GOLD: $1252.20  DOWN $20.40

Silver: $16.69  DOWN 42  cent(s)

Closing access prices:

Gold $1253.40

silver: $16.75













Premium of Shanghai 2nd fix/NY:$7.25


LONDON FIRST GOLD FIX:  5:30 am est  $1260.25




For comex gold:



TOTAL NOTICES SO FAR: 2208 FOR 220,800 OZ    (6.8678 TONNES)

For silver:

For silver:


335,000  OZ/

Total number of notices filed so far this month: 901 for 4,505,000 oz




The bankers continued with their raid of gold and silver today. I believe that the bankers are quite concerned with silver as demand continues to rise and the bankers have a massive paper short.

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. It is up for the 11th consecutive trading day. We certainly have a determined entity trying to get its hands on whatever silver is available.

The big news of the day came from China where the large conglomerate insurance giant Anbang  chairman, Wu has just been detained by the authorities.  Anbang’s revenue dropped by 90% this month and that has scared the living daylights out of investors. These guys were the huge funders of those shadow banking WMP’s and a default with Anbang will no doubt cause a systemic mess throughout China.

Let us have a look at the data for today


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!



In silver, the total open interest ROSE BY 1179  contract(s) UP to 202,393 WITH THE RISE IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (UP 37 CENT(S). In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.014 BILLION TO BE EXACT or 145% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold ROSE BY  2,867 contracts WITH THE RISE IN PRICE OF GOLD   ($7.00 with YESTERDAY’S TRADING). The total gold OI stands at 474,001 contracts.

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


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


We had  a monstrous change in tonnes of gold at the GLD: a paper withdrawal of 13.32 tonnes

Inventory rests tonight: 853.68 tonnes



Today: no  a monstrous changes in inventory/ a withdrawal of 3.405 million oz of paper silver

THE SLV Inventory rests at: 336.200 million oz



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

1. Today, we had the open interest in silver ROSE BY 1,179 contracts UP TO 202,393 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), WITH THE RISE IN PRICE FOR SILVER WITH YESTERDAY’S TRADING  ( UP 37 CENTS).We gained back a few of our paper players as our  core players remain firm and determined.

(report Harvey)


2.a) The Shanghai and London gold fix report



2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg


 i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed UP 1.81 POINTS OR 0.06%   / /Hang Sang CLOSED DOWN 310.56 POINTS OR 1.20% The Nikkei closed DOWN 51.70 POINTS OR 0.26%/Australia’s all ordinaires  CLOSED DOWN 1.12%/Chinese yuan (ONSHORE) closed DOWN at 6.8035/Oil DOWN to 44.64 dollars per barrel for WTI and 46.95 for Brent. Stocks in Europe OPENED IN THE RED,,      ..Offshore yuan trades  6.8042 yuan to the dollar vs 6.8035 for onshore yuan. NOW  THE OFFSHORE IS WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN A LITTLE WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A LOT WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY WITH THE RISE IN THE USA DOLLAR





i)This is huge!! The large Chinese conglomerate Anbang which deals in insurance and other aspects of the global economy just received moments ago a  systemic risk as revenues crash 90% as its Chairman Wu has been detained. This will no doubt cause a systemic crash in the Chinese economy due to the potential liquidation of WMP products and Anbang itself!!!

(courtesy zerohedge)


ii)Not only is China trying to rein in shadow banking activities but now we are witnessing a crash in net bond issuance

China  is not growing at all

( zero hedge)



i)The pound spikes higher as the Bank of England now becomes hawkish on a rate increase.

( zero hedge)

ii)the EU has reached a deal with Greece. However  no debt reductions until 2018. In essence the 8 billion euros received will go right back to pay the ESFS boys and other loans from  the EU.  Greece gets nothing.

( zero hedge)



Russia/Germany/Austria vs USA

Germany and Austria are getting quite angry with the latest sanctions against Russia for their “incursion into USA politics as well as “increased involvement into the Ukraine”.  The USA is set to pose fines for any European country that participates in the NordStream 2 pipeline.

the real reason for the sanctions:  the USA wants the LNG pipeline from Qatar through Saudi Arabia, through Syria, through Turkey and onto Greece and the rest of Europe bypassing Russia altogether

(courtesy zerohedge)



WOW!  This will hurt” existing home sales crash in May by 6.2%

(courtesy zero hedge)

ii) NIKE

This ought to give us a huge clue as to how global growth is performing:  Nike is cutting 2% of its global workforce

( zero hedge)





i)A very important commentary from Andrew Maguire today.  He comments on the continual spoofing in the gold/silver markets by central banks.  He also has stated that sovereigns have bids at around $1260 or slightly below and that will give support to the market


( Andrew Maguire/Kingworldsnews)


ii)It looks like our major bankers did not win in their fight to manage the State of Texas new gold depository: Lone Star tangible won and they will also provide services for anyone wishing to hold gold there.

( Texas Tribune/GATA)

iii)Barrick to hold talks with Tanzania’s officials to allow export of dore

( Reuters/GATA)

iv)South Africa’s new charter is demanding that mines must be 30% owned by blacks. If you will recall this is the same scenario that wiped out mining in Rhodesia which became Zimbabwe


( zero hedge)

10. USA Stories

i)Last night:  Scalise is still in critical condition and will require more surgeries


( zero hedge)

ii)The witch hunt is on:  Mueller is investigating Trump for possible obstruction of Justice according to the Washington Post.What absolute nonsense!

( zerohedge)

iii)Trump’s response:  they had zero proof on Russian collusion so now they go after obstruction of Justice on the phony Russian collusion.
( zero hedge)
iv)According to Bloomberg’s Cudmore, the Fed has made a big mistake and every tightening move is a signal to buy long bonds due to their mistake. They themselves are pushing the uSA towards recession
( zero hedge)
v)Another sign that the economy is rolling over and that the inflation that the Fed needs is non existent

( zero hedge)

vi)Soft data NY Fed manufacturing and Philly Fed soar



vii)Janet will not like this:  hard data USA manufacturing output tumbles .4% month/month in May

( zero hedge)

viii)Illinois is essentially bust:

( Mish Shedlock/Mishtalk)

ix)The new budget projections is just sheer fantasy

(Craig Wilson/David Stockman)

Let us head over to the comex:

The total gold comex open interest ROSE BY 2867 CONTRACTS UP to an OI level of 474,001 WITH THE  RISE IN THE PRICE OF GOLD ($7.00 with YESTERDAY’S trading)., The bankers are expecting more gold leaves to fall from the gold tree with the raid in the access market and that data will be given tomorrow.

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 GAIN OF 22 contract(s)RISING TO  1573.  We had 15 notices filed yesterday so we FINALLY GAINED 37  contracts or an additional 3700 oz will stand for delivery in this very active delivery month of June AND  0 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 AT THE COMEX ARE SO FAR REFUSING THAT FIAT BONUS (OVER 11 TONNES STANDING)

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 111 contracts to stand at 1915 contracts. The next big active month is August and here the OI GAINED 1,241 contracts UP to 346,986,  as the bankers trying to keep this month down to manageable size.

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


The next big active month will be July and here the OI LOST 3,705 contracts DOWN to 96,828 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 10 contracts to stand at 65.  The next big active delivery month for silver will be September and here the OI already jumped by another 5009 contracts up to 64,461.

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

 Monday, June 15.2016:  90,474 contracts were still outstanding vs 96,828 contracts June 15.2017

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  (3,945,000 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 67 notice(s) filed for 335,000 oz for the June 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 171,197 contracts which is  GOOD

Yesterday’s confirmed volume was 357,697 contracts  which is EXCELLENT

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for JUNE
 June 15/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 nil oz
Deposits to the Dealer Inventory in oz nil  oz
Deposits to the Customer Inventory, in oz 
 nil oz
No of oz served (contracts) today
2 notice(s)
200 OZ
No of oz to be served (notices)
1571 contracts
157,100 oz
Total monthly oz gold served (contracts) so far this month
2208 notices
220,800 oz
6.86780 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   282,794.7 oz
Today we HAD  0 kilobar transaction(s)/ 
We had 0 deposit into the dealer:
total dealer deposits: nil oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had no dealer deposits:
total dealer deposits:  nil oz
we had 0  customer deposit(s):
total customer deposits; nil  oz
We had 0 customer withdrawal(s)
total customer withdrawal: nil  oz
 we had 0 adjustment(s):
 Rather strange for the 2nd biggest delivery month of the year and no activity inside the gold comex.  Also it must be still alarming to our bankers to see 11.5 tonnes of gold standing and probably no gold to back up those who stand.

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 2  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 2 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

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 (2208) x 100 oz or 220,800 oz, to which we add the difference between the open interest for the front month of JUNE (1573 contracts) minus the number of notices served upon today (2) x 100 oz per contract equals 377,900  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 (2208) x 100 oz  or ounces + {(1573)OI for the front month  minus the number of  notices served upon today (2) x 100 oz which equals 377,900 oz standing in this  active delivery month of JUNE  (11.754 tonnes)
Total dealer inventory 889,847.333 or 27.67 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,636,844.749 or 268.64 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 268.64 tonnes for a  loss of 34  tonnes over that period.  Since August 8/2016 we have lost 85 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best
I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold!

The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.
And now for silver
June INITIAL standings
 June 15 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 1,960.300  oz
Deposits to the Dealer Inventory
NIL oz
Deposits to the Customer Inventory 
 nil oz
No of oz served today (contracts)
(335,000 OZ)
No of oz to be served (notices)
8 contracts
( 40,000 oz)
Total monthly oz silver served (contracts) 901 contracts (4,505,000 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 2,735,819.5 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: NIL  oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 2 customer withdrawal(s):
 i) out of Delaware: 960.60 oz
ii) Out of HSBC: 999.700 oz
 We had 0 Customer deposit(s):
***deposits into JPMorgan have now stopped
In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts.
why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver
total customer deposits: nil oz
 we had 0 adjustment(s)
The total number of notices filed today for the JUNE. contract month is represented by 67 contract(s) for 335,000 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 901 x 5,000 oz  = 4,505,000 oz to which we add the difference between the open interest for the front month of JUNE (75) and the number of notices served upon today (67) x 5000 oz equals the number of ounces standing


Thus the initial standings for silver for the JUNE contract month:  901 (notices served so far)x 5000 oz  + OI for front month of JUNE.(75 ) -number of notices served upon today (67)x 5000 oz  equals  4,545,000 oz  of silver standing for the JUNE contract month.
We gained 65 contracts or an additional 325,000 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 82,433 which is HUGE
Yesterday’s  confirmed volume was 148,650 contracts which is GIGANTIC
Total dealer silver:  34.315 million (close to record low inventory  
Total number of dealer and customer silver:   204.796 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

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 6.6 percent to NAV usa funds and Negative 6.8% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.1%
Percentage of fund in silver:37.8%
cash .+0.1%( June 15/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV  RISES TO .31% (june 15/2017) 
3. Sprott gold fund (PHYS): premium to NAV RISES to -0.64% to NAV  (June 15/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.31 /Sprott physical gold trust is back into NEGATIVE/ territory at -0.64%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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

 Section: Daily Dispatches

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


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

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

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

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

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

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

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

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

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

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

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


And now the Gold inventory at the GLD

June 15/ a monstrous “paper” withdrawal of 13.32 tonnes/Inventory rests at 853.68 tonnes



June 13. No change in gold inventory at the GLD/Inventory rests at 867.00 tonnes

June 12/No change in gold inventory at the GLD/Inventory rests at 867.00 tonnes

June 9/no change in inventory at the GLD/Inventory rests at 867.00 tonnes


June 7 a huge change in inventory/a deposit of 13.93 tonnes/inventory rests at 864.93 tonnes

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


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 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

June 15 /2017/ Inventory rests tonight at 853.68 tonnes


Now the SLV Inventory

June 15/ a massive “paper withdrawal” of 3.405 million oz of silver/Inventory rests at 336.200 million oz/


June 13/no change in silver inventory at the SLV/Inventory rests at 339.605 million oz

June 12/no change in silver inventory at the SLV/Inventory rests at 339.605 million oz/

June 9/no change in silver inventory at the SLV/Inventory rests at 339.605 million oz/


June 7/no change in inventory at the SLV/inventory rests at 339.605 million oz/

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/


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

June 15.2017: Inventory 336.299  million oz
We are going to provide GOFO rates  (gold) each day and shortly silver
courtesy of Bron Suchecki of Monetary Metals
and here is today’s figures:

The actual figures can be found on our home page https://monetary-metals.com/

with this box in the left side


6 month: 1.30%  (yesterday 1.26%)

12 month:  1.45% (yesterday 1.44%)

Unlocking the Productivity of Gold
M: +61 4 1210 1912 | bron@monetary-metals.com
Skype: bron.suchecki
Twitter: @bronsuchecki
Website: monetary-metals.com
Use this link to encrypt and safely send confidential documents to Monetary Metals®


Major gold/silver trading/commentaries for THURSDAY



Is there gold “hype” and is gold an emotional trade?

– Very little hype in gold

– Sentiment is important in the gold market as is other markets particularly stocks

– Article ignores the large body of research showing gold is safe haven asset

– Gold may struggle to breach $1,300 in short term

– Trading gold and short term speculation is high risk and for professionals

– Important for investors to focus on long term fundamentals which remain sound

Cycle of Emotions – Hope Phase Now (GoldCore)

Earlier this week Shelley Goldberg , commodities strategist for Roubini Global Economics wrote  about how gold was set to disappoint the ‘gold bulls – again.’ Goldberg argued that we should ‘throw out all the fancy analysis and realize that gold is an emotional trade.’

Aside from yesterday’s little hiccup following the Fed announcement, the gold price has had a great year. Goldberg agrees, ’After breaking through a six-year downtrend line, gold rose last week to its highest level since Nov. 4, and is up an impressive 10.5 percent this year.’

Despite this performance Goldberg argues that we shouldn’t ‘believe the hype’ when it comes to gold. The hype she is referring to seems to be made up of the various op-eds and analysis that argue $1,300/oz is a key barrier for the metal to break through in order to set off on a bull run.

A very straightforward presentation of the ‘number of reasons why gold is in demand’ makes up the bulk of Goldberg’s article, yet she concludes ‘with so many valid reasons for gold to rally further, why am I a doubter?  The most rudimentary reason is that gold is also an emotional trade and $1,300 is a round number. One need not be a superstar technical analyst. Just consider that for both psychological and systematic reasons, traders and algorithms like to sell on landmark numbers that also serve as a testing ground for a rally’s sustainability.’

Is the evidence that traders like to trade off ‘landmark numbers’ but analysis says it should go higher evidence that there is ‘hype’? We disagree. Rather we argue that not only is there relatively little hype in the gold market but that it is significantly outshone by all the reasons Goldberg gives herself, for why gold demand is up.

Where is the hype?

A brief google search of ‘$1,300 gold’ and my own daily experience of reading gold commentary does not bring me to the conclusion that there is hype. Gold has had a great year, but it has also surprised and disappointed many of us for the last couple of years. We are all aware that $1,300 is the next significant level, but most think that it needs to go higher than this in order to get any significant momentum.

This is something most seem relatively balanced about. There is a huge amount going on both politically and economically at the moment. As we often conclude so many of these commentaries, there is uncertainty everywhere and that includes gold’s performance.

We are not even seeing any ‘hype’ when it comes to physical gold buying. Gold demand is down in the US and we are not in any religious periods that mean manic gold buying as we often see during wedding season in India or New Year in China.

The focus on $1,300 reduces the argument for gold down to one thing – people only care about gold because of the price. This isn’t true, partly because of the six very comprehensive and real reasons Goldberg herself gives to the bullish argument to own gold but also thanks to academic evidence, history and sentiment.

Why is gold demand up?

Goldberg offers six reasons for gold’s popularity at present:

  1. Role as an inflation hedge
  2. US Dollar performance
  3. Interest rates
  4. Only commodity showing strength
  5. Concerns over overvalued sectors
  6. Geopolitical risks pushing safe haven demand

These are all very significant reasons for gold’s performance of late. What we tend to see in mainstream commentary regarding gold is the suggestion that when one of these issues begins to ‘improve’ then gold will begin to suffer. This is a very short-term perspective and one which is supported by traders and speculators. It does not take into account long term fundamentals, all of which these six listed factors feed into. The long term fundamentals are not just influenced by these factors but also history, gold’s performance in a portfolio and sentiment.

Does the price matter?

Of course the price matters, we all like to know what we can sell something for should we need to. But does it matter as much as Goldberg seems to think it does?

For much of the time you are holding gold, you should perhaps look at the price in the same way one might view the price of their house. It’s nice to know what its worth but at that moment in time you know you have no plans to sell it and you still need a roof over your head.

Short-term the price of gold may well struggle to breach $1,300. For now it is likely to stay between $1,260-$1,280, especially given the recent Fed announcement and various uncertainties in the global economy. This might sound like bad news for an investor who entered the gold market at nearly $2,000/oz in September 2011. But did the investor buy gold because of its US dollar price or because of the long-term fundamentals and gold’s role as a safe haven?

Just like when you own a house, you also buy home insurance. So when you invest and have savings you should have a form of financial insurance. Of course, the price of this financial insurance matters, but you will also be considering all the factors that affect your investments both long and short-term, you are not just focused on the price.

It’s a safe haven. It’s academic

“…there is plenty of global geopolitical risk to popularize haven investments, from the spreading of radical Islamic terrorism, to unpredictable North Korean, Philippine and Russian strongmen, to Brexit and the potential for other European Union members to exit, to Gulf Cooperation Council nations severing ties with Qatar and heightening tensions in the Middle East. Add to that global warming, climate risk and wars over water. Then consider the U.S., where a special counsel has been set up to investigate Russian meddling in the 2016 election and where hopes are fading for a economic bump from President Donald Trump’s pro-growth fiscal agenda.”

Goldberg seems to think that gold’s role as a safe haven (or form of financial insurance) is only valid due to geopolitical risk. In fact, gold acts as a safe haven against the initial five reasons she lists for gold demand climbing.

Back in February, we defined a safe haven as ‘An investment that is expected to retain its value or even increase its value in times of market turbulence. Safe havens are sought after by investors to limit their exposure to losses in the event of market downturns.’

In that same article we drew the reader’s attention to the growing body of research on gold and its financial role. Goldberg appears to be unaware of this academic evidence which appears to turn so called hype and emotional trading into real, analytical evidence for gold’s vital role in a portfolio, regardless of its price performance.

The academic research does not define gold as just having one role, for instance ’Hedges and Safe Havens – An Examination of Stocks, Bonds, Oil, Gold and the Dollar’ by Dr Constantin Gurdgiev and Dr Brian Lucey is an excellent research paper which clearly shows gold’s importance to a diversified portfolio due to gold’s “unique properties as simultaneously a hedge instrument and a safe haven.”

As Goldberg points out, sentiment for safe havens are high at present because of the geopolitical sphere. But, she also dismisses gold because it is an emotional investment. In truth, the two cannot really be separated; there is a fine line between sentiment and emotion.

If sentiment is high then we can perhaps feel too confident about an investment and we act on that emotion, and vice versa. But Goldberg seems to think that gold investors are unable to keep these feelings in check or that these are invalid reasons for investing at all.

Conclusion: What’s wrong with a bit of emotion?

“The desire of gold is not for gold. It is for the means of freedom and benefit” Ralph Waldo Emerson

Like any market, sentiment plays a big role in the price and demand for gold. There is also strong anecdotal evidence of gold demand being driven by emotion – the purchase of jewellery is the most obvious example but also consider demand for gold bars and coins during religious festivals. Additionally when people feel panicked or threatened (see Emerson’s quote) then demand for gold will go up.

None of these reasons make gold an investment that feeds of hype and should be ignored. Human emotions and sentiment drive markets, they have throughout history and they will continue to do so. What’s wrong with a bit of emotion? Very few humans can honestly say that some of the biggest life decisions they have made have not been as a result of emotion.

The key here is to be aware of when emotion is the only reason you are making an investment decision, rather than considering the other factors such as gold’s role in the wider economy, in your portfolio and its past performance.

Is gold an emotional trade? It depends on the trader. To give a blanket statement that ‘gold is also an emotional trade’ is to suggest that everyone who buys and sells gold is blinded by emotion.

Goldberg is dismissive of the multitude of factors that affect the decision to buy and hold gold, instead focusing on the price. Investors should always be aware of the risks when investing in gold, but investing in gold means you are considering and insuring yourself against the risks in the wider economy and political sphere. When you take these into account then you are unlikely to be worrying about so-called hype and an arbitrary number picked out of a price chart.

News and Commentary

Gold eases after Fed raises interest rate (MarketWatch.com)

Fed raises rates, unveils balance sheet cuts in sign of confidence (Reuters.com)

ETF rebalancing on Friday – Bumpy ride for junior gold miners (TheGlobeAndMail.com)

Oil settles at a 7-month low under $45 a barrel (MarketWatch.com)

Gold jumps, but traders see limited upside ahead of the Fed (CNBC.com)

Is Gold Undervalued? (MorningStar.co.uk)

Bundesbank’s Weidmann: Digital Currencies Will Make The Next Crisis Worse (ZeroHedge.com)

You won’t believe this stupid new law against Cash and Bitcoin (SovereignMan.com)

How the U.S. government tried to convict a golden rooster (QZ.com)

What’s next for the pound? Frisby (MoneyWeek.com)



A very important commentary from Andrew Maguire today.  He comments on the continual spoofing in the gold/silver markets by central banks.  He also has stated that sovereigns have bids at around $1260 or slightly below and that will give support to the market


(courtesy Andrew Maguire/Kingworldsnews)



Government’s agents keep ‘spoofing’ in gold market, Maguire tells KWN


12:44p ET Wednesday, June 14, 2017

Dear Friend of GATA and Gold:

London metals trader Andrew Maguire today tells King World News that entities trading gold futures for the Federal Reserve and Bank for International Settlements were entering “spoofing” trades in gold futures yesterday at gold’s 50-day moving average and that he reported this, along with supporting data, to the U.S. Commodity Futures Trading Commission.

With all the recent investigations, lawsuits, and criminal charges recently brought against market manipulation, Maguire says, only the operatives of governments and central banks would continue such “spoofing.”

Maguire’s interview is excerpted at KWN here:


CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.









It looks like our major bankers did not win in their fight to manage the State of Texas new gold depository: Lone Star tangible won and they will also provide services for anyone wishing to hold gold there.


(courtesy Texas Tribune/GATA)


Texas taps private vendor to manage first state-run gold depository in U.S.


By Andy Duehren
Texas Tribune, Austin
Wednesday, June 14, 2017


Two years after Gov. Greg Abbott announced Texas would build the country’s first state-run gold depository, the project took a major step forward today.

Comptroller Glenn Hegar announced at a news conference at the Capitol that his office had selected Austin-based Lone Star Tangible Assets as the private vendor tasked with building and operating the Texas Bullion Depositor

“The Texas Bullion Depository will offer Texas safe, fully-insured storage of precious metals providing an alternative to the depositories largely located in and around New York City,” Hegar said.

In 2015, the Texas Legislature passed House Bill 483, creating a gold depository in Texas. The project’s main cheerleader, state Rep. Giovanni Capriglione, R-Southlake, was only able to pass the bill after rewriting it to ensure there would be no cost to the state by requiring that a private vendor run it and charge fees.

The depository will store gold and other precious metals, allowing customers to open accounts and potentially pay for transactions with them.

The state has signed a five-year-contract with Lone Star Tangible Assets with two one-year extension options, Hegar said.

Hegar said the depository could open in Lone Star’s current Austin facility as early as January. The company will also build a new vault facility in the Austin-area specifically for the Texas Bullion Depository, Hegar said. That facility could be ready as early as December 2018.

But Hegar said he expects Texans won’t have to travel to Austin to open accounts at the depository.

“We envision a network of licensed and insured depository agents to help Texans sign up for our services,” Hegar said.

The announcement ends a two-year review process in the Comptroller’s office for a private vendor to run the depository. More than a dozen companies responded last year to Hegar’s request for private sector input on the project. Tom Smelker, the director of Treasury Operations in the Comptroller’s office, will serve as the state’s first Texas Bullion Depository administrator.

Abbott drew national attention in 2015 when he announced that the depository would allow Texas to “repatriate” $1 billion in gold bullion currently being stored in New York. He was referring to gold bullion assets held by the University of Texas Investment Management Company, which oversees the assets of both the University of Texas and Texas A&M systems.

The nonprofit currently has $861.4 million worth of gold bullion in storage at the HSBC Bank in New York City, according to Jenny LaCoste-Caputo, a spokeswoman for the UT system. But UTIMCO officials appear unlikely to move their gold holdings to the state depository. Officials there have previously said the Texas depository would have to be a member of the Chicago Mercantile Exchange’s COMEX platform, where gold futures contracts are traded. LaCoste-Caputo confirmed Tuesday that that condition still holds.

The new state depository will not be a member of COMEX, according to Matthew Ferris, chairman of Lone Star Tangible Assets. He pointed to geographical limitations as preventing the Texas Bullion Depository from joining.

“Ultimately, our goal is to create liquidity of COMEX levels in the state of Texas for those large institutions over time,” Ferris said.

LaCoste-Caputo also said that gold storage fees UTIMCO pays would have to be cheaper at the Texas depository than it currently pays in New York for the organization to make the switch.




Barrick to hold talks with Tanzania’s officials to allow export of dore

(courtesy Reuters/GATA)


Barrick Gold to hold talks with Tanzania over export row


By Fumbuka Ng’wanakilala and David Lewis
Wednesday, June 14, 2017Barrick Gold’s chairman and Tanzania’s president met today and agreed to hold talks aimed at resolving an escalating dispute over an export ban that has hit Barrick’s Acacia Mining.Shares in Acacia, 63.9 percent owned by Barrick, jumped as much as 11 percent, to 303 pence, after the news and closed 5.5 percent higher, outpacing sector rivals.Tanzania is Africa’s fourth-largest gold producer, and Acacia its largest miner, with three gold mines that also produce copper in the East African country.Acacia’s market value has nearly halved to about $1.4 billion since Tanzania banned the export of unprocessed ore in March, part of a push for the construction of a local smelter to make the country’s gold exports more valuable.”I feel very optimistic that we will reach a resolution which is a win-win,” Barrick Chairman John Thornton said after meeting Tanzanian President John Magufuli. …… For the remainder of the report:https://www.reuters.com/article/tanzania-acacia-idUSL8N1JB1YR



South Africa’s new charter is demanding that mines must be 30% owned by blacks. If you will recall this is the same scenario that wiped out mining in Rhodesia which became Zimbabwe


(courtesy zero hedge)

South Africa Says Mines Must Be 30% Black-Owned; Rand, Mining Shares Tumble

Not long after South Africa introduced legislation calling for the redistribution of white-owned land and business to the country’s black population, in a redux of the catalyst that resulted in Zimbabwe’s hyperinflation at the start of the century, on Thursday South Africa doubled down when it announced plans to revise its mining charter and introduce rules requiring all local mines be 30% black-owned, regardless of whether they have previously sold shares or assets to black investors that later divested.

Mining stocks promptly tumbled on the news, with shares in Anglo American sliding 5% after the announced mining regulation changes; AngloGold and Kumba also fell 5 percent in Johannesburg, while Sibanye traded 6.5% lower.

The charter revision comes shortly after Africa’s most industrialised economy entered its first recession since 2009, with investor confidence already shaken by infighting within the ANC over the scandal-hit presidency of Jacob Zuma.

The proposal was unveiled by the Department of Mineral Resources which said it intends to raise the minimum black-ownership level from the current 26% to ensure more proceeds from the country’s natural resources flow to the black majority, Mining Minister Mosebenzi Zwane told reporters on Thursday in Pretoria. The charter will also require companies to pay 1% of annual revenue to communities and new prospecting rights will require black control, Zwane said.

“The mining sector does not exist in a vacuum,” Zwane said as he unveiled the charter on Thursday. South African miners needed “strong legislative regimes” to thrive, he added.

“We have listened to miners who have not seen real economic benefit; people who don’t see benefit of transformation structures,” he said.

Some more details from Bloomberg:

A holder who claims a historical transaction that achieved 26 percent prior to the new Mining Charter, which Zwane presented on Thursday, “must top up to 30 percent within 12 months,” regardless of whether the earlier black shareholders still hold their position, according to a statement handed to reporters

According to Bloomberg, most mining companies reached the 26% level under previous versions of the mining charter but many black investors have since sold out. The Chamber of Mines, which represents mining companies, has said it’s willing to fight the government in court over the issue of getting credit from earlier deals, which it says would kill investment in the industry.

Glencore Plc, Impala Platinum Holdings Ltd., South32 Ltd. and Kumba Iron Ore Ltd., which is majority owned by Anglo, would need to sell the biggest stakes if the new charter fails to give credit for previous deals, Avior Capital Markets (Pty) Ltd. said June 1. AngloGold Ashanti Ltd. and Sibanye Gold Ltd., the country’s two biggest gold miners, may also be affected by the new rules.

As the FT adds, President Zuma has called for “radical economic transformation” to more fairly share the benefits of South Africa’s economy among the black majority. Zwane, a close ally of embattled president Zuma, said the government was “not blind” to the downturn but added that “there’s a need to produce a new era of industrialisation driven by young economic champions,” referring to the charter as a “revolutionary tool”.

Miners who rely on international supply chains to operate in South Africa may be hard hit by rules that require companies to procure 80 per cent of services and 70 per cent of goods from black-owned local suppliers.


In addition, the holder of a South African mining right will be forced to pay 1 per cent of its annual turnover to communities.

Confirming that this is the latest disastrous populist policy adopted by South Africa, the rand promptly tumbled on the news.






For your enjoyment.


(courtesy Bloomberg/GATA)

Getting high on cryptocurrencies


By Tim Culplan
Bloomberg News
Wednesday, June 14, 2017

There are now four times as many cryptocurrencies in circulation as fiat currencies.

That’s amazing. And encouraging.

According to the Swiss Association for Standardization, which maintains the International Standards Organization database, there are 177 national currencies currently in use. That list generously includes four precious-metals and four bond-market units (codes XBA to XBD, for the curious).

The CoinMarketCap website lists 753 cryptocurrencies, all the way from Bitcoin and Ethereum down to StrongHands and Paccoin (current value: $0.00000014).

With a retired basketball star promoting one such incarnation — tied to marijuana — on a recent trip to a repressive Asian nation lying to the north of South Korea, I’m tempted to call Peak Crypto.

But let’s not kid ourselves: The madness is far from over. Bitcoin skeptics have been eating their words ever since the leading digital currency reached $1,000. January seems like such a long time ago now that Bitcoin is trading above $2,700. …

… For the remainder of the report:



Your early THURSDAY 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  WEAKER 6.8035(DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES  MUCH WEAKER TO ONSHORE AT   6.8042/ Shanghai bourse CLOSED UP 1.81 POINTS OR 0.06%  / HANG SANG CLOSED DOWN 310.56 POINTS OR 1.20% 

2. Nikkei closed DOWN 51.70 POINTS OR 0.26%   /USA: YEN RISES TO 109.77

3. Europe stocks OPENED IN THE RED        ( /USA dollar index RISES TO  97.27/Euro DOWN to 1.1166


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  44.64 and Brent: 46.95

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.262%/Italian 10 yr bond yield UP  to 1.998%    

3j Greek 10 year bond yield RISES to  : 5.86???  

3k Gold at $1254.15  silver at:16.78 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 10/100 in  roubles/dollar) 57.50-

3m oil into the 44 dollar handle for WTI and 46 handle for Brent/

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9739 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0877 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 10 Year German bund now POSITIVE territory with the 10 year FALLSS to  +0.262%

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 2.785% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Stocks Slide On Trump Probe Report, Fed Indigestion

Is it going to be another May 17, when US stocks tumbled as concerns of a Trump impeachment over obstruction of justice and impeachment surged ahead of Comey’s testimony?

Overnight, S&P500 futures accelerated their decline following yesterday’s WaPo report that Special Counsel Mueller has launched a probe into potential obstruction of justice by Trump…

…   while European and Asian markets dropped dragged lower by commodities which reacted to the latest Fed rate hike, as copper dropped and oil fluctuated. The Bloomberg commodity index fell to the lowest in more than a year, pressuring miners and E&P companies which were among the big losers as the Stoxx Europe 600 Index retreated for a second day. The dollar advanced after the Fed raised interest rates for the second time in 2017 and Yellen suggested the strength of the U.S. labor market will ultimately prevail over recent weakness in inflation, which however the bond market strongly disagrees with, sending the curve the flattest its has been since October.

Traders were surprised as Yellen played down the recent drop in inflation and voiced confidence the central bank was on course to hit its 2% inflation goal, something it hasn’t done in three years. As Bloomberg notes, the Fed’s actions and words struck a careful balance between showing resolve to continue tightening in response to falling unemployment while acknowledging the persistence of unexpectedly low inflation this year. Adding to the uncertainty, the WaPo reported that the special counsel investigating Russia’s interference in the 2016 election plans to interview two top U.S. intelligence officials about whether Trump sought to “pressure” them to back off a related probe of former National Security Adviser Michael Flynn.

In China, overnight the PBOC injected net 90 billion yuan with reverse repos, strengthens CNY fixing to strongest since November, however unlike in March, this time the PBOC did not raise rates on its reverse repo operations, thereby not following the Fed by tightening further. Dalian iron ore slides two percent. Australia’s S&P/ASX 200 Index slumped 1.2% , with energy and raw-material shares dropping more than 2% . The Hang Seng Index slid 1.2 percent as Hong Kong followed the Fed’s move, elevating the risk of a selloff in the world’s priciest housing market.

European equities followed Asia’s lead, opening lower after the Fed raised rates for the second time this year. Subsequent dollar strength persisted while Treasuries were range-bound, having dropped after Yellen’s comments. French and Spanish bond sales pressured European fixed income; OATs extended losses, demand in 10Y Spain supply strong. WTI futures trade below $45, having dropped sharply on higher-than-expected U.S. inventories. Weaker-than-forecast U.K. retail sales helped push GBP lower, though largely driven by dollar gains, before the BOE decision at 12 p.m. in London.

S&P 500 futures dropped 0.7 percent as of 6:45am EDT. The index dropped 0.1% on Wednesday, while the tech-heavy Nasdaq indexes retreated 0.4%. The Dow Jones Industrial Average edged higher to a fresh record. The Stoxx Europe 600 Index retreated 0.7 percent.

The Bloomberg Dollar Spot Index rose 0.2 percent following three days of losses. The yen was little changed at 109.57 per dollar after climbing 0.5 percent Wednesday. The British pound weakened 0.4 percent to $1.2703 and the euro retreated 0.3 percent to $1.1181. The Australian dollar strengthened 0.3 percent after employment surged in May. The New Zealand dollar fell 0.5 percent as data showed the economy grew less than expected in the first quarter.

In rates, the 10-year Yield rose one basis point to 2.14% after dropping 8.5 bps Wednesday to 2.13 percent, the lowest level since November, a clear indicator that the bond market is convinced the Fed is making a mistake. The yield on benchmark U.K. bonds rose three basis points to 0.96% , while those of French and German peers also increased two basis points.

WTI swyng around the flatline before falling 0.1 percent to $44.70 a barrell, extending a 3.7% drop in the previous session. U.S. gasoline supplies unexpectedly rose for a second week. Gold rose less than 0.1 percent to $1,261.42 an ounce after sliding 0.5 percent the previous day.

Overnight Media Digest

  • European bourses trade lower amid the negative lead from Asia post-FOMC
  • EUR/USD has been on the back foot this morning and has now slipped back under 1.1200, but as we noted yesterday, strong demand anticipated in the 1.1150-60 area
  • Looking ahead, highlights include US CPI, Retail Sales, DoEs and the FOMC rate decision

Market Snapshot

  • S&P 500 futures down 0.7% to 2,420
  • STOXX Europe 600 down 0.7% to 385.37
  • Brent Futures up 0.3% to $47.13/bbl
  • Gold spot up 0.1% to $1,261.89
  • U.S. Dollar Index up 0.2% to 97.14
  • German 10Y yield rose 1.7 bps to 0.243%
  • Euro down 0.3% to 1.1184 per US$
  • Italian 10Y yield fell 4.1 bps to 1.649%
  • Spanish 10Y yield rose 4.8 bps to 1.43%
  • MXAP down 0.8% to 154.71
  • MXAPJ down 0.8% to 502.18
  • Nikkei down 0.3% to 19,831.82
  • Topix down 0.2% to 1,588.09
  • Hang Seng Index down 1.2% to 25,565.34
  • Shanghai Composite up 0.06% to 3,132.49
  • Sensex down 0.2% to 31,084.67
  • Australia S&P/ASX 200 down 1.2% to 5,763.19
  • Kospi down 0.5% to 2,361.65

Top Overnight News from Bloomberg

  • Mueller Said to Examine Whether Trump Sought to Slow Flynn Probe
  • Messaging Startup Slack Said to Draw Interest From Amazon.com
  • Rand Weakens as South Africa Says Mines Must Be 30% Black- Owned
  • U.K. Retail Sales Fall More Than Forecast as Squeeze Hits
  • Hammond to Make Public Case for Brexit That Protects Economy
  • SNB Keeps Key Rate on Hold as Inflation Forecasts Trimmed
  • Supply Weighs on EGBs; Block Trades in Bunds, Downside in Schatz
  • New U.S. Carrier Hobbled by Flaws in Launching, Landing Planes
  • Western Digital Seeks Injunction to Block Toshiba Chip Sale
  • Hammond to Make Public Case for Brexit That Protects Economy
  • Netlist Sues SK Hynix for Patent Infringement in California
  • Columbia Sportswear Names Jim Swanson CFO
  • Cummins Plans Electric Powertrain for Commercial Vehicles by ’19
  • CALC to Buy 50 Boeing 737MAX Aircraft for List Price of $5.8b
  • Yahoo Reports Alibaba VWAP, Prices for Shares in Tender Offer
  • Hilton Grand Vacations Holder Blackstone Offering 9.65m Shares
  • Flex Gains After Jabil 3Q Rev. Beats; Benchmark, Plexus May Move
  • AveXis Reports Alignment With FDA on Manufacturing; Shares Rise
  • Carney’s Quiet Period Ends With U.K. Demanding Attention
  • MUFG Said to Consider Shrinking Headcount by 10,000 Over Decade
  • Deutsche Bank Said to Create New Global Capital Markets Unit

A cautious tone gripped Asia with most major bourses negative following a similar showing in US, after the Fed hiked rates as expected but caught markets off guard with details on how it expects to begin its balance sheet normalization. This dampened ASX 200 (-1.2%) and Nikkei 225 (-0.3%) from the open, with underperformance in the former due to a commodity rout in which WTI crude futures fell over 3% on a narrower than expected draw in headline DoE stockpiles. Hang Seng (-1.1%) was also among the laggards after the HKMA raised base rates in response to the Fed hike and warned of property sector risks, while the Shanghai Comp. (+0.1%) traded choppy with downside stemmed by a firm liquidity effort by the PBoC and as participants digested the latest mixed loans and financing data. 10yr JGBs were higher amid a cautious risk tone in the region and the BoJ’s presence in the market for nearly JPY 700bIn of JGBs, while the curve flattened as the super-long end outperformed. PBoC injected CNY 50bIn in 7-day reverse repos, CNY 40bIn in 14-day reverse repos and CNY 60bIn in 28-day reverse repos. PBoC set CNY mid-point at 6.7852 (Prey. 6.7939).  Australian Employment Change (May) M/M 42.0K vs. Exp. 10.0K (Prey. 37.4K.) Australian Unemployment Rate (May) M/M 5.5% vs. Exp. 5.7% (Prey. 5.7%)

Top Asian News

  • Anbang’s Woes Deepen as Banks Said Told to Halt Dealings
  • BOJ Slowing Bond Buys Put Meeting Under Taper Talk Scrutiny
  • MUFG Said to Weigh Shrinking Headcount by 10,000 Over 10 Years
  • Philippine Overseas Workers Remittances Fall Most in 17 Months
  • Graticule Hedge Fund Said to Part Ways With at Least 5 Staff

European equity markets opened lower in Europe, as an aftermath of the Fed was clear. The FOMC voted to increase interest rates by 25bps, to 1.00% – 1.25% as expected, however, what was less so expected was the optimism toward the US economy from Fed Chair Yellen. As such, 9/10 of the Stoxx 600 sectors trade in the red. Fixed income markets find themselves in subdued trade, as the futures dictated the majority of the move in US hours, following from the aforementioned Fed move. 10y Gilt futures followed GBP in taking no real attention to the UK retail sales, seeing misses across the board, however, upward revisions did soften the blow. Elsewhere, supply today from Europe has come from Spain and France with both auctions relatively well digested by the market.

Top European News

  • U.K. Retail Sales Fall More Than Forecast as Squeeze Hits Home
  • SNB Keeps Key Rate on Hold as Inflation Forecasts Trimmed
  • DFS Plunges After Profit Warning, Leads U.K. Retailers Lower
  • U.K. Sofas Join Tories in Election Slump as DFS Orders Plunge

In currencies, it was a quiet start to London trade in the aftermath of the FOMC announcements last night, where the 25bp hike was followed up with details on balance sheet reduction as well as a generally upbeat tone on growth, inflation and the labour markets. The overall impact was to redress some of the overly bearish USD sentiment, which has been justified on valuation levels against some of its major counterparts, but perhaps a little too zealously in the time frame(s) achieved. EUR/USD has been on the back foot this morning and has now slipped back under 1.1200, but as we noted yesterday, strong demand anticipated in the 1.1150-60 area, and if not then from 1.1120 again lower down. We have also seen USD/JPY gravitating somewhat nervously back towards 110.00 again, and we can only put this down to the lofty levels on Wall Street, which will have been perturbed by a Fed intent on maintaining the normalisation path. For GBP, it has not been a good week based on politics alone, but on the data front it is not much better, as the slightly higher than expected inflation read on Tuesday was followed up by a drop off in wage growth yesterday while retail sales fell more than expected in this morning’s release. This was marginally offset by prior revisions, but coming up is the BoE announcement, and it is hard to see past a cautious MPC have little alternative but to account for the fresh uncertainty propagated by Theresa May’s snap election and the unnerving end result.

In commodities, given the focus on political and central bank risks of late, the commodities markets have taken a backseat to a larger degree, but standout losses in Oil prices have been prominent, with the WTI taking out USD45.00 on the downside and showing no signs of giving up on even lower levels. On the week, the API build in Crude stocks was the first surprise, added to by the DoE draw which was smaller than expected. Amid the backdrop of growing US shale production, the prospect of a test towards USD40.00 looks ever likely, but there is a strong level of support to contend with down here. Still no change in the Brent premium, which has remained uniform inside USD2.00-2.50. Copper prices have slipped again noticably, making the breach of USD2.60 an all to brief affair, but elsewhere, we see Zinc and Lead showing 1.0% gains on the day, while Nickel is now flat. Gold was choppy over the FOMC last night, having raced up to USD1280 on the post data (inflation/retail sales) USD hit, but is now hovering in the low USD1260’s with Silver still camped below USD17.00.

Looking at the day ahead, we’ll kick off with the import price index reading for May, followed
then by the latest weekly initial jobless claims print and Philly Fed
manufacturing index for June. Following that we then get industrial and
manufacturing production for May before finishing with the NAHB housing
market index reading for June.

US Event Calendaar

  • 8:30am: Empire Manufacturing, est. 5, prior -1
  • 8:30am: Import Price Index MoM, est. -0.1%, prior 0.5%; Import Price Index YoY, est. 2.9%, prior 4.1%
  • 8:30am: Export Price Index MoM, est. 0.15%, prior 0.2%; Export Price Index YoY, prior 3.0%
  • 8:30am: Initial Jobless Claims, est. 241,000, prior 245,000; Continuing Claims, est. 1.92m, prior 1.92m
  • 8:30am: Philadelphia Fed Business Outlook, est. 24.9, prior 38.8
  • 9:15am: Industrial Production MoM, est. 0.2%, prior 1.0%; Capacity Utilization, est. 76.8%, prior 76.7%
  • 9:15am: Manufacturing (SIC) Production, est. 0.1%, prior 1.0%
  • 9:45am: Bloomberg Consumer Comfort, prior 49.9
  • 10am: NAHB Housing Market Index, est. 70, prior 70
  • 4pm: Total Net TIC Flows, prior $700.0m deficit; Net Long-term TIC Flows, prior $59.8b

DB’s Jim Reid concludes the overnight wrap

Plenty to get through today but only one place to start and that is with the Fed. As widely expected a 25bp hike in the fed funds rate was delivered lifting the target range to 1.00% to 1.25%. There were no real surprises in the dots either. The 2017 and 2018 median dots were left unchanged at 1.375% and 2.125% respectively implying one further rate hike this year (although 4 members expect 2 more hikes and another 4 members expect no more hikes). The 2019 median dot was rounded down marginally to 2.9375% while the longer run dot was left unchanged at 3%. All the talk though was about the relatively upbeat tone in the FOMC statement, particularly in light of the soft CPI data earlier in the day, a continuation of a somewhat hawkish tone by Fed Chair Yellen in the postmeeting press conference and finally some of the details released around the process of rolling-off the balance sheet.

Touching on those points in some sort of order, there were two notable takeaways from the FOMC statement initially. The first was the slightly more upbeat description of economic activity and the second was the acknowledgement that “inflation on a 12-month basis is expected to remain somewhat below 2% in the near term but to stabilize around the committee’s 2% objective over the medium term”. In the press conference Yellen added to this by saying that “we continue to feel that with a strong labour market and a labour market that’s continuing to strengthen, the conditions are in place for inflation to move up”. As a reminder this followed what was a pretty soft May inflation report released a few hours earlier. Both headline (-0.1% mom vs. 0.0% expected) and core (+0.1% mom vs. +0.2% expected) CPI missed which in  turn pushed the annual rates down to +1.9% yoy (from +2.2%) and +1.7% yoy (from +1.9%) respectively. The YoY rate for the core is now the lowest since May 2015. The Fed Chair sought to downplay the data in her press conference by saying that its important “not to overreact to a few readings” and also that the data can be noisy, while indicating that the recent prints also appear to be the result of one-off factors. In summary, despite having the opportunity to do so, it didn’t feel like the Fed sounded particularly concerned on the inflation front.

In terms of the balance sheet the most notable development was the FOMC announcing the decision to likely proceed with the balance sheet wind down later this year. Specifically, the statement revealed that “the committee currently expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated”. There were further details also released which provided some guidance as to the process that the Fed expects to take. In summary the initial cap will be set at $10bn a month of which $6bn will be from Treasuries and $4bn from MBS. The caps will then increase every three months by $6bn for Treasuries until they reach $30bn and $4bn for MBS until they reach $20bn. Once they hit their maximum run off the Fed then expects that “holdings will continue to decline in a gradual and predictable manner until the committee judges that the Fed is holding no more securities than necessary to implement monetary policy effectively and efficiently”.

So where to now? Our US economics team have concluded that their expectations for Fed policy for the rest of this year are unchanged post the meeting. That is they continue to expect a formal announcement about unwinding the balance sheet at the September meeting, to start in October. They also expect a pause in the rate hiking cycle in September, followed by another rate hike in December, assuming that the economy evolves in line with the Fed’s expectations. They add that it is possible for the Fed to both raise rates and announce a shift in its balance sheet policy at the same meeting if the economy, labour market, and (most importantly) inflation surprise to the upside. But recent inflation data have raised the bar for such surprises. You can read more in their report here.

Over in markets the most significant move initially came after the soft inflation data. 10y Treasury yields plunged as much as 11bps to hit an intraday low of 2.101% and the USD sold-off as much as -0.78% from its highs. While the Greenback made a near-complete u-turn post the FOMC to finish little changed on the day Treasury yields only edged a couple of basis points off their lows. 10y Treasuries still finished the day 8.5bps lower in yield at 2.126% for the lowest close since November last year. The curve flattened fairly dramatically too. The 2s10s spread tightened over 5bps to 79bps and is now at the tightest since September 1st. As a reminder this was as high as 136bps in December. The low in 2016 was 75bps and should it tighten below that, then it will hit the lowest spread since 2007. The 5s30s spread of 105bps is only a smidgen off the YTD lows too. It’s worth noting that Oil tumbled -3.72% yesterday and below $45/bbl following the latest inventory data which didn’t go unnoticed for bond  markets. Meanwhile the S&P 500 finished a choppy session down -0.10% with the energy sector underperforming, while the Nasdaq (-0.41%) underperformed once again and fell for the third time in the last four sessions.

All that to look forward to but before we get there, this morning in Asia equity markets have mostly followed the lead from Wall Street in falling into the red. The Nikkei (-0.43%), Hang Seng (-0.90%), Kospi (-0.62%) and ASX (-1.12%) are all weaker with energy and commodity-sensitive names most under pressure. Bourses in China are little changed while US equity index futures are also slightly in the red. Sovereign bond markets have rallied with the antipodeans in particular around 5bps lower in yield. In FX the Aussie Dollar (+0.58%) has been the big outperformer following better than expected employment numbers in Australia this morning.

Back to yesterday. The other notable data release in the US was the May retail sales report. The data was also disappointing with headline sales falling unexpectedly (-0.3% mom vs. 0.0% expected) – the biggest one month decline since January 2016 – and ex auto and gas sales flat versus expectations for a +0.3% mom rise. The control group (0.0% mom vs. +0.3% expected) also missed although there was a reasonable upward revision to the April reading. Away from that business inventories in April fell -0.2% mom as expected.

In the UK the remaining employment data revealed that the ILO unemployment rate held steady at 4.6% in April while the claimant count rose 7k for the third consecutive monthly increase. Elsewhere in Europe CPI for Germany in May was confirmed at -0.2% mom and +1.4% yoy (unrevised from the initial flash reading) while industrial production for the Euro area was confirmed as rising +0.5% mom, bang in line with the consensus. European bond yields moved in tow with Treasuries following that soft US CPI data. 10y Bund yields finished the day down 4.0bps at 0.223% while OATs were 2.5bps lower at 0.579%. It was the move for Gilts which stood out however with the rally clearly supported by that soft wage growth number. 10y Gilt yields plummeted 10.7bps to 0.927%, the lowest level since October last year and the biggest one-day rally since December 2nd.

Looking at the day ahead, this morning in Europe we’ll receive the final May CPI reports for both France and Italyfollowed by May retail sales data in the UK (core retail sales expected to decline -1.0% mom). Following that we’ll get the April trade balance for the Euro area before attention turns over to the aforementioned BoE policy rate decision at midday. This afternoon in the US there are a number of reports due out. We’ll kick off with the import price index reading for May, followed then by the latest weekly initial jobless claims print and Philly Fed manufacturing index for June. Following that we then get industrial and manufacturing production for May before finishing with the NAHB housing market index reading for June. Away from that we’ll also get the SNB rate decision today, while another event to keep an eye on is the Euro area finance ministers meeting in Luxembourg where debt relief for Greece is expected to be discussed.


i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed UP 1.81 POINTS OR 0.06%   / /Hang Sang CLOSED DOWN 310.56 POINTS OR 1.20% The Nikkei closed DOWN 51.70 POINTS OR 0.26%/Australia’s all ordinaires  CLOSED DOWN 1.12%/Chinese yuan (ONSHORE) closed DOWN at 6.8035/Oil DOWN to 44.64 dollars per barrel for WTI and 46.95 for Brent. Stocks in Europe OPENED IN THE RED,,      ..Offshore yuan trades  6.8042 yuan to the dollar vs 6.8035 for onshore yuan. NOW  THE OFFSHORE IS WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN A LITTLE WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A LOT WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY WITH THE RISE IN THE USA DOLLAR 





This is huge!! The large Chinese conglomerate Anbang which deals in insurance and other aspects of the global economy just received moments ago a  systemic risk as revenues crash 90% as its Chairman Wu has been detained. This will no doubt cause a systemic crash in the Chinese economy due to the potential liquidation of WMP products and Anbang itself!!!

(courtesy zerohedge)

Anbang Just Became A “Systemic Risk”: Revenues Crash 90% As Its Chairman Is “Detained”

As reported earlier this week, overnight Bloomberg confirmed that Wu Xiaohui, the chairman of China’s insurance conglomerate which recently made headlines in the US for nearly reaching a deal with Jared Kushner over 666 Fifth Ave., was detained by a joint team of Central Commission for “Discipline Inspection” and police for questioning. It adds that that Chinese investigators who detained Wu are carrying out a wide probe that includes looking into the sources of funding for the firm’s acquisitions overseas, possible market manipulation by insurers, and “economic crimes.”

The Wall Street Journal reported earlier that investigators were seen checking whether Wu – whose fortune last year was calculated to be just over $1 billion – was involved in bribery and other economic crimes at Anbang and that Wu couldn’t be contacted for comment. As noted on Wednesday, Anbang said Wu couldn’t perform his duties for personal reasons, a story which has since been disproved.

The authorities are said to be examining Anbang transactions including acquisitions overseas and their funding. According to Bloomberg;s sources, the probe also fits into a broader investigation of possible market manipulation by insurers, although they didn’t specifically define the term “economic crimes.” The action is the result of the government’s crackdown on a sector that is “supposed to help families and companies cut their financial risks, but has recently become a hub for rampant financial speculation.”

Yet while Wu’s fate now appears sealed, swallowed by China and unlikely to reemerge any time soon if ever, questions have emerged about the viability of Anbang Insurance Group itself, which as the NYT reported overnight, has seen its growth come to a “screeching halt” as Chinese investors who helped fund its meteoric rise no longer want to have anything to do with the politically connected company which is “no longer in Beijing’s good graces.”

Specifically, according to government data released on Thursday, Anbang’s sales of life insurance policies and investment products, an key source of cash, stopped almost completely in April after tumbling sharply in March. It wasn’t just Anbang: across the insurance industry, where the (ab)use of Wealth Management Products is prevalent, sales slowed in April compared with earlier in the year.

More details:

From January through March of this year, Anbang raised three-fifths as much money as it raised all of last year, government data shows. It has maintained a large stockpile of cash after a series of big investments fell apart, including a $14 billion bid for Starwood Hotels and Resorts and a deal for a Manhattan office tower with Kushner Companies, the family real estate firm partly owned by Jared Kushner, the son-in-law of President Trump and an administration adviser.


But Anbang’s latest figures are eye-catching for the opposite reason. Including new kinds of policies and wealth management products, it took in only $218 million in April this year, down from $5.92 billion in the same month last year, the government data on Thursday showed.

That was the biggest Y/Y collapse in the company’s premium income on record, and as a result Anbang is now under “acute” financial pressure. The NYT notes that “its revenue from existing life insurance policies and certain wealth management products was down 88 percent in April compared with the same month the previous year. The rest of the industry was up 4.5 percent in the same period.”

While largely ignored on the list of potential Chinese risk factors, Anbang’s troubles could soon become systemic.

In early May, Chinese insurance regulators ordered Anbang to stop selling two investment products. One, they said, was improperly marketed as long-term insurance while a crucial application for the other lacked an actuary’s signature. By that point, Anbang was already in trouble. Questions about Anbang’s financial strength had begun circulating on social media in China in March and April, as Chinese officials publicly raised questions about sales of wealth management products by some insurers.

If the drop in revenue is steep enough, Anbang could eventually be forced to liquidate assets. A big factor will be what happens with its existing policies and investment products, which comprise China’s shadow banking system. As the NYT adds, Anbang’s annual report provides little information on the monthly tempo at which its previously issued investments are maturing. The company might need to pay them out if they are not rolled over into further investments with the company. The company’s policies do have very stiff penalties on early redemption to discourage holders from turning them in early for cash. Anbang could raise money by selling some of its investments, but that could take time.

Additionally, the conglomerate, which over the past 3 years was nothing short of the world’s most aggressive “roll up” has been an active investor in Western hedge funds, in addition to making outright acquisitions of overseas companies. And those terms tend to impose severe limits on Anbang’s ability to ask for its money back quickly. That said, a firesale of Anbang assets, which include the Waldorf Astoria, should be a fascinating event.

The biggest risk from a potential unwind of Anbang, however, is the fate of its billions in  WMP “assets” and whether any troubles at the insurer lead to investor impairment, and a potential run on China’s $8.5 billion “shadow bank” considered by many as the Achilles heel of China’s massively overlevered financial system



Not only is China trying to rein in shadow banking activities but now we are witnessing a crash in net bond issuance

China  is not growing at all

(courtesy zero hedge)

A New Chinese Threat Emerges: Net Bond Issuance Crashes Most On Record

One month ago, we first highlighted a troubling development for China’s banking system, one which we called the “Great Shadow Unwind” and which showed that entrusted loans, a broad proxy for China’s unregulated ‘shadow banking’ system, contracted for the first time since 2007, confirming Beijing’s ongoing crackdown of China’s runaway $8.5 trillion shadow banking system. Well, overnight, the PBOC released its latest Chinese loan data, and it had several notable highlights, most of which got lost in today’s overall noise.

First, the one aspect of the latest Chinese data most commentators focused on and discussed, was the collapse in China’s M2 aggregate to just 9.6%, which not only missed expectations of 10.4%, but was also the lowest print on record.

However, unlike most developed nations, M2 in China has largely become an anachronism from China’s pre-shadow banking past, which excludes many of the broad monetary-equivalents in circulation. This is how Goldman explained this morning why those concerned about the plunge in M2 growth shouldn’t lose much sleep: “We put more weight on the adjusted total social financing data, because M2 data are heavily distorted by borrowings between financial institutions which may have relatively limited impacts on the real economy, though TSF has its own problems– such as not including all forms of financing, especially newly developed ones.”

Touching on the plunge in M2, on the PBOC’s website, the central bank explained that slower M2 growth was a result of declining leverage, and the implementation of a “prudent, neutral monetary policy, and intensified supervision that has compelled the financial system to reduce leverage,” adding that as deleveraging continues, “slower M2 growth than in the past will become a new normal.”

Which, in turn brings us to the far more important, for China, loan number: Total Social Financing – a monetary aggregate that captures both traditional bank loans as well as shadow loans, including trusted, entrusted loans and undiscounted bankers accepetances, which in May likewise dropped to CNY 1.06tn, missing consensus estimates of CNY 1.19tn and down from 1.39 tn in April.

And while the PBOC has aggressively clamped down on shadow financing, the central bank has refrained from cutting off traditional bank loans to companies, aiming to support growth. And, sure enough, in May China’s new Yuan loan creation did beat estimates modestly, rising by CNY1.11tn vs CNY 1tn expected. This number is hardly anything to write home about however, because as Goldman explains, “strong broad credit growth is mainly a reflection of continued strength in credit demand and the willingness of the central bank to maintain just enough liquidity to the real economy to maintain growth at the current near-trend level. This is likely the main driver of stronger RMB loan growth in April and May, which offset the fall in non-loan credit in total social financing data.”

But while loan growth was stable, it was the broader TSF which demanded further attention, not least of all because – by definition – it should be bigger than its loan component. Since that was not the case, it suggests that one or more of the other TSF components declined. But before that, here is a look at China’s broadest credit growth on a annual basis: just like M2, the slowdown in the overall growth rate is, while not quite as sharp, quite visible and is a bright red flag that China’s credit impulse is turning sharply negative.

So what decline?

The answer brings us back to the abovementioned entrusted loans, a topic we first brought up a month ago. As the chart below shows, not only did entrusted loans drop for the second month in a row, but in May, they posted the biggest drop on record, dropping by CNY28 billion.

However, this time it wasn’t just entrusted loans: bankers’ acceptance bills, another key, if far more volatile, shadow funding conduit also posted a monthly decline in the past month, dropping by CNY124 billion.

For those unfamiliar, here is a breakdown of the three main “shadow” credit components,  all unique to China:

  • Entrusted loans: Loans organized by a bank between borrowers and lenders. These are essentially inter-enterprise loans due to the difficulties involved in direct borrowing and lending between commercial enterprises.
  • Trust loans: Loans made by trust companies. Typical investors are high net worth individuals and corporations, and typical maturity of these products is two years. Trust loans are often used to finance infrastructure and real estate projects and are an important source of funding for private entities and risky borrowers who have difficulties in accessing bank loans.
  • Undiscounted bankers’ acceptance: A type of short-term credit issued by a firm with a bank’s guarantee. The firm’s deposit at the bank serves as both the collateral for the credit and the source of payment at a future date. While normally used in commercial transactions, this is also a way for banks to move assets off balance sheet and to engage in high-risk lending.

And yet, neither the drop in entrusted loans, nor the decline in undiscounted bankers acceptance was the highlight of the latest Chinese data: China’s “Great Shadow Unwind” was last month’s story, and is a continuation of the previously discussed crackdown on shadow banking –  which for now appears to be gaining traction – amid moves to contain excessive borrowing as Beijing tries to push all loan creation into the “open” via regulated pathways.

The real story of the latest loan data was the record collapse in net corporate bond financing, the latest and far more “tangible” threat to China’s debt-fuelled economy. As shown in the chart below, in May a quarter trillion yuan in corporate bonds matured, or was repaid, or defaulted, resulting in the biggest corporate debt drain in history.

This has now emerged as the latest major, and most imminent, threat facing China’s financial sector and $10 trillion corporate debt market.

What happened?

It turns out, amid the continued pressure on shadow banking, Beijing’s leverage crackdown has also forced local companies to confront their addiction to traditional short-term corporate bond sales that they use to roll over debt. And, as Bloomberg warns, the shock therapy is worsening the outlook for corporate defaults in the second half of this year, just as borrowing costs jumped to a two-year high.

With various Chinese interest rates – both secured and unsecured  – surging, from Repo and Shibor…

… to short-term funding, as discussed yesterday when we most recently observed the historic inversion in China’s 1s10s curve…

… credit to China’s corporate issuers is suddenly grinding to a halt. In fact, non-banking firms sold 131 billion yuan ($19.3 billion) of bonds with a maturity of one year or less in May, the least since January 2014 and less than half of the same month last year, according to data compiled by Bloomberg which also adds that about 87% of the short note sales last month will be used for refinancing.

For those familiar with the lock up in US shadow markets during the financial crisis, this is a huge warning flag , as the growing asset-liability maturity mismatch is traditionally one of the biggest threats facing an overly indebted financial system.

According to Bloomberg, Chinese firms’ “habit” of relying on borrowing short-term money to repay maturing debt – one could call it a Ponzi scheme, and one would not be wrong – has pushed up such liabilities to a total of 5.2 trillion yuan on China’s listed non-financial companies’ balance sheets as of March 31, the highest on record. Meanwhile, with no sign of an end to the government’s campaign against leverage, the average coupon rate for bonds with a maturity of one year or less has risen to a massive 5.5% in June, deterring issuers from raising money to roll over debt. In fact, not only deterring, but making debt repayment in some cases impossible.

Unable to rollover maturities, an unknown number of Chinese companies may have no option but to default According to Ma Quansheng, of Fullgoal Fund Management, “small issuance of short-term bonds will be a normal phenomenon in the coming six months because cash supply will probably remain tight. Both default risks and the number of corporate bond defaults may increase.

To be sure, Chinese companies have managed to avoid repayment pressure so far in 2017 because thanks to loose funding environment last year, they were able to raise enough money. That, however, is no longer the case. Take for example one-year AAA rated company bonds, whose yield averaged 4.19% this year, up nearly 50% from 2.97% in 2016. According to HFT Investment Management, more note defaults may come “as the economy doesn’t look good.” In the second half of this year, Chinese non-banking firms must repay 2.36 trillion yuan of bonds, according to Bloomberg data.

“The current rising borrowing costs may have a big impact on companies’ operations and finance,” HFT’s Lu Congfan told Bloomberg. “What can you do when you must refinance to repay maturing debt while facing such high borrowing costs? That would be a question challenging many local companies in the second half or next year.

Still, some firms refuse to throw in the towel and are selling bonds despite the soaring yields. One such company is Xingjiang Guanghui Industry Investment, a AA+ rated automobile service provider, which issued one-year bonds at a whopping yield of 7.3% this month, the highest among all notes maturing in one year or less. A recent Moody’s report said that Xinjiang Guanghui’s short-term debt amounted to around 54 billion yuan as of Dec. 31, well exceeding its cash holdings. It is clear that if and when the debt can no longer be rolled over, it and many of its peers, will have no choice but to default.

Meanwhile, the worst issuers’ liquidity problems are getting worse by the day, according to China’s CIC Corp. About 14.6% of bond issuers’ cash and cash equivalents is less than 30% of their short-term borrowings as of March 31. The percentage is higher than the year-end level in 2015 and 2016, said CICC.

Any temporary halt in high-leverage issuers’ access to the short-term bond market could trigger more defaults,” said Wang Ying, head of China research initiative at Fitch in Shanghai. “The government is showing more tolerance for corporate defaults. But if there is any sign of regional risk, it may intervene to prevent default risks from spreading.”

Which brings us back to the chart above: if the biggest net reduction, or drain, in corporate bonds on record is just the start, how far will this spread?

As for the final nail in China’s economy, it may have been the result of Yellen’s own rate hike earlier today: Chen Qi, chief strategist at private fund management company Shanghai Silver Leaf Investment Co., told Bloomberg said the surging borrowing costs will make matters even worse for struggling companies. Recall that in March, after the last Fed rate increase, China had no choice but to match it. Will it risk doing so again, knowing that the outcome could be a wave of corporate bankruptcies as Chinese corporations finds themselves starved of liquidity and locked out of the bond market?

“High-quality companies will still be able to borrow money from banks even if they cancel bond sales,” said Chen in Shanghai. “But it’s difficult for lower-quality companies to get money elsewhere. They may face something bad down the road.”

* * *

Finally, the reason why all of the above matters for not only the Chinese, but global, economy is because as we showed two days ago, China’s credit impulse is already crashing and has suffered its biggest drop since the financial crisis. As UBS calculated, “from peak to trough the deceleration in global credit growth is now approaching that during the global financial crisis (-6% of global GDP), even if the dispersion of the decline is much narrower.

If one adds tens, if not hundreds of billions in Chinese corporate bond defaults to the China, and thus global credit drain next, the global credit impulse, and global deflationary tsunami, may surpass that observed during the financial crisis. And ironically, this “credit crunch” will come at a time when the Fed, unlike back in 2009 when Bernanke had just launched QE1, is hiking rates and preparing todo what it has never done before: reduce its balance sheet without crashing the market.


The pound spikes higher as the Bank of England now becomes hawkish on a rate increase.

(courtesy zero hedge)


Russia/Germany/Austria vs USA

Germany and Austria are getting quite angry with the latest sanctions against Russia for their “incursion into USA politics as well as “increased involvement into the Ukraine”.  The USA is set to pose fines for any European country that participates in the NordStream 2 pipeline.

the real reason for the sanctions:  the USA wants the LNG pipeline from Qatar through Saudi Arabia, through Syria, through Turkey and onto Greece and the rest of Europe bypassing Russia altogether

(courtesy zerohedge)

Germany, Austria Slam US Sanctions Against Russia, Warn Of Collapse In Relations

Less than a day after the Senate overwhelmingly voted to impose new sanctions against the Kremlin, on Thursday Germany and Austria – two of Russia’s biggest energy clients in Europe – slammed the latest U.S. sanctions against Moscow, saying they could affect European businesses involved in piping in Russian natural gas.

Shortly after the Senate voted Wednesday to slap new sanctions on key sectors of Russia’s economy over “interference in the 2016 U.S. elections” and aggression in Syria and Ukraine, in a joint statement Austria’s Chancellor Christian Kern and Germany’s Foreign Minister Sigmar Gabriel said it appeared that the Senate bill was aimed at securing US energy jobs and pushing out Russian gas deliveries to Europe.

Gabriel and Kern also accused the U.S. of having ulterior motives in seeking to enforce the energy blockade, which they said is trying to help American natural gas suppliers at the expense of their Russian rivals. And they warned the threat of fining European companies participating in the Nord Stream 2 project “introduces a completely new, very negative dimension into European-American relations.”

In their forceful appeal, the two officials urged the United States to back off from linking the situation in Ukraine to the question of who can sell gas to Europe. “Europe’s energy supply is a matter for Europe, and not for the United States of America,” Kern and Gabriel said. The reason why Europe is angry Some Eastern European countries, including Poland and Ukraine, fear the loss of transit revenue if Russian gas supplies don’t pass through their territory anymore once the new pipeline is built.

While the diplomats said that it was important for Europe and the US to form a united front on the issue of Ukraine, “we can’t accept the threat of illegal and extraterritorial sanctions against European companies,” the two officials warned citing a section of the bill that calls for the United States to continue to oppose the Nord Stream 2 pipeline that would pump Russian gas to Germany beneath the Baltic Sea. According to AP, half of the cost of the new pipeline is being paid for by Russian gas giant Gazprom, while the other half is being shouldered by a group including Anglo-Dutch group Royal Dutch Shell, French provider Engie, OMV of Austria and Germany’s Uniper and Wintershall.

Their concern was echoed by Russia’s energy giant Gazprom, whose Deputy CEO Alexander Medvedev said that Senate’s plan for extended sanctions to cover Nord Stream 2 gas pipeline project is a way to secure US LNG in Europe. He also said that the project is proceeding in line with plan and that it has already received more than €1BN from Nord Stream 2 partners, chief among which Germany and Austria.

In light of recent media frenzy in the US, we are skeptical the Senate will undo its decision, lest it too be accused of being infiltrated by KGB spies and colluding with Putin.

Meanwhile, this just hit:





WOW!  This will hurt” existing home sales crash in May by 6.2%

(courtesy zero hedge)

Despite Bank Of Canada Hubris, Existing Home Sales Crash In May

The Bank of Canada is stuck between the rock of a housing bubble (textbook-based trickle-down confidence-inspiration) and a hard place of a housing bubble (total lack of affordability) as it proclaimed this week that it may withdraw stimulus because, paraphrasing, everything was awesome. Well, today’s existing home sales collapse may change that tune quickly…

Bloomberg reports that in a speech she’s delivering in Winnipeg, Manitoba, Senior Deputy Governor Carolyn Wilkins highlighted how the nation’s recovery is broadening across regions and sectors, giving policy makers “reason to be encouraged.”

“As growth continues and, ideally, broadens further, Governing Council will be assessing whether all of the considerable monetary policy stimulus presently in place is still required,” Wilkins said in the text of a speech she’s giving Monday.


“At present, there is significant monetary policy stimulus in the system.”


“The adjustment to lower oil prices is now largely behind us, and we are looking for signs that the sources of growth are broadening across sectors and regions,” Wilkins said. “The signs are encouraging.”

Well, wih the worst print on record, Canada existing home sales crashed 6.2% MoM in May…


“The signs are less encouraging now”

Below we again put Canada’s housing market, and bubble, in perspective with some of our favorite charts, first showing total Canadian household debt compared to the US. Most of this is in the form of mortgages.

Next, despite Canada’s low rates, the debt service ratio of an average Canadian household is nearly 40% higher than when compared to the US.

And finally, the punchline: indexed home prices in Canada compared to the US. This needs to commentary.

This won’t end well… and as this month’s home sales data shows, the pain is just beginning.



This ought to give us a huge clue as to how global growth is performing:  Nike is cutting 2% of its global workforce

(courtesy zero hedge)

Nike Cutting 2% Of Global Workforce

In a preview of more pain to come for US, and global, workers, moments ago Nike announced that it will soon be parting ways with approximately 2% of its 70,700 global workforce, or roughly 1,500 employees.

Nike introduced the Consumer Direct Offense, a new company alignment, resulting in leadership and organizational changes as part of which the company would see an overall reduction in about 2% of the company’s global workforce to “streamline and speed up strategic execution.”

In addition to the mass layoff, Nike is realigning its regional units as it focuses on driving growth in its most important markets and getting new products to market more quickly. Among the details:

  • Cutting product styles by 25%, but will offer deeper selection of key franchises
  • Aiming to cut creation cycle in half to speed new products to market
  • Consumer Direct Offense program under NKE Brand President Trevor Edwards to focus on improving growth in New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, Milan
  • Sees targeted cities accounting for 80% of projected growth through 2020
  • Realigning geographic segments to 4 regions from 6; will report results under North America, EMEA, Greater China and Asia Pacific and Latin America starting in fiscal 2018

Discussing the corporate overhaul, Trevor Edwards, President of the NIKE Brand said that “today we serve our athletes in a changing world: one that’s faster and more personal. This new structure aligns all of our teams toward our ultimate goal — to deliver innovation, at speed, through more direct connections.”  It will also deliver what is likely the start of many layoffs.

Full press release below.

NIKE, Inc. today introduced the Consumer Direct Offense, a new company alignment that allows Nike to better serve the consumer personally, at scale. Leveraging the power of digital, Nike will drive growth — by accelerating innovation and product creation, moving even closer to the consumer through Key Cities, and deepening one-to-one connections.

“The future of sport will be decided by the company that obsesses the needs of the evolving consumer,” said Mark Parker, NIKE, Inc. Chairman, President, and CEO. “Through the Consumer Direct Offense, we’re getting even more aggressive in the digital marketplace, targeting key markets and delivering product faster than ever.”

Consumer-focused Growth

Trevor Edwards, President of the NIKE Brand, will drive the Consumer Direct Offense through integrated category, geography, marketplace, product, merchandising, digital, and direct-to-consumer teams.

In the new alignment, the company will drive growth by deeply serving consumers in 12 key cities, across 10 key countries: New York, London, Shanghai, Beijing, Los Angeles, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul, and Milan. These key cities and countries are expected to represent over 80 percent of Nike’s projected growth through 2020.

Nike is moving closer to the consumer—creating a local business, on a global scale. To improve efficiency, all key cities and countries are supported by a simplified geography structure, changing from six to four—comprised of North America; Europe, Middle East and Africa (EMEA); Greater China; and Asia Pacific and Latin America (APLA). The leaders of the newly-formed geographies are: Tom Peddie VP/GM of North America, Bert Hoyt VP/GM of EMEA, Angela Dong VP/GM of Greater China, and Ann Hebert VP/GM of APLA.

As such, financial results for the NIKE Brand will be reported based on these four operating segments beginning in fiscal 2018.

The geography leaders will report to Elliott Hill, President of Geographies and Integrated Marketplace.

Nike’s Triple Double

The Consumer Direct Offense is fueled by Nike’s Triple Double strategy: 2X Innovation, 2X Speed and 2X Direct connections with consumers.

To double innovation, Nike will accelerate the impact and cadence of new innovation platforms. As an example, over the past few months, Nike launched a cushioning revolution, featuring three new groundbreaking platforms: ZoomX, Air VaporMax and Nike React. And, to give consumers more choices of the products they love, Nike is editing to amplify — reducing its styles by 25 percent, and offering a deeper selection of key franchises.

To double speed, Nike is on a path to cut product creation cycle times in half. That starts with the Express Lane, which quickly creates, updates and fulfills products in response to consumer demand. Already operating in North America and Western Europe, a new Express Lane will be activated this summer in China, serving Shanghai, Seoul and Tokyo—some of the world’s most promising markets for sport.

To supercharge this faster pipeline, Michael Spillane is assuming the new role of President of Categories and Product—leading an end-to-end design-to-delivery organization, including Categories, Design, Product and Merchandising. This new integrated organization will place greater resources in the categories with the highest potential to fuel growth: Running, Basketball, Nike Sportswear, Men’s and Women’s Training, Global Football and Young Athletes. To build on the growth of the Nike Women’s business, a new dedicated Women’s team will complement each top-tier category.

To double direct connections with consumers and shape the future of retail, Nike is creating the new Nike Direct organization, led by Heidi O’Neill, President of Nike Direct, and Adam Sussman, Chief Digital Officer. This organization will unite Nike.com, Direct-to-Consumer retail, and Nike+ digital products to enhance and expand Nike’s membership experience on an increasingly global scale. Nike will also extend innovations to its strategic wholesale partners.

Leading with mobile, this team will unite physical and digital retail to serve consumers with the best of Nike. Two recent examples of innovative consumer connections are SNKR Stash, which unlocks access to exclusive Nike and Jordan product using mobile geo-locations; and Shock Drop, surprise alerts for coveted sneakers that allow consumers to buy instantly through the app or at their nearest Nike or wholesale store. Over the next several months, Nike is also launching its Nike+ and SNKRS apps globally to energize the sneaker experience in new markets.

Spillane, Hill, O’Neill and Sussman will all report to Edwards.

Nike’s leadership and organizational changes will streamline and speed up strategic execution. The changes are also expected to result in an overall reduction of approximately 2 percent of the company’s global workforce.

“Today we serve our athletes in a changing world: one that’s faster and more personal,” said Edwards. “This new structure aligns all of our teams toward our ultimate goal — to deliver innovation, at speed, through more direct connections.”





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



GBP/USA 1.2766 UP .0021 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED



Early THIS THURSDAY morning in Europe, the Euro FELL by 44 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1166; 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 1.81 POINTS OR 0.06%     / Hang Sang  CLOSED DOWN 310.56 POINTS OR 1.20% /AUSTRALIA  CLOSED DOWN 1.12% / 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 THURSDAY morning CLOSED DOWN 51.70 POINTS OR 0.26%

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


Gold very early morning trading: 1258.35


Early THURSDAY morning USA 10 year bond yield: 2.145% !!! UP 2 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.785, UP 2  IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 97.27 UP 33  CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING


And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 2.860%  UP 1 in basis point(s) yield from WEDNESDAY 

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

SPANISH 10 YR BOND YIELD: 1.416%  UP 3 IN basis point yield from WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.967 UP 3   POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 46 points HIGHER than Spain.





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

Euro/USA 1.1144 DOWN .0063 (Euro DOWN 63 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.75 UP  1.309 (Yen DOWN 131 basis points/ 

Great Britain/USA 1.2754 UP 2 ( POUND UP 2 basis points) 

USA/Canada 1.3288 UP .0045 (Canadian dollar DOWN 45 basis points AS OIL FELL TO $44.50


This afternoon, the Euro was DOWN by 68 basis points to trade at 1.1144


The POUND ROSE BY 2  basis points, trading at 1.2754/ 

The Canadian dollar FELL by 45 basis points to 1.3288,  WITH WTI OIL FALLING TO :  $44.50

The USA/Yuan closed at 6.8078/
the 10 yr Japanese bond yield closed at +.053% DOWN 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 5 IN basis points from WEDNESDAY at 2.160% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.783  UP 1  in basis points on the day /

Your closing USA dollar index, 97.50 UP 56 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 THURSDAY: 1:00 PM EST

London:  CLOSED DOWN 55.04 POINTS OR 0.74%
German Dax :CLOSED DOWN 114.24 POINTS OR 0.89%
Paris Cac  CLOSED DOWN 26.41 POINTS OR 0.50% 
Spain IBEX CLOSED  DOWN  76.20 POINTS OR 0.71%

Italian MIB: CLOSED  DOWN 113.04 POINTS/OR 0.54%

The Dow closed DOWN 14.66 OR 0.07%

NASDAQ WAS closed DOWN 29.39 POINTS OR 0.47%  4.00 PM EST
WTI Oil price;  44.50 at 1:00 pm; 

Brent Oil: 46.92 1:00 EST




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

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


BRENT: $46.84


USA 30 YR BOND YIELD: 2.788%


USA/JAPANESE YEN:110.92  UP 1.470

USA DOLLAR INDEX: 97.47  UP 53  cent(s) ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2759 : UP 6 POINTS FROM last NIGHT  

Canadian dollar: 1.3262 DOWN 21  BASIS pts 

German 10 yr bond yield at 5 pm: +0.282%


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


DeFANG-ed – Tech Wreck Continues As Dollar Bounces, Yield Curve Collapses

We suspect this NSFW clip reflects the sounds coming from more than a few investors today…


Some more dismal data this morning – yeah seriously more of it – sent the US Macro Surprise Index to its weakest level in over two years…


Notably, the US Macro Surprise Index has dropped for 13 straight weeks (since The Fed hiked in March) – this is the biggest 3-month drop in US economic data since Lehman and 2011’s Summer USA Downgrade


And while ‘weak’ growth expectations has traditionally prompted panic bids in ‘growth’ stocks


With the highest growth FANG stocks getting slammed to 8-week lows…before dip-butyers jumped back in again…


While everyone was excited about the bounce in FANG stocks, we note that they closed below yesterday’s lows…


NFLX remains the biggest loser of the FANGs…


Trannies managed to scramble into the green but Small Caps and Nasdaq were the worst, despite the drift up after the European close and meltup into the close….


From Thursday’s close, S&P is unch, Small Caps are red, and Nasdaq is ugly (down 4 of the last 5 days)…


Financials dropped for the first time in 7 days…


VIX topped 12 briefly but that didn’t last long…Notably VIX was slammed and stocks bid right as Europe closed…


Banks extended their gains today even as the yield curve collapsed…


Treasury yields rose modestly on the day (with the curve bear flattening once again)…


The yield curve collapsed even further…


While The Fed continues to ignore the collapse of America’s economy, the dollar is not…


Though ironically, today saw the dollar index extend its gains off the rebound post-Fed lows yesterday… pushing up to unchanged on the week…


JPY was the biggest loser today as the dollar ramped back to unch for the week…


WTI and RBOB both got hammered again…


And the Dollar strength sent gold and silver lower…


Finally, Bitcoin took a pretty big spill today…but bounced back in the afternoon…

And selling presure returned…

Last night:  Scalise is still in critical condition and will require more surgeries


(courtesy zero hedge)


The witch hunt is on:  Mueller is investigating Trump for possible obstruction of Justice according to the Washington Post.What absolute nonsense!

(courtesy zerohedge)

Mueller Is Investigating Trump For Possible Obstruction Of Justice: Wapo

If Trump wasn’t under investigation before for colluding with Russian spies to steal the election from Hillary Clinton, it seems that he may be now for claims that he intentionally obstructed justice by firing FBI Director James Comey just over a month ago…at least according to more anonymous sources from the Washington Post which have proven themselves to be slightly less than completely ‘accurate’ several times in the recent past.

According to Wapo, this new revelation marks a “major turning point” in the investigation of the Trump administration and will get underway with interviews of numerous “senior intelligence officials” as early as this week.

The special counsel overseeing the investigation into Russia’s role in the 2016 election is interviewing senior intelligence officials as part of a widening probe that now includes an examination of whether President Trump attempted to obstruct justice, officials said.


The move by Special Counsel Robert S. Mueller III to investigate Trump’s own conduct marks a major turning point in the nearly year-old FBI investigation, which until recently focused on Russian meddling during the presidential campaign and on whether there was any coordination between the Trump campaign and the Kremlin. Investigators have also been looking for any evidence of possible financial crimes among Trump associates, officials said.


Five people briefed on the requests, who spoke on condition of anonymity because they were not authorized to discuss the matter publicly, said Daniel Coats, the current director of national intelligence, Adm. Mike Rogers, head of the National Security Agency, and Rogers’ recently departed deputy, Richard Ledgett, agreed to be interviewed by Mueller’s investigators as early as this week. The investigation has been cloaked in secrecy and it’s unclear how many others have been questioned by the FBI.


And, like many of these stories from the past 6 months, the breathless headline from Wapo is followed, some 10 paragraphs into the story, with a slightly more realistic ‘hedge’ which suggests that the whole story may just another fishing expedition into prompting yet another infuriated response by Trump, which would assure he digs himself into an even deeper hole.  Here is today’s ‘hedge’:

The interviews suggest Mueller sees the attempted obstruction of justice question as more than just a “he said, he said” dispute between the president and the fired FBI director, an official said.

Of course, as we pointed out last week, Senator Jim Risch did a masterful job of dismantled any ‘hopes’ of an obstruction of justice case when he essentially got Comey himself to admit there was no ‘there’ there:

Risch: “Boy you nailed this down on page 5 paragraph 3, you put this in quotes, words matter, you wrote down the words so we could all have the words in front of us now.  There are 28 words there that are in quotes and it says, ‘I hope’, this is the President speaking, ‘I hope you can see your way claer to letting this go, to letting Flynn go…I hope you can let this go.'”


“Now those are his exact words, is that correct”


Comey:  “Correct.”


Risch:  “And you wrote them here and you put them in quotes?”


Comey:  “Correct.”


Risch:  “Thank you for that.  He did not direct you to let it go.”


Comey:  “Not in his words, no.”


Risch:“He did not order you to let it go.”


Comey:“Again, those words are not an order.”


Risch:  “He said ‘I hope’.  Now, like me you probably did 100’s of cases, maybe 1,000s of cases charging people with criminal offenses.  And, of course, you have knowlege of the 1,000s of cases out there where people have been charged.  Do you know of any case where a person has been charged for obstruction of justice, for that matter of any other criminal offense,  where they said or thought they hoped for an outcome?”


Comey:  “I don’t know well enough to answer.  And the reason I keep saying ‘his words’ is I took it as a direction…”


Risch:  “You may have taken it as a direction but that is not what he said.  He said, ‘I hope.’  You don’t know of anyone who has ever been charged for hoping something, is that a fair statement?”


Comey:“I don’t as I sit here.”


So, to summarize, for anyone who has managed to ignore all the mass hysteria of the past 6 months, the intelligence community basically forced Trump’s hand by slowly leaking out damaging innuendos and accusations over the past several months, all while refusing to confirm that he, himself, was never actually under investigation.  In the end, those damaging leaks, combined with Comey’s refusal to confirm publicly that Trump was not under investigation, resulted in Comey’s sudden dismissal on May 9th.  And now, even though he was never a target of any investigation, leaks from the intelligence community have forced a situation where Trump may be under investigation by the intelligence community, a rather confounding, if perhaps well-orchestrated, outcome.

Trump’s response:  they had zero proof on Russian collusion so now they go after obstruction of Justice on the phony Russian collusion.
(courtesy zero hedge)

Trump: “Zero Proof” Of Russian Collusion “So Now They Go For Obstruction Of Justice”

Yesterday, when we summarized the latest WaPo article according to which Special Counsel Mueller is now probing Trump for obstruction of justice, we said “the intelligence community basically forced Trump’s hand by slowly leaking out damaging innuendos and accusations over the past several months, while refusing to confirm that he, himself, was never actually under investigation.  In the end, those damaging leaks, combined with Comey’s refusal to confirm publicly that Trump was not under investigation, resulted in Comey’s sudden dismissal on May 9th.  And now, even though he was never a target of any investigation, leaks from the intelligence community have forced a situation where Trump may be under investigation by the intelligence community, a rather confounding, if perhaps well-orchestrated, outcome.”

This morning, Trump essentially repeated that assessment, when early on Thursday he said that They made up a phony collusion with the Russians story, found zero proof, so now they go for obstruction of justice on the phony story. Nice”

They made up a phony collusion with the Russians story, found zero proof, so now they go for obstruction of justice on the phony story. Nice


Trump’s Thursday morning tweet his first about the investigation since the shooting Wednesday at a congressional baseball practice in Alexandria. As a reminder, Trump had repeatedly claimed, and Comey affirmed during his testimony, that Comey assured him he was not personally under FBI investigation. But investigators began probing Trump for obstruction of justice soon after Comey’s termination, perhaps as intended. After Comey’s testimony last week, further questions were raised about whether Trump tried to obstruct justice.

Elsewhere, addressing the Russian population, Vladimir Putin echoed Trump’s sentiment, saying so far there has been “zero proof” presented confirming any collusion or interference by Russia in the US election.

Meanwhile, in a follow up tweet moments later, Trump also tweeted You are witnessing the single greatest WITCH HUNT in American political history – led by some very bad and conflicted people!  #MAGA

You are witnessing the single greatest WITCH HUNT in American political history – led by some very bad and conflicted people!

According to Bloomberg’s Cudmore, the Fed has made a big mistake and every tightening move is a signal to buy long bonds due to their mistake. They themselves are pushing the uSA towards recession
(courtesy zero hedge)

Cudmore: Yellen Just Made A Big Mistake

One of the lingering questions to emerge from yesterday’s FOMC meeting, after Yellen’s “first dovish, then hawkish” statement rocked the dollar and markets, is whether the Fed chair has some more accurate way of forecasting inflation than the rest of market to justify her optimistic outlook, and to explain why the divergence between the Fed’s dot plot and the market’s own FF forecasts is nearly 100%. And, if not, is the Fed about to make another major policy mistake by forecasting a far stronger economy than is possible, culminating with a recession.

According to Bloomberg’s Mark Cudmore, the answer is that while Yellen is desperate to infuse confidence in the market, the Fed, which “hasn’t been correct for seven years”, remains as clueless as ever, which is why the Fed’s hawkishness is actually a signal to buy long-end bonds, which will add to further curve tightening and ultimately precipitate the next recession.

Put otherwise, “if Yellen had acknowledged that the policy frameworks she and her colleagues have been using since the crisis have all been incorrect, then we might believe she has a chance of now applying a more appropriate framework and has a credible plan to sustainably hit the inflation target. Instead, traders can’t help but feel that no lessons are being learned and will have to raise the probability of a major policy mistake in market pricing. This means that the yield curve will need to flatten further through long-end yields dropping.”

In simple words: the Fed has just brought the next recession that much closer, which shouldn’t come as a surprise.  As we showed before, every Fed tightening akways ends with a recession. The only question is when.

From Marc Cudmore’s latest Macro View.

Fed’s Hawkishness Is Negative for Long-End Yields


It may seem counter-intuitive but the Fed’s optimistic perspective on the U.S. economy makes it more likely that 10-year Treasury yields have more downside.  The problem for Janet Yellen is that the data is there for us all to see: What few inflation pressures did exist are now receding rapidly. By failing to comprehensively address the fact that the committee’s projections are constantly over-optimistic, they further undermine their own credibility.


The Fed hasn’t been correct for seven years. The evidence would suggest their models are broken. Yellen still cites the Phillips curve even though some of her own committee have questioned its validity and it has shown no sign of working as anticipated in recent years.


Temporary factors are cited as the reason for low inflation – for example a decline in mobile phone bills – without acknowledging that the technological innovation frequently behind such factors isn’t a temporary phenomenon.


Technology is also helping drive down external inflationary pressures coming through from commodity prices. And the committee’s models don’t seem to adequately account for demographic disinflationary impulses either.


If Yellen had acknowledged that the policy frameworks she and her colleagues have been using since the crisis have all been incorrect, then we might believe she has a chance of now applying a more appropriate framework and has a credible plan to sustainably hit the inflation target.


Instead, traders can’t help but feel that no lessons are being learned and will have to raise the probability of a major policy mistake in market pricing. This means that the yield curve will need to flatten further through long-end yields dropping.



Another sign that the economy is rolling over and that the inflation that the Fed needs is non existent

(courtesy zero hedge)

US Import & Export Prices Tumble In May As China Credit Impulse Collapses

For the first time since Augist 2016, both import prices (-0.3% MoM) and export prices (-0.7% MoM) dropped in May.

As China’s credit impulse disappears (and turns negative) so YoY gains in import and export prices are also rolling over notably.

And judging by historical relationships, it’s going to get worse before it gets better… no matter what China does now (it’s already baked into the cake for the next 9 months).


Soft data NY Fed manufacturing and Philly Fed soar



New York Fed Soars To Highest Since Sept 2014, Philly Fed Also Beats

In a much needed confirmation that Janet Yellen did not make a policy mistake by hiking rates yesterday, moments ago both the Empire State and Philly Feds smashed expectations, with the first printing at the highest level since September 2014 of 19.8, above the expected 4, and well above May’s -1 contraction print, while the Philly Fed posted at 27.6, also beating consensus estimates of 24, if a drop from last month’s 38.8.

The New York Fed breakdown:

  • Prices paid fell to 20 vs 20.9
  • New orders rose to 18.1 vs -4.4
  • Number of employees fell to 7.7 vs 11.9
  • Work hours rose to 8.5 vs 7.5
  • Inventory rose to 7.7 vs -0.7

Meanwhile over in Philadelphia:

  • June prices paid fell to 23.6 vs 24.2
  • New orders rose to 25.9 vs 25.4
  • Employment fell to 16.1 vs 17.3
  • Shipments fell to 28.5 vs 39.1
  • Delivery time rose to 13.9 vs 6.4
  • Inventories rose to 5.8 vs 1.4
  • Prices received rose to 20.6 vs 15.3
  • Unfilled orders rose to 14.0 vs 9.0
  • Average workweek fell to 20.5 vs 21.7
  • Six-month outlook fell to 31.3 vs 34.8
  • Six-month outlook for capex fell to 28.6 vs 32.6

The sentiment at both regional Feds was quite optimistic. First the NY Fed:

Business activity rebounded strongly in New York State, according to firms responding to the June 2017 Empire State Manufacturing Survey. The headline general business conditions index shot up twenty-one points to 19.8, its highest level in more than two years. The new orders index posted a similar increase, rising twenty-three points to 18.1, and the shipments index advanced to 22.3. The inventories index climbed to 7.7, indicating a rise in inventory levels, and labor market indicators pointed to a modest increase in employment and hours worked. The pace of input price increases was unchanged, while selling price increases picked up somewhat. Looking ahead, firms remained optimistic about the six-month outlook.

The only negative factor was a drop in employment: The index for number of employees edged down four points to 7.7, and the average workweek index was little changed at 8.5. 

On the inflation front, the prices paid index held steady at 20.0, and the prices received index
rose six points to 10.8, pointing to a pickup in selling price increases.

Looking forward, firms remained optimistic: “Indexes assessing the six-month outlook suggested that firms continued to expect conditions to improve. The index for future business conditions was little changed at 41.7, and the index for future new orders rose nine points to 42.2. Inventories were expected to be slightly lower in the months ahead, and employment was expected to increase modestly. The capital expenditures index rose to 20.8, and the technology spending index was 11.5.”

Meanwhile in Philadelphia, while modestly subdued, sentiment was also strong:

The index for current manufacturing activity in the region increased from a reading of 22.0 in April to 38.8 this month. The index has been positive for 10 consecutive months. This month, the index recovered some of the declines of the previous two months, but it still remains slightly below its high reading of 43.3 in February (see Chart 1). Fifty-one percent of the firms indicated increases in activity in May, while 13 percent reported decreases. The current new orders and shipments indexes remained at high readings. The shipments index increased 16 points, while the new orders index declined 2 points. Both the delivery times and unfilled orders indexes were positive for the seventh consecutive month, suggesting longer delivery times and increases in unfilled orders

Unlike New York, Philadelphia saw price pressures moderate: “The survey’s diffusion indexes for prices remained positive but decreased from their readings in April. On the cost side, 31 percent of the firms reported increases in the prices paid for inputs, compared with 36 percent in April, and the prices paid index decreased 10 points to 24.2. With respect to prices received for firms’ own manufactured goods, 21 percent of the firms reported higher prices, and 6 percent reported lower prices. The prices received index decreased 1 point.”

And while Philly firms expected continued growth, optimism fell:

Most of the survey’s six-month indicators decreased further from the higher readings seen at the beginning of the year. The diffusion index for future general activity decreased from 45.4 in April to 34.8 this month, its second consecutive decline. Forty-five percent of the manufacturers expect increases in activity over the next six months, while 10 percent expect declines. The indexes for future new orders and shipments also fell, decreasing 9 points and 6 points, respectively. The future employment diffusion index, at 29.2, fell 8 points. Thirty-seven percent of the firms expect to increase employment  over the next six months, down from 46 percent last month.

Overall, however, sentiment remained strong with responses suggesting continued growth for the region’s manufacturing sector. All the broad indicators either improved or remained at high positive readings, suggesting continued expansion.

In other words, if Yellen was looking for some validation that the economy is recovering, at least the soft data is happy to provide it. Whether it spills over into inflation prints remains to be seen.





Janet will not like this:  hard data USA manufacturing output tumbles .4% month/month in May

(courtesy zero hedge)

Trump-Train Stalls As US Manufacturing Output Tumbles In May

After an exuberant spike in April, US Manufacturing output dropped 0.4% MoM in May (the biggest drop since Feb 2015), missing expectations of a 0.1% rise by three standard deviations.

Manufacturing Output has been swinging violently in the last 3 months…

Headline Industrial Production also disappointed (unch vs +0.2% exp), the weakest print since January.

After three yuuge months for Industrial Production gains, the Trump train appears to have stopped.

Finally there’s this…

The Dow Jones Industrial Average is up 30%, while US Industrial Production is down 2% from its peak in Nov 2014.



Illinois is essentially bust:

(courtesy Mish Shedlock/Mishtalk)

This is interesting:  Trump is preparing an executive order on drug pricing.

(courtesy zero hedge)

Trump Preparing Executive Order On Drug Prices; Spec Pharma Stocks Slide To One Month Lows

Specialty pharma stocks are dropping – again – on news that the Trump administration is preparing an executive order – again – targeting lower U.S. drug costs. Bloomberg reports that the order addressing the sensitive campaign issue could come within weeks and has been largely left out of Republican legislative efforts in Congress, until now.

As a result of the report, the Bloomberg Specialty-Generic Pharma index has dropped as much as 1.24%, its lowest in a month, with the drop led by the usual suspects: VRX -3%, MYL -2.7%, ENDP – 2.7%, MNK -1.2%.

Some more details from Bloomberg, which writes that top health and budget officials in the administration will meet Friday to discuss the issues, according to the people, who asked not to be identified because the session is private. Trump sought recommendations from the nation’s health agencies on reducing medication costs, Health and Human Services SecretaryTom Price told senators last week.

One policy being discussed for inclusion in the order is expressing support forvalue-based agreements, a drug industry-backed proposal in which pharmaceutical companies and health insurers develop arrangements to pay for products depending on how well they work, one of the people said. Price, Centers for Medicare and Medicaid Services Administrator Seema Verma, Food and Drug Administration Commissioner Scott Gottlieb and Treasury Secretary Steve Mnuchin are expected to attend the meeting Friday, which is being led by Office of Management and Budget Director Mick Mulvaney, according to the people.


The recommendations from the officials may be used to craft a first executive order on drug prices that could come out soon, according to the people, followed by a second, more extensive order later. While executive orders can’t change laws, Trump could use the efforts to direct agencies to explore regulatory changes and set direction.

The development is hardly new, with Trump having threatened on several occasions to force drugmakers to bid for government business as a way to reduce prices. He’s also talked about letting consumers import drugs from other countries with lower prices. Neither of those policies, which would likely require a change in law to be implemented in a meaningful way, are in drafts of the orders.

The new budget projections is just sheer fantasy
(Craig Wilson/David Stockman)

Stockman Slams Trump Administration’s Budget Projections As “Fantasy”

Authored by Craig Wilson via The Daily Reckoning,

David Stockman joined Bloomberg Markets to discuss President Donald Trump’s latest budget projections. After the White House and current Office of Management and Budget director Mick Mulvaney released various statements on the budget proposal viability conversations already began within the GOP and Congress.

When prompted by host David Gura over his thoughts, even reflecting on former Treasury Secretary Summers comments that the budget is ludicrously optimistic, David Stockman did not mince words speaking on Washington.

“I think it is fantasy land. They have been kicking the can so long that the magnitude of the problem is almost insuperable. They just imagine options, they imagine policy mixes that have no chance in the world of happening.”


“Not only does this budget project all of this GDP, which can’t happen, it also says we’re going to have what they’ve laid out as a $7.5 trillion gross tax cut over ten years. They’ve identified 15% on the corporate rate, 15% on the pass through and doubled the standard deduction along with all of the rest of the proposals. Yet they say they’re going to pay for it with 100% offset so that there’s no revenue loss.”

During the conversation the Bloomberg host then inserted that the budget offers a “double count” with reference to the math completed by the Administration. Stockman remarked, “Sure, I’m all for a broader base, lower rates – that’s what Reagan did in 1986. But how are you going to come with $7.5 trillion of offsets, when you have the K-Street lobbyists lined up from one end of the swamp to the other. The big dollars are really beyond reach.”


“The biggest loophole you could close is the health exclusion – that’s $200 billion a year. The House Republicans backed out on that during the Obamacare repeal. The next biggest one is $180 billion which is pensions and IRA’s. Do you think they’re going to take pensions and IRA’s away?”


“The third biggest one is capital gains and dividends treated on a preferential basis. When you put all the Wall Street lobbyists, along with the rest of them, on the case they’re not going to do that either.”


“My point is, they pretend to have a tax cut that they haven’t paid for that produces GDP that’s out of this world beyond what’s possible. They end up with budget numbers that are so unrealistic and such a complete fantasy that they might as well not even bother.”

Stockman then urged all that together with the fact that, “they pretend that you can raise defense, veteran spending and have a trillion dollar infrastructure program. That you can ring-fence social security and medicare which is $1.8 trillion, not cutting them a dime.”

“Essentially, they believe you can take $500 billion of a $4 trillion budget and cut the hell out of that little corner and leave all the rest to either grow or stay the same while believing it adds up. It doesn’t.”


This is not pretty:  huge contractor Booz Allen crashes after the Dept of Justice launches a probe against the company

(courtesy zero hedge)

NSA Contractor Booz Allen Crashes After DoJ Launches Probe

Shares in Booz Allen Hamilton are crashing after hours (down 13%) after releasing an 8-K admitting that the Department of Justice is investigating the NSA Contractor’s direct and indirect charging practices.

In their 8K, they admit…

On June 7, 2017, Booz Allen Hamilton Inc. (the “Company”), a wholly owned subsidiary of Booz Allen Hamilton Holding Corporation, was informed that the U.S. Department of Justice is conducting a civil and criminal investigation relating to certain elements of the Company’s cost accounting and indirect cost charging practices with the U.S. government.


To date, our internal and external audit processes have not identified any significant deficiencies or material weaknesses, or identified any significant erroneous cost charging.


The Company is cooperating with the government in these matters and expects to bring them to an appropriate resolution.

As a reminder this is the company that Edward Snowden worked for, and as The Washington Post previously noted, the CEO desperately tried to distance himself from any reputational risk in 2013…

“I told our employees Mr. Snowden was on our payroll for a short period of time, but he was not a Booz Allen person and he did not share our values,” Shrader said.


“We cannot and will not let him define us.”

It appears they have more than ‘leaks’ to worry about.


We will see you tomorrow night


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