di Siena SpA, business lobby Confindustria said on Wednesday that the country must “be ready for when the ECB will end sovereign bond purchases” according to Bloomberg. This means “quickly lowering the mountain of public debt through privatizations and sale of state-owned real estate,” Chairman Vincenzo Boccia said in Rome.

While it did not show it, the chart below from Goldman summarizes the threat: a normalization of European rates would result in double digit principal losses for bondholders in countries like German, Spain, France and Italy… but not if they sell first to other “greater fools.” It is this transition from a stable to a chaotic market, that is currently troubling the central bank.

Two steps ahead of the ECB, the Fed has already raised rates twice since late last year and policy makers predict two more hikes in 2017. In Europe, an exit from unconventional stimulus is also moving closer, even though officials caution that quantitative easing must be unwound very gradually before higher borrowing costs should even be discussed.

As it has done repeatedly in recent months, the ECB report also warned that Brexit “contributes to prevailing political uncertainties,” but said the impact on financial stability should be limited as long as banks take proper action in time. It sees a low risk of the euro-area economy facing restrictions in accessing financial services after Britain’s departure from the European Union.

“Well-managed preparations will be essential as a relocation of financial services capacity during the transition from the current situation to the new equilibrium could, in some cases, face frictions,” according to the report. “Therefore, the ECB underlines the need for the concerned banks and other financial institutions to undertake all the necessary preparations in a timely manner.”

* * *

Separately, in a warning that resident of Vancouver and Toronto will appreciate, the central bank also cautioned that since 2010, house prices in European capital cities have risen far more than national averages. The ECB cited Berlin, Paris, Vienna and Amsterdam as cities that have performed particularly well.

While it did not use the words irrational exuberance, it came close, when the ECB said that “exuberant house price developments in certain regions could, in principle, threaten the stability of financial institutions with mortgage exposures concentrated in those regions.”

Although diverging developments at the regional level could be justified by fundamentals, such as differences in regional income, employment, population dynamics and amenities, they could also signal excessive exuberance of house prices in certain areas, for example due to the strong presence of foreign buyers

While hardly rocket science, Bloomberg points out that record-low interest rates have fueled demand for residential properties as investors seek to buy assets that generate returns rather than depositing their money in banks. That has benefited housing markets in Germany, France and the Netherlands, as well as Estonia and Ireland, the ECB said.

Compounding the problem, the central bank warned that elevated levels of household indebtedness and large real estate exposures of banks in countries such as Finland and the Netherlands could  “amplify” shocks. The central bank said it’s monitoring property-market developments closely and may top up national measures if necessary.

To which all we can say is that we wish the ECB, which created all the problems it now complains about, the best of luck as it scrambles to contain the genie inside

 

 

the bottle.

END

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

The Canadian loonies surges to a 5 week high after the Bank of Canada surprises with hawkish statements that Canada is doing OK even with lower oil prices

(courtesy zero hedge)

Loonie Surges To 5 Week High After BOC Surprises With Hawkish Statement

While the Bank of Canada did not surprise with its interest rate decision, holding rates at 0.5% as expected, the market has read between the lines of the statement and concluded that it was substantially more optimistic than expected, with clear hawkish notes as a result of the following line: “The Canadian economy’s adjustment to lower oil prices is largely complete and recent economic data have been encouraging, including indicators of business investment.”

Additionally, the BOC has added a new line which now reads: “all things considered, Governing Council judges that the current degree of monetary stimulus is appropriate at present, and maintains the target for the overnight rate at 1/2 per cent” and replacing the previous conclusion which said there was “significant uncertainty on the outlook.”

And while the BOC hedged by saying “the uncertainties outlined in the April MPR continue to cloud the global and Canadian outlooks” the market is clearly more impressed by the hawkish readthru, sending the Loonie surging after the report.

Some other observations from the report:

  • On inflation: “The Bank’s three measures of core inflation remain below two per cent and wage growth is still subdued, consistent with ongoing excess capacity in the economy.”
  • On housing: “Consumer spending and the housing sector continue to be robust on the back of an improving labour market, and these are becoming more broadly based across regions. Macroprudential and other policy measures, while contributing to more sustainable debt profiles, have yet to have a substantial cooling effect on housing markets. Meanwhile, export growth remains subdued, as anticipated in the April MPR, in the face of ongoing competitiveness challenges. The Bank’s monitoring of the economic data suggests that very strong growth in the first quarter will be followed by some moderation in the second quarter.”

End result: the USDJPY has tumbled to 5 week lows.

7. OIL ISSUES

This is a very important read…originally estimated to have a SPR of 500 million barrels, it has now grown to over 700  million barrels and that should be close to maximum capacity.  For the first time, this month, China is slowing down its purchases of oil

(courtesy zero hedge)

a must read…

 

Why China’s Strategic Petroleum Reserve Is All That Matters For OPEC

When OPEC sits down on Thursday, keeping the price of Brent above $50 (to avoid a budget catastrophe and social upheaval in Saudi Arabia) and below $60 (to prevent US production from going exponential), will be just one problem the cartel nations and various hangers-on will be desperate to solve. A much bigger one, literally, is the problem that led to this week’s OPEC meeting in the first place, and years of headache for OPEC and non-OPEC nations: a record global oil inventory glut.

The supply glut that began in mid-2014 has dumped almost one billion barrels of petroleum into global inventories. However, of this only 35–45% has ended up in transparent OECD tanks. For OPEC, that is all the matters – in the past, OPEC oil ministers have repeatedly referenced the level of OECD petroleum inventories relative to their five-year average as a gauge of the rebalancing. And, as ScotiaBank notes, those inventories were more than 280 Mbbl above their five-year average as of January and, while European stocks have been falling into a healthier range, the same cannot be said of industry stocks in the US, which despite declining for several weeks, are just below all time highs.

But forget OECD: an increasingly greater concern for OPEC is not the less than a third of above ground oil held in developed nations; it is the rest that is the big challenge. As ScotiaB

ank’s Rory Johnston points out in the following chart, the majority of the remainder was absorbed by China’s vast and growing strategic petroleum reserve (SPR), which means that “the lion’s share of functional—and thus needing to draw from an OPEC perspective—industry inventories remain in the OECD, and specifically in the US (chart 3).”

As we have explained on several occasions over the past year, China’s SPR is far more important to the global oil (im)balance and inventory glut than the less than a third of total oil produced since the summer of 2014 and stored. This is due to one main reason: while ScotiaBank is correct that any draws will likely come from OECD storage, it forgets the demand side of the equation.

 


Storage tanks in China’s strategic oil reserve complex in Zhoushan

One year ago, JPMorgan estimated that the daily build of China’s SPR, had grown at a breakneck pace, from 491Kbpd average in 2015 to a record 1.191MMbpd in 2016 through May, equivalent to roughly 15% of the country’s total crude oil imports.

More importantly, it was roughly a year ago when JPM calculated that China’s SPR was getting dangerously close to its estimated capacity, just over 500 million barrels.

JPM also made a forecast that based on its assumptions, Chinese oil imports would slide by roughly the amount that would have been going into the SPR starting in late 2016 as the reserve hit capacity. When that did not happen, there was much confusion among the commodity space, until in late September 2011, satellite imagery from Orbital Insight revealed that the total size of China’s SPR was vastly greater than previously estimated.

According to satellite images by  geospatial analytics startup Orbital Insight, China, has not only misrepresented how much oil it has stored, it has done so at a massive scale, with the real number dwarfing even JPM own estimate: the real amount of Chinese oil in storage, according to Orbital, was a whopping 600 million barrels as of May. Assuming JPM’s estimated rate of SPR accumulation of about 1mmbpd, the 600 million number as of May would have grown to well over 700 million barrels as of September.

 

Orbital’s figure as first reported by Bloomberg, is well over two times larger than China’s official estimates for strategic petroleum reserves and for commercial stocks, said Orbital Chief Executive Officer James Crawford.

To be sure, in late 2016 other skeptics started warning that even with the revised size estimates, China’s SPR was likely approaching capacity. Last September, the IEA warned that “recent pillars of demand growth China and India are wobbling.” S&P Global Platts’ Ernsberger, cited by CNBC, said that the slowdown in Chinese demand was worrying for major oil producers.

“The demand picture is very unsettling for OPEC and for all producers of crude and refined products (and this is seen most significantly in) the slowdown in growth in the Chinese market. China has returned more incremental demand for the oil market in the last five years than any other country in the world and more than almost any of the counties combine. But this year demand growth in China has stalled and that represents a significant change in the environment for producers both in OPEC and outside it.”

Then 2016 came and went, and we find ourselves almost mid-way into 2017 and ask: has anything finally changed, and will all those predictions of an imminent Chinese SPR overflow finally prove accurate?

We don’t know just yet, but according to data released by the General Administration of Customs data on Tuesday, China’s oil stockpiling pace finally tumbled to 1.36mbpd in April, from 1.6mbpd in March, the sharpest decline in reserve accumulation in years, and in line with the recent slowdown from record oil imports. If indeed China is finally at capacity for the SPR, the SPR stocpiling is about to fall off as cliff this month.

In other words, all those forecasts that China’s SPR is almost full appear to be finally coming true, and at the worst possible time for OPEC, because if suddenly over 1 million in daily “demand” is pulled from the market, OPEC will suddenly find themselves with another huge glut now that Beijing is no longer waving it in. In fact, we contend that while OPEC’s decision on Thursday is fully priced in by the market, the only thing that matters for the future price of oil is how long until China halts SPR imports. Here, those who have faster access to commercial satellite imagery will be a distinct advantage over everybody else, even the momentum-chasing, headline scanning algos…

 

 

end

 

We just had the 16th straight week of USA increased crude production and that sent both WTI and RBOB southbound;

(courtesy zero hedge)

WTI/RBOB Stumble After Mixed Inventory Data, 16th Straight Week Of Increased Crude Production

WTI/RBOB prices were relatively unchanged from last night’s API inventory print (despite some volatility from OEPC headlines) ahead of the DOE print, but that did not last long as Crude saw a much bigger than expected draw (-4.43mm vs -2mm exp) and gasoline a considerably smaller draw than API (-787k vs -3.18mm API) and the same with distillates. Lower 48 crude production rose for the 16th straight week and seemed to take the shine off the inventory data – sending WTI/RBOB prices lower.

 

API

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

DOE

  • Crude -4.43mm (-2mm exp)
  • Cushing -741k
  • Gasoline -787k (-1.08mm exp)
  • Distillates -485k (-493k exp)

Crude’s 7th weekly draw in row was much bigger than expected, but Gasoline only saw amodest draw…

 

Bloomberg’s Mitchell Martin notes that gasoline stockpiles are more than 9% above the five-year average. Summer driving season will likely take on greater significance this year, but gasoline consumption may rise less than 1% from last year’s level. Bloated distillate inventories are being relieved by exports, but stockpiles remain 15% above the five-year average, even with demand from railroads and industrial users helping to boost consumption to a five-year high in April.

Bloomberg’s Laura Blewitt notes that we can thank Gulf Coast refiners for that massive crude draw. PADD 3 refinery crude runs rose to the highest on record in data going back to 1992.

This is the 16th straight week of increased crude production from The Lower 48, as output tracks the lagged surge in oil rig counts. Production rose from 8.795mm to 8.815mm last week, highest since Aug 2015

Javier Blas points out that the U.S. continues to import lots of crude from Saudi Arabia, despite the OPEC production cuts (creating a bit of mismatch between the rhetoric here in Vienna about the curbs and what refiners receive). Last week, U.S. refiners bought 1.371 million barrels a day from the kingdom, largely unchanged from the previous week (1.376 million). Shipments from Iraq fell significantly, but they were offset by a surge in Kuwaiti arrivals. All in all, Middle East crude appears to be plentiful in the U.S. Something OPEC will likely need to explain tomorrow at its official meeting.

Gasoline (big build) was higher heading into the DOE data, crude was lower as ovenight streength faded after OPEC’s Vienna meetings ended with no statement today. Bloomberg’s Laura Blewitt points out that summer driving season arrives this weekend. This year comes with a unique price trend: the typical 50-cent spring surge in gasoline prices hasn’t happened. The reaction to the DOE data was clear – WTI up, RBOB down…BUT that did not last as both are lower now on the lack of product demand.

 

Bloomberg notes that crude is on a nice bullish streak, not huge gains but steady daily ones. In the five days through Tuesday, WTI gained 41, 28, 98, 40 and 34 cents. The flip to July delivery also helped the front-month contract, pushing it to the highest settlement since April 18. Aggregate volume hasn’t been rising with the price, though. Both days this week were under 1 million trades after being over a million from May 2 to May 19 with the exception of May 12, when volume totaled 999,989.

END

8. EMERGING MARKET

Chaos in Brazil

(courtesy zero hedge)

Brazil Deploys Troops To Protect Government Buildings As Protesters Set Ministries On Fire

Update 2: Physical confrontation erupts in Brazil’s Congress between Temer’s supporters & opponents after he deploys the military against protesters.

Deputados da base e da oposição se agridem durante sessão após Presidência decretar Forças Armadas na rua para garantir a ordem

* * *

Update 1: Reuters reports that Temer has deployed troops to protect government buildings::

  • BRAZIL DEFENSE MINISTER JUNGMANN SAYS PRESIDENT TEMER HAS ORDERED ARMY TROOPS TO PROTECT GOVT BUILDINGS FROM PROTESTERS

* * *

Amid massive protests demanding the ouster of Brazilian President Michel Temer, local riot police used tear gas and concussion grenades against groups of violent protesters in the Brazilian capital, where according to GloboNews protesters set fire to several ministry buildings on Wednesday afternoon, as tens of thousands gathered outside Congress.

ERRATA: The protesters set on fire the Brazilian “IRS” federal buildings in Brasília the capital of Brazil and the Ministry of Agriculture

Protesters have set fire to the finance ministry.

Protesters chanting “Out with Temer!” marched to the presidential palace to demand an end to austerity reforms, AFP reports adding that police stopped their advance by using tear gas, while the protesters retaliated by throwing stones at the officers.

“It’s the end of this putchist government. That’s why the people have taken to the streets,” said Francisca Gomes, 59, who came from Sao Paulo for the protest and carried a funeral ribbon carrying the image of the president and the words: “RIP Temer.”

Brasilia’s security service said that 500 buses had converged on the capital, with some 25,000 protesters. Organizers claimed there were far more, but an independent estimate was not immediately possible.

The protest began peacefully but clashes erupted almost as soon as the crowd got close to the government complex, where large numbers of riot police hiding behind black shields and others on horseback stood in reserve. Driven back, the protesters spread out, with some throwing stones against ministry buildings.

“Damned government,” a man said as he retreated, with eyes streaming from the effects of the tear gas.

“In a democracy, no government can resist when the people take to the streets,” said Dorival Pereira, 60, who had traveled 18 hours from Mato Grosso do Sul to be at the protest. Like many demonstrators, she wore a T-shirt with the slogan “Elections now!”

“Four people were detained by police,” Brazil’s Globo broadcaster reported, citing a police statement that also said three of the arrested had drugs on them and another a melee weapon. Protesters then set the Agricultural Ministry’s building on fire and smashed windows at several other ministerial buildings, Brazilian media report. All ministry buildings were subsequently evacuated and civil servants sent home.

The protesters have erected barricades on the streets using “sofas, chairs and tables” from nearby buildings and are burning litter.

The demonstrators burnt public bicycles and “plundered” the Ministry of Planning, according to some reports. The demonstrators also “did some damage” to the Brasilia Metropolitan Cathedral and the Museum of the Republic, according to Globo.

Tension in Brazil has risen sharply over the past week, after news broke that the Supreme Court authorized an investigation into the president over allegations of passive corruption and obstruction of justice. Unions opposed to Temer’s labor and pension reforms organized Wednesday protests, with some 35,000 taking to the streets and calling for immediate general elections. According to Brazilian law if Temer resigns or is forced out of office, Congress will elect an interim president.

As the protests took place outside Congress, members of Temer’s allied base were meeting to discuss whether to stick by the embattled president.

end

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

Euro/USA   1.1187 UP .0008/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 RED EXCEPT LONDON 

USA/JAPAN YEN 111.81 DOWN 0.144(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 1.2969 UP .0014 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

USA/CAN 1.3503 DOWN .0018 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 8 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1187; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 2.13 POINTS OR .07%     / Hang Sang  CLOSED  UP 25.35 POINTS OR 0.10% /AUSTRALIA  CLOSED UP 0.15% EUROPEAN BOURSES OPENED IN THE RED EXCEPT LONDON  

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED UP 129.70 POINTS OR 0.66%

Trading from Europe and Asia:
1. Europe stocks  OPENED IN THE RED EXCEPT LONDON

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 25.35 POINTS OR 0.10%  / SHANGHAI CLOSED UP 2.13 POINTS OR .07% /Australia BOURSE CLOSED UP 0.15% /Nikkei (Japan)CLOSED  UP 129.70 POINTS OR 0.66%    / INDIA’S SENSEX IN THE RED

Gold very early morning trading: 1251.60

silver:$17.03

Early WEDNESDAY morning USA 10 year bond yield: 2.28% !!! 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  2.937, DOWN 1/2  IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 97.36 UP 1  CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.23%  UP 6 in basis point(s) yield from TUESDAY 

JAPANESE BOND YIELD: +.053%  DOWN 2/5   in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.61%  DOWN 1  IN basis point yield from TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.137 UP 2   POINTS  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 53 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.403% DOWN 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.1176 DOWN .0003 (Euro DOWN 3 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.06 UP  0.102 (Yen DOWN 10 basis points/ 

Great Britain/USA 1.2933 DOWN 0.0022( POUND DOWN 22basis points)

USA/Canada 1.3455 DOWN .0066 (Canadian dollar UP 66 basis points AS OIL ROSE TO $51.19

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This afternoon, the Euro was DOWN by 3 basis points to trade at 1.1176

The Yen FELL to 112.06 for a LOSS  of 11  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 22  basis points, trading at 1.2933/

The Canadian dollar ROSE by 66 basis points to 1.3455,  WITH WTI OIL RISING TO :  $51.19

The USA/Yuan closed at 6.8901/
the 10 yr Japanese bond yield closed at +.053% UP 2/5  IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 2  IN basis points from TUESDAY at 2.292% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.947  UP 2 in basis points on the day /

Your closing USA dollar index, 97,42 UP 7  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 WEDNESDAY: 1:00 PM EST

London:  CLOSED UP 29.61 POINTS OR 0.40%
German Dax :CLOSED DOWN 16.28 POINTS OR 0.13% 
Paris Cac  CLOSED DOWN  6.62 POINTS OR 0.13% 
Spain IBEX CLOSED  DOWN 8.90 POINTS OR 0.08%

Italian MIB: CLOSED  DOWN 46.01 POINTS/OR 0.21%

The Dow closed UP 74.51 OR 0.36%

NASDAQ WAS closed up 24.31 POINTS OR 0.40%  4.00 PM EST
WTI Oil price;  51.19 at 1:00 pm; 

Brent Oil: 53.91 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  56.53 DOWN 21/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD FALLS T0  +0.403%  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:$51.27

BRENT: $53.91

USA 10 YR BOND YIELD: 2.254%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.926%

EURO/USA DOLLAR CROSS:  1.1218 UP .0040

USA/JAPANESE YEN:111.50  DOWN 0.465

USA DOLLAR INDEX: 97.05  DOWN 30  cents ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2974 : UP .0019  OR 19 BASIS POINTS.

Canadian dollar: 1.3405  DOWN .01138 (CAN DOLLAR UP 114 BASIS PTS)

German 10 yr bond yield at 5 pm: +.403%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Stocks Surge As VIX Crushed To 9-Handle Despite Fed Warning Of “Risks To Financial Stability”

It’s crazy pills time again…

 

Post-FOMC Minutes, eveything was bid…

 

So The fed said this… “asset valuation pressures in some markets were notable… vulnerabilities appeared to have increased for asset valuation pressures.. a sharp decline in such valuations could pose risks to financial stability,”

And investors did this…Nasdaq record highs, S&P record close…

 

Which lifted the S&P and Dow green post-Trump-Dump…

 

VIX was crushed back to a 9-handle to get ensure the S&P held above 2400…

 

The S&P 500 ETF (SPY) set a 2017 volume low for the second day in a row…

 

It seems no one wants to talk about the flash crash in Russell 2000 this morning…

 

Today’s rally lifts The Dow into the green for May (for now)…

 

The dollar fell to a fresh low for the session after the minutes of the Federal Open Market Committee’s May meeting showed that “a few” participants expressed concern that progress on inflation might have slowed. FOMC participants generally judged that it would be prudent to await more evidence that weaker economic data was “transitory” before further removing accommodation. Does that look transitory?

U.S. Treasuries rose after the release of the minutes while the greenback tumbled.

Fed funds futures continued to price around 80 percent odds of a June rate increase.

The entire TSY curve dropped today, almost erasing yesterday’s spike…

 

The dollar drop pushed it red on the week led by CAD strength (BOC comments)…

 

Despite dollar weakness, WTI and RBOB could not catch a bid after weaker than expected product inventories (and rising production) sent prices lower…

 

Gold and Silver both gained on the day…

 

 

END

For those of you who think that markets are not manipulated, we now have legendary investor Asher Edelman state that the entire market rally is the PPT

(courtesy zero hedge)

Legendary Investor Asher Edelman Says “I Have No Doubt” PPT Behind Market Rally

Legendary vulture investor Asher Edelman, the 1980s model for Gordon Gekko, strayed into what must’ve been uncomfortable territory for CNBC during an appearance on “Smart Money” when he discussed his view that the government’s “plunge protection team” is the only thing propping up the current market rally, and said he suspects that it has again been recently een intervening in the market to keep stocks at record highs.

Edelman simply notes that he doesn’t want to be in the markets right now because “I don’t know when the plug is going to be pulled.”

Few can explain the market’s recent resilience, holding near record highs despite weak economic data and intensifying geopolitical tensions. The main benchmarks have risen for the fourth straight day following last week’s “Trump Dump” despite a terror attack in the U.K., the worst soft economic data since February 2016, and surprisingly low trading volume.

@AsherEdelman: “I don’t want to be in the market because I don’t know when the plug is going to get pulled”

The “plunge protection team” was created by President Ronald Reagan one year after the stock market crash in 1987, when the president called for the creation of the “Working Group on Financial Markets.”

It’s believed – as the name would suggest and as has been profiled on countless occasions on this website previously – that the group’s mandate is to maintain stability in the market and head off any severe crashes like what was seen in 1987. It’s believed the group reports only to the president, though the head of the Treasury, head of the Securities and Exchange Commission and Federal Reserve Chairman are also involved. The team, according to Asher, steps in to execute trades on all exchanges when the market isn’t behaving as it would like, working only with big banks like Goldman Sachs Group and Morgan Stanley.

“We have seen the most extraordinary lack of volatility in the VIX since Trump has been in office and it’s interesting the night he was elected you may recall the futures came down about 400 or 600 points.

 

You may also recall that the next morning they were even again. Watching plunge protection for years, I had no doubt that’s what happened.

That may have been the case in the 1980s, however in recent years the PPT is the collaboration of the NY Fed and Citadel, which are most aggressive during times of substantial market stress and selling, when intervention is needed to stop the downward momentum in prices.

Edelman says he believes one sign of TPP intervention is when a smaller, less-liquid stock suddenly rises late in the trading day.

We’ve noted in the past that there appears to be a rule against mentioning the team on CNBC – with guests routinely getting “Schiff’d” for doing so.

And once again, this time, the “theory” was treated with derision by his fellow hosts.

“I think we all have so many questions here I don’t think I know where to begin,” Fast Money host Melissa Lee said.

Some audience members were more enthusiastic.

END

 

The never ending witch hunt of Donald Trumps ties to Russia continues: today the House Democrats ask Deutsche bank for information of loans given to the President

(courtesy zero hedge)

House Democrats Ask Deutsche Bank If Trump Accounts Have Russia Ties

In the aftermath of prior media reports that in the past Deutsche Bank provided hundreds of millions in loans to Trump, today Democratic lawmakers – looking for a smoking gun- asked Germany’s largest bank to hand over its findings on “two politically charged matters”, demand details whether Trump accounts have Russia ties, and if Deutsche Bank loans to Trump were backed by Russia.

From the letter:

We write seeking information relating to two internal reviews reportedly conducted by Deutsche Bank (“Bank”): one regarding its 2011 Russian mirror trading scandal and the other regarding its review of the personal accounts of President Donald Trump and his family members held at the Bank. What is troubling is that the Bank to our knowledge has thus far refused to disclose or publicly comment on the results of either of its internal reviews. As a result, there is no transparency regarding who participated in, or benefited from, the Russian mirror trading scheme that allowed $10 billion to flow out of Russia.  Likewise, Congress remains in the dark on whether loans Deutsche Bank made to President Trump were guaranteed by the Russian Government, or were in any way connected to Russia. It is critical that you provide thisCommittee with the information necessary to assess the scope, findings and conclusions of your internal reviews.

Along with the internal review of the Russian stock-trading scheme, Democrats are seeking any internal correspondence and communications related to loans extended to Trump and his immediate family members. The bank has made more than $300 million in loans to Trump, for the Doral golf resort in Florida, a Washington, D.C., hotel and a Chicago tower.

“Deutsche Bank’s pattern of involvement in money laundering schemes with primarily Russian participation, its unconventional relationship with the President, and its repeated violations of U.S. banking laws over the past several years, all raise serious questions about whether the Bank’s reported reviews of the mirror trading scheme and Trump’s financial ties to Russia were sufficiently robust,” the lawmakers wrote in the letter.

The letter, which asks Deutsche Bank to respond by June 2, also asks whether the bank’s loans to Trump, made years before the New York developer ran for president, “were guaranteed by the Russian government, or were in any way connected to Russia.”

It was not clear just how Russia would  “guarantee” a loan that is by definition secured (as a recourse loan at that) by an asset, although the confusion is understandable, as the initiative is being spreadheaded by Maxine Waters, who together with four other Democrats on the House Financial Services Committee, has asked the Frankfurt-based lender for the various documents.

Other details: the lawmakers asked whether the bank’s loans to Trump, made years before the New York developer ran for president, “were guaranteed by the Russian government, or were in any way connected to Russia.” A copy of the letter sent to the bank was reviewed by Bloomberg News.

That said, it is unlikely that either Trump or DB will lose much sleep over this initial disclosure request: as the minority party, Democrats don’t have the power to force Deutsche Bank to make any disclosures.

Furthermore, it’s not clear whether Representative Jeb Hensarling of Texas, the chairman of the committee, shares his colleagues’ interest in the matter. If past is prologue, the answer is most likely note: Bloomberg reminds us that the same group of Democrats demanded in March that Hensarling hold a hearing to explore the bank’s conduct in the Russian mirror-trading scandal, as part of an effort to ensure that the Justice Department investigation wasn’t influenced by the lender’s relationship with Trump. No hearing has been scheduled.

That said, Democrats may have a good reason to peek inside DB’s book, citing the bank’s previous compliance failures, “which have resulted in more than $6 billion in fines and penalties to U.S. regulators since 2015.”  Previously, Bloomberg has reported that the bank’s loans to Trump were structured as “recourse” loans, which, in the case of default, would allow the bank to go after Trump’s own assets.

The full letter is below (link):

end

 

Existing home sales which includes many flippers, records slumping sales despite prices soaring to record highs(courtesy zero hedge)

Existing Home Sales Slump As Prices Soar To Record Highs

Following yesterday’s collapse in new home sales, NAR reports that existing home sales in April also disappointed – dropping 2.3% (and March revised lower). This drop happens as median home prices spiked 6.0% YoY to record highs as sales declines are blamed once again on a lack of supply (forget affordability?).

Highlights include:

  • Existing-home sales at 5.57m, vs est. of 5.65m
  • March at 5.7m; revised from 5.71m
  • Existing-home sales fell 2.3% after rising 4.2% prior month
  • 4.2 months supply in April vs. 3.8 in March
  • Inventory rose 7.2% to 1.93m homes
  • 1st-time buyers 34% of total sales; all cash 21%; investors 15%
  • Distressed sales 5% of total sales

Don’t be too surprised…

The median existing-home price for all housing types in April was $244,800, up 6.0 percent from April 2016 ($230,900). April’s price increase marks the 62nd straight month of year-over-year gains.

However, as has traditionaly been the case, the bulk of price increases has been toward the upper end:

Total housing inventory at the end of April climbed 7.2 percent to 1.93 million existing homes available for sale, but is still 9.0 percent lower than a year ago (2.12 million) and has fallen year-over-year for 23 consecutive months. Unsold inventory continues to rise and is at a 4.2-month supply at the current sales pace.

Lawrence Yun, NAR chief economist, says every major region except for the Midwest saw a retreat in existing sales in April.

“Last month’s dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market,” he said.

 

“Demand is easily outstripping supply in most of the country and it’s stymieing many prospective buyers from finding a home to purchase.”

As a reminder, the May University of Michigan Consumer Sentiment survey showed a six-year low among those who think it’s a good time to buy a house and a 12-year high among those who say it’s a good time to sell. Disparities of this breadth tend to coincide with break points and that’s just where we’ve landed in the cycle.

The beginning of May officially marked the advent of a buyers’ market, defined simply as sellers outnumbering buyers by a wide enough margin to trigger falling prices. Yes, it’s the moment buyers have been waiting for. It is also the moment private equity investors, those who’ve crowded out natural buyers, have been dreading.

FOMC Minutes Signal Rate-Hike “Soon”, Economic Weakness Probably “Transitory” But Need “Evidence”

Having top-ticked US economic data with its March rate-hike, all eyes are on the May minutes to confirm the total lack of data-dependence now present at The Fed. The main focus of the minutes was on the ‘normalization’ of the balance sheet (since June hike odds are at 100%), which was confirmed with details of the plan revealed. Economic weakness in Q1 was shrugged off as “transitory” – although with the provision that evidence is needed – and tightening as well as balance sheet rolloff is appropriate “soon”, likely signaling that a June rate hike is on despite the recent economic slowdown. Fed also warns of asset valuations.

Key Minutes Headlines:

  • *MOST FED OFFICIALS SAW TIGHTENING LIKELY APPROPRIATE `SOON’
  • *FED BALANCE-SHEET PLAN WOULD RAISE ROLLOFF CAPS EVERY 3 MONTHS
  • *FOMC VOTERS: PRUDENT TO AWAIT EVIDENCE SLOWDOWN IS TRANSITORY

The Minutes had something for everyone, starting with the “dovish cop“, and the focus on the triple reiteration of “weakness” in the FOMC minutes, and furthermore the warning that Q1 GDP weakness was not due to seasonality:

The staff judged that the weakness in first-quarter real GDP was probably not attributable to residual seasonality and that it instead reflected transitorily soft consumer expenditures and inventory investment.

Another risk factor: the Fed expected PCE inflation to pick up more the spring “which would be more consistent with ongoing gains in employment.” It did not happen…

Importantly, PCE  growth was expected to pick up to a stronger pace in the spring, which would be more consistent with ongoing gains in employment, real disposable personal income, and households’ net worth.

The Fed also wanted move evidence the slowdown is transitory:

Members generally judged that it would be prudent to await additional evidence indicating that the recent slowing in the pace of economic activity had been transitory before taking another step in removing accommodation.

However, we then quickly shift to the “hawkish cop” because ironically, just a few lines lower, the Fes does blame the weather:

It was noted that much of the recent slowing likely reflected transitory factors, such as low consumer spending for energy services induced by an unusually mild winter and a decline in motor vehicle sales  from an unsustainably high fourth-quarter pace. Nevertheless, contacts expected that demand for motor vehicles would be well maintained.

The outlook is also expected to improve:

With respect to the economic outlook and its implications for monetary policy, members agreed that the slowing in growth during the first quarter was likely to be transitory and continued to expect that, with gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace, labor market conditions would strengthen somewhat further, and inflation would stabilize around 2 percent over the medium term.

Sure, it could also be inducted by the collapse in demand for auto and credit card loans as the Fed itself discovered just a few days after the May FOMC meeting in its latest Senior Loan Officer Survey, and reported previously here.  Yet despite the Fed’s growing concern about “weakness”, its conclusion was that gradual tightening remains appropriate:

Although the data on aggregate spending and inflation received over the intermeeting period were, on balance, weaker than participants expected, they generally saw the outlook for the economy and inflation as little changed and judged that a continued gradual removal of monetary policy accommodation remained appropriate.

As for employment and inflation…

Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as tilted to the upside. The risks to the projection for inflation were judged to be roughly balanced. The downside risks from the possibility that longer-term inflation expectations may have edged down or that the dollar could appreciate substantially were seen as roughly  counterbalanced by the upside risk that inflation could increase more than expected in an economy that was projected to continue operating above its longer-run potential.

Also notable is the Fed’s explicit warning that “vulnerabilities have increased for asset valuation pressures.”

This overall assessment reflected the staff’s judgment that leverage as well as vulnerabilities from maturity and liquidity transformation in the financial sector were low, that leverage in the nonfinancial sector was moderate, and that asset valuation pressures in some markets were notable. Although these assessments were unchanged from January’s assessment, vulnerabilities appeared to have increased for asset valuation pressures, though not by enough to warrant raising the assessment of these vulnerabilities to elevated.

* * *

“In addition, it was noted that real estate values were elevated in some sectors of the CRE market, that a sharp decline in such valuations could pose risks to financial stability, and that potential reforms in the housing finance sector could have implications for such valuations.”

So…  the prices are too high?

The Fed also touched on deregulation risks:

“With regard to financial stability, several participants emphasized that higher requirements for capital and liquidity in the banking system and other prudential standards had contributed to increased resilience in the financial system since the financial crisis. However, they expressed concerns that a possible easing of regulatory standards could increase risks to financial stability. “

And on the future balance sheet “renormalization” and runoff:

“Under the proposed approach, the Committee would announce a set of gradually increasing caps, or limits, on the dollar amounts of Treasury and agency securities that would be allowed to run off each month, and only the amounts of securities repayments that exceeded the caps would be reinvested each month. As the caps increased, reinvestments would decline, and the monthly reductions in the Federal Reserve’s securities holdings would become larger. The caps would initially be set at low levels and then be raised every three months, over a set period of time, to their fully phased-in levels. The final values of the caps would then be maintained until the size of the balance sheet was normalized.

*  *  *

If The Fed somehow makes believe that the data “continues to support” normalization, then their credibility just went negative…

 

Data-dependence? The Fed is still calling for 2 more rate hikes, the market sees just 1.44 hikes…

 

So what happens when The Fed balance sheet normalization begins?

 

June rate hike odds were 100% before the Minutes (and 50% chance of anmother hike by December – 39.3% + 9.6%)

 

 

end

The CBO has now scored the Ryan healthcare bill (Obamacare repeal) will cut the deficit by $119 billion over 9 years, but leave 23 million less with insurance:

 

(courtesy CBO/zerohedge)

CBO Projects Obamacare Repeal Will Cut Deficit By $119 Billion, Leave 23 Million Less With Insurance

The CBO has finally scored the House-passed healthcare bill, H.R.1628 (which as a reminder remains DOA in the Senate), and finds modest improvement relative to its last scoring of the proposed Healthcare bill as of March 23. Here are the apples to apples comparisons with the last proposed version of the bill:

  • Under the House-passed Bill, the US budget deficit would be reduced by $119 billion between 2017 and 2026. This is $31 billion less than the proposed March bill, which would have lowered the deficit by $150 billion.
  • Offsetting the smaller benefit on the deficit, the CBO found that the number of Americans expected to lose their health coverage would rise to 23 million in 2026, which is 1 million fewer than the 24 million forecast in March, or roughly $31 billion in spending over 10 years to provide 1 million Americans with insurance over the same time period.
  • The CBO concludes that in 2026, an estimated 51 million people under age 65 would be uninsured, compared with 28 million who would lack insurance that year under current law. Under the last CBO estimate, the number of Americans wihtout insurance in 2026 was 52 million of Americans under 65, so an improvement of 1 million as expected.

Below is the “bridge” of the budget deficit reduction from the CBO:

The key details from the official score:

  • CBO and JCT estimate that, over the 2017-2026 period, enacting H.R. 1628 would reduce direct spending by $1,111 billion and reduce revenues by $992 billion, for a net reduction of $119 billion in the deficit over that period (see Table 1, at the end of this document). The provisions dealing with health insurance coverage would reduce the deficit, on net, by $783 billion; the noncoverage provisions would increase the deficit by $664 billion, mostly by reducing revenues.
  • CBO and JCT estimate that, in 2018, 14 million more people would be uninsured under H.R. 1628 than under current law. The increase in the number of uninsured people relative to the number projected under current law would reach 19 million in 2020 and 23 million in 2026.
  • In 2026, an estimated 51 million people under age 65 would be uninsured, compared with 28 million who would lack insurance that year under current law. Under the legislation, a few million of those people would use tax credits to purchase policies that would not cover major medical risks.

Furthermore, since much of the impact of the GOP bill would be at the state level and whether states request various waivers, the CBO added the following discussion on the impact of premiums on state-specific impacts:

  • About half the population resides in states that would not request waivers regarding the EHBs or community rating, CBO and JCT project. In those states, average premiums in the nongroup market would be about 4 percent lower in 2026 than under current law, mostly because a younger and healthier population would be purchasing the insurance. The changes in premiums would vary for people of different ages. A change in the rules governing how much more insurers can charge older people than younger people, effective in 2019, would directly alter the premiums faced by different age groups, substantially reducing premiums for young adults and raising premiums for older people.
  • About one-third of the population resides in states that would make moderate changes to market regulations. In those states, CBO and JCT expect that, overall, average premiums in the nongroup market would be roughly 20 percent lower in 2026 than under current law, primarily because, on average, insurance policies would provide fewer benefits. Although the changes to regulations affecting community rating would be limited, the extent of the changes in the EHBs would vary widely; the estimated reductions in average premiums range from 10 percent to 30 percent in different areas of the country. The reductions for younger people would be substantially larger and those for older people substantially smaller.
  • Finally, about one-sixth of the population resides in states that would obtain waivers involving both the EHBs and community rating and that would allow premiums to be set on the basis of an individual’s health status in a substantial portion of the nongroup market, CBO and JCT anticipate. As in other states, average premiums would be lower than under current law because a younger and healthier population would be purchasing the insurance and because large changes to the EHB requirements would cause plans to a cover a smaller percentage of expected health care costs. In addition, premiums would vary significantly according to health status and the types of benefits provided, and less healthy people would face extremely high premiums, despite the additional funding that would be available under H.R. 1628 to help reduce premiums. Over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) in those states to purchase insurance because their premiums would continue to increase rapidly. As a result of the narrower scope of covered benefits and the difficulty less healthy people would face purchasing insurance, average premiums for people who did purchase insurance would generally be lower than in other states—but the variation around that average would be very large. CBO and JCT do not have an estimate of how much lower those premiums would be.
  • Although premiums would decline, on average, in states that chose to narrow the scope of EHBs, some people enrolled in nongroup insurance would experience substantial increases in what they would spend on health care. People living in states modifying the EHBs who used services or benefits no longer included in the EHBs would experience substantial increases in out-of-pocket spending on health care or would choose to forgo the services. Services or benefits likely to be excluded from the EHBs in some states include maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental benefits. In particular, out-of-pocket spending on maternity care and mental health and substance abuse services could increase by thousands of dollars in a given year for the nongroup enrollees who would use those services. Moreover, the ACA’s ban on annual and lifetime limits on covered benefits would no longer apply to health benefits not defined as essential in a state. As a result, for some benefits that might be removed from a state’s definition of EHBs but that might not be excluded from insurance coverage altogether, some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed. That could happen, for example, to some people who use expensive prescription drugs. Out-of-pocket payments for people who have relatively high health care spending would increase most in the states that obtained waivers from the requirements for both the EHBs and community rating.

Full CBO document below (link)

end

 

Rob Kirby is one of my favourite commentators. He is one smart cookie and I urge you to listen to his conversation with Greg Hunter

 

 

(courtesy Greg Hunter/USAWatchdog)

Rise of Crypto Currency Means Rejection of US Dollar-Rob Kirby

By Greg Hunter On May 24, 2017 In Market Analysis

Forensic macroeconomic analyst Rob Kirby thinks the U.S. dollar is in big trouble. He says the tip-off is skyrocketing crypto currencies such as Bitcoin. Kirby explains, “The rise of the crypto currency is an expression of the rejection of the U.S. dollar as a store of value in international markets. To back that statement up, I would only point to the four largest crypto currencies by market capitalization and what they have done in the last three months. . . . Bitcoin gets most of the press, and there is a good reason for that. It is the biggest crypto currency by market capitalization at around a $34 billion market cap. That $34 billion market cap has doubled in the last three months. The three crypto currencies behind Bitcoin in market capitalization are Ethereum. . . . It has gone from a market cap, three months ago, of $1.12 billion to $15.7 billion. So, it’s up 13 times in three months. The next biggest one by market cap, it’s called Ripple, is currently at a $12.9 billion market cap. Ripple had a market cap 3 months ago at $205 million. So, Ripple has gone up 60 times in the last three months. The next crypto by market cap stands at $2.38 billion and it’s called NEM. Three months ago, NEM had a market cap of $56.8 million. . . . So, it’s gone up 20 times in the last three months. To anybody paying attention, I would suggest that if gold and silver were not strapped down in a straight jacket with the suppressive activities of the central banks and the Exchange Stabilization Fund (ESF) in the United States, they too would have probably ratcheted up 10 to 20 times easily in the last three months because what we are experiencing globally is the rejection of the U.S. dollar.

Kirby says the key assets in the game for the big money players are gold and silver. Kirby contends, “The Achilles heel of this whole shooting match truly is physical precious metal. It’s the one thing you cannot paper over unless you have people willing to excuse you of making a physical delivery of metal for a premium. . . . So long as people are willing to take fiat money in lieu of physical precious metal, the game can continue. The minute someone is due a large chunk of physical metal and the seller cannot supply it . . . that’s when this whole thing unravels. That’s when we see an uncontrollable rise in the price of precious metals like we’ve seen in the last three months in the crypto currencies.”

Former White House Budget Director David Stockman thinks a big financial crash will happen this fall. What does Kirby think? Kirby says, “Pay attention to the rapid ascent in the crypto currencies . . . they are likely nodding their head in agreement with Mr. Stockman’s prognostication that a crisis occurs sooner rather than later. If we see these crypto currencies continue to vector up, it would imply to me a market crash is very near at hand. For what is coming for the U.S. dollar, having it timed to the day, week or month, isn’t the big issue. The really big issue is what comes after. I do believe there will come a point with the physical precious metals, there is going to come a point, whether you have it or you don’t, and if you don’t, you won’t get any because it won’t be available. I have long said that there will come a day that you will not be able to buy precious metals with U.S. dollars. That day is approaching.”

Join Greg Hunter as he goes One-on-One with financial expert Rob Kirby of KirbyAnalytics.com.

(There is much more in the video interview.)

Video Link

http://usawatchdog.com/rise-of-crypto-currency-means- rejection-of-us-dollar-rob-kirby/

-END-

 

Well that is all for today

I will see you tomorrow night

H.

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