May 26/Gold breaks through $1264 and finishes the comex session at $1267.75/silver also performs admirably rising 21 cents to $17.33/ Gold open interest rises by 3,000 contracts for the entire complex with yesterday’s $2.90 gain/However the big story is the huge amount of gold OI standing for June!/Huge Chinese sovereign intervention last night in the currency markets/Wall Street throws in the towel on oil as it does not like the fundamentals/

GOLD: $1267.75  up $11.45

Silver: $17.33  up 21  cent(s)

Closing access prices:

Gold $1267.11

silver: $17.35










Premium of Shanghai 2nd fix/NY:$12.38


LONDON FIRST GOLD FIX:  5:30 am est  $1257.10




For comex gold:



 TOTAL NOTICES SO FAR: 529 FOR 52900 OZ    (1.6457 TONNES)

For silver:

For silver: MAY


Total number of notices filed so far this month: 4615 for 23,035,000 oz






We have now entered options expiry week:

options  expiry on  the OTC/LBMA gold/silver contracts: May 31/2017 at around 12 noon.

The big news of the day is the huge open interest at the gold comex  for the upcoming June delivery month.  We may have a monstrous amount of gold ounces seeking delivery.  We have so far 126,399 contracts still standing vs last yr’s 88,374 with 2 days to go before first day notice.  This should be interesting to watch!


Let us have a look at the data for today



In silver, the total open interest FELL  BY 1,585  contract(s) DOWN to 201,865 DESPITE THE  RISE IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (UP  9 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.  1.0099 BILLION TO BE EXACT or 144% of annual global silver production (ex Russia & ex China).



we had 1 notice(s) filed upon for 100 oz of gold.


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


We had no changes in tonnes of gold at the GLD

Inventory rests tonight: 847.45 tonnes



Today: another huge changes in inventory/another withdrawal of 946,000 oz with the price of silver rising?

THE SLV Inventory rests at: 340.976 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 340 million dollars and  the price of silver is $1.09 less.  And the comex is a price discovery mechanism????



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


(report Harvey)


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 2.28 POINTS OR 0.07%   / /Hang Sang CLOSED UP 8.49 POINTS OR 0.03% The Nikkei closed DOWN 126.29 POINTS OR 0.64%/Australia’s all ordinaires  CLOSED DOWN  0.64%/Chinese yuan (ONSHORE) closed WELL UP at 6.8560/Oil DOWN to 48.63 dollars per barrel for WTI and 51.06 for Brent. Stocks in Europe OPENED IN THE RED     ..Offshore yuan trades  6.8224 yuan to the dollar vs 6.85603 for onshore yuan. NOW  THE OFFSHORE IS HUGELY STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY WEAKER DOLLAR. CHINA NOT HAPPY WITH THE NEWS THAT ITS DEBT HAS BEEN DOWNGRADED BUT IS HAPPY WITH THE WEAKER DOLLAR/CHINA UNDERGOES MASSIVE INTERVENTION LAST NIGHT 






huge story last night:  the yuan rises sharply on Chinese central bank intervention and cable  (British Pound/USA dollar) cracks on poor confidence numbers ahead of the British June election

( zero hedge)

ii) China/USA

Two Chinese fighter jets attempted to intercept a USA surveillance plane. This would make it two incidents whereby USA was close to invading Chinese airspace.

(courtesy zero hedge)




This saddens me greatly;  Gunman kills 23 Coptic Christians in an Egyptian attack, many of whom are children.  The attack occurred in Minya, 140 miles south of Egypt

( zerohedge)


This does not look good.  Estonia which borders with Russia and is a firm NATO country expels two Russian diplomats and no reasons given. Russia responds that this unfriendly action will not go unanswered. Remember the Estonia has weapons pointing towards Russia

( zero hedge)


ESPN/Sports’ Bubble

A great commentary on another bubble bursting:  the sports bubble and ESPN

( William Anderson/Mises Institute)


i)Finally Wall Street gets the picture and throws up on OPEC.  Barclay’s is very negative on the future of oil pricing as they see no light at the end of the tunnel

( zero hedge)

ii)This ought to be “good” for the price of oil: USA crude production hits a 21 month high and rig counts rises for the 19th straight week;

( zero hedge)



i)A good lesson on the faults of Keynesian theory
( Alasdair Macleod)

ii)A good story..

Russian explorers find a billion roubles in an abandoned mine and all of it worthless.  It would have been better to have converted the roubles into gold

( BBC)

iii)Jim Richards take on the embarrassing gold/silver manipulation scheme.  I kind of disagree with him on the China situation.  It is my belief that when China cannot get enough gold for its citizens, it will then crash the comex and that is when the game ends

( GATA/Jim Rickards)

iv)An important commentary from Ronan Manly on gold withdrawals from the Shanghai gold Exchange

(Ronan Manly/GATA)

( zero hedge)

v b) Then Bitcoin crashed again late in the day:

(zero hedge)


vii)In the latest data from Swiss exports of refined gold, India tops the list for the 4th consecutive month.  Total for the last 4 months: 167.2 tonnes. Normally Switzerland supplies around 47% of India’s gold needs. Thus you can safely say that India will import another round of 1000+ tonnes of gold.  Also remember that this is recorded gold.  India smuggles a huge amount of gold into the country to avoid the 10% tax.

( Lawrie Williams/Sharp Pixley)

10. USA stories

i)My goodness:  this is ridiculous.  Washington Post writes that Kushner is under FBI scrutiny. The facts suggest otherwise:

( zero hedge)

ii)Trump will appeal the travel ban to the Supreme Court

( zero hedge)

iii)Trump takes on the Germans with their huge trade surplus with the uSA.  Trump vows to stop this

( zerohedge)

iv)A bill in California to raise the minimum wage to $15.00 will no doubt cause a huge number of teenagers to be fired especially if the Democrats wins Congress in 2018.

( zero hedge)

v)You will recall that Republican candidate Gianforte assaulted a reporter the day before the election in Montana. It had no effect on that election as Gianforte wins handily.  We were waiting to see any anti Trump backlash which was not to be

( zerohedge)

vi)Core durable goods/new orders plunge in April

(courtesy zero hedge)

vii)strange: Q1 DGP revised upwards to 1.2% on stronger spending despite corporate profits tumbling.  Still no word on 2nd quarter GDP but expect a huge downdraft with yesterday’s poor inventory numbers and today’s poor durable goods report

( zero hedge)

viii) Soft data report U. of Michigan confidence report shows a huge divide between Republicans and Democrats.  However what it does agree with on both sides, it that it is time to sell your house

(courtesy zero hedge)

ix)FISA court blasts the FBI for their disregard for rules and illegally shares spy data with private contractors

( zerohedge)

x)The G7 leaders got nowhere with Trump to back a climate deal and that was to be expected.

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 2,983 CONTRACTS UP to an OI level of 473,848 WITH THE RISE IN THE PRICE OF GOLD ( $2.90 with YESTERDAY’S trading). SO FAR WE HAVE NOT HAVE OUR USUAL OBLITERATION OF OPEN INTEREST AS WE ENTER FIRST DAY NOTICE. I WILL BE MONITORING THIS!! 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 LOSS OF 7 contract(s) FALLING TO  23. We had 4  notices filed yesterday so we LOST 3 GOLD CONTRACTS OR AN ADDITIONAL 300 gold ounce will NOT stand for delivery and 3 contracts were cash settled through the EFP route where they receive a cash bonus plus a future gold contract.

The next big active month is June/2017 and here the OI LOST A MUCH SMALLER THAN ANTICIPATED 25,527 contracts DOWN to 126,399.  The non active July contract GAINED another 6 contracts to stand at 1510 contracts. The next big active month is August and here the OI gained 26,264 contracts up to 211,005. FIRST DAY NOTICE IS WEDNESDAY MAY 31.2017 AND WE HAVE TWO MORE READING DAYS AFTER TODAY: TUESDAY AND WEDNESDAY.

OH OH!! WE HAVE NOW SURPASSED last year’s huge open interest as on May 26 2016 we had at this exact time:   88,374 contracts of JUNE 2016 CONTRACTS OPEN.( compared to JUNE 2017: 126,399)WITH EXACTLY 2 DAYS TO GO BEFORE FIRST DAY NOTICE FOR BOTH YEARS.

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


We had 1 notice(s) filed upon today for 100 oz

Below is a little background on the EFP contracts  initiated by our bankers:
(We now know for certainty that private EFP contracts are given by the bankers when faced with an upcoming active delivery month.  We just do not know the makeup of that private deal.  It is my contention that the longs in silver at the end of April were given a fiat bonus plus a long “in the money” call for a  future May contract or a July contract. They were told not to exercise for a new contract until at least the first week of May is over so it would not look like a paper settlement which in reality it surely is.
So now everything makes sense: the obliteration of OI as we enter first day notice has not really occurred but replaced with a future contract with some bonus money for their effort. No doubt by the end of May, the open interest in the silver contract month will be close to the OI we had around mid April/2017.)
We are in the active delivery month is MAY  Here the open interest LOST 24 contracts FALLING TO 41 contracts. We had 11 notices filed on yesterday , so we LOST 15 notices or an additional 75,000 oz will NOT  stand for delivery and 15 CONTRACTS were settled through the EFP route.

The non active June contract LOST 67 contracts to stand at 623. The next big active month will be July and here the OI  LOST 3035 contracts DOWN to 142,224.

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 21 notice(s) filed for 105,000 oz for the MAY 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 218,091 contracts which is FAIR

Yesterday’s confirmed volume was 275,167 contracts  which is GOOD (BUT MANY ROLLOVERS).

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for MAY
 May 26/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 
No of oz served (contracts) today
1 notice(s)
100 OZ
No of oz to be served (notices)
22 contracts
2200 oz
Total monthly oz gold served (contracts) so far this month
529 notices
52900 oz
1.6457 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   230,129.2 oz
Today we HAD  0 kilobar transaction(s)/
total dealer deposits: nil oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had no dealer deposits:
total dealer deposits:  nil oz
we had 0  customer deposit(s):
total customer deposits; NIL  oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil oz
 we had 0 adjustments:
For MAY:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 1 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

To calculate the initial total number of gold ounces standing for the MAY. contract month, we take the total number of notices filed so far for the month (529) x 100 oz or 52,900 oz, to which we add the difference between the open interest for the front month of MAY (23 contracts) minus the number of notices served upon today (1) x 100 oz per contract equals 55,100 oz, the number of ounces standing in this  active month of MAY.
Thus the INITIAL standings for gold for the MAY contract month:
No of notices served so far (529) x 100 oz  or ounces + {(30)OI for the front month  minus the number of  notices served upon today (1) x 100 oz which equals 55,100 oz standing in this non active delivery month of MAY  (1.718 tonnes).  We LOST 3 contracts or an additional 300 oz will NOT stand for delivery and 3 contracts were cash settled through the EFP route 
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/  1.718 TONNES
total for the 17 months;  249.651 tonnes
average 14.685 tonnes per month
Total dealer inventory 877,817.092 or 27.303 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,811,289.032 or 274.06 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 274.06 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.
And now for silver
MAY INITIAL standings
 May 26. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
1,353,429.270 oz
Deposits to the Dealer Inventory
nil oz
Deposits to the Customer Inventory 
 559,691.100  oz
No of oz served today (contracts)
(105,000 OZ)
No of oz to be served (notices)
20 contracts
( 100,000 oz)
Total monthly oz silver served (contracts) 4615 contracts (23,075,000 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  8,111,049.1 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 3 customer withdrawal(s):
i) Out of brinks: 458,026.000 oz ??? EXACT WEIGHT??
ii) out of Scotia: 559,691.100 oz
iii) out of JPMorgan: 335,722.120 oz*
this is the first withdrawal of silver from JPMorgan this year.
 We had 1 Customer deposits:
i) Into HSBC: 3559,691.100  oz
***deposits into JPMorgan have now stopped 
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits  559,691.100 oz
 we had 1 adjustment(s)
out of the Delaware vault:  5067.600 oz was adjusted out of the dealer and this landed into the customer account of Delaware
The total number of notices filed today for the MAY. contract month is represented by 21 contract(s) for 105,000 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 4615 x 5,000 oz  = 23,075,000 oz to which we add the difference between the open interest for the front month of MAY (41) and the number of notices served upon today (21) x 5000 oz equals the number of ounces standing


Thus the initial standings for silver for the MAY contract month:  4615(notices served so far)x 5000 oz  + OI for front month of APRIL.(65 ) -number of notices served upon today (21)x 5000 oz  equals  23,175,000 oz  of silver standing for the MAY contract month.
We lost 15 contracts  or an additional 75,000 oz will not stand for delivery this month,  and 15 contracts were issued  EFP contract for a huge fiat bonus and a future silver contract (probably either a June or July contract.)  
Volumes: for silver comex
Today the estimated volume was 34,019 which is FAIR
Yesterday’s  confirmed volume was 67020 contracts which is HUGE
Total dealer silver:  32.530 million (close to record low inventory  
Total number of dealer and customer silver:   200.987 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
Today at 3:30 pm est we receive the COT report which gives position levels of our major players.
I would like to see what the commercials did in both gold and silver:
First the Gold COT
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
241,752 81,985 63,428 112,114 286,405 417,294 431,818
Change from Prior Reporting Period
20,220 -12,823 8,769 -1,605 29,827 27,384 25,773
167 95 97 51 59 259 217
Small Speculators  
Long Short Open Interest  
45,278 30,754 462,572  
167 1,778 27,551  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, May 23, 2017
Our large speculators:
those large speculators that have been long in gold added a whopping 20,220 contracts to their long side and refused so far to trade for an EFP
those large specs that have been short in gold covered a whopping 12,823 contracts.
large specs thus go net long by 33,043 which is gigantic
Our commercials;
those commercials that have been long in gold pitched 1605 contracts from their short side.
those commercials that have been short in gold added a monstrous 29,827 contracts to their short side and basically controlled the northbound price rise in gold
Our small specs:
those small specs that have been long in gold added a tiny 167 contracts to their long side ?? strange that we got only a tiny rise in the small spec oi.
those small specs that have been short in gold added 1778 contracts to their short side and got it wrong this week.
large specs go net long by 33,000 contracts. the commercials go net short by 31,000
and at the comex, the front OI for June with two days to go is extremely high suggesting a 50 tonnes+ of gold standing for delivery. Next week should be extremely interesting.
And now the Silver COT
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
96,531 45,358 27,962 53,195 117,182
-3,611 -11,780 -2,371 -2,417 4,233
102 52 46 35 37
Small Speculators Open Interest Total
Long Short 203,459 Long Short
25,771 12,957 177,688 190,502
-3,269 -1,750 -11,668 -8,399 -9,918
non reportable positions Positions as of: 155
Our large speculators:
those large specs that have been long in silver, pitched 3611 contracts from their long side.
those large specs that have been short in silver covered a whopping 11,780 contracts from their short side.
large specs go net long by 8169 contracts.
Our commercials;
those commercials that have been long in silver pitched 2417 contracts from their long side
those commercials that have been short in silver only added 4233 contracts to their short side.
commercials go net short by 6650 contracts
Our small specs:
those small specs that have been long in silver pitched 3269 contracts from their long side.
those small specs that have been short in silver covered 1750 contact from their short side.
it seems everybody is confused with silver and do not know what to make of the situation. However it is bearish if your just look at the commercials going net short.

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.7 percent to NAV usa funds and Negative 6.7% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.7%
Percentage of fund in silver:38.2%
cash .+0.1%( May 26/2017) 
2. Sprott silver fund (PSLV): Premium RISES TO   -.10%!!!! NAV (May 26/2017) 
3. Sprott gold fund (PHYS): premium to NAV rises to -0.62% to NAV  (May 26/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.10% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.62%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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

 Section: Daily Dispatches

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

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

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

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

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

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

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

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

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

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

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

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


And now the Gold inventory at the GLD

May 26./no change in inventory at the GLD/Inventory rests at 847.45 tonnes

May 25./no change in inventory at the GLD/Inventory rests at 847.45 tonnes

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




May 26 /2017/ Inventory rests tonight at 847.45 tonnes


Now the SLV Inventory

May 26/another paper withdrawal of 946,000 oz of silver from the SLV with silver rising/inventory rests at 340.976 million oz

May 25/no change in silver inventory at the SLV/Inventory rests at 341.922 million oz

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/



May 26.2017: Inventory 340.976  million oz

Major gold/silver trading/commentaries for FRIDAY



Silver Bullion In Secret Bull Market

Silver Bullion In Secret Bull Market

by Sean Broderick of Uncommon Wisdom Daily

Do you think silver is poised to go higher?

I sure do. That’s because I’m watching what is going on in the world’s silver ETFs. I’m also watching the mountain of forces that are piling up to push the metal higher.

Look at this chart. It shows all the metal held by the world’s physical silver ETFs (black line). And all the metal held by the world’s physical gold ETFs (blue line) …

I showed you this same chart last week. Since then, silver ETFs have added another 8 million ounces. At the same time, gold ETFs have added only 56,000 ounces.

In fact, since late April, silver ETFs have added 31 million ounces of the metal. Gold ETF holdings over that time frame have zigged and zagged. But those are basically flat.

Kind makes you go “hmm,” doesn’t it?

Why is someone stocking up on all that silver?

I can think of a few reasons why …

Silver ore in mines is getting less-rich. That makes sense, because miners dig up the rich stuff first. And silver, like gold, is a depleting asset. That’s why primary silver miners’ average yield has fallen from 13 ounces per ton in 2005 to 7.4 ounces per ton in 2016. This is a 43% decline in just 12 years.

Silver is an industrial metal. Half of silver demand is for industry. It will be affected by China’s economic and industrial outlook. Both of those are improving. Though silver demand dropped last year, it is zig-zagging higher.

Global silver production keeps falling. In fact, silver production fell more than demand last year. That is probably why prices went up 9.3% last year.

The Silver Institute reported that global silver production peaked in 2015. It takes years to bring a new silver mine online. And let me tell you, there aren’t a lot of new silver projects around.

Looking at that earlier chart of silver ETFs, the recent demand trend looks clear. (Up!) Now ask yourself, “What happens when silver demand goes higher?”

Last year, the physical deficit was 52.2 million ounces, according to Thomson Reuters. That was the third deficit in a row. And that trend is not about to change anytime soon …Well, when you put together rising demand and falling supply, you get a deficit.

Another Massive Deficit This Year

This year, it should be four years of deficit in a row. Banking giant HSBC has forecast a 132 million-ounce deficit for 2017. That’s more than double last year’s deficit.

Sure, not everyone agrees on the exact amount of silver supply … demand … or silver in storage. That’s what makes a market.

But the forecasts of a deficit are backed up by what we can see on the ground. Chile’s silver production dropped 26% in the first quarter.

Now, some will tell you that the silver market is always in deficit lately. And the market never seems to care.

That’s true … to a point. That’s because the deficit can be made up by above-ground stockpiles. But stockpiles will only last so long.

And that brings me back to that chart I showed you. I think someone is betting that the time for a price squeeze is edging closer.

Solar Demand Could be Key

The difference may be photovoltaic demand. It climbed from 57.2 million ounces in 2015 to 76.6 million ounces in 2016. And the solar buildout is still ramping up.


Forecasts by GTM Research predict that solar installations will double from 2015 to 2021.

I find that solar forecasts that go more than a couple years out are generally unreliable. So far, they’ve always underestimated real demand.

On the other hand, remember that the solar industry is getting more-efficient in its silver use. Still, add it all up, and the demand trend looks big.

That’s longer term. Is there a driver of silver prices in the short term? Yes!

Let me show you one more chart. I snagged this from our friends at It shows how hedge funds are betting on silver right now.

I’d say silver could go ballistic.Hedge funds are making a lot of bearish bets on silver. But keep in mind that hedge funds are often wrong. What do you suppose will happen if and when they have to cover those bearish bets?

As published yesterday on Uncommon Wisdom Daily

News and Commentary

PRECIOUS-Gold rises as Asian stocks, dollar slip after oil slump (

Gold prices halt two-session skid as dollar stalls (

Jobless claims edge up; goods trade deficit widens (

LBMA launches code of conduct for precious metals markets (

Gold used to deliver anticancer drugs into tumours (


An important commentary from Ronan Manly on gold withdrawals from the Shanghai gold Exchange

(courtesy Ronan Manly/GATA)


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



2. Nikkei closed DOWN 126.29 POINTS OR 0.64%   /USA: YEN FALLS TO 110.98

3. Europe stocks OPENED IN THE RED        ( /USA dollar index RISES TO  97.26/Euro DOWN to 1.1195


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  48.63 and Brent: 51.06

3f Gold UP/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 DOWN for WTI and DOWN for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.326%/Italian 10 yr bond yield DOWN  to 2.104%    

3j Greek 10 year bond yield FALLS to  : 5.982% ???  

3k Gold at $1266.40/silver $17.26 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 1/100 in  roubles/dollar) 56.88-

3m oil into the 48 dollar handle for WTI and 51 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 HUGE SIZED REVALUATION NORTHBOUND 


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9728 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0890 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +0.326%

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 2.2340% early this morning. Thirty year rate  at 2.904% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Rally Fizzles After “OPEC Shock” In “Slow Risk-Off Session”


S&P futures were fractionally lower from yesterday’s record high as European stocks declined and Asian stocks were mixed, pressured by yesterday’s 5% plunge in crude after OPEC unexpectedly “failed to surprise” markets, and announced the bare minimum supply cut extension that was expected by oil traders, who in turn puked long positions.

It wasn’t just oil: it has been a slow risk-off session as Bloomberg phrased it, ahead of the long weekend for U.S. and U.K. markets, with the key carry pair, USD/JPY breaking below 111.00 as the USD continues to weakens, while the GBP tumbled 0.5%, after the latest poll shows Tory lead narrowing. As futures declined, fixed income markets ground higher as the 2s10s hits flattest level YTD. European equity markets open lower led by oil related stocks after yesterday’s heavy sell-off in oil. Automakers also weaker after possible Trump comments on German car exports. Gold well supported amid general risk-off.

Most of the early attention, however, was on the market’s reaction to yesterday’s oil selloff. “To say that yesterday’s performance was disappointing for bulls is an understatement,” Tamas Varga, analyst at PVM Oil Associates wrote in an emailed report quoted by Bloomberg. “It is, however, not a foregone conclusion that the trend is definitely turning. The question now is whether yesterday’s sharp drop in oil prices was a panic long-liquidation or the technical picture is now firmly turning bearish.”

Stocks from Tokyo to Europe were dragged down by oil producers as oil headed for a weekly loss after falling the most in three weeks on Thursday as OPEC’s move to prolong supply cuts for nine months disappointed investors hoping for more.

“Markets ultimately found the renewed deal among OPEC and friends underwhelming,” Cole Akeson, a strategist at Sberbank CIB in Moscow, wrote in a note. “Essentially, the market consensus seems to have come around to a view that regardless of what effect on global inventories the deal may have for now, OPEC and its partners have little insight as to what to do later on.”

Before this week’s deal, oil had climbed back above $51 a barrel after Saudi Arabia and non-OPEC member Russia rallied support from the Organization of Petroleum Exporting Countries and other nations to extend the supply pact into 2018. However, as the chart below shows, that proved to be too optimstic for a market which no longer will buy simple on OPEC jawboning, but demands results.

With oil in the spotlight, Japan’s Topix index slipped 0.6%, trimming its weekly advance to 0.6%. Australia’s S&P/ASX 200 Index fell 0.7 percent, with BHP Billiton Ltd. dropping 2 percent.  South Korea’s Kospi rose 0.5 percent to another record. The index is up 2.9 percent for the week, the biggest gain in two months. Hong Kong’s Hang Seng Index was flat, keeping its weekly gain at 1.8 percent, while the Shanghai Composite increased 0.1 percent.

The Stoxx Europe 600 Index dropped 0.4% with oil and gas producers falling 1.2%. S&P 500 futures were little changed, after rising 0.4% on Thursday to new all time highs driven by a narrow basket of tech stocks.

Elsewhere, as discussed last night, the British pound tumbled over 0.5% to $1.2861 and looked set for its biggest one-day slide in over three weeks and steepest one-week decline since early April, after a poll showed the Conservative party lead narrowed after the Manchester attack, and as investors in Asia sold the currency after U.K.’s first-quarter economic growth missed estimates. The poll results come less than two weeks before the June 8 general election.

“With this kind of momentum and almost two weeks to go until the vote, not only is this not going to be the breeze that May anticipated when she called the snap election last month, it could yet turn into a humiliating defeat for the Conservative leader and her party,” said Craig Erlam, senior market analyst at OANDA.  “Coming on the back of losses yesterday, it’s turning into a rotten end to the week for the pound.”

Elsewhere, confirming that the reason for the sharp spike in the Yuan over the past two days, the biggest move since January, was direct government intervention, overnight Bloomberg reported that China is considering changes to the way it calculates the yuan’s daily reference rate against the dollar “to reduce exchange-rate volatility while undermining efforts to increase the role of market forces” in Asia’s largest economy. Policy makers may add a “counter-cyclical factor” to the yuan’s daily fixing, according to a government statement on Friday. Analysts said the change would give authorities more control over the fixing and restrain the influence of market pricing.

Overnight, both the onshore and offshore yuan rose to three-month highs on continued speculation the Chinese government will continue to support the currency and stock markets. The currency advanced for a second day on talk state-backed funds were propping up Chinese assets Thursday following Moody’s downgrade of China’s credit rating.

In currencies, the Bloomberg Dollar Spot Index fell 0.1 percent, poised for a second week of declines. The pound slid 0.5 percent to $1.2875 (see above). The yen rose 0.7 percent to 111.11 per dollar, after dropping 0.3 percent on Thursday. The euro strengthened 0.2 percent to $1.1227

After its sharp drop on Thursday, oil edged higher in early trading but remained on the back foot after tumbling 5% in the previous session. On Thursday in Vienna, the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers agreed to extend a pledge to cut around 1.8 million barrels per day (bpd) until the end of the first quarter of 2018 – disappointing investors betting on longer or larger curbs.

Friday economic data include annualized GDP, durable goods orders and University of Michigan indexes.

Bulletin Headline Summary from RanSquawk

  • European equities enter the North American crossover lower as energy names underperform following yesterday’s OPEC announcement
  • GBP has been placed under pressure after the latest polling data shows the race for Downing Street getting closer
  • Looking ahead, highlights include US GDP, Durables and Uni. Of Michigan

Market Snapshot

  • S&P 500 futures down 0.1% to 2,411.55
  • STOXX Europe 600 down 0.4% to 390.42
  • MXAP up 0.01% to 152.86
  • MXAPJ down 0.08% to 499.83
  • Nikkei down 0.6% to 19,686.84
  • Topix down 0.6% to 1,569.42
  • Hang Seng Index up 0.03% to 25,639.27
  • Shanghai Composite up 0.07% to 3,110.06
  • Sensex up 0.8% to 30,983.82
  • Australia S&P/ASX 200 down 0.7% to 5,751.66
  • Kospi up 0.5% to 2,355.30
  • German 10Y yield fell 1.4 bps to 0.348%
  • Euro up 0.1% to 1.1225 per US$
  • Brent futures up 0.8% to $51.84/bbl
  • Italian 10Y yield fell 1.9 bps to 1.826%
  • Spanish 10Y yield fell 2.2 bps to 1.562%
  • Brent futures up 0.8% to $51.84/bbl
  • Gold spot up 0.8% to $1,265.34
  • U.S. Dollar Index down 0.1% to 97.11

Top overnight news

  • Political uncertainty in the U.K. rose after the race between the ruling Conservative party and opposing Labour party narrowed, raising prospects that the Tory majority will be smaller than expected and this could have implications on the Brexit process.
  • The Federal Reserve is ‘very close’ to where it needs to be on policy and shouldn’t be thinking in terms of major increases in the policy rate, St. Louis Fed President James Bullard tells reporters in Tokyo
  • Focus on U.S. President Donald Trump’s G-7 summit visit which will involve debates on climate change, free trade, terrorism and security
  • China is considering changes to the way it calculates the yuan’s daily reference rate against the dollar, a move that’s likely to reduce exchange-rate volatility while undermining efforts to increase the role of market forces in Asia’s largest economy
  • The OPEC’s historic pact to extend oil supply cuts has left markets guessing on the group’s long term plans and its exit strategy

Asia equity markets traded mixed as the region failed to take the baton from another record setting day on Wall St, with oil names dampened following the weakness across the energy complex. This saw commodity-related sectors in ASX 200 (-0.7%) underperform as they felt the brunt of the 5% declines in crude prices due to disappointment from the OPEC output extension deal. A firmer JPY kept the Nikkei 225 (-0.3%) subdued, while Hang Seng (Unch.) and Shanghai Comp. (+0.2%) traded choppy amid a reserved liquidity operation by the PBoC and continued pessimistic comments from Moody’s following the recent sovereign rating downgrade. 10yr JGBs traded higher amid a downbeat risk tone, while the BoJ were also present in the market under its bond buying operation for JPY 750b1n of JGBs in the belly to super-long end. Moody’s stated that China growth will slow, while it added that China may lose Al rating if there are signs debt keeps increasing and debt surpasses expectations.

Top Asian News

  • Taiwan’s Economy Grew 2.6% Y/y in 1Q; Survey Est. +2.6%
  • China Confirms It’s Considering Changing Yuan Fixing Formula
  • Vanguard to Triple Shanghai Staff by Year-End as China Opens
  • SBI Said to Pick BofA, Deutsche Bank for $2 Billion Offering
  • Incoming Philippine BSP Governor Discusses His Plans: Q&A
  • China Money Funneled to Far-Flung Homes Flags Bubble Trouble
  • Hong Kong Dollar Heads for Biggest Weekly Drop Since Early 2016

European equities trade with modest losses, largely stemming from the disappointed/scepticism amongst investors over OPEC’s decision to only extend the current output cut by 9-months. Following this announcement crude prices slipped, WTI hitting a low of USD 48.21, subsequently large energy names felt the brunt of this. Although, crude prices have seen a modest reprieve this morning with WTI consolidating above USD 49. Across credit markets, EGB’s have been kept afloat with support from FTQ flow, upside in bunds has met resistance at the 161.55 area, a breach may see a move to the 18th May highs situated at 162.02. As we approach month-end, Citi expect healthy extensions for European and UK bonds, with OATs set to benefit the most.

Top European News

  • Retirement Savings Gap Is Seen Climbing to $400 Trillion by 2050
  • EU to Demand Full ECJ Jurisdiction on Rights Post-Brexit: Doc.
  • Italian Manufacturing Morale Falls Amid Concerns Over Recovery
  • Portugal Asks to Make EU9.7b Early Repayment to IMF: IGCP
  • Barclays Bid to Cut Africa Stake Still With S. Africa Regulator
  • Restaurant Group Surges Most in 9 Months on ‘Reassuring’ Update

In currencies, GBP has been pressured with market attention being placed on the most recent polls which have shown a narrowing lead for PM May and her Conservative party over the Labour party. As such, GBP has tripped below 1.2900 to eye up support layered in around 1.2850-1.2844, a break through this could see a test to the May 4th low at 1.2831. USD-index continued to ease as one of the more dovish FOMC speakers, Bullard sounded the alarm over the path of inflation, most of this seen against the JPY, which has run through support at 111.50. Elsewhere, the slip in commodities pressures AUD yet again, this continues to drive AUD/NZD lower which is now hovering around 3-month lows, given that NZD has remained firm in the wake of New Zealand’s strong budget position.

In commodities, WTI and Brent crude futures have staged a modest recovery from yesterday’s lows to enter the North American crossover modestly higher with the usual value-buyers entering the market amid no new developments on the fundamental side since yesterday’s OPEC-inspired sell-off. In terms of newsflow for the complex, things have remained relatively light as markets take a breather from yesterday. In metals markets, Gold has seen mild support with the safe-haven asset underpinned amid a cautious risk tone, which also kept copper subdued.

Looking at the day ahead now, the focus will be on the US this afternoon where there are a number of important releases due. First up is the second estimate of Q1 GDP where the consensus is for an upward revision in growth to +0.9% qoq from +0.7%.  Our US colleagues expect a small upward revision to +0.8% qoq. Importantly for growth in the current quarter we’ll also receive the April durable and capital goods orders report where the consensus is for a weak headline durable goods  orders print to be offset by a healthy gain in both ex-transportation orders (+0.4% mom expected) and core capex orders (+0.5% mom expected). Also due out  this afternoon is the final May University of Michigan consumer sentiment print where it’s worth keeping an eye on the various inflation expectations indicators too.

US Event Calendar

  • 8:30am: GDP Annualized QoQ, est. 0.9%, prior 0.7%; Personal Consumption, est. 0.4%, prior 0.3%; GDP Price Index, est. 2.3%, prior 2.3%; Core PCE QoQ, est. 2.0%, prior 2.0%
  • 8:30am: Durable Goods Orders, est. -1.5%, prior 0.9%, revised 1.7%; Durables Ex Transportation, est. 0.4%, prior 0.0%, revised 0.8%
    • Cap Goods Orders Nondef Ex Air, est. 0.5%, prior 0.5%; Cap Goods Ship Nondef Ex Air, est. 0.5%, prior 0.5%, revised 0.3%
  • 10am: U. of Mich. Sentiment, est. 97.5, prior 97.7
    • U. of Mich. Current Conditions, prior 112.7
    • U. of Mich. Expectations, prior 88.1
    • U. of Mich. 1 Yr Inflation, prior 2.6%
    • U. of Mich. 5-10 Yr Inflation, prior 2.3%

DB’s Jim Reid concludes the overnight wrap

With markets already with one eye on the long weekend holidays in the US and UK it’s not been the most inspiring last 24 hours. Really it has been all about Oil after prices fell sharply yesterday in the wake of OPEC and non-OPEC producers agreeing to extend the production cut deal by 9 months into 2018. That was pretty much as guided to although the disappointment reflected in the price action appeared to be twofold with cuts not being deepened and no new producers joining the pact. It did however appear that there was some optionality left open for cuts being extended beyond the additional 9 months should prices decline. It was also noted that the importance of the five-year rolling average of OECD inventory was cemented and our commodity strategists highlight that this helps solidify their expectations that output controls will eventually be extended at least until the end of 2018, and more likely than not into 2019 (you can find more details in their report here

After touching a high of $52.00/bbl yesterday morning, post the headlines WTI proceeded to tumble and finished the day down -4.79% at $48.90/bbl and back to the lowest level in a week. It was also the third biggest daily decline this year. This morning it is down another -0.90% too. The biggest impact on other asset classes yesterday was Oil-sensitive currencies with the likes of the Russian Ruble (-0.90%), Norwegian Krone (-0.79%) and Canadian Dollar (-0.57%) all weaker.

That was really the extent of the excitement in markets though. Given the holidays in Europe volumes were thin and price action was pretty benign as a result (Stoxx 600 ending -0.06%). Meanwhile it was business as usual for US equity markets again where – despite the energy sector doing its best to weigh on broader indices – the S&P 500 (+0.44%) rose for the sixth consecutive session and in doing so notched up yet another record high. The longest consecutive winning streak for the S&P this year came in February when it rose for seven sessions on the trot. Some better than expected results in the retail sector, namely from Best Buy and PVH, appeared to be the driving force yesterday while the VIX also finished the day lower and closed below 10.00 (at 9.99) for the first time in over 2 weeks. In fact it’s now closed below that level 3 times this year, including yesterday. From 1990-2016, it had actually only closed below 10 on a total of 9 occasions.

There was a similar lack of excitement in Treasuries yesterday where yields finished the day little changed after spending much of the session in a tight range. We did hear from the Fed and specifically from Governor Lael Brainard who said that she is encouraged by a brightening global economic outlook and that downside risks from certain economies appear to be fading. Brainard has previously been one of the most dovish Fed officials for what it’s worth.

While we’re on the Fed, it’s worth highlighting that yesterday our US economists made some small timing changes to their Fed call for the rest of the year in light of Wednesday’s FOMC minutes. They note that if the Fed intends to begin reducing its holdings of Treasury and MBS securities this year, then policymakers are likely to announce a change in their reinvestment policy at the conclusion of the September 20 FOMC meeting. The details of this policy should be made known well in advance – most likely after the June meeting (press conference and/or minutes). The team go on to say that given the committee’s concerns about a subsequent over-tightening of financial conditions once the process of reinvestment tapering begins, it is unlikely that the Fed will raise the fed funds rate at the same time that they announce a change in reinvestment policy. As a result the team has now shifted their view of a June and September hike to a June and December hike, with the Fed staying put at the September meeting.

Elsewhere, President Trump’s overseas tour continues with Trump yesterday causing some ripples at the NATO summit after criticising allies for “chronic underfunding”. Meanwhile the travel ban is back in focus overnight after the US attorney general said that the White House will appeal its latest courtroom defeat in the US Supreme Court. Also worth pointing out is the Washington Post reporting that investigators are now focusing on Trump’s son-in-law and advisor Jared Kushner in connection with the Russia-Election investigation. Kushner was said to have held meetings with Russia in December, however it remains to be seen if this is the person of interest that was mentioned in press reports (like Washington Post) last week.

In Asia this morning it’s been a much more mixed start for major bourses. While the Nikkei (-0.35%), and ASX (-0.65%) are down, mostly as a result of weakness in the energy sector, the Shanghai Comp and Hang Seng are flat and the Kospi (+0.48%) has edged higher. US equity futures are also little changed. Meanwhile the big mover in FX this morning is Sterling which is down -0.42% versus the Dollar after a YouGov poll for the Times (conducted over 24-25 May) showed the Conservatives as holding just a 5% lead over Labour at 43% to 38%. That is the smallest lead for the Tories since May became PM back in July  last year. The last YouGov poll (18-19 May) showed the Conservatives as holding a 9% lead at 44% to 35%. Other opinion polls showed a lead for the Tories of as much 12-13% just over a week ago, so it’s worth keeping an eye on this trend over the next week or two. The other news to highlight from overnight is the PBoC announcing that it is planning a change in the formula behind the daily yuan fixing to include a ‘counter-cyclical adjustment factor’. The suggestion is that it’ll dampen the impact of big swings. There has been little change in either the onshore or offshore yuan following that news. Finally inflation data in Japan this morning didn’t throw up any real surprises with headline (+0.4% yoy), core (+0.3% yoy) and core-core (+0.0% yoy) rates all up slightly versus March and more or less matching expectations.

In terms of yesterday’s economic data, in the US the advance goods trade balance reading in April revealed a slightly wider than expected deficit of $67.6bn. Away from that initial jobless claims continue to hover at multi-decade lows after printing at 234k for last week. The four-week average is now at 235k. Meanwhile the Kansas City Fed’s manufacturing activity index for May edged up 1pt to +8 (vs. +9 expected) with the details showing that both new orders and employment were a little firmer which is in contrast to the data we saw in the Richmond Fed’s survey. The other data was the April wholesale inventories print which came in at -0.3% mom and will likely result in downward pressure on some of the GDP trackers. In Europe the only data came from the UK where Q1 GDP was revised down to +0.2% qoq from +0.3% with the big negative contribution coming from net trade.

Looking at the day ahead now, with no data of significance due out in Europe this morning the focus will be on the US this afternoon where there are a number of important releases due. First up is the second estimate of Q1 GDP where the consensus is for an upward revision in growth to +0.9% qoq from +0.7%.  Our US colleagues expect a small upward revision to +0.8% qoq. Importantly for growth in the current quarter we’ll also receive the April durable and capital goods orders report where the consensus is for a weak headline durable goods  orders print to be offset by a healthy gain in both ex-transportation orders (+0.4% mom expected) and core capex orders (+0.5% mom expected). Also due out  this afternoon is the final May University of Michigan consumer sentiment print where it’s worth keeping an eye on the various inflation expectations indicators too.

Away from the data there isn’t much central bank speak to highlight but it’s worth keeping an eye on the G7 summit where Trump, May, Macron and Merkel are gathering. That meeting concludes on Saturday with closing press conferences due to take place so we’ll have a recap in Monday’s EMR of any important snippets. Fingers crossed we’ll also be opening Monday  on the back of an FA Cup final win for Arsenal tomorrow. We need one positive to come away from what has otherwise been a fairly depressing season for Arsenal fans.


i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 2.28 POINTS OR 0.07%   / /Hang Sang CLOSED UP 8.49 POINTS OR 0.03% The Nikkei closed DOWN 126.29 POINTS OR 0.64%/Australia’s all ordinaires  CLOSED DOWN  0.64%/Chinese yuan (ONSHORE) closed WELL UP at 6.8560/Oil DOWN to 48.63 dollars per barrel for WTI and 51.06 for Brent. Stocks in Europe OPENED IN THE RED     ..Offshore yuan trades  6.8224 yuan to the dollar vs 6.85603 for onshore yuan. NOW  THE OFFSHORE IS HUGELY STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A MUCH STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY WEAKER DOLLAR. CHINA NOT HAPPY WITH THE NEWS THAT ITS DEBT HAS BEEN DOWNGRADED BUT IS HAPPY WITH THE WEAKER DOLLAR/CHINA UNDERGOES MASSIVE INTERVENTION LAST NIGHT 






huge story last night:  the yuan rises sharply on Chinese central bank intervention and cable  (British Pound/USA dollar) cracks on poor confidence numbers ahead of the British June election

(courtesy zero hedge)

FX Chaos – Cable Cracks Lower On Election/Confidence; Chinese Yuan Spikes To 3-Month Highs

A kneejerk lower in Cable overnight (on Tory poll numbers dropping and weak confidence) started the fun in FX markets but (aside from Bitcoin), but Yuan is the big mover once more with a big figure spike to 6.85 – strongest since early Feb, extending the gains post-FOMC Minutes.

A new poll from Reuters shows the Tory lead fading fast in the UK election…

In a sign that the election could be more closely contested than has previously been thought, YouGov said on Thursday May’s party was on 43 percent, down 1 percentage point compared to a week ago, while Labour was up 3 points on 38 percent. The previous YouGov poll had given May a lead of nine points.


Then YouGov/CEBR consumer confidence tumbled to the weakest since weeks after Brexit vote…

  • Consumers the least confident about their current financial situation since December 2014
  • Expectations about their finances over the next 12 months also fell
  • Perceptions of job security were at a four-year low

“It looks like this may be the point where the slowing GDP figures start to translate to people’s everyday lives,” Stephen Harmston, Head of YouGov Reports, said. “The figures indicate that they are starting to experience a downturn.”

And that prompted notable weakness in Cable…


But Yuan is now 4 handles higher since The Fed Minutes…snapping higher again tonight


Pushing Yuan to 3-month highs…

ii) China/USA

Two Chinese fighter jets attempted to intercept a USA surveillance plane. This would make it two incidents whereby USA was close to invading Chinese airspace.

( zero hedge)


Two Chinese Fighter Jets Attempted “Intercept” Of US Surveillance Plane

A day after China confronted a US warship that came within 12 miles of one of China’s artificial reefs in the South China Sea,Reuters is reporting that Beijing decided to respond by sending two Chinese fighter jets to intercept a US military surveillance plane near Hong Kong, with one plane coming within 200 yards of the American aircraft.

A P-3 Orion surveillance plane was flying 150 miles (240 km) south east of Hong Kong when it was approached by two Chinese fighter jets. In the ensuing “unsafe intercept,” the Chinese aircraft came within 200 yards (182 meters) of the P-3 and one plane flew in front of the US aircraft, “restricting its ability to maneuver.”

If report is accurate, it means there were two near-confrontations between Chinese and American forces on the same day – a clear sign that, despite Trump’s turn toward friendly rhetoric in his dealings with the Chinese, tensions between the world’s two largest economies continues to rise. 

The report follows a similar incident from last week, when two Chinese Su-30 fighter jets came within 150 feet of a U.S. Air Force WC-135 radiation detection plane while it was flying over the Yellow Sea in international airspace.

Responding to that incident, China’s Defense Ministry said the US account did “not accord with the facts” and urged Washington to stop its surveillance flights near Chinese borders. “The relevant action [of the Chinese pilots] was professional and safe,” the ministry said in a statement, quoted by Reuters. “We hope that the US side stops relevant surveillance activities, to avoid this kind of incident happening again.”

The US has a habit of flying its planes in the immediate vicinity of foreign nations. In the period 2014-2016, there were dozens of similar “unsafe” flybys flagged by the Pentagon involving Russian fighter jets, which however took plane not over the Gulf of Mexico, or Alaska, for example, but kilometers away from the Russian border. Perhaps the most surprising things to result from all these provocations is that nobody has gotten hurt, yet.




This saddens me greatly;  Gunman kills 23 Coptic Christians in an Egyptian attack, many of whom are children.  The attack occurred in Minya, 140 miles south of Egypt

(courtesy zerohedge)

“Many Were Children”: Gunmen Kill 23 Coptic Christians In Egypt Attack

The attacks on Egypt’s Coptic Christian minority continued Friday as gunmen opened fire on a convoy of vehicles carrying worshippers to a desert monastery, leaving 23 dead and another 25 injured, the New York Times reports.

Here’s NYT:

“A Christian official in Minya Province, south of Cairo, said the attackers opened fire on a pickup truck carrying workmen and a bus carrying worshippers as they traveled in convoy to St. Samuel’s monastery. Many of the worshippers were children.



‘We are having a very hard time reaching the monastery because it is in the desert. It’s very confusing. But we know that children were killed,’ said the official, Ibram Samir.”

Minya is about 140 miles south of Cairo, NBC News reports. No group has claimed responsibility for the attack as of yet.

Coptic Christians, who account for about 10% of Egypt’s population of 80 million, have become the victims of an intensifying campaign of bombings and shootings masterminded by ISIS, which is trying to expand its footprint in Egypt.

In April, at least 37 people were killed and more than 100 injured in two separate bombings at Christian Coptic churches packed with worshippers in northern Egypt one week before Coptic Easter.




This does not look good.  Estonia which borders with Russia and is a firm NATO country expels two Russian diplomats and no reasons given. Russia responds that this unfriendly action will not go unanswered. Remember the Estonia has weapons pointing towards Russia


(courtesy zero hedge)


Estonia Expels Two Russian Diplomats; Moscow Warns This “Unfriendly Action Will Not Go Unanswered”

Two senior Russian diplomats, Consul General Dmitri Kazjonnov and Consul Andrei Surgjev, have been ordered to leave Estonia the country’s foreign ministry said on Friday.It was not immediately clear what prompted the expulsion, and the Estonian foreign ministry gave no other details. “We can only confirm that two diplomats have been expelled,” said spokesperson Mariann Sudakov.

Russian flag at the Russian Embassy in Tallinn.

According to a local news portal, the duo were posted at Moscow’s consulate in the northeastern town of Narva on the Estonian-Russian border. Delfi, the local Estonian news portal, cited unidentified sources for its report on the two diplomats.

“This is one more unfriendly and groundless action that will not go unanswered,” TASS agency cited a Russian foreign ministry official as saying in an initial reaction from Moscow. According to diplomatic practice, it can be expected that the Russian Federation may send an Estonian diplomat out of Russia in response.

Estonia, a member of NATO and the European Union, has had a tense relationship with its large neighbor Russia. According to Reuters, earlier in May, an Estonian court handed out a five-year prison sentence to a Russian national for spying for Russia’s main intelligence directorate, the foreign intelligence unit of the Russian armed forces.

The expulsion comes four months ahead of large-scale Russian military exercises which are set to take place in September near the Baltic states which according to western military commanders “pose heightened risks for a miscalculation that could lead to a crisis.”

The exercises, which Western officials estimate will involve nearly 100,000 troops, will be the first to roll out after a new NATO force in the region reaches full strength. They will also take place at the same time as military drills by Western forces in Sweden, across the Baltic Sea.

U.S. and NATO officers have warned this year’s version of Russia’s annual Zapad exercises could create more tensions than they have in years, even recalling those that arose during the Cold War. The exercise is set to take place at a time when Trump has infuriated NATO with his demands that alliance member states boost their contribution to NATO’s bottom line, although he has not explicitly threatened with removing US support should any NATO article be triggered.


ESPN/Sports’ Bubble

A great commentary on another bubble bursting:  the sports bubble and ESPN


(courtesy William Anderson/Mises Institute)

ESPN And The Bursting Of The Sports Bubble

Authored by William Anderson via The Mises Institute,

When the cable TV sports giant ESPN announced 100 layoffs recently, including letting go a number of high-profile broadcasters, a lot of people took notice, and well they should: things no longer are business as usual in sports broadcasting, and we are not even at the beginning of the end, and maybe not even the end of the beginning.

Like the slow crashing of the retail sector as online purchase firms like Amazon begin their domination, we are seeing a sea change in sports broadcasting and that is going to mean big changes are down the road not only for ESPN, but for all of the sports entities that depend upon the huge payouts that ESPN provides. To put it mildly, a lot of people are about to see their lives change drastically as consumer choices drive sports broadcasting in a new direction.

Enough with the superlatives. What is happening with ESPN, and why is it important? As Clay Travis of the sports website Outkick the Coverage has been writing for more than a year, the main ESPN business plan, the one that brings in the most revenues to the firm, is doomed to near-extinction, and there is nothing ESPN can do about it. Writes Travis:

In the past five years ESPN has lost 11,346,000 subscribers according to Nielsen data.


If you combine that with ESPN2 and ESPNU subscriber losses this means that ESPN has lost over a billion dollars in cable and satellite revenue just in the past five years, an average of $200 million each year. That total of a billion dollars hits ESPN in the pocketbook not just on a yearly basis, but for every year going forward.


It’s gone forever.

Since it began to grow in popularity in the late 1970s, cable (and later, satellite) television has offered its customers coverage with “bundles,” that is different payments allow cable subscribers to expand their viewership as payments increase. For example, a “basic” cable subscription would allow the customers to view, say, 15 channels including the ABC-CBS-NBC-PBS lineup plus other channels such as CNN or Fox. A higher-tier subscription would add other channels, including ESPN and its associated channels and others such as The Food Channel or assorted movie channels.

One problem with bundling, of course, is that subscribers will pay for channels that they rarely or do not watch. For example, I have a basic subscription with Direct TV, but maybe watch 10 channels at most, even though dozens are available. (I don’t include ESPN or any of the other sports channels in my monthly package.)

As technology has improved in telecommunications, the ability of providers to further segment packages has meant that cable and satellite subscribers are able to eliminate the channels they don’t want to watch, and that means that many are unhooking from ESPN. Continues Travis:

ESPN is losing 10,000 subscribers every day so far in 2017. In the past six years they have lost 13 million subscribers and that subscriber loss is escalating each year. That’s billions of dollars in lost revenue.


Every year for the next five years ESPN is spending more and bringing in less. You don’t have to be Warren Buffett to see that’s a business problem. 

He goes on to the heart of the matter:

ESPN is spending over eight billion dollars on sporting rights this year and by 2021 I believe they will be losing money regardless of how many people they fire. ESPN can’t fire employees into profitability. It’s just not possible. These firings are going to become a yearly thing and they still aren’t going to prevent the business from dying.

True, ESPN, as well as all commercial broadcasters, receive advertising revenue, but advertising alone, along with subscriptions from people who choose to purchase ESPN in their cable/satellite packages, will not be enough for the network to meet its obligations to the various organizations it pays for the rights to broadcast their events. From the National Football League (NFL), to the National Hockey League (NHL), to the National Basketball Association (NBA) to the National Collegiate Athletic Association (NCAA), ESPN has paid billions of dollars, money that is funneled into high athlete salaries, not to mention salaries of coaches, university athletic directors, and, indirectly into the building and maintaining of magnificent sports facilities.

The revenues lost to ESPN are lost forever, and even given the rise of smart phones and Internet streaming, the current state of affairs is unsustainable and the sports landscape is going to change, and the changes will be extensive. It is here that Austrian economics gives us insight into how at least some of the changes will proceed.

Carl Menger, who we know as the “founder” of the Austrian school of economics, in his path-breaking book Principles of Economics in 1871 demonstrated conclusively that the value of the factors of production was based not on costs derived from other costs of production, but rather the value of the factors was imputed via the value consumers placed upon the final goods. This view contradicted the standard British classical view that the value of consumption goods was derived from the value of the factors of production, and it placed Menger in the Pantheon of the early Marginalists.

In laying out his theory, Menger used tobacco and the factors used to produce it. If people suddenly stopped using tobacco, he reasoned, then the value of the factors would change quickly relative to their ability to be transferred to other uses. The more specialized the factor, the greater the change in its value. For example, the land on which tobacco is grown would then be used for other purposes, such as growing corn or wheat, or even pasture for cows or sheep. Highly-specialized tools used only for growing or harvesting tobacco, however, would see a steep drop in value and maybe would have to be abandoned altogether.

What does this have to do with the demise of ESPN? As noted earlier, the network pays billions of dollars for rights to broadcast sports events, and it is unlikely that as ESPN loses the revenues that permit it to pay large sums, other networks will be able to take up that slack. That means the organizations that now receive this money are looking at “haircuts” down the road, which includes the NCAA and collegiate athletic teams.

The ESPN funding allows for the network to broadcast a number of collegiate sports events that ordinarily would not rate enough of an audience, and its large payouts also allow for coaches to receive record-high salaries that would not be possible if these programs depended just on ticket sales and other donations. And while it is tempting to say that “ESPN pays for this,” in reality, it is the consumer of cable/satellite television that ultimately decides the size of the ESPN payouts, and consumers are stating their preferences with their checkbooks, and there is nothing ESPN can do about it.

Without cable/satellite subscribers being willing to pay extra for the sports channels, and without the viewership that draws advertisers, ESPN revenues will fall, and that means that the factors that make up the “product” that appears on ESPN broadcasts also are going to lose value, as long as other networks don’t take up the slack (and it is doubtful they will). Thus, one is looking at a long, steady decline and the world of televised sports is going to have to adjust to the new reality.

Unfortunately, as Travis has pointed out many times, ESPN during this ratings slide has taken a hard turn toward the political left, which has further alienated a lot of conservative viewers. Writes Travis:

As ESPN has lost 10,000 cable and satellite subscribers every day in 2017, seen ratings collapse for all original programming, and recently embarked on the firing of 100 employees as part of a desperate cost cutting move to save its business. The network’s sports media defenders have desperately argued that the network’s embrace of far left wing politics has not had any impact on its collapsing viewership. That’s despite the fact that there have been two different studies that have demonstrated Republican voters have abandoned the network’s original programming in the past year.

In that regard, one can argue that ESPN has done what numerous (and especially elite) colleges and universities have done the past several years: create a hostile atmosphere for white male students all the while wanting them to be paid customers. One cannot both seek to offend and attack the same people one wishes to purchase their services without courting disaster, yet higher education and ESPN are doing just that.

To a certain extent, one can argue that both higher education and ESPN have benefited from “bubble” economies, and as consumer choice becomes directed elsewhere, the bubbles burst. As Carl Menger demonstrated, the bursting of the bubbles will mean that some factor owners will have to receive less pay in order to remain employed, while other factors will have to be transferred to other uses altogether or simply become unemployed. All soothing rhetoric aside, the world of sports broadcasting is going to see major changes in the next decade as consumers have their say.


Finally Wall Street gets the picture and throws up on OPEC.  Barclay’s is very negative on the future of oil pricing as they see no light at the end of the tunnel

(courtesy zero hedge)

Wall Street Throws Up On OPEC: Barclays Sees “No Light At The End Of The Tunnel”; MS Cuts WTI Price Target

Oil bulls were unhappy with yesterday’s OPEC announcement, which disappointed by adding nothing to the 9 month supply cut extension announcement which had already been leaked and largely priced in while leaving key questions unanswered, including what it has planned for the long-term.

The broader Wall Street commentary was similarly downbeat: “To say that yesterday’s performance was disappointing for bulls is an understatement,” Tamas Varga, analyst at PVM Oil Associates wrote in an emailed report. “It is, however, not a foregone conclusion that the trend is definitely turning. The question now is whether yesterday’s sharp drop in oil prices was a panic long-liquidation or the technical picture is now firmly turning bearish.”

Barclay’s analyst Michael Cohen captured the mood best with a note overnight titled “No light at the end of the tunnel:, in which he writes that “OPEC and several non-OPEC countries finalized plans to extend production cuts for an additional nine months (through Q1 2018) without specifically articulating an exit strategy. During the press conference, Saudi Energy Minister Khalid Al-Falih expressed confidence in the plan to extend the cuts through Q1 2018, saying that inventories would fall below the five-year average before year-end, but cuts should remain in place during Q1 2018 due to seasonal demand weakness, which we highlighted yesterday (OPEC’s Vienna Meeting: Intermission, May 24, 2017).  By our calculations, if half of the supply deficit is applied to OECD stocks, we do not see the inventory level approaching the five-year average by this timeframe.

This is exactly what we warned about in “The Math Behind OPEC’s Revised Production Cut Still Does Not Work.”

Below we excerpt some other of the key highlights from MS, which was clearly soured on the outlook for oil prices after OPEC’s meeting:

  • OPEC may still be underestimating shale. Saudi Oil Minister Khalid Al-Falih made several comments that highlighted an interpretation contrary to our thinking about the state of the US shale industry.
  • Cost inflation is not yet an issue for US E&Ps. The first comment related to “significant cost inflation” that has hit the industry this year. This belief runs counter to reports from many US E&Ps and the oilfield service companies during their Q1 earnings calls (Figure 3). Those that are experiencing cost inflation have been able to mitigate total well costs through further efficiency gains.
  • Most US E&Ps are still drilling their core acreage. The second comment was that as activity ramps up, producers are moving into more expensive shales, which runs counter to E&P reports that the industry has several years of tier 1 (low breakeven) drilling inventory.
  • The US oil and gas sector is focused on growth and will slow when prices dictate. The third comment related to a “hope” that shale producers would moderate production. US E&Ps will moderate activity only if prices constrain activity. At current price levels, many producers will continue to meet or exceed their 2017 production guidance.
  • The extension should afford some price stability over the next nine months, allowing US producers to move forward with 2017 and even 2018 development plans. During Q1 2017, many E&Ps used $50 oil to provide guidance for 2017. In our view, producers will not diverge from guidance unless prices are significantly below this level ($40-45) for a sustained period.
  • The JMMC will monitor country production levels and recommended adjustments if necessary. As we highlighted yesterday, the JMMC is the new mechanism to make recommendations and will be meeting on a bi-monthly basis to discuss the progress of the deal. This new function adds additional uncertainty to what balances will look like over the coming months. If prices fall or rise too much, the JMMC may propose actions to re-stabilize prices.
  • The recasting of a new producer group, “NOPEC,” which includes 24 countries that account for around 60% of production.  Russian energy minister Novak and Saudi Minister Al Falih took pains to highlight that through regular interaction the group can promote “healthy markets.”  Furthermore, the countries are “better poised to approach challenges that might lie ahead.”
  • Equatorial Guinea has joined OPEC. This will end up being an accounting change. We expect its almost 300 kb/d of output to decline next year.

Next, Barclays’ implications and outlook:

Market balance implications:  If OPEC is taken at its word and maintains 100% compliance over the summer, the balances would likely be 500-600  kb/d tighter than what we currently assume, and this would coincide with an inventory draw that presents upside risk to our $56/b forecast in 2H17 and 1Q18 and downside risk to our forecast in the remainder of 2018 assuming no further changes to OPEC output. For now, we maintain our forecast, as other prevailing factors would likely offset further oil price appreciation, such as accelerated US tight oil growth and demand destruction that would occur as prices increase. We will publish an update to our comprehensive market balance in our upcoming Blue Drum monthly publication. We are already calling for US liquids production to grow 1.2 mb/d from Q4 2016 to Q4 2017 and an additional 1 mb/d from Q4 2017 to Q4 2018.  With this agreement, there is scope for output to move even higher over the next 18 months.


The implication of OPEC’s action creates a situation that will force it gradually to exit its market management mode. Minister Al Falih tried to assuage fears that it has an exit strategy in mind by saying it will cross that bridge when it comes to it in November 2017 and next year. In our view, the more accelerated declines we will see in stocks in the coming quarters and the floor OPEC has provided for the coming nine months are likely to result in aggressive growth in US tight oil, which we are already forecasting, and OPEC is likely to struggle to find a big enough hole to fit its incremental supply, keeping the proverbial light at the end of the tunnel out of reach for longer than just the first quarter of 2018.

* * *

Separately, in a just as disappointed note released overnight by another recent oil bull, Morgan Stanley’s Martijn Rats, the commodity analyst echoed what Goldman said yesterday, and lowered its year end oil price forecast from $60 to $55 because while “OPEC’s extended cut will likely lead to stock draws in 2Q/3Q and provide some oil price support, when this agreement ends, and coincides with strong shale growth, the market looks oversupplied again. This has become our expectation for 2018, and we lower price forecasts as a result.

Other higlights:

OPEC chooses the lesser of two evils: In recent weeks, OPEC found itself faced with a difficult choice: extend the production cuts to bring down bloated inventories, or end the cuts to prevent further loss of market share. The experience of the 1980s has shown that the latter can become as problematic as the former. Clearly, OPEC decided for the former, but it is storing up problems for 2018, in our view.


Near-term we see inventories drawing and providing support for oil prices: Global oil inventories finally started drawing in March, at a rate of ~0.9 mb/d based on monthly data. Weekly data suggests this has continued in April and May. With demand getting a seasonal tailwind, and OPEC extending its cuts, we expect inventory draws to accelerate in 3Q. Altogether, we estimate that global stocks will fall by ~100 million bbl in the balance of the year. Although these draws are smaller and are coming later than we once expected, this should nevertheless provide some price support in coming months. We forecast WTI to end 2017 at $55/bbl, down from our previous forecast of $60/bbl.



But the outlook for 2018 is starting to look troublesome End of OPEC agreement + Strong shale growth = Loose market: We do not expect that OPEC will extend its output cuts much beyond 1Q. By historical standards, that would be an unusually long period of output restraint. However, non-OPEC production has already returned to year-on-year growth and is set to accelerate in 2018, driven by shale. When the end of the OPEC production cuts meet strong shale growth, the market is almost certainly oversupplied again. As a result, we lower our end-2018 WTI price forecast to $55/bbl, from $60/bbl before, although we could still see lower prices at some point during 2018.


All of this has implications for long-term prices too: Our previous long-term price forecast of ~$70/bbl for WTI by 2019/20 was based on our estimate that ~1.5 mb/d of 2020 demand would need to be supplied by projects that have not been sanctioned yet, but that have break-even oil prices around that level. However, with stronger shale growth, slightly weaker demand and some additional cost deflation, the reliance on this 1.5 mb/d has almost entirely been wiped out. We still see 1.6 mb/d of 2020 demand that needs to come from projects with break-evens of $55-65/bbl, so we lower our end-2020 WTI forecast to $60/bbl.


How long until OPEC is back to the drawing board, or at least jawboning, of even more cuts, and even longer production halts? The answer: not long at all, as this hit moments ago from Reuters:


(courtesy zero hedge)

US Crude Production Hits 21-Month Highs As Rig Count Rises For 19th Straight Week

For the 19th week in a row, the number of US oil rigs rose (up 2 to 722). This is the largest number of oil rigs since April 2015 as Lower 48 crude production (much to the chagrin of OPEC) surges to its highest since August 2015.


Lagged WTI prices lead rising rig counts…NOITE – if the relationship holds then we would expect the rig count rised to stall here…


And rising rig counts lead US crude production…


And this is why it matters…


And prices are holding their post-OPEC losses…

“It was so well telegraphed a lot of people were probably thinking they’d take it the extra mile,” Jasper Lawler, senior market analyst at London Capital Group, told Bloomberg. “One of the things worth noting is that the ramp-up into the meeting and the drop down have averaged out; markets are definitely not as optimistic as they were”



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



GBP/USA 1.2838 DOWN .0091 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED


Early THIS FRIDAY morning in Europe, the Euro FELL by 14 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1195; 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 2.28 POINTS OR 0.07%     / Hang Sang  CLOSED  UP 8.49 POINTS OR 0.80% /AUSTRALIA  CLOSED DOWN 0.63% / EUROPEAN BOURSES OPENED  RED 

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 FRIDAY morning CLOSED DOWN 126.29 POINTS OR 0.64%

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


Gold very early morning trading: 1266.11


Early FRIDAY morning USA 10 year bond yield: 2.234% !!! DOWN 2 IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.904, DOWN 2  IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 97.26 UP 1  CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING


And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 3.144%  DOWN 5 in basis point(s) yield from THURSDAY 

JAPANESE BOND YIELD: +.042%  DOWN 4/15  in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.543%  DOWN 4  IN basis point yield from THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.10 DOWN 2   POINTS  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 54 points HIGHER than Spain.





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

Euro/USA 1.1164 DOWN .0045 (Euro DOWN 45 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.40 DOWN  0.344 (Yen UP 34 basis points/ 

Great Britain/USA 1.2785 DOWN 0.0145( POUND DOWN 145 basis points)

USA/Canada 1.3457 DOWN .0028 (Canadian dollar DOWN 28 basis points AS OIL ROSE TO $49.46


This afternoon, the Euro was DOWN by 45 basis points to trade at 1.1164


The POUND FELL BY 145  basis points, trading at 1.2785/

The Canadian dollar ROSE by 28 basis points to 1.3457,  WITH WTI OIL RISING TO :  $49.46

The USA/Yuan closed at 6.8555/
the 10 yr Japanese bond yield closed at +.042% DOWN 8/10  IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 0  IN basis points from THURSDAY at 2.252% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.917  DOWN 1/4 in basis points on the day /

Your closing USA dollar index, 97,49 UP 25 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 FRIDAY: 1:00 PM EST

London:  CLOSED UP 29.92 POINTS OR 0.40%
German Dax :CLOSED DOWN 19.54 POINTS OR 0.15% 
Paris Cac  CLOSED DOWN  0.52 POINTS OR 0.01% 

Italian MIB: CLOSED  DOWN 81.15 POINTS/OR 0.38%

The Dow closed DOWN 2.67 OR 0.01%

NASDAQ WAS closed up 4.94 POINTS OR 0.08%  4.00 PM EST
WTI Oil price;  49.46 at 1:00 pm; 

Brent Oil: 52.00 1:00 EST




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

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


BRENT: $52.21


USA 30 YR BOND YIELD: 2.916%


USA/JAPANESE YEN:111.28  down 0.461

USA DOLLAR INDEX: 97.44  up 20  cent(s) ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2803 : UP .01240  OR 124 BASIS POINTS.

Canadian dollar: 1.3443  up 41 pts 

German 10 yr bond yield at 5 pm: +.331%


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


Stocks Surge For 7th Straight Day As US Macro Data Hits 15-Month Lows


“Smells Like Victory” – Happy Memorial Weekend…


Let’s start with this…


S&P at record highs as US macro data topples to 15-month lows…


Nasdaq hit record highs as Earnings Expectations slump to 2017 lows…


Small Caps remain underwater post-Trump-Dump… Nasdaq is now up 7 days in a row – longest streak since early Feb

NOTE – today was different – no big spike in stocks


Today saw S&P and Dow glued to the flatline…with a very chaotic end


Volume continues to collapse in this levitation off the Trump Dump…


As the cap-weighted S&P continues to dramatically outperform the equal-weighted S&P (i.e. the big tech names are driving)


S&P Equal weight remains below the March highs…Simply put, without FANG stocks, th emarket has gone nowhere in almost 3 months…


As Citi notes, a close today above 2,405 on the S&P 500 suggests we can rally towards 2,500+ in the coming weeks:

  • Even within trends, markets do not move in straight lines. Rather, market rallies are interspersed between sideways moving markets. In some cases, the majority of a rally is spent in consolidation with the big moves in the trend happening quickly. Such a dynamic is currently at play in the S&P 500.
  • Since the bullish break seen in July 2016, the S&P 500 rallied 14% over 46 weeks through today (this came after over a year of the S&P 500 consistently failing around the 2,100 area). However, most of that time has been spent with the equity market in consolidation/ranges. The actual gains have taken place over just 14 of those 46 weeks in the shape of quick market rallies.
  • We may now be on the verge of another such move. In the prior three rallies since July, a weekly close through the top of the prior range has signaled the start of a multi-week rally. Another break like this would be confirmed with a close today above 2,405.
  • If this is a bullish break, how high can we go? The average rally after the prior three breaks (from the break level) has been 4.2% and a similar move this time would suggest a move to 2,506 in the coming weeks.
  • Beyond that, we continue to view the overall global economic and market backdrop to be positive for Equities and continue to think a move towards 2,750 by year end can be seen


Finally, while AMZN dropped after testing towards $1000 agains today, it closed modestly green again (for the 7th straight day)


Here is a helpful chart in case you were wondering what was driving AMZN’s success?


VIX is down 7 straight days and clsoed at the lowest weekly close since 1993…


Short-term VIX crashed a record low…


Treasuries ended the week marginally higher in yield…


But the yield curve (2s10s and 2s30s) have tumbled to cycle lows…


The Dollar index managed to close green on the week after bouncing off the post-Fed drop…


Cable was by far the weakest against the greenback and Yuan the strongest…


Despite dollar ended higher, gold and silver gained on the week…


WTI and RBOB both fell on the week after OPEC disappointed…


Gold and Silver had a great week (with the last now well above pre-fed rate hike lows)


Finally, Bitcoin was hitting the headlines every day this week and ended on a weak note (biggest drop since January) but still up over 10% on the week…



My goodness:  this is ridiculous.  Washington Post writes that Kushner is under FBI scrutiny. The facts suggest otherwise:

(courtesy zero hedge)


Jared Kushner “Under FBI Scrutiny” In Russia Probe: NBC

Update:  Just like last week’s bombshells, the Washington Post managed to publish an almost identical confirmation of NBC’s story within minutes…almost like they coordinated…

And, just like NBC, the Washington Post was careful to hedge their salacious title (though multiple paragraphs down in the body of the article) by pointing out that Kushner is not technically a “target” in any investigation and has not been accused of any wrongdoing.

The Post has not been told that Kushner is a target — or the central focus — of the investigation, and he has not been accused of any wrongdoing. Target is a word that generally refers to someone who is the main suspect of investigators’ attention, though prosecutors can and do bring charges against people who are not marked with that distinction.

Breaking: Jared Kushner now a focus in Russia investigation 

Photo published for Jared Kushner now a focus in Russia investigation

Jared Kushner now a focus in Russia investigation

Investigators are looking in particular at meetings the president’s son-in-law held in December with Russians, people familiar with the matter said.

Last week when the Washington Post first reported that a senior White House adviser and “someone close to the president” was under scrutiny by investigators looking into possible coordination between Russia and the Trump campaign, we noted speculation from the Twittersphere suggesting that that “someone” might be Jared Kushner (see “Unnamed White House Official Under FBI Investigation In Russia Probe“).  Now, at least according to NBC, and information garnered from more anonymous sources, it seems that speculation may have been accurate.

Jared Kushner, the president’s son-in-law and one of his senior advisers, has come under FBI scrutiny in the Russia investigation, multiple U.S. officials told NBC News.


Investigators believe Kushner has significant information relevant to their inquiry, officials said. That does not mean they suspect him of a crime or intend to charge him.


The FBI’s scrutiny of Kushner places the bureau’s sprawling counterintelligence and criminal investigation not only on the doorstep of the White House, but on the cusp of the Trump family circle. The Washington Post first reported last week that a senior White House official close to Trump was a “person of interest,” but did not name the person.

Not surprisingly, NBC’s report is lacking on actual facts on why Kushner may be a “person of interest” in the FBI’s inquiry but is long on innuendo as they point out that he met at least once in December with the Russian ambassador, Sergey Kislyak, and he also met last year with a Russian banker, Sergey Gorkov.

Meanwhile, Kushner’s lawyer told NBC that he expects to cooperate if contacted in regards to any inquiry.

“Mr. Kushner previously volunteered to share with Congress what he knows about these meetings,” Kushner’s lawyer, Jamie Gorelick, told NBC News. “He will do the same if he is contacted in connection with any other inquiry.

Of course, despite the sensational headline, NBC’s report still offers no facts to support their larger thesis of collusion between Russia and the Trump campaign…but it does help advance the provocative narrative just a bit further…


Trump will appeal the travel ban to the Supreme Court

(courtesy zero hedge)

Trump Will Appeal Travel Ban To Supreme Court

Well, Trump did warn he would appeal the travel ban all the way to the Supreme Court if he had to, and that’s precisely what he plans on doing.

On Thursday afternoon, shortly after the 4th U.S. Circuit Court of Appeals, in a 10-3 vote that Trump’s travel ban likely violates the constitution and ruled against the executive order, Attorney General Jeff Sessions said the Justice Department will ask the Supreme Court to review the appeals court ruling. The 4th Circuit (based in Richmond, Va) is the first appeals court to rule on the revised travel ban unveiled in March. A second appeals court, the 9th U.S. Circuit based in San Francisco, is also weighing the revised travel ban after a federal judge in Hawaii blocked it.

The first travel ban issued Jan. 27 was aimed at seven countries and triggered chaos and protests across the country as travelers were stopped from boarding international flights and detained at airports for hours. Trump tweaked the order after the 9th U.S. Circuit Court of Appeals refused to reinstate the ban. Following the revision, Trump’s administration had hoped it would avoid the legal problems that the first version from January encountered, but it was not meant to be.

The new version made it clear the 90-day ban covering those six countries doesn’t apply to those who already have valid visas. It got rid of language that would give priority to religious minorities and removed Iraq from the list of banned countries. But critics said the changes don’t erase the legal problems with the ban.

As described previously, a core question in the case before the 4th Circuit was whether courts should consider Trump’s public statements about wanting to bar Muslims from entering the country as evidence that the policy was primarily motivated by the religion. Trump’s administration argued the court should not look beyond the text of the executive order, which doesn’t mention religion. The countries were not chosen because they are predominantly Muslim but because they present terrorism risks, the administration said.

But Chief Judge Roger L. Gregory wrote that the government’s “asserted national security interest … appears to be a post hoc, secondary justification for an executive action rooted in religious animus and intended to bar Muslims from this country.

President Donald Trump’s revised travel ban “speaks with vague words of national security, but in context drips with religious intolerance, animus and discrimination,” the appeals court also said Thursday in ruling against the executive order.

To this, Jeff Sessions responded that the court’s ruling blocks Trump’s “efforts to strengthen this country’s national security” adding that Trump is not required to admit people from “countries that sponsor or shelter terrorism until he determines that they can be properly vetted” and don’t pose a security threat.

The three dissenting judges, all appointed by Republican presidents, said the majority was wrong to look beyond the text of the order. Calling the executive order a “modest action,” Judge Paul V. Niemeyer wrote that Supreme Court precedent required the court to consider the order “on its face.” Looked at that way, the executive order “is entirely without constitutional fault,” he wrote.

As for SCOTUS, according to AP, the Supreme Court would likely step into the case if asked as the justices almost always have the final say when a lower court strikes down a federal law or presidential action. Trump could try to persuade the Supreme Court to allow the policy to take effect, even while the justices weigh whether to hear the case, by arguing that the court orders blocking the ban make the country less safe. If the administration does ask the court to step in, the justices’ first vote could signal the court’s ultimate decision.

Ilya Somin, a law professor at George Mason University, said if the Supreme Court follows a partisan divide, the Trump administration may fare better since five of the nine are Republican nominees. Still, he said, it’s difficult to make a confident prediction because “Supreme Court justices don’t always vote in ideological lockstep.”

Critics of Trump’s order were delighted with the outcome:

The case ruled on by the 4th Circuit was originally brought in Maryland by the American Civil Liberties Union and the National Immigration Law Center on behalf of organizations as well as people who live in the U.S. and fear the executive order will prevent them from being reunited with family members from the banned countries.


“President Trump’s Muslim ban violates the Constitution, as this decision strongly reaffirms,” said Omar Jadwat, director of the ACLU’s Immigrants’ Rights Project, who argued the case. “The Constitution’s prohibition on actions disfavoring or condemning any religion is a fundamental protection for all of us, and we can all be glad that the court today rejected the government’s request to set that principle aside.”

And now it will be up to the Supreme Court to rule once again on this issue, hopefully finally making it go away. Travel ban aside, the upcoming case will be a litmus test of just what (and how strong) the ideological leanings of the revised SCOTUS bench are, now that Gorsuch is in town.


FISA court blasts the FBI for their disregard for rules and illegally shares spy data with private contractors

(courtesy zerohedge)

FISA Court Blasted “FBI’s Apparent Disregard For Rules”; Illegally Shared Spy Data With “Private Contractors”

Earlier this week we highlighted sections of a recently unclassified FISA Court order which found that the Obama administration routinely conducted “widespread” illegal searches of American citizens, an issue which the court described as a “serious fourth amendment issue” (see “FISA Court Finds “Serious Fourth Amendment Issue” In Obama’s “Widespread” Illegal Searches Of American Citizens“).

Today, as highlighted by Circa, we find the that FBI, led by James Comey, was one of the biggest offenders when it came to improper usage of foreign-sourced intelligence on American citizens.  Per the FISA court order (which can be found here), the DOJ conducted a review of the FBI’s handling of so-called “Section 702-acquired information” beginning on March 9, 2016 and what that review found was fairly disturbing. 

Among other things, the DOJ found that the FBI routinely shared “raw FISA information” on American citizens with “private contractors”…to paraphrase, the FBI took illegally sourced intelligence on American citizens (no warrants required) and shared it with random private citizens working at non-government firms.

“On March 9, 2016, DOJ oversight personnel conducting a minimization review at the FBI’s [redacted] learned that the FBI had disclosed raw FISA information, includined but not limited to Section 702-acquired information, to [redacted]...largely staffed by private contractors.”


But it wasn’t just that one time…

“For these reasons, the government concluded that the FBI had given the information to the private entity [redcated], not to an assisting federal agency.”


All of which resulted in the following punchline from the FISA Court:

“The Court is nonetheless concerned about the FBI’s apparent disregard of minimization rules and whether the FBI may be engaging in similar disclosures of raw Section 702 information that have not been reported.”


But sure, our intelligence agencies should be blindly trusted to spy on American citizens without the hassle of warrants…they would never abuse those powers, right?  Plus, it’s for our own good…

“Those who would give up essen


Trump takes on the Germans with their huge trade surplus with the uSA.  Trump vows to stop this

(courtesy zerohedge)

Trump Slams “Very Bad” Germans For Selling Millions Of Cars In US: “We Will Stop This”

A day after Trump stunned his fellow NATO leaders, shoving one of them out of the way for a photo-op and demanding that they “must do more” to offset defense costs which are mostly borne by the US, Trump lobbed another bomb at the European center-right consensus by renewing his attacks on the German auto industry during a closed door meeting with two high-ranking European Union officials, according to a report in German magazine Der Spiegel, that was picked up by Bloomberg and CNBC.

Citing unidentified attendees, Spiegel quoted Trump as saying that “the Germans are bad, very bad” and adding “look at the millions of cars that they sell in the U.S. Terrible. We’re going to stop that.” The comments were said to have been made during a closed-door meeting with the EU President Jean-Claude Juncker and the European Council President Donald Tusk, who reportedly both stood up for Germany, according to CNBC.

Trump administration officials immediately went into damage-control mode, even as Juncker said the reports of the comment in question had been exaggerated. National Economic Council Director and former Goldman Sachs President Gary Cohn clarified that the US has concerns with the US-German trade balance, not with Germany itself.

“He said they’re very bad on trade, but he doesn’t have a problem with Germany. He said his dad is from Germany. He said, ‘I don’t have a problem Germany, I have a problem with German trade’,” according to Bloomberg.

The German trade surplus rose to a record €235 billion ($284 billion) last year, while the US trade deficit widened in January to its highest level since March 2012. Excluding the EU, Germany is the third largest exporter in the world, after China and the US.

Shares of German automakers were down slightly in Frankfurt trading following Trump’s comments, which apparently reminded investors of his January threat to slap BMW AG with a 35% tariff.

Trump reportedly tried to negotiate a bilateral trade deal with German Chancellor Angela Merkel when she visited Washington in March, according to CNBC. But Merkel insisted that all trade deals with the EU must be made unilaterally.

Following his meeting with Merkel back in March, Trump claimed that the Germans owe “vast sums of money” to NATO, and that the US “must be paid more” for the defense services it provides to Germany.

To be sure, Trump wasn’t the first U.S. leader to complain that most NATO nations, including Germany, weren’t meeting the alliance’s goal that members spend 2% of their GDP on defense. Germany spends about 1.2% currently.

In fact, none other than President Barack Obama in 2016 said in an interview with The Atlantic about his foreign policy doctrine that “free riders aggravate me.”



A bill in California to raise the minimum wage to $15.00 will no doubt cause a huge number of teenagers to be fired especially if the Democrats wins Congress in 2018.

(courtesy zero hedge)

Pelosi Vows To Get A Bunch Of Teenagers Fired If Democrats Win Congress

Top congressional Democrats, including Senate Minority Leader Chuck Schumer, House Minority Leader Nancy Pelosi, House Minority Whip Steny Hoyer and Bernie Sanders, held a press conference earlier today to officially introduce their “Fight For $15” minimum wage legislation, dubbed the Raise the Wage ActAmong other things, the bill primarily serves to more than double the federal minimum wage from it’s current level of $7.25 to $15 by 2024. 

The Raise the Wage Act would raise the minimum wage to $15 per hour by 2024 and would be indexed to the median wage growth thereafter. These increases would restore the minimum wage to 1968 levels, when the value was at its peak. The bill would also gradually increase the tipped minimum wage, which has been fixed at $2.13 per hour since 1991, bringing it to parity with the regular minimum wage. Moreover, it would also phase out the youth minimum wage, that allows employers to pay workers under 20 years old a lower wage for the first 90 calendar days of work. This legislation would give more than 41 million low-wage workers a raise, increasing the wages of almost 30 percent of the wage-earning workforce in the United States.


The Raise the Wage Act is front loaded to provide the biggest impact to workers. Upon enactment, the federal minimum wage would be increased from $7.25 to $9.25.  The following increases are: $10.10 (2018); $11 (2019); $12 (2020); $13 (2012); $13.50 (2013); $14.20 (2023); $15.00 (2024).

Meanwhile, foreshadowing the Democrats’ key campaign promise in 2018, undoubtedly designed to win back working class voters of the Midwest who abandoned them ‘yugely’ in 2016, Nancy Pelosi vowed her party would pass a $15 per hour minimum wage within the first 100 hours if they manage to recapture Congress during the next election cycle.

“We’re willing to fight for $15, and I’ll tell you one thing for sure, we win the election and in the first 100 hours we will pass a $15 per hour minimum wage.”


“We’d rather have it now.  We’d rather win on the issue than worry about the election.”


Of course, seemingly no amount of empirical evidence will ever convince progressives that raising minimum wages to artificially elevated levels is a bad idea.  Somehow the basic idea that raising the cost of a good ultimately results in lower consumption of that good just doesn’t compute.

So while it will undoubtedly fall on deaf ears, we would once again point Ms. Pelosi to a recent study from the American Action Forum (AAF) which estimated that 2.6 million jobs will be lost around the country over the next several years as states phase-in minimum wage hikes that have already been passed (see “State Minimum Wage Hikes Already Passed Into Law Expected To Cost 2.6 Million Jobs, New Study Finds“).  Shockingly, and only after running a lot of really complicated math using complex equations that most of us stupid people just wouldn’t understand, AAF ultimately concluded the whole elasticity of demand thing actually works (a.k.a. ‘the higher shit is priced the less people will buy of it’).

Moreover, as Dunkin’ Donuts’ CEO recently pointed out, a significant number of Americans working for minimum wage are teenagers and not the “older, blue-collar workers” that Bernie and Nancy say they want to help.  Which, of course, means that to the extent they get to keep their jobs a fair portion of the minimum wage increases will simply flow to teenagers who may already be a part of affluent families.


But goodluck with the crusade, Nancy and Bernie!  If you get hungry along the way, we highly recommend you try out a sandwich from this new “Big Mac ATM” which comes with McDonald’s special sauce and all the fixin’s but requires exactly 0 of your minimum wage workers to prepare.

Minimum Wage

You will recall that Republican candidate Gianforte assaulted a reporter the day before the election in Montana. It had no effect on that election as Gianforte wins handily.  We were waiting to see any anti Trump backlash which was not to be

(courtesy zerohedge)

Republican Gianforte Wins Montana Special Election Despite Assault Charge

Political pundits were closely watching last night’s special election in Montana for two reasons: to see if there is an anti-Trump sentiment shift in this hard-line republican state, and whether the “body slamming” scandal that sent shockwaves just one day prior would cost Republican frontrunner Greg Gianforte the election.

The results emerged early on Friday morning, when Republican Greg Gianforte, a wealthy technology executive who had urged voters to send him to Congress to help Trump, was projected to win Thursday’s special election for Montana’s lone House seat with about 50% of the vote, while challenger Democrat Rob Quist had 44% at the time of the call, according to the Montana secretary of State’s website. Quist, a banjo player and first-time candidate, had focused his campaign on criticism of the Republican effort to repeal and replace former President Barack Obama’s healthcare law.

Gianforte’s victory came only hours after a shocking physical altercation with Guardian reported Ben Jacobs, whose audio was recorded and disseminated, led to the local sheriff filing a misdemeanor assault charge against the republican. Gianforte is scheduled to appear in county court sometime before June 7—the charge carries a maximum fine of $500 or a prison term of no more than six months.

And while the news blanketed the news and prompted three major Montana papers to pull their endorsement of Gianforte, the Republican was buoyed by how many voters sent in their ballots early, making their choice before the altercation. According to Reuters, it was unclear if Gianforte’s assault had an impact on the vote. More than a third of the state’s registered voters had already submitted ballots before it happened, state election officials said, and some Gianforte supporters shrugged off the charges or said they did not believe published accounts.

“I feel like, it’s all just propaganda, you know what I mean, it’s hard for me to believe anything the media tells me,” said Nathaniel Trumper, who cast a vote for Gianforte at a polling station in Helena.

The assault occurred as Jacobs tried to ask Gianforte about healthcare, according to an audio tape. Fox News Channel reporter Alicia Acuna, who was preparing to interview Gianforte, said the candidate “grabbed Jacobs by the neck with both hands and slammed him to the ground.”

Speaking to cheering supporters in Bozeman after his win, Gianforte apologized for the incident and said he was not proud of his actions. “I should not have responded the way I did, and for that I’m sorry,” Gianforte said. “I should not have treated that reporter that way.”

Gianforte specifically addressed his apology to Jacobs. “Last night I made a mistake,” he said, adding: “I’m sorry, Mr Ben Jacobs.”

The victory will calm Republicans who had grown restless with the rapidly tightening race in what had been a safe Republican seat for years. And it deals a blow to Democrats who had hoped to frame a victory as a rebuke of President Trump that would give them a shot of momentum ahead of the 2018 midterms.

Meanwhile, Quist, who raised more than $6 million for his upstart bid, said the experience gave him insight into the economic struggles some people face. He campaigned last weekend with U.S. Senator Bernie Sanders of Vermont, who won the state’s 2016 Democratic presidential primary against Hillary Clinton.

As for the consequences of Gianforte’s bodyslamming of Jacobs, the republican could face additional, more serious charges once prosecutors review the evidence, Gallatin County Attorney Marty Lambert told Reuters.

Gianforte has two weeks to enter a plea to the misdemeanor citation issued by the Gallatin County Sheriff’s Office, according to Lambert, who said he would likely review the case before then to decide whether it should be treated as a felony offense, which would supersede the current charge. “There’s always the possibility that when we get the case and the details, that we might look differently at the charging decision,” Lambert said.

Republican National Committee Chairwoman Ronna McDaniel called Gianforte’s apology “a good first step toward redemption” and said she hoped he “continues to work toward righting his wrong.” Gianforte will take the House seat vacated when Trump named Ryan Zinke as secretary of the interior. Trump and Vice President Mike Pence recorded robocalls to voters on Gianforte’s behalf, and Republican groups poured millions into ads criticizing Quist for property tax liens and unpaid debts, which Quist said stemmed from a botched gallbladder surgery.


Core durable goods/new orders plunge in April

(courtesy zero hedge0

Core Durable Goods New Orders Plunge In April

Headline durable goods orders tumbled 0.7% MoM (the worst of the year), but beat expectations of a 1.5% drop. However, Core Durable Goods New Orders fell 0.4% (dramatically worse than the +0.4% expectation) for the worst performance since June 2016.

  • Non-Defense ex-Aircraft new orders were unchanged in April (huge miss) – weakest in 2017
  • Shipments Ex-Aircraft fell 0.1% in April (huge miss) – weakest in 2017

Worst still, Headline New Orders are unchanged year-over-year…


strange: Q1 DGP revised upwards to 1.2% on stronger spending despite corporate profits tumbling.  Still no word on 2nd quarter GDP but expect a huge downdraft with yesterday’s poor inventory numbers and today’s poor durable goods report

(courtesy zero hedge)

Q1 GDP Revised To 1.2% On Stronger Spending, Capex, While Corporate Profits Tumble

Q2 GDP is starting to get in trouble with Durable Goods piling on after inventories weakness yesterday.


We have one question – when does this revert?

After a very disappointing first Q1 GDP print of only 0.7%, on Friday the BEA reported that its second estimate of first quarter growth showed a sizable rebound, with annualized GDP growing at 1.2%, above the 0.9% estimate. The growth rate, however, was still well below the 2.1% print from Q4 2016.


The increase in real GDP was accounted for by increases in business investment, housing investment, consumer spending on services, and exports. These increases were partly offset by decreases in inventory investment, and government spending. Imports, which are a subtraction from GDP, increased. The upward revision to the second estimate of GDP growth reflected upward revisions in business investment, consumer spending in services, and state and local government spending. These upward revisions were partly offset by a downward revision to inventory investment.

Of note, personal consumption contributed 0.44% to the bottom GDP line, up nearly double from the 0.23% reported one month ago. In a longer-term context, however, it was still a disappointing number.

Similarly, fixed investment rose to 1.85% in the second revision, up from 1.62% reported in the first revision.

Yet while the headline data showed a modest improvement, one which will likely subtract from “pent up” Q2 GDP growth, a more troubling observation was revealed in the corporate profits estimation, which decreased 1.9% at a quarterly rate in the first quarter of 2017 after increasing 0.5 percent in the fourth quarter of 2016.

  • Profits of domestic nonfinancial corporations decreased 1.4 percent after decreasing 4.9 percent.
  • Profits of domestic financial corporations decreased 5.5 percent after increasing 5.4 percent.
  • Profits from the rest of the world increased 1.4 percent after increasing 11.0 percent.
  • Y/y corp. profits grew 3.7% in 1Q after rising 9.3% prior quarter
    • Financial industry profits declined 5.5% in 1Q after rising 5.4% prior quarter
    • Federal Reserve bank profits up 2.7% in 1Q after falling 1.8% prior quarter
    • Nonfinancial sector profits fell 1.6% in 1Q after falling 4.9% prior quarter

A big part of the reason why this number differs so notably from the alleged surge in profitability, is that it avoid non-GAAP adjustments and various other gimmicks used by management teams to boost their stock prices and increase stock-linked compensation.

As the WSJ notes, a main driver behind the drop was that legal settlements trimmed top-line numbers. Profits after tax without inventory valuation and capital consumption adjustment, a number that reflects figures reported by companies, was down 0.3% from the fourth quarter of 2016, Commerce Dept says. Financial corporate profits were hit after the federal government imposed a $3.1B penalty on a unit of Deutsche Bank and a $2.48B penalty on a unit of Credit Suisse, and nonfinancial profits were reduced by $4.3B following a settlement with Volkswagen.

Of course, for stock market purposes, these settlements are “adjusted” out. However, when it comes to real data, what matters is the actual, GAAP bottom line, and here we just suffered the biggest drop in over a year.

And now we await for the sellside to start cutting their Q2 GDP estimates as a result of this “pulling forward” of growth back to Q1.



Soft data report U. of Michigan confidence report shows a huge divide between Republicans and Democrats.  However what it does agree with on both sides, it that it is time to sell your house

(courtesy zero hedge)

UMich Confidence Shows Partisan Divide Widest Ever But All Agree It’s Time To Sell Your House

UMich confidence is stable at its post-Trump plateau for now, but the partisan divide between Republicans (robust economic growth ahead) and Democrats (recession looms) has never been wider. However, one thing they all agree on is that for the first time since the peak of the housing market in 2006, home-buyers are negative on home prices with home-sellers most dominant since 2005.

The current conditions dropped but hope rose once again…

As UMich’sRichard Curtin notes, Consumer sentiment has continued to move along the high plateau established following Trump’s election. The final May figure was virtually unchanged from either earlier in May or the April reading. Indeed, the May figure was nearly identical with the December to May average of 97.3.

Moreover, the partisan divide between Democrats and Republicans has also remained largely unchanged, with the first expecting a recession and the other more robust economic growth. How long will economic expectations be dominated by partisanship? Unlike differences in expectations across age, education, or income groups, which usually reflect actual differences in prospects for employment and income expectations, for example, partisanship is reflected by economic policy preferences. Since no major policies, such as healthcare, taxes, or infrastructure spending have yet been adopted, the partisan divide may reflect differences in policy preferences expressed as expected economic outcomes. Thus, the extreme partisan divide may persist until passage is deemed either inevitable or impossible. While extremes may well narrow, it is unlikely that the impact of partisanship on economic expectations will disappear.


Despite the expected bounce back in spending in the current quarter, personal consumption is expected to advance by 2.3% in 2017, although this is based on averages across the political divide, which has never been as extreme as it is currently.


Selective perception of economic news still dominates. Favorable news about recent economic developments were reported by 84% of Republicans but just 37% of Democrats; unfavorable developments were reported by just 19% of Republicans but by 73% of Democrats. Nearly all of the difference involved references to jobs and economic policies, with Republicans holding much more favorable views on jobs and policies than Democrats. The impact of these disparate views led 79% of Republicans to anticipate a continuous expansion over the next five years and 66% of Democrats to anticipate a recession.


While the partisan gap on the year-ahead outlook for the economy was slightly narrower than three months ago, it is still substantial. Economic conditions were anticipated to improve during the year ahead by 75% of Republicans but only by 16% of Democrats; this gap of 59 percentage points was slightly better than the 68 percentage points recorded three months ago.

However, there is one thing that all respondents agree on… Home Prices are a huge concern…

Simply put – it’s a seller’s market!! And the last time that happened, things escalated quickly (as we are now seeing in San Francisco)


The G7 leaders got nowhere with Trump to back a climate deal and that was to be expected.

(courtesy zero hedge)

G7 Leaders Fail To Persuade Trump To Back Climate Deal After “Controversial” Debate

The Group of Seven world leaders, or rather Six excluding Trump, tried to tame the US president… and failed. Which means on Saturday the group will sign off on a significantly “pared-down” statement at the close of their meeting in Sicily – an indication of deep divisions on climate change, trade and various other issues between Trump and the rest of the developed world. Pushing hard to persuade Trump to back the landmark Paris climate accord deal, after hours of talks that were described by Angela Merkel as controversialthe G-7 leaders failed to get Trump’s endorsement.

The leaders did, however, issue a joint statement on fighting terrorism, admonishing internet service providers and social media companies to “substantially increase” their efforts to rein in extremist content. According to Italy’s Prime Minister and host, Paolo Gentiloni, the group was also inching closer to finding common language on trade, a controversial for Trump who has repeatedly pushed for an “America first” agenda.

But on the issue of climate, there was no breakthrough.

“There is one open question, which is the U.S. position on the Paris climate accords,” Gentiloni told reporters according to Reuters, referring to a 2015 deal on reducing greenhouse gas emissions.


“All others have confirmed their total agreement on the accord.” U.S. officials had signaled beforehand that Trump, who dismissed climate change as a “hoax” during his campaign, would not take a decision on the climate deal in Taormina, the cliff-top town overlooking the Mediterranean where G7 leaders met.

Other leaders, including German Chancellor Angela Merkel and new French President Emmanuel Macron, had hoped to sway the president at his first major international summit.

They failed, despite what Merkel described as a “controversial” climate debate and added that there was a “very intensive” exchange of views. One can only imagine.

Speaking separately, Trump’s economic adviser Gary Cohn said Trump’s views on climate were “evolving” and that he would ultimately do what was best for the United States.

* * *

The tense summit, held at a luxury hotel that was once a Dominican monastery and base for the Nazi air force during World War Two, took place one day after Trump blasted NATO allies for spending too little on defense and described Germany’s trade surplus as “very bad” in a meeting with EU officials. As noted yesterday, Trump’s NATO speech shocked allies, who had been expecting him to reaffirm Washington’s commitment to Article 5, the part of the military alliance’s founding treaty which describes an attack on one member as an attack on all.

Italy chose to stage the summit in Sicily to draw attention to Africa, which is 140 miles (225 km) from the island at its closest point across the Mediterranean. More than half a million migrants, most from sub-Saharan Africa, have reached Italy by boat since 2014, taking advantage of the chaos in Libya to launch their perilous crossings.

In addition to trade and climate, drafts of the communique as of Friday were due to address topics such as migration and gender equality. The “ongoing large-scale movement” of migrants and refugees calls for “coordinated efforts,” according to a draft of the communique seen by Bloomberg News.

“We reaffirm the sovereign rights of states to control their own borders and set clear limits on net migration levels, as key elements of their national security and economic well-being,” according to the draft.


The nations are also set to say gender equality is fundamental for human rights. The leaders also issued a separate statement on counter-terrorism efforts that called on social media companies to do more in the fight against terrorism.

As the leaders attended a concert and gala dinner on Friday night, their aides worked to finalize the draft wording. “On the major theme of global trade, we are still working on the shape of the final communique, but it seems to me the direct discussions today have produced common positions that we can work on,” said Gentiloni.

The final G7 communique traditionally outlines the common positions
of the member states’ leaders on the economy and other global issues
requiring joint action by the world’s leading powers. This year’s
statement is on pace to be less than 10 pages, or less than a third the 32-page memo signed last year in Japan, according to Bloomberg.

“You can test this stuff empirically. A shorter communique tends to mean the less they actually produce by way of commitments,” John Kirton, director of the University of Toronto’s G7 Research Group, told Bloomberg. He downplayed the relative scale of divisions:

“I don’t think it’s more divided than it’s ever been before,” he said, citing
the 1982 summit as a failure where the issue of a Soviet gas pipeline,
opposed by Ronald Reagan, divided the countries. “So they patched over
some communique, but then they all ran off to their post-summit
briefings and said ’we don’t agree with it, we don’t agree with it.’ So
it made things worse. They kind of publicized their failure.”

* * *

There was one thing the group could agree on: a crackdown on the “internet abuse.”

“We will combat the misuse of the Internet by terrorists,” the statement said. The G-7 “calls for communication service providers and social media companies to substantially increase their efforts to address terrorist content.”



Let us wrap up with week with this offering from Greg Hunter of uSAWatchdog

(courtesy Greg Hunter/USAWatchdog

Still No Proof of Trump/Russia Collusion, Economic Update, MSM Is Fake News

By Greg Hunter On May 26, 2017

Former CIA Director John Brennan testified on Capitol Hill this week and told Congress that he was “concerned” and “aware of information and intelligence that revealed contacts and interactions between Russian officials and . . . the Trump campaign.” The big headline buried in the mainstream media (MSM) reporting was Brennan admitting in the same hearing, “I don’t know whether or not such collusion . . . existed. I don’t know.” That means there is still zero evidence that anyone in the Trump campaign colluded with the Russians. The “Witch Hunt” continues.

The Fed warns of “vulnerabilities” from elevated asset prices. Noble Prize winner in economics Robert Shiller opines the stock market could go up “50%” from here. Legendary investor Asher Edelman admits on CBNC, “I have no doubt” the Plunge Protection Team in the federal government is propping up the stock market. What gives? Why all the wild predictions? Gregory Mannarino of says, “Nobody can get their head around the magnitude of the distortions in the markets. . . . They are off the charts.” This is the reason for the wild calls both up and down, according to Mannarino.

There is a new Harvard poll out, and it proves the mainstream media’s (MSM) biased reporting is nothing more than propaganda and “fake news.” According to the new Harvard-Harris poll, “65% of voters believe the MSM publishes fake news.” That poll says it all and proves the MSM is killing its own business with its biased political reporting.

Join Greg Hunter as he looks at these stories and more in the Weekly News Wrap-Up.

(There is much more in the video newscast.)

Video Link trumprussia-collusion-economic-update-msm-is-fake-news/



Well that about does it for today

To all our American friends a safe and happy Memorial Holiday weekend

I will see you all on Tuesday night





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