June 28/probable raid in gold/silver tomorrow prior to options expiry/China suspends fuel sales to North Korea/Both the UK and Canada to raise rates and eliminate stimulus/WalMart raises the heat against Amazon/

GOLD: $1248.40  UP $1.60

Silver: $16.78  UP 6  cent(s)

Closing access prices:

Gold $1249.50

silver: $16.81

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

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

SHANGHAI FIRST GOLD FIX: $1263.39 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1251.10

PREMIUM FIRST FIX:  $12.29

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SECOND SHANGHAI GOLD FIX: $1262.14

NY GOLD PRICE AT THE EXACT SAME TIME: $1251.65

Premium of Shanghai 2nd fix/NY:$10.49

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LONDON FIRST GOLD FIX:  5:30 am est  $1251.60

NY PRICING AT THE EXACT SAME TIME: $1251.85  

LONDON SECOND GOLD FIX  10 AM: $1248.00

NY PRICING AT THE EXACT SAME TIME. $1249.95 ???  

For comex gold:

JUNE/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH:  18 NOTICE(S) FOR 1800  OZ.

TOTAL NOTICES SO FAR: 2868 FOR 286,800 OZ    (8.9206 TONNES)

For silver:

JUNE

 0 NOTICES FILED TODAY FOR

NIL  OZ/

Total number of notices filed so far this month: 993 for 4,915,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

END

We have now officially entered options expiry week:

 

London options expiry: Friday June 30

first day notice  Friday June 30

expect a raid tomorrow as they usually hit the day before London OTC expires Friday morning.

end

Let us have a look at the data for today

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In silver, the total open interest SURPRISINGLY ROSE BY 1500 contract(s) UP to 204,637 DESPITE THE RAID AND THE SLIGHT RISE IN PRICE OF SILVER THAT TOOK PLACE WITH YESTERDAY’S TRADING (UP 2 CENT(S). In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.0230 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 0 NOTICE(S) FOR NIL  OZ OF SILVER

In gold, the total comex gold  SURPRISINGLY ROSE BY  3766 CONTRACTS DESPITE THE TINY RISE IN THE PRICE OF GOLD   ($0.10 with YESTERDAY’S TRADING). The total gold OI stands at 453,144 contracts.

we had 18 notice(s) filed upon for 1800 oz of gold.

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

GLD:

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

Inventory rests tonight: 853.66 tonnes

.

SLV

Today: a small change  in silver inventory at the SLV: a withdrawal of 662,000 oz from the SLV

THE SLV Inventory rests at: 339.226 million oz

end

.

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

1. Today, we had the open interest in silver ROSE BY  1500 contracts  UP TO 204,637 (AND now A LITTLE CLOSER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), DESPITE THE TINY RISE IN PRICE FOR SILVER WITH YESTERDAY’S TRADING  (UP 2 CENTS).We LOST NOBODY AS EVERYBODY remains firm and determined.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 17.99 POINTS OR 0.56%   / /Hang Sang CLOSED DOWN 156.49 POINTS OR 0.61% The Nikkei closed DOWN 94.68 POINTS OR 0.47%/Australia’s all ordinaires CLOSED UP 0.74%/Chinese yuan (ONSHORE) closed UP at 6.7994/Oil UP to 44.06 dollars per barrel for WTI and 46.63 for Brent. Stocks in Europe OPENED ALL IN THE RED,,   Offshore yuan trades  6.8042 yuan to the dollar vs 6.7994 for onshore yuan. NOW THE OFFSHORE IS STILL WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN  STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS  STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS VERY HAPPY TODAY

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA

 This will annoy North Korea greatly as China suspends fuel sales to it:( zerohedge)

ii)Then North Korea issues a standing order to execute former South Korean President Park who tried to orchestrate an assassination on Kim in 2015:

( zero hedge)

b) REPORT ON JAPAN

c) REPORT ON CHINA

i)Satellite imagery and a new Satellite Mfg Index shows Chinese manufacturing on the decline

( zero hedge)

ii)There is more to the story of how 50 companies collapsed in a historic crash on Monday.  Zero hedge explains what happened:

(courtesy zero hedge)

4. EUROPEAN AFFAIRS

i)EU

What an absolute joke.  It is obvious that these morons have no idea what to do next. Now Draghi tells the market that they have misjudged his comments.  To me, he was quite direct:

( zero hedge)

ii)UK

Next up, the uK as  the Bank of England’s turn to hint of stimulus withdrawal

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

6 .GLOBAL ISSUES

Canada

Canadian dollar spikes to a 5 month high with the Governor and his deputy both suggesting an end to low interest rates

( zerohedge)

7. OIL ISSUES

Oil got a little reprieve today on a larger than expected gasoline draw and production tumbles the most since last August

( zero hedge)

8. EMERGING MARKET

Coup attempt in Venezuela.  It failed but Maduro’s days are numbered

( zero hedge)

9.   PHYSICAL MARKETS

10. USA Stories

i)Interesting:  two out of 3 patients cannot afford their hospital bills thanks to the high and soaring deductibles:

( zero hedge)

ii)A great question:  is the status of Illinois and Puerto Rico the future for most?

( Pat Buchanan via Buchanan.org)

iii)Illinois has 72 hours to pass a budget or else they go into junk status on their bonds

( zero hedge)

( zero hedge)

v)Another indicator of a weakening economy: pending home sales tumble to the same level achieved in June 2013

( zero hedge)

vi)The war between WalMart and Amazon has just heated up: WalMart will no longer do business with any trucking company that does business with Amazon

(courtesy zero hedge)

vii)After nailing CNN last night, Project Veritas exposes CNN’s Van Jones: ” the Russia thing is a big nothing burger”

( zero hedge)

Let us head over to the comex:

The total gold comex open interest SURPRISINGLY ROSE BY 3,766 CONTRACTS UP to an OI level of 453,144 DESPITE THE TINY RISE IN THE PRICE OF GOLD ($0.10 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 115 contract(s)FALLING TO  104.  We had 77 notices filed yesterday so we LOST 38  contract(s) or an additional 3800 oz will NOT stand for delivery in this very active delivery month of June AND  38 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 (JUST UNDER 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 LOST 195 contracts to stand at 449 contracts. The next big active month is August and here the OI GAINED 1,714 contracts UP to 300,996, as the bankers trying to keep this month down to manageable size.

We had 18 notice(s) filed upon today for 1800 oz

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And now for the wild silver comex results.  Total silver OI SURPRISINGLY ROSE BY  1,500 contracts FROM 203,137 UP TO 204,637 DESPITE YESTERDAY’S TINY 2 CENT GAIN. OUR BANKER FRIENDS ARE DESPERATELY TRYING TO COVER THEIR SHORTS IN SILVER BUT AS YOU CAN SEE  THEY HAVE NOT BEEN AS SUCCESSFUL AS THEY WOULD HAVE LIKED.
We are in the NON active delivery month is JUNE  Here the open interest LOST 2 contract(s) FALLING TO 0 contracts. We had 2 notices served upon yesterday so we  LOST 0 CONTRACT(S) OR AN ADDITIONAL  NIL OZ OF SILVER WILL NOT STAND FOR DELIVERY IN THIS NON ACTIVE DELIVERY MONTH OF JUNE AND 0 EFP CONTRACTS WERE ISSUED.  IT SEEMS WE ARE CONTINUING WHERE WE LEFT OFF LAST MONTH IN SILVER AS INVESTORS ARE WILLING TO FORGO THE FIAT PROFIT JUST TO SECURE PHYSICAL SILVER METAL. ALSO SO FAR WE HAVE HAD NO OBLITERATION OF SILVER CONTRACTS AS ARE NOW GETTING CLOSE TO FIRST DAY NOTICE  (ON FRIDAY)

The next big active month will be July and here the OI LOST 15,280 contracts DOWN to 25,397 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. We have 2 trading days left before first day notice

The month of August, a non active month picked up 30 contracts to stand at 328.  The next big active delivery month for silver will be September and here the OI already jumped by another 14,744 contracts up to 134,564.

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

  June 28.2016:  29,455 contracts were still outstanding vs 25,397 contracts June 28.2017.WITH THE EXACT SAME NUMBER OF TRADING DAYS BEFORE FIRST DAY NOTICE 

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  (4,915,000 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 0 notice(s) filed for NIL oz for the June 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 124,504 contracts which is poor

Yesterday’s confirmed volume was 238,304 contracts  which is GOOD

volumes on gold are STILL HIGHER THAN NORMAL!

INITIAL standings for JUNE
 June 28/2017.
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
31,502.012
OZ
Brinks
HSBC
Deposits to the Dealer Inventory in oz NIL  oz
Deposits to the Customer Inventory, in oz 
29,572.655 oz
No of oz served (contracts) today
 
18 notice(s)
1800 OZ
No of oz to be served (notices)
86 contracts
8600 oz
Total monthly oz gold served (contracts) so far this month
2868 notices
286,800 oz
8.9206 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   369,940.9 oz
Today we HAD  0 kilobar transaction(s)/ 
We had 0 deposit into the dealer:
total dealer deposits: NIL oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had no dealer deposits:
total dealer deposits:  nil oz
we had 1  customer deposit(s):
Into Scotia:  29,572.655 oz
(arriving from Brinks)
total customer deposits; 29,572.655  oz
We had 2 customer withdrawal(s)
i) Out of Brinks: 29,572.655 oz
ii) Out of HSBC: 1929.06 oz
total customer withdrawal: 31,502.072  oz
 we had 1 adjustment(s):
 i Out of the Delaware vault:  201.03 oz was adjusted out of the customer and this landed into the dealer account of Delaware
 
For JUNE:

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 18  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 13 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

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To calculate the initial total number of gold ounces standing for the JUNE. contract month, we take the total number of notices filed so far for the month (2868) x 100 oz or 286,800 oz, to which we add the difference between the open interest for the front month of JUNE (104 contracts) minus the number of notices served upon today (18) x 100 oz per contract equals 295,400  oz, the number of ounces standing in this active month of JUNE.
 
Thus the INITIAL standings for gold for the JUNE contract month:
No of notices served so far (2868) x 100 oz  or ounces + {(104)OI for the front month  minus the number of  notices served upon today (18) x 100 oz which equals 295,400 oz standing in this  active delivery month of JUNE  (9.188 tonnes)
.
WE LOST 38 CONTRACTS OR AN ADDITIONAL 3800 OZ WILL NOT STAND AT THE COMEX AND 38 CONTRACT WAS GIVEN AN EFP CONTRACTS WHICH ENTITLES THEM TO A FIAT BONUS PLUS A FUTURES GOLD CONTRACT OR A LONG CALL ON A GOLD CONTRACT OR MOST LIKELY A LONDON BASED GOLD FORWARD CONTRACT. YOU CAN NOW SEE WHY THE COT REPORTS ARE DISTORTED DUE TO THE ISSUANCE OF THESE EFP CONTRACTS 
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Total dealer inventory 850,984.123 or 26.460 tonnes 
Total gold inventory (dealer and customer) = 8,613,922.334 or 267.92 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 267.92 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.
 
IN THE LAST 10 MONTHS  85 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
AND NOW THE June DELIVERY MONTH
 
June INITIAL standings
 June 28 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 600,334.600  oz
JPMorgan
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
951,129.640 oz
HSBC
JPMorgan
No of oz served today (contracts)
 0 CONTRACT(S)
(NIL OZ)
No of oz to be served (notices)
0 contracts
( NIL oz)
Total monthly oz silver served (contracts) 983 contracts (4,915,000 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 6,932,572.9 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil  oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had 1 customer withdrawal(s):
i) Out of JPMorgan:  600,334.600 oz
TOTAL CUSTOMER WITHDRAWALS 600,334.600 oz
We had 2 Customer deposit(s):
i)Into HSBC:  582,746.400 oz
ii) Into JPMorgan: 368,383.240
***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: 951.129.640 oz
 
 we had 1 adjustment(s)
i) out of  Scotia:  5291.110 oz was adjusted out of the dealer and this landed into the customer account of Scotia
The total number of notices filed today for the JUNE. contract month is represented by 0 contract(s) for NIL 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 983 x 5,000 oz  = 4,915,000 oz to which we add the difference between the open interest for the front month of JUNE (2) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing
 

 

.
 
Thus the initial standings for silver for the JUNE contract month:  983 (notices served so far)x 5000 oz  + OI for front month of JUNE.(2 ) -number of notices served upon today (0)x 5000 oz  equals  4,915,000 oz  of silver standing for the JUNE contract month.
 
We LOST 2 contract(s) or an additional 10,,000 oz will stand for delivery. WE ALSO HAD 2 EFP CONTRACTS THAT WERE ISSUED AS THE LONGS FINALLY SUCCUMBED TO A FIAT BONUS:  . THIS ENDED THE STREAK AT 18TH CONSECUTIVE TRADING DAY THAT WE EITHER GAINED NOR DID WE LOSE ANY SILVER CONTRACTS THROUGH THE EFP ROUTE.
 
 
Volumes: for silver comex
Today the estimated volume was 66,011 which is EXCELLENT
Yesterday’s  confirmed volume was 146,506 contracts which is THROUGH THE MOON
YESTERDAY’S CONFIRMED VOLUME OF 146,506 CONTRACTS EQUATES TO 732 MILLION OZ OF SILVER OR 105% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.
 
Total dealer silver:  35.468 million (close to record low inventory  
Total number of dealer and customer silver:   207.886 million oz
The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42
The previous record was 224,540 contracts with the price at that time of $20.44
end

NPV for Sprott and Central Fund of Canada

1. Central Fund of Canada: traded at Negative 7.3 percent to NAV usa funds and Negative 7.4% to NAV for Cdn funds!!!! 
Percentage of fund in gold 62.1%
Percentage of fund in silver:37.8%
cash .+0.1%( June 28/2017) 
 
2. Sprott silver fund (PSLV): STOCK   NAV  rises TO +.38% (june 28/2017) 
3. Sprott gold fund (PHYS): premium to NAV falls TO -0.45% to NAV  (June 28/2017 )
Note: Sprott silver trust back  into POSITIVE territory at +0.38 /Sprott physical gold trust is back into NEGATIVE/ territory at -0.45%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

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

(courtesy Sprott/GATA)

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

 Section: Daily Dispatches

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

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

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

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

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

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

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

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

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

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

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

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

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

end

And now the Gold inventory at the GLD

June 28/no change in inventory at the GLD/Inventory rests at 853.66 tonnes

June 27.2017/a deposit of 2.64 tonnes into the GLD/inventory rests at 853.66 tonnes

June 26/a withdrawal of 2.66 tonnes from the GLD and this gold no doubt was part of the raid/Inventory rests at 851.02

June 23/no change in gold inventory at the GLD/Inventory rests at 853.68 tonnes

June 22/no change in gold inventory at the GLD/Inventory rests at 853.68 tonnes

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 19/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 14./NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 867.00 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 8/AN ADDITION OF 3.07 TONNES OF GOLD ADDED TO 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

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

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

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

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

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

May 24/no change in inventory at the GLD/inventory rests at 847.45 tonnes

May 23/a paper withdrawal of 5.03 tonnes of gold from the GLD/Inventory rests at 847.45 tonnes

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

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

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

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

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June 28 /2017/ Inventory rests tonight at 853.66 tonnes
*IN LAST 182 TRADING DAYS: 93.47 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 123 TRADING DAYS: A NET  33.96 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET  47.30 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

June 28/ a small withdrawal of 662,000 oz form the SLV/Inventory rests at 339.226 million oz/

June 27/no change in the silver inventory at the SLV/Inventory rests at 339.888 million oz/

June 26/no change in the silver inventory at the SLV/Inventory rests at 339.888 million oz/

June 23/no change in silver inventory at the SLV/Inventory rests at 339.888 million oz

June 22/ a big change; a huge deposit of 2.175 million oz into the SLV/Inventory rests at 339.888 million oz

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 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 336.200 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 14/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 339.605 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 8/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/

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

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

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

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

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

May 24./a “paper” withdrawal of 1.893 million oz from the SLV/inventory rests tonight at 341.922 million oz

May 23/no change in silver inventory at the SLV/inventory rests at 343.815 million oz

May 19/no change in silver inventory at the SLV/Inventory rests at 343.815 million oz.

may 18/2017/another big deposit of 1.42 million oz added to the SLV/inventory rests at 343.815 million oz.

may 17/no change in silver inventory at the SLV/Inventory rests at 342.395 million oz/

June 28.2017:
 Inventory 339.226  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.20%
  • 12 Month MM GOFO
    + 1.43%
  • 30 day trend

end

Major gold/silver trading/commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Shrinkflation – Real Inflation Much Higher Than Reported

  • Shrinkflation – Real inflation much higher than reported and realised
  • Shrinkflation is taking hold in consumer sector
  • Important consumer, financial, monetary and economic issue being largely ignored by financial analysts, financial advisers, economists, central banks and the media.
  • Food becoming more expensive as consumers get less for price paid
  • A form of stealth inflation, few can avoid it
  • Brexit is the scapegoat for shrinkflation by the media and companies
  • Consumers blame retailers rather than central banks
  • Gold hedge has doubled in value since 2007 

Editor: Mark O’Byrne

Shrinkflation: no one left untouched

600 new words entered our official lexicon this week as the Oxford English Dictionary announced the latest new additions to their online records.

One of the words reportedly up for consideration was shrinkflation. It did not make the final cut and as a result continues to be defined by the authority as ‘a portmanteau, made from combining shrink: ‘to become or make smaller in size’, with the economic sense of inflation: ‘a general increase in prices and fall in the purchasing value of money’.

In order for a word to be accepted into the OED it must have been in use for at least five years. But the latest list suggests that this isn’t the case and exceptions can be made. The inclusion of ‘superbrat’, a word which is usually associated with the behaviour of John McEnroe in the 1970s, actually dates back to the the 1950s.


Yet, shrinkflation continues to elude the world’s authority on the English language. This seems bizarre to us given both the word and the phenomenon and something consumers have been experiencing for a number of years.

Although it is understandable in the context of an important consumer, financial and economic issue which is being largely ignored by financial analysts, financial advisers, economists and the media.

We first covered the shrinkflation phenomenon back in 2014 when we reported how  Dr. Philippa Malmgren had highlighted this ‘shrinkflation’ trend in a new book.

Shrinkflation: a new phenomenon?

As we mentioned last week, shrinkflation is a phenomenon that is not unique to the current financial crisis. In 1916 The Seattle Star ran a front-page story on the issue, ‘“[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.”

Search Graph for Shrinkflation (Google)

Granted, back in 1916 the word ‘shrinkflation’ was not in use but it had a place firmly in the economy. Use of the word shrinkflation has been picking up pace since at least 2012. We can see this by the examining the search history for the phrase on Google.

You can clearly see a peak in the search for the term in November 2016. It was at this point when news of the newly designed Toblerone hit the British newspapers. Mondelez, Toblerone’s manufacturers had announced they would be reducing the bars from 170 grams to 150 grams in the UK which would affect the shape.

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.

Cocoa Prices – Money Week

It’s not just Toblerone fans who are feeling the pinch on chocolate bars. Creme Eggs and Quality Street (other British high street favourites) have been shrinking, with price remaining the same.

Other household items and food prices have also been affected.

Brexit is the scapegoat

Even though we can go back nearly 100 years to witness shrinkflation and see evidence of it in our household items and online searches, it is only in the last year that manufacturers and the media have managed to find a reason for its existence.

Brexit is being blamed – as it is being blamed for a number of woes being experienced in the UK at present.

Brexit seems to be bearing the brunt of the blame for the recent shrinkages, thanks to the impact of the referendum of the price of sterling. You don’t need to have a PhD in economics to understand the effect this has on prices.

12 months since the vote sterling is still weak, it is 15% down against the US dollar, and 14% against the euro. Things are expected to get worse, with HSBC analysts expecting the pound to hit parity with the euro by the end of the year.

There is little doubt that a weak currency will impact the cost of raw goods and materials which make up chocolate bars and other items. However shrinkflation existed even when the pound was strong.

No sign of easing up

In 2015 the Irish Times reported on this very topic and referred to a 2014 Which? survey:

Aunt Bessie’s Homestyle Chips were reduced in size from 750g to 700g, while a box of Surf with Essential Oils washing powder fell in size from 2kg to 1.61kg. In 2014 there was 750g of mixed vegetables in a Birds Eye Select bag; today it is 690g. Cif Actifizz Multi-Purpose Lemon Spray and Domestos Spray Bleach Multipurpose Cleaner were reduced in size from 750ml last year to 700ml today…

‘The shrinkage does not end there. In previous years, Which? has recorded one- litre tubs of Carte D’Or ice cream turning into 900ml tubs, while a litre of Innocent smoothies became 900ml. Magnum ice creams, which used to be 360ml, are now 330ml, and the size of a bar of Imperial Leather soap fell from 125g to 100g, a reduction of 20 per cent…

‘The list goes on. A packet of 48 Persil washing tablets turned into a packet of 40, a decline of 16.6 per cent, while 56 Pampers Baby Wipes used to be a packet of 63, an 11.1 per cent reduction.’

This was well before the EU referendum. It was impossible to blame a weak currency, instead this was and remains all about the impact of real inflation on consumer prices. This is despite having been told for years that inflation was very low.

UK Inflation Expectations (FT)

Inflation expectations are relatively low amongst households in the UK, EU and U.S.

Only now are we beginning to see both officials and individuals wake up to the presence of inflation in the UK. In May consumer prices accelerated faster than BoE expectations. They hit a four-year high of 2.9% and are expected to exceed 3% in the coming months.

In the UK, there are some concerns and dissent has increased in the BoE’s monetary policy committee (MPC) over the suitability of its record low interest rate policy in regard to rising inflationary pressures. It has been some time since we have seen any sign of concern regarding inflationary issues, from members of the MPC.

Meanwhile in households it looks like it has taken the appearance of a chocolate bar to drive the message home that businesses are experiencing price pressures. Unfortunately this has merely come out as anger towards companies rather than the central banks and governments who are ultimately responsible for this inflationary issue.

Unjust for consumers or time to take responsibility?

Which? magazine and consumer action groups have tried to bring retailers to account for what are considered to be misleading practices.

In Ireland, the Consumer Association’s Chief Executive stated

“I don’t know if we can say consumers are being deliberately misled but they are being put in a position where it becomes very difficult to make informed decisions.”

“I think the worst example of this is the widespread shrinking of products. The content gets smaller but the price and the packaging stays the same. These are price increases by stealth, and by any measure inflation of this nature is abnormal in the current environment. I think they are appalling.”

As we have seen with quantitative easing, bank bailouts and the overall financial crisis consumers seem to be relatively disinterested in fighting back against these practices that ultimately cost them more.

A YouGov survey found that 46 per cent those polled would prefer to pay more for an item than see it shrink. Yet 36 per cent said they’d be satisfied if the pack got smaller, but the price stayed the same.

The same survey run by YouGov Portion Sizes and Health found that firms risk losing over a third of their customer base if they cut pack sizes by 15 per cent.

While there is uproar on Facebook pages about this topic, the concerns of some consumers are not being voiced by politicians, economists, central bankers or the media.

Depite the zeitgeist of the moment, this isn’t about retailers taking advantage of consumers. Shrinkflation is a very serious byproduct of a practice which has been going on for many years now.

Shrinkflation is just inflation in stealth mode and is the consequence of currency debasement on a scale that the world has never seen before.

It brings the economy’s problems literally to the kitchen table.

We are finally at a point where those who have so far been apparently untouched by the financial crisis i.e. the middle classes who still have jobs, they have seen their homes increase in value and they still go abroad twice a year, are beginning to see their cost of living increase.

As are the working classes, pensioners and those on low salaries or fixed incomes.

They will soon recognise that no one is left unharmed by the monetary and economic policies which followed the financial crisis.

Easy monetary policy is wealth ignorant. It gives little regard to how you spend your money and where you hold your cash. That’s why savers have to make room for those real assets which cannot be shrunk down and magicked away.

Investments such as gold and silver by their very nature are immune to the shrinkflation effect and are an important hedge against it.

Next time you’re considering that bar of Toblerone at the supermarket checkout, just imagine how much is missing compared to when you would have bought with the proceeds of your first payslip.

Then consider how much a bar of gold would have changed since then, the fact is that it hasn’t. You would still have the same sized bar, with the same gold content and it is worth a lot more now.

Gold in USD – 10 Years

Gold is twice the price it was before the crisis in 2007. While many household goods and products are higher in price or the same price but a much smaller size.

Shrinkflation is happening and real inflation is much higher than is being reported or people realise.

Your purchasing power and your wealth can be preserved from the ravages of shrinkflation, just don’t expect it to happen courtesy of central banks and governments.

News and Commentary

Gold prices firm on weaker dollar, equities (Reuters)

Ransomware virus hits computer servers across Europe (Bloomberg)

Not another financial crisis in ‘our lifetimes’: Fed’s Yellen (Reuters)

UK consumer confidence plunges after May’s election flop (Reuters)

75% of London homes now selling below asking price (City A.M. )

Bloomberg Image

Markets Have Nothing Left to Fear But Fearlessness Itself (Reuters)

Real reason central bankers don’t want to raise interest rates (Moneyweek)

Brexit One Year Later, in Five Charts (Goldseek)

London’s Palladium Market’s Metal Shortage, Structure, and Irregular Appearance (Safe Haven)

Why Institutional Investors Are Buying Gold Again (Goldseek)

Gold Summer Doldrums (Investing.com)

Gold Prices (LBMA AM)

28 Jun: USD 1,251.60, GBP 976.25 & EUR 1,101.91 per ounce
27 Jun: USD 1,250.40, GBP 980.31 & EUR 1,111.36 per ounce
26 Jun: USD 1,240.85, GBP 975.56 & EUR 1,109.32 per ounce
23 Jun: USD 1,256.30, GBP 987.70 & EUR 1,125.27 per ounce
22 Jun: USD 1,251.40, GBP 988.36 & EUR 1,120.13 per ounce
21 Jun: USD 1,247.05, GBP 989.04 & EUR 1,118.98 per ounce
20 Jun: USD 1,246.50, GBP 981.99 & EUR 1,117.24 per ounce

Silver Prices (LBMA)

28 Jun: USD 16.78, GBP 13.08 & EUR 14.78 per ounce
27 Jun: USD 16.66, GBP 13.07 & EUR 14.79 per ounce
26 Jun: USD 16.53, GBP 12.98 & EUR 14.79 per ounce
23 Jun: USD 16.71, GBP 13.12 & EUR 14.97 per ounce
22 Jun: USD 16.58, GBP 13.09 & EUR 14.85 per ounce
21 Jun: USD 16.51, GBP 13.03 & EUR 14.81 per ounce
20 Jun: USD 16.59, GBP 13.10 & EUR 14.88 per ounce


Recent Market Updates

– Goldman, Citi Turn Positive On Gold – Despite “Mysterious” Flash Crash
– Worst Crash In Our Lifetime Coming – Jim Rogers
– Go for Gold – Win a beautiful Gold Sovereign coin
– Only Gold Lasts Forever
– Your Future Wealth Depends on what You Decide to Keep and Invest in Now
– Inflation is no longer in stealth mode
– James Rickards: Gold Will Start Heading Higher On “Dwindling” Supply
– Billionaires Invest In Gold
– Brexit and UK election impact UK housing
– In Gold we Trust: Must See Gold Charts and Research
– Pension Funds, Sovereign Wealth Funds, Central Banks “Stock Up” on Gold “Amid Uncertainty”
– 4 Charts Show Gold May Be Heading Much Higher
– Gold in Pounds Surges 1.5% To £1,001/oz – UK Political Turmoil Likely

end


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

 
 

1 Chinese yuan vs USA dollar/yuan  STRONGER 6.7994(REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES  A LITTLE WEAKER TO ONSHORE AT   6.8042/ Shanghai bourse CLOSED DOWN 17.99 POINTS OR 0.56%  / HANG SANG CLOSED DOWN 156.49 POINTS OR 0.61% 

2. Nikkei closed DOWN 94.68 POINTS OR 0.47%   /USA: YEN FALLS TO 112.17

3. Europe stocks OPENED ALL IN THE RED       ( /USA dollar index FALLS TO  96.28/Euro UP to 1.1356

3b Japan 10 year bond yield: RISES TO   +.064%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 110.06/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  44.06 and Brent: 46.63

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.380%/Italian 10 yr bond yield UP  to 2.052%    

3j Greek 10 year bond yield RISES to  : 5.50???  

3k Gold at $1253.45  silver at:16.82 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 19/100 in  roubles/dollar) 59.61-

3m oil into the 43 dollar handle for WTI and 46 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.17 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9605 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0908 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to  +0.380%

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 2.244% early this morning. Thirty year rate  at 2.793% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Euro Surges As Europe Stocks Slump; Yields Rise After Central Bankers Spook Markets

 

U.S. index futures point to a slightly higher open, as markets in both Europe and Asian fall.The EUR surges to one year highs as markets continue to reverberate from Draghi’s hawkish comments while yields rose around the globe following similar hawkish comments from Fed speakers on Tuesday.

Asian stocks closed softer overall with benchmark yields sharply higher following hawkish comment from Draghi and Yellen. The MSCI Asia Pacific Index fell 0.3 percent as declines in technology shares overshadowed gains in banks and raw-materials companies. Samsung Electronics Co., Taiwan Semiconductor and Tencent led the selloff with losses of at least 1.2 percent.

Australian 10-year yield jumps as much as nine basis points, their biggest rise since November; while CAD and AUD lead gains in broad-based dollar pullback. PBOC skipped open market operations for fourth day, and drained liquidity fro the market for the 6th day while strengthening the daily CNY fixing by most in almost four weeks; Shanghai Composite closed modestly in the red as Dalian iron ore ended near unchanged after yesterday’s torrid gains. Of note were comments by a PBOC adviser, who said he sees no further tightening in 2H monetary policy.

In the start of the overnight session, as usual eyes were on the yuan, which was on deck for its biggest two-day gain since June 1, with China’s central bank strengthening its daily fixing by the most in almost four weeks after an overnight drop in the dollar, and the PBOC strengthened its daily reference rate by 0.35% to 6.8053.  The yuan continued to rise on speculation of central bank intervention, with the offshore currency up 0.2 percent after surging 0.6 percent Tuesday. As a reminder, on Tuesday the Yuan surged in afternoon trade amid talk of PBOC intervention. Speaking of the PBOC, the central bank drained a net 50 billion yuan in open-market operations, pulling funds from the financial system for the sixth day in a row.

The big action however continues to be the follow through from Draghi’s comments on Tuesday which unleashed a hawkish avalanche on Tuesday. As a reminder, Draghi said that “as the economy continues to recover, a constant policy stance will become accommodative, and the central bank can accompany the recovery by adjusting the parameters of its policy instruments – not in order to tighten the policy stance, but to keep it broadly unchanged”. In other words if prices rise as the ECB expect in 2018 ECB policy will become more accommodative as inflation picks up. Draghi also added that “all the signs now point to a strengthening and broadening recovery in the Euro area” and that “deflationary forces have been replaced by reflationary ones”. The ECB President also cited that risks of “hysteresis effects” had diminished and that “now we can be confident that our policy is working and that those risks have abated”. Draghi also suggested that political winds are now becoming tailwinds. As DB strategists called it, the speech seemed to mark a transition from the “whatever it takes” period to “it will take less” and a potential slow turning point in the direction of travel towards tighter policy. The final day of the Sintra ECB forum is today and a as reminder a policy panel between Draghi, the BoE’s Carney, BoJ’s Kuroda and BoC’s Poloz is due at 1.30pm BST which will be worth watching.

The market reaction to Draghi’s comments was violent with 10y Bund yields surged +12.5bps to close at 0.368% and back to the highest yield since May 24th. That was the weakest day for Bunds since August 25th 2015 or 22 months. Comparable OATs rose 13.7bps to 0.732% which matches the sell-off on November 10th last year when yields surged higher post Trump’s election victory. Prior to that you’d have to also go back to August 2015 to find as big a sell-off. It was a similar story in the periphery too with yields in Italy, Spain and Portugal up +16.7bps, +12.2bps and +13.3bps respectively. 10y Gilts also surged +7.9bps to 1.088% while the moves also weighed on US Treasuries with 10y yields darting up +6.8bps to 2.206%.

Fast forward to Wednesday when the euro touched a one-year high and government bond yields climbed as investors digested a series of hawkish messages from central banks. European stocks sank in early trading as the global selloff in technology companies spread, while German 10Y yields rose as high as 0.40%, nearly doubling in two days, as the curve steepened sharply.

The Euro rose to the highest level since last June’s Brexit vote and most bonds extended declines. The currency is now up almost 10% this year. The head of the Federal Reserve, Janet Yellen, and one of her lieutenants, Patrick Harker, said on Tuesday that they expected to continue raising U.S. interest rates, but it couldn’t rally the dollar.

That provoked the banking world’s single biggest cheerleader for a stronger dollar, Deutsche Bank, to declare the end of the greenback’s bull run which dates back to 2014.

“I do think the euro now has got quite significant momentum behind it and I think that will build towards the confirmation of some tapering announcement this year. So I would be long the euro on a tactical basis for the rest of the year,” JPMorgan Asset Management’s Global Market Strategist, David Stubb, said.

At the same time core European bonds are the significant area of vulnerability to better euro zone growth and to changes in ECB policy, he told Reuters. “If you are looking at a 10-year maturity and further out, it is a global bond market and the extremely low yields in core Europe stick out alongside Japan and Switzerland as the places that seem stretched in terms of valuation.”

Not helping the doves this morning was the latest M3 and loan growth data out of Europe, which rose again, with M3 up 5% Y/Y, while Loan Growth rose by 2.6% Y/Y, up from 2.4% the month before, and once again suggesting that Draghi risks falling behind the curve if he doesnt tighten soon.

Janet Yellen added to the hawkish momentum as she noted asset valuations look rich and signaled the U.S. economy can withstand higher interest rates, and Treasury yields rose again after the biggest increase since January. Speaking in London, Yellen made a reference to asset valuations being “somewhat rich” by some metrics contributing to a late leg lower for risk assets in the US. However, the big negative catalyst had taken place earlier when the news that the healthcare legislation vote was to be pushed back beyond July 4th hit. Senate majority leader McConnell reflecting what is almost certainly still a lack of votes and clear divisions within the party. That was seen as another blow to the Trump fiscal trade while away from that markets were also spooked by the news of a fresh global cyberattack which has spread and hit government and corporate systems alike.

And while Yellen qualified her assessment that asset valuations look high by some measures, the note of caution came just as markets were buffeted by a series of events, including an IMF cut to its U.S. growth forecast, Google suffering the biggest ever EU antitrust fine, a fresh blow to the Republican agenda in Washington and a global cyberattack.

“Central banks taking the punch bowl of liquidity away does not bode well for the outlook for volatility in the short term, leading to position adjustments,” Morgan Stanley strategists including Hans Redeker wrote in a note. “Conditions for the emergence of a proper bear market are not yet in place, even so, yesterday’s high trading volume suggests that corrective activity may stay with us for several days.”

Futures on the Nasdaq 100 Index retreated in a sign that the selloff in technology shares may not be over, while a drop in oil also weighed on equity markets.  Nasdaq 100 futures expiring in September fell 0.2 percent at 6:03 a.m. in New York, with shares of chipmakers down in premarket trading.

Overnight, Wall Street’s S&P 500 posted its biggest one-day drop in about six weeks and closed at its lowest point since May 31. It was spooked after the U.S. Senate delayed voting on a healthcare reform bill, rekindling worries about the timeline of Donald Trump’s business-friendly policies. Futures on the S&P 500 Index were higher by 0.1% as of 6:30am EDT. The index lost 0.8% Tuesday, the most since May 17.

In currencies, the euro rose 0.2 percent to $1.1358 as of 10:02 a.m. in London, after briefly touching $1.1379, the highest level since June 2016. The currency surged 1.4 percent on Tuesday.

The dollar index, which gauges the U.S. currency against a basket of six major counterparts, edged down 0.2 percent to 96.227, well below its previous session high of 97.447. The Bloomberg Dollar Spot Index fell less than 0.1 percent after declining 0.6 percent in the previous session. The Canadian dollar strengthened 0.4 percent, adding to a 0.4 percent gain on Tuesday. Bank of Canada Governor Stephen Poloz said in a CNBC interview that interest rate cuts “have done their job” and that levels are now “extraordinarily low.”

The weaker dollar helped bolster spot gold, which was up 0.4 percent at 1,251.59 per ounce, and also boosted crude. Oil’s winning streak ended as industry data showed American stockpiles rose: WTI futures fell 0.6 percent to $43.99 after climbing 4 percent in the previous four sessions. Gold rose 0.5 percent to $1,252.84 an ounce, climbing for a second day.

In rates, the yield on 10-year Treasuries added three basis points to 2.23 percent after jumping seven basis points Tuesday. The yield on German bunds climbed one basis points, after rising 13 basis points in the previous session for the biggest surge since December 2015. British yields rose four basis points.

While there are no major events or central bank speeches, the Fed is set to announce the results of the second part of its annual bank stress test, which will determine whether lenders can increase dividends and share repurchases.

Bulletin Headline Summary From RanSquawk

  • EUR/USD breaches 1yr highs post-Draghi yesterday (due again today at 1430BST)
  • EU equities continue to slip with healthcare names seen softer
  • Highlights include comments from slew of central bank speakers including Carney and Poloz, DoE Crude inventories

Markets Snapshot

  • S&P 500 futures up 0.1% to 2,422
  • STOXX Europe 600 down 0.3% to 384.76
  • MXAP down 0.3% to 154.79
  • MXAPJ down 0.5% to 504.23
  • Nikkei down 0.5% to 20,130.41
  • Topix down 0.3% to 1,614.37
  • Hang Seng Index down 0.6% to 25,683.50
  • Shanghai Composite down 0.6% to 3,173.20
  • Sensex down 0.4% to 30,843.25
  • Australia S&P/ASX 200 up 0.7% to 5,755.70
  • Kospi down 0.4% to 2,382.56
  • German 10Y yield rose 0.8 bps to 0.378%
  • Euro up 0.3% to 1.1376 per US$
  • Brent future up less then 0.1% to 46.69
  • Italian 10Y yield rose 15.9 bps to 1.768%
  • Spanish 10Y yield fell 2.5 bps to 1.47%
  • Gold spot up 0.5% to $1,252.94
  • U.S. Dollar Index down 0.2% to 96.22

Top Overnight News

  • Yellen says asset valuations ’somewhat rich’, rates to rise very gradually; Kashkari says economy not on verge of overheating, inflation low
  • BOC’s Poloz expects Canada’s growth to stay above potential; looks as though ’rate cuts have done their job’
  • PBOC adviser sees no further tightening in 2H monetary policy
  • China 2Q economic growth may be 6.8%, CPI 1.4%: Business Herald
  • Japan PM Abe said to ditch balanced budget pledge to delay sales tax hike
  • RBA could raise rates 8 times in two years, ex-board member Edwards says
  • API inventories according to people familiar w/data: Crude +0.9m; Cushing -0.7m; Gasoline +1.4m; Distillates +0.7m
  • Rate-Cutting Race Among BRICS Outliers Pits Russia, Brazil
  • McConnell Scrambles to Win GOP Votes for Troubled Health Measure
  • Moon Enlists Chaebol Execs to Disarm Trump’s Trade Threat
  • Buffett Renews Attack on Health Bill as ‘Relief for Rich Act’
  • Toshiba Sues Western Digital for 120 Billion Yen in Damages
  • F-35 Unreliability Risks Strain on Pentagon Budget, Tester Says
  • Google News Redesigns With a Focus on Facts, More User Control
  • Australia Signs A$70m Sustainment Contract for C-17A With Boeing
  • Bluebird Bio Prices 3.81m Shares at $105 Apiece
  • Mattel Accused of ‘Loading Up’ Stores to Bolster Financials
  • Dow, DuPont to Sell Some Assets in Competition Bureau Agreement
  • International Paper to Pay $354m in Kleen Products Settlement
  • Accenture Plans to Spend $1.8B on Acquisitions in 2017: Mint
  • Glenview Said to Call for Changes in Dow-DuPont Deal Plan: WSJ

Asian equity markets traded mixed after a slight improvement from the losses on Wall Street where there was a renewed sell-off in tech names and healthcare suffered after the Senate delayed the vote to repeal and replace Obamacare. This weighed on Nikkei 225 (-0.3%) from the open although downside was stemmed by yesterday’s JPY weakness, while ASX 200 (+0.6%) was kept afloat by strength in miners and materials stocks. Shanghai Comp. (+0.1%) and Hang Seng (-0.3%) were both initially lower after the PBoC refrained from liquidity operations for the 4th consecutive session, before mainland sentiment gradually recovered amid an optimistic forecast of 6.8% growth for China this year by Bank of China and after reports that a PBoC adviser expects no further tightening of monetary policy during H2. 10yr JGB are marginally lower despite the risk averse tone in Japan and a moderate BoJ Rinban announcement of JPY 880b1n, while a slight underperformance was seen in the long-end resulting to a mildly steeper curve.

Top Asian News

  • China Prepares Bigger Opening to Its $9 Trillion Bond Market
  • Worst Likely Over For Malaysian FX and Rates Markets, CIMB Says
  • H.K. SFC Investigates Short Sellers Who Issue Research Reports
  • Small China Banks Rally As Investors Seen Seeking Low Valuations
  • Japan’s FTC to Take ‘Strict Action’ on LNG Antitrust Violations
  • Cofco, ADM Hit by New Cyberattack That’s Spreading Worldwide
  • Japan Tobacco Faces Supply Shortage as Rivals Pile On In Japan

In European stocks, there has been a modest extension seen in EUR/USD this morning, stretching the lead gains to a little shy of 1.1390. The hawkish European equities are trading lower across the board (Eurostoxx 50 -0.8%) in a continuation of the some of the price action seen yesterday, most notably on Wall Street. More specifically, healthcare names are seen softer in Europe after yesterday’s announcement that the US healthcare bill vote is to be delayed until after Independence Day. Tech names continue to face selling pressure in the wake of the Supreme court ruling earlier in the week regarding the Trump travel ban while energy names are also adding pressure to indices after yesterday’s 851 k build in the API’s. From a fixed income perspective, prices have continued their descent (GE 10yr yield +2.4bps) seen since yesterday’s more hawkish than anticipated leaning from ECB President Draghi. That said, some market participants have raised the question over whether the central bank head will try and redress the market later to at 1430BST given the extent of the moves yesterday. In terms of performance elsewhere, spreads are broadly tighter to the German benchmark with 10yr French paper tighter by 0.7bps with BTPs bucking the trend (1bps wider to GE 10yr) amid impending supply on Friday.

Top European News

  • JPMorgan Reshuffles European Management as Casanueva Retires
  • Asset Management Fee Pressure to Intensify After FCA Report: RBC
  • Draghi Gets Backing in Argument Over How to Best Spur Reforms
  • May’s New U.K. Government to Face First Test on Austerity
  • Deutsche Bank Raises EUR/USD Forecast After Draghi’s Speech
  • Philips to Buy Spectranetics, Starts Buyback of Up to EU1.5B
  • Maersk Has Shut Down Some Systems to Help Contain Cyber Attack

In currenices, a modest extension seen in EUR/USD this morning, stretching the lead gains to a little shy of 1.1390. The hawkish takeaways from president’s Draghi’s speech at the ECB forum continue to ring in the ears, and we continue to wrestle for position for a test on 1.1400, with selling interest aplenty all the way through to 1.1500. EUR gains have been added against the major counterparts across the board, and have been underpinned by the EUR/CHF move above 1.0900 again. EUR/GBP put another dent into the upside ahead of 0.8900, but as we have reported, strong resistance will be reinforced by even stronger levels ahead of 0.9000. This serves to prop up Cable, which tested through 1.2850 in NY yesterday, but with liquidity improved, buyers are having a tough time of it this morning. CAD still probing the downside as we challenge lows ahead of 1.3100. Oil prices, and indeed all commodities have edged higher — partly down to USD weakness — and this ‘cycle’ has generated the move lower to put the key 1.3000 level on the radar, but it is proving slow going in the meantime.

In commodities, as a function of the weaker USD, we see another round of gains seen across the commodity spectrum, where we will lead with the metals market as Copper extends above USD2.65. The lack of momentum is a clear sign of caution, and at these levels unsurprisingly so as the ongoing concerns over global demand linger despite a broadly optimistic outlook from central banks globally. On the day, we are seeing prices coming off better levels — Zinc pulling back a little more than the rest after recent bouts of outperformance. WTI is back above USD44.0 this morning, but we sense USD45.0 will be a challenge as there is no change in the fundamental driver that is the growing rate of US shale production. Gold is close to returning back to levels seen Monday morning, just before the sharp USD20.0 hit, with Silver moving decidedly hesitantly inside a USD16-17 range for now.

Looking at the day ahead, in the US data includes the May advance goods trade balance reading, wholesale inventories for May and pending home sales data for May. Away from the data the main focus for markets today will likely be the aforementioned ECB panel debate between Draghi, Carney and Kuroda. Speaking of the Fed, the results from the second part of the Fed’s stress test (known as the Comprehensive Capital Analysis and Review) will also be out late this afternoon which determines whether banks can increase dividends and conduct share repurchases.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 0.6%
  • 8:30am: Advance Goods Trade Balance, est. $66.0b deficit, prior $67.6b deficit, revised $67.1b deficit
  • 8:30am: Wholesale Inventories MoM, est. 0.2%, prior -0.5%; Retail Inventories MoM, prior -0.3%
  • 10am: Pending Home Sales MoM, est. 1.0%, prior -1.3%; NSA YoY, est. 0.5%, prior -5.4%

DB’s Jim Reid concludes the overnight wrap

After a strange few weeks of incredible weather and steamy politics here in the UK I landed back in London late last night to see that normal service has been resumed. Yes it was cold with heavy rain and England had just lost to Germany on penalties in a major football tournament!! After last night’s Euro U-21 semi-final loss a quick Google search revealed that Germany has virtually the best penalty shoot-out record in major world football and England one of the worst. If anyone in Germany can tell me why I’d be delighted to know. At the end of every school day are penalties compulsory? Talking of Google there were hundreds of correct answers to my quiz from yesterday as to which song (from one of my favourite albums of all time) is virtually the only song in history to mention one of the most famous economists of all time. The answer was Dignity by  Deacon Blue which mentions Maynard Keynes. I mention Google as it was difficult to ascertain which of the correct answers were a product of knowledge and which were a product of an internet search. Quizzes have certainly got easier and less fun in the internet age. The most amusing answer was those that suggested my favourite song of all time might be “When will I be famous?” by 80s boyband Bros. This song mentions Karl Marx. Thankfully this wasn’t the answer I was looking for.

Yesterday’s comments from Mr Draghi at the ECB forum in Sintra seemed to indicate that he thought the last ECB meeting ended up in a draw and that he wanted to take the first penalty kick in the aftermath. He certainly seemed more upbeat yesterday than in his more balanced press conference that obviously more reflected the views of the committee. The changes were subtle but significant. Before we discuss his comments the impact was clear as bonds across the continent saw one of the biggest sell-offs for many months. Indeed 10y Bund yields surged +12.5bps to close at 0.368% and back to the highest yield since May 24th. That was the weakest day for Bunds since August 25th 2015 or 22 months. Comparable OATs rose 13.7bps to 0.732% which matches the sell-off on November 10th last year when yields surged higher post Trump’s election victory. Prior to that you’d have to also go back to August 2015 to find as big a sell-off. It was a similar story in the periphery too with yields in Italy, Spain and Portugal up +16.7bps, +12.2bps and +13.3bps respectively. 10y Gilts also surged +7.9bps to 1.088% while the moves also weighed on US Treasuries with 10y yields darting up +6.8bps to 2.206%.

Specifically, Draghi said that “as the economy continues to recover, a constant policy stance will become accommodative, and the central bank can accompany the recovery by adjusting the parameters of its policy instruments – not in order to tighten the policy stance, but to keep it broadly unchanged”. In other words if prices rise as the ECB expect in 2018 ECB policy will become more accommodative as inflation picks up. Draghi also added that “all the signs now point to a strengthening and broadening recovery in the Euro area” and that “deflationary forces have been replaced by reflationary ones”. The ECB President also cited that risks of “hysteresis effects” had diminished and that “now we can be confident that our policy is working and that those risks have abated”. Draghi also suggested that political winds are now becoming tailwinds.

As our rates strategists’ aptly called it, the speech seemed to mark a transition from the “whatever it takes” period to “it will take less” and a potential slow turning point in the direction of travel towards tighter policy. The final day of the Sintra ECB forum is today and a as reminder a policy panel between Draghi, the BoE’s Carney, BoJ’s Kuroda and BoC’s Poloz is due at 1.30pm BST which will be worth watching.

Staying with central banks, it’s not often that Mrs Yellen gets overshadowed but that was the case yesterday with nothing of real interest policy wise to emerge from her London speech. However a reference to asset valuations being “somewhat rich” by some metrics from the Fed Chair did contribute to a late leg lower for risk assets in the US. In fairness though the damage had already been done for markets following a trifecta of other factors earlier in the day. The most significant was perhaps the news that the healthcare legislation vote was to be pushed back beyond July 4th. Senate majority leader McConnell reflecting what is almost certainly still a lack of votes and clear divisions within the party. That was seen as another blow to the Trump fiscal trade while away from that markets were also spooked by the news of a fresh global cyberattack which has  spread and hit government and corporate systems alike.

The final variable for markets to deal with was a renewed sell-off in the tech sector. It appeared that the news of a €2.4bn antitrust fine for Google from the European Commission over abusing its near-monopoly  position for online searches in order to give the company an “illegal advantage” played a big role. Alphabet’s share price fell nearly -2.50% while the Nasdaq tumbled -1.61%. That retreat for tech names sent the S&P  500 down -0.81% for its worst day in 6 weeks. Markets were also weak in Europe with the Stoxx 600 closing -0.79%. Credit also gave back some recent performance. CDX IG closed 2bps for its worst day in 6 weeks too while in Europe the iTraxx Main finished 1.5bps wider. It’s worth noting that these moves came despite commodities having a rare strong day across the board. WTI Oil (+1.98%) continued its bounce back, Iron Ore  rallied +5.20%, Copper firmed +1.10% and Gold was +0.20% better off.

Refreshing our screens now, with little new news to note, the falls in equity markets in Europe and on Wall Street yesterday has continued this morning into Asia for the most part. The Nikkei (-0.29%), Hang Seng  (-0.71%), Shanghai Comp (-0.41%) and Kospi (-0.30%) have all dropped into the red however the ASX (+0.32%) has bucked the trend in firming up. Bonds have been heavily sold across Asia with 10y yields in the likes of Australia and New Zealand 7bps higher Moving on. On Monday my team published a report “iTraxx Financial Senior: Where Next?” which should be in your inbox. The report looks at what is behind the recent strong outperformance of the iTraxx Financial Senior index. Firstly, it explains the basics of the regulatory changes that have resulted in a change of the index rules for the upcoming roll, as announced last week, which will change the risk of the index meaningfully. It looks into single-name CDS repricing within the index following the announcement and also contrasts the performance of the index with cash bonds. Finally, it concludes with views about where the index is heading in the near term, where the September roll might price and the likely performance of the current series after the roll. Email Michal.Jezek@db.com if you’d like a copy.

In terms of other news from yesterday, there was some focus also on the BoE following the release of the semi-annual Financial Stability Review. The most notable takeaway was an increase in the counter-cyclical capital buffer applied to banks to 0.5% from 0% and a guide to a possible increase to 1% in the November meeting. The BoE pointed to ‘pockets of risk’ despite the overall risk environment being classified as at a ‘standard level’. Specifically there was mention of the rapid increase in consumer credit and also – unsurprisingly – the prevailing uncertainty from Brexit negotiations.

Before we look at the day ahead, yesterday’s macro data – while flying mostly under the radar – was actually relatively upbeat. The conference board’s headline consumer confidence index for June was reported as rising 1.3pts to 118.9 with the current conditions index rising 5.7pts to 146.3 and the highest since 2001. Offsetting that however was a drop in the expectations index of 1.7pts to 100.6 and to the lowest since January. Away from that the Richmond Fed’s manufacturing index rose 6pts in June to +7 (vs. +5 expected). Meanwhile the S&P/Case-Shiller house price index revealed that house prices rose +0.3% mom in April the 20 largest cities. Finally closer to home in the UK the CBI’s distributive trades survey for June revealed that a net 12% of retailers reported sales growth in June which was up 3% from May.

Looking at the day ahead, this morning the early data due to be released is out of Germany with the May import price index reading and then the UK with the latest Nationwide house price index data for June. M3 money supply data for the Euro area is then out later this morning. Across the pond in the US this afternoon’s data includes the May advance goods trade balance reading, wholesale inventories for May and pending home sales data for May. Away from the data the main focus for markets today will likely be the aforementioned ECB panel debate between Draghi, Carney and Kuroda. The Fed’s Williams also speaks this morning. Speaking of the Fed, the results from the second part of the Fed’s stress test (known as the Comprehensive Capital Analysis and Review) will also be out late this afternoon which determines whether banks can increase dividends and conduct share repurchases.

 END

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 17.99 POINTS OR 0.56%   / /Hang Sang CLOSED DOWN 156.49 POINTS OR 0.61% The Nikkei closed DOWN 94.68 POINTS OR 0.47%/Australia’s all ordinaires CLOSED UP 0.74%/Chinese yuan (ONSHORE) closed UP at 6.7994/Oil UP to 44.06 dollars per barrel for WTI and 46.63 for Brent. Stocks in Europe OPENED ALL IN THE RED,,   Offshore yuan trades  6.8042 yuan to the dollar vs 6.7994 for onshore yuan. NOW THE OFFSHORE IS STILL WEAKER TO THE ONSHORE YUAN/ ONSHORE YUAN  STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS  STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS VERY HAPPY TODAY

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA

This will annoy North Korea greatly as China suspends fuel sales to it:

(courtesy zerohedge)

China Suspends Fuel Sales To North Korea

It appears President Trump’s remarks about the lack of progress made by China in pressuring North Korea has worked. Reuters reports that CNPC – the main supplier of diesel and gasoline to North Korea – has halted sales, reportedly because the buyers could not pay.

A week after the President said that “while I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out. At least I know China tried!

While I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out. At least I know China tried!

And China responded that:

China has “played an important and constructive role” in seeking peace on the Korean peninsula, Foreign Ministry spokesman Geng Shuang told reporters in Beijing.

 

China strictly implements United Nations Security Council resolutions and isn’t the crux of the North Korean issue, he said.

Reuters reports that China National Petroleum Corp has suspended sales of fuel to North Korea over concerns the state-owned oil company won’t get paid, as pressure mounts on Pyongyang to rein in its nuclear and missile programmes, three sources told Reuters.

China provides most of North Korea’s food and fuel imports. It has backed the Kim dynasty since the Korean War, in part to keep U.S. troops away from its border. While China has taken some steps on North Korea — including halting coal purchases this year after Kim’s estranged half-brother was murdered in Malaysia — its efforts haven’t produced a breakthrough so far.

But perhaps the death of Otto Warmbier was enough to push the Chinese to this decision, but as Reuters notes, while it’s unclear how long the suspension will last, a prolonged cut would threaten critical supplies of fuel and force North Korea to find alternatives to its main supplier of diesel and gasoline, as scrutiny of China’s close commercial ties with its increasingly isolated neighbour intensifies.

A source with direct knowledge of the matter said CNPC decided to put fuel sales on hold “over the last month or two” and described it as a “commercial decision”.

 

“It’s no longer worth the risks,” said the source. Chinese and international banks are stepping up compliance checks on companies dealing with countries on the U.S. sanctions list, such as North Korea, he said.

 

The North Korean agents who mostly buy the diesel and gasoline have been unable recently to pay for the supplies — CNPC normally requires upfront payments, the source said.

 

Reuters was unable to determine if the agents have started facing credit problems with Chinese and international banks worried about sanctions compliance issues.

The United States has pressed China to exert more economic and diplomatic pressure on North Korea, but Beijing has said its influence on North Korea is limited and it is doing all it can, and as Reuters concludes,the sources in China saw no sign yet that Beijing is cutting crude oil to Pyongyang.

The big question now is – will this corner an apparently already crazy leader into some action we may all regret, or will the suffering of his people be the line he is not willing to cross as some diplomatic face-saving approach is found.

end

 

Then North Korea issues a standing order to execute former South Korean President Park who tried to orchestrate an assassination on Kim in 2015:

(courtesy zero hedge)

N.Korea Issues Standing Order To Execute Former S.Korea President

Two days ago, Japan’s Asahi Shimbun newspaper reported that former South Korean President Park Geun-hye had made plans to assassinate North Korean leader Kim Jong-un, adding that Ex-president Park, who was impeached in a corruption scandal earlier this year, signed a document approving a “leadership change” in North Korea back in 2015. According to the Japanese outlet, South Korea’s intelligence agencies were to prepare operations to carry out the plan.

The report noted that the plotters considered arranging accidents, with a car accident or the derailment of a train carrying Kim Jong-un on the table. Park’s administration also reportedly considered staging a coup in North Korea.

The military activities of South Korea’s communist neighbor, including its nuclear arms development programs, apparently motivated the alleged plot, Asahi Shimbun notes. Tension between Seoul and Pyongyang spiked in August of 2015 as the countries exchanged fire after the North fired a projectile at the border city of Yeoncheon. However, the plans to assassinate the North Korean leader were not picked up by President Moon Jae-in’s administration after Park’s impeachment, the daily reports.

One month ago, North Korea accused US and South Korean spy agencies of plotting to kill Kim Jong-un with some “biochemical substances,” the country’s Ministry of State Security said, as quoted by AFP.

Turns out he was right. And, as of today, he is out for revenge.

According to Reuters, North Korea has issued a standing order for the execution of former South Korean President Park Geun-hye and her spy chief for a plot to assassinate its leader.

The North’s official KCNA said “revelation showed” Park had masterminded a plot to execute its “supreme leadership” in 2015 and it was imposing the “death penalty on traitor Park Geun-hye”.

 

KCNA did not disclose the source of the revelation but a Japanese newspaper reported this week that Park in 2015 approved a plan to overturn the North Korean regime of leader Kim Jong Un.

While recently Syria had once again stormed to the front line of nations who will be attacked by the US next, following Monday’s cryptic White House announcement that Syria was preparing a chemical attack, interpreted by many that Trump was about to launch another ballistic missile attack, should Kim continue with such aggressive statements, North Korea’s odds of hosting operation “wag the dog” will surge. That said, somehow doubt that the impeached former South Korean president is too concerned about the Kim’s latest bloodlust.

b) REPORT ON JAPAN

c) REPORT ON CHINA

Satellite imagery and a new Satellite Mfg Index shows Chinese manufacturing on the decline

(courtesy zero hedge)

Chinese Satellite Data Hint At Ominous Manufacturing Slowdown

Chinese factory activity contracted last month for the first time in nearly a year when the Caixin PMI dipped below 50, the threshold for growth. And now, early indicators for the month of June – including one satellite-based measure – suggest that there’s more pain ahead for the manufacturing sector in the world’s second-largest economy.

A reading published by San Francisco-based SpaceKnow Inc. which uses commercial satellite imagery to monitor activity across thousands of industrial sites signaled deterioration in the country’s manufacturing sector for the first time since August. The gauge, known as the China Satellite Manufacturing Index, fell to 49.6, below the 50 break-even level. The index incorporates satellite data from thousands of industrial sites across China.

Satellite imagery has often proved eerily presceint in the recent past: In the US, satellite data analyzing activity in retailers’ parking lots pointed to significant activity weakness at core US retail locations, even as sentiment indicators were suggesting an uptick in sales following the election.

Meanwhile, small- and medium-sized enterprises showed the lowest level of confidence in 16 months, and conditions in the steel business remained lackluster, according to Bloomberg.

Some other indicators have been slightly more sanguine: sales-manager sentiment stayed positive, and outlook of financial experts recovered.

Still, data suggest that output in China’s economy slowed during the second quarter after a strong start to the year, with investment slowing, some credit becoming tighter and signs that curbs on the country’s property market are starting to have an impact.

Should growth continue to slow, China’s leaders would find themselves in an awkward position, with the country’s twice-a-decade leadership transition expected to occur this fall when the 19th Party Congress convenes to appoint its new senior leadership. It’s widely believed that China’s President Xi Jinping will begin serving his second five-year term.

Another gauge, Standard Chartered Plc’s Small and Medium Enterprise Confidence Index slumped to a 16-month low at 54.7 – a sign that smaller companies are finding it harder to obtain credit as regulators move to damp financial risks. A sub-gauge of lending fell below 50, signaling deterioration, for the first time on record.

These data show that Chinese banks are growing reluctant to lend to small Chinese companies, preferring larger, more established peers, this leaves those companies in line to feel the brunt of the People’s Bank of China’s monetary tightening, as the central bank tries to ease the market off of its dependence on repeated liquidity injections.

“Although the central bank will likely provide sufficient liquidity to avoid a liquidity crunch, banks may still prefer lending to bigger rather than smaller companies amid tighter liquidity conditions,” according to Standard Chartered’s Kelvin Lau and Hunter Chan.

That could be the spark that ignites China’s “Minsky moment” – the financial cataclysm that Kyle Bass and other perma-china-bears have been waiting for when China’s overleveraged market crumbles to dust – might finally be in the offing. Indeed, though China’s markets have been relatively calm recently, the PBOC’s attempts to tighten liquidity have sparked some instability in recent months. Back in March, the central bank had to engage in mini bailouts when a jump in interbank rates caused some small regional lenders to default on their interbank loans after money market rates shot higher. Meanwhile, China’s weakening credit impulse should give any China bulls pause.

In one ominous sign, Hong Kong microcap stocks crashed overnight after a rumor that local exchanges might force all “zombie companies “ to delist triggered a wave of margin calls. The selloff triggered worries about stability in the country’s equity market, which has seen a series of spectacular crashes in individual names this year, despite the broader Hang Seng benchmark’s strong performance.

Compounding worries for investors is a report published by Caixin a few weeks ago saying that two dozen Chinese companies asked their employees to buy their stock, promising to cover their losses – a transparent attempt at pumping up the price to fend off collateral calls on stock-backed loans.

What’s more, in a fantastic expose from earlier this month, Reuters reported on how Chinese firms’ “rehypothecating” collateral between two and three borrowers, suggesting that billions, or maybe even trillions, of dollars’ worth of loans are based on so-called ghost collateral, leaving them effectively unsecured.

Meanwhile, the S&P Global Platts China Steel Sentiment Index remained at a lackluster level — 38.12 out of 100 points. The gauge is based on a survey of about 75 to 90 China-based market participants including traders and steel mills.

“Market participants do not expect any great improvement over the coming month,” Paul Bartholomew, a senior managing editor at S&P Global Platts in Melbourne, wrote in a release. “Confidence in the export market has evaporated after two stronger months, as overseas customers are wary about buying when the price direction is so unclear.”

In addition to the ominous economic indicators, political tensions are worsening, too. Two weeks after Trump’s ominous China “tried and failed” to contain North Korea tweet, the leaders of the two global powers appear to be getting closer to the default relationship that many expected after the election – that is to say, a hostile one. The Trump report follows last night’s news that the United States plans to place China on its global list of worst offenders in human trafficking and forced labor, a step that according to Reuters could aggravate tensions with Beijing.

end

 

There is more to the story of how 50 companies collapsed in a historic crash on Monday.  Zero hedge explains what happened:

(courtesy zero hedge)

How The “Enigma Network” Led To A Historic Crash In One Hong Kong Market

Yesterday morning we discussed the sudden crashes amid 17 small cap Hong Kong firms, which collectively lost over $6 billion in market cap, on what we dubbed was a marketwide margin call, as confidence in the entire sector vaporized instantly, sending the small cap Growth Enterprise Market (GEM) plunging by over 9%, with some stocks plunging over 90%. Quoted by Bloomberg, Francis Lun, the CEO of HK’s Geo Securities said “we’re seeing a domino effect; all the companies in the same network got cut. These shares are owned by the same group of people so they must be experiencing a liquidity crunch and they don’t have the money to support the share prices.”

 

It turns out there was more to this story, at the heart of which is a report issued six weeks ago titled The Enigma Network: 50 stocks not to own” by David Webb, a former director of the Hong Kong stock exchange, whose argument is that companies which crashed were entwined in a complex web of cross-shareholdings that had pushed their valuations to unsustainable levels. As Reuters adds, “Webb’s report mapped out a complex web of cross-shareholdings between companies listed on both the main board and its sibling, the Growth Enterprise Market, which he said created a breeding ground for volatility.

In other words, Webb mapped out the margin call domino effect whose impact was not a question of if but when. It is shown in the chart below.


David Webb’s graphic representation of ‘The Enigma Network.’

And, as Bloomberg notes, if investors ignored him until now, they’re paying the price, and not just on Tuesday when the first hit stuck, but also on Wednesday, when the selloff in the GEM continued with many stocks dropping a further 20-30%, and this time starting to impact the broader Hang Seng index.

HK Penny Stocks that evaporate billions of HKD yesterday continue to plunge today, -15%~30%… Dragging down the entire HK stock market now.

The turmoil once underscored how the Hong Kong Stock Exchange and its sibling, the Growth Enterprise Market, have become a breeding ground of wild volatility according to Bloomberg, a phenomenon which has raised red flags for the city’s regulators, who have warned small-caps can be black boxes and, at times, subject to manipulation.

David Webb

Webb, who is an activist investor who’s been a vocal critic of the Hong Kong exchange since he quit the board in 2008, has been calling on authorities to do more to protect investors. “What this really points to is the ongoing problems with our legal and regulatory system for listed companies,” he told Bloomberg in an interview on Tuesday.

While the Hong Kong’s Securities and Futures Commission said it couldn’t comment on whether it’s pursuing any investigations, the regulator did note note that Tuesday’s biggest decliners tended to have characteristics conducive to extreme volatility and market misconduct: multiple relationships between different companies and listed brokerage firms, high shareholding concentrations, low volume and small public floats. Oh, and questionable underlying collateral value, which due to cross-asset holdings, means that a selloff in one company would promptly hit the entire sector.

That’s precisely what happened on Tuesday and again on Wednesday, when the selloff continued and the GEM market fell to a new record low as a swathe of small-cap stocks continue to tumble in the wake of Tuesday’s $6bn drop.  On Wednesday, the S&P/HKEX Growth Enterprise Market index fell as much as 2.3% to 279.17 on Wednesday, the lowest intraday level on record for the index and down 11.8% in the week to date.

According to the FT, among the worst-hit GEM stocks on Wednesday was GreaterChina Professional Services, down another 39.1% on Wednesday, while fellow GEMs WLS Holdings and Hao Wen Holdings had dropped 56.3% and 48.7% , respectively.

As noted previously, Hong Kong Exchanges & Clearing Ltd., which proposed sweeping changes to its small-cap market earlier this month to revive confidence in the venue, said it couldn’t explain Tuesday’s moves. It was unable to add more color on Wednesday either.

Demonstrating once again just how incapable of fundamental analysis the market has become, while the stocks highlighted by Webb barely budged when he released his report in May, they accounted for all but three of Tuesday’s 20 biggest losers in Hong Kong.

In total, 38 of the 50 stocks flagged by Webb fell on Wednesday. By the close, the S&P/HKEX GEM Index dropped another 0.8%, following Tuesday’s 9.6% rout.

Ultimately, as Bloomberg notes, “whatever the catalyst for the selloff, investors can’t say they weren’t warned. As Webb flagged six weeks ago and reiterated on Tuesday: “A lot of the stocks were very overvalued.”

Ironically, the market is now ignoring similar warnings by none other than Yellen, Fischer and Dudley. We wonder how long until a similar “post-mortem” phrasing will be applied to the broader S&P market, when “nobody could have possibly foreseen the coming crash.”

end

 

4. EUROPEAN AFFAIRS

EU

What an absolute joke.  It is obvious that these morons have no idea what to do next. Now Draghi tells the market that they have misjudged his comments.  To me, he was quite direct:

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

end

6 .GLOBAL ISSUES

Canadian dollar spikes to a 5 month high with the Governor and his deputy both suggesting an end to low interest rates

(courtesy zerohedge)

7. OIL ISSUES

Oil got a little reprieve today on a larger than expected gasoline draw and production tumbles the most since last August

(courtesy zero hedge)

WTI/RBOB Jump On Gasoline Draw As US Crude Production Tumbles Most Since August

Last night’s unexpected API builds kneejerked prices lower but a weaker dollar helped levitate WTI/RBOB into the DOE print. While tropical depression Cindy may have affected the data, DOE reports a small build in crude (expectations for a draw) but all eyes were on gasoline which drew 894k, well below API’s build levels and expectation of no change. Production in the Lower 48 fell 55k b/d – the biggest drop since Aug 2016 (likely impacted by Cindy).

 

API

  • Crude +851k (-2.25mm exp)
  • Cushing -678k
  • Gasoline +1.351mm (unch exp)
  • Distillates +678k (+350k exp)

DOE

  • Crude +118k (-2.25mm exp)
  • Cushing -297k (-600k exp)
  • Gasoline -894k (unch exp)
  • Distillates -223k (+934k exp)

Figures will be tricky to interpret because of impact from tropical depression Cindy, and notably the Colonial Pipeline shipping demand fell to its lowest level in six years indicating the East Coast is well-supplied and the economics to ship from the Gulf Coast are unattractive.

The levels are de minimus for sure…but enough to spike WTI/RBOB withg their extreme positioning…

 

As Bloomberg’s Javier Blas notes, forget about crude oil, look at gasoline. The glut in crude appears to be shifting into products as refiners run their plants at record pace. As the 10-year seasonal chart below shows, U.S. gasoline stocks remain above the highest level for this time of the year.

 

Tropical Depression Cindy will likely have had some impact on U.S. oil production last week, as Bloomberg’s Brad Gilbert notes that shutting in about 3 percent of the most recently reported lower 48 production number on 06/21 and 06/22. That being said, the impact should still be small and against increasing production, lower 48 production this weeks looks like it could drop by about 60,000 barrels a day as a result.  

And it did – Lower 48 Production fell 55k b/d last week – the biggest drop since Aug 2016…

A tumbling dollar (on more comments from Sintra this morning) helpe rejuvenate WTI/RBOB prices overnight and while the initial algo reactrion was to kneejerk lower, prices are rising back to pre-API levels…

“We think the oil price will continue to range trade from $40/bbl to $55/bbl for the foreseeable future,” says James Butterfill, head of investments and research at ETF Securities. “It doesn’t surprise me that the oil price is starting to stabilize now as it’s close to our lower end of $40 a barrel”

end

8. EMERGING MARKET

Coup attempt in Venezuela.  It failed but Maduro’s days are numbered

(courtesy zero hedge)

Venezuela’s Maduro Says Armed Group “Started A Coup”, Used Helicopter To Drop Grenades

In an incident that is oddly reminiscent to the “failed coup” in Turkey from last June, late on Tuesday a rogue Venezuelan police helicopter strafed the Supreme Court and the interior ministry on Tuesday, in what President Nicolas Maduro called an attack by “terrorists seeking a coup” and which major news agencies said was an escalation of the OPEC nation’s political crisis, although to some local Venezuelans this was a staged attempt to justify ongoing repression at Venezuela’s National Assembly.

According to Reuters, the helicopter fired 15 shots at the Interior Ministry, where dozens of people were gathered at a social event, after dropping four grenades on the Supreme court during a meeting of judges, although there were no reports of injuries. Opponents to Maduro view the symbolic Interior Ministry as a bastion of repression and also hate the Supreme Court for its string of rulings bolstering the president’s power and undermining the opposition-controlled legislature.

President Nicolas Maduro, speaking on state television after the incident, said people flying a helicopter conducted an “armed terrorist attack against the country’s institutions” and added that “this is the kind of armed escalation I have been denouncing.”

President says an armed group has started a coup, with a stolen helicopter used to drop grenades.

Maduro said one of the helicopter pilots served as pilot for former Interior Minister Migue Rodriguez Torres, a critic of Maduro, and said that an air defense plan was immediately activated while calling on the pPblic Prosecutor’s office to take action against “terrorist attack.”

“Sooner rather than later, we are going to capture the helicopter and those behind this armed terrorist attack against the institutions of the country,” Maduro said. “They could have caused dozens of deaths.”

After Maduro’s speech, Venezuela’s government confirmed the helicopter was stolen by “investigative police pilot” Oscar Perez, who declared himself in rebellion against Maduro. Images posted on social and local media show Perez waving a banner from the helicopter reading “Liberty”, and the number “350” in large letters. The number refers to the constitutional article allowing people the right to oppose an undemocratic government.

View image on TwitterView image on Twitter

| Oscar Perez flying stolen helicopter that dropped grenades on Supreme Court. pics via twitter.

A video posted on Perez’ Instagram account around the same time showed him standing in front of several hooded armed men, saying an operation was underway to restore democracy.

| Oscar Perez declares war after attacking supreme court. says theres union bet citizens police & soldiers to topple Maduro

Perez said in the video he represented a coalition of military, police and civilian officials opposed to the “criminal” government, urged Maduro’s resignation and called for general elections. “This fight is … against the vile government. Against tyranny,” he said. Local media also linked Perez to a 2015 action film, Suspended Death, which he co-produced and starred in as an intelligence agent rescuing a kidnapped businessman.

Additionally, on Tuesday, witnesses reported hearing several detonations in downtown Caracas, where the pro-Maduro Supreme Court, the presidential palace and other key government buildings are located. Roughly at the same time, Venezuela National Guard shut down major roads concerned about potential coup, with various small clashes reported breaking out.

National Guard shut down major roads concerned about potential coup. Small clashes already reported

The alleged “terrorist coup” caps a volatile period of three months of often violent protests from opposition leaders who decry the 54-year-old socialist leader as a dictator who has wrecked a once-prosperous economy. More troubling for Maduro, in recent weeks there has also been growing dissent too from within government and the security forces, which have traditionally been aligned with the regime.  At least 75 people have died, and hundreds more been injured and arrested, in the anti-government unrest since April according to Reuters.

While demonstrators have been demanding general elections, as well as measures to alleviate a brutal economic crisis, freedom for hundreds of jailed opposition activists, and independence for the opposition-controlled National Assembly legislature, Maduro has responded that the locals are seeking a coup against him with the encouragement of a U.S. government eager to gain control of Venezuela’s oil reserves, the largest in the world.

* * *

And yet this is where the comparisons emerge with the “failed Turkish coup” to “remove” Erdogan last summer, which most admit was a staged attempt meant to further entrench the despotic president.

While Venezuela opposition leaders have long been calling on Venezuela’s security forces to stop obeying Maduro, following yesyerday’s event, there was speculation among opposition supporters on social media that the attack could have been staged to justify repression or cover up drama at Venezuela’s National Assembly, where two dozen lawmakers said they were being besieged by pro-government gangs.

Earlier in the day, Bloomberg reported that pro-government “violent groups” shot fireworks into the National Assembly gardens under the watch of security forces, opposition lawmaker Henry Ramos Allup wrote on Twitter.

National Guard bursting into National Assembly building in . Apparently beating up lawmakers

Allup wrote that National Guard officers had stored boxes belonging to the electoral council in their National Assembly offices.Opposition lawmaker Delsa Solorzano wrote on Twitter that National Guard officers assaulted lawmakers at National Assembly, while opposition lawmaker Amelia Belisario said lawmakers were assaulted for “demanding responses regarding electoral material” National Guard brought into National Assembly.

Military attack senators of national congress in 🇻🇪

As Reuters adds, earlier on Tuesday, Maduro warned that he and supporters would take up arms if his socialist government was violently overthrown by opponents. “If Venezuela was plunged into chaos and violence and the Bolivarian Revolution destroyed, we would go to combat. We would never give up, and what couldn’t be done with votes, we would do with arms, we would liberate the fatherland with arms,” he said.

“If Venezuela was plunged into chaos and violence and the Bolivarian Revolution destroyed, we would go to combat. We would never give up, and what couldn’t be done with votes, we would do with arms, we would liberate the fatherland with arms,” he said.  And what better way – at least in his eyes – to generate some empathy ahead of the “great war” with the domestic and international community, than to be cast as the tragic victim of a “terrorist coup” attempt.

Additionally, Maduro is pushing a July 30 vote for a special super-body called a Constituent Assembly, which could rewrite the national charter and supersede other institutions such as the opposition-controlled congress. He has touted the assembly as the only way to bring peace to Venezuela. But opponents, who want to bring forward the next presidential election scheduled for late 2018, say it is a sham poll designed purely to keep the socialists in power. They have announced a boycott of the coming vote, and protesting daily on the streets to try and have it stopped.

Finally, for good measure, Maduro decided to threaten the US, which he has repeatedly accused of being behind the social turmoil and said the “destruction” of Venezuela would lead to a huge refugee wave dwarfing the Mediterranean migrant crisis.

“Listen, President Donald Trump,” he said earlier on Tuesday. “You would have to build 20 walls in the sea, a wall from Mississippi to Florida, from Florida to New York, it would be crazy … You have the responsibility: stop the madness of the violent Venezuelan right wing.”

Opposition to the July 30 vote has come not just from Venezuelan opposition parties but also from the chief state prosecutor Luisa Ortega and one-time government heavyweights such as former intelligence service boss Miguel Rodriguez. As Reuters notes, Rodriguez criticized Maduro for not holding a referendum before the Constituent Assembly election, as his predecessor Chavez had done in 1999.

“This is a country without government, this is chaos,” he told a news conference on Tuesday. “The people are left out … They (the government) are seeking solutions outside the constitution.”

While many are skeptical, if today’s “coup” attempt was legitimate, and if opposition to Maduro is indeed at a tipping point among the security forces and military, then not only are Maduro’s days numbered, but in the political and power vacuum that will result following the change in regime, the last thing Venezuela will be able to focus on is maintaining oil production (even if China were to paradrop a group of engineers to its oil vendor state). In which case, crude oil may once again become a barometer of geopolitical tensions; as such keep an eye on the price of oil for the best indication of how close Maduro is to vacating the Caracas presidential palace for the last time.

end

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

Euro/USA   1.1356 UP .0020/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA FALLING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE RED 

USA/JAPAN YEN 112.17 DOWN 0.017(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2823 UP .0011 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.3093 DOWN .0092 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 20 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1356; 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  DOWN 17.99 POINTS OR 0.56%     / Hang Sang  CLOSED DOWN 156.49 POINTS OR 0.61% /AUSTRALIA  CLOSED UP 0.74% / 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 94.68 POINTS OR 0.47%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 156.49 POINTS OR 0.61%  / SHANGHAI CLOSED DOWN 17.99 POINTS OR 0.56%   /Australia BOURSE CLOSED UP 0.74% /Nikkei (Japan)CLOSED DOWN 94.68 POINTS OR 0.47%    / INDIA’S SENSEX IN THE RED

Gold very early morning trading: 1253.05

silver:$16.79

Early WEDNESDAY morning USA 10 year bond yield: 2.244% !!! UP 9 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  2.793, UP 8  IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 96.28 DOWN 11  CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 2.98%  DOWN 9 in basis point(s) yield from TUESDAY 

JAPANESE BOND YIELD: +.064%  UP 2  in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.425% DOWN 7  IN basis point yield from TUESDAY 

ITALIAN 10 YR BOND YIELD: 2.028 DOWN 4  POINTS  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 60 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.368% DOWN 1/8 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.13720 UP .0036 (Euro UP 144 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.14 DOWN  0.049 (Yen UP 5 basis points/ 

Great Britain/USA 1.2942 UP 0.01303( POUND UP 130 basis points) 

USA/Canada 1.3038 DOWN .0145 (Canadian dollar UP 145 basis points AS OIL ROSE TO $44.57

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This afternoon, the Euro was UP  by 36 basis points to trade at 1.1372

The Yen ROSE to 112.14 for a GAIN of 5  Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE BY 145  basis points, trading at 1.2942/ 

The Canadian dollar ROSE by 145 basis points to 1.3192,  WITH WTI OIL RISING TO :  $44.57

The USA/Yuan closed at 6.7990/
the 10 yr Japanese bond yield closed at +.064% UP 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1 IN basis points from TUESDAY at 2.2156% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.7690  UP 1 in basis points on the day /

Your closing USA dollar index, 96.08  DOWN 31 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 46.56 POINTS OR 0.63%
German Dax :CLOSED DOWN 23.75 POINTS OR 0.19%
Paris Cac  CLOSED DOWN 5.68 POINTS OR 0.11% 
Spain IBEX CLOSED UP 54.80 POINTS OR 0.51%

Italian MIB: CLOSED  UP 256.94 POINTS/OR 1.24%

The Dow closed UP 143.95 OR 0.68%

NASDAQ WAS closed UP 87.79 POINTS OR 1.43%  4.00 PM EST
WTI Oil price;  44.57 at 1:00 pm; 

Brent Oil: 47.13 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.37 UP 1/100 ROUBLES/DOLLAR (ROUBLE LOWER BY 1 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +0.368%  FOR THE 10 YR BOND  4.PM EST EST

END

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

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

WTI CRUDE OIL PRICE 5:00 PM:$44.84

BRENT: $47.41

USA 10 YR BOND YIELD: 2.228%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.7810%

EURO/USA DOLLAR CROSS:  1.1376 up .0039

USA/JAPANESE YEN:112.26  DOWN 0.088

USA DOLLAR INDEX: 96.05  down 35  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2923 : UP 110 POINTS FROM last NIGHT  

Canadian dollar: 1.3032 UP 151  BASIS pts 

German 10 yr bond yield at 5 pm: +0.3680%

END

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

TRADING IN GRAPH FORM FOR THE DAY

Dollar Dumped, Tech Stocks Pumped As Central Banker Bias Turns Tighter

More crappy data and every central banker in the world turning hawkish… BTFD you idiots!!

 

As we noted earlier… there’s only one thing standing…

 

Before the US cash open, The ECB desperately tried to jawbone back Draghi’s comments from yesterday… it was met with an instant reaction lower (in Bund yields and EURUSD) but the rest of the day saw that reaction entirely erased…

 

The ECB chatter did impact US equities early on…

 

Nasdaq was crazy today, with chaotic moves all over the place as every effort was made to ensure the tech-heavy index closed above the May close of 6198.5…

 

 

The bounce occurred right at the 50DMA…

 

FANG Stocks bounced off the tech-wreck day lows…

 

The entire equity complex saw v-shape recovery today.. which started at 10ET following dismal home sales data…NOTE – Dow, S&P, Trannies, and Small Caps went nowhere after Europe closed, Nasdaq kept on running. Little selling pressure into the close…

 

Nasdaq was unable to recover yesterday’s losses and the S&P ended unch from Monday’s close…

 

The driver of the panic-bid – simple – another huge short-squeeze at the open and lasted through the European close… (today was  the biggest short-squeeze since the first day of March)

 

Banks were bid and Utes were offered today ahead of the stress test results…

 

As rates and the yield curve has plunged in June, so the big banks have been bought…round-tripping today from the CAR results last week…

 

Despite the manic buying in stocks, bonds limped only 1-2bps higher (with 2Y yields actually down 2bps on the day)…

 

The Dollar Index extended its losses after Carney and Poloz comments in Sintra… the Dollar Index is now at pre-Fed-hike levels…

 

Funnily enough USDJPY (green below) was deadstick as everything flew around in FX land (and Kuroda warned the world that “there’s no magic wand.”)

 

Poloz restating his bias towards higher rates sent CAD surging most since March 15th to its strongest since Feb 2017…“The Poloz comments buttress the change in tone that we’ve seen from the Bank over the past month,” said Bipan Rai, Toronto-based senior foreign-exchange and macro strategist at Canadian Imperial Bank of Commerce. “There’s still some speculative shorts out there are being squeezed as a result.”

 

Cable also extended yesterday’s gains after Carney hinted at stimulus withdrawal… (biggest gain since April and strongest since the election)

 

WTI and RBOB bounced notably after DOE inventory and production data…

 

Gold and silver managed to close higher also as the dollar sank…

 

Finally, as Bloomberg notes, high-beta stocks are no longer in sync with the S&P 500, sending a cautionary signal to equity bulls.

The S&P 500 High Beta Index turned south before each of the last two stock corrections. The high-beta index peaked in February 2011, more than two months before the S&P 500’s apex that March. Again in 2015, the high-beta index peaked about a month before the S&P 500. In 2017, the high-beta index peaked in February yet has failed to recover with the broader market.

end

 

Interesting:  two out of 3 patients cannot afford their hospital bills thanks to the high and soaring deductibles:

 

(courtesy zero hedge)

2 Out Of 3 Patients Can’t Afford Their Hospital Bills Thanks To Obamacare’s Soaring Deductibles

We’ve spent a lot of time over the past couple of years talking about soaring healthcare premiums brought on by Obamacare. The price increases have been outright crippling for those forced to buy policies on the exchanges, up well over 100% over the past 4 years, on average, with some states up over 200%.

 

But premiums aren’t the only part of health plans that have soared under Obamacare.  For those people who are lucky enough to actually be able to afford a plan, you simply bought yourself the opportunity to cover even more of your healthcare costs out of pocket as deductibles have also soared.

Deductibles

 

In fact, a new study from TransUnion Healthcare reveals that 2 out of 3 patients (68%) couldn’t afford to pay their hospital bills in full in 2016, up from 49% in 2014.

A new TransUnion Healthcare analysis revealed a significant rise in the percentage of patients that didn’t pay their hospital bills in full. Approximately 68% of patients with bills of $500 or less did not pay off the full balance during 2016 – up from 53% in 2015 and 49% in 2014.

 

“There are many reasons why more patients are struggling to make their healthcare payments in full, the most prominent of which are higher deductibles and the increase in patient responsibility from 10% to 30% over the last few years,” said Wiik, author of the book and also principal for healthcare revenue cycle management at TransUnion. “This shift in healthcare payments has been taking place for well over a decade, but we are seeing more pronounced changes in how hospital bills are paid during just the last few years.”

But that’s not even the worst of it, patient responsibility on 14% of hospital bills in 2016 exceeded $3,000, an obligation which only 1% of patients were able to cover on a timely basis.

– 63% of hospital bills were $500 or less; of those hospital bills, 68% were not paid in full in 2016.

 

– 14% of hospital bills were $3,000 or more; of those hospital bills, 99% were not paid in full in 2016.

 

– 10% of hospital bills were $500 to $1,000; of those bills 85% were not paid in full in 2016.

Meanwhile, the soaring deductibles are putting even more pressure on razor thin hospital margins and have caused a rash of closures since 2010.  Per CNBC:

The Affordable Care Act has given more people access to health care, but it has driven deductibles up, in some cases, making it harder for patients to pay, said John Yount, TransUnion’s vice president of product for the health-care division. Hospital margins are already between only 2 and 4 percent on average, Yount said, and that margin quickly narrows when more patients can’t pay their bills.

 

“What it means is as a patient takes on more responsibility, then it is likely that that debt, which is a component of uncompensated care, has a potential to increase for hospitals,” Yount said. “It’s likely that as they provide services and their bad debt increases, it could be difficult to continue certain operations.”

 

Since 2010, 79 rural hospitals have closed, according to the North Carolina Rural Health Research Program. Yount warned that number will continue to increase if more patients can’t pay their bills.

So fight on, Democrats.  Obamacare is clearly a piece of legislation worth saving.

END

A great question:  is the status of Illinois and Puerto Rico the future for most?

(courtesy Pat Buchanan via Buchanan.org)

 

Goldman No Longer Believes Republicans Can Repeal Obamacare: Here’s Why

One month after Goldman gave up on Trump being able to pass any major (or minor) tax package in 2017, overnight – in the aftermath of Senate GOP’s deplorable failure to find the needed 51 votes to ” repeal and replace” Obamacare- Goldman’s Washington analyst Alec Phillips throws up his hands, and no longer believes that passage of Obamacare is possible.

In a note that looks at the current state of health legislation, titled appropriately enough “Nearing the End”, Goldman summarizes that Senate Republican leaders have postponed the vote on health legislation that had been tentatively scheduled this week. A vote is possible in two weeks, but further delays are possible.

Phillips does note that there are still some arguments in favor of eventual enactment: Republicans will be under pressure to follow through on a long-standing political commitment, and the estimated deficit reduction and tax cuts in the health bill could be useful in passing tax legislation later. Fixing the existing program for the coming year will also be necessary.

However, he is skeptical and says that “these factors are likely to be outweighed by the political obstacles. Estimates of the potential increase in the uninsured population seem unlikely to improve substantially even after revisions to the bill. Public support for the effort is also weak, and intraparty divisions appear to pose too many obstacles. At this point, enactment of broad health legislation like the House passed or the Senate is contemplating seems unlikely.

That said, Goldman is not too worried about the implications of the Senate’s failure, saying that “the prospects for passage should also be somewhat less important to broader financial markets than they might have been several months ago. The debate over health legislation is likely to end—either with enactment or a failed vote—by mid- to late July, allowing the rest of the budget process to proceed, eventually leading to consideration of tax legislation. In the less likely scenario that broad health legislation is enacted, there would be few near-term economic effects as most of the changes do not take effect until 2020.”

Goldman’s full note:

Health Legislation: Nearing the End

Markets are once again focused on the potential for a congressional vote on health legislation, this time regarding the Senate’s Better Care Reconciliation Act (BCRA). This is presumably due to the need to move beyond the health bill before tax legislation can be addressed, as discussed below, and because of the broader signal that passage of a health bill might send regarding the rest of the Trump agenda.

However, the effort to replace the Affordable Care Act (ACA) has been set back once again with the announcement that no vote will be held for at least another two weeks. At that point, there are three potential options:

  • Passage: If Senate Republican leaders are able to muster a majority in favor of a health bill, the bill would move back to the House for at least one more vote. The outcome there would depend on the details of the final product, but a bill that can manage to win support of 50 of 52 politically diverse Senate Republicans would probably be able to pass the House and become law.
  • Defeat: Major legislation is rarely rejected on the House or Senate floor, since congressional leaders usually know whether there is adequate support. However, it is clearly possible that this bill could end in a failed vote; if Senate Republican leaders determine that there is very little chance of ever coming up with an acceptable compromise, they might allow a vote against the bill to provide a more definitive end to the process and, possibly, as a way to pivot to a short-term bipartisan effort to stabilize the individual health insurance market for 2018.
  • Delay: As of this writing, Senate Republican leaders have opted to delay the vote for at least two weeks, until the week of July 10. A delay could be interpreted as a sign that Republican leaders believe there is a chance of gaining support over the next two weeks for a modified bill. However, it might also simply signal that leaders are not quite ready to give up on the effort, even if they recognize that the odds of eventual enactment are low. Further delays cannot be ruled out, though we would be very surprised if the Senate debate continues past late July.

The situation is fluid but at this point our expectation is that the Senate will ultimately fail to pass broad health legislation similar to the House-passed bill or the recently introduced Senate legislation. While we see this as a fairly close call, our view is based on the following considerations:

  • Coverage estimates: While it is certainly possible that the Congressional Budget Office (CBO) will estimate that the next iteration of the Senate proposal will increase the projected uninsured population by less than the 22 million increase it estimated would result under the most recent proposal, this seems unlikely to change substantially. Repeal of the individual mandate alone has been estimated to reduce coverage by 15 million, and the repeal of the Medicaid expansion and the cap on the future growth rate of the program would reduce coverage further.
  • Public support: The Affordable Care Act (ACA) is much more popular than the pending legislation, and even among Republican voters views are mixed (Exhibit 1). One problem congressional Republicans face is that public sentiment regarding the ACA has shifted since the debate began, possibly because the public has become more aware of the coverage expansion under the ACA.
  • Thin margins: Even with Vice President Pence casting the tie-breaking vote, 50 of 52 Republicans would need to support the bill. This means bridging the gap between the most conservative senators (shown at the top of Exhibit 2) and centrist Republicans (toward the bottom of Exhibit 2) and those representing swing states (to the left of Exhibit 2).
  • Medicaid politics: 20 Republican senators represent states that have expanded Medicaid under the ACA. While many of them appear likely to support the bill, the proposed cuts have been difficult for some expansion-state Republicans to support, including Senators Capito, Heller, Murkowski and Portman.

Exhibit 1: The ACA has become more popular recently

Source: Real Clear Politics, Goldman Sachs Global Investment Research

Exhibit 2: Opposition at both ends of the political spectrum

Source: Federal Election Commission, Voteview, Goldman Sachs Global Investment Research
Of course, there are arguments in favor of eventual passage. These include:

Campaign commitments: After House Republican leaders postponed a long-awaited vote on their health legislation earlier this year, it had appeared that debate might turn to other issues on the agenda. However, the health effort was of such political consequence that Republican leaders ultimately returned to the issue. It is possible that congressional Republicans will continue to press the issue until health legislation is enacted, even if it takes a while longer. That said, our sense is that Senate Republican leaders like Sen. McConnell have a limited appetite for further debate on health care, as discussed below.

Fiscal benefits: The Senate health legislation has two potential benefits for the rest of the fiscal agenda. First, CBO estimates that the bill would reduce the deficit by $321 billion over the next ten years. These savings could potentially be redirected toward other legislative efforts, like tax reform. Second, the bill repeals the taxes enacted in the ACA, reducing revenues by $563 billion over ten years. By offsetting these tax cuts with the spending cuts in the health legislation, this would relieve pressure on congressional Republicans to address the repeal of ACA taxes in tax reform legislation later. That said, our expectation is that the final Senate bill, if it passed, would probably not save more than the $119bn the House bill was estimated to save. While helpful, this would not meaningfully change the outlook for tax reform.

Fixing the existing program: The Senate legislation includes $50bn over the next four years for this purpose, as well as explicit funding for cost-sharing reduction (CSR) payments (the uncertainty surrounding the Trump Administration’s willingness to continue making CSR payments had led some insurers to increase their proposed premiums for 2018). If the Senate does not approve the pending legislation or something similar, congressional Republicans may attempt to pass a more narrowly focused package to stabilize the individual insurance market which includes the subsidized plans offered through “exchanges”.

While the health debate is clearly relevant, in our view it is becoming less important to the broader agenda, for a few reasons:

  • The debate on the current health bill will end soon, one way or the other: Market participants have focused on the health vote in large part because it is seen as a prerequisite to passing tax reform. The health bill is being considered under the 2017 budget cycle, through the “reconciliation” process that allows for Senate passage with a simple majority (i.e., potentially only Republican votes). Since Congress can consider only one reconciliation bill for tax and spending per budget cycle, and budget cycles cannot overlap, Congress must conclude its debate on the healthcare bill before it can formally begin considering tax reform. If the Senate passes the bill in the next few weeks, the process could then turn to the FY18 budget resolution, followed by tax reform. But it seems unlikely that the Senate will debate health legislation after July, so whether it passes or whether it fails, health legislation seems unlikely to delay tax legislation much further.
  • There isn’t much signaling value left: Earlier this year, the health debate was seen as a signal of how successful the Trump Administration and congressional Republicans might be in getting other aspects of the agenda through Congress. However, at this stage, it seems fairly clear that intraparty disputes and a thin margin in the Senate have made sweeping reforms difficult. As a result, eventual Senate passage of the health legislation wouldn’t meaningfully change our expectation of what might be possible regarding tax reform, for example.
  • Health legislation is unlikely to have substantial economic effects in the near-term. While the current legislative debate on health care could have important consequences for those enrolled in subsidized benefits and, to a lesser extent, enrollees in the individual market more generally, it seems unlikely to meaningfully affect the economic outlook, for two main reasons. First, most of the reduction in benefits would take place in 2020 and beyond. In 2018 and 2019, the bill would actually increase the deficit by about $30bn each year, as the value of the tax cuts starting in 2018 more than offsets the spending cuts. Second, the ACA’s disinflationary effect is unlikely to reverse as a result of this legislation. We previously estimated that two policies accounted for most of the policy-related slowdown in medical inflation over the last couple of years: the cuts to the growth rate of Medicare reimbursements and the shift of the uninsured into the Medicaid program, which pays less for a given service than most other sources of coverage. The legislation would not reverse the Medicare cuts. If legislation is enacted it might result in a gradual reversal of the coverage effect but probably only in 2020 and beyond.

Over coming days, we expect to hear more regarding potential modifications to the original Senate proposal. If progress is made during the remainder of the week, it is possible that a revised CBO estimate could be produced not long after the Senate returns from recess on July 11. A vote looks possible anytime between late in the week of July 10 and the end of July, though at this point the odds seem stacked against Senate passage.

end

Another indicator of a weakening economy: pending home sales tumble to the same level achieved in June 2013

 

(courtesy zero hedge)

Pending Home Sales Tumble, Unchanged Since June 2013

After modest bounces in existing and new home sales (despite weakness in starts and permits and mortgage application declines), pending home sales in May tumbled 0.8% MoM and were revised even lower (-1.7%) in April. This dismal print was below all economists’ expectations, missing by 4 standard deviations.  

This is the 3rd straight monthly drop and 2nd straight annual decline in pending home sales.

 

The biggest MoM decline was in The West (down 1.3%), but as the chart below shows, Pending Home Sales are now unchanged since June 2013.

The index is now 1.7 percent below a year ago, which marks the second straight annual decline and the most recent since November and December of last year.

NAR notes that prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.

Weaker financial and economic confidence could also be playing a role in the slowdown in contract activity. NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey, released earlier this week, found that fewer renters think it’s a good time to buy a home, and respondents overall are less confident about the economy and their financial situation than earlier this year.

“Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales.”

end

The war between WalMart and Amazon has just heated up: WalMart will no longer do business with any trucking company that does business with Amazon

(courtesy zero hedge)

 

We will see you THURSDAY night

Have a great evening

Harvey.

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