May 31/Gold rises $9.55 but silver is down 5 cents/Amt standing for gold at the comex: 19.95 tonnes of gold with over 30,000 EFP’s issued in gold delaying gold deliveries/ gold open interest drops over 31,000 contracts but silver OI rises/Both onshore and offshore yuan rise hugely as Hibor rates escalates to over 21/%//EU document surfaces outlining the huge damages (costs) that they demand of the UK for separating/ Comey set to testify publicly with respect to Trump’s involvement trying to curtail the investigation into Michael Flynn/

GOLD: $1272.35  up $9.55

Silver: $17.37  down 5  cent(s)

Closing access prices:

Gold $1269.00

silver: $17.33

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

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

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

SHANGHAI FIRST GOLD FIX: $1266.03 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  1260.95

PREMIUM FIRST FIX:  $5.08

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SECOND SHANGHAI GOLD FIX: $1273.84

NY GOLD PRICE AT THE EXACT SAME TIME: 1261.30

Premium of Shanghai 2nd fix/NY:$12.54

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LONDON FIRST GOLD FIX:  5:30 am est  $1263.80

NY PRICING AT THE EXACT SAME TIME: $1263.90

LONDON SECOND GOLD FIX  10 AM: $1266.20

NY PRICING AT THE EXACT SAME TIME. $1265.30

For comex gold:

MAY/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH:  808 NOTICE(S) FOR 80,800  OZ. 

 TOTAL NOTICES SO FAR: 808 FOR 8080000 OZ    (2.513 TONNES)

For silver:

For silver: MAY

 37 NOTICES FILED TODAY FOR 185,000  OZ/

Total number of notices filed so far this month: 37 for 185,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

END

 

 

FEDERAL RESERVE BANK OF NY EAR MARKED GOLD REPORT

 

 

LAST MONTH WE HAD 7,841 MILLION DOLLARS WORTH OF GOLD VALUED AT 42.22 DOLLARS PER OZ

THIS MONTH:  WE HAVE 7841 MILLION DOLLARS WORTH OF GOLD VALUED AT $42.22 PER OZ

 

AMOUNT OF GOLD MOVED FROM NY:  0

 

 

END

 

 

 

We have now finished options expiry week:

 

gold has now broken out of the resistance level of $1264.00 and then propelled it up to $1274 before being pulled back.  The bankers still have their foot on silver’s throat .

 

 

 

 

Let us have a look at the data for today

.

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In silver, the total open interest ROSE BY  A TINY 107  contract(s) UP to 205,235 DESPITE THE RISE IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (UP  10 CENT(S).   In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.02500 BILLION TO BE EXACT or 147% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 37 NOTICE(S) FOR 185,000  OZ OF SILVER

In gold, the total comex gold FELL BY A WHOPPING  31,057 contracts WITH THE SLIGHT FALL IN THE PRICE OF GOLD ($4.45 with YESTERDAY’S TRADING). The total gold OI stands at 434,246 contracts.  ON THE LAST TRADING DAY OF THE MONTH, IT HAPPENED AGAIN: TOTAL OBLITERATION OF OPEN INTEREST AS WE ENTERED FIRST DAY NOTICE.  A MAJOR PORTION OF THOSE 31,000 CONTRACTS RECEIVED AN EFP CONTRACT WHICH ENTITLES THEM TO A FIAT BONUS PLUS A FUTURE CONTACT. (OR MOST LIKELY A FUTURE LONG OPTION OR A LONDON BASED GOLD CONTRACT)

we had 808 notice(s) filed upon for 80,800 oz of gold.

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

GLD:

We had no changes in tonnes of gold at the GLD

Inventory rests tonight: 847.45 tonnes

.

SLV

Today: no changes in inventory

THE SLV Inventory rests at: 340.976 million oz

end

.

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

1. Today, we had the open interest in silver ROSE BY 107 contract UP TO 205,235, (AND now CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), DESPITE THE  RISE IN PRICE FOR SILVER WITH YESTERDAY’S TRADING  (10 CENTS). NO QUESTION THAT WE HAD FAILED  SHORT COVERING BY THE BANKERS ALONG WITH SOME BANKER DELTA HEDGING WITH THE RISE IN PRICE.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) Federal Reserve Bank of NY Ear Marked Gold Report

(Harvey)

3. ASIAN AFFAIRS

)Late TUESDAY night/WEDNESDAY morning: Shanghai closed UP 7.12 POINTS OR 0.23%   / /Hang Sang CLOSED DOWN 40.98 POINTS OR 0.16% The Nikkei closed DOWN 27.28 POINTS OR 0.14%/Australia’s all ordinaires  CLOSED UP  0.09%/Chinese yuan (ONSHORE) closed HUGELY  UP at 6.8118/Oil DOWN to 48.66 dollars per barrel for WTI and 51.00 for Brent. Stocks in Europe OPENED IN THE GREEN     ..Offshore yuan trades  6.7650 yuan to the dollar vs 6.8118 for onshore yuan. NOW  THE OFFSHORE IS HUGELY STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS HUGELY  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  /CHINA UNDERGOES INTERVENTION AGAIN LAST NIGHT DRIVING UP BOTH YUANS.

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA

b) REPORT ON JAPAN

c) REPORT ON CHINA

i)LAST NIGHT

Mainland China raises margin costs (overnight deposit rate)for offshore yuan to 65% forcing bears to capitulate: also interbank lending rate HIBOR rises to 21%

( zero hedge)

ii)Fitch has now warned, Chinese search engine corporation, Baidu  with a negative watch claiming their involvement with WMP’s may cause their bonds to default

( zero hedge)

4. EUROPEAN AFFAIRS

i)British pound/USA dollar  (Cable) tumbles after the latest poll indicates that the Tories will fall short of a majority government by 16 seats:

( zero hedge)

ii)UK/EU

Ten days before the election and a 12 page document surfaces which outlines the demands to the UK for separation.

Theresa May is one angry woman:

( Mish Shedlock/Mishtalk)

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

It seems that sanctions have helped not hurt Russia as its credit default swaps drop to 4 yr lows

( zero hedge)

6 .GLOBAL ISSUES

7. OIL ISSUES

i)as expected WTI crashes into the 47 dollar column due to OPEC compliance issues

( zero hedge)

ii)This is just temporary!  WTI and gasoline jump after a bigger than normal crude draw down.

(courtesy zero hedge)

8. EMERGING MARKET

 

9.   PHYSICAL MARKETS

I)Hong Kong needs around the clock gold trading to a force;

( Yiu/South China Morning Post, Hong Kong)

ii)Bloomberg offers 5 big reasons why people are still skeptical about bitcoin.  What puzzles me is why would somebody buy a bitcoin for 2250.00 USA with gold trading at 1266.00

( Katz/Bloomberg)

iii)A great commentary tonight from Steve St Angelo who reports on Chinese fabrication of silver.  It is well down and a sign that global growth iis just ot there

( SRSRocco report/Steve St Angelo)

iv)Dave Kranzler talks about the high amount of gold demand coming from India

 

( Dave Kranzler/IRD)

10. USA stories

i)No surprise here;  Trump has reportedly decided to pull out of the Paris climate accord

( zero hedge)

ii)The National Chicago Manufacturing PMI index which measures overall manufacturing in the USA is now down to 6 month lows.
It is a soft data report
( zerohedge)

iii)What an absolute farce: Chicago PMI changes its mind and corrects earlier reported dismal data;

( zerohedge)

iv)The USA banks are now having trouble earning money as revenues tumble 15% with respect to Bank of America and JPMorgan.  Both blame the flattening of the yield curve and low volatility

( zero hedge)

v)It seems that the housing sector in the uSA is in disarray:  pending home sales are now crashing due to price and inventory:

( zero hedge)

vi)This should be fun:  Comey is to testify before the House and state publicly that Trump did push him to end Flynn’s Russian probe:

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY A MONSTROUS 31,057 CONTRACTS DOWN  to an OI level of 434,246 DESPITE THE TINY FALL IN THE PRICE OF GOLD ( $4.45 with YESTERDAY’S trading). ON THE LAST TRADING DAY WE FINALLY DID HAVE OUR USUAL OBLITERATION OF OPEN INTEREST AS WE ENTERED FIRST DAY NOTICE TODAY. THE BANKERS SUPPLIED HUGE AMOUNTS OF EFP PAPER TO LONGS TO  DELAY  JUNE GOLD DELIVERIES  CONTRACTS FOR A FUTURE CONTRACTS OR A LONG FUTURE CALL ON A FUTURE GOLD CONTRACT (I.E. EITHER JULY OR AUGUST GOLD) OR MAYBE EVEN A LONDON BASED GOLD FORWARD CONTRACT PLUS A FIAT BONUS FOR THEIR HARD EFFORT PERPETRATING THIS FRAUD. THIS IS WHY OPEN INTEREST ALWAYS FALLS WHEN WE ENTER AN ACTIVE DELIVERY MONTH WHETHER IT IS GOLD OR SILVER. THE COMEX IS NOW ONE COMPLETE FRAUD

We are now in the contract month of JUNE and it is one of the BETTER delivery months  of the year. In this JUNE delivery month  we had A  GIGANTIC LOSS OF 58,358 contract(s) FALLING TO  6414. THUS BY DEFINITION WE HAVE 6414 X 100 OZ OR 641,400 STAND FOR DELIVERY WHICH IS REPRESENTED BY 19.95 TONNES

The non active July contract GAINED another 489 contracts to stand at 2190 contracts. The next big active month is August and here the OI gained ONLY 21,590 contracts up to 309,897. WE MUST HAVE HAD A MONSTROUS 30,384 EFP CONTRACTS ISSUED.. (WE LOST 58,358 CONTRACTS STANDING IN JUNE AND ONLY 21,590 ROLLED TO AUGUST plus 6,414 delivery notices filed)

 

We had 808 notice(s) filed upon today for 80,800 oz

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And now for the wild silver comex results.  Total silver OI ROSE BY 107 contracts FROM 205,128 UP TO 205,235 DESPITE YESTERDAY’S 10 CENT GAIN.  IT SURE LOOKS LIKE OUR BANKERS ARE TRYING TO COVER THEIR SHORTS IN SILVER IN EARNEST. WE ALSO NO DOUBT HAVE CONSIDERABLE EVIDENCE OF SOME DELTA HEDGING BY THE BANKERS TRYING TO OFFSET THAT HUGE SHORT POSITION THEY HAVE BEEN BURGEONING OVER THE YEARS.
Below is a little background on the EFP contracts  initiated by our bankers:
We now know for certainty that private EFP contracts are given by the bankers when faced with an upcoming active delivery month and they state that this is for emergency purposes only and that they do not have actual physical metal to deliver upon in the front month.  We just do not know the makeup of that private deal.  It is my contention that the longs in GOLD FOR INSTANCE at the end of MAY(for June contracts) were given a fiat bonus plus a long “in the money” call for a  future July contract or a August FUTURE contract or MAYBE EVEN A LONDON BASED FORWARD GOLD CONTRACT. . and this is why the total comex open interest complex obliterates as we enter first day notice.  So now everything makes sense: the obliteration of OI as we enter first day notice has not really occurred in the real sense but replaced with a future long contract call and/or an off -comex London based gold contract  with some bonus money for their effort.
We are in the NON active delivery month is JUNE  Here the open interest LOST 255 contract(s) FALLING TO 396 contracts.  THUS BY DEFINITION, THE AMOUNT OF SILVER STANDING IN JUNE IS 396 X 5000 CONTRACTS OR 1,980,000  OZ

The next big active month will be July and here the OI LOST 3186 contracts DOWN to 139,036.

 

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 37 notice(s) filed for 185,000 oz for the June 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 82,233 contracts which is poor

Yesterday’s confirmed volume was 433,959 contracts  which is excellent ( MANY ROLLOVERS).

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for JUNE
 May 31/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 64,912.642
oz
HSBC
Scotia
Deposits to the Dealer Inventory in oz nil oz

 

Deposits to the Customer Inventory, in oz 
 2399.99 oz
Delaware
No of oz served (contracts) today
 
808 notice(s)
80,800 OZ
No of oz to be served (notices)
5606 contracts
560,200 oz
Total monthly oz gold served (contracts) so far this month
808 notices
80800 oz
2.513 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   64,912.64 oz
Today we HAD  0 kilobar transaction(s)/ 
We had 0 deposit into the dealer:
total dealer deposits: nil oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had no dealer deposits:
total dealer deposits:  nil oz
we had 1  customer deposit(s):
 i) into Delaware:  2399.99 oz
total customer deposits; 2399.99  oz
We had 2 customer withdrawal(s)
 i) into HSBC: 578.718 oz
ii) Into Scotia: 64,301.774 oz
real gold left the vaults today.
total customer withdrawal: 64,912.642 oz
 we had 0 adjustments:
For JUNE:

Today, 0 notice(s) were issued from JPMorgan dealer account and 292 notices were issued from their client or customer account. The total of all issuance by all participants equates to 808 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 675 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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To calculate the initial total number of gold ounces standing for the JUNE. contract month, we take the total number of notices filed so far for the month (808) x 100 oz or 80,800 oz, to which we add the difference between the open interest for the front month of MAY (6414 contracts) minus the number of notices served upon today (808) x 100 oz per contract equals 641,400 oz, the number of ounces standing in this active month of JUNE.
 
Thus the INITIAL standings for gold for the JUNE contract month:
No of notices served so far (808) x 100 oz  or ounces + {(6414)OI for the front month  minus the number of  notices served upon today (808) x 100 oz which equals 641,400 oz standing in this  active delivery month of JUNE  (19.95 tonnes).  
 
 
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Total dealer inventory 894,646.624 or 27.82 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,750,276.96 or 272.17 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 272.17 tonnes for a  loss of 30  tonnes over that period.  Since August 8/2016 we have lost 81 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 12 MONTHS  81 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE MAY DELIVERY MONTH
June INITIAL standings
 May 31. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
1,117,812.319 oz
CNT
SCOTIA
Deposits to the Dealer Inventory
335,609.060 oz
JPM
Deposits to the Customer Inventory 
 1,159,012.960  oz
 HSBC
SCOTIA
No of oz served today (contracts)
 37 CONTRACT(S)
(185,000 OZ)
No of oz to be served (notices)
359 contracts
( 1,795,000 oz)
Total monthly oz silver served (contracts) 37 contracts (185,000 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 1,117,812.319 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil  oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
i) Out of CNT: 621,976.619  oz
ii) out of Scotia: 495.935.700 oz
TOTAL CUSTOMER WITHDRAWALS: 1,117,812.319  oz
 We had 1 Customer deposit(s):
i) Into JPMorgan:  335,609.060 oz
***deposits into JPMorgan have now resumed 
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits  335,609.060 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the JUNE. contract month is represented by 37 contract(s) for 185,000 oz. To calculate the number of silver ounces that will stand for delivery in JUNE., we take the total number of notices filed for the month so far at 37 x 5,000 oz  = 185,000 oz to which we add the difference between the open interest for the front month of JUNE (396) and the number of notices served upon today (37) x 5000 oz equals the number of ounces standing

 

.
 
Thus the initial standings for silver for the JUNE contract month:  37(notices served so far)x 5000 oz  + OI for front month of JUNE.(396 ) -number of notices served upon today (37)x 5000 oz  equals  1,980,000 oz  of silver standing for the JUNE contract month.
 
 
Volumes: for silver comex
 
Today the estimated volume was 29,740 which is fair
Yesterday’s  confirmed volume was 85,017 contracts which is HUGE
FRIDAY’S ESTIMATED VOLUME OF 85,017 CONTRACTS EQUATES TO 425 MILLION OZ OF SILVER OR 61% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.  
 
Total dealer silver:  33.563 million (close to record low inventory  
Total number of dealer and customer silver:   201.367 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
 
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.9 percent to NAV usa funds and Negative 6.9% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.7%
Percentage of fund in silver:38.2%
cash .+0.1%( May 31/2017) 
 
2. Sprott silver fund (PSLV): Premium RISES TO   -.13%!!!! NAV (May 31/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS to -0.71% to NAV  (May 31/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.13% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.71%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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

 Section: Daily Dispatches

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

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

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

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

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

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

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

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

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

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

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

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

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

end

And now the Gold inventory at the GLD

May 31./ no change in gold inventory at the GLD/Inventory rests at 847.45 tonnes

May 30/no change in gold inventory at the GLD/Inventory rests at 847.45 tonnes

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

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

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

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

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

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

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

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

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

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

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

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

May 4/A tiny change in inventory at the GLD /a withdrawal of .28 tonnes to pay for fees/inventory rests at 853.08 tonnes

May 3/no change in inventory at the GLD/Inventory rest at 853.36 tonnes

May 2/no change in inventory at the GLD/Inventory rests at 853.36 tonnes

May 1/ no changes in inventory at the GLD/inventory rests at 853.36 tonnes

 

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May 31 /2017/ Inventory rests tonight at 847.45 tonnes
*IN LAST 162 TRADING DAYS: 100.68 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 105 TRADING DAYS: A NET  26.75 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET  52.09 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

May 31./ no change in silver inventory at the SLV/inventory rests at 340.976 million oz/

May 30/no change in silver inventory at the SLV/inventory rests at 340.976 million oz

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??)

 

May 31.2017: Inventory 340.976  million oz
 end

Major gold/silver trading/commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Is China manipulating the gold market?

By janskoyles May 31, 2017

  • Hedge fund, PhD statistician claims gold market is “the most blatant case of manipulation”
  • PhD: “Statistically impossible unless there’s manipulation occurring”
  • Gold serves as political chips on the world’s financial stage.
  • Price is being suppressed until China gets the gold that they need
  • Gold will go higher when all central banks ‘confront the next global liquidity crisis’
  • ‘When that happens, physical gold may not be available at all.’

Jim Rickards: The Golden Conspiracy

Is there gold price manipulation going on? Absolutely. There’s no question about it. That’s not just an opinion.

There is statistical evidence piling up to make the case, in addition to anecdotal evidence and forensic evidence. The evidence is very clear, in fact.

These are the opening lines of Jim Rickards’ piece ‘ The Golden Conspiracy’, an op-ed that may surprise even the most seasoned followers of gold markets.

Gold and silver price manipulation is not a new topic to regular readers. For years the idea that precious metals markets are subject to more than just free market forces has been dismissed by the mainstream. Many have referred to gold and silver manipulation as topic fodder for the conspiracy and deep web forums. This is despite evidence to the contrary.

In the last eighteen months or so what was dismissed as anecdotal tales of manipulation has finally been recognised by the regulators and lawmakers as something very real and serious. Fines have been doled out and regulators have been slowly implementing new rules.

But what if the manipulation goes above institutions that can be called to account? Can they be fined? Can it be somewhat controlled by the authorities? What if it is a country doing the manipulation? Rickards believes it is.

‘…where is the manipulation coming from? There are a number of suspects but you need look no further than China.’

Role of China

Previously we have been excited about China’s role in the gold market. In April last year they launched yuan denominated gold bullion trading. We not only expected this to further boost its power in the global gold and forex markets but to also lead to increased transparency and reduce price manipulation.

However the country is not only keen to increase transparency in the market for their own long-term gain, they have short-term goals as well – to increase their gold reserves.

Rickards explains:

China wants to do what the U.S. has done, which is to remain on a paper currency standard but make that currency important enough in world finance and trade to give China leverage over the behavior of other countries.

The best way to do that is to increase its voting power at the IMF and have the yuan included in the IMF basket for determining the value of the special drawing right (SDR).

China accomplished that last September when the IMF added the yuan to its basket of currencies.

The rules of the game also say you need a lot of gold to play, but you don’t recognize the gold or discuss it publicly. Above all, you do not treat gold as money, even though gold has always been money.

The members of the club keep their gold handy just in case, but otherwise, they publicly disparage it and pretend it has no role in the international monetary system. China is expected to do the same.

Right now, China officially does not have enough gold to have a “seat at the table” with other world leaders. Think of global politics as a game of Texas Hold’em.

What do want in a poker game? You want a big pile of chips.

Gold serves as political chips on the world’s financial stage. It doesn’t mean that you automatically have a gold standard, but that the gold you have will give you a voice among major national players sitting at the table.

For example, Russia has one-eighth the gold of the United States. It sounds like they’re a small gold power — but their economy’s only one-eighth as big. So, they have about the right amount of gold for the size of their economy. And Russia has ramped up its gold purchases recently.

The U.S. gold reserve at the market rate is under 3% of GDP. That number varies because the price of gold varies. For Russia, it’s about the same. For Europe, it’s even higher — over 4%.

In China, that number has been about 0.7% officially. Unofficially, if you give them credit for having, let’s say, 4,000 tons, it raises them up to the U.S. and Russian level. But they want to actually get higher than that because their economy is still growing, even if it’s at a much lower rate than before.

Where is the evidence for this?

As we have explained previously, manipulation is often dismissed as a conspiracy and anecdote driven theory. But Rickards has academic evidence:

I spoke to a PhD statistician who works for one of the biggest hedge funds in the world. I can’t mention the fund’s name but it’s a household name. You’ve probably heard of it. He looked at COMEX (the primary market for gold) opening prices and COMEX closing prices for a 10-year period. He was dumbfounded.

He said it was is the most blatant case of manipulation he’d ever seen. He said if you went into the aftermarket, bought after the close and sold before the opening every day, you would make risk-free profits.

He said statistically that’s impossible unless there’s manipulation occurring.

I also spoke to Professor Rosa Abrantes-Metz at the New York University Stern School of Business. She is the leading expert on globe price manipulation. She actually testifies in gold manipulation cases that are going on.

She wrote a report reaching the same conclusions. It’s not just an opinion, it’s not just a deep, dark conspiracy theory. Here’s a PhD statistician and a prominent market expert lawyer, expert witness in litigation qualified by the courts, who independently reached the same conclusion.

Surely they can be honest about it?

One would perhaps think that given China’s resources and their growing power in the physical gold market, the country would be able to just buy all that they need. Without the need for cloak and dagger activities.

Rickards argues this isn’t possible:

Here’s the problem: If you took the lid off of gold, ended the price manipulation and let gold find its level, China would be left in the dust. It wouldn’t have enough gold relative to the other countries, and because the price of gold would be skyrocketing, they could never acquire it fast enough. They could never catch up. All the other countries would be on the bus while the Chinese would be off.

When you have this reset, and when everyone sits down around the table, China’s the second largest economy in the world. They have to be on the bus. That’s why the global effort has been to keep the lid on the price of gold through manipulation. I tell people, if I were running the manipulation, I’d be embarrassed because it’s so obvious at this point.

The price is being suppressed until China gets the gold that they need. Once China gets the right amount of gold, then the cap on gold’s price can come off. At that point, it doesn’t matter where gold goes because all the major countries will be in the same boat. As of right now, however, they’re not, so China has though to catch-up.

I’ve described some catastrophic scenarios where the world switches to SDRs or goes to a gold scenario, but at least for the time being, the U.S. would like to maintain a dollar standard. Meanwhile, China feels extremely vulnerable to the dollar. If we devalue the dollar, that’s an enormous loss to them.

China has recently sold a portion of its dollar reserves to prop up its own currency, which has come under tremendous pressure. But it still holds a large store of dollar reserves.

If China has all paper and no gold, and we inflate the paper, they lose. But if they have a mix of paper and gold, and we inflate the paper, they’ll make it up on the gold. So they have to get to that hedged position.

China has been saying, in effect, “We’re not comfortable holding all these dollars unless we can have gold. But if we are transparent about the gold acquisition, the price will go up too quickly. So we need the western powers to keep the lid on the price and help us get the gold, until we reach a hedged position. At that point, maybe we’ll still have a stable dollar.”

China isn’t the only one

We know that the banks like to play with the gold market, but China isn’t the only country involved. Rickards says Russia has the same goals as the PRC. Together they are not only critical to the physical gold market but also for the overall structure:

Currently the price of gold is set in two places. One is the London spot market, controlled by six big banks including Goldman Sachs and JPMorgan. The other is the New York gold futures market controlled by COMEX, which is governed by its big clearing members, also including major western banks.

In effect, the big western banks have a monopoly on gold prices even if they do not have a monopoly on physical gold. But that could be about to change.

Russia and China are not only building up physical reserves and exploring for more, they are building trading systems that allow for price discovery and leveraged trading in gold.

It may take a year or so to attract liquidity, but once these new exchanges are fully functional, the physical gold market will regain the upper hand as a price maker.

Then gold will commence its march to monetary status, and its implied non-deflationary price of $10,000 per ounce.

How to turn a problem into an opportunity

Manipulation goes on across many markets, whether precious metals, interest rates or forex. At no point is it victimless. Individuals and companies alike have experienced losses on their investments, both as a direct and indirect result of manipulation.

To hear this can be depressing, many investors might just ask what the point is in investing in assets such as gold and silver when they might be as manipulated as paper markets. Sure they might go to $10,000, but what stops it being manipulated even then?

Those who are concerned should take a step back and look at the bigger picture which is actually an opportunity rather than a problem. A suppressed price means great opportunity for investors to accumulate more bullion. Ironically for those looking to manipulate the price, this is good news for those who are keen to stock up on both gold and silver.

In the long-term Rickards is convinced that we will see big changes in the gold price ‘when China reaches its gold reserve target of 10,000 tons — surpassing the United States. At that point, it will be in China’s interest to become more transparent and let the price of gold soar, which is another way of saying the value of the dollar is in free-fall.’

In the short-term, gold investors and those considering diversifying their portfolio with the yellow metal would be wise to consider the following, according to Rickards:

  • Private gold holders continue to hold their gold
  • There is persistent excess of demand over supply
  • Situations in North Korea, Syria, Iran, the South China Sea, and Venezuela (to name a few) show no signs of improving, in fact the opposite.
  • Fed policy tightening is normally a headwind for gold. But, the last two times the Fed raised rates — December 14, 2016 and March 15, 2017 — gold rallied as if on cue. Look for another Fed rate hike on June 14, and another gold spike to go along with it.

Gold manipulation aside, we are currently in a period of major market complacency. Mainstream investors have seemingly been lured into thinking that years of risky and unprecedented policy making will be without consequence. They believe that elevated prices of stocks and bonds and reduced price volatility in stock markets are completely normal. This cannot be.

At some point the marketplace will realise all is not really as it seems. When this happens, expect a serious backlash and ensure you are holding onto something that is real and has shown its true value despite years of manipulation on all fronts.

http://www.goldcore.com/us/gold-blog/china-manipulating- gold-market/

-END-

 

Hong Kong needs around the clock gold trading to a force;

(courtesy Yiu/South China Morning Post, Hong Kong)

 

Hong Kong needs around-the-clock gold trading

Section:
By Enoch Yiu
South China Morning Post, Hong King
Tuesday, May 30, 2017For the Hong Kong Exchanges and Clearing to be successful in its plans for gold trading, longer trading hours are needed as mainland and international customers are likely to need 24-hour servicing, according to leading traders in the yellow metal.The HKEX has presented proposals for two new gold futures products, to be launched as early as July, which would trade 16 hours a day. But brokers say that might prove too short.
“The gold market trades around the clock. This is why our customers are trading at CME Group (Chicago Mercantile Exchange) in the United States, which trades 23 hours a day,” said Alfred Yeung Ping-kwan, founding chairman of Glory Sky Group, which trades gold and stocks for investors in Hong Kong.HKEX this month said it would start offering two new gold futures contracts — one in US dollars the other in yuan — with physical delivery. …… For the remainder of the report:http://www.scmp.com/business/companies/article/2096234/hong-kong-needs-a…

* * *

END

Bloomberg offers 5 big reasons why people are still skeptical about bitcoin.  What puzzles me is why would somebody buy a bitcoin for 2250.00 USA with gold trading at 1266.00

(courtesy Katz/Bloomberg)

Five big reasons why people are still skeptical about bitcoin

Section:

By Lily Katz
Bloomberg News
Monday, May 29, 2017

Bitcoin’s astronomical rally has cryptocurrency bulls feeling vindicated. Not so fast, skeptics say.

The digital currency’s more than 100 percent surge in the past two months looks eerily familiar, argue the bears, pointing to November 2013, when the price quintupled in short order to top $1,000 for the first time. By Valentine’s Day it was worth around half that, and spent the better part of the next two years languishing below $500.

Then it absolutely exploded — jumping more than $1,400 in two months. At its height last week, one bitcoin could buy about two ounces of gold. Its champions touted the arrival of blockchain into the mainstream, the coin’s underlying technology which they say can lift the poor out of poverty and make transactions more secure, inexpensive and efficient.

But signs of a top have emerged, detractors warn. On May 25, bitcoin surged more than $300 to a record only to turn tail and close little changed. The $600 round trip was the biggest daily swing in its history. It then slumped 8 percent the next day. Bitcoin was little changed at $2,310 as of 7:39 a.m. in New York. For bears, that kind of volatility shows the asset’s unreliability as a store of value.

Here are some other reasons why they warn caution is warranted: …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-05-30/bitcoin-s-rapid-surge…

END

 

A great commentary tonight from Steve St Angelo who reports on Chinese fabrication of silver.  It is well down and a sign that global growth iis just ot there

(courtesy SRSRocco report/Steve St Angelo)

CHINA’S INDUSTRIAL SILVER FABRICATION TUMBLES: A Bad Sign For The Global Economy

|

May 30, 2017 – 10:19pm

The once Great Chinese Dragon Economy seems to be burning out as its economic indicators continue to weaken and smolder.  One such indicator is China’s rapidly falling industrial silver consumption.  At one time, Chinese industrial silver fabrication was consuming nearly a third of the global total.  However, this has fallen considerably over the past two years.

According to the data in the 2017 World Silver Survey, China’s industrial silver consumption fell 15% in 2016, from 169 million oz (Moz) in 2015 to 144 Moz last year.  That’s a 25 Moz decline in just one year:

Furthermore, Chinese industrial silver fabrication has fallen 23%, (42 Moz) from its peak of 186 Moz in 2014.  While some may believe the decline in China’s industrial silver usage had something to do with rising silver prices.  This couldn’t be, as the average annual silver price was $19.08 in 2014, $15.68 in 2015 and $17.14 last year.

So, as we can see, the Chinese consumed a great deal more silver for industrial silver applications when the price of silver was higher in 2014 than either 2015 or 2016.  Which means, it had nothing really to do with the price.  That being said, there is an even more alarming trend.

Chinese industrial silver demand last year was the lowest since the 2009 Global Financial Meltdown.  In 2009, China consumed 137 Moz of silver for its industrial applications, compared to 144 Moz last year.  Moreover, China continued to see a slow but steady increase in silver consumption from 2010 to 2014 for industrial fabrication, but it really started to deteriorate over the past two years.

This suggests that domestic and global demand for Chinese industrial products (that use silver in their manufacture) has been declining significantly since 2014.  Some readers may assume that the decline in Chinese industrial silver consumption is due to the efficiency in solar manufacturing.  While the manufacturing of Photovoltaic Cells has most certainly become more efficient, from 0.5 grams silver per cell in 2011 down to 0.15 grams in 2016 (data: 2017 World Silver Survey), consumption of Solar PV silver increased to 76.6 Moz in 2016 versus 57.2 Moz in 2015.

Thus, overall consumption of silver for PV Solar manufacturing has continued to increase from 51.8 Moz in 2014 to 76.6 Moz last year.  So, this does not explain the big drop in Chinese silver industrial fabrication over the past two years.

Now, if we look at global silver industrial fabrication over the past decade, we can spot an interesting trend:

When the price of silver was at its highest level in 2011 (average was $35.12), the world consumed the most silver for industrial applications (661 Moz).  However, global silver consumption in the industrial sector has continued to decline, reaching a low of 562 Moz last year.  This is nearly 100 Moz less than it was in 2011.

Yes, it is true that the world is using less silver for Photography, but it hasn’t fallen that much since 2011.  According to the data in the 2017 World Silver Survey, silver consumption in the Photographic industry only fell 16 Moz since 2011.  However, the biggest decline in silver consumption came from the “Electrical & Electronics” sector.  Silver consumption in that industry fell from 291 Moz in 2011 to 234 Moz last year.

Again, we can’t blame rising prices for the decline in silver consumption in the electrical or electronics sector because it fell more than 50% since 2011.  You would think silver consumption in electronics would have risen as the price fell by more than half.

So, what does this all mean?  It means the world economies that are being propped up by a massive amount of monetary printing, debt and Central Bank asset purchases aren’t really growing in REAL TERMS, but rather they are contracting.

Sure, some sectors might be growing, such as the automobile industry, but this is not sustainable.  Why?  Because, using easy money, subprime finance and extending payments are the last stages before the market falls off a cliff, as it did in 2008.

Of course, many investors have heard all this already as they become increasing frustrated that the “TIMING OF THE CRASH” continues to be delayed.  I see this sentiment on my site as well as others.  While I can understand the frustration these investors are feeling… it doesn’t bother me a bit.  I moved out of the BIG CITY in 2007 and relocated to the country when I knew the market crash was coming.  So, when everything fell apart in 2008 and 2009, I wasn’t surprised.  However, I was surprised how long the Central Banks could prop up the system.

But….. there is an expiration date or time when the propping will no longer work.  While I don’t know the exact timing of this event, I can tell you that the lousy indicators taking place in the oil industry provides a clue that it will likely occur sooner than most realize.  Now, I am not saying tomorrow, next week-month or next year… but I can see BIG PROBLEMS by 2020, and it could come sooner.

Which is why, you don’t want to play with fire and TIME your exit out of these insane markets.  However, most investors think they KNOW BETTER.  So, it will be interesting to see when things fall apart, just how well that strategy worked.

IMPORTANT NOTE:  Falling industrial silver demand is not a bad indicator for the future price of silver.  First… I don’t look at short-term supply and demand factors as indicators of price.  Second… I focus on the longer term trends in the silver market for clues on the timing when the value of silver will move to a high-quality store of value.  Lastly, the most important indicator for the future value of silver (or gold) is energy.  This energy fundamental is overlooked by the majority of precious metals analysts.

Please stay tuned over the next several weeks as I plan on putting out some interesting articles.  While most of the respected precious metals analysts continue to discuss the economy and financial system in terms of FIAT MONEY, DEBT, DERIVATIVES, GEOPOLITICS and CENTRAL BANKS, very few if any understand the dire energy predicament we face. 

I believe those who follow the work on the SRSrocco Report site will be more informed about the coming ECONOMIC COLLAPSE (due to energy) than those analysts who remain focused on the more superficial information and data.

Check back for new articles and updates at the SRSrocco Report.

end

 

Dave Kranzler talks about the high amount of gold demand coming from India

 

(courtesy Dave Kranzler/IRD)

Early Monsoon Season Will Boost Indian Gold Buying

After the concerted western Central Bank  effort, led by the BIS, to squelch Indian gold imports by eliminating the most commonly used currency bills failed, the fake news about Indian gold imports coming from the World Gold Council amplified.  The WGC missed its Q1 2017 forecast for Indian gold imports by a country mile, as Indian gold imports doubled in Q1 to 253 tonnes.   Please note that these numbers do not include the amount of gold smuggled into India, which has been estimated to be 200-300 tonnes annually.

Now the World Gold Council is promoting the narrative that Indian gold imports will average only 90 tonnes per quarter the rest of the year because of a new General Sales Tax scheduled to be implemented on July 1st plus restrictions to be implemented on gold dore bar imports.  However, this is again an ill-fated prediction, likely for the purpose of spreading anti-gold propaganda, which seems to be one of the World Gold Council’s general directives.

First, in April and May, the premiums to world gold paid in India suggest that April/May imports already are well into triple-digits.  And the WGC’s arguments are absurd, as expressed by John Brimelow in his Gold Jottings report:

In JBGJ’s opinion the only way this prediction can be right is if the $US price of gold jumps a couple of hundred dollars. Since Q2 is half gone and premiums have if anything been even more constructive during April and May, imports for the quarter are very likely be deep in triple digits also. The dore point is just ridiculous.  To the extent dore is not available India will just revert to buying kilo bars which are only a few dollars more expensive. How the Authorities will treat the gold trade in introducing General Sales Tax is still uncertain. But using it to increase the rate of tax will just increase smuggling. In any case, fear of a tax increase should be stimulation anticipatory buying, a point the WGC avoids mentioning.

In addition to the current elevated level of gold demand in India, the early arrival of monsoon season to India will further boost demand for gold “by setting up India for higher farm output and robust economic growth” (Economic Times).   Farmers use cash from their harvest sales to buy gold, which is one of the major sources of demand fueling India’s biggest seasonal gold-buying period in the fall through year-end.  The bigger the harvest, the more gold bought by Indian farmers.

For the WGC to forecast 90 tonnes per quarter for the rest of 2017, especially given that Q2 is nearly in the bag and is likely already well over 100 tonnes, is nothing short of motivated anti-gold propaganda.  An increase in the General Sales Tax will likely cause a temporary dip in gold imports.  But, as with sudden moves higher in the price of gold, Indians will “get used” to paying a slightly higher price and normal import patterns will resume. Furthermore, a higher rate of taxation on gold sales in India will likely stimulate increased smuggling, over which the Indian authorities seem to limited control.

I appears currently that the western Central Banks are having a difficult time keep a lid on the price of gold.  The elevated level of Privately Negotiated Transactions and Exchange for Physical transactions – both of which facilitate settlement of Comex gold contracts off-exchange, privately and out of sight – is an indicator the banks are struggling to settle gold contracts with deliveries from the amount of gold available on the  Comex.   For now the price of gold has been successfully contained below $1300.  But it would not surprise me if gold makes a strong run over $1300 heading into, in not before, Labor Day weekend.

end

 

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

 
 

1 Chinese yuan vs USA dollar/yuan HUGELY STRONGER  6.8118(REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES HUGELY STRONGER TO ONSHORE AT   6.7650/ Shanghai bourse CLOSED UP 7.12 POINTS OR .23%  / HANG SANG CLOSED DOWN 640.98 POINTS OR 0.16% 

2. Nikkei closed DOWN 27.28 POINTS OR 0.14%   /USA: YEN FALLS TO 110.80

3. Europe stocks OPENED IN THE GREEN        ( /USA dollar index FALLS TO  97.14/Euro UP to 1.1220

3b Japan 10 year bond yield: RISES TO   +.049%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 110.94/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  48.66 and Brent: 51.00

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  +.295%/Italian 10 yr bond yield UP  to 2.197%    

3j Greek 10 year bond yield RISES to  : 6.09 ???  

3k Gold at $1264.10/silver $17.34 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 28/100 in  roubles/dollar) 56.85-

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 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 110.80 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9707 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0892 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +0.295%

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 2.2220% early this morning. Thirty year rate  at 2.889% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Quiet Month End Markets Hide “Below The Surface” Fireworks

It has been another quiet session for global equity markets, with S&P futures flat, as are European and Asian stocks, which is perhaps odd, as there was quite a bit of newsflow and, in the case of China, outright fireworks.

The main event in DM was the violent move in sterling, which as we first reported on Tuesday afternoon, tumbled for the first time this week after a YouGov poll showed Theresa May’s Conservative Party may fall short of a majority. The currency’s weakness boosted British equities, and the FTSE 100 Index rose even as miners and energy companies weighed on the broader European gauge after another night of sliding commodities in China.

“The return of U.S. and UK markets yesterday (after holidays) saw a little bit of weakness creep in as we head into month end and what has been a positive month for markets, with records broken on an almost daily basis,” said Michael Hewson, chief markets analyst at CMC Markets. “This soft tone looks set to be carried over this morning,” he said.

Uncertainty about the reliability of polling, however, helped contain the pound’s retreat, which has since regained all of its overnight losses, but the moves are a reminder of the potential risks surrounding a series of national elections in Europe this year.

Another key overnight event, one which helped the Shanghai Composite close higher, was a stronger than expected Chinese Mfg PMI, as well as a Non-manufacturing PMI which rose in May. Specifically, China’s NBS May manufacturing PMI came in at 51.2, same as the previous reading and slightly above expectations. The official non-manufacturing PMI (comprised of the service and construction sectors at roughly 80%/20% weights, based on our estimates) increased to 54.5 in May from 54.0 in April, on higher services PMI. Services PMI rose to 53.5 from 52.6 in April. On the other hand, construction PMI fell to 60.4 from 61.6 in April.

But China’s “goalseeked” indices were far less notable than what happened in China’s currency market, where the offshore yuan jumped the most in four months as funding costs exploded amid speculation policy makers were supporting the currency in the wake of a surprise sovereign rating downgrade. At one point, in its ongoing crusade to crush offshore Yuan shorts, the PBOC sent the overnight interbank rate higher than 21%….

… while the CNH overnight deposit rate hit a staggering 65%!

As a result, the CNH premium to CNY rose as much as 2.3 standard deviations, as Beijing appears set to send the Yuan far higher, perhaps still hurting from the recent Moody’s downgrade, and intent on teaching shorts a very memorable lesson. As shown in the chart below, the Yuan hit the strongest level against the dollar, with the offshore Yuan surging the most.

Meanwhile, as the currency surged, China’s commodities – perhaps predictably – tumbled, with all mainland commodities tumbling by the close of trading.

ALL mainland commodities closed in GREEN (down) today.
Coke leads -8.97%, Rubber -7.81%, Coking Coal -7.64%

Elsewhere in Asia, 10yr JGBs were lower amid a mild improvement of the risk tone in the region, while the curve was slightly flatter on outperformance in the super-long end, even after a Bloomberg report that the BOJ may “taper its taper” and revert to its traditional bond purchase schedule.

Away from China, a much anticipated European inflation report showed that Draghi still has room to scapegoat weak eurozone inflation, afterboth headline and core CPI missed expectation, printing at 1.4% Y/Y (exp. 1.5%) and Core 0.9% Y/Y (Exp. 1.0%) respectively.

Also today, representatives from the ECB, ESM and the Greek Government will be in Frankfurt today to discuss, among other things, the prospect of a return to the financial markets for Greece. ESM and Greek officials recently claimed that Greece should be able to return to the market by summer 2018. But given the current impasse between Greece and her creditors, and the fact that a commitment on debt relief from the EU will probably be pushed back until the end of 2018, that seems optimistic according to Capital Economics.

Looking at other asset classes, oil extended losses even as industry data later is expected to show a supply drop in the U.S. even as the American drill count is at the highest since April 2015. What is most notable here is that OPEC jawboning now appears to have lost all potency, as oil tumbled even after the Saudi energy minister vowed to do “whatever it takes” to cut inventories. Oil has since tumbled to fresh session lows.

Falih has gone for “whatever it takes” “committed to cutting inventories to 5Y ave” and “joint commitment” and is 10c off session low

And yet, despite all this, markets barely batted an eyelid, and world stocks are poised to end May up nearly 2 percent, marking the seventh straight monthly increase and the longest monthly winning streak in over a decade. The MSCI’s global equity index held steady on Wednesday, while European stocks edged down 0.1% in early trade following Wall Street’s dip on Tuesday.

The MSCI Asia Pacific Index dropped 0.1 percent, paring its advance for May to 2.6%. Some Asian shares were boosted by the noted strong Chinese PMI surveys, although a sturdy performance from the Japanese yen helped push the Nikkei into the red. European indexes were slightly higher early on Wednesday, with the Stoxx 600 up 0.2% to 381.31 . U.S. futures pointed to a rise of 0.1 percent on Wall Street.

In rates, the yield on 10-year Treasuries rose one basis point to 2.22 percent after declining four basis points in the previous session. Benchmark yields in the U.K. were little changed after a drop of two basis points Tuesday.

Economic data include MBA mortgage applications, Chicago PMI and pending home sales. Analog Devices and HP are among companies reporting earnings.

Global Market Snapshot

  • S&P 500 futures little changed at 2,411.70
  • STOXX Europe 600 up 0.2% to 391.31
  • MXAP down 0.1% to 152.63
  • MXAPJ down 0.07% to 498.26
  • Nikkei down 0.1% to 19,650.57
  • Topix down 0.3% to 1,568.37
  • Hang Seng Index down 0.2% to 25,660.65
  • Shanghai Composite up 0.2% to 3,117.18
  • Sensex up 0.1% to 31,204.54
  • Australia S&P/ASX 200 up 0.1% to 5,724.57
  • Kospi up 0.2% to 2,347.38
  • German 10Y yield rose 1.2 bps to 0.304%
  • Euro down 0.06% to 1.1179 per US$
  • Brent Futures down 0.8% to $51.41/bbl
  • Italian 10Y yield rose 10.9 bps to 1.997%
  • Spanish 10Y yield fell 0.5 bps to 1.523%
  • Brent futures down 1.1% to $51.25/bbl
  • Gold spot up 0.1% to $1,264.11
  • U.S. Dollar Index up 0.1% to 97.38

Top Overnight Stories from Bloomberg

  • Euro-Area Prices Undershoot Estimate; Flynn to Give Documents for Russia Probe; China PMI Steady, Topping Estimates
  • BlackRock Inc. expects insurance companies could move more than $300 billion into debt exchange-traded funds over the next five years, thanks to a gate that’s been lifted in U.S. regulations
  • Investors including Elliott Management Corp. are seeking to pressure NXP Semiconductors NV to renegotiate with Qualcomm Inc. to persuade the U.S. company to raise its $110-a-share purchase offer, according to people familiar with the process
  • American Tower Corp. is exploring a bid for Cellnex Telecom SA to expand in Europe as the Spanish tower operator’s main shareholder considers selling assets as part of a merger, according to people familiar with the matter. Cellnex surged in Madrid trading
  • Euro-area inflation slowed more than economists forecast, giving ammunition for European Central Bank policy makers who say it’s too early to commit to an exit from monetary stimulus
  • Deutsche Bank AG agreed to pay $41 million to settle Federal Reserve allegations that its U.S. operations failed to maintain adequate protections against money laundering, the latest in a string of fines that have cost the German lender billions of dollars

Asian markets shrugged off a negative lead from the US where the S&P 500 snapped a 7-day win streak, with the region mixed as China returned from holiday to be greeted by encouraging PMI data. This aided a recovery in the ASX 200 (+0.1%) which was underpinned by IT and Financial sectors, while Nikkei 225 (-0.1%) lagged after Industrial Production figures missed estimates. Shanghai Comp. (+0.2%) initially outperformed as mainland participants returned to market and digested better than expected Official Chinese Manufacturing PMI as well as an improvement in Non-Manufacturing PMI data, although the support from the data gradually faded throughout the day. 10yr JGBs are lower amid a mild improvement of the risk tone in the region, while the curve was slightly flatter on outperformance in the super-long end.
Chinese Official Manufacturing PMI (May) 51.2 vs. Exp. 51.0 (Prey. 51.2). Non-Manufacturing PMI (May) 54.5 (Prey. 54.0)

Top Asian News

  • Yuan Surges in Hong Kong as Traders See PBOC Squeezing Bears
  • Iron Ore Rout Drives Price Into $30s for Lower-Grade Miners
  • Dana Gas Venture Seeks $26.5 Billion in Damages From Iraqi Kurds
  • Hong Kong Stocks Set for Longest Run of Monthly Gains Since 2013
  • BOJ to Keep Pace of JGB Buys in June; Tweaks
  • VietJet to Buy $3.6 Billion of CFM Engines for Growing Fleet
  • Kabul Hit by Worst Attack Since Last July, Scores Dead

In Europe, price action and macro newsflow has been relatively quiet for most part of the European morning, stocks are modestly lower across the board with material and energy names the notable laggards. This comes despite some encouraging data from China, which reported Mfg. PMI was unchanged at 51.2 against expectations of a fall to 51. Notable outperformers this morning is Ericsson after activist investor Cevian Capital bought a stake of over 5% in the Co. Tesco shares slipped in the wake of the latest Kantar World panel data which showed discount retailers sales rising the most since 2015. In credit markets, OATs are benefitting from the large month-end extension with the 10 and 30yr spread vs the bund  tighter by 1.5bps. Elsewhere, bund yields have ticked up this morning, slight underperformance led by the long end. 

Top European News

  •  Italy Unemployment Rate Fell to Almost 5-Year Low in April
  • Co-Op Bank Said to Head for Debt-for-Equity Swap, Sale Fades
  • Vivendi CEO Said Poised to Become Telecom Italia Chairman
  • Deutsche Bank Fined $41 Million for Money-Laundering Lapses
  • German Unemployment Declines as Economy Poised for More Growth
  • Bulgaria Seeks Political Backing to Lock It on Road to Euro
  • Visco Says Italy Banks May Lose $11 Billion in Bad-Loan Sales
  • Veneto Banks Solution Must Be Found Soon: Pop. Vicenza CEO
  • Metro’s Consumer Electronics Loss Dampens Spirits Ahead of Split
  • Rocket Internet Boosts Startup Sales, Improves Profitability

In currencies, the pound was the key mover, initially tumbling, then recovering all losses and trading at 1.2850 latest. The euro was little changed, heading for a monthly gain of 2.6 percent, its best performance in more than a year. The yen was up 0.1 percent at 110.76 per dollar after rising 0.4 percent Tuesday. The South African rand strengthened 0.1 percent after tumbling for two days. The Bloomberg Dollar Spot Index was little changed for a third straight day. The gauge is down 1.3 percent for the month.  Most of the action — if we can call it that(!) — has been in GBP, where the YouGov forecasts through their latest polls put a median probability that a Tory win will fall short of attaining a majority. When the headlines first hit the wires, Cable was trading in the mid 1.2800’s, but hit down through 1.2800, a series of attempted recoveries continue to run into sellers as election fears dictate. Added pressure seen through the month end demand seen in the EUR/GBP rate, but this pair is struggling around 0.8750, above which lies the strong resistance zone from 0.8800-0.8860. Cable support ahead of 1.2750 looks vulnerable though. Elsewhere, USD/JPY is struggling again, and the repeated moves below 111.00 test the resolve of buyers lining up ahead of 110.00-50. US Treasury yields are struggling, though no major sell off in sight as yet, but we have some key data to look to over Thursday and Friday, so the above support may hold in the interim. EU CPI was 0.1% off expectations at at 1.4%, but widely anticipated after the German release yesterday. The unemployment rate eased off to 9.4%, but the EUR is modestly supported today on cross rate flow.

In commodities, there is not too much activity across the commodity spectrum to look to as the global risk mood is pretty balanced at the present time. Near term USD weakness is also adding little influence also, but after the China PMIs overnight, which were a touch above expectations, we would have expected to see some stabilisation in the metals complex. Copper is back in the middle of the USD2.50-2.60 range, but remains heavy amid losses elsewhere. After outperforming yesterday, Nickel is down over 2.5% today, losing the 9000 level (since June last year (with Zinc not far behind at a little under 2.0% down on the day. Oil prices have been drifting sideways, but with WTI struggling to stay close to USD50.00. This has been exacerbated by a rise in Libyan production levels, which has pulled Light Texas under USD49.00 recently. Brent steady in the mid USD51.00’s, but dragged lower. Nb, APIs are tonight. Silver remains comfortably above the USD17.00 level, while Gold is struggling for upside despite the weakness in the greenback.

Looking at today’s calendar, we’ll get the May Chicago PMI which is expected to nudge down a little to 57.0, and also April pending home sales. The Fed’s Beige Bok is also due to be released today while the Fed’s Kaplan speaks at 8am BST.

US event claendar

  • 7am: MBA Mortgage Applications, prior 4.4%
  • 9:45am: Chicago Purchasing Manager, est. 57, prior 58.3
  • 10am: Pending Home Sales MoM, est. 0.5%, prior -0.8%; YoY, prior 0.5%
  • 2pm: U.S. Federal Reserve Releases Beige Book
  • 8am: Fed’s Kaplan Speaks in New York
  • 8:10pm: Fed’s Williams Speaks in Seoul

DB;s Jim Reid concludes the overnight wrap

Welcome to the last day of May, the month not the UK PM ahead of next week’s election. On the subject of UK politics I had the surreal experience of being in a hotel room in Berlin last night wifi-ing into my TV at home and seeing the leader of the opposition Jeremy Corbyn presenting a pot of homemade jam to the interviewer on the show he was on. He also boasted about his love of his allotment. Before I get too critical my recent attempt at making homemade hummus was a disaster and I should add that in a small herb garden we have outside our kitchen, this year’s basil has just died over the weekend in spite of much attempted love and affection. The herb garden cost us a fortune to install and was meant to be a lasting monument to our wedding and one that would provide us with many good harvests over the years ahead and remind us of our happy day. So far we’ve got the equivalent of about 5 pots of herbs out of it in nearly 4 years. They would have cost us about 5 pounds in the supermarket.

Like my basil, markets are wilting slightly at the moment. There’s nothing sinister around but it does feel like there is a slight loss of confidence as data momentum is stalling a touch and politics continues to be unpredictable.

Staying in the UK there’s been a bit of a shock poll overnight from YouGov/ Times that shows that the Conservative Party could lose 20 seats in next week’s election and with it the party’s current slim majority. The poll showed that the Conservative Party is on track to take 310 seats (versus 330 seats currently) with 326 seats needed for a majority while Labour may win 257 seats, up from 229. That central estimate therefore implies a hung parliament. The poll is YouGov’s first constituency-by-constituency estimate however it appears that the model allows for big variations and a large margin of error with it also suggesting that the Conservatives could take home as many as 345 seats and as few as 274. The model supposedly draws upon 50,000 respondents quizzed over the course of a week. Notwithstanding the complexity of the polling methodology and some of the large variations, the headlines saw Sterling immediately tumble around -0.50% and down to as low as $1.279, although it has bounced back a bit since and currently sits at -0.35%.

On this subject yesterday DB’s Mark Wall and Oliver Harvey published a note addressing some of the recent trends in the polls. Their central case is still for a market-friendly 50/60 seat Conservative majority, albeit just. In their note they look at four alternatives in the case of a less-than-50-seat majority outcome, none of which are market friendly. Indeed they go on to say that there is value in owning downside to GBP/USD with risk premia and outright vol way below other UK political event risks such as the May 2015 election, Brexit and Scottish independence referendum.

Staying with politics, with markets coming to terms with a possible Italian election as soon as this Autumn and President Trump taking to twitter yesterday to criticise Germanyfor not spending enough on NATO and the military, markets were on the back foot in Europe from the off with the Stoxx 600 closing -0.19%. The US session was probably best remembered for Amazon’s share price briefly passing $1,000 for the first time ever as the broader market was fairly dull with the S&P 500 (-0.12%) bringing to an end a run of 7 consecutive daily gains. Some mixed macro data and softish inflation reports on both sides of the pond (more on that shortly) didn’t help. On that the US economic surprise index continues to hover near 12-month lows while the global measure is at the lowest in over 6 months now. Adding to the softness was the steady slide for Oil prices which saw WTI touch as low as $49.03/bbl intraday and down nearly a Dollar from Friday.

Meanwhile most DM Bond markets (apart from Germany for good reasons and Italy for less good reasons) are approaching the tight end of their 3 month yield range. The data combined with some cautious words from the Fed’s Brainard yesterday saw 10y Treasury yields fall 3.7bps to 2.211% which compares to the 3 month range of 2.168%-2.626%. Gilts were nearly 2bps lower yesterday at 0.992% which is the low mark of the last 3 months with the high being 1.251%. OAT yields were 0.5bps lower at 0.725% which is also the bottom of the range (the high being 1.114%). It’s a similar story too in Spain, Portugal, Sweden, Switzerland and the Netherlands.

Meanwhile China’s official May PMIs were released just a few hours ago and the data is largely positive. The manufacturing reading was unchanged during the month at 51.2 however that did compare to expectations for a small decline to 51.0. The new orders component also held steady at 52.3 while the nonmanufacturing reading rose a solid 0.5pts to 54.5. Following a two-day break, Chinese bourses were initially higher following that data however have pared a good chunk of the move with the Shanghai Comp now just +0.07%. In fact momentum has faded across much of Asia with most bourses now flat to very modestly in the red, following a large positive start this morning.

Back to yesterday. Just on those Brainard comments, while the Fed official highlighted that she still expected a Fed rate hike soon she also noted that “I see some tension between signs that the economy is in the neighbourhood of full employment and indications that the tentative progress we had seen on inflation may be slowing”. She added “if the soft inflation data persist, that would be concerning and, ultimately, could lead me to reassess the appropriate path of policy”. It’s worth noting that while Brainard had typically been more upbeat of late, she is also well known for being one of the more dovish members on the FOMC.

Over at the ECB there was a bit of interest in a Reuters report which suggested that ECB officials are ready to drop the reference to downside risks in their statement at the meeting on June 8th and instead replace it with “largely balanced”. The article also suggested that the ECB will debate the removal of its easing bias. None of this appeared to be a great surprise though and the Euro was quick to pare back a small jump. Speaking of FX, yesterday our global FX strategists published their latest FX Blueprint. The most notable takeaway for us is their EUR/USD view which they expect to hold at the top end of the 1.05-1.15 range given European data surprises at positive extremes versus the US, a soft ECB tapering already appearing priced in, European equity valuations shifting to being expensive versus the US and unhedged equity inflows approaching previous peaks. On the US side the path of monetary policy looks mis-priced in their view while the euro has already overshot relative to short-term rate differentials. They expect the Euro to gravitate back to 1.10 over the summer. A link to their report can be found here.

Finally to the economic data now where yesterday the main focus was on the various inflation reports. In Germany headline CPI in May was revealed as falling a little more than expected (-0.2% mom vs. -0.1% expected) with the annual rate dipping six-tenths to +1.4% yoy as a result. In Spain a flat headline CPI reading for May saw the annual rate also fall six-tenths to +2.0% yoy which was a tenth lower than  expected. It’s worth noting that these readings come ahead of the Euro area CPI report today. Over in the US we learned that both personal income and spending rose +0.4% mom in April, as expected with the latter seeing the March reading also revised up three-tenths. The headline PCE deflator rose +0.2% mom lowering the annual rate by two tenths to +1.7% yoy. The more important core measure rose +0.2% mom also however base effects saw the annual rate fall one-tenth to +1.5% yoy and the lowest reading since December 2015.

Away from the inflation readings, in France Q1 GDP was revised up one-tenth to 0.4% qoq while the European Commission’s economic indicators for May showed a 0.5pt decline in the economic sentiment index to 109.2 in May, albeit still the second best reading since 2007. In the US the headline consumer confidence reading dipped 1.5pts to 117.9 in May and is now down 7pts from the March high. A decline in the forward-looking expectations index appeared to be the driver, fallings 2.8pts to a four-month low of 102.6. Elsewhere the Dallas Fed’s manufacturing survey for May saw a 0.4pt increase in the headline reading to 17.2, while finally the S&P/Case-Shiller house price index reported that house prices rose +0.9% mom in March.

Looking at today’s calendar, this morning in Europe we start with Germany where April retail sales data is due, before we then get the flash May CPI print in France and then back to Germany with May unemployment data. The UK follows that with April money and credit aggregates data before we then get the flash May CPI print for the Euro area where the market is expecting a decline in the headline to +1.5 yoy (from +1.9%) and core to +1.0% yoy (from +1.2%) as base effects associated with the Easter holiday timing roll out. Across the pond this afternoon we’ll get the May Chicago PMI which is expected to nudge down a little to 57.0, and also April pending home sales. The Fed’s Beige Bok is also due to be released today while the Fed’s Kaplan speaks at 1pm BST. Over at the ECB we are due to hear from Coeure this morning and Lautenschlaeger this afternoon.

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed UP 7.12 POINTS OR 0.23%   / /Hang Sang CLOSED DOWN 40.98 POINTS OR 0.16% The Nikkei closed DOWN 27.28 POINTS OR 0.14%/Australia’s all ordinaires  CLOSED UP  0.09%/Chinese yuan (ONSHORE) closed HUGELY  UP at 6.8118/Oil DOWN to 48.66 dollars per barrel for WTI and 51.00 for Brent. Stocks in Europe OPENED IN THE GREEN     ..Offshore yuan trades  6.7650 yuan to the dollar vs 6.8118 for onshore yuan. NOW  THE OFFSHORE IS HUGELY STRONGER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS HUGELY  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  /CHINA UNDERGOES INTERVENTION AGAIN LAST NIGHT DRIVING UP BOTH YUANS.

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA/SOUTH KOREA

b) REPORT ON JAPAN

c) REPORT ON CHINA

LAST NIGHT

Mainland China raises margin costs (overnight deposit rate)for offshore yuan to 65% forcing bears to capitulate: also interbank lending rate HIBOR rises to 21%

(courtesy zero hedge)

Chinese Currency Bears Crucified After Yuan Overnight Deposit Rate Hits 65%

Less than a week after China revised its Yuan fixing mechanism (and just one day after the Moody’s downgrade) to add a “counter cyclical factor” in what many suggested was a new mechanism for the PBOC to intervene in the currency, and push it higher at will to avoid giving Yuan bears the upper hand, overnight China engaged in its favorite activity: crushing Yuan bears by sending margin costs for offshore Yuan through the roof, forcing yet another historic short squeeze.

As Bloomberg reports, the offshore yuan soared the most in four months as funding costs surged “amid speculation policy makers were supporting the currency” following Moody’s surprise rating downgrade last week. The offshore Yuan jumped as much as 0.8% to 6.7677 per dollar, the highest level since Nov. 4, before easing to 6.7731. The currency has rallied 1.6 percent, the most in Asia, since Moody’s Investors Service cut its rating on China’s debt a week ago.

As shown below, and as reported in our morning wrap, a short squeeze launched by China’s central bank has slammed yuan bears, after Hibor, the overnight yuan interbank rate in Hong Kong, surged 15.7% points on Wednesday to 21.08% , the highest since Jan. 6…

while the offshore yuan’s overnight deposit rate jumped to a whopping 65%, the highest so far this year.

Having emerged as a favorite mechanism to “clear out shorts”, the PBOC has aggressively hiked offshore yuan funding costs before, with the overnight interbank loan rate in Hong Kong surging to 66.82% in January last year, and hitting again 23.68% last September, then surging again this January to 61.33% amid tightened capital controls on the mainland. Overnight it rose even more.

“The sharp gain in the offshore yuan is partially due to the unwinding of short yuan positions because the high offshore yuan funding cost has made the currency too expensive to short,” said Stephen Innes, senior Asia-Pacific currency trader at Oanda cited by Bloomberg. “Bears with short yuan positions would need to cut their exposure.”

Chinese government intervention has been speculated to be behind a scorching rally in China’s financial markets since Moody’s said May 24 the nation’s efforts to cut leverage would be insufficient to curb debt, which culminated with Friday’s announcement that Beijing would change 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. As a result both on and offshore Yuan rates have hit the highest levels since November.

 

To be sure, The increase in yuan funding costs is an increasing signal that authorities are intervening, said Nathan Chow, a Hong Kong-based economist at DBS Group Holdings Ltd. He speculated, as have others, that officials may be reacting to prevent a negative reaction from Moody’s downgrade.

Of course, China can intervene for only so long at which point the bears will return, but the real question is: just how worried is the Chinese central bank if it is engaging in such dramatic actions to prevent Yuan selling following what is mostly a symbolic downgrade, which merely told the world what everyone already knew, namely that China has too much debt – hardly news to anyone who trades the Chinese currency…

end

 

Fitch has now warned, Chinese search engine corporation, Baidu  with a negative watch claiming their involvement with WMP’s may cause their bonds to default

(courtesy zero hedge)

Fitch Warns Baidu Faces “Default Risk” Due To Growing Shadow Banking Business

Less than a week after Moody’s downgraded China’s sovereign credit rating, prompting an unprecedented currency response by the PBOC which as noted earlier resumed its crusade against Yuan shorts by sending CNH overnight deposit rates as high as 65%, on Wednesday another rating agency, Fitch, took aim at what many consider the weakest link in China’s financial system: the nearly $9 trillion in shadow banking “assets”, of which roughly $4 billion are Wealth Management Products.

Just as surprising was the target of Fitch’s wrath: none other than China’s tech giant Baidu, which Fitch put on “negative watch” warning that the company’s financial services division faced increased risk of default as a result of its growing reliance on shadow banking in general and Wealth Management Products (WMPs) in particlar. As reported previously, China’s popular WMPs offer a higher yielding alternative to conventional financial instruments by bundling together investments into money market bonds, corporate loans and many other products, all of which are usually a mystery to the buyer. As of 2016, China had nearly 30 trillion yuan outstanding in WMPs.

Baidu, China’s dominant search engine, has not been immune to the scramble for funding optionality provided by shadow banking alternatives, and has been getting into the WMP game by rapidly expanding its Financial Services Group, which Fitch says is increasing Baidu’s overall business risk.

While Baidu is not under obligation to pay the returned target on these products, a failure could be potentially damaging to Baidu’s reputation, Fitch warned.

“As with Chinese banks, Baidu does not need to set aside large capital against potential defaults on its WMPs … WMPs have become an alternative form of financing for projects or investments that would not qualify for bank loans,” Fitch said.

This could lead to an increased risk of default or “shadow bank run”, since many of the bundled assets are of poor quality and would not qualify for bank loans. The WMP warning from Fitch came less than two weeks after Moody’s also put Baidu’s corporate debt on watch for a potential downgrade. WMPs have been behind the staggering surge in total assets of Baidu’s Financial Services Group, which have more than doubled to CNY25 billion in the period ended April 2017.

Fitch also cautioned that while Baidu’s credit risk compared well with western internet peers such as eBay and Expedia, it was worse than its domestic competitors in China’s tech trinity, Alibaba and Tencent.

Meanwhile, as a result of declining operating metrics and growing leverage, Baidu profits have continued to slide at the technology company in recent quarters. It has struggled with making the transition to the world of mobile internet, and as the FT reports, suffered a highly publicised scandal last year as a result of its reliance on revenues from medical advertising — some of which comes from dubious medical outfits.

Key highlights from the Fitch report:

Fitch Ratings has placed China-based Baidu, Inc.’s (Baidu) ‘A’ Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) and ‘A’ foreign-currency senior unsecured rating on Rating Watch Negative (RWN).

 

The RWN reflects Fitch’s belief that the rapid growth in Baidu’s financial services activities under its wholly owned Financial Services Group (FSG) has increased Baidu’s overall business risk.

 

The risk profile of the financial services activities is significantly higher than the risk profile of Baidu’s core internet services, such as search services, online video and transaction services.

 

The RWN will be resolved when management has provided further information on FSG’s expansion plans, risk control policies and procedures, and capital structure.

 

We may affirm the ratings at their current levels or downgrade the ratings, although any downgrade is likely to be a single notch. Our review will take into account Baidu’s strong net cash position, which provides a cushion to fund potential losses in the FSG.

 

KEY RATING DRIVERS

 

Elevated Business Risk: The FSG sells wealth management products (WMPs), which are mostly fixed-income products with short tenors of up to 12 months, and operates a micro-lending business.

 

Baidu’s wealth management business is similar to that of many Chinese banks and WMPs are part of the shadow banking system in China. As with Chinese banks, Baidu does not need to set aside large capital against potential defaults on its WMPs.

 

Baidu sells WMPs to retail investors and reinvests most of the funds via a third-party trust company into money market investments, other fixed-income investments and corporate borrowers.

 

Although we understand that Baidu is not legally bound to pay the target return on the WMPs to investors, we believe that the potential damage to the company’s reputation – should the WMPs fail to achieve the target returns or have enough liquidity to meet maturities – is large enough that Baidu will honour the obligations under the WMPs.

 

We also believe that the risk profile of the micro-lending business is also much higher than Baidu’s core business, as its loans and cash credits to consumers are unsecured.

 

Rapidly Growth in WMPs: Baidu’s FSG business has grown from assets of CNY12 billion at end-2016 to CNY25 billion at end-March 2017, and we expect both FSG’s WMP assets and micro-loan book to continue to expanding very rapidly at least in the short-term. WMPs continue to proliferate in China as there is abundant liquidity, but a scarcity of high-yielding assets in which to invest.

 

WMPs have become an alternative form of financing for projects or investments that would not qualify for bank loans.

 

A large exposure to WMPs may make Baidu vulnerable to asset-quality shocks, especially as loss events rise.

 

Contingent Loss-absorption Capacity: Our review will address Baidu’s capacity to absorb losses in the FSG operations, to ensure that if FSG underperformed, the additional funding required would not be a big enough drain on cash from Baidu’s core operations to threaten the ‘A’ rating.

 

We believe that Baidu’s net cash position will be increasingly important as it will be the primary source of contingent loss-absorption capacity. At end-2016, Baidu’s net cash totalled CNY23 billion, excluding payables to WMP customers of CNY7 billion, which were funds from retail investors entrusted to Baidu to invest in WMPs.

4. EUROPEAN AFFAIRS

British pound/USA dollar  (Cable) tumbles after the latest poll indicates that the Tories will fall short of a majority government by 16 seats:

(courtesy zero hedge)

Cable Tumbles After New Poll Shows Tories Falling Short Of Majority By 16 Seats

With the UK elections fast approaching, what was until recently seen as an almost certain overall majority for Theresa May is rapidly slipping away, and moments ago according to Sam Coates, the Deputy Political Editor of the Times, a just released YouGov poll shows that the Conservatives would miss the number of seats needed for a majority (326) by roughly 16 seats, and in fact would lose 20 seats from the 330 the Tories had at the time of the dissolution of the 2015-2017 parliament.

Tonight: we reveal YouGov’s first seat by seat projection of the campaign – suggests Tories fall 16 seats short of overall majority

It took the algos a while to catch up, but cable is now down 50 pips since the time of the announcement, and continuing to slide as UK political chaos once again appears to be on the agenda.

That said there are some major caveats: according to Bloomberg, the poll allows for big variations and suggests Conservatives could get as many seats as 345, or as few as 274. BBG adds that the polling model based on 50,000 interviews over course of a week from panel brought together by YouGov. Finally, the central projection of model allows for wide margin of error.

In other words, just like with Brexit, the finaly number can be pretty much anything.

 

 

END

UK/EU

Ten days before the election and a 12 page document surfaces which outlines the demands to the UK for separation.

Theresa May is one angry woman:

(courtesy Mish Shedlock/Mishtalk)

 

“Painstakingly Detailed” EU Brexit Document Demands UK Payment For Everything

Authored by Mike Shedlock via MishTalk.com,

Brexit without a signed agreement looks increasingly likely as I suggested all along.

EU documents reveal “Painstaking Brexit Detail” down to the smallest item demanded by every nation.

The document also demands arbitration by the European Court of Justice (ECJ). These are both non-starters from the UK side. 

Just 10 days before the general election, the EU published two documents that will affect every person living in Britain for years to come. Despite being dropped into the maelstrom of an election caused by Brexit, there was hardly a murmur.

 

The documents were the most detailed positions yet from the EU’s chief negotiator, Michel Barnier, on the upcoming divorce talks with the UK.

 

In two policy papers, the bloc has elaborated its stance on the Brexit bill and citizens’ rights.

 

The 10-page paper on the bill does not put a price on the divorce, but sets out in painstaking detail all EU bodies with a vested interest in the spoils – 40 agencies, eight joint projects on new technologies and a panoply of funds agreed by all countries, from aid for refugees in Turkey to supporting peace in Colombia.

 

No detail is too small. Britain is even on the hook for funding teachers at the elite European schools that educate EU civil servants’ children.

 

On citizens’ rights, the EU spells out in greater detail the protections it wants to secure for nearly 5 million people on the wrong side of Brexit – 3.5 million EU nationals in the UK and 1.2 million Britons on the continent.

 

In a red rag to hardline Brexiters, the document stresses the European court of justice (ECJ) must have full jurisdiction for ruling on disputes about citizens’ rights, while the European commission ought to have full powers for monitoring whether the UK is upholding the bargain.

 

“On the side of the 27, people are a little cross and they have hardened their positions,” said Jean De Ruyt, a former EU ambassador. “It is a dangerous situation when you harden positions and you cannot do anything [because formal talks have not begun].”

 

The divide is stark on the Brexit bill. The European commission president, Jean-Claude Juncker, was shocked after May told him the UK had no obligation to pay anything on leaving the bloc.

 

Diplomats on the EU side say they cannot contemplate scaling back demands on the divorce. EU civil service pensions will not be bartered away to secure the UK’s post-Brexit contribution to the union’s seven-year budget, known as the multiannual financial framework (MFF), the EU diplomat said.

 

“I think our priority is that the UK will pay for everything,” they said. “Everything is a priority – we cannot trade pensions for the MFF.”

Ridiculous Demands

Britain’s Brexit Secretary David Davis has mocked the European Union over divorce talks after Brussels published its position papers for talks with the UK on crucial issues.

PressTV reports UK describes EU Brexit demands as ‘ridiculous’.

Davis said on Tuesday that the EU’s demands to protect its citizens’ rights in the UK were “ridiculously high”, giving its citizens greater rights in the UK than Britons have.

“Art of the Deal”

“Art of the Deal” tactics by the EU are not going to work.

The EU exports more to the UK than vice versa. Fishing rights in UK waters are in play. The lower British Pound will temper cost of any tariffs the EU places on UK exports. EU imports to UK will collapse.

It’s hard to imagine a worse negotiating stance than that taken by the EU.

By insisting the UK pay for everything with the ECJ as arbitrator, the EU will instead receive nothing.http://mishtalk.com/2017/05/30/eu-brexit-document-demands-uk-payment-for-everything 

Once again I repeat: Brexit Negotiations: Why Bother?

 

 

end

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

It seems that sanctions have helped not hurt Russia as its credit default swaps drop to 4 yr lows

(courtesy zero hedge)

Sanctions, What Sanctions? Russian Credit Risk Collapses To 4-Year Lows

After more than three years of US sanctions (and almost a year of constant attacks from the western media) Russian credit risk has collapsed to its lowest level since September 2013.

As Bloomberg notes, high demand for Russia’s dollar-denominated assets is driving the cost of the country’s credit-default swaps back near record lows…

Investors with a bullish view on the nation’s debt sell the default protection and collect regular payments for the instruments rather than buying the country’s dollar bonds and receiving interest.

After sanctions caused a dearth of new dollar securities, CDS have become an increasingly popular way for investors to gain exposure to Russia, according Societe Generale SA’s Rosbank PJSC unit.

While Russian 10Y bond yields have tumbled back to 4.00% – the lowest since the election, Chinese bond yields have exploded higher (up almost 100bps to 3.7% – the highest since Dec 2014).

Perhaps Rex Tillerson was right after all – despite the liberal media’s desperation to paint him as yet another ‘friend of Putin’ – when he questioned the efficacy of US sanctions on Russia this week during his confirmation hearings…

The long-serving executive said the Trump administration needs to review the efficacy of the sanctions and judge whether there might be better ways to try to constrain, or potentially woo, the Kremlin.

 

“Sanctions, in order to be implemented, do impact American business interests,” Mr. Tillerson said in response to questioning. “When sanctions are imposed, they are, by design, going to harm American business.”

 

“In protecting American interests.…sanctions are a powerful tool. Let’s design them well… Let’s ensure those sanctions are applied equally.”

END

6 .GLOBAL ISSUES

7. OIL ISSUES

as expected WTI crashes into the 47 dollar column due to OPEC compliance issues

(courtesy zero hedge)

WTI Crude Tumbles To $47 Handle As OPEC-Compliance Drops

Crude oil prices have retraced 50% of their pre-OPEC-deal hope rally and dropped back below $48 as JBC Energy reports OPEC compliance dropping to 92% in May from 96% in April.

Additionally, Bloomberg notes:OPEC-14 OUTPUT ROSE 370K B/D TO 32.5M B/D IN MAY: JBC ENERGY

“There continues to be considerable skepticism about the effectiveness of the production cuts,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a report.

 

“Oil prices are still trending towards weakness.”

WTI hit $47 and Brent dropped below $50.

 

Tonight brings inventory data from API.

end

 

This is just temporary!  WTI and gasoline jump after a bigger than normal crude draw down.

(courtesy zero hedge)

WTI/RBOB Jump After Biggest Crude Draw Since September

Libya production updates and weak economic data weighed on crude ahead of the API print tonight but as the data hit showing a bigger than expected crude draw (8th week in a row), both WTI and RBOB jumped higher. This was the biggest crude draw since Sept 2016.

 

API

  • Crude -8.67mm (-3mm exp)
  • Cushing -753k
  • Gasoline -1.726mm (-1.5mm exp)
  • Distillates +124k

If this holds for tomorrow’s DOE data, this is the 8th weekly crude draw in a row (and this week’s 8.67mm draw is the largest since Sept 2016)

 

We suspect month-end squaring also weighed on markets today but the bigger than expecte draws sent both WTI and RBOB higher in the after market…

END

8. EMERGING MARKET

end

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

Euro/USA   1.1220 UP .0048/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RAISING INTEREST RATES/EUROPE BOURSES IN THE GREEN 

USA/JAPAN YEN 110.80 DOWN 0.030(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2842 UP .0034 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

USA/CAN 1.3454 DOWN .0016 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 48 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1220; 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 7.12 POINTS OR .23%     / Hang Sang  CLOSED  DOWN 40.98 POINTS OR 0.16% /AUSTRALIA  CLOSED UP 0.09% / EUROPEAN BOURSES OPENED IN THE GREEN

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED DOWN 27.28 POINTS OR 0.14%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 40.98 POINTS OR 0.16%  / SHANGHAI CLOSED UP 7.12 POINTS OR .23%   /Australia BOURSE CLOSED UP 0.09% /Nikkei (Japan)CLOSED  DOWN 27.28 POINTS OR 0.24%    / INDIA’S SENSEX IN THE RED

Gold very early morning trading: 1264.20

silver:$17.31

Early WEDNESDAY morning USA 10 year bond yield: 2.222% !!! UP 2 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.889, UP 1  IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 97.50 UP 6  CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.06%  DOWN 5 in basis point(s) yield from TUESDAY 

JAPANESE BOND YIELD: +.049%  UP 1/2  in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.553%  UP 3 IN basis point yield from TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.203 UP 2   POINTS  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 65 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.304% UP 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.1237 UP .0065 (Euro UP 65 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.68 DOWN  0.161 (Yen UP 16 basis points/ 

Great Britain/USA 1.2879 UP 0.0071( POUND UP 71 basis points)

USA/Canada 1.3511 UP .0043 (Canadian dollar DOWN 43 basis points AS OIL FELL TO $49.36

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 65 basis points to trade at 1.1237

The Yen ROSE to 110.68 for a GAIN  of 16  Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE BY 71  basis points, trading at 1.2879/

The Canadian dollar FELL by 43 basis points to 1.3511,  WITH WTI OIL FALLING TO :  $48.34

The USA/Yuan closed at 6.8180/
the 10 yr Japanese bond yield closed at +.049% UP 1/2  IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 3  IN basis points from TUESDAY at 2.197% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.864  DOWN 3 in basis points on the day /

Your closing USA dollar index, 96,99 DOWN 28 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED DOWN 6.56 POINTS OR 0.09%
German Dax :CLOSED UP 16.38 POINTS OR 0.13% 
Paris Cac  CLOSED DOWN  22.31 POINTS OR 0.42% 
Spain IBEX CLOSED  UP 3.10 POINTS OR 0.03%

Italian MIB: CLOSED  DOWN 82.80 POINTS/OR 0.40%

The Dow closed DOWN 20.82 OR 0.10%

NASDAQ WAS closed DOWN 4.67 POINTS OR 0.08%  4.00 PM EST
WTI Oil price;  48.34 at 1:00 pm; 

Brent Oil: 50.76 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  56.75 DOWN 18/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD RISES T0  +0.304%  FOR THE 10 YR BOND  4.PM EST EST

END

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

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

WTI CRUDE OIL PRICE 5:00 PM:$48.36

BRENT: $51.12

USA 10 YR BOND YIELD: 2.204%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.866%

EURO/USA DOLLAR CROSS:  1.1239 UP .0067

USA/JAPANESE YEN:110.74  down 0.100

USA DOLLAR INDEX: 96.98  DOWN 30  cent(s) ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2888 : UP .0080  OR 80 BASIS POINTS.

Canadian dollar: 1.3498  down 28 BASIS pts 

German 10 yr bond yield at 5 pm: +.304%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Nasdaq Shrugs Off Commodity Carnage, Retail Crash In May For Longest Win Streak Since 2009

US Macro data at its worst since Feb 2016, 2017 lows for EPS Expectations, Record Highs for Nasdaq… “inconceivable

 

With 5 months down this year, Gold is the biggest winner and ‘no brainer’ banks are in the red…

 

May saw US Macro data collapse for the 2nd month in a row – the biggest sequential drop in US economic conditions since May 2011 – which was when QE2 was in full swing… (NOTE: Soft Data was the biggest driver of the drop in macro data)

 

But it’s not just ‘Murica that is struggling with ‘real’ data,  the entire world’s economic data is collapsing…

 

Bonds beat stocks in May..

 

“Sell In May” for some… but definitely not Nasdaq…

  • Nasdaq 100 up 7 months in a row – longest streak since Sept 2009; Gained 20% in those 7 months – best since April 2012
  • Nasdaq Composite up 7 months in a row – longest streak since May 2013; Gained 20% in those 7 months – biggest rise since April 2012
  • FANG up over 7% this month (cap-weighted) – best since Oct 2015; up 6 months in a row.
  • Small Caps worst month since Oct 2016

Nasdaq was ramped into the green for the week…

 

Banks are down for the 3rd month in a row but the barbell trade is now well and truly in place with Utes and Tech surging together (as Retail crashes – worst month since Jan 2014)…

 

JPMorgan and Goldman Sachs were the worst performers…big banks worst month since Jan 2016

 

May saw a non-stop slide in market breadth…

 

VIX dared to rise above 11 briefly today…

 

Alphabet made a run for $1000 around the open, but failed…Today was FANG stocks’ worst day in 2 weeks (first losing day in 2 weeks)

 

Treasury yields extended their decline post-FOMC Minutes…

 

Treasury yields ended May lower (apart from 2Y’s modest 1bps rise)…

 

With the yield curve (2s10s) flattening for the 6th straight month – and its lowest monthly close since September 2016…Trumpflation is over

 

NOTE that since shortly after the initial chaos of Trump’s election, G3 central banks have been throwing money at the problem as never before and that is lifting stocks (Nasdaq highest beta) and bonds (yield curve collapsing)…

 

The Dollar Index tumbled today…

 

To close at its lowest since Nov 4th 2016…

 

May was a bloodbath for commodities…3rd monthly drop in a row (most notably China-related ones)

 

Crude fell for the 3rd straight month (and gold gained for the 5th straight month)

 

It’s been an ugly few days for crude…

 

And finally, Bitcoin surged 76% in May – its best month since Nov 2013…

 

Bonus Chart: This has not ended well…

Here is every time in past decade when big-cap tech reached a new high and barely half of small-cap stocks were in a bull mkt.

end

 

No surprise here;  Trump has reportedly decided to pull out of the Paris climate accord

(courtesy zero hedge)

Trump Has Reportedly Decided To Pull Out Of Paris Climate Accord

In yet another blow to President Obama’s utopian legacy, Axios is reporting that two sources with direct knowledge of the decision confirm President Trump has made his decision to withdraw from the Paris climate accord.

Having tweeted last week – after upsetting Merkel et al. at the G7…

I will make my final decision on the Paris Accord next week!

It appears Trump has made his decision. Axios notes that details on how the withdrawal will be executed are being worked out by a small team including EPA Administrator Scott Pruitt. They’re deciding on whether to initiate a full, formal withdrawal — which could take 3 years — or exit the underlying United Nations climate change treaty, which would be faster but more extreme.

Trump’s decision reportedly follows a letter from 22 Republican Senators (including Mitch McConnell) that called for a clean exit had reinforced Trump’s instincts to withdraw, and the president had been telling confidants over the past week that he was going to pull out.

“Because of existing provisions within the Clean Air Act and others embedded in the Paris Agreement, remaining in it would subject the United States to significant litigation risk that could upend your Administration’s ability to fulfill its goal of rescinding the Clean Power Plan. Accordingly, we strongly encourage you to make a clean break from the Paris Agreement.”

Trump joins Nicaragua and Syria as the 3 nations that are not supportive of the climate accord, and as Axios concludes, pulling out of Paris is the biggest thing Trump could do to unravel Obama’s climate legacy. It sends a combative signal to the rest of the world that America doesn’t prioritize climate change and threatens to unravel the ambition of the entire deal.

‘Soft’ Data Slammed To 6-Month Lows As Chicago PMI Tumbles

Employment, new orders, and production all slowed notably in May according to the MNI Chicago PMI report. Printing at 55.2 – below the lowest expectation – this is the lowest level since January’s collapse.

Forecast range 56 – 62 from 34 economists surveyed… oops!

Breakdown:

  • Prices paid rose at a slower pace, signaling expansion
  • New orders rose at a slower pace, signaling expansion
  • Employment rose at a slower pace, signaling expansion
  • Inventories rose at a faster pace, signaling expansion
  • Supplier deliveries rose at a faster pace, signaling expansion
  • Production rose at a slower pace, signaling expansion
  • Order backlogs fell at a slower pace, signaling contraction
  • Business activity has been positive for 12 months over the past year.
  • Number of components rising vs last month: 3

The continued disappontment in ‘soft’ data is becoming serious…

Six-month lows in Animal spirits?

 end

What an absolute farce: Chicago PMI changes its mind and corrects earlier reported dismal data;

(courtesy zerohedge)

 

Stocks Rebound As Chicago PMI Changes Its Mind, “Corrects” Earlier Dismal Data To Highest Since 2014

What a total farce…

After reporting a dismal 4-month low drop in Chicago PMI this morning which sparked a decent reality check drop in stocks, they have changed their mind…

0945ET – U.S. MAY MNI CHICAGO REPORT BUSINESS INDEX AT 55.2; EST 57.0 – lowest since Jan 2017

1121ET – CORRECT: U.S. MAY MNI CHICAGO REPORT BUSINESS INDEX AT 59.4 – highest since Nov 2014.

And so stocks are rebounding…

 

Here is the original note…

 

And now employment has been revised dramatically higher….from 53.7 to 57.1

“Fake Data”?

end

 

The USA banks are now having trouble earning money as revenues tumble 15% with respect to Bank of America and JPMorgan.  Both blame the flattening of the yield curve and low volatility

(courtesy zero hedge)

Banks Tumble After BofA, JPM Warn Revenue Will Be Down As Much As 15%

The collapse in volatility is finally trickling up to the big banks.

Moments ago, JPM CFO Marianne Lake speaking at a Deutsche Bank conference in New York, warned that contrary to expectations for an ongoing rebound in revenue and profits, the bank’s second quarter revenue has been 15% lower from a year ago. And while she said that US economic figures are “solid, not stellar”, she blamed the same thing that has been the nightmare of daytraders everywhere: collapsing volatility. 

From the newswires

  • JPMORGAN 2Q MARKET REVENUE HAS BEEN DOWN ABOUT 15 PERCENT FROM YEAR EARLIER, CFO SAYS
  • JPMORGAN CFO SAYS MARKET REVENUE LOWER ON LOWER VOLATILITY THAN YEAR EARLIER
  • JPMORGAN CFO: LOW RATES, LOW VOLATILITY HAVE LEAD TO LOW CLIENT FLOWS
  • JPMORGAN CFO: DOESN’T SEE REASON 2Q TREND WOULD CHANGE IN JUNE

It wasn’t just JPM: while it did not give a specific range, Bank of America CEO Brian Moynihan also warned that Q2 trading revenues will be lower than a year ago.

  • BANK OF AMERICA 2ND QTR TRADING REVENUE WILL BE LOWER THAN A YEAR AGO, CEO SAYS

The news has hit the bank sector, which was not expecting this early guidance cut, with Goldman sliding more than 2% in early trading.

And with absolute yields levels plumbing 2017 lows and the yield curve at its flattest in 8 months…

Bank are getting hit by a double whammy of not only the flattening yield curve, but the prospect of lower revenues.

It is still not too late sell in May…

end

It seems that the housing sector in the uSA is in disarray:  pending home sales are now crashing due to price and inventory:

(courtesy zero hedge)

Pending Home Sales Crash Most In 3 Years, Hit By “Double Whammy” Of Price, Inventory

Signed contracts in April tumbled 5.4% YoY (NSA). This is the biggest drop in pending home sales since August 2014 and comes on the back of last week’s disappointing housing ‘recovery’ data as perhaps Fed- and Trump-driven mortgage-rate rises have finally hit the American ‘pocketbook’.

This is the second monthly drop in a row (-1.3% MoM) and comes with downward revisions for the last few months.

As Bloomberg notes, the back-to-back declines in contract signings were the first since May and June of last year and underscore how limited choices of properties are impinging on the market’s progress by boosting prices and creating affordability issues.

Ironically, NAR’s Larry Yun blames weak contract activity this spring on significantly weak supply levels spurring deteriorating affordability conditions.

“Much of the country for the second straight month saw a pullback in pending sales as the rate of new listings continues to lag the quicker pace of homes coming off the market,” he said.

 

 “Realtors are indicating that foot traffic is higher than a year ago, but it’s obviously not translating to more sales.” 

 

“Prospective buyers are feeling the double whammy this spring of inventory that’s down 9.0 percent from a year ago and price appreciation that’s much faster than any rise they’ve likely seen in their income.”

US housing data is at its worst since May 2016…

 

So what happens next?

This should be fun:  Comey is to testify before the House and state publicly that Trump did push him to end Flynn’s Russian probe:

(courtesy zero hedge)

Comey To Testify Publicly That “Trump Did Push Him To End” Flynn’s Russia Probe

The showdown between Donald Trump and James Comey will be televised after all.

According to CNN, the former FBI director plans to testify publicly in the Senate as early as next week to confirm bombshell accusations that President Donald Trump “did push Comey to end his investigation into a top Trump aide’s ties to Russia.”

As a reminder, it was allegations that Trump was urging the former FBI director to end the FBI’s ongoing probe into Michael Flynn (all allegedly written down in Comey’s notebook, which so far few if anyone besides Comey has seen), that prompted the worst stock market selloff in mid-May, when some interpreted Trump’s actions as an attempt to obstruct justice, with some speculating that Trump could even be impeached if Comey’s allegations were confirmed.

As CNN adds, “final details are still being worked out and no official date for his testimony has been set. Comey is expected to appear before the Senate Intelligence Committee, which is investigating possible connections between the Trump campaign and Russia during last year’s presidential election.” Additionally, it emerged that Comey has spoken privately with Special Counsel Robert Mueller III to work out the parameters for his testimony to ensure there are no legal entanglements as a result of his public account, a source said. Comey will likely sit down with Mueller, a longtime colleague at the Justice Department, for a formal interview only after his public testimony.

 

When he testifies, Comey is unlikely to be willing to discuss in any detail the FBI’s investigation into the charges of possible collusion between Russia and the Trump campaign — the centerpiece of the probe, this source said. But he appears eager to discuss his tense interactions with Trump before his firing, which have now spurred allegations that the president may have tried to obstruct the investigation. If it happens, Comey’s public testimony promises to be a dramatic chapter in the months-long controversy, and it will likely bring even more intense scrutiny to an investigation that Trump has repeatedly denounced as a “witch hunt.”

Comey’s termination unleashed a firestorm of press coverage, with reports emerging in the New York Times, WaPo and elsewhere about the confrontations with Trump that Comey memorialized in memos afterward. A week after he took office in January, Trump allegedly demanded Comey’s “loyalty” if he kept him on as FBI director, and he urged Comey to drop his ongoing investigation into Michael Flynn, Trump’s fired national security adviser, in a separate, one-on-one meeting.

“The bottom line is he’s going to testify,” the CNN source said. “He’s happy to testify, and he’s happy to cooperate.”

END

Well  that about does it for tonight

I will see you tomorrow night

 

h

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3 comments

  1. KansasCrude · · Reply

    What a freaking joke the Crimex is this EFP scam is a deal breaker. All the scam artists are now lining up every month to suck some cream off the trough. What a travesty…RIckarts with the same Chinese market rigging argument that’s been used for at least the last 5 years. JOKE

    Harvey getting harder to follow the bouncing ball again to many loose ends. You’re a saint for doing this but seriously it needs editing the separation of gold and silver activity is confusing and counter productive. Need to consolidate please

    Like

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