June 6/Gold and silver shoot up on Qatari blockade/For 3 consecutive days, the amount standing for physical silver has increased on each of those 3 days/South Africa officially moves into recession/In the uSA a poor JOLTS number and Macy’s warns!!/

GOLD: $1294.40  up $15.10

Silver: $17.68  up 13  cent(s)

Closing access prices:

Gold $1294.30

silver: $17.68

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: $1290.47 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  1284.15

PREMIUM FIRST FIX:  $6.32

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SECOND SHANGHAI GOLD FIX: $1296.93

NY GOLD PRICE AT THE EXACT SAME TIME: 1287.15

Premium of Shanghai 2nd fix/NY:$9.78

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1287.85

NY PRICING AT THE EXACT SAME TIME: $1288.50

LONDON SECOND GOLD FIX  10 AM: $1293.50

NY PRICING AT THE EXACT SAME TIME. $1294.00

For comex gold:

JUNE/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH:  15 NOTICE(S) FOR 1500  OZ. 

 TOTAL NOTICES SO FAR: 1927 FOR 192700 OZ    (5.9937 TONNES)

For silver:

For silver: JUNE

 10 NOTICES FILED TODAY FOR 50,000  OZ/

Total number of notices filed so far this month: 486 for 3,430,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

END

 

Gold and silver had a good day spurred by the problems in the middle east i.e. the blockade on Qatar.

Over at the comex, the amount standing for the silver metal again rose in similar fashion to what we witnessed last month and also in April.  We certainly have a determined entity trying to get its hands on whatever silver is available.

Let us have a look at the data for today

.

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This is where we are heading:  (JB Slear/Jim Sinclair)

 

According to JB Slear, this is what the future holds. Why should I write words. Get into the cellar as fast as you can!

Jim

unnamed

 

 

 

In silver, the total open interest FELL BY 1186  contract(s) DOWN to 205,495 DESPITE THE RISE IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (UP 6 CENT(S).   In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.0290 BILLION TO BE EXACT or 147% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 10 NOTICE(S) FOR 50,000  OZ OF SILVER

In gold, the total comex gold ROSE BY ANOTHER SOLID 4,566 contracts WITH THE TINY  RISE IN THE PRICE OF GOLD ($3.10 with YESTERDAY’S TRADING). The total gold OI stands at 467,718 contracts.

we had 15 notice(s) filed upon for 1500 oz of gold.

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

GLD:

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

Inventory rests tonight: 851.00 tonnes

.

SLV

Today: no changes in inventory/

THE SLV Inventory rests at: 339.605 million oz

end

.

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

1. Today, we had the open interest in silver FELL BY 1186 contracts DOWN TO 205,495 (AND now A LITTLE  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  ( UP 6 CENTS). NO QUESTION THAT WE AGAIN HAD FAILED SHORT COVERING BY THE BANKERS ALONG WITH CONSIDERABLE BANKER DELTA HEDGING WITH THE STRONGER PERFORMANCE FROM SILVER .

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 10.47 POINTS OR 0.34%   / /Hang Sang CLOSED UP 134.15 POINTS OR 0.52% The Nikkei closed DOWN 190.92 POINTS OR 0.95%/Australia’s all ordinaires  CLOSED DOWN 1.450%/Chinese yuan (ONSHORE) closed UP at 6.7960/Oil DOWN to 47.25 dollars per barrel for WTI and 49.28 for Brent. Stocks in Europe OPENED ALL IN THE RED      ..Offshore yuan trades  6.7960 yuan to the dollar vs 6.7960 for onshore yuan. NOW  THE OFFSHORE IS MUCH WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY WEAK DOLLAR. CHINA NOT HAPPY WITH THE NEWS THAT ITS DEBT HAS BEEN DOWNGRADED

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA

b) REPORT ON JAPAN

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

ECB/GERMANY

The ECB is running out of long dated German bunds to purchase as they are now contemplating getting out of the QE game:

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

QATAR

The Qatari Riyal peg to the dollar breaks.  Trouble ahead!

(courtesy zerohedge)

ii)IT BEGINS!! NAVAL BLOCKADE ON QATAR

( ZERO HEDGE)

6 .GLOBAL ISSUES

 

7. OIL ISSUES

i)The real reason for the Qatar blacklist:  their dominance in the natural/liquefied gas business:

a must read…

( zero hedge)

ii) WTI and Gasoline both drop after a huge gasoline buildup

( zero hedge)

8. EMERGING MARKET

SOUTH AFRICA

South Africa , with today’s release showing that it’s first quarter GDP tumbled .7%. This is the second straight quarter of negative GDP growth and thus by definition South Africa is now officially in recession:

(courtesy zero hedge)

9.   PHYSICAL MARKETS

i)Gold trading early this morning: the reason for gold’s rise: Qatar!!
( zero hedge)

ii)Ridiculous! Bitcoin trading near $2900.00 per coin

( zero hedge)

iii)We brought you the story last night with the charging of this junior trader (from Deutsche bank) and how he spoofed the precious metals/  The fun will begin as they go up the ladder  (Harvey:  Bank A = Deutsche bank)

( zero hedge)

iv)Singapore’s strategy of becoming a gold hub is paying off

( Soh/Business Times, Singapore)

10. USA Stories

 

i)We now find out that the Democrats are plotting to  filibuster the debt ceiling debate and shut down government

( zero hedge)

ii)After dumping USA treasuries these past few years, China announces that yields on USA treasuries is more attractive than other sovereigns.  This caused bond yields to tumble to 2017

( zero hedge)

( zero hedge)

iv)Macy’s shares tumble after issuing another profit warning.  This is an excellent Bellwether indicator as to how the uSA economy is behaving

( zero hedge)

 

Let us head over to the comex:

The total gold comex open interest ROSE BY A STRONG 4,566 CONTRACTS UP  to an OI level of 467,718 WITH THE RISE IN THE PRICE OF GOLD ($3.10 with YESTERDAY’S trading). The bankers were supplying the short comex gold paper and the longs just gobbled them up with reckless abandon.

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  HUGE LOSS OF 123 contract(s) FALLING TO  2669.  We had 57 notices filed yesterday so we LOST ANOTHER 66  contracts or an additional 6,600 oz will  NOT stand for delivery in this very active delivery month of June AND WITHOUT A SHADOW OF DOUBT THESE 66 CONTRACTS RECEIVED AN EFP CONTRACT WHICH ENTITLES THEM TO A FIAT BONUS PLUS A FUTURE GOLD CONTRACT/OR A LONG CALL OR MOST LIKELY A LONDON BASED FORWARD GOLD CONTRACT. THESE EFP’S ARE PRIVATE OFF COMEX TRANSACTIONS. THE STUBBORN LONGS WHO ARE REMAINING STOIC ARE SO FAR REFUSING THAT FIAT BONUS 

Below is a little background on the EFP contracts  initiated by our bankers:
We now know for certain 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.

The non active July contract LOST 12 contracts to stand at 2336 contracts. The next big active month is August and here the OI gained 3990 contracts up to 344,217.

We had 15 notice(s) filed upon today for 1500 oz

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And now for the wild silver comex results.  Total silver OI FELL BY 1186 contracts FROM  206,681 DOWN TO 205,495 DESPITE YESTERDAY’S 6 CENT GAIN.  IT SURE LOOKS LIKE OUR BANKERS ARE DESPERATELY TRYING TO COVER THEIR SHORTS IN SILVER BUT TO NO AVAIL. 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.
We are in the NON active delivery month is JUNE  Here the open interest LOST 221 contract(s) FALLING TO 20 contracts. We had 229 notices served upon yesterday so we AGAIN GAINED 8 CONTRACTS OR AN ADDITIONAL  40,000 OZ OF SILVER WILL STAND FOR DELIVERY IN THIS NON ACTIVE DELIVERY MONTH OF JUNE.  IT SEEMS WE ARE CONTINUING WHERE WE LEFT OFF LAST MONTH IN SILVER AS INVESTORS ARE WILLING TO FORGO THE FIAT PROFIT JUST TO SECURE PHYSICAL SILVER METAL.

The next big active month will be July and here the OI LOST 3148 contracts DOWN to 131,578 as we start to wind down before first day notice Friday, June 30.  July will be interesting to watch in silver as we witness fewer players pitching for EFP contracts than with gold.

The month of August, a non active month picked up 9 contracts to stand at 11.  The next big active delivery month for silver will be September and here the OI already jumped by another 1475 contracts up to 35,305.

I will give you a snapshot as to what happened last year at the exact number of days before first day notice:

June 6.2016:  194,908 contracts were still outstanding vs 132,053 contracts June 5.2017

At the conclusion of June, the final standing for physical silver was 3,080,000 oz and we have already surpassed that number this year  (3,435,000 oz).

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 10 notice(s) filed for 50,000 oz for the June 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 134,153 contracts which is FAIR

Yesterday’s confirmed volume was 144,281 contracts  which is FAIR

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for JUNE
 June 6/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 nil oz
Deposits to the Dealer Inventory in oz nil  oz

 

Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
 
15 notice(s)
1500 OZ
No of oz to be served (notices)
2654 contracts
265,400 oz
Total monthly oz gold served (contracts) so far this month
1927 notices
192,700 oz
5.9937 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   65,073.4 oz
Today we HAD  1 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 0  customer deposit(s):
total customer deposits; nil  oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil  oz
 we had 2 adjustments:
i) out of Brinks:  27,352.819 oz was adjusted out of the dealer and into the customer account
ii) Out of Scotia;  17,728.481 oz was adjusted out of the dealer and this landed into the customer account of Scotia
For JUNE:

Today, 0 notice(s) were issued from JPMorgan dealer account and 2 notices were issued from their client or customer account. The total of all issuance by all participants equates to 15  contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 8 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 (1927) x 100 oz or 192,700 oz, to which we add the difference between the open interest for the front month of JUNE (2669 contracts) minus the number of notices served upon today (15) x 100 oz per contract equals 458,100  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 (1927) x 100 oz  or ounces + {(2669)OI for the front month  minus the number of  notices served upon today (15) x 100 oz which equals 458,100 oz standing in this  active delivery month of JUNE  (14.2488 tonnes)
.
WE LOST 66 CONTRACTS OR AN ADDITIONAL 6600 OZ WILL NOT STAND AT THE COMEX.  HOWEVER THESE GUYS WERE GIVEN EFP CONTRACTS WHICH ENTITLES THEM TO A FIAT BONUS PLUS A FUTURES GOLD CONTRACT OR A LONG CALL ON A GOLD CONTRACT OR MOST LIKELY A LONDON BASED GOLD FORWARD CONTRACT.  
 
 
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Total dealer inventory 900,191.813 or 27.99 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,854,476.09 or 275.41 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 275.41 tonnes for a  loss of 28  tonnes over that period.  Since August 8/2016 we have lost 79 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
 
IN THE LAST 12 MONTHS  79 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE MAY DELIVERY MONTH
June INITIAL standings
 June 6. 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
19,971.070 oz
 CNT
Deposits to the Dealer Inventory
NIL oz
Deposits to the Customer Inventory 
 929,196.530 oz
JPMORGAN
HSBC
No of oz served today (contracts)
 10 CONTRACT(S)
(50,000 OZ)
No of oz to be served (notices)
10 contracts
( 50,000 oz)
Total monthly oz silver served (contracts) 686 contracts (3,430,000 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 1,980,528.6 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: NIL  oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 1 customer withdrawal(s):
i) Out of CNT:  19,971.07 oz
TOTAL CUSTOMER WITHDRAWALS:  19,971.07  oz
 We had 2 Customer deposit(s):
i) Into JPMorgan:  629,955.500  oz
ii) Into HSBC:  299,241,03 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  929,196.53 oz
 
 we had 0 adjustment(s)
The total number of notices filed today for the JUNE. contract month is represented by 10 contract(s) for 50,000 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 686 x 5,000 oz  = 3,430,000 oz to which we add the difference between the open interest for the front month of JUNE (20) and the number of notices served upon today (10) x 5000 oz equals the number of ounces standing

 

.
 
Thus the initial standings for silver for the JUNE contract month:  686(notices served so far)x 5000 oz  + OI for front month of JUNE.(20 ) -number of notices served upon today (10)x 5000 oz  equals  3,480,000 oz  of silver standing for the JUNE contract month.
We gained 8 contracts or an additional 40,000 oz will stand for delivery. WE ALSO HAD 0 EFP CONTRACTS THAT WERE ISSUED AS THE LONGS REFUSED A FIAT BONUS: THEY WANT THEIR PHYSICAL SILVER.
 
 
Volumes: for silver comex
 
Today the estimated volume was 32,313 which is fair
Yesterday’s  confirmed volume was 55,270 contracts which is excellent
YESTERDAY’S ESTIMATED VOLUME OF 55,270 CONTRACTS EQUATES TO 276 MILLION OZ OF SILVER OR 39% 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:  34.315 million (close to record low inventory  
Total number of dealer and customer silver:   204.541 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 6.2 percent to NAV usa funds and Negative 6.2% to NAV for Cdn funds!!!! 
Percentage of fund in gold 61.9%
Percentage of fund in silver:38.0%
cash .+0.1%( June 6/2017) 
 
 
2. Sprott silver fund (PSLV): Premium RISES TO   -.00%!!!! NAV (june 6/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES to -0.09% to NAV  (June 6/2017 )
Note: Sprott silver trust back  into POSITIVE territory at -0.00% /Sprott physical gold trust is back into NEGATIVE/ territory at -0.09%/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

June 6/ no changes in inventory at the GLD/Inventory remains at 851.00 tonnes

June 5.2017/no changes at the GLD/Inventory remain at 851.00 tonnes

June 2/2017/a huge deposit of 3.55 tonnes of gold into the GLD/Inventory rests at 851.00 tonnes

June 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 847.45 TONNES

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

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
June 6 /2017/ Inventory rests tonight at 851.00 tonnes
*IN LAST 166 TRADING DAYS: 97.13 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 109 TRADING DAYS: A NET  30,3 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET  55.64 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

June 6/no change in inventory at the SLV/Inventory rests at 339.605 million oz.

June 5/a huge change at the SLV/a withdrawal of 1.371 million oz /inventory rests at 339.605 million oz/

June 2/no change in silver inventory at the SLV/Inventory rests at 340.976 million oz/

June 1/NO CHANGE IN INVENTORY AT THE SLV/INVENTORY RESTS AT 340.976 MILLION OZ

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??)

June 5.2017: Inventory 339.605  million oz
 end

Major gold/silver trading/commentaries for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Deposit Bail In Risk as Spanish Bank’s Stocks Crash

– Deposit bail in risk as stocks and bonds of Spanish bank –  Banco Popular – crash

– Banco Popular stock crashes most on record – down 63% this year to 34 euro cents

– Spanish bank tells employees – “Don’t panic”

– Risk of Spanish banking crisis as Banco Popular credit curve inverts

– Banco Popular needs to find at least €4 billion more capital – analysts

– Deposits over €100,000 (euro) vulnerable to bail-in

– EU, U.S., UK push for bank ‘bail-ins’ poses risks to depositors

Source: Google

Banco Popular’s shares crashed another 17 per cent yesterday to record lows amid concerns the Spanish bank may have to be “wound down” and could see bail-ins of investors and depositors.

There are increasing fears that there is no buyer for the bank and this saw its share price dropped to €0.34 (34 euro cents). The bank’s stocks had already fallen nearly 50 per cent in the last week and is down 63% this year.

Shares also fell sharply last Friday as hoped for buyers dropped out of the Banco Popular auction process. Final bids are due this week and international publications have reported that Spanish banking rivals BBVA and Bankia had been interested.

Source: Zero Hedge

Analysts estimate that the bank needs at least €4 billion more capital and it is burdened with a likely insurmountable €37 billion pile of toxic property loans and assets.

Banco Popular is Spain’s sixth-largest bank and there is a debate as to whether it is systematically important. It likely is as it has the largest amount of small business customers in Spain. These companies are the backbone of the Spanish economy and now vulnerable to having their deposits over €100,000 confiscated in bank bail-ins.

The bank is also used by many of Spain’s wealthy catholic individuals and institutions including one of Spain’s most influential institutions – Opus Dei.

The badly debt laden bank may have to liquidate as neither a buyer nor a new capital raise appear likely. It now looks possible that Spain may be the first nation to have the EU’s new BRRD “bail-in” insolvency directive involving bank “resolution” imposed on it.

According to Bloomberg:

“Resolution is the process of restructuring a bank that’s too systemically important to be liquidated in a normal insolvency process. If a supervisor determines that a lender is failing or likely to fail, it gets turned over to the resolution authority.

For major banks in the euro area, that’s the Single Resolution Board, led by Elke Koenig. The restructuring of the bank is supposed to be funded primarily by imposing losses on creditors, including senior bondholders if necessary.”

It also involves depositors of up to €100,000 suffering “haircuts” and having their deposits bailed-in.

Deposit bail in is one of the greatest financial risks to investors, savers and indeed companies internationally today. Yet it remains the most poorly covered financial risk and is largely ignored by financial advisers, brokers and not surprisingly governments and banks.

The bail-in regime and confiscating deposits, especially from job creating companies, would be extremely deflationary and would likely contribute to severe recessions. This is something we warned of when we conducted our extensive research on the developing global bail-in regimes after the Cyprus bail-ins in 2013.

Diversification of deposits remains vital and another important way to protect against deposit bail in is diversification into physical gold. Owning gold bullion coins and bars in allocated and segregated storage in the safest vaults in the world is prudent given the deposit bail in risk.

Protecting-Your-Savings-In-The-Coming-Bail-In-EraFree Bail-in Guide

News and Commentary

Gold Seen Rising to Four-Year High as Fed ‘Gentle’ on Rates (Bloomberg.com)

Gold steady near late April highs as Asian stocks slip (Reuters.com)

Asian markets slip as investors turn cautious (MarketWatch.com)

Wild swings, lack of liquidity keeping U.S. funds out of bitcoin (Reuters.com)

Fretting over savings, savers in Asia turn to bitcoin (Reuters.com)


Image Source

Investors Should Prepare for Flight to Gold – Deutsche Bank (CommodityTradeMantra.com)

Deutsche Bank Calculates The “Fair Value Of Gold” And The Answer Is… (ZeroHedge.com)

Gold And Silver Price Seasonality…June Worst Month? (Gold-Eagle.com)

Italy faces borrowing shock when ECB removes support, warns Pimco (Telegraph.co.uk)

One of Trump’s potential Fed picks is advocate of negative interest rates (Bloomberg.com)

 

 

end

Gold trading early this morning: the reason for gold’s rise: Qatar!!
(courtesy zero hedge)

Qatarstrophe Sends Gold Near Post-Election Highs As Crude Tests 2017 Lows

With Treasury yields at their lowest since the election, it appears a shift towards safe-havens (or Trumpflation unwinds) is well underway. Gold is nearing $1300 this morning – its highest since the election. WTI Crude has sunk back to a $47 handle, ignoring dollar weakness as the Qatarstrophe raises more doubts about OPEC coordination.

A weaker dollar is helping precious metals (and Bitcoin) but not crude – a break in the relationship regime we have seen this year.

As UBS notes, gold is extending its recovery, creeping closer towards our target of $1300, supported
by recent developments across the macro space. The pullback in US real rates and the dollar have clearly been key
positive influences for gold prices of late. Gold’s strength is in the face of equities
hovering at all-time highs. The disappointment around the US employment report for
May triggered the move towards the latest highs in gold – although our US economists
do not think this derails the Fed from hiking rates next week, it does introduce a bit
more uncertainty around Fed expectations later this year. (See Mild slowing in payrolls
but hints of less slack)

end

 

Ridiculous! Bitcoin trading near $2900.00 per coin

(courtesy zero hedge)

 

“It’s Pure Frenzy” – Bitcoin Extends Overnight Gains, Rises 200% Year-To-Date

More Japanese exuberance overnight (as USDJPY and Nikkei stumbled hard) sent Bitcoin to fresh record highs, blowing through $2800 and nearing $2900 this morning – now up 200% year-to-date.

It seems the momentum trade has caught the eye of Mrs. Watanabe…

But as we noted overnight, it’s not just Bitcoin that is soaring, Bloomberg reports that Remixpoint Co., Infoteria Corp. and Fisco Ltd., have all seen volatile swings in their share prices after announcing businesses related to digital currencies.

Remixpoint, which has more than doubled since tying up with Peach Aviation Ltd. to let customers pay for tickets with bitcoin, fell as much as 9 percent in Tokyo on Tuesday.

 

Infoteria, up more than 50 percent in the past month, is testing ways to let shareholders vote by proxy using blockchain, bitcoin’s underlying technology.

 

Fisco, a financial information services provider, began operating a bitcoin exchange last year and is up about 25 percent since early May.

All of these gains coincide with bitcoin’s rally, with the value of the virtual currency doubling against the U.S. dollar since early May. That has made the stocks of the these small-cap companies an attractive way for speculators to invest in cryptocurrency markets without buying them directly. That’s because investors can make bets via their brokerage accounts instead of taking risks with bitcoin exchanges, according to Naoki Murakami, a well-known day trader in Japan.

“From about a month ago when all these virtual currencies started spiking like crazy, we began seeing the so-called ‘stocks of the virtual currency bubble,”’ said Murakami, a frequent speaker at investor conferences.

 

“Not everyone is sure they can trust bitcoin exchanges. And some don’t have accounts there. That’s why they’re using the stock market to speculate.”

Another reason why these stocks can become proxies for bitcoin is due to Japan’s relatively loose listing laws, some of which require no income and a market value of as little as $10 million before a company can go public. That’s made the Tokyo Stock Exchange home to hundreds of small companies.

“It’s pure frenzy,” Murakami said.

In April, Prime Minister Shinzo Abe’s government legalized digital currencies as a form of payment and placed rules around audits and security.

end

 

Chris Powell comments on the huge story we presented to you last night, in that the CFTC discovers that the silver market was manipulated after all

(courtesy Chris Powell/GATA)

Ted Butler: CFTC discovers some silver market manipulation after all

Section:

10:55a ET Monday, June 5, 2017Dear Friend of GATA and Gold:

Silver market analyst Ted Butler notes today that last week’s actions in U.S. District Court in Chicago and the U.S. Commodity Futures Trading Commission in Washington against a former trader for Deutsche Bank who admitted manipulating the silver market covered the period in which the CFTC investigated silver market manipulation and proclaimed that it could not find anything actionable.

Butler speculates that the CFTC’s surprising action may have something to do with a new manager of its enforcement division.

Butler’s commentary is headlined “Surprise CFTC Announcement” and it’s posted at GoldSeek’s companion site, SilverSeek, here:

http://silverseek.com/commentary/surprise-cftc-announcement-16665

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

end

We brought you the story last night with the charging of this junior trader (from Deutsche bank) and how he spoofed the precious metals/  The fun will begin as they go up the ladder  (Harvey:  Bank A = Deutsche bank)

(courtesy zero hedge)

 

Exposing “The Legend” – How Traders ‘Spoofed’ The Precious Metals Markets

Following last week’s admission by a former Deutsche Bank trader that he and many other traders conspired to manipulate the precious metals markets, court documents expose chat messages that show the level of rigging and how an unknown trader known as “the legend” taught them the “tricks from the… master.

The Deutsche Bank trader, David Liew, pleaded guilty in federal court in Chicago to conspiring to spoof gold, silver, platinum and palladium futures, according to court papers. Bloomberg notes that spoofing involves traders placing orders that they never intend to fill, in an attempt to manipulate the price.

Following an introductory period that included orientation and training, LIEW was eventually assigned to the metals trading desk (which included base metals and precious metals trading) in approximately December 2009. During the Relevant Period, LIEW was employed by Bank A as a metals trader in the Asia-Pacific region, and his primary duties included precious metals market making and futures trading.

 

 

Between in or around December 2009 and in or around February 2012 (the “Relevant Period”), in the Northern District of Illinois, Eastem Division, and elsewhere, defendant DAVID LIEW did knowingly and intentionally conspire and agree with other precious metals (gold, silver, platinum, and palladium) traders to: (a) knowingly execute, and attempt to execute, a scheme and artifice to defraud, and for obtaining money and property by means of materially false and fraudulent pretenses, representations, and promises, and in furtherance of the scheme and artifice to defraud, knowingly transmit, and cause to be transmitted, in interstate and foreign commerce, by means of wire communications, certain signs, signals and sounds, in violation of Title 18, United States Code, Section 1343,which scheme affected a financial institution; and (b) knowingly engage in trading, practice, and conduct, on and subject to the rules of the Chicago Mercantile Exchange (“CME”), that was, was of the character of, and was commonly known to the trade as, spoofing, that is, bidding or offering with the intent to cancel the bid or offer before execution, by causing to be transmitted to the CME precious metals futures contract orders that LIEW and his coconspirators intended to cancel before execution and not as part of any legitimate, good-faith attempt to execute any part of the orders, in violation of Title 7, United States Code, Sections 6c(a)(5)(C) and 13(a)(2); all in violation of Title 18, United States Code, Section 371.

 

 

Defendant LIEW’s employer, Bank A, was one of the largest global banking and financial services companies in the world. Bank A’s primary precious metals trading desks were located in the United States, the United Kingdom, and the Asia-Pacific region.

 

Defendant LIEW and other precious metals traders, including traders at Bank A, engaged in a conspiracy to commit wire fraud affecting a financial institution and spoofing, in the trading of precious metals futures contracts traded on the CME.

 

Defendant LIEW placed, and conspired to place, hundreds of orders to buy or to sell precious metals futures contracts that he intended to cancel and not to execute at the time he placed the orders (the “Spoof Orders”).

And now, as Bloomberg reports, after pleading guilty to fraud charges last week and agreeing to cooperate, Liew has become a prime government witness for U.S. prosecutors investigating whether traders at the world’s biggest banks conspired to manipulate prices in silver, gold, platinum and palladium.

His chats with colleagues — part of an FBI affidavit filed in Chicago and placed under seal — provide a window into the investigation by the Justice Department, which began looking into such activities at a dozen of the biggest global banks two years ago.

“Tricks from the …master,” Liew typed in a chat after working with a colleague to move gold futures prices while Liew executed a trade. In the course of a year, Liew and his colleagues used fake orders to try to manipulate prices, an illegal practice called spoofing, more than 50 times.

 

In his court plea, Liew described working with others at his own bank and at two other operations. He refers to “The Legend,” without naming him, at another unidentified global bank. Many details are cloaked.

According to the documents, at least two senior colleagues taught Liew how small orders could be placed and then quickly pulled, pushing prices in a direction to benefit traders with client orders to fill. Within a couple years, he was teaching newer traders to do the same. In all, according to the filings, he attempted to move prices on Chicago’s CME more than 300 times before he left.

After trading silver futures on March 29, 2011, Liew wrote to the trader he called The Legend. “Look at silver … all algo play … basically I sold out … by just having fake bids,” according to chats transcribed in the FBI affidavit.

 

By June 2011, Liew had begun teaching others the mechanics of spoofing, according to the FBI affidavit. In a chat with a trader from an unidentified trading firm, Liew explained how he used high-speed traders to move the market to his advantage. “I just spam … then cancel a lot … its actually stupid … cause im risking … but it gets the job done.”

 

That August, Liew and a colleague discussed Dodd-Frank and their trading strategy in a chat, then engaged in spoofing to help Liew’s position in gold futures, according to the affidavit. “dodd frank gonna get me fired,” Liew wrote.

 

Eight minutes later, Liew wrote, “I bought some gold for us … get ready .. to buy a bit more.” The two then spoofed the market through a series of orders, according to the FBI account. Later, they boasted about their profits.

 

“u greedy for 50cents pumpkin … but Im greedy for $5 …lol,” Liew wrote. His Deutsche Bank colleague replied, “I think we made … a lot … its ok … ahaha.”

As we noted last week, Liew quite his job in July of 2012 to start a tech company, remarking on his personal blog that he was “uncomfortable with some of the things I witnessed/experienced.”

Still we are sure that anyone uttering the word “rigged” around these markets will be chopped down to size by the mainstream, despite the reams of evidence (and facts), because all that matters is financial repression, precious metals suppression, and stock market acceleration.

 

 

end

Bill Holter provides another commentary on the conviction in Federal court of the Deutsche bank trader

 

Time and Sales…!

 

As an addendum to yesterday’s subscriber article, the topic of “time and sales” needs to be discussed.  “Time and sales” is a very simple report that can be requested by literally anyone in any market.  For example, when I was a young broker I had a large client who traded a minimum 10,000 shares at a clip.  From time to time he would request a time and sales report to make sure his order was a good fill. Over a year’s time and asking for close to a dozen orders to be checked, he did have one trade where he was ripped off for an 1/8th ($1,250) of a point (we still traded in 1/16ths and 1/8ths so you can guess how long ago this was).  The order was rectified and the client was reimbursed.
  The reason I bring this up is because the CFTC, NYSE, NASDAQ, SEC or any other agencies have this tool of “time and sales” available to them as all exchanges are required to keep these reports.  The CFTC can pull a time and sales report to investigate ANY time period they choose going back to the 1970’s …which of course includes many of the obvious and blatant precious metal waterfall events since 1996.  The report will tell them EXACTLY how many contracts were bought or sold and which firm(s) performed the trade.  Then, they can query the firm to find out who the buyer (or gross seller) was.  They have the ability to track ANY trade back to the source, end of story!
But, they have not ever done this no matter how loudly the public cried out.  Why not?  This is fairly obvious, can you imagine if we truly knew “who”?  I guess you could say because the public could NEVER handle the truth in their opinion?
  So what is the point here?  I wrote yesterday commenting on the settlement between the CFTC and David Liew and said I hoped they would “pull on that thread”.  The more I thought about it, the CFTC never needed David Liew (though he would be helpful).  All they need (needed) to do is pull a time and sales report before, during and after any of the plentiful waterfall events in precious metals.  This would lead them to the clearing firm and thus the ultimate client.  I might add, there was gross negligence after 911 for the airline put trades never to have been tracked back to the source.  I would also add, if anyone in law enforcement is reading this, many people were MURDERED that day and there is no statute of limitations for murder.  Please demand a time and sales for who bought all of those puts, follow the money (even though the winnings were never collected).  The firms were required to “know their customer”, the identities can still be discovered if someone within law enforcement truly wanted to know.  Perhaps, just as above …the public cannot handle the real truth?
  The question still remains, is the CFTC now “changed” with a new administration and are they serious about following the rule of law?
If this is the case, all they need to do is follow the paper trail to discover who sold time and time again into the paper gold and silver markets to “e”ffect (no not a typo) and suppress price?  Time and sales is in no way rocket science, any B grade broker has heard the term and knows what it is …does the CFTC?  I am certain they do!
Standing watch,
Bill Holter
Holter-Sinclair collaboration

Singapore’s strategy of becoming a gold hub is paying off

(courtesy Soh/Business Times, Singapore)

 

Singapore’s gold hub strategy bears fruit as imports, exports rise

Section:

By Andrea Soh
The Business Times, Singapore
Monday, June 5, 2017

Singapore’s strategy to develop itself as a gold hub has proven successful, as its imports and exports almost doubled in the years after the goods and services tax was removed for investment-grade precious metals in 2012.

But there is still more work to be done, especially in increasing business flows now that the infrastructure is in place, said the Singapore Bullion Market Association.

In numbers released for the first time, statistics from International Enterprise Singapore show that total imports and exports of gold in Singapore have expanded from 474 tonnes in 2012 — when the GST exemption started — to a peak of 823 tonnes in 2014 before falling to 618 tonnes last year. …

… For the remainder of the report:

http://www.businesstimes.com.sg/government-economy/singapores-gold-hub-s…

* * *

end

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

 
 

1 Chinese yuan vs USA dollar/yuan  STRONGER  6.7960(REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES  WEAKER TO ONSHORE AT   6.7960/ Shanghai bourse CLOSED UP 10.47 POINTS OR .34%  / HANG SANG CLOSED UP 134.15 POINTS OR 0.52% 

2. Nikkei closed DOWN 190.92 POINTS OR 0.95%   /USA: YEN RISES TO 109.41

3. Europe stocks OPENED IN THE RED        ( /USA dollar index FALLS TO  96.73/Euro DOWN to 1.1246

3b Japan 10 year bond yield: FALLS TO   +.042%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.41/ 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::  47.25 and Brent: 49.28

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  +.255%/Italian 10 yr bond yield DOWN  to 2.240%    

3j Greek 10 year bond yield RISES to  : 6.05???  

3k Gold at $1292.50/silver $17.68 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 12/100 in  roubles/dollar) 56.73-

3m oil into the 47 dollar handle for WTI and 49 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.41 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  0.9646 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0848 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  +0.255%

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 2.145% early this morning. Thirty year rate  at 2.805% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Gold Surges, Global Stocks Slide As “Super Thursday” Risks Loom

 

With traders realizing that the “Thursday Turmoil Trifecta” looms, world stocks dropped and safe-haven assets rose as investors focused on the growing tension in the Middle East, while caution spread across markets in a week full of risk events including James Comey’s congressional testimony to the ECB’s policy meeting and Britain’s increasingly uncertain election, all in the span of 24 hours. As a result, European and Asian stocks as well as S&P futures all fell, while gold, yen and Treasuries gained.

World stocks edged further away from record highs hit last week, the MSCI world equity index fell 0.12%. Crude continued to decline despite OPEC’s best efforts to stabilize its price, with WTI edging lower by 0.2% to $47.33 a barrel, after dropping as much as 1% and rising as much as 0.7% earlier.

Quick recap of the trading action so far courtesy of Bloomberg’s macro squawk wrap:

 Europe follows defensive Asian session with little appetite for risk before events later in the week. USTs continue overnight rally, Eurodollar curve bull-flattens, bund and gilt futures move higher in tandem. DAX reopens after Whit Monday holiday and underperforms other European equity markets, construction sector lags; Banco Popular trades with small gains +1.8% after recent heavy losses. USD/JPY at overnight lows amid broad risk-off, USD grinds marginally higher from overnight lows against G-10; spot gold trades approximately $5 away from YTD high, EMFX led lower by ZAR, which spikes lower after South African economy enters recession. Focus overnight on PBOC conducting a 498b yuan 1-year MLF operation, Hibor rates continue to normalize after recent spike higher.

In an otherwise quiet session, the big FX outlier was the yen which rose 0.7% to 109.70 per dollar, reaching the strongest level in six weeks, since April 21. The yen outperformed G10 currencies on haven demand while the pound also gained against the dollar ahead of Thursday’s U.K. election.  Declines in stocks and U.S. Treasury yields prompted yen buying, leading it to break the key 110 level against the dollar in Asian trading.

“Investors appear nervous ahead of several key events on Thursday including the U.K. election, former FBI Director James Comey’s testimony before the U.S. Senate and the ECB meeting,” Credit Agricole SA strategists including Manuel Oliveri said in a note to clients

Gold, which has become an inverse trade on the USDJPY, spiked above $1,290, advancing for a third day to the highest since April 18.

10-year Treasury yields fell to near the lowest since November. The dollar traded at an eight-month low.

Europe’s benchmark share index dropped the most in a week led by Swiss pharmaceutical company Roche Holding AG after one of its drug studies disappointed. Miners were among the biggest losers again as Bloomberg’s commodities index declined a sixth day. In Asia, Japan’s Topix index fell 0.8 percent after the yen strengthened. Australia’s S&P/ASX 200 tumbled 1.5 percent, the most in more than two months and reaching the lowest since February. The Aussie dollar swung between gains and losses after the central bank left its benchmark interest rate unchanged.

The Stoxx Europe 600 Index declined 0.4 percent and the FTSE 100 fell 0.2 percent. Futures on the S&P 500 Index dropped 0.1 percent after the underlying gauge slid 0.1 percent Monday. Qatari stocks steadied after plunging the most since 2009 on Monday. Saudi Arabia and three other Arab countries severed most diplomatic and economic ties to the country.

As first warned yesterday, Bloomberg again reminds us that all three major events – Comey, the ECB meet and British election – are set for Thursday, and as a result investors’ risk-off mood this week is understandable. It’s been compounded by a diplomatic spat among energy producing nations in the Middle East and a terror attack in London.

“There is not much scheduled today that could potentially inspire the markets as the main focus this week is on ‘Super Thursday,”’ Piotr Matys, a London-based currency strategist at Rabobank, wrote in a client note. “Essentially, we brace for a volatile session on Thursday and Friday as at least one of those crucial events could trigger sharp moves in the markets.”

Then there was Reuters, which notes that on what BayernLB analysts called “Super Thursday”, British voters will go to polls in an increasingly unpredictable general election, the European Central Bank is due to meet and later the same day former FBI director James Comey will testify before Congress.

“We have a big week or so ahead of us with the UK heading to the polls and the ECB announcing its latest monetary policy decision on Thursday and the Federal Reserve doing the same next Wednesday,” said Craig Erlam, a market analyst for OANDA securities. “Once these events pass, we may have a little more clarity and therefore see a little less caution in the markets.”

The dollar, meanwhile, touched a seven-month low ahead of Comey’s testimony. Reports suggest the former FBI chief plans to talk about conversations in which U.S. President Trump pressured him to drop his investigation into former national security adviser Mike Flynn, who was fired for failing to disclose conversations with Russian officials. The dollar index which tracks the currency against a basket of trade-weighted peers, fell to its lowest level since the November U.S. election.

A quick look at the latest polls in the UK. There were a couple released overnight, the first was another YouGov poll (conducted 29 May-4 June) with a sample size of over 50,000 (8,000 votes were taken on 4 June) which showed the Conservatives as holding a 4% lead over Labour at 42-38%. The model also suggested that the Conservatives are on track to take between 268-344 seats which again suggested that the Tories could lose their majority (326 needed). Shortly after that an ICM/Guardian poll (2-4 June) of 2000 respondents showed the Conservatives as holding an 11% lead over Labour at 45-34%. That’s unchanged versus the same poll just under a week ago. Last night a Survation Poll for ITV showed the Conservatives as holding a 1% lead at 41% to 40%. It was noted that this poll was conducted over June 2-3 and prior to the weekend terror attack.

Data on Monday of U.S. services sector activity slowing in May as new orders tumbled also hit the greenback.

JOLTS April job openings data due. Michaels, Keysight, HD Supply are among companies reporting earnings

Bulletin Headline Summary from RanSquawk

  • European equities enter the North American crossover in negative territory with underperformance in health care names, led by Roche
  • Cable has tested 1.2950 but ran into a wall of selling interest here, but the pullback has found some support ahead of 1.2900 for now
  • Looking ahead, US APIs and NZ GDT Index

Market Snapshot

  • S&P 500 futures down 0.1% to 2,431.75
  • MXAP down 0.2% to 155.09
  • MXAPJ down 0.3% to 502.27
  • Nikkei down 1% to 19,979.90
  • Topix down 0.8% to 1,596.44
  • Hang Seng Index up 0.5% to 25,997.14
  • Shanghai Composite up 0.3% to 3,102.13
  • Sensex down 0.3% to 31,223.91
  • Australia S&P/ASX 200 down 1.5% to 5,667.47
  • Kospi down 0.1% to 2,368.62
  • STOXX Europe 600 down 0.4% to 390.43
  • German 10Y yield fell 1.6 bps to 0.271%
  • Euro down 0.03% to 1.1251 per US$
  • Brent Futures down 0.4% to $49.27/bbl
  • Italian 10Y yield rose 1.3 bps to 1.979%
  • Spanish 10Y yield fell 3.0 bps to 1.549%
  • Gold spot up 0.8% to $1,289.46
  • U.S. Dollar Index down 0.1% to 96.71

Top Overnight News From Bloomberg

  • U.K. Conservatives at 41.5%, Labour at 40.4%: Survation/GMB poll, Conservative lead falls from 17 points in Survation’s first poll in early May
  • Spain: Banco Popular is preparing the sale of a real estate portfolio worth EU1.5b-EU2b according to Vozpopuli. Bank official says ECB is “perfectly informed” of the current situation
  • Italy: lower house of parliament to start debate on new electoral law today after Constitutional Affairs Committee gave assent
  • South Africa 1Q GDP q/q: -0.7% vs +1.0% est; economy in recession for the first time since 2009
  • RBA keeps cash rate at 1.50% as expected; says GDP expected to have slowed in the March quarter
  • Qatar Crisis Draws Mediation Effort as Saudis Tighten Screws
  • China Rebuffs U.S. Over Detainees Probing Ivanka Shoe Supplier
  • Harvard Man Mindich Loses Out in Endowment Hedge Fund Overhaul
  • Airbus to Cut A380 Output Below One a Month If No New Orders
  • Brevan Howard’s Main Hedge Fund Loses Money for Third Month
  • Anonymous Analytics Says Short-Selling Rival Got It Wrong on AAC
  • Deutsche Bank Says It Can’t Share Details of Trump Relationship

Asia traded mostly lower following a subdued Wall St. close where all 3 major indices finished with minor losses amid range-bound trade. ASX 200 (-1.4%) underperformed as the utilities, REIT and IT sectors weighed down the index, whilst Nikkei 225 (-1.0%) suffered as the JPY firmed across the board. Shanghai Comp. (+0.3%) and Hang Seng (+0.5%) were initially negative after the PBoC refrained from conducting repo operations, although the Chinese bourses attempted to recover following a CNY 498b1n medium lending term facility operation. 10yr JGBs were relatively flat with only minimal gains seen amid a cautious risk tone, while the 30yr JGB auction also failed to spur firm demand despite the b/c printing its highest in 8 months of 3.63 (Prey. 3.35), as this was only a mild increase and other metrics were relatively stable from prior. PBoC skipped open market operations today, but conducted a CNY 498b1n Medium-Term Lending Facility operation.

Top Asian News

  • With 260-to-1 Leverage, A Chinese Giant Takes On Goldman in Repo
  • Billionaire Draper Shuns China Investments Amid Capital Controls
  • China Said to Give Banks More Time to Report on Exposures
  • Beijing Jingyuntong Rises After Solar Pact with Wuhai Government
  • Indian Power Surplus Outlook Signals Lagging Electrification

Souring sentiment this morning in Europe with equities weighed by oil and healthcare names. The big story this morning, is Roche (-4.5%) shares on course for its worst day in 2’/ years after investors were disappointed with the company’s Aphinity study results. Elsewhere, oil prices continue to slip due to the deepening diplomatic rift in the Middle East, this has also impacted the likes of Norsk Hydro who stated that exports from its Qatar-based JV aluminium plant were blocked. Fixed income markets at elevated levels amid the risk off tone, while the German curve has shown some bull flattening. Additionally, peripheral debt has been outperforming, with the Italian and Spanish 10yr widening against the German benchmark. Of note, supply kicked up a notch with Austria tapping 6s and 10s, while the UK issued 5yr debt which was well-digested by the market and caused little of the way in a reaction for UK paper.

Top European News

  • May Sends Johnson to Labour Heartland as Terror Shapes Campaign
  • Popular in Fight to Survive as Bank Updates ECB on Situation
  • German Top Court to Issue Nuclear-Fuel Tax Ruling June 7
  • Rocket-Backed Delivery Hero Targets $500 Million in IPO

In currencies, the yen rose 0.7 percent to 109.70 per dollar as of 10:07 a.m. in London, reaching the strongest level since April 21. The Bloomberg Dollar Spot Index fell 0.1 percent, trading at the lowest since October. The euro was little changed at $1.1254 and the British pound rose 0.2 percent to $1.2923. Watching USD/JPY, European markets have desisted from extending the USD/JPY push lower, and as we noted yesterday, 109.50-60 support here has been noteworthy, though we suspect a warranted push lower would have made light work of this. More support seen lower down at 109.00, but dealers report stops below here. Mid curve treasury yields have stabilised a little, so this is providing a near term prop, but Wall Street will likely dictate from current levels. In GBP, Cable has tested 1.2950 but ran into a wall of selling interest here, but the pullback has found some support ahead of 1.2900 for now. This will likely come under pressure as the election jitters are cranked up, and we suspect some of this is being reflected in the buoyant tone in EUR/GBP. Traders however, are also loath to sell out EUR/USD from current levels, as we await the ECB press conference on Thursday. The market is pre-empting some of communication leading to a change in tack in ECB policy, but expect Draghi and co to be as vague as possible, given their awareness of market eagerness to get ‘ahead’ of an eventual signal to reining in stimulus.

In commodities, gold climbed 0.7 percent to $1,289.04 an ounce, advancing for a third day to the highest since April 18. WTI crude edged lower by 0.2 percent to $47.33 a barrel, after dropping as much as 1 percent and rising as much as 0.7 percent earlier. The notable mover today is Gold, pushing up towards USD1290+ levels on the back of the risk tone which is have been worsening over a combination of factors, but which until now, have done little to put a dent in the Wall Street climb higher. In spite of the gains seen in the S&P, Dow and NASDAQ, buyers of the safe haven have been `following’ the yellow metal higher, with Silver lagging as we were trading on an USD18 handle the last time Gold was up here. Consequently, base metals are sporting a heavy tone, with Copper edging back to the lower end of the USD2.50-2.60 range. This is the underperformer on the day, with Platinum and Palladium showing modest gains on the day. Oil prices will remain heavy for the foreseeable future with focus on US shale production, but we continue to watch the API’s (tonight) and the DoE report tomorrow. WTI struggles in the low USD47.00’s, though we saw a snap up from sub figure levels this morning.

Looking at the day ahead, this morning in Europe it’s fairly quiet with the only releases scheduled being the Sentix investor confidence reading for June (expected to hold steady) and Euro area retail sales data for April (+0.2% mom expected). In the US the sole release is JOLTS job openings for April. Away from that we are expecting to receive the ECB’s latest CSPP and PSPP holdings data after technical issues yesterday delayed the release.

US Event Calendar

  • 10am: JOLTS Job Openings, est. 5,750, prior 5,743

DB’s Jim Reid concludes the overnight wrap

With bigger events to come later this week including a potential ‘super’ Thursday, markets never really got out of the starting blocks on Monday. Unsurprisingly much of the focus was of a political nature following the terrible London attack over the weekend and then the Qatar and Gulf news this time yesterday. The White House confirmed last night that President Trump is committed to holding talks with all parties in the Gulf in a bid to “de-escalate” the crisis. Qatar’s main stock exchange plummeted -7.27% and by the most since 2009. Oil was initially +1.50% higher as we went to print yesterday with WTI trading up at $48.42/bbl however that move was quickly reversed as the news was seen as having a limited impact on Gulf energy supplies. In the end WTI eventually closed last night at $47.40/bbl and over 2% off the highs and it is down another half a percent this morning.

That was largely the limit of the excitement for markets though. The S&P 500 (-0.12%), Dow (-0.10%) and Stoxx 600 (-0.13%) all faded to small losses. The Nasdaq briefly touched a new intraday record high before also fading later in the session too to close -0.16%. Alphabet’s share pricing passing the $1,000 mark less than a week after Amazon achieved such a feat was a notable landmark however. If you are lucky enough to have bought and held since Google IPO’d then that’s a total return of 2260%.

Meanwhile bond markets were also a bit weaker at the margin yesterday which more than likely reflected a fairly busy day for issuance in the US. 10y Treasury yields edged up 2.3bps to close at 2.183% while yields in Europe were up 1-2bps generally. Elsewhere, in FX Sterling recovered from early losses to close up +0.12% as markets digested the latest set of opinion polls (more on that shortly). Finally the rest of the commodities complex away from Oil was soft, particularly base metals like Aluminium (-1.45%), Zinc (-1.74%) and Iron Ore (-3.27%). It’s worth noting that Iron Ore is now down to the lowest level since October last year and over 41% off the February highs.

In terms of the macro, yesterday’s US economic data wasn’t hugely inspiring. In a busier than usual day for releases following a Friday employment report, the main focus was on the ISM and PMIs. The  non-manufacturing ISM came in at 56.9 for May which was both down 0.6pts versus April and also a shade lower than the consensus of 57.1. The details were a bit more mixed. While new orders fell 5.6pts to 57.7 the employment component interestingly rose 6.4pts to 57.8 and to the highest since July 2015 which was a bit of a head scratcher given the soft payrolls report. Meanwhile the services PMI was revised down 0.6pts to 53.6 which has left the composite at 53.6 and up for the second month in a row (although below the January high of 55.8).

Away from that there were some revisions made to both Q1 nonfarm productivity – which is now reported as being flat as opposed to the initial -0.6% reading – and unit labour costs (which were revised down to 2.2% from 3.0%). In other news factory orders were reported as falling -0.2% mom in April while core capex orders were revised up one-tenth to +0.1% mom.

In Europe the main focus was on the remaining PMIs for May. The final services PMI for the Euro area was revised up one-tenth to 56.3 which means it is down just 0.1pts from the April high. That left the composite unrevised at 56.8 which is flat versus April. At a country level the services reading for France was revised down 0.8pts to a still relatively solid 57.2 while Germany was revised up 0.2pts to 55.4. In the periphery we saw small misses for both Spain and Italy. Our European economists made the important note that the details of the PMIs revealed that both input and output prices indices were revised slightly lower in the May data. This means PMI prices indices have retreated for the past 2-3 months and while they expect core inflation to begin to recover as we move into H2, much like the CPI report last month, these figures will do little to change the ECB’s cautious assessment. At a broad level however our economists also note that the PMIs are consistent with Q2 GDP growth of around +0.8% qoq assuming
June is unchanged which represents clear upside to their +0.5% qoq view. All eyes will be on the incoming Q2 hard data flow including some of the industrial data later this week.

Switching over to the latest in Asia now where markets for the most part appear to be following the soft lead from Wall Street last night and trading slightly weaker. The Nikkei (-0.72%), Shanghai Comp (-0.20%), Kospi (-0.13%) and ASX (-1.07%) have all dipped lower with most sectors under pressure. The Hang Seng (+0.20%) is the only index current tracking higher. Gold (+0.39%) and the Yen (+0.52%) are also a little firmer reflecting the risk off moves while the Aussie Dollar is a little weaker ahead of the RBA meeting where no change in policy is expected.

Back to the latest polls in the UK. There were a couple released in the morning. The first was another YouGov poll (conducted 29 May-4 June) with a sample size of over 50,000 (8,000 votes were taken on 4 June) which showed the Conservatives as holding a 4% lead over Labour at 42-38%. The model also suggested that the Conservatives are on track to take between 268-344 seats which again suggested that the Tories could lose their majority (326 needed). Shortly after that an ICM/Guardian poll (2-4 June) of 2000 respondents showed the Conservatives as holding an 11% lead over Labour at 45-34%. That’s unchanged versus the same poll just under a week ago. Last night a Survation Poll for ITV showed the Conservatives as holding a 1% lead at 41% to 40%. It was noted that this poll was conducted over June 2-3 and prior to  the weekend terror attack.

Looking at the day ahead, this morning in Europe it’s fairly quiet with the only releases scheduled being the Sentix investor confidence reading for June (expected to hold steady) and Euro area retail sales data for April (+0.2% mom expected). Over in the US this afternoon the sole release is JOLTS job openings for April. Away from that we are expecting to receive the ECB’s latest CSPP and PSPP holdings data after technical issues yesterday delayed the release. UK PM Theresa May is also due to take part in a live ITV interview this evening at 7.30pm BST

 

3. ASIAN AFFAIRS

i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 10.47 POINTS OR 0.34%   / /Hang Sang CLOSED UP 134.15 POINTS OR 0.52% The Nikkei closed DOWN 190.92 POINTS OR 0.95%/Australia’s all ordinaires  CLOSED DOWN 1.450%/Chinese yuan (ONSHORE) closed UP at 6.7960/Oil DOWN to 47.25 dollars per barrel for WTI and 49.28 for Brent. Stocks in Europe OPENED ALL IN THE RED      ..Offshore yuan trades  6.7960 yuan to the dollar vs 6.7960 for onshore yuan. NOW  THE OFFSHORE IS MUCH WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY WEAK DOLLAR. CHINA NOT HAPPY WITH THE NEWS THAT ITS DEBT HAS BEEN DOWNGRADED  

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA/SOUTH KOREA

b) REPORT ON JAPAN

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

ECB/GERMANY

The ECB is running out of long dated German bunds to purchase as they are now contemplating getting out of the QE game:

(courtesy zero hedge)

The ECB Has Almost Run Out Of German Bonds To Buy

One month ago, when looking at the sudden change in ECB bond purchasing patterns, especially of German Bunds, we reported that the central bank may have as little as 4 months of space left in its PSPP program when it comes to German bond purchases. The first thing that caught our eye was that based on calculations from ABN Amro’s Kim Liu, the ECB bought roughly €400 million fewer bonds in Germany in April than its rules allow, suggesting a severe scarcity of eligible bonds.

“It was by far the largest deviation, at least for Germany, and for me suggests that on top of the political stress and smoothing of purchases, there are scarcity constraints for the Bundesbank,” said Pictet’s senior economist Frederik Ducrozet. “What it means is that the ECB has to be very cautious with its exit and if they don’t taper within less than six months (of ending the programme) something might have to give.”

In addition to the sharp drop in nominal purchases, the ECB data also revealed that in just six months the average maturity of monthly German debt purchases by the ECB has dropped to under five years from more than 10.

That indicated that a shortage of longer-dated eligible debt is forcing the Bundesbank, which buys securities on behalf of the ECB, to take advantage of recent rule tweaks to buy more shorter-dated bonds. Still, while that shift was expected after last December’s change allowing the ECB to buy bonds yielding less than the -0.40% depo rate, analysts admitted that “the speed at which the Bundesbank put that to use has taken markets by surprise.”

The shortfalls prompted questions about how close the ECB is to hitting its bond-buying limits in Germany, the euro zone’s benchmark issuer and (at least until now) the deepest and biggest source of bonds under the ECB’s QE program which is currently scheduled to run until the end of 2017. According to Barclays calculations, if the ECB maintains its buying program as is, it would hit its mandated, 33% ceiling on German Bund holdings  as soon as October, or just over 4 months from now.

Fast forward to today when the ECB reported its latest monthly purchase data for the month of May and it revealed even more troubling trends: in May, the weighted average maturity of monthly PSPP purchases rose in France, Italy and Spain, but plunged in Germany.

As the chart below shows, last month the average maturity of all German purchases plunged below 4 for the first time ever, or just 3.98 years, the lowest on record.

But perhaps more interesting is that as Jefferies pointed out, since QE was reduced in April from €80bn per month down to €60bn, there has been a disproportionate reduction in asset purchases by country (see second table below). For instance in Germany and in the Netherlands (and Spain) PSPP quantities had fallen by around 30% in the last two months; but in France and in Italy, the figure is only around 21%.

This confirms that in order to give itself as long as QE runway as possible, the ECB is actively reducing the amount of German Bunds it is purchasing every month, and is also increasingly shifting to the short end of the curve as it appears to have run out of longer-dated bonds to buy. Of course with QE likely to run for at least another year, these country differences could very well increase as the scarcity of bonds in certain markets becomes more of a problem – unless the ECB amends some of the rules around the PSPP.

* * *

Some parting thoughts just two days ahead of the ECB’s much anticipated meeting.

For now, the ECB has been lucky: the economic situation in Europe has been improving, with inflation posting a modest pick up, and all signs suggesting that Mario Draghi will be able to taper – not because he wants to but because – as the charts above show – he has to. In mid May, ECB board member Yves Mersch said the ECB was close to replacing its negative view on whether the euro zone economy would reach growth targets with a neutral one, providing yet another justification to reducing its unsustainable bond purchases.

As a reminder, in December the ECB already tapered its monthly purchases by €20 billion to €60 billion in April, while money markets price in roughly a 70 percent chance of a rate hike in early 2018.

“The ECB can always get around its rules, it has the flexibility on whether to buy central government or local government or agency debt to fulfill its quotas,” said Marchel Alexandrovich, senior European economist at Jefferies. “But the longer QE goes on, the more the ECB will have to think about changing the rules again … And the issue now is the willingness to carry on with QE.”

And as for European false dawns, just ask Jean-Claude Trichet and the infamous rate hike of 2011 which launched the most serious leg of the European sovereign debt crisis. Should Europe’s economy turn south again just as the ECB is tapering its purchases and/or raising rates, and the central bank be forced to keep or even boost its QE, Mario Draghi will suddenly find himself in very big trouble. That, or simply do what the BOJ has been doing for years, and start buying ETFs and single stocks.

One final point: even if all goes according to plan, recall that the only reason stocks are at all time highs, is due to the $250 bilion per month, or $1.2 trillion YTD – an all time high – in central bank purchases; purchases which are only thanks to the ECB and BOJ. With both banks now actively contemplating tapering their asset monetizations, the outlook for risk assets is anything but good.

END

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

QATAR

The Qatari Riyal peg to the dollar breaks.  Trouble ahead!

(courtesy zerohedge)

Qatarstrophe Strikes Riyal – FX Forwards Signal Peg-Break Looms

If the collapse in Qatar’s bond and stock markets was not enough to warrant concerns, the Riyal peg is now coming under great pressure as FX forwards crash to their weakest on record

It is clear that this is not just speculation in the forwards market, as the spot market has also been slammed, presumably by outflows, sending it to its weakest since 1998

This is not the first time the Riyal peg has come under pressure. As the chart above shows, the last time speculators bet against the peg holding, some quick jawboning by the central bank chief saved the day

The Qatari riyal’s peg to the U.S. dollar has been of great benefit to Qatar’s economy, the country’s central bank governor Sheikh Abdullah bin Saud al-Thani said in an interview published on the central bank’s website on Monday.

 

Asked by the local Lusail news website about the fluctuations of the dollar against other currencies, Sheikh Abdullah replied:

 

“Such concerns do not exist for us – as you know the U.S. economy is the strongest in the world and depreciation of the dollar against some foreign currencies is usually in small percentages over a limited amount of time.

 

“And our long experience with the riyal peg against the dollar has proved to us that it is best for our economy to continue this peg as it has many benefits.

 

“This peg in recent decades has spared us many of the risks associated with exchange rates, and has contributed to a large reduction of imported inflation, which has a role in the retreat of domestic inflation.”

 

“Keeping in mind the increase in the high level of capital, and a reduction in non-performing loans, the banks have great space to withstand any additional pressures in the system if they appear,

We suspect however that things are a little different for Qatar this time.

END

 

IT BEGINS!! NAVAL BLOCKADE ON QATAR

(COURTESY ZERO HEDGE)

Gulf States Launch Naval Blockade Of Qatar

In what has emerged as the most significant escalation to result from the Qatar diplomatic crisis – which pits two of OPEC’s largest oil producers, Saudi Arabia and the UAE, against the world’s biggest exporter of liquefied natural gas and further disrupts stability in the region –  the biggest Middle East oil and container ports banned all vessels sailing to and from Qatar from using their facilities.

According to a notice posted on the website of Inchcape Shipping, Saudi Arabian and Bahraini authorities closed off all of their ports to Qatari-flagged vessels or ships traveling to or coming from the Persian Gulf state, in what has been described as a naval blockade.

As Bloomberg adds, container and oil terminals in the United Arab Emirates also closed off traffic to any ships touching Qatar.

Saudi Arabia’s eastern coast is home to the port of Ras Tanura, which state-owned Saudi Arabian Oil Co. says is the biggest crude terminal in the world. Jebel Ali port, the region’s biggest container terminal, will be restricted from Tuesday until further notice, its operator Dubai’s DP World Ltd. said in an emailed statement according to Bloomberg. In the U.A.E., DP World operates Jebel Ali along with Dubai’s Mina Rashid and Mina Al Hamriya ports. Elsewhere, government-owned Abu Dhabi National Oil closed its crude and refined-product ports to any vessels to or from Qatar. The port at Fujairah, a main oil transit and refined product hub, said Monday it was closed to Qatar-linked traffic.

For now, shipping at Egyptian ports was operating normally as of Tuesday, according to Inchcape. The company also said the Suez Canal Authority has advised that there aren’t restrictions on vessels in the waterway since it is an international route.

Separately, Bloomberg also reported that A.P. Moller-Maersk A/S, which owns the world’s biggest container line, said it can no longer get cargo to Qatar as a result of the Saudi-imposed blockade of transport to and from the Gulf state. Though the situation remains “very fluid,” with updates expected throughout the coming hours, Maersk Line expects “disruptions to our Qatar services,” spokesman Mikkel Elbek Linnet said in an emailed statement on Tuesday. For now, “we have confirmation that we will not be able to move cargo to or from Qatar,” he said.

Maersk Line doesn’t use its own vessels to bring cargo to Qatar, but relies on third-party so-called feeder services from the United Arab Emirates Jebel Ali port in Dubai. “We will notify our customers on alternatives as soon as possible,” Linnet said.

Maersk ships about 16 percent of the world’s seaborne freight, making it the global leader in container transportation. Maersk, which has been working on splitting off its energy business to concentrate on its transport operations, said last year it lost the biggest oil field in its portfolio when Qatar ended a 25-year partnership with the Danish company. The agreement allowing Maersk to operate the Al Shaheen offshore field expires next month, after the company lost its bid for renewal to Total SA.

In addition to crippling overall Qatar-bound trade, the sea blockade will hurt shipments of oil and refined products from the world’s biggest energy exporting region.

According to Per Mansson, a shipbroker at Affinity Shipping in London, the Saudi ban on vessels going to and from Qatar will create logistical difficulties for some combination charters of crude oil supertankers from the Persian Gulf and will likely increase the use of smaller vessels. “It will be a little more difficult, it will be a little bit more tricky for certain charters”: Mansson said, noting that there are “not huge quantities” of oil being exported from Qatar relative to other Gulf states.

Afffinty also says that the combination charters, where loading occurs in more than one nation, are popular on routes to Japan, Korea and adds that the use of Suezmax and Aframax ships on Qatar routes may increase. That said, companies could still book combination charters with Qatar and other nations that don’t have restrictions, including Iran and Iraq.

Yet while the shipbroker tried to talk down the potential impact of the shipping ban, according to Bloomberg oil strategist Julian Lee, blocking vessels going to/from Qatar is probably the most important direct move that Saudi Arabia has made in terms of hindering its smaller neighbor’s ability to export crude oil and condensates.

Saudi Arabia’s move mirrors similar restrictions by United Arab Emirates, which will mean ships going to/from Qatar no longer have access to the Middle East’s biggest refueling center at the port of Fujairah.

According to Bloomberg, 27 of 31 vessels that loaded Qatari crude, condensate in May co-loaded in either Saudi Arabia or the UAE.

The good news is that aside from the above, Lee believes that there is little reason – so far – to believe that measures against Qatar will have a materially negative impact on country’s energy exports.

* * *

Finally, there is the question of LNG shipments.  Here, as Reuters reported earlier, LNG traders took a wait-and-see approach, alert to potential disruption of regional energy flows “but erring on the assumption that any trade shocks could be contained given well supplied global markets.”

Qatar’s top clients in Japan and India quickly received reassurances that supplies would continue as usual. Whether this persists is unclear: within hours of the diplomatic break, the UAE barred all vessels coming to or from Qatar using its popular anchorage point off Fujairah. The ban impacts about six LNG vessels linked to Qatar now anchored in the Fujairah zone which may need to be moved out, according to shipping data on Thomson Reuters.

 

But there was little sign yet of LNG supply being hit. “I cannot see this impacting exports of Qatari LNG outside the Arab world at all and it won’t likely impact LNG and gas pipeline exports within the Arab world either,” Morten Frisch, an independent LNG and gas industry consultant, said. Still, traders startled by the development began to plan for all eventualities, especially any upsets to piped gas supplies from Qatar to the UAE.

Egypt, while relying heavily on Qatari LNG brought in by Swiss commodity trade houses, is less vulnerable than the UAE because it has no direct deals with Qatar, domestic gas output is squeezing out the need for imports, and traders would be liable for any moves by Qatar to restrict exports.

“Trafigura, Glencore and Vitol frequently take LNG from Qatar and deliver it to Egypt but they take ownership of the cargoes at the Qatari port and don’t use Qatari ships, meaning technically that Qatar shouldn’t have sway,” one trade source said. In reality though, Qatar can block exports to certain countries by issuing so-called destination restrictions.

“It’s not clear yet,” another LNG trader said of potential impacts to deliveries from Qatar to Egypt.

* *

Can (and will) Qatar respond to the blockade?

Retaliatory measures such as suspending LNG supply deals would leave Qatar free to push more volumes into Europe where it has access to several import terminals. Under that scenario, trade houses with supply commitments to Egypt could turn to the United States, Algeria and Nigeria for replacement cargoes, traders and industry sources told Reuters.

The deterioration in ties between Qatar and Egypt contrasts with 2013 when the producer gifted five LNG cargoes to Egypt – when Mohamed Mursi, leader of the Muslim Brotherhood, served as president. Ironically, it is Qatar’s support for the MB – if only according to the “official narrative” – that is the catalyst for the current crisis.

END

6 .GLOBAL ISSUES

 

 

7. OIL ISSUES

The real reason for the Qatar blacklist:  their dominance in the natural/liquefied gas business:

a must read…

(courtesy zero hedge)

 

 

 

“Forget Terrorism”: The Real Reason Behind The Qatar Crisis Is Natural Gas

According to the official narrative, the reason for the latest Gulf crisis in which a coalition of Saudi-led states cut off diplomatic and economic ties with Qatar, is because – to everyone’s “stunned amazement” – Qatar was funding terrorists, and after Trump’s recent visit to Saudi Arabia in which he urged a crackdown on financial support of terrorism, and also following the FT’s report that Qatar has directly provided $1 billion in funding to Iran and al-Qaeda spinoffs, Saudi Arabia finally had had enough of its “rogue” neighbor, which in recent years had made ideologically unacceptable overtures toward both Shia Iran and Russia.

However, as often happens, the official narrative is traditionally a convenient smokescreen from the real underlying tensions.

The real reason behind the diplomatic fallout may be far simpler, and once again has to do with a long-running and controversial topic, namely Qatar’s regional natural gas dominance.

Recall that many have speculated (with evidence going back as far back as 2012) that one of the reasons for the long-running Syria proxy war was nothing more complex than competing gas pipelines, with Qatar eager to pass its own pipeline, connecting Europe to its vast natural gas deposits, however as that would put Gazprom’s monopoly of European LNG supply in jeopardy, Russia had been firmly, and violently, against this strategy from the beginning and explains Putin’s firm support of the Assad regime and the Kremlin’s desire to prevent the replacement of the Syrian government with a puppet regime.

Note the purple line which traces the proposed Qatar-Turkey natural gas pipeline and note that all of the countries highlighted in red are part of a new coalition hastily put together after Turkey finally (in exchange for NATO’s acquiescence on Erdogan’s politically-motivated war with the PKK) agreed to allow the US to fly combat missions against ISIS targets from Incirlik. Now note which country along the purple line is not highlighted in red. That’s because Bashar al-Assad didn’t support the pipeline and now we’re seeing what happens when you’re a Mid-East strongman and you decide not to support something the US and Saudi Arabia want to get done.

Now, in a separate analysis, Bloomberg also debunks the “official narrative” behind the Gulf crisis and suggests that Saudi Arabia’s isolation of Qatar, “and the dispute’s long past and likely lingering future are best explained by natural gas.

The reasons for nat gas as the source of discord are numerous and start in 1995 “when the tiny desert peninsula was about to make its first shipment of liquid natural gas from the world’s largest reservoir. The offshore North Field, which provides virtually all of Qatar’s gas, is shared with Iran, Saudi Arabia’s hated rival.”

The result to Qatar’s finances was similar to the windfall that Saudi Arabia reaped from its vast crude oil wealth.

The wealth that followed turned Qatar into not just the world’s richest nation, with an annual per-capita income of $130,000, but also the world’s largest LNG exporter. The focus on gas set it apart from its oil producing neighbors in the Gulf Cooperation Council and allowed it to break from domination by Saudi Arabia, which in Monday’s statement of complaint described Qataris as an “extension of their brethren in the Kingdom” as it cut off diplomatic relations and closed the border.

In short, over the past two decades, Qatar become the single biggest natural gas powerhouse in the region, with only Russia’s Gazprom able to challenge Qatar’s influence in LNG exports.

To be sure, Qatar has shown a remarkable ability to shift its ideological allegiance, with the FT reporting as recently as 2013, that initially Qatar was a staunch supporter, backer and financier of the Syrian rebels, tasked to topple the Assad regime, a process which could culminate with the creation of the much maligned trans-Syrian pipeline.

The tiny gas-rich state of Qatar has spent as much as $3bn over the past two years supporting the rebellion in Syria, far exceeding any other government, but is now being nudged aside by Saudi Arabia as the prime source of arms to rebels.

 

The cost of Qatar’s intervention, its latest push to back an Arab revolt, amounts to a fraction of its international investment portfolio. But its financial support for the revolution that has turned into a vicious civil war dramatically overshadows western backing for the opposition.

As the years passed, Qatar grew to comprehend that Russia would not allow its pipeline to traverse Syria, and as a result it strategically pivoted in a pro-Russia direction, and as we showed yesterday, Qatar’s sovereign wealth fund agreed last year to invest $2.7 billion in Russia’s state-run Rosneft Oil, even as Qatar is host of the largest US military base in the region, US Central Command. This particular pivot may have also added to fears that Qatar was becoming a far more active supporter of a Russia-Iran-Syria axis in the region, its recent financial and ideological support of Iran notwithstanding.

As a result of the tiny nation’s growing financial and political “independence”, its neighbors grew increasingly frustrated and concerned: “Qatar used to be a kind of Saudi vassal state, but it used the autonomy that its gas wealth created to carve out an independent role for itself,” said Jim Krane, energy research fellow at Rice University’s Baker Institute, quoted by Bloomberg.

Furthermore, Qatar’s natural gas output has been “free from entanglement” – and political pressure – in the OPEC, the oil cartel that Saudi Arabia dominates.

“The rest of the region has been looking for an opportunity to clip Qatar’s wings.”

And, as Bloomberg adds, “that opportunity came with U.S. President Donald Trump’s recent visit to Saudi Arabia, when he called on “all nations of conscience” to isolate Iran. When Qatar disagreed publicly, in a statement the government later said was a product of hacking, the Saudi-led retribution followed.”

To be sure, in a series of tweets, Trump himself doubled down on the “official narraitve”, taking credit for Qatar’s isolation (perhaps forgetting that a US base is housed in the small nation).

So good to see the Saudi Arabia visit with the King and 50 countries already paying off. They said they would take a hard line on funding…

…extremism, and all reference was pointing to Qatar. Perhaps this will be the beginning of the end to the horror of terrorism!

 

The cynics may be forgiven to assume that if Trump is tweeting that the reason for Qatar’s isolation is “to end the horror of terrorism”, even as the US just signed a $100+ billion arms deal with the single biggest supporter of terrorism in the world, Saudi Arabia, then indeed the Trump-endorsed “narrative” is to be dismissed outright.

Which again brings us back to nat gas, where Qatar rapidly emerged as the dominant, and lowest cost producer at a time when its neighbors started demanding the commodity on their own, giving the tiny state all the leverage. As Bloomberg adds “demand for natural gas to produce electricity and power industry has been growing in the Gulf states. They’re having to resort to higher-cost LNG imports and exploring difficult domestic gas formations that are expensive to get out of the ground, according to the research. Qatar’s gas has the lowest extraction costs in the world.”

Of course, with financial wealth came the need to spread political infludence: ”

Qatar gas wealth enabled it to develop foreign policies that came to irritate its neighbors. It backed the Muslim Brotherhood in Egypt, Hamas in the Gaza Strip and armed factions opposed by the UAE or Saudi Arabia in Libya and Syria. Gas also paid for a global television network, Al Jazeera, which at various times has embarrassed or angered most Middle Eastern governments.

And, above all, “gas prompted Qatar to promote a regional policy of engagement with Shiite Iran to secure the source of its wealth.

And here the source of tension emerged: because as Steven Wright, Ph.D. Associate Professor at Qatar University told Bloomberg, “you can question why Qatar has been unwilling to supply its neighboring countries, making them gas poor,” said Wright, the academic, speaking by telephone from the Qatari capital Doha. “There probably was an expectation that Qatar would sell gas to them at a discount price.”

It did not, and instead it took a step backward in 2005, when Qatar declared a moratorium on the further development of the North Field that could have provided more gas for local export, adding to the frustrations of its neighbors.

Qatar said it needed to test how the field was responding to its exploitation, denying that it was bending to sensitivities in Iran, which had been much slower to draw gas from its side of the shared field. That two-year moratorium was lifted in April, a decade late, after Iran for the first time caught up with Qatar’s extraction rates.

As Qatar refused to yield, the resentment grew.

“People here are scratching their heads as to exactly what the Saudis expect Qatar to do,” said Gerd Nonneman, professor of international relations and Gulf studies at Georgetown University’s Doha campus. “They seem to want Qatar to cave in completely, but it won’t call the Muslim Brotherhood a terrorist organization, because it isn’t. And it isn’t going to excommunicate Iran, because that would jeopardize a relationship that is just too fundamental to Qatar’s economic development.

* * *

Whether nat gas is the source of the Qatari isolation will depend on the next steps by both Saudi Arabia and Iran. Saudi Arabia, along with the United Arab Emirates and Egypt – are all highly reliant on Qatari gas via pipeline and LNG.

According to Reuters, traders startled by the development, have begun to plan for all eventualities, especially any upsets to piped gas supplies from Qatar to the UAE. The UAE consumes 1.8 billion cubic feet/day of Qatari gas via the Dolphin pipeline, and has LNG purchase agreements with its neighbor, leaving it doubly exposed to tit-for-tat measures, industry sources and traders said.

So far flows through Dolphin are unaffected but traders say even a partial shutdown would ripple through global gas markets by forcing the UAE to seek replacement LNG supply just as its domestic demand peaks.

With LNG markets in bearish mood and demand weak, the UAE could cope with Qatar suspending its two to three monthly LNG deliveries by calling on international markets, but Dolphin piped flows are too large to fully replace.

 

“A drop off in Dolphin deliveries would have a huge impact on LNG markets,” one trader monitoring developments said.

And since it all boils down to who has the most leverage as this latest regional “balance of power” crisis unfolds, Qatar could simply take the Mutual Assured Destruction route, and halt all pipeline shipments to its neighbors crippling both theirs, and its own, economy in the process, to find just where the point of “max pain” is located.

end
WTI and Gasoline both drop after a huge gasoline buildup
(courtesy zero hedge)

WTI/RBOB Drop After Biggest Gasoline Build In 5 Months

Following last week’s biggest crude build since 2016, API reports another large crude draw (seemingly confirming refinery run rates remain high), but WTI/RBOB prices slipped lower on an unexpectedly large build in Gasoline (and Distillates).

Genscape reported a 750k draw at Cushing last week…

API

  • Crude -4.62mm (-3.25 exp) -0 9th weekly build in a row
  • Cushing -1.56mm (-593k exp) – biggest draw since Oct ’16
  • Gasoline +4.08mm (-50k exp) – biggest build since Jan ’17
  • Distillates +1.75mm

Following last week’s biggest build since 2016, API reported a 9th weekly draw in Crude but Gasoline saw its biggest build since Jan 2017, very much against the recent trend…

 

Notably WTI rallied back today (on weak dollar) to recover the post-Qatar losses…(despite EIA upping its 2018 US Crude output estimate above 10mm b/d for the first time…EIA sees US crude production at 9.81mbpd (was 9.74) in December 2017 and at 10.29mbpd in December 2018…) but once the API data printed both WTI and RBOB started to fade…

And RBC is upset at this volatility… There’s a “fundamental knowledge gap” occurring in the oil market as many traders are reacting to headline data on items including storage instead of understanding the breakdown of production and fundamentals, RBC’s commodity strategist Mike Tran said in presentation during RBC’s conference in New York earlier.

Tran adds that less physical traders exist in the market along with less pure-play energy commodity hedge funds; banks have also scaled back commodity trading units.

8. EMERGING MARKET

SOUTH AFRICA

South Africa , with today’s release showing that it’s first quarter GDP tumbled .7%. This is the second straight quarter of negative GDP growth and thus by definition South Africa is now officially in recession:

(courtesy zero hedge)

South Africa Unexpectedly Plunges Into Recession

Despite expectations (among 19 ‘economists’) that growth would be up 1.0% in Q1, South African GDP tumbled 0.7% (the second drop in a row) pushing the nation back into recession after eight years.

The median of 19 economists’ estimates in a Bloomberg survey was for 1 percent expansion. There was only one forecast for a contraction. This was a four standard deviation miss…

 

Indicating contraction for the second quarter in a row – technically signaling a recession –  as all bar two industries shrank.

“We can now pronounce that the economy is in recession,” Statistics South Africa Deputy Director General Joe de Beer said. “The major industries that contracted in the economy were the trade and manufacturing sectors.”

The Rand retraced some its recent gains on the GDP print…

As Bloomberg reports, while rains are helping Africa’s most-industrialized economy recover from a 2015 drought that was the worst since records started more than a century earlier, political uncertainty has hampered implementing reforms aimed at boosting growth. President Jacob Zuma changed his cabinet and fired Pravin Gordhan as finance minister in March, a move that saw the nation lose its investment-grade status with two ratings companies for the first time in 17 years.

“There is a risk that these contractions are not over and we could see another negative coming out in the second quarter of this year,” Annabel Bishop, the chief economist at Investec Ltd., said by phone from Johannesburg.

 

“The rating agencies, even if they have already done their assessments, will no doubt be downgrading their GDP outlook off the basis of these numbers,” Gina Schoeman, an economist at Citigroup Inc. in Johannesburg, said by phone.

 

Christie Viljoen, an economist at KPMG LLP in Cape Town, said by phone, “I’m not excited about a big turnaround in the GDP numbers for the second quarter, there’s just no reason to believe that at this stage.”

This miss follows the central bank on May 25 reducing its forecast for growth this year to 1 percent from 1.2 percent, and trimmed the outlook for 2018 to 1.5 percent from 1.7 percent because of the anticipated impact of the downgrades.

 

 

end

 

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

Euro/USA   1.1246 DOWN .0012/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 ALL IN THE RED 

USA/JAPAN YEN 109.41 DOWN 0.982(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 1.2898 DOWN .0007 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

USA/CAN 1.3466 DOWN .0011 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS TUESDAY morning in Europe, the Euro FELL by 38 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1217; 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 10.47 POINTS OR .34%     / Hang Sang  CLOSED  UP 134.15 POINTS OR 0.52% /AUSTRALIA  CLOSED DOWN 1.450% / EUROPEAN BOURSES OPENED ALL IN THE RED 

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED DOWN 190.92 POINTS OR 0.95%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 134.15 POINTS OR 0.52%  / SHANGHAI CLOSED UP 10.47 POINTS OR .34%   /Australia BOURSE CLOSED DOWN 1.450% /Nikkei (Japan)CLOSED DOWN 190.92 POINTS OR 0.95%    / INDIA’S SENSEX IN THE RED

Gold very early morning trading: 1292.40

silver:$17.69

Early TUESDAY morning USA 10 year bond yield: 2.145% !!! DOWN 4 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.805, DOWN 4  IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 96.73 DOWN 7  CENT(S) from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 3.085%  UP 3 in basis point(s) yield from MONDAY 

JAPANESE BOND YIELD: +.042%  DOWN 1  in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.592%  UP 2 IN basis point yield from MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.256 down 2   POINTS  in basis point yield from MONDAY 

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

GERMAN 10 YR BOND YIELD: +.252% DOWN 3 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR TUESDAY

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

Euro/USA 1.1269 UP .0012 (Euro UP 12 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.44 DOWN  0.952 (Yen UP 95 basis points/ 

Great Britain/USA 1.2885 DOWN 21( POUND DOWN 21 basis points)

USA/Canada 1.3455 DOWN .0021 (Canadian dollar UP 21 basis points AS OIL FELL TO $47.11

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 12 basis points to trade at 1.1269

The Yen ROSE to 109.44 for a GAIN  of 95  Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL BY 21  basis points, trading at 1.2885/

The Canadian dollar ROSE by 21 basis points to 1.3455,  WITH WTI OIL FALLING TO :  $47.11

The USA/Yuan closed at 6.7952/
the 10 yr Japanese bond yield closed at +.042% DOWN 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 4 IN basis points from MONDAY at 2.139% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.805  DOWN 4  in basis points on the day /

Your closing USA dollar index, 96.63 DOWN 10 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED DOWN 0.81 POINTS OR 0.01%
German Dax :CLOSED DOWN 132 POINTS OR 1.04%
Paris Cac  CLOSED DOWN  38.67 POINTS OR 0.73% 
Spain IBEX CLOSED  DOWN 5.00 POINTS OR 0.05%

Italian MIB: CLOSED  UP 38.97 POINTS/OR 0.19%

The Dow closed DOWN 47.81 OR 0.23%

NASDAQ WAS closed DOWN 20.62 POINTS OR 0.33%  4.00 PM EST
WTI Oil price;  47.11 at 1:00 pm; 

Brent Oil: 49.74 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  56.52 UP 10/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD FALLS T0  +0.252%  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:$47.34

BRENT: $49.41

USA 10 YR BOND YIELD: 2.181%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.84%

EURO/USA DOLLAR CROSS:  1.1255 DOWN .0023

USA/JAPANESE YEN:110.48  UP 0.124

USA DOLLAR INDEX: 96.81  UP 10  cent(s) ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2902 : UP .0020  OR 20 BASIS POINTS.

Canadian dollar: 1.3473 DOWN 4 BASIS pts 

German 10 yr bond yield at 5 pm: +.252%

END

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

TRADING IN GRAPH FORM FOR THE DAY

FANG Flop Sparks D(own)-Day For Stocks As Dollar Dumps To 8-Month Lows

73 years ago today…

 

Gold remains the big winner post-payrolls…

 

Quiet day for US Macro didn’t help as stocks opened under pressure after overnight weakness in Asia (USDJPY and NKY), staged the ubiquitous ramp back to try and get to unchanged.. only to fade into the close…

 

FANG Stocks got hammered in the last hour of the day…

 

with GOOGL losing the $1000 level

 

VIX pushed higher on the day to close above 10.5…

 

The Dollar Index continues to slide post-payrolls…

 

Down to its lowest in 8-months… and is unchanged YoY…

 

USDJPY tumbled almost 1% today to 7-week lows…dragging NKY lower…

 

Treasuries were bid (helped by headlines about China buying), erasing all of yesterday’s losses…

 

To trade at their lowest since the election… and notably 30Y yields are below the levels when The Fed first hiked rates in Dec 2015 – “policy error”

 

As Trumpflation trades are collapsing…

 

Gold continued to rise to its highest since the election…

We now find out that the Democrats are plotting to  filibuster the debt ceiling debate and shut down government

(courtesy zero hedge)

Democrats Plot Debt Ceiling Fight And Government Shut Down To Thwart Trump Tax Cuts

After 8 years of bashing Republicans for using debt ceiling votes as leverage to try to force spending cuts, Democrats now seem intent upon doing pretty much the same thing, well, at least the ‘using the debt ceiling as leverage’ part.  In fact, after repeatedly calling for a ‘clean’ debt ceiling vote (i.e. one without attached conditions) House minority leader Nancy Pelosi recently hinted, in her typical incoherent manner no less, that Democrats may now be looking into using the debt ceiling vote as leverage to thwart Trump’s forthcoming tax proposals.

“I don’t have any intention of lifting the debt ceiling to enable the Republicans to give another tax break to the wealthy in our country.  To further exacerbate the challenge that is created when they have their trickle down economics.”

 

“The president keeps saying ‘the tax bill is moving through Congress,’ it doesn’t exist.  It doesn’t exist.  So you understand the frustration.  It doesn’t exist.  There is no tax bill moving through Congress.”

 

As Bloomberg points out, Democrats have been the key to passing ‘clean’ debt ceiling increases in the past but hypocrisy is not a concept that is well understood in Washington D.C.

It’s unclear how this would work in practice, but Democratic aides in both chambers said they are discussing possible strategies to tie the debt ceiling to blocking tax cuts.

 

Such an approach would be a significant change for Democrats, who have spent the past eight years arguing that debt ceiling increases should be free from conditions, and could further complicate efforts to raise the government’s borrowing authority when the current limit is reached later this year.

 

Democrats have been willing in the past to provide Republicans enough support on “clean” debt-ceiling measures to help make up for the loss of votes among conservatives, mostly in the House, who refuse to support them without deep cuts to domestic programs. Democrats were key to helping resolve the 2011 fight over the debt limit, a protracted standoff that contributed to S&P Global Ratings’ decision to downgrade the U.S. to AA+ to AAA.

Ironically, efforts to use the debt ceiling as leverage could, presumably for the first time ever, partially align the interests of Democrats with the most conservative voices in Congress, many of whom would have no problem shutting down the federal government for a while.  After being singled out and blamed for the last government shutdown in 2013, the House Freedom Caucus undoubtedly welcomes Pelosi’s sudden support.

Already, members of the House Freedom Caucus have said they will push for spending cuts in this year’s debt-ceiling debate in exchange for their support. On Friday, President Donald Trump’s chief economic adviser, Gary Cohn, said the White House would consider spending cuts or policy changes favored by Republicans in order to avert an unprecedented default. That appears to align him with White House budget director Mick Mulvaney, but against Treasury Secretary Steve Mnuchin, who has called on Congress to pass a “clean” debt-ceiling hike.

 

“Treasury secretary would love to do a clean debt ceiling — I get that. But if we need to get things attached to get it through, we’ll attach things,” Cohn said on CNBC.

 

Several conservative groups met at the White House last week to discuss a strategy. Ideas they discussed included caps on mandatory programs such as Social Security and Medicare, extending automatic across-the-board spending cuts and matching any debt-limit increase with spending cuts, according to two participants in the meeting.

 

Republicans in both chambers are seeking to draft and approve a tax-cut package this year that would lower individual and corporate tax rates, although no proposal has been circulated yet. Several leaders, including Senate Majority Leader Mitch McConnell, have said they want any tax overhaul to be revenue-neutral. But Trump has repeatedly promised large cuts.

So, by all means, fight on Nancy…for one time in your multi-decade political career you may actually slip up and save taxpayers some money.

 

 

end

 

After dumping USA treasuries these past few years, China announces that yields on USA treasuries is more attractive than other sovereigns.  This caused bond yields to tumble to 2017

(courtesy zero hedge)

 

(courtesy zero hedge)

“Schizophrenic” JOLTS Report Reveals Record Job Openings As Hiring Crashes

Following the very disappointing, and downward revised May jobs report, when as a reminder the US added only 138,000 jobs, and 120K in the last three months. today’s JOLTS report showed a very mixed picture in the labor market in the month of April (recall JOLTS is two months delayed) with great news on the job openings front, offset by another month of hiring and quits weakness.

So what did “Janet Yellen’s favorite labor market indicator” show?  First, the one indicator everyone hones in on first, the number of job openings surged by 301K to an all time high of 6.044 million, with the biggest number of job openings found in Professional and Business Services (1.134MM), Education and Health Services (1.112MM) and Health case and social assistance (1.013MM).  The number of job openings edged up for total private (+220k) and increased for government (+39k). Job openings also increased in a number of industries with the largest increase occurring in accommodation and food services (+118k). Job openings decreased in durable goods manufacturing (-30k).

And while America’s millions of job openings remain unfilled – which according to the latest Fed Beige Book is due to a growing decline in qualified workers – a continuation of the recent troubling trend was seen in the April hiring numbers, which showed that new hires in the month plunged by 253K to 5.051 million, the lowest number of monthly hires going back to April 2016!  What is just as concerning is that this series has completely flatlined in the 5-5.3 million range for the past three years.

Putting the above chart in a more troubling light was the Y/Y % rate of change: as shown in the chart below, has been steadily declining since 2014, and after its first negative print in February, has wrapped the flatline in both March and April, when only 0.3% more workers were hired than a year ago.

Which leads to our favorite chart: hiring vs payrolls. With the cumulative 12 month change in jobs declining steadily since 2015, many wonder if and when the pace of hiring – traditionally a leading indicator to overall jobs growth – will start a sharper deterioration. For now, it has kept steady in the abovementioned range, and in April dropped to a level last seen in 2015.

Last but not least was that other key indicator, the “quits” rate, or the “take this job and shove it.” As a reminder, Americans only quit their jobs when they are confident they can find a better paying job elsewhere, and in January we saw the number of quits rising to the highest level in 16 years. Here, after a modest rebound in March, when an additional 102K Americans quit their jobs, following a 150K drop in February, the number once again dropped substantially and in April declined to 3.027 million, down 111K to the lowest since last August.

Overall, a very mixed JOLTS reports, with several trading desks quantifying its as outright “schizophrenic”, and as a reminder, JOLTS tends to be goalseeked retroactively during major inflection points in the payrolls series. And with the BLS reporting that job additions in recent months have declined substantially, it may soon be time for the BLS to take a long, hard look at yet another downward JOLTS revision.

Finally, as expected, the latest Beveridge Curve confirms that the “new normal” divergence between job openings and the unemployment rate continues.

END

Macy’s shares tumble after issuing another profit warning.  This is an excellent Bellwether indicator as to how the uSA economy is behaving

(courtesy zero hedge)

Macy’s Tumbles After Issuing Profit Margin Warning

Another day, another guidance cut by a retailer, this time from Macy’s which during its investor meeting, warned investors that the company’s gross margin could be below the forecast given just this part February, some 60-80 basis points lower.

According to Fly on the Wall, Macy’s CFO Karen Hoguet said at investor day that the gross margin for the fiscal year ending January 2018 is trending 60bps-80bps below FY17, with the 2Q rate ~100bps below 2QFY17. One possible explanation: liquidation of excess inventory as the company is unable to sell enough product per planned prices. Indeed, this was confirmed moments ago by a statement made on the investor call:

  • MACY’S INC EXEC SAYS NOT SATISFIED WITH INVENTORY LEVELS IN STORES

The silver lining: Macy’s, at least for now, reaffirmed its FY18 sales and EPS forecast, and said it plans for exclusive product to reach 40% by 2020.

Some other details from the investor meeting per Bloomberg:

  • Macy’s says it can expand gross margin on apparel side of business over time, but can’t say when beauty margin will grow: mgmt speaking at investor day.
  • Excess inventory, beauty markdowns hurt margin forecast
  • There is a place for both Amazon, Macy’s to succeed
  • Hoping to scale Backstage next year; beauty working very well in Backstage, partly due to bath & body; home products also working
  • Herald Square property getting more valuable
  • Ralph Lauren, Michael Kors are part of M’s power brands; they may be having trouble right now, but confident they will turn, just like Tommy Hilfiger did
  • Nothing in forecast that is counting on traffic changing from current trends
  • Buy online/pickup in stores capability will be available by year end
  • Looks at product every day with an eye towards “editing” SKUs
  • Not satisfied with inventory turns

 

The market did not take the warning in stride, and M stock has tumbled to session lows, down as much as 5% to lowest intraday since mid-May.

Well that about does it for tonight.

I will see you tomorrow night

H.

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