GOLD: $1243.40  UP $2.40

Silver: $16.36  DOWN 4  cent(s)

Closing access prices:

Gold $1246.50

silver: $16.44









Premium of Shanghai 2nd fix/NY:$10.50


LONDON FIRST GOLD FIX:  5:30 am est  $1247.05




For comex gold:



TOTAL NOTICES SO FAR: 2621 FOR 262,100 OZ    (8.1524 TONNES)

For silver:

For silver:


200,000  OZ/

Total number of notices filed so far this month: 957 for 4,785,000 oz



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 15th consecutive trading day. We certainly have a determined entity trying to get its hands on whatever silver is available.


We have now officially entered options expiry week:

comex options expiry: Tuesday June 27

London options expiry: Friday June 30

first day notice  Friday June 30


expect continual whacking by the crooked banks.




Here is something interesting on our last 3 huge waterfalls in gold
On Dec 15 2016, gold finished at its nadir at $1125.60.  The comex OI on that day:  402,111 contracts. The OI on silver:  164,500.
On Dec 16:                                                                                 The comex OI on that day: 401,798 contracts.  The OI on silver: 164,479
On March 9 2017: gold finished its nadir fall to $1200.00. The comex OI on that day: 427,627.  The comex OI for silver:  191,422
On March 10: 2017:                                                                       The comex OI on that day: 425,837.  The comex OI for silver: 189,548
On April 18/2017 gold finished at its nadir: $1226.90.  the comex OI on that day: 474,257.  silver comex OI 227,755
On April 19.2017:                                                                     the comex OI on that day: 472,263.  Silver comex OI: 227,954
today:  gold at $1245.00 so far/comex gold OI 445,000/silver comex OI 198,800 (approx)
it seems that we are having in gold higher lows and close to higher lows on the OI.
In silver, the comex OI is all over the board.
I would like to comment on the new platform that Andrew Maguire and his cohorts have been working on for the past year.  The ABX system has now completed a gold and silver backed cryptocurrency “bitcoin” and silver. It will not be necessary to “mine” these coins as the value is already behind the digital coin.  Mining companies will thrive on this as the operators will give a added bonus every time the “currency” moves from one place to another having paid for goods.  The mining companies by giving their metal to the ABX, the crooked banks loose valuable physical that they will never get. It would seem that holders of the 177 cryptocurrencies out there, would rather have a gold backed “bitcoin” than a non backed one. They are going live on July 5. The ABX is using the block chain technology which protects all transactions and is almost impossible to crack
this one is going to be big!!
here is the tape :

Topic: Allocated Bullion Exchange – Investor Presentation

Date : Jun 19, 2017 10:27 AM Eastern Time (US and Canada)





Access Password: ABX190617





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 SURPRISINGLY ROSE BY 1,216  contract(s)UP to 199,929 DESPITE THE FALL IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (DOWN 8 CENT(S). In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.0005 BILLION TO BE EXACT or 143% of annual global silver production (ex Russia & ex China).


In gold, the total comex gold SURPRISINGLY ROSE BY 3,226 CONTRACTS DESPITE  THE FALL IN PRICE OF GOLD   ($3.20 with YESTERDAY’S TRADING). The total gold OI stands at 445,841contracts.

we had 9 notice(s) filed upon for 900 oz of gold.


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


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

Inventory rests tonight: 853.68 tonnes



Today: no changes  in silver inventory at the SLV

THE SLV Inventory rests at: 337.713 million oz



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

1. Today, we had the open interest in silver ROSE BY 1216 contracts UP TO 199,929 (AND now A LITTLE CLOSER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), DESPITE THE FALL IN PRICE FOR SILVER WITH YESTERDAY’S TRADING  (DOWN 8 CENTS).We LOST NOBODY AS EVERYBODY remains 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 TUESDAY night/WEDNESDAY morning: Shanghai closed UP 16.19 POINTS OR 0.52%   / /Hang Sang CLOSED DOWN 148.46 POINTS OR 0.57% The Nikkei closed DOWN 91.62 POINTS OR 0.45%/Australia’s all ordinaires  CLOSED DOWN 1.54%/Chinese yuan (ONSHORE) closed DOWN at 6.8270/Oil DOWN to 43.51 dollars per barrel for WTI and 45.97 for Brent. Stocks in Europe OPENED ALL IN THE RED,,      ..Offshore yuan trades  6.8270 yuan to the dollar vs 6.8270 for onshore yuan. NOW  THE OFFSHORE IS WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN  WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A LITTLE WERAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY TODAY



 we wonder how long this will last: North Korea open to halting nuclear and missile testing if the uSA and South Korea stop military exercises.  Not sure if South Korea will agree to this( zero hedge)





 Sovereign China tries to send a signal that everything is OK as corporate bond issuance evaporates completely.  The yield curve still remains totally inverted:( zero hedge)





This is a surprise:  Andy Haldane a voting member of the Bank of England surprisingly turned hawkish and is now leaning towards a rate hike and a withdraw of QE.

If everybody withdraws their liquidity what on earth is going to sustain asset prices?

( zero hedge)



I kind of expected this:  The Saudi King removes the Crown Price and replaced him with his son Mohammed bin Salman who becomes the Crown Price and heir apparent:

( zero hedge)

ii)The escalation against Iran with respect to Saudi and new found friend Israel will commence:

( zero hedge)


Russia cancels a meeting with a USA official in protest over sanctions and their “destructive’ USA policy. The democrats in the uSA are furious that the Republicans voted against the sanctions.

(courtesy zero hedge)


Another Muslim attack but it seems it is one of our boys (Canadian born) who attacked a police officer in Flint Michigan

(courtesy zerohedge)


Sears Canada is said to be preparing bankruptcy protection
( Lochner/Bloomberg)


i)This time, nobody bought the “production cuts”

( zero hedge)

ii)Oil then retreats after a  huge gasoline build and more announcements of a surge in production
( zero hedge)

(courtesy zerohedge)



Brazil now facing a major crisis as police say it has evidence Temer received bribes

(courtesy zerohedge)



i)Mining entrepreneur Frank Giustra repeats his observation made at the Vancouver Resource Conference in January that the gold/silver market is manipulated

( GATA/ChrisPowell/Kitco)


ii)GATA will have a conference in London in November  (Mines and Money)

( GATA/ChrisPowell)

iii)Bitcoin surges above 2700 USA as India legalizes the cryptocurrency:

( zero hedge)

10. USA Stories

i)Illinois can no longer function

( zero hedge)

ii)Donald is not going to like this:  Ford scraps its plant in Mexico and then they decide not to go back to the USA but to move to China

( zerohedge)

iii)Geez..those Russians did it again: they foiled the election in Georgia as the Republican Handel won easily over Democrat  Offsef despite the huge spending by the democrats (7/1)

( zero hedge)

 iv)The State dept has now begun a probe on Clinton’s mishandling of classified intelligence.  She will probably lose her security clearance when this is done( zero hedge)

v)my goodness:  some of these guys must have figured this thing out: the House Republicans block the Senate Russian sanction bill:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest SURPRISINGLY  ROSE BY 3,226 CONTRACTS UP to an OI level of 445,841 DESPITE THE FALL IN THE PRICE OF GOLD ($3.20 with YESTERDAY’S trading). An open interest of around 390,000 to 400,000 is core and nothing will move these guys from their contracts.

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 LOSS OF 81 contract(s)FALLING TO  703.  We had 23 notices filed yesterday so we LOST 58  contract(s) or an additional 5800 oz will NOT  stand for delivery in this very active delivery month of June AND  58 CONTRACT(S) 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 10 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 GAINED 7 contracts to stand at 1605 contracts. The next big active month is August and here the OI LOST 3,069 contracts DOWN to 307,868,  as the bankers trying to keep this month down to manageable size.

We had 9 notice(s) filed upon today for 900 oz


The next big active month will be July and here the OI LOST 6029 contracts DOWN to 76,032 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 1 contracts to stand at 92.  The next big active delivery month for silver will be September and here the OI already jumped by another 6705 contracts up to 81,979.

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

 WEDNESDAY, June 21.2016:  83,808 contracts were still outstanding vs 76,032 contracts June 21.2017

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  (4,595,000 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.

As for the July contracts:

Initial amount that stood for silver for the July 2016 contract:  14.785 million  oz

Final standing:  12.370 million with the difference being EFP’s taking delivery in London.

We had 40 notice(s) filed for 200,000 oz for the June 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 91,516 contracts which is  poor

Yesterday’s confirmed volume was 202,592 contracts  which is fair

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for JUNE
 June 21/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 17,682.500 oz
550 kilobars
Deposits to the Dealer Inventory in oz nil  oz
Deposits to the Customer Inventory, in oz 
1000 kilobars
No of oz served (contracts) today
9 notice(s)
900 OZ
No of oz to be served (notices)
694 contracts
69,400 oz
Total monthly oz gold served (contracts) so far this month
2621 notices
262,100 oz
8.1524 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   326,769.0 oz
Today we HAD  2 kilobar transaction(s)/ 
We had 0 deposit into the dealer:
total dealer deposits: nil oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had no dealer deposits:
total dealer deposits:  nil oz
we had 1  customer deposit(s):
i) into Scotia: 32,150.000 oz
1000 kilobars
total customer deposits; 32150.000  oz
We had 1 customer withdrawal(s)
 i) Out of Scotia
17,682.5000 oz
550 kilobars
total customer withdrawal: 17,682.500  oz
 we had 0 adjustment(s):
 strange:  again no incoming gold into the gold comex as I consider kilobars a fake entry.

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 9  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 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 (2621) x 100 oz or 262,100 oz, to which we add the difference between the open interest for the front month of JUNE (703 contracts) minus the number of notices served upon today (9) x 100 oz per contract equals 331,500  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 (2621) x 100 oz  or ounces + {(703)OI for the front month  minus the number of  notices served upon today (9) x 100 oz which equals 331,500 oz standing in this  active delivery month of JUNE  (10.311 tonnes)
Total dealer inventory 889,847.333 or 27.67 tonnes DEALER RAPIDLY LOSING GOLD
Total gold inventory (dealer and customer) = 8,625,825.229 or 268.299 tonnes 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 267.84 tonnes for a  loss of 35  tonnes over that period.  Since August 8/2016 we have lost 86 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 21 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 708,155.177  oz
Deposits to the Dealer Inventory
597,202.06 oz
Deposits to the Customer Inventory 
 nil oz
No of oz served today (contracts)
(200,000 OZ)
No of oz to be served (notices)
14 contracts
( 70,000 oz)
Total monthly oz silver served (contracts) 957 contracts (4,785,000 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 4,350,570.3 oz
today, we had  1 deposit(s) into the dealer account:
 i) Into Brinks:  597,202.06 oz
total dealer deposit: 597.202.06  oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 3 customer withdrawal(s):
 i) Out of CNT:  50,056.330
ii) Out of Delaware: 5916.197 oz
iii) Out of Scotia:  652,082.65 oz
 We had 0 Customer deposit(s):
***deposits into JPMorgan have now resumed again
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 40 contract(s) for 200,000 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 957 x 5,000 oz  = 4,785,000 oz to which we add the difference between the open interest for the front month of JUNE (54) and the number of notices served upon today (40) x 5000 oz equals the number of ounces standing


Thus the initial standings for silver for the JUNE contract month:  957 (notices served so far)x 5000 oz  + OI for front month of JUNE.(54 ) -number of notices served upon today (40)x 5000 oz  equals  4,855,000 oz  of silver standing for the JUNE contract month.
Volumes: for silver comex
Today the estimated volume was 49,554 which is very good
Yesterday’s  confirmed volume was 109,833 contracts which is GIGANTIC
Total dealer silver:  34.915 million (close to record low inventory  
Total number of dealer and customer silver:   206.208 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 7.0 percent to NAV usa funds and Negative 6.9% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.3%
Percentage of fund in silver:37.5%
cash .+0.2%( June 21/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV  FALLS TO -.24% (june 21/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS to -0.63% to NAV  (June 21/2017 )
Note: Sprott silver trust back  into NEGATIVE territory at -0.24 /Sprott physical gold trust is back into NEGATIVE/ territory at -0.63%/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 21/no change in gold inventory at the GLD/Inventory rests at 853.68 tonnes

June 20/no  change in gold inventory at the GLD//Inventory rests at 853.68 tonnes


June 16/no changes in gold inventory at the GLD/Inventory rests at 853.68 tonnes

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 21 /2017/ Inventory rests tonight at 853.68 tonnes


Now the SLV Inventory

June 21/no change in silver inventory at the SLV/inventory rests at 337.713 million oz

June 20/a deposit of 1.513 million oz/inventory rests at 337.713 million oz/.


June 16/no changes in inventory at the SLV/inventory rests at 336.200 million oz

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 21.2017: Inventory 337.713  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: 1.22%  (yesterday 1.22%)

12 month:  1.42% (yesterday 1.42%)

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 WEDNESDAY



Inflation is no longer in stealth mode

  • IHS Markit index shows UK households pessimistic about finances for 2017-208
  • UK household finances remain under intense pressure from rising living costs
  • 58 percent of respondents expected higher interest rates in 12 months time
  • Inflation in the United Kingdom currently at near four-year high
  • Prices up prices by 2.9pc year-on-year, biggest annual increase since June 2013
  • In May consumer spending in the UK fell for the first time in almost four years

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. John Maynard Keynes, The Economic Consequences of the Peace (1919)

Inflation is taxation without legislation Milton Friedman

Inflation is no longer in stealth mode

Inflation at 2.9% and wage growth lagging behind has meant household consumers in the UK are under intense pressure from rising living costs.

The IHS Markit Index and Survey measures how people feel about their current situation. The June reading changed from 43.8 from 42.6, indicating that households are the most pessimistic about their finances than they have been in three months.

Reports have linked this to the latest Consumer Price Index readings combined with inflation and interest rate expectations. It is no surprise that with weakening economic indicators and an uncertain political outlook that sentiment is falling.

The fall in the British pound, following the 2016 Brexit vote, is seemingly being blamed for this fall in consumer confidence and climb in inflation. Prior to the referendum last June, official inflation was just 0.3%.

Whilst the pound has recovered slightly from it’s tumble post General Election, general sentiment regarding the currency and the general political and economic situation, is weak. Following the Brexit shock the fall in sterling pushed up the cost of imported goods.

Higher interest rates and inflation expectations

The IHS Market survey also showed that 58% of respondents expect the Bank of England’s Monetary Policy Committee (MPC) to raise interest rates in 12 months’ time. Following the Brexit vote, less than half of the number of people expected this to happen, suggesting consumers were unprepared for the economic hardship that was coming their way.

Consumers might not be wrong to expect a rate hike in the next year. Minutes from the MPC’s June meeting showed that three members (of eight) voted for a rate increase. Rates currently stand at 0.25%.

Usually the Bank of England would look to raise interest rates given the continuing climb above the inflation target. However, these results not only suggest the MPC will have to wait longer but that they will also be unable to inject more cash into the economy. This would perhaps not be a bad thing, in the long run.

One of the major products contributing to the increase in inflation this month was apparently package holidays, highlighting the growing cost of foreign travel at current sterling prices. The second product highlighted by the Office of National Statistics to be contributing to inflation was computer games.

We’re fairly sure that consumers have been feeling the pinch regardless of whether they like a trip to Brittany or enjoy a late-night session of World of Warcraft. Wage growth consistently fails to keep up with inflation and the UK’s household debt to income ratio shows Brits are consistently spending more than they are earning.

There are some major long-term indicators that suggest consumers have been suffering from climbing inflation for some time. But, there has been little official recognition of this, in other words we have been experiencing stealth inflation.

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit-man” Ronald Reagan

Inflation no longer so stealthy

Whilst Brexit, a hung parliament and the subsequent weak pound are being blamed for the rise in inflation and fall in consumer sentiment, make no mistake that inflation has been making its way into the market in a variety of ways for many years now. It is also at a much higher level than the Consumer Price Index would have us believe.

The first example is the CPIH which a measure of how much manufacturers are having to pay for raw materials and energy. Prices were up 15.6% in a year, in April and 11.6% in May. How this really feeds through to consumers though is not just through price rises as is measured by the CPI, but by what we call a stealth form of inflation – a fall in quality and increase in price.

“…[inflation] will lead to a decline in the quality of goods and of service to consumers, since consumers often resist price increases less when they occur in the form of downgrading of quality.” Murray Rothbard, What Has Government Done to Our Money?

Everyone you speak to can think of an example of this form of stealth inflation – decreasing quality with higher prices. The oft-quoted ‘they don’t make ‘em like they used to’ is more relevant today than it ever was.

Unfortunately there is no official measure of this form of inflation, only anecdotal evidence, conversations in the supermarket queue, at the school gates, with furniture salesman etc. Think back to when you first noticed an item of clothing falling apart or not washing properly and wondering why these things didn’t last anymore. It was a while back, certainly a long time before any official measures of inflation said anything was up.

This form of inflation is obvious however when you look at price versus size and how this has changed in recent years. Toilet and tissue paper companies are a good example. In a phenomenon known as ‘de-sheeting’ Kimberly-Clark’s 2013 Kleenex was advertised as 15% bulkier…but with 13% fewer sheets.

The US website consumerist.com joyfully calls this form of stealth inflation the Grocery Shrink Ray, a ‘phenomenon wherein an item sold at X price at a retailer shrinks in size but still costs X amount.’

The most recent example of this was the announcement by Toblerone’s manufacturers that the shape of the infamous pyramid bar would be changing. Mondelez, Tobelerone manufacturers, announced they would be reducing the bars from 170 grams to 150 grams in the UK which would affect the shape. ‘Uproar’ is not quite a strong enough word to describe the reaction from Toblerone fans. Despite the reduction in size, the RRP for the bars has not been reduced.

Mondelez’s justification for the change was due to an uptick in ‘many ingredients’ prices’, the company specifically blamed the drop of the euro against the Swiss franc in January, and an increase in cocoa prices over the last three years.

Staying with confectionary, a Missouri man has filed a federal lawsuit against Hershey’s whom he accuses ‘of under-filling the Reese’s box by around 29%, and the Whoppers box by 41% to mislead shoppers and make them believe that the box is more full than it is.’ The case was not dismissed by the judge.

This is not a new phenomenon. It has been seen repeatedly prior to major depressions. consumerist.com draws our attention to this 1916 (front-page) story in The Seattle Star, ‘[Inspectors] went from bakery to bakery Thursday checking up on the bread situation…And here is what they found: ten-cent loaves of bread have shrunk from 32 ounces to 22 ounces, and standard 5-cent loaves, that used to weigh 16 ounces, now average 11 ounces.”

Toiler paper and sweets might seem like a fickle way to demonstrate the existence of inflation but the truth is that is because of the rising cost and falling quality of everyday goods that consumers are feeling down about the economy.

Conclusion – can doctors treat economic depression?

With wage growth refusing to keep up with rising price levels, the MPC refusing to tackle inflation and declining economic growth likely, the UK may be entering a period of stagflation. When a similar event occurred in the 1970s the period was long lasting and unmanageable.

We don’t know if we are heading into a similar period, but it would be imprudent to fail to prepare for such an event. In the meantime, it is obvious both officially and unofficially that inflation is very much here to stay for the foreseeable future and that is is affecting sentiment both at home and abroad.

Economic depression is usually defined as a sustained, long-term downturn in an economy. At the moment we are clearly look at the form of depression that precedes this – long-term, sustained downturn in economic mood and sentiment. As with an economic depression, there is no quick-fix or obvious treatment. Instead, we can only prepare ourselves for what might be coming.

Gold is a hedge against both inflation and stagflation. History shows it has preserved purchasing power over long periods of time. When compared with the prices of commodities denominated in a fiat currency, the prices of commodities such as oil when priced in gold remain relatively stable.

In contrast, the value of fiat only continues to fall thanks to inflation. It is near impossible to preserve your wealth when kept in such a form. This combined with the increased cost of day-to-day living means households will continue to struggle and the economic outlook for the UK will remain weak.

Readers would be wise to look at their portfolios and consider how it is set for a long-term period of economic depression and rising inflation, whether stealth or otherwise.

News and Commentary

Gold hovers near 5-week low; political tensions support (Reuters.com)

Gold ends lower as Fed seen adopting hawkish stance (Marketwatch.com)

Dollar rises after Fed Dudley’s comments, yen falls (Reuters.com)

U.S. Tech Stocks Rally; Dollar Gains, Bonds Slide: Markets Wrap (Bloomberg.com)

Gold ends lower as Fed seen adopting hawkish stance (Marketwatch.com)

 Are Central Banks Getting Ready to Crash the System Again?” (Goldseek.com)

Massive Central Bank Asset Purchases: Last Ditch Effort To Save Economy & Cap Silver-Gold Prices (Silverseek.com)

“The Central-Bank Moment” – Global Excess Liquidity Collapses (24HGold.com)

The Pin To Pop This Mother Of All Bubbles? (24HGold.com)

Bill Blain Flips Out: “Not Much Surprises Me Any More About Markets, But Really? Really!?” (Zerohedge.com)



Mining entrepreneur Frank Giustra repeats his observation made at the Vancouver Resource Conference in January that the gold/silver market is manipulated


(courtesy GATA/ChrisPowell/Kitco)


Giustra repeats that gold price is ‘managed’ but won’t say ‘manipulated’


3:32p ET Tuesday, June 20, 2017Dear Friend of GATA and Gold:

Mining entrepreneur Frank Giustra, interviewed today by Kitco News’ Daniella Cambone, repeats his observation, made at the Vancouver Resource Investment Conference in January —


— that the price of gold is “managed” by central banks with the help of bullion banks. In his interview with Kitco, Giustra doesn’t want to say the gold price is “manipulated,” but he warns against “paper gold” because of its likely lack of backing.

The interview is 6 1/2 minutes long and is posted at Kitco News here:


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



GATA will have a conference in London in November  (Mines and Money)


(courtesy GATA/ChrisPowell)

Join GATA at Mines and Money’s London conference in November


4:18p ET Tuesday, June 20, 2017

Dear Friend of GATA and Gold:

Planning is under way for the 15th annual Mines and Money conference in London, headquarters of both the real gold business and the paper gold business. The conference will be held from Monday to Thursday, November 27-30, at the Business Design Centre in London’s Islington neighborhood.

Dozens of mining companies will be exhibiting, scores of leading investors will be attending, and dozens of mining and financial experts will speak, including mining entrepreneur Robert Friedland; Commodity Discovery Fund founder and author Willem Middelkoop; Ronald-Peter Stoferle, managing partner of Incrementum and co-author of the investment firm’s annual “In Gold We Trust” reports; Sprott Asset Management CEO Peter Grosskopf; Tocqueville Asset Management portfolio manager Doug Groh; Ross Norman, CEO of bullion dealer Sharps Pixley; David Morgan of Silver-Investor.com; and British political leader Nigel Farage.

Your secretary/treasurer will be speaking too.

For more information about Mines and Money London and to register for the conference, please visit:


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


Bitcoin surges above 2700 usa as India legalizes the cryptocurrency:

(courtesy zero hedge)

Bitcoin Surges Back Above $2700 As India “Legalizes” Cryptocurrency

After crashing 30% last week, Bitcoin is now up over 33% in the last few days helped by a surge in demand from India exchanges after the India government ruled Bitcoin as legal in India

Yet another big rebound… this time as India – the world’s second most-populous nation rules in favor of regulating Bitcoin…

As CoinTelegraph reports, over the past three years, the big three Indian Bitcoin exchanges including Zebpay, Coinsecure and Unocoin operated with self-regulated trading platforms with strict Know Your Customer (KYC) and anti-money laundering systems in place, despite the lack of regulations in the digital currency industry and market.

The efforts of the Bitcoin exchanges in India to self-regulate the market allowed the Indian government to reconsider the Bitcoin and digital currency sectors, regardless of the criticisms by several politicians that significantly lack knowledge in cryptocurrency.

On March 24, Cointelegraph reported that Kirit Somaiya, a member of parliament of the ruling BJP in India, was harshly criticized for his description of Bitcoin as a Ponzi scheme.

In a letter to the Finance Ministry and the Reserve Bank of India, Somaiya explained that Bitcoin is a pyramid Ponzi-type scheme. However, Somaiya was criticized for his inability to understand the structural and fundamental difference between a Ponzi scheme and Bitcoin.

The legalization of Bitcoin in India

In spite of the negative attitude of certain politicians, the Indian government has come to a decision to regulate the market and provide an even playing field for Bitcoin exchanges that have allocated a significant amount of resources to standardize the market and industry.

Back in April, Mohit Kalra, CEO of Coinsecure, one of the largest Bitcoin exchanges in India, told Cointelegraph in an interview that the Indian government has finally started to take Bitcoin seriously and are considering the possibility of regulating the market.

Kalra said:

“Finally, something positive for the industry. Authorities are now taking this technology seriously. We have been trying to get their attention for years now. I am glad it’s all happening at the right time. At Coinsecure, we are seeing a massive increase in the number of users and volumes. We are positive with what will happen in these coming three months.”

On June 20, CNBC India announced that the Indian government committee has ruled in favor of regulating Bitcoin and is currently establishing a task force to create various regulatory frameworks with the aim of fully legalizing Bitcoin in the short-term.

Prior to the announcement of the Indian government, Chris Burniske, ARK Invest’s crypto lead, noted that the trading volumes in India have been on the rise. Burniske previously revealed that the Indian Bitcoin exchange market is responsible for processing around 11 percent of Bitcoin-to-USD trades.



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


1 Chinese yuan vs USA dollar/yuan  WEAKER 6.8270(DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES  A LITTLE WEAKER TO ONSHORE AT   6.8270/ Shanghai bourse CLOSED UP 16.19 POINTS OR 0.52%  / HANG SANG CLOSED DOWN 148.46 POINTS OR 0.57% 

2. Nikkei closed D0WN 91.62 POINTS OR 0.45%   /USA: YEN FALLS TO 111.35

3. Europe stocks OPENED ALL IN THE RED        ( /USA dollar index FALLS TO  97.63/Euro UP to 1.1149


3c Nikkei now JUST BELOW 17,000

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

3e WTI::  43.51 and Brent: 45.97

3f Gold UP/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  +.255%/Italian 10 yr bond yield DOWN  to 1.894%    

3j Greek 10 year bond yield FALLS to  : 5.57???  

3k Gold at $1246.00  silver at:16.48 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 5/100 in  roubles/dollar) 59.54-

3m oil into the 43 dollar handle for WTI and 45 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 1.0857 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 FALLING to  +0.255%

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 2.153% early this morning. Thirty year rate  at 2.736% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Oil Bear Market Sends Global Stocks, Yields Sliding; Chinese MSCI Addition Fizzles

In an eventful overnight session which saw a historic transition in Saudi Arabia, an unexpected Republican victory in the Georgia Special Election, China’s inclusion in the MSCI EM index and Travis Kalanick’s resignation, S&P futures continued to fall, alongside stock markets in Asia and Europe, while oil prices extended their drop despite a larger than expected draw reported by API on Tuesday. The USDJPY continued its recent slide, dropping just shy of 111, while GBPUSD tumbled as low as 1.2589, the lowest since May announced the UK election, only to reverse and recover all gains ahead of the Queen’s speech on Wednesday.

Despite the much hyped inclusion of 222 mainland Chinese shares in the MSCI EM index starting May 2018, which will by only 0.73% to include Chinese A-shares, the Shanghai composite closed a modest 0.5% higher, as the initial euphoria fizzled following calculations that buying pressure from the MSCI shift would be muted. MSCI estimated the change, due around the middle of next year, would drive inflows of between $17 billion and $18 billion. China’s market cap is roughly $7 trillion.

The index provider also set out a laundry list of liberalization requirements before it would consider further expansion. “We suspect that it will be a long time before this happens,” wrote analysts at Capital Economics in a note. While China’s weighting in the MSCI Emerging Markets Index may ultimately rise to 40 percent or so, this rise is likely to be slow,” they added. “The upshot is that any initial boost to equities is likely to be small.”

“Inclusion is unlikely to result in a significant shift in the underlying flow picture,” Goldman Sachs economists led by MK Tang write in note. “While short-term sentiment could be favorable, over the longer term we continue to expect the CNY to move in a managed path, gravitating gradually towards a weaker level against the USD due to fundamental forces.”

More notably perhaps, the offshore yuan dropped, shrugging off MSCI’s decision to include mainland shares in its benchmark stock indexes while China’s Ten-year sovereign bonds fall, with the yield rising the most in 6 weeks after the PBOC drained CNY 40bn in liquidity, even as S&P said it sees a “real possibility” of a China downgrade, for one simple reason: China continues to drown in debt.

European shares fell for a second day as crude continued to edge lower. Haven demand spurred the yen and gold, which was poised to advance after five days of losses. For once oil’s woes had little impact in Saudi Arabia, where a palace reshuffle and good news from MSCI Inc. boosted equities. Shanghai stocks also advanced after the index provider added China’s domestic shares to its emerging-markets gauge.

Another key overnight development, was the Saudi Royal reshuffle in which King Salman stripped the current crown prince, his nephew Mohammed bin Nayer, of his post, and replaced him with his son, Mohammed bin Salman.  While speculation remains on what was the cause for the historic shakeup, with the ongoing collapse in the price of oil and resulting sharp saudi deficits cited as the most likely one, the local market took it in stride, with the Saudi Tadawul All-Share index rallying 3.3% after the news.

Back to markets, Australia’s S&P/ASX 200 Index slumped 1.6%, erasing its gain for the year, as energy shares tumbled. BHP Billiton and Rio Tinto both slid at least 2.9 percent. While the SHCOMP eeked out modest gains, Hong Kong’s Hang Seng Index fell 0.6% perhaps due to rebalancing.

European shares fell for a second day as crude extended its drop further into a bear market. Safe haven demand spurred the yen and gold, which was poised to advance after five days of losses. The ongoing weakness in crude and other commodities threatens to crush arguments from US central bankers that weak inflation rates will be transitory, adding to concerns of a Fed policy error that could unintentionally crimp the global economic recovery, according to Bloomberg. The Stoxx Europe 600 lost 0.7% with bank stocks leading the way.

All eyes remained on oil, where signs of a growing glut of supply and rising Libyan output sent Brent crude futures skidding back to $45.50 as European trading gathered momentum. The slide in energy costs boosted bond prices and flattened yield curves as investors priced in lower inflation for longer, while safe-haven flows underpinned the Japanese yen.

Brent now the lowest since mid-November: remember that whole reflation thing? No, neither does the market,” Rabobank analysts told clients in a reference to Brent crude futures, which have slid almost 10 percent this month, and over 20% since the recent highs. Oil had shed 2% on Tuesday, taking U.S. crude futures into a bear market, a red flag to investors who follow technical trends.

The moves in rates were just as dramatic, with the spread between yields on U.S. five-year notes and 30-year bonds shrank to the smallest since 2007 as investors wagered the Federal Reserve might have to delay further rate hikes. Thirty-year German debt yields bonds also tumbled back toward two-month lows, adding to a more than 20-basis-point drop over the past month and ahead of what will now be a closely watched sale of 30-year debt in Berlin later.

“The plunge in oil prices ignited a bull flattening on the German and U.S. curve,” analysts at UniCredit said in a note adding that it suggested “reflation trades are finally deflated.”

The recent setback for crude and commodity prices as well some equity markets is partly over doubts of Trump’s promised multi-trillion dollar stimulus program, which had raised hopes of boosted inflation and growth, and has been a huge disappointment instead.

In currency markets, the flight from oil and into long-dated government bond benefited the safe-have yen which climbed to 111.120 per dollar. The U.S. currency was holding its own elsewhere though – oil and the greenback often move inversely. Against a basket of currencies, it was steady at 97.736 having touched a five-week peak overnight. The euro stood at $1.1146 after hitting a three-week low, while the dollar eased a touch on the yen to 111.17. Sterling was still in the firing line initially sliding back under $1.26 but since rebounding sharply and recoupong all losses.  It took a spill after Bank of England Governor Mark Carney hosed down speculation that he might soon back higher interest rates, saying he first wanted to see how the economy coped with Brexit talks.

Oracle scheduled to report earnings later on Wednesday, while numbers on existing home sales will be published on the macro side

Market Snapshot

  • S&P 500 futures down 0.3% to 2,431.00
  • STOXX Europe 600 down 0.8% to 386.28
  • MXAP down 0.5% to 154.46
  • MXAPJ down 0.9% to 500.76
  • Nikkei down 0.5% to 20,138.79
  • Topix down 0.4% to 1,611.56
  • Hang Seng Index down 0.6% to 25,694.58
  • Shanghai Composite up 0.5% to 3,156.21
  • Sensex down 0.2% to 31,222.18
  • Australia S&P/ASX 200 down 1.6% to 5,665.72
  • Kospi down 0.5% to 2,357.53
  • German 10Y yield fell 1.4 bps to 0.248%
  • Euro down 0.04% to 1.1130 per US$
  • Italian 10Y yield fell 4.4 bps to 1.62%
  • Spanish 10Y yield fell 2.2 bps to 1.363%
  • Brent Futures down 0.6% to $45.76/bbl
  • Gold spot up 0.2% to $1,246.00
  • U.S. Dollar Index up 0.01% to 97.77

Top Overnight News from BBG

  • Theresa May will make her first attempt to engage with Britain’s new political landscape as she publishes a legislative program heavy on Brexit and likely to be light on anything controversial
  • U.K. first secretary of state Damian Green tells BBC radio there’s still every possibility of Conservative Party deal with DUP; government currently lacks overall majority in parliament with legislative program due later on Wednesday in Queen’s Speech
  • Saudi Arabia’s Deputy Crown Prince Mohammed Bin Salman was named to replace his cousin as heir to the throne in a shake-up that consolidates the 31-year-old leader’s power in the world’s biggest oil exporter
  • Emmanuel Macron’s justice and European affairs ministers quit, bringing to four the number of members of his cabinet who have left in recent days amid various ethics investigations
  • Chinese stocks were little moved by their addition to MSCI Inc.’s benchmark indexes as investors weighed the symbolic importance of inclusion against the limited impact on short-term inflows
  • Republican Wins U.S. House Seat in Georgia After Close Race
  • Oil Slide Hits Stocks; MSCI China Impact Is Muted
  • Housing Finance Overhaul May Come Before Dodd-Frank, Warner Says
  • Saudi Crown Prince Seen Keeping Oil Policy Aimed at Higher Price
  • Uber CEO Travis Kalanick Quits Under Pressure From Investors
  • BMC Software, CA Said to Weigh Deal to Combine, Take CA Private
  • Sears Canada Is Said to Prepare to Seek Creditor Protection
  • Sinopec, JD.com Discuss Cooperation on Logistics, Finance
  • Sharp Says FY 2016 Sales to Apple Fell 18.8% Y/y to 542.1b Yen
  • Mithra Completes Recruitment for Added Estelle® Safety Study

Asia equity markets traded mostly negative following the downbeat Wall St. close, where energy lagged after WTI crude briefly slipped below USD 43/bbl to hit a 9-month low. ASX 200 (-1.6%) underperformed with the index dragged by weakness across commodities, while Nikkei 225 (-0.4%) was dampened by a firmer JPY. Shanghai Comp. (+0.2%) and Hang Seng (-0.6%) were mixed with the mainland bourse kept afloat following MSCI’s inclusion of China A-shares in its Emerging Market index, which in turn also dampened stocks in South Korea due to expected outflows from the decision. 10yr JGBs are mildly higher with mild demand seen amid weakness in stocks, while the BoJ were also in the market for JPY 1.03fin of JGBs ranging from 1yr-10yr maturities.

Top Asian News

  • Toshiba Picks Bain-Japan Group as Preferred Chip Unit Buyers
  • Freeport Indonesia Workers to Extend Strike for Third Month
  • Australia Law to See Online Retailers Pay More Sales Tax
  • Vanke’s Wang Exits After Tussle Over China’s No. 1 Developer
  • China Stocks Win MSCI Entry as $6.9 Trillion Market Goes Global
  • MSCI Sees $17b of China Inflows Under Current Inclusion Plan
  • Singapore June COE Second Open Tender: Summary (Table)
  • Allianz Seeks to Bulk Up in Asia in Wait for China Permit
  • China Steel Rebar Extends Drop as ‘Off-Season’ Demand Takes Toll

EU markets trade in the red, a continuation from yesterday’s US session. Energy continues to struggle, with WTI futures looking to once again attack the USD 43.00/bbl level. Financials lead the downside however, not helped by earnings downgrades this morning, with prudential (-16%) the clear laggard in FTSE 100. Fixed Income markets are evident of the risk off sentiment — Gilts and Bunds continue to tick higher as global uncertainties continue. Spreads to the Bund have been mixed, with the lOy Spain trading well, 0.50bps tighter to Bunds, contrasting with a 0.50bps widening for BTPs. UK PM May stated that the Brexit needs to be delivered in a way the commands maximum public support, while May added they will work with parliament, businesses and devolved governments to ensure a smooth and orderly exit.
30 UK Conservative MPs are reported to have told PM May they will not accept a Brexit without a deal. The DUP was reported to have threatened to walk away from talks with the Conservative party over forming a government. Last night there was speculation that the Conservatives could even open talks with the Liberal Democrats’ 12 MPs about supporting the Tory Government if the DUP talks fail.

Top European News

  • Gecina to Buy Eurosic for $2.8 Billion to Add Paris Offices
  • Provident Financial Falls 20% After Warning on Consumer Credit
  • Credit Suisse to Bolster Leveraged Finance Business: FT
  • Australian Regulator Postpones Decision Date on Bayer, Monsanto
  • Novo Nordisk’s Victoza Heart Benefit Claim Backed by FDA Panel
  • May Faces New Political Reality With Brexit-Heavy Program
  • Macron Loses Two More French Ministers as Bayrou, Sarnez Quit
  • U.K. Budget Deficit Narrows in Fiscal Boost for Hammond
  • Italy’s Gentiloni: U.K. Not Very Strong at Start of Brexit Talks

In currencies, FX markets again influence by the political mess in the UK, where we have a minority government scrambling for seats. The DUP have threatened to walk away from talks according to the media, but insiders suggest talks are ongoing, so earlier speculation that Theresa May and her band of not-so merry men will turn to the LibDems is premature. Nevertheless, GBP remains under pressure, as yesterday’s catalyst of gov Carney’s distancing from hawkish sentiment at the MPC has seen 1.2600 relinquished, but all too briefly as yet. EUR/GBP grinds higher to test 0.8850, but has stopped short of this level by some 5 ticks or so as yet. Elsewhere, we have seen a modest pullback in the USD in line with the Treasury curve, where the key 10yr rate is now just under 2.15%. USD/JPY is testing moderate support ahead of 111.00, but this is all inside familiar territory and suggests a period of range bound trade ahead. This goes for EUR/USD also, but we sense the demand in EUR/GBP is adding an artificial bid here as the lead EUR rate looks prime for a deeper setback after the sold resistance seen ahead of 1.1300, and now at 1.1200. EUR/CHF heavy in the mid 1.0800’s supports this view.

In commodities, West Texas oil fell 0.2 percent to $43.41. Futures tumbled more than 2 percent on Tuesday, touching the lowest since August. Gold rose 0.2 percent to $1,245.98 an ounce after falling for five straight days. Oil had shed 2 percent on Tuesday, taking U.S. crude futures 20 percent off recent highs and thus into official bear territory, a red flag to investors who follow technical trends.  “Brent now the lowest since mid-November: remember that whole reflation thing? No, neither does the market,” Rabobank analysts told clients in a reference to Brent crude futures, which have slid almost 10 percent this month. The weakness in crude and other commodities threatens to dent arguments from U.S. central bankers that weak inflation rates will be transitory, adding to concerns of a Fed policy error that could unintentionally crimp the global economic recovery.

Looking at the day ahead, it’s a quiet day for data with only US existing home sales for May out this afternoon. Away from the data the BoE Chief Economist Andy Haldane is scheduled to speak at midday today while the Queen’s speech will be the other big focus.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 2.8%
  • 10am: Existing Home Sales, est. 5.55m, prior 5.57m
  • 10am: Existing Home Sales MoM, est. -0.36%, prior -2.3%

DB’s Jim reid concludes the overnight wrap

It it seems apt that Oil was one of the major market movers yesterday. WTI fell -2.19% yesterday to close at $43.23/bbl (although did hit an intraday low of $42.75/bbl). That means it has now fallen a little over 20% from its highs back in February (using close-to-close prices – closer to 23% using intraday pricing) and therefore slipping into the definition of a bear market. Rather than there being one specific catalyst yesterday the move just appeared to be an extension of the slide that we’ve seen for the last few months now with markets questioning the impact of the OPEC-led output cuts and also a reinvigorated US shale market. Risk assets were hit hard too as a result. The S&P 500 (-0.67%) suffered its biggest decline since May 17th while the Stoxx 600 (-0.70%) was down a similar amount. EM currencies sold off while sovereign bond yields fell in tow. 10y Treasuries ended the day 3.2bps lower at 2.157% while 10y Bunds were 1.9bps lower at 0.258%.

Oil is now back to levels last seen on September 16th last year and even though we’ve rallied hard since February 2016, Oil has only been lower than this for 6% (188 days) of the time since the start of 2005. That is mostly made up of 44 days in 2008/09 and 112 days in late 2015/ early 2016. So these are pretty stressed levels relative to the past decade or so. Given that Oil has returned back to start of 2005 levels we thought we would publish our usual monthly asset performance chart from this date to put the lethargic performance of Oil in some  context over the last 12 and a half years. Keeping it in USD  hedged terms only for simplicity sake, of our usual asset classes we monitor the biggest winners have been the Shanghai Comp (+286%), Gold (+189%), Hang Seng (+177%), S&P 500 (+163%) and EM Equities (+160%). So while Oil is net flat it’s not stopped equity markets rallying incredibly over that time. US and EUR credit indices have returned anywhere from +34% to +109% and DM bond markets have returned +38% to +61%. In fact outside of currencies only 4 assets have fallen in the last 12 and a half years (and therefore unperformed Oil). Those include the FTSE MIB (-10%), European Banks (-34%), the Broad Commodity Index (-38%) and Greek Equities (-68%). Clearly the financial crisis and peripheral European concerns of the last decade are the big themes there.

Away from Oil the other notable news yesterday came last night after markets closed with the announcement that China’s A-shares will be included in MSCI’s benchmark indexes for the first time following three previous failed attempts. The index complier plans to add 222 large cap China A stocks which will mean they occupy an aggregate weight of 0.7% in the emerging markets index. According to the FT that is a larger number of stocks and overall percentage than MSCI had previously proposed. Stocks will be added in two stages in May and August next year. Significantly this marks a fairly major landmark for China in as far as integrating into the global financial markets.

The announcement has seen Chinese equity markets firm up this morning which is helping to offset falling energy stocks. The Shanghai Comp is currently +0.13% after being up as much as +0.45% while the CSI 300 is +0.52%. In contrast the Hang Seng (-0.30%) is in the red along with the Nikkei (-0.23%), ASX (-1.35%) and Kospi (-0.56%). Oil is little changed while US equity index futures are also pointing towards a slightly weaker open. As we go to print headlines are also hitting the screens noting that Saudi Arabia’s King has replaced the Crown Prince, replacing him with his son Mohammed bin Salman.

Moving on. With the calendar fairly thin again today expect there to be a reasonable amount of focus on the Queen’s speech at 11.30am BST in the UK. With no deal reached yesterday it appears that an agreement between the Conservatives and the DUP parties will not be made in time for it. So it’s likely that the government will today present its legislative programme with no guaranteed majority. Several days of debate is expected to commence following the speech with votes then expected to go ahead on June 28th and 29th. The Telegraph ran a story last night suggesting that DUP MP’s are threatening to walk away from a deal entirely. So it’s very fragile situation.

Of course this all comes with the first week of Brexit negotiations getting underway and for which more and more details will emerge in weeks to come. Brexit was a big focus in Governor Carney’s Mansion House speech yesterday with the Governor stating that he wants to see how the economy reacts to the reality of Brexit negotiations. Carney also talked about “mixed signals on consumer spending and business investment” along with the “still subdued domestic inflationary pressures, in particular anaemic wage growth”. So pretty dovish overall particularly in light of the more hawkish BoE meeting last week. Sterling tumbled -0.85% yesterday to close at $1.263 and is now below the big election night spike lower, and at the lowest since April. It’s worth adding the Chancellor Hammond also spoke yesterday at the Mansion House and reiterated that the Government will “remain committed to the fiscal rules set out at the Autumn Statement….to a balanced budget by the middle of the next decade”. In other words no indication that the Government will be changing course any time soon but he did acknowledge that the election shows that Britain had become weary of austerity so maybe higher taxes are planned for some. He also spoke about prioritising jobs and the economy in Brexit talks which was different to the campaign trail rhetoric from his leader.

Away from the BoE it was also a busy day over at the Fed. The Chicago Fed’s Evans spoke again and said that he was a little nervous on inflation but overall still positive about the US economy. He also suggested that the Fed could wait until December before deciding whether or not to tighten again. Vice-Chair Fischer acknowledged that low rates have contributed to rising house prices in certain countries while the Boston Fed’s Rosengren voiced some concerns about financial stability risks as a result of a long period of low rates.

Meanwhile House Speaker Paul Ryan delivered his eagerly awaited tax speech but it ended up being pretty short on exciting details for markets. Ryan emphasised that the current administration is “”going to fix this nation’s tax code once and for all” while also saying that “we need to get this done by 2017”. It’s worth noting that Ryan avoided the much debated border adjusted tax issue although in a TV interview just after did also note that the BAT isn’t dead but that officials are also working on possible alternative proposals.

Before we wrap up, in terms of the limited macro data out yesterday, in the US the current account deficit for Q1 revealed a deficit of 2.5% of GDP during the quarter which is little different to that seen on average over the past eight years. In Germany a drag lower from energy prices saw Germany’s PPI fall -0.2% mom in May and a little bit more than expected.

Looking at the day ahead, it looks set to be another quiet day for data with only UK public sector net borrowing data for May due out this morning and US existing home sales for May out this afternoon. Away from the data the BoE Chief Economist Andy Haldane is scheduled to speak at midday today while the Queen’s speech will be the other big focus.



i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed UP 16.19 POINTS OR 0.52%   / /Hang Sang CLOSED DOWN 148.46 POINTS OR 0.57% The Nikkei closed DOWN 91.62 POINTS OR 0.45%/Australia’s all ordinaires  CLOSED DOWN 1.54%/Chinese yuan (ONSHORE) closed DOWN at 6.8270/Oil DOWN to 43.51 dollars per barrel for WTI and 45.97 for Brent. Stocks in Europe OPENED ALL IN THE RED,,      ..Offshore yuan trades  6.8270 yuan to the dollar vs 6.8270 for onshore yuan. NOW  THE OFFSHORE IS WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN  WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS A LITTLE WERAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY TODAY



we wonder how long this will last: North Korea open to halting nuclear and missile testing if the uSA and South Korea stop military exercises.  Not sure if South Korea will agree to this

(courtesy zero hedge)

In Major Diplomatic Shift, North Korea Open To Halting Nuclear, Missile Tests

Is Trump about to have his biggest diplomatic victory yet?

According to Yonhap, North Korea’s top envoy to India on Wednesday offered a conditional moratorium, i.e. halt, on his country’s nuclear and missile tests in what was said to be an “apparent bid to hold talks with the United States.” While the North Korean offer is conditional, its “demands” are hardly outrageous.

North Korea Ambassador to India Kye Chun-yong said Pyongyang is willing to talk in terms of freezing its nuclear and missile tests under certain circumstances. “If our demands is met, we can negotiate in terms of the moratorium of such as weapons testing,” Kye said in English in an interview posted on the website of India’s television station WION.

He suggested that one of the key demands is the halt of the U.S. joint military drills with South Korea, which Pyongyang denounced as a rehearsal for invasion. Seoul and Washington say their annual exercises are defensive in nature.

This could be a potential hurdle, as South Korea’s new President Moon Jae-in said Seoul has no plans to scale back joint military exercises with Washington, according to an interview with U.S. broadcaster CBS. Moon dismissed as personal views his adviser’s recent remarks in Washington that South Korea and the U.S. may consider scaling back their joint military exercises in exchange for North Korea freezing its nuclear and missile development programs. Moon has repeatedly stated he is willing to engage North Korea diplomatically, and now that the first negotiating bid has been made by Pyongyang, there rest may be simple protocol.

That said, this wouldn’t be the first such “moratorium”: in February 2012, North Korea agreed to temporarily put a moratorium on missile and nuclear tests and freeze its uranium-enrichment facilities in exchange for 240,000 tons of food aid from the U.S. But the deal unraveled two months later as North Korea made an unsuccessful attempt to launch what it claims was a rocket to put an earth observation satellite into orbit.

South Korea, the U.S. and other regional powers said it was a cover for testing the North’s ballistic missile technology, which is banned under a U.N. resolution.

In recent years, North Korea has carried out five nuclear tests and dozens of missile tests as it seeks to develop a nuclear-tipped intercontinental ballistic missile capable of hitting the U.S. Despite sanctions and pressure, North Korea has repeatedly vowed to further develop its missile and nuclear weapons program, viewing it as a deterrent against what it claims is Washington’s hostile policy against it.




Sovereign China tries to send a signal that everything is OK as corporate bond issuance evaporates completely.  The yield curve still remains totally inverted:

(courtesy zero hedge)

China ‘Rescues’ Bond Market In Symbolic Move But Yield Curve Remains Inverted

For the 10th day in a row, China’s bond yield curve remains inverted (the longest in history).

With yields at 3-year highs, corporate bond issuance is evaporating, and has now emerged as the latest major, and most imminent, threat facing China’s financial sector and $10 trillion corporate debt market.

However, it appears Chinese authorities have reached their max pain point.


In a very symbolic move overnight, China’s Ministry of Finance bought 1.26 billion yuan of 1-year bonds for the first time in history via the secondary market. As Bloomberg reports,

The operation is part of a broader initiative to generate a reliable yield curve for risk-free government debt that can serve as a benchmark for borrowing costs across the economy.


While China has more than 22.9 trillion yuan ($3.4 trillion) of government securities outstanding — one of the world’s largest — it has less liquidity than many developed nations.


Under a system unveiled last November, China’s Ministry of Finance confers with market participants and, after any agreement that government bonds have insufficient or excess demand, issues additional securities or purchases existing ones from the secondary market.

While yields tumbled on the rescue attempt, the curve remains inverted...

As Christophe Barraud, Chief Economist & Strategist at Market Securities, explains, while the amount is not huge, it’s much more about the signal.

They really want to show that they are ready to buy bonds to contain short term yields, in line with recent injections of liquidity via OMOs.


Once again, in a year of political transition, they will do what is necessary to avoid any tensions.


So, despite the need to curb credit growth and the housing bubble, they should remain active on the money market.


In the meantime, public spending more precisely infrastructure spending will be a key tool to avoid a hard landing.

Finally, the reason why all of the above matters for not only the Chinese, but global, economy is because as we showed last week, 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 to do what it has never done before: reduce its balance sheet without crashing the market.




This is a surprise:  Andy Haldane a voting member of the Bank of England surprisingly turned hawkish and is now leaning towards a rate hike and a withdraw of QE.

If everybody withdraws their liquidity what on earth is going to sustain asset prices?

(courtesy zero hedge)

Pound Surges As BOE Chief Economist “Leans Toward” Hiking Rates In 2017

Here we go again.

One week after the pound surged following the BOE’s unexpectedly hawkish 5-3 vote split, then tumbled after Mark Carney’s speech yesterday which suggested no rate hike is coming any time soon, today, for the third time in almost as many days, all GBPUSD stops were taken out after BoE Chief Economist, Andy Haldane, surprised the market with unexpectedly hawkish comments in his speech in Yorkshire. He said he was leaning toward joining the hawks on the Monetary Policy Committee and considered a vote for a rate increase as early as June. He also said he favors withdrawing some of the August 2016 stimulus in the second half, and that the partial withdrawal of additional stimulus put in place last year would be “prudent relatively soon, provided the data come in broadly as expected in the period ahead.

He said that the balance of risks between tightening policy too early and too late has “swung materially towards the latter in the past six to nine months” and that tightening is likely needed “‘well ahead of current market expectations” and that a late decision to raise interest rates “could result in a much steeper path of rate rises later on”.

He also suggested that he may even have voted in favour at the last meeting in June when MPC voted 5-3 to leave rates at record low.

As Citi notes, this is uncharacteristically hawkish from Haldane, and appears to contradict much of Carney’s dovishness from yesterday, or as Citi notes, “Maybe Haldane is the new Forbes?”

In any case, with cable in dire need of some good headlines – and FX traders in dire need of a stop hunt – Haldane has been quite the welcome catalyst. GBPUSD is back up to 1.2688, and EURGBP has erased today’s gains and is now at 0.87895.




I kind of expected this:  The Saudi King removes the Crown Price and replaced him with his son Mohammed bin Salman who becomes the Crown Price and heir apparent:

(courtesy zero hedge)

In Historic Shakeup Saudi King Removes Crown Prince, Names Son As First Heir

In a shocking development, on Wednesday Saudi Arabia’s King Salman appointed his 31-year-old son Mohammed bin Salman (his eldest son from his third wife) as crown prince, placing him as first-in-line to the throne and removing his nephew, 57-year-old Mohammed bin Nayef – the country’s counterterrorism czar and a figure well-known to Washington – from the royal line of succession, relieving him of his post as Interior Minister, and stripping him from all his titles.

Bin Salman already controls the Kingdom’s defense, oil and economic policies; today’s announcement merely consolidates his power. He was also credited with arranging Trump’s “successful” trip to Riyadh.

Al Arabiya television reported that the promotion of the prince was approved by the kingdom’s Allegiance Council with 31 of 34 members approving, and that the king had called for a public pledging of loyalty to Mohammed bin Salman on Wednesday evening in Mecca. The surprise announcement follows 2-1/2 years of already major changes in Saudi Arabia, which stunned allies in 2015 by launching a war in Yemen, cutting old energy subsidies and in 2016 proposing partly privatizing state oil company Aramco.

As AP further reports, in a series of royal decrees carried on the state-run Saudi Press Agency, the monarch stripped Prince Mohammed bin Nayef, who had been positioned to inherit the throne, from his title as crown prince and from his powerful position as the country’s interior minister overseeing security.

The newly announced Crown Prince Mohammed bin Salman already oversees a vast portfolio as defense minister and head of an economic council tasked with overhauling the country’s economy. And while he had previously been the second-in-line to the throne as deputy crown prince, numerous royal watchers had suspected his rise to power under his father’s reign might also accelerate his ascension to the throne.

The young prince was little known to Saudis and outsiders before Salman became king in January 2015, although he quickly rose to prominence when he emerged as the dominant voice in the OPEC production cut negotiations. He had previously been in charge of his father’s royal court when Salman was the crown prince. The Saudi monarch awarded his son expansive powers to the surprise of many within the royal family who are more senior and more experienced than Mohammed bin Salman.

King Salman also reinstated all allowances and bonuses that were canceled or suspended to civil servants and military personnel, SPA reported.

While the backroom negotiations that resulted in today’s stunning announcement will likely remain unknown indefinitely, today’s dramatic overhaul of the Saudi royal succession was previewed here as recently as December, when we discussed that the present Saudi king, Salman bin Abdul Aziz, is the last of the sons of the first Saudi king, Abdul Aziz al Saud, who will ever sit on the Saudi throne. After Salman dies, Saudi leadership will pass to a new generation of Saudi royals. But not all the descendants of the first Saudi king are happy about how the future succession may turn out.

Salman named his nephew, Mohammed bin Nayef, as crown prince after firing his half-brother, Mugrin bin Abdul Aziz, as crown prince after the death of King Abdullah in 2015. For good measure, Salman also named his son, Mohammad bin Salman, who is little-known outside the kingdom, as deputy prime minister. The 30-year old Mohammad bin Salman is seen by some as the eventual crown prince after King Salman figures out some way to ease Mohammad bin Nayef, the Interior Minister and close friend of the United States, out of the position of heir apparent to the throne.


More and more power has been concentrated into Mohammad bin Salman’s hands, including control over the Defense Ministry, the Council of Economy and Development, and the Saudi government-owned Arabian-American oil company (ARAMCO). The deputy crown prince and defense minister is the architect of Saudi Arabia’s genocidal military campaign against the Houthi rebels in Yemen and continued Saudi support for jihadist guerrillas in Syria and Iraq, as well as military support for the Wahhabist royal regime in Bahrain in its bloody suppression of the Shi’a Muslim majority population. Mohammad bin Salman is also the major force in Saudi Arabia seeking a military confrontation with Iran.


There is a schism within the Saudi royal family that has created a real-life «Game of Thrones» within the kingdom.

Finally, while it remains unclear what domestic consequences the King’s decision will have, a decree which an official said was “due to special circumstances”, that this major power move comes at a time when OPEC and Saudi Arabia are both reeling, as a result of plunging oil prices leads one to believe that the current deteriorating state of the Saudi economy, coupled with plunging oil revenues, may have been a catalyst in today’s announcement.



The escalation against Iran with respect to Saudi and new found friend Israel will commence:

(courtesy zero hedge)


After Shocking Saudi Shakeup “Not A Question Of If But When New Escalation With Iran Starts”

Two days ago, when reporting on the surprising “terrorist attempt” by Iran’s National Guard on a major Saudi offshore oilfield (at least according to Saudi media), we said that “if the Saudi account of events is accurate, and if Iran is indeed preparing to take out Saudi oil infrastructure in retaliation or otherwise, the simmering cold war between Saudi Arabia and Iran is about to get very hot.” This in turn followed an earlier analysis on the ongoing Syrian war in which we said that “the next major regional conflict appears set to be between Saudi Arabia and Iran. All it needs is a catalyst.”

That catalyst, according to energy consultancy Petromatrix, may have been revealed overnight with the stunning Saudi royal shakeup in which the King announced he was stripping the current Crown Prince, his nephew Mohamed bin Nayef (MBF), of all titles and obligations, and replacing him with his son Mohamed bin Salman (MBS).

Summarizing the event, Petromatrix analyst Olivier Jakob wrote that “the day starts with the Saudi Crown Prince sent to retirement and replaced by the deputy Crown Prince Mohammed bin Salman (MBS). MBS was already the strong hand in Saudi Arabia, this latest development, and the purge that goes with it, confirms that he is the de-facto king of Saudi Arabia. Under his watch, Saudi Arabia has developed aggressive foreign policies (Yemen, Qatar…) and he has not been shy about making strong statements against Iran.”

The punchline: “with MBS now having greater control of Saudi Arabia and with Jared Kushner having a large control of the White House it is not really a question of if but rather of when a new escalation with Iran starts.

Jakob wasn’t the only one to react strongly to the Saudi royal shakeup. Below, courtsy of Bloomberg, are several other notable reactions:

John Sfakiankais, director of research at Gulf Research Center in Riyadh

  • The crown prince is “the architect of the Vision 2030” and the Aramco IPO is “a cornerstone of the vision”
  • “Saudi Arabia will even try to push for more dominance in OPEC. Bringing in Russia to the deal was hard without Prince Mohammed’s role behind the scenes”
  • “He will also make sure that the country in the long-term will move away from oil. But in the short-term Saudi Arabia will still remain focused on using oil revenue to support its diversification plans”
  • “Saudi oil policy will be business as usual meaning that they will continue to look at supply imbalance in the market and if the situation requires a further cut or interference, the Saudis will consider taking further actions”
  • “Deepening the cuts of OPEC is now a very likely scenario if oil prices continue to tumble”

Rodger Shanahan, a research fellow at the Lowy Institute for International Policy in Sydney.

  • “Saudi has tried to assert its authority over a range of regional events, and by cementing the question of succession at this time, the region is on notice that this direction will be pursued for the long term”
  • “MBS’s youth means that there will be no interim succession — he will be in power for a long time and has been a very public proponent of a robust Saudi presence in the region”
  • “MBS has been very public in naming Iran as the major threat and we should expect to see a continuation of tensions and proxy conflicts in the region”

Amir Handjani, senior non-resident fellow at the Atlantic Council, speaking from New York City

  • “MBS has been consolidating power is various ministries that were long the domain of Muhammad Bin Nayef”
  • While the promotion is “hardly surprising” it “does amount to a political earthquake for Riyadh”
  • Prince Muhammad Bin Nayef has had “a long track record” of combating terrorism in the kingdom and strong relationships with intelligence communities” in many Western capitals
  • MBS “so far has had a disastrous war in Yemen to contend with as he tries to reorient the Saudi economy from being dependent on oil”

Ghanem Nuseibeh, founder of Cornerstone Global Associates:

  • Prince Mohammed Bin Salman is “seen as the modernizer” in Saudi Arabia and the appointment “increases his remit” and leverage to introduce reforms
  • Previously, his focus was on economic and social reforms, will now have “ability, clout and leverage to implement reforms in politics as well”
  • Appointment is “a vote of confidence” by the king and the succession council, which “voted overwhelmingly in his favor on what he has been doing so far
  • MBS “has really been the powerful man in Saudi Arabia ever since his appointment as deputy crown prince,” and while today’s announcement doesn’t change much on the ground, it “removes impediments that he had in that he had someone more senior to him who was perhaps a bit more conservative;” “now he’ll have a freer hand”

Rami Khouri, senior public policy fellow at the American University of Beirut:

  • “Evidence suggests that Mohammed Bin Salman is daring, that he does bold things, but he hasn’t done them very well,” such as Saudi Arabia’s involvement in Yemen and Syria, and the standoff with Qatar
  • “Seems to have a lot of support among many Saudis, especially younger people”
  • Historically, Saudi Arabia has been extremely cautious and low key, but that’s changed since Arab uprisings
  • “The region is changing around them radically in ways they do not like — they do not like democratic elections or a free, liberal press, they don’t like the spreading Islamist movements, they don’t like Iran having good ties with the West; they can’t seem to stop them, and this is their reaction”

Amin Saikal, director of the Centre for Arab and Islamic Studies at the Australian National University.

  • Prince Mohammed Bin Salman “has been at the forefront of Saudi Arabia’s isolation of Qatar, the war in Yemen, and enmity with Iran,” Saikal said. “Now that he’s entrusted with more power, one cannot be too hopeful for improvement in the regional situation.”



Russia cancels a meeting with a USA official in protest over sanctions and their “destructive’ USA policy. The democrats in the uSA are furious that the Republicans voted against the sanctions.

(courtesy zero hedge)


Another Muslim attack but it seems it is one of our boys (Canadian born) who attacked a police officer in Flint Michigan

(courtesy zerohedge)

Officer Stabbing At Flint Airport By “Allahu Akbar”-Shouting Canadian Investigated As Act Of Terrorism

Wednesday morning’s incident at Bishop airport in Flint, Michigan, in which an airport officer was stabbed in the neck is being investigated as a possible act of terrorism according to Federal investigators.

Lieutenant Jeff Neville, who retired from the Genesee County Sheriff’s Office, was stabbed in the neck and is listed in stable condition. Sources cited by ABC say Neville was at his post at the top of the escalators at Bishop when he was attacked from behind with a larger knife, similar to a Bowie knife.

The knife-yielding suspect is Canadian-born and shouted “Allahu Akbar” before stabbing the officer multiple law enforcement sources say. He was then taken into custody.

NBC News: Federal investigators are looking into the stabbing of a police officer at the Flint, MI airport as a possible act of terrorism.

NBC News: The Canadian born suspect shouted “Allahu Akbar” before stabbing the officer multiple law enforcement sources say. W/ @anblanxhttps://twitter.com/Tom_Winter/status/877562881721516032 

After the attack, Bishop International Airport was evacuated and is closed. The airport released the following statement:

“All passengers are safe and are being evacuated at this time. Please check with your airline for potential cancellations or delays.”

The FBI is leading the investigation. The Flint City Hall began operating under heightened security in an abundance of caution after the incident.

“Right now we are still awaiting more information about the situation at Bishop Airport this morning,” Flint Mayor Karen Weaver said. “My thoughts and prayers are with all of our law enforcement officers who work to service and protect us each and every day. I want the public to know that several agencies are involved and working to ensure the situation is under control. However, at this time we are taking extra precautions just to be safe.”






Sears Canada is said to be preparing bankruptcy protection
(courtesy Lochner/Bloomberg)

Sears Canada Is Said to Prepare to Seek Creditor Protection

June 20, 2017, 5:50 PM EDTJune 21, 2017, 7:43 AM EDT
  • Filing expected to result in liquidation of retailer
  • Company voiced ‘significant doubt’ about its future this month

Where Sears Canada Went Wrong

Sears Canada Inc., the struggling offshoot of Sears Holdings Corp., is preparing to seek court protection from creditors in the coming weeks, according to people familiar with the matter.

The court filing will likely lead to a liquidation, with the business sold off in pieces, said one of the people, who asked not to be identified because the deliberations are private. The company’s most valuable assets are real estate, but many of its locations are in lower-end shopping centers. That makes it difficult to sell them to a single buyer, the person said.

The move would herald the end of a once-prized piece of the Sears retail empire. As in the U.S., Canadians are increasingly shopping online and shifting more spending toward experiences — rather than apparel and other department-store fare. Sears also has had to contend with homegrown competitors, such as Canadian Tire Corp. and Hudson’s Bay Co.

A representative for Sears Canada didn’t immediately respond to a request for comment.

In preparing the filing, Sears follows in the footsteps of Target Corp., another U.S. chain that saw its northern operations falter. Target announced plans in 2015 to close its 133 Canadian stores after its operations there amassed more than $2 billion of debt. Wal-Mart Stores Inc. and Costco Wholesale Corp. suffered some missteps entering Canada as well, though they remain in the country.

And while Sears Holdings posted its first profit since 2015 in the first quarter, the U.S. company remains in a dire state. It burned through $900 million in cash in the period to support operations as revenue tumbled 20 percent. Once the country’s biggest retailer, Sears has been shuttering stores amid a broader department store slump as consumers shift to online shopping alternatives. Last month, Evercore ISI analyst Matt McGinley said Sears’s “shrink-to-survive mode” leaves little room for optimism about a turnaround.

‘Significant Doubt’

Earlier this month, Sears Canada voiced “significant doubt” about its ability to pay its bills and keep operating after a shortfall in the financing it could line up. It hired BMO Capital Markets to explore options including a possible sale, and Osler, Hoskin & Harcourt LLP for legal counsel.

Shares of Sears Canada have declined 64 percent this year. The stock was up 3.9 percent to 80 Canadian cents on Tuesday.

Billionaire Edward Lampert, who is Sears’s chairman, chief executive officer and largest shareholder, owned about 45 percent of Sears Canada stock as of April 25, data compiled by Bloomberg show. Sears Holdings owned 12 percent, down from 95 percent in 2012.

The Toronto-based company has lost more than C$700 million ($528 million) in the past three years.

The company’s plight worsened after it attempted to borrow as much as $175 million, using its real estate as collateral. After negotiations with lenders faltered, Sears Canada said last week that it only expected to get $109 million before transaction fees. With few other quick sources of cash available, the conditions “raise significant doubt as to the company’s ability to continue as a going concern,” the company said at the time.



This time, nobody bought the “production cuts”

(courtesy zero hedge)

Oil Shrugs As Iran Hints At More OPEC Cuts, Admits Surprise At US Shale Production

If at first you don’t succeed, try again… and if that fails, start jawboning about more production cuts again.

Iranian Oil Minister Bijan Namdar Zanganeh says on state radio that “we are consulting with OPEC member states to have them prepared to make a decision to make further cuts [to production].”

As is clear from the chart below the reaction is anything but exuberant

Zanganeh went to say…

The US oil production increase was unpredictable and this increase is more than what OPEC members had foreseen”


“OPEC should wait a while and see how the market forms”


“But making a decision in this organization is very difficult because any decision will mean an output cut by the members.”

Somehow they saw US shale increasing production amid higher prices as “unpredictable”? Perhaps that’s why the market is unimpressed.

Oil then retreats after a  huge gasoline build and more announcements of a surge in production
(courtesy zero hedge)

WTI/RBOB Pump’n’Dump After Gasoline Build, Production Surge

Following API’s reported build in gasoline (and distillates), oil prices have chopped around amid Saudi headlines and OPEC jawboning, as all eyes are focused on gasoline inventories in the DOE report. An unexpedted draw in Gasoline (and Crude draw) sent prices higher initially, but another surge in production capped some of the gains and prices fell back.



  • Crude -2.72mm (-1.2mm exp)
  • Cushing -1.269mm
  • Gasoline +346k (+500k exp)
  • Distillates +1.837mm


  • Crude -2.45mm (-1.2mm exp)
  • Cushing (-579k exp)
  • Gasoline -578k (+500k exp)
  • Distillates +1.08mm (+500k exp)

Opposing API’s reported build,. DOE reports a Gasoline draw in the last week (while distillates built for the 4th week) and crude drew more than expected…

Crude exports fell to the lowest level this year, at 517k barrels a day.

As we noted earlier, Gasoline demand was puking when it should be peaking in the middle of summer-driving-season… (but jumped in the last week)


And Inventories are surging when they should be tumbling…


US crude production continues to trend higher with rising rig counts… highest production in the Lower 48 since Aug 2015


Prices popped a little this morning on the heels of Iran’s OPEC-cut comments, “the bounce that we’ve seen out of Iran isn’t particularly big to the upside when you consider how much ground crude has lost in the last couple of weeks,” says David Madden analyst at CMC Markets. “The technical trend that we have seen has been pretty clear to the downside.”

Then post-DOE data, WTI/RBOB jumped…

(courtesy zerohedge)

WTI Tumbles To $42, Brent Below $45 As Credit Crashes

High yield energy credit markets are in trouble again, with risk now at its highest level in 7 months.

Despite this morning’s Iran-hyped OPEC bullshit and a small draw in Gasoline, it appears the reality of surging US shale production and lagging demand is weighing down oil (and gasoline) markets…

Macquarie’s head ofoil & gas research warns…


Brent crude extends drop falling below $45/bbl for the first time since November 15.




Brazil now facing a major crisis as police say it has evidence Temer received bribes

(courtesy zerohedge)

“Brazil Now Facing A Major Crisis”: Police Says It Has Evidence President Temer Received Bribes

Update: and right on time, the Brazilian house speaker confirmed that the worst case scenario – for Temer – is on the table:


* * *

Almost exactly one month after Brazil’s stock market crashed, and the Real plunged after the country’s never-ending political drama made a triumphal return following accusations that president Michel Temer had encouraged a “hush money” bribe to former House Speaker Eduardo Cunha in return for not getting dragged into the Carwash scandal, on Tuesday afternoon, Brazil’s federal police force said it has found evidence that the embattled president received bribes to help businesses, Brazil’s O Globo reported.

Investigators said in a preliminary report published Tuesday by Brazil’s top court that Temer deserves to be investigated for passive corruption, a process that would likely culminate with his impeachment. Temer has denied any wrongdoing and has already pledged not to resign.

The news comes hours after a defiant Senate committee voted down a key anchor of Temer’s proposed reform platform, the landmark labor reform bill, whose passage in the lower house in April prompted widespread protests by labor unions who are against the proposed legislation which would abolish mandatory payment of union dues by Brazilian workers. The vote was seen as a blow to the government, amid other political noise embroiling President Temer.

Even before today’s police announcement, Brazil’s Attorney General Rodrigo Janot said last month there were enough preliminary indications of wrongdoing for Temer to be investigated for corruption and obstruction of justice. And if Brazil’s top prosecutor agrees with the federal police recommendation, Congress will decide whether Temer should be investigated by the country’s Supreme Court. The court is the only body that can formally investigate the president.

If two-thirds of Congress votes to allow the investigation, Temer would be suspended from office pending trial, suffering the same fate as his predecessor Dilma Rouseff whose vice-president Temer was originally, and eventually managed to overthrow with an elaborate plot “exposing” her corrupt activities. Karma, it turns out, is a bitch in all jurisdictions, including Latin America.


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



GBP/USA 1.2681 UP .0050 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED



Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 14 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1149; 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 16.19 POINTS OR 0.52%     / Hang Sang  CLOSED DOWN 148.46 POINTS OR 0.57% /AUSTRALIA  CLOSED DOWN 1.54% / 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 WEDNESDAY morning CLOSED DOWN 91.62 POINTS OR 0.45%

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


Gold very early morning trading: 1246.20


Early WEDNESDAY morning USA 10 year bond yield: 2.153% !!! DOWN 0 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.736, DOWN 0  IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 97.63 DOWN 5  CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING


And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 2.921%  UP 5 in basis point(s) yield from TUESDAY 

JAPANESE BOND YIELD: +.062%  UP 1/2  in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.370%  DOWN 2 IN basis point yield from TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.907 DOWN 0   POINTS  in basis point yield from TUESDAY 

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





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

Euro/USA 1.1146 UP .0010 (Euro UP 10 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 111.49 UP  0.156 (Yen DOWN 16 basis points/ 

Great Britain/USA 1.2661 UP 0.0030( POUND UP 30 basis points) 

USA/Canada 1.3319 UP .0050 (Canadian dollar DOWN 50 basis points AS OIL FELL TO $43.17


This afternoon, the Euro was UP by 10 basis points to trade at 1.1146


The POUND ROSE BY 30  basis points, trading at 1.2661/ 

The Canadian dollar FELL by 50 basis points to 1.3319,  WITH WTI OIL FALLING TO :  $43.17

The USA/Yuan closed at 6.8295/
the 10 yr Japanese bond yield closed at +.062% UP 1/2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1 IN basis points from TUESDAY at 2.162% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.735  DOWN 1/2  in basis points on the day /

Your closing USA dollar index, 97.71  DOWN 5 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED DOWN 24.92 POINTS OR 0.33%
German Dax :CLOSED DOWN 40.53 POINTS OR 0.32%
Paris Cac  CLOSED DOWN 19.39 POINTS OR 0.37% 

Italian MIB: CLOSED  UP 261.89 POINTS/OR 1.29%

The Dow closed DOWN 57.11 OR 0.27%

NASDAQ WAS closed UP 45.92 POINTS OR 0.74%  4.00 PM EST
WTI Oil price;  43.17 at 1:00 pm; 

Brent Oil: 45.58 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: $44.72


USA 30 YR BOND YIELD: 2.730%


USA/JAPANESE YEN:111.41  UP 0.077

USA DOLLAR INDEX: 97.56  DOWN 20  cent(s) ( HUGE resistance at 101.80 broken TO THE DOWNSIDE)

The British pound at 5 pm: Great Britain Pound/USA: 1.2667 : UP 36 POINTS FROM last NIGHT  

Canadian dollar: 1.3328 DOWN 58  BASIS pts 

German 10 yr bond yield at 5 pm: +0.265%


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


Traders Panic Into ‘Safe Haven’ Biotechs As Crude, Credit, & Yield Curve Carnage Continues


These are actual quotes from banks

  • BofA: “markets are very weird
  • JPM: “low vols will suffer catastrophic losses”
  • DB: “cataclysmic events are coming”
  • GS: “it will end in tears
  • Citi:“expect markets to flounder as central banks try to exit”

And even e*Trade is starting to get it…


So today saw traders greatly rotating from energy stocks into the safe-haven of Biotechs…


Biotechs are up 8% in the last 3 days – the biggest jump since the election to Jan 2016 highs…


However, the attention was focused on oil. As WTI crashed to a $42 handle (lowest since August and RBOB trading to 139 lows (lowest since Nov)

And Brent entered a bear market (down 24% from the Jan highs)…


This appears to be why…

NOTE – scales are different, indicative of trend only

Oil’s demise is not just weighing on Energy stocks, credit is imploding to 7-month wides. For now the broad HY market is desperately ignoring it (but traded at least 100bps wider than this the last time energy risk was this elevated)


But Nasdaq Futures were seemingly magically levitated in a straight line from around 430am ET… with VIX trading very strange… once again pushed back below 11


On the day, Nasdaq was the biggest (and only) winner…


Nasdaq remains down 2% from pre-FANG crash closing levels…


As Energy and Retail Stocks have crashed in the last two days, only Healthcare (driven by Biotech) is green…


Even as FANG Stocks trod water again…


Treasury yields were mixed… (short-end unch, long-end lower in yields)


But once again the curve flattened… deeper into 2007 lows


The Dollar Index ended the day modestly lower, stalling at the clifff edge from Payrolls…


Gold rallied modestly, testing back up to its 200-day moving average…


Finally, it appears the global deflationary collapse means everyone will advertise on Google, shop online, Netflix’n’Chill, or drive Teslas?



Illinois can no longer function


(courtesy zero hedge)


Illinois Comptroller: “The State Can No Longer Function, We Have Reached A New Phase Of Crisis”

With just 10 days to go until Illinois enters its third year without a budget, resulting in the state’s imminent downgrade to junk status and potentially culminating in a default for the state whose unpaid bills now surpass $15 billion, Democratic Illinois Comptroller Susana Mendoza issued a warning to Illinois Gov. Rauner and other elected officials on Tuesday, saying in a letter that her office has “very serious concerns” it may no longer be able to guarantee timely and predictable payments” for some core services.

In the letter posted on her website, Mendoza who over the weekend warned that Illinois is “in massive crisis mode” and that “this is not a false alarm” said the state is “effectively hemorrhaging money” due to various court orders and laws that have left government spending roughly $600 million more a month than it’s taking in. Mendoza said her office will continue to make debt payments as required, but indicated that services most likely to be affected include long-term care, hospice and supportive living centers for seniors. She added that managed care organizations that serve Medicaid recipients are owed more than $2.8 billion in overdue bills as of June 15.

The state can no longer function without a responsible and complete budget without severely impacting our core obligations and decimating services to the state’s most in-need citizens,” Mendoza wrote. “We must put our fiscal house in order. It is already too late. Action is needed now.

Unveiling the most dire langage yet, in her letter Mendoza said “we are now reaching a new phase of crisis” perhaps in an attempt to prompt the Democrats and Republicans to sit down and come up with a comrpomise:

As Illinois’ Chief Fiscal and Accountability Officer, my Office is responsible for managing the state’s financial accounts as well as providing the public and the state’s elected leadership with objective and timely data concerning the state’s difficult fiscal condition. As you are quite aware, I have been very vocal regarding these issues and the budgetary impasse since assuming office six months ago; however we are now reaching a new phase of crisis.

She then addresses “the full extent of [Illinois'[ dire fiscal straits and the potential disruptions that we face in addressing even our most critical core responsibilities”:

Accordingly, I must communicate to you at this time the full extent of our dire fiscal straits and the potential disruptions that we face in addressing even our most critical core responsibilities going forward into the new fiscal year.  My Office has very serious concerns that, in the coming weeks, the State of Illinois will no longer be able to guarantee timely and predictable payments in a number of areas that we have to date managed (albeit with extreme difficulty) despite an unpaid bill backlog in excess of $15 billion and growing rapidly.

The cause for alarm in America’s most bananish state is well-known: living far beyond one’s means, resulting in soaring deficits and the critical need for constant debt funding.

My cause for alarm is rooted in the increasing deficit spending combined with new and ongoing cash management demands stemming from decisions from state and federal courts, the latest being the class action lawsuit filed by advocates representing the Medicaid service population served by the state’s Managed Care Organizations (MCOs). As of June 15, the MCOs, and their provider networks, are owed a total of more than $2.8 billion in overdue bills at the Comptroller’s Office. There is no question that these obligations should be paid in a more timely manner and that the payment delays caused by the state’s financial condition negatively impact the state’s healthcare infrastructure. We are currently in court directed discussions to reach a workable and responsive payment schedule going forward, but any acceleration of the timing of those payments under the current circumstances will almost certainly affect the scheduling of other payments, regardless of other competing court orders and Illinois statutory mandates.

There was one silver lining: a default is not imminent, at least not in Mendoza’s view, as the comptroller explained that “debt service payments will not be delayed or diminished going forward and I will use every statutory avenue or available resource to meet that commitment.”

It is a necessary pledge in order to attempt to avoid further damage to our already stressed credit ratings and to make possible the additional debt financing that we all know will be required to achieve some measure of stability going forward.

And when “every available resource” runs out, that’s when things get really bad.

* * *

Meanwhile, as the state’s budget director warns of fire and brimstone, in a last ditch attempt to reach an agreement with the legislature, Illinois’ Republican Gov. Bruce Rauner will deliver a brief address Tuesday night calling for unity as lawmakers prepare to return to Springfield for a special session, a move Democrats quickly dismissed as a political stunt.

The speech, which is closed to the press but expected to air live on 6 p.m. television newscasts, comes just days after Rauner launched a TV advertising blitz attacking Democratic House Speaker Michael Madigan, whom the governor has spent years vilifying as the source of the state’s deep financial woes according to the Chicago Tribune. Democrats have long argued that Rauner’s frequent political attacks do little to bring about common ground. The governor says political gamesmanship is part of being in public service but should not impact what happens at the Capitol.

Rauner will give his remarks at the Old State Capitol, where Abraham Lincoln gave his “House Divided” speech and Barack Obama kicked off his first White House run in 2007.

The speech will fall short.

Democratic governor candidate J.B. Pritzker called Rauner’s address a “sham,” saying Rauner “either doesn’t have the slightest clue what unity is or just doesn’t care.” House Democrats called it laughable, saying if Rauner wanted to negotiate he would do it behind closed doors not in front of television cameras. “I find it tragically comedic that a governor who has done more to divide this state than probably any other governor in history is going to give a unity address,” said Rep. Christian Mitchell, D-Chicago.

It’s not just the Democrats: Republican lawmakers said they would vote for that tax plan, but only if the hike were limited to four years starting in July, and were tied to a four-year property tax freeze. The Senate Democrats’ plan makes the tax hikes permanent and applies them retroactively to the beginning of 2017.

While Rauner is expected to talk about the need for unity and compromise, House GOP leader Jim Durkin said last week that Republicans expect “substantial compliance” from Democrats, warning that he would reject “reform light or anything that is significantly diluted.”

* * *

Finally, in a habringer of what’s to come for the entire state, Bloomberg reports that Chicago’s junk-rated school system just went “no bid”, and is paying bond-market penalties similar to those seen during the financial crisis. The Chicago school district, slammed by the fallout from the Illinois budget gridlock, has been stuck paying punitive interest rates on $167.5 million of adjustable-rate bonds after PNC Capital Markets failed in March to resell the securities once previous owners sold them.

Remember the failure of Auction-Rate Securities just before all hell broke loose in 2008? Well, it’s kinda like that.

The rate on the bonds, which are supposed to stay extremely low because investors can resell them to banks periodically, jumped to a maximum 9% on March 1 from 4.64% the week before and has stayed there ever since, according to data compiled by Bloomberg.

The spiraling interest bills are reminiscent of the chaos that erupted in the wake of the Lehman Brothers Holdings Inc.’s bankruptcy in 2008, when state and local governments were stung by soaring costs after investors sold the variable-rate securities en masse just as banks were scrambling to raise cash. In Chicago’s case, though, it reflects how skittish investors have become about holding the debt of the cash-strapped school system.

In another preview of what’s coming once Illinois is junked, the school district agreed this week to pay a rate of 6.39% for a short-term $275 million loan from JPMorgan Chase & Co. to help make a pension payment and cover the cost of staying open through the end of the school year. As we reported last week, the schools didn’t receive $215 million more in state aid to make the retirement-fund contribution after a measure was vetoed by Governor Bruce Rauner. Illinois has failed to pass a budget for more than two years as the Republican governor and Democrat-led legislature battle over how to close the state’s chronic budget deficits.

“Chicago Public Schools has been unable to create a fiscally responsible budget and it relies on outside sources that, as we see, sometimes comes through and sometimes don’t,” said Matt Dalton, chief executive officer of Rye Brook, New York-based Belle Haven Investments, which manages $6 billion of municipal bonds, including about $3 million of insured Chicago school debt.

“That’s unsettling investors.”

Unfortunately, that’s just the beginning, and once the state itself is junked, investors will be even more unsettled.

But the biggest insult and injury is to the near-insolvent state is that Illinois is facing a full-blown crisis just one day after chronic defaulter Argentina managed to pull off a 100 year bond offering, which was 3.5x oversubscried.


Donald is not going to like this:  Ford scraps its plant in Mexico and then they decide not to go back to the USA but to move to China


(courtesy zerohedge)


Plant In Mexico? Well, They’ve Just Moved It To China

Back in January, Trump took a very public victory lap when Ford decided to scrap plans to build a $1.6 billion manufacturing facility in Mexico and invest in its Michigan facilities instead (we discussed it here: Trump Takes Victory Lap After Ford Cancels $1.6 Billion Mexican Expansion Plan As “Vote Of Confidence” In President-Elect).

@DanScavino: Ford to scrap Mexico plant, invest in Michigan due to Trump policies”http://www.foxnews.com/politics/2017/01/03/ford-to-scrap-mexico-plant-invest-in-michigan-due-to-trump-policies.html 

Photo published for Ford to scrap Mexico plant, invest in Michigan; CEO cites Trump policies

Ford to scrap Mexico plant, invest in Michigan; CEO cites Trump policies

Ford Motor Company on Tuesday announced plans to cancel the building of a $1.6 billion plant in Mexico and instead invest $700 million in a Michigan assembly plant, directly tying the decision to…



As Ford announced at the time, the decision was sold to the public and the United Auto Workers as an opportunity to permanently shift production capacity, that would have otherwise been built in Mexico, back to Wayne, Michigan.

To support the new era of vehicles, Ford is adding 700 direct new U.S. jobs and investing $700 million during the next four years, creating the new Manufacturing Innovation Center at its Flat Rock Assembly Plant.


Ford today announced it is cancelling plans for the new plant in San Luis Potosi, Mexico. It also announced that, to improve company profitability and ensure the financial as well as commercial success of this vehicle, the next-generation Focus will be built at an existing plant in Hermosillo, Mexico. This will make way for two new iconic products at Michigan Assembly Plant in Wayne, Michigan, where Focus is manufactured today – safeguarding approximately 3,500 U.S. jobs.


This incremental investment in Flat Rock Assembly Plant comes from $1.6 billion the company previously had planned to invest in a new plant in Mexico.


“I am thrilled that we have been able to secure additional UAW-Ford jobs for American workers,” said Jimmy Settles, UAW vice president, National Ford Department. “The men and women of Flat Rock Assembly have shown a great commitment to manufacturing quality products, and we look forward to their continued success with a new generation of high-tech vehicles.”



But, as Ford points out today, Trump’s victory lap may have been premature as one of the first strategic actions taken by the company’s new CEO, Jim Hackett, will be to relocate the company’s ‘Focus’ production to China rather than Mexico.

Exciting new Ford Focus on the way for North American customers beginning in 2019 with more technology, more space and a number of new Focus models. Next-generation Focus for North America will be globally sourced primarily from China – rather than Hermosillo, Mexico – with production starting in the second half of 2019. Current model production ends in mid-2018


This manufacturing plan allows the company to further grow its leadership as an exporter and deliver world-class Focus to North American customers in a way that makes business sense – with no U.S. employees out of a job


Ford is saving $1 billion in investment costs versus its original Focus production plan, improving the financial health of its Focus business and further improving manufacturing scale in China – all helping create a more operationally fit company

And while Ford has suggested that the move will not cost a single UAW worker his/her job here in the United States, we have our doubts as manufacturing capacity, much like cash, is somewhat fungible…so unless Ford plans to massively grow market share and/or permanently increase overall demand, shifting production to China must mean that production will decline somewhere else…we suspect that ‘somewhere else’ will be somewhere in the U.S.



Geez..those Russians did it again: they foiled the election in Georgia as the Republican Handel won easily over Democrat  Offsef despite the huge spending by the democrats (7/1)

(courtesy zero hedge)

The Russians Do It Again: Democrats Get Crushed In Georgia Election Despite 7x Spending Advantage


After months of Democrats boasting that Georgia’s special election in the 6th district would be a startling referendum on Trump’s agenda, they just got served up another stunning defeat, as most networks have now called the race for Republican Karen Handel.  In fact, rather than losing ground since Trump moved into the White House, Republicans actually performed better.

View image on TwitterView image on Twitter

Don’t listen to the BS media narrative

Republicans did BETTER in June of 2017 than in November

Democrats lost traction, not gained!

Of course, making Handel’s win even sweeter for Republicans is the fact that Democrats outspent them by a margin of 7-to-1, with Ossoff dropping a staggering ~$22 million versus only $3 million for Handel….which is kind of reminiscent of how things played our for Hillary…oops.



Meanwhile, as The Mercury News pointed out earlier this morning, this race has been by far the costliest in the history of Congressional races with Ossoff raising over $23 million.  Ironically, he received nearly 9x more donations from California than from Georgia, a testament to how this special election has morphed into a national contest for Democrats.

Between March 29 and May 31, Ossoff reported receiving 7,218 donations from California, dwarfing the 808 donations he received from Georgia. In the nine Bay Area counties alone, he received 3,063 donations in the same time period.


Those are only a fraction of Ossoff’s total donations, as he doesn’t have to report contributions from people who give less than $200 in total. In addition, many of the individual donations include the same people giving to his campaign multiple times.

Finally, just as we pointed out earlier this morning, there seems to have been some “oversamples” in the polling data as the Real Clear Politics average had Ossoff winning by 5 points just last week…for those keeping track that’s a roughly 10-point polling ‘error’ from how things actually turned out. Here’s what we said earlier today:

According to the Real Clear Politics average, Handel’s support has surged in recent days making the race a dead heat heading into election day. That said, just like last November, we would be shocked if there weren’t some “oversamples” in the polling data. 



Of course, it’s only a matter of time until someone at CNN and/or MSNBC alleges that Russia stole the election or thunderstorms suppressed the minority vote…you know, because it simply can’t be that American’s just aren’t buying into their failed, Big Government policies anymore.


Update 9 (10:00 EST):

CNN is forced to admit what has been obvious for a couple of hours now…



The State dept has now begun a probe on Clinton’s mishandling of classified intelligence.  She will probably lose her security clearance when this is done

(courtesy zero hedge)

Clinton Faces Loss Of Security Clearance After State Begins Probing Her Mishandling Of Classified Intel

The State Department confirmed months of speculation on Tuesday when it leaked to Fox News that it had opened a formal inquiry into Hillary Clinton’s alleged mishandling of classified information on her private email server. Clinton, who has repeatedly blamed the FBI’s handling of the inquiry for her embarrassing defeat in November, is now facing the possibility of having her top-level security clearance revoked – a penalty that echoes the investigation of former National Security Adviser Mike Flynn.

President Donald Trump repeatedly promised to investigate the Clinton’s, so the probe could see the president fulfilling yet another campaign promise. As Fox reports, “during the FBI’s investigation of Clinton’s use of top-secret and classified information on her private server, former FBI Director James Comey said there were seven email chains on Clinton’s computer that were classified at the “Top Secret/Special Access Program level.”

Another 2,000 emails on her private server were found to have contained information deemed classified now, though not marked classified when sent. In addition, the server also contained 22 top-secret emails deemed too damaging to national security to be released.”

To paraphrase Senate Judiciary Committee Chairman Chuck Grassley, there is plenty of evidence to suggest that violations of statutes concerning the handling and dissemination of classified materials occurred.

Judicial Watch’s Chris Farrell said he believes Clinton and her “circle of national security criminals” should not have access to any classified information for any reason.

“Their conduct has cost them that privileged position of special trust and confidence,” Farrell said.

Here’s Fox:

The department’s investigation aims to determine whether Clinton and her closest aides violated government protocols by using her private server to receive, hold and transmit classified and top-secret government documents. The department declined to say when its inquiry began, but it follows the conclusion of the FBI’s probe into the matter, which did not result in any actions being taken against Clinton or any of her aides.


Depending on the outcome of the current State Department inquiry, Clinton and her aides could have their access to sensitive government documents terminated.
Senate Judiciary Committee Chair Chuck Grassley, R-Iowa, confirmed to Fox News the department’s formal inquiry.


Meanwhile, Grassley’s committee launched its own inquiry into Clinton’s handling of emails, an inquiry that began in March. Grassley cited among his concerns the July 5 statement of former FBI Director James Comey that the agency found Clinton and her staff members were “extremely careless in their handling of very sensitive, highly classified information.”

A response from a Clinton spokesman suggests that the Clinton camp hasn’t learned from its mistakes during the campaign.

In the statement, Clinton’s top spokesman, Nick Merrill told Fox that a final judgment of Clinton has already been reached. “Nothing’s been more thoroughly dissected. It’s over. Case closed. Literally,” said Merrill.

Former FBI Director Comey announced that the bureau had closed its investigation in July 2016, before turning around and announcing that it had been reopened following the discovery of emails from Clinton on a laptop owned by former Congressman Anthony Weiner.


my goodness:  some of these guys must have figured this thing out: the House Republicans block the Senate Russian sanction bill:

(courtesy zero hedge)

House Republicans Block Russia Sanctions Bill

After recruiting Trump, the KGB and Moscow have clearly also managed to make all House Republicans their puppets, because the Senate bill that passed last week and slapped new sanctions on Russia (but really was meant to block the production on the Nord Stream 2 gas pipeline from Russia and which Germany, Austria and France all said is a provocation by the US and would prompt retaliation) just hit a major stumbling block in the House.

At least that’s our interpretation of tomorrow’s CNN “hot take.”

Shortly after House Ways and Means Chairman Kevin Brady of Texas said that House leaders concluded that the legislation, S. 722, violated the origination clause of the Constitution, which requires legislation that raises revenue to originate in the House, and would require amendments, Democrats immediately accused the GOP of delaying tactics and “covering” for the Russian agent in the White House.

“House Republicans are considering using a procedural excuse to hide what they’re really doing: covering for a president who has been far too soft on Russia,” Senate Minority Leader Chuck Schumer of New York said in a statement. “The Senate passed this bill on a strong bipartisan vote of 98-2, sending a powerful message to President Trump that he should not lift sanctions on Russia.”

And, if the House does pass it, a huge diplomatic scandal would erupt only not between the US and Russia, but Washington and its European allies who have slammed this latest intervention by the US in European affairs… a scandal which the Democrats would also promptly blame on Trump.

That said, the bill may still pass: Brady pushed back against Democrat suggestions that House GOP leadership is trying to delay the bill, stressing that he thought the Senate legislation was sound policy.

“I strongly support sanctions against Iran and Russia to hold them accountable. We were willing to work with the Senate throughout the process, but the final bill and final language violated the origination clause in the Constitution,” Brady told reporters on Tuesday. “I am confident working with the Senate and Chairman [Ed] Royce that we can move this legislation forward. So at the end of the day, this isn’t a policy issue, it’s not a partisan issue, it is a Constitutional issue that we will address.”

Or maybe not.

AshLee Strong, a spokeswoman for House Speaker Paul Ryan said that “the Senate bill cannot be considered in the House its current form” according to The Hill. She added that Ryan strongly supports sanctions and “we will determine the next course of action after speaking with our Senate colleagues.” An aide for Sen. Bob Corker who was deeply involved in negotiating the Senate deal, said that the House has raised “concerns with one of the final provisions” of the bill.

“The House has always, in a bipartisan way, followed protocol to avoid Origination Clause violations. It’s the Constitution. It’s pretty straightforward,” a senior GOP aide added.

And yet, despite the clear procedural issues, Democrats would just not let it go and warned that Republicans are trying to delay the bill amid pushback from the Trump administration.

As usual, Schumer lambasted the move, arguing they’re using the procedural roadblock to cover for Trump, “who has been far too soft on Russia.”

“Responding to Russia’s assault on our democracy should be a bipartisan issue that unites both Democrats and Republicans in the House and the Senate. The House Republicans need to pass this bill as quickly as possible,” he said.

Rep. Eliot Engel, the top Democrat on the House Foreign Affairs Committee, added that Republicans could easily work around the violation by introducing an indention House bill. “[But] I predict this isn’t the last excuse we’ll hear for trying to slow this bill’s momentum, but make no mistake, anything short of an up-or-down vote on this tough sanctions package is an attempt to let Russia off the hook,” he said.

Another Democrat, Sen. Ben Cardin stressed that he didn’t think the Senate bill actually had a “blue slip” issue, but echoed Engel noting they it could be “easily corrected” by using a House bill.

* * *

Under the bill which was voted 98-2 in the Senate, new Russia sanctions could be levied on entities engaging in “malicious cyber activity”, perhaps like those which gave Republican Handel the victory in Georgia. It would require the administration to explain any moves to ease or lift sanctions, and create a new mechanism for Congress to review and block any such effort according to Bloomberg.

And, of course, the most controversial issue, the legislation would also put into law penalties that were imposed by the Obama administration on some Russian energy projects, a move in 2014 that came in response to Russia’s actions in Ukraine. It is over this part of the legislation that America’s European “allies” have threatened the US with retaliation.

The White House has said it is committed to existing sanctions and hasn’t taken a formal position on the Senate bill.


David Stockman explains what Trump is facing with respect to the Deep State’s attack on him with respect to Russia-phobia.




The Little Putsch That Could Beget a Great Big Coup


So let’s start with two obvious points about the whole Russia fiasco…Namely, there is no “there, there.” First off, the president has the power to declassify secret documents at will. But in this instance he could also do that without compromising intelligence community (IC) “sources and methods” in the slightest.That’s because after Edward Snowden’s revelations in 2013, the whole world was put on notice — and most especially Washington’s adversaries — that it collects every single electronic digit that passes through the worldwide web and related communications grids.Washington essentially has universal and omniscient SIGINT (signals intelligence). Acknowledging that fact by publishing the Russia-Trump intercepts would provide new knowledge to exactly no one.

Nor would it jeopardize the lives of any American spy or agent (HUMINT). It would just document the unconstitutional interference in the election process that had been committed by the U.S. intelligence agencies and political operatives in the Obama White House.

That pales compared to whatever noise comes out of Langley (CIA) and Ft. Meade (NSA). And I do mean noise.

Yes, I can hear the boxes on the CNN screen harrumphing that declassifying the “evidence” would amount to obstruction of justice! That is, since Trump’s “crime” is a given (i.e. his occupancy of the Oval Office), anything that gets in the way of his conviction and removal therefrom amounts to “obstruction.”

Given that he is up against a Deep State/Democratic/Neoconservative/mainstream media prosecution, the Donald has no chance of survival short of an aggressive offensive of the type I just described.

But that’s not happening because the man is clueless about what he is doing in the White House. And he’s being advised by a cacophonous coterie of amateurs and nincompoops. So he has no action plan except to impulsively reach for his Twitter account.

That became more than evident — and more than pathetic, too — when he tweeted out an attack on his own Deputy Attorney General, Rod Rosenstein. At least Nixon fired Elliot Richardson (his Attorney General) and Bill Ruckelshaus (Deputy AG):

I am being investigated for firing the FBI Director by the man who told me to fire the FBI Director! Witch Hunt.

Alone with his Twitter account, clueless advisors and pulsating rage, the Donald is instead laying the groundwork for his own demise. Were this not the White House, this would normally be the point at which they send in the men in white coats with a straight jacket.

Indeed, that’s essentially what the Donald’s so-called GOP allies on the Hill are actually doing.

RussiaGate is a witch hunt like few others in American political history. Yet as the mainstream cameras and microphones were thrust at one Congressional Republican after another following the Donald’s outburst quoted above, there was nary an echo of agreement.

Even Senator John Thune, an ostensible Swamp-hating conservative, had nothing but praise for Special Counsel Robert Mueller, that he would fairly and thoroughly get to the bottom of the matter.

No he won’t!

Mueller is a card-carrying member of the Deep State who was there at the founding of today’s surveillance monster as FBI Director following 9/11. Since the whole $75 billion apparatus that eventually emerged was based on an exaggerated threat of global Islamic terrorism, Russia had to be demonized into order to keep the game going — a transition that Mueller fully subscribed to.

So he will “find” extensive Russian interference in the 2016 election and bring the hammer down on the Donald for seeking to prevent it from coming to light. The clock is now ticking. And his investigatory team is being packed with prosecutorial killers with proven records of thuggery. They’re determined to find crimes that create fame and fortune for prosecutors — even if the crime itself never happened.

For example, Mueller’s #1 hire was the despicable Andrew Weissmann. This character had led the fraud section of the department’s Criminal Division and served as general counsel to the F.B.I. when Mueller was its director. And more importantly, Weissmann was the driving force behind the Enron task force — the most egregious exercise in prosecutorial abuse and thuggery in 100 years.

Meanwhile, the GOP leadership could not be clearer about what is coming down the pike.

They are not defending Trump with even a hint of the vigor and resolve that I recall from the early days of Tricky Dick Nixon’s ordeal. Of course, Nixon didn’t survive anyway.

Instead, it’s as if Paul Ryan, Mitch McConnell, et al. have offered to hold his coat, while the Donald pummels himself with a 140-character Twitter Knife that is visible to the entire world.

So there should be no doubt. A Great Big Coup is on the way.

But here’s the irony of the matter: Exactly four years ago in June 2013 no one was seriously demonizing Putin or Russia. In fact, the slicksters of CNN were still snickering about Mitt Romney’s silly claim during the 2012 election campaign that Russia was the greatest security threat facing America.

But then came the Syrian jihadist false flag chemical attack in the suburbs of Damascus in August 2013 and the U.S. intelligence community’s flagrant lie that it had proof the villain was Bashar Assad.

To the contrary, it subsequently became evident that the primitive rockets that had carried the deadly sarin gas, which killed upwards of 1500 innocent civilians, could not have been fired from regime held territory. The rockets examined by UN investigators had a range of only a few kilometers, not the 15-20 kilometers from the nearest Syrian base.

In any event, President Obama chose to ignore his own red line and called off the bombers. That in turn paved the way for Vladimir Putin to persuade Assad to give up all of his chemical weapons — a commitment he fully complied with over the course of the next year.

Needless to say, in the eyes of the neocon War Party, this constructive act of international statesmanship by Putin was the unforgivable sin. It thwarted the next target on their regime change agenda — removal of the Assad government in Syria as a step toward an ultimate attack on its ally, the Shiite regime of Iran.

So it did not take long for the Deep State to retaliate. While Putin was basking in the glory of the 2014 winter Olympics at Sochi, the entire apparatus of Imperial Washington — the CIA, the National Endowment for Democracy, the State Department and a long string of Washington funded NGOs — was on the ground in Kiev assisting the putsch that overthrew Ukraine’s constitutionally elected President and Russian ally.

From there, the Ukrainian civil war and partition of Crimea inexorably followed, as did the escalating campaign against Russia and its leader.

So as it turned out, the War Party could not have planned a better outcome — especially after Russia moved to protect its legitimate interests in its own backyard resulting from the Washington-instigated civil war in Ukraine. That included protecting its 200-year old naval base at Sevastopol in Crimea.

The War Party simply characterized these actions falsely as acts of aggression against Russia’s European neighbors.

There is nothing like a demonized enemy to keep the $700 billion national security budget flowing and the hideous Warfare State opulence of the Imperial City intact. So why not throw in an allegedly “stolen” U.S. election to garnish the case?

In a word, the Little Putsch in Kiev is now begetting a Great Big Coup in the Imperial City.

This is a history-shattering development, but don’t tell the boys and girls and robo-machines on Wall Street.

Pathetically, they still think it’s game on.

So if there was ever a time to take advantage of the day traders and robo-machines which linger in the casino, now would be the occasion to sell, sell, sell. Once the breakdown starts there will be no respite from the implosion.


David Stockman
for The Daily Reckoning



We will see you THURSDAY night




  1. Silver is becoming scarce. Some large companies (can you say Apple) are starting to panic. They couldn’t care less what the price is. It is also why the OI won’t drop significantly when the price is manipulated lower. This is the moment that all silver stackers have been waiting for.


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