July 10/Gold and silver rebound/Friday witnesses an astronomical volume of 165,000 contracts/Italy and Germany becomes outraged with migrants: Italy wants to end immigration;Germany witnesses the introduction of Sharia law in Berlin/Mosul,Iraq is liberated/OIl tumbles into the 43 dollar column/Avery Goodman commentary on why gold/silver have been suppressed/FBI determines that Comey leaked classified information in the release to the public/Trump is very angry at that/

GOLD: $1213.90  UP $3.50

Silver: $15.71  UP 28  cent(s)

Closing access prices:

Gold $1214.00

silver: $15.66

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: $1211.73 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1211.50

PREMIUM FIRST FIX:  $10.23

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SECOND SHANGHAI GOLD FIX: $1215.44

NY GOLD PRICE AT THE EXACT SAME TIME: $1208.95

Premium of Shanghai 2nd fix/NY:$6.49

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LONDON FIRST GOLD FIX:  5:30 am est  $1207.55

NY PRICING AT THE EXACT SAME TIME: $1221.30  

LONDON SECOND GOLD FIX  10 AM: $1211.95

NY PRICING AT THE EXACT SAME TIME. $1209.75  ??? 

For comex gold:

JULY/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH:  1 NOTICE(S) FOR 100  OZ.

TOTAL NOTICES SO FAR: 62 FOR 6200 OZ    (.1928 TONNES)

For silver:

JULY

 61 NOTICES FILED TODAY FOR

305,000  OZ/

Total number of notices filed so far this month: 2323 for 11,615,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

Let us have a look at the data for today

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In silver, the total open interest SURPRISINGLY ROSE BY 141 contract(s) UP to 207,946 DESPITE THE MONSTROUS FALL IN PRICE THAT SILVER TOOK WITH FRIDAY’S TRADING (DOWN 53 CENT(S) ON TOP OF THE  CONSTANT TORMENT THESE PAST FEW WEEKS. It could only mean that if the commercials did cover some contracts, the speculators were coaxed into going short. The Washington generals (specs) are being set up for the kill. 

 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.040 BILLION TO BE EXACT or 149% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 61 NOTICE(S) FOR 305,000  OZ OF SILVER

In gold, the total comex gold SURPRISINGLY ROSE BY 2,464 CONTRACTS DESPITE THE  FALL IN THE PRICE OF GOLD  ($13.40 with FRIDAY’S TRADING). The total gold OI stands at 475,295 contracts.

we had 1 notice(s) filed upon for 100 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: 835.35 tonnes

.

SLV

Today: STRANGE: AFTER AN EARLY HIT ON SILVER THIS MORNING, WE HAD A HUGE RISE IN  INVENTORY OF 2.921 MILLION OZ/

INVENTORY RESTS AT 344.662 MILLION OZ

Please note the difference between gold and silver with respect to the GLD and SLV inventory changes

end

.

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

1. Today, we had the open interest in silver  ROSE BY 141 contracts  UP TO 207946 (AND now A LITTLE CLOSER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787), DESPITE THE HUGE FALL IN PRICE FOR SILVER WITH FRIDAY’S TRADING  (DOWN 53 CENTS ).We  SEEM TO HAVE LOST NOBODY AS  EVERYBODY remains firm and determined. It could also mean that some commercials got to cover but new speculators entered the market on the short side. The COT report on Friday reported just that: commercials going net long and the speculators going net short in the time period ended July 3.2107

(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 SUNDAY night/MONDAY morning: Shanghai closed DOWN 5.3251 POINTS OR 0.17%   / /Hang Sang CLOSED UP 159.21 POINTS OR 0.63% The Nikkei closed UP 151.89 POINTS OR 0.76%/Australia’s all ordinaires CLOSED UP 0.23%/Chinese yuan (ONSHORE) closed DOWN at 6.8046/Oil DOWN to 43.79 dollars per barrel for WTI and 46.32 for Brent. Stocks in Europe OPENED MIXED LEANING TO  RED,,   Offshore yuan trades  6.80074 yuan to the dollar vs 6.7990 for onshore yuan. NOW THE OFFSHORE IS A TOUCH WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN  WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT  HAPPY TODAY

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA

 No doubt that the following is the correct solution to the North Korean situation( Scott Adams)

ii)Two B 1 B bombers hold live fire drills over the Korean peninsula.  North Korea is not happy

( zero hedge)

iii)North Korea warns that the USA bombing drill is provoking a potential for a “nuclear war”

( zero hedge)

b) REPORT ON JAPAN

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

i)Italy

Italy’s elite is outraged after Renzi has had enough with the migrant.  He now states that Italy which has been taking in the lions share has no moral duty to take on more migrants

( zero hedge)

ii)Germany

Just look at the trouble that Merkel got herself into with respect to the migrants.  Now the “Chechen” sharia police are terrorizing Berlin:
see below
( SoerenKern/Gatestone Institute)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)MOSUL,IRAQ

Mosul is liberated from the ISIS

( zero hedge)

ii)Saudi Arabia/Russia

This is important:  Saudi Arabia seems to be wishing to change its only focus is on the USA as they now lean to Russia.

No doubt Russia and Saudi Arabia can develop LNG natural gas projects which will be against the Iran/Qatar LNG project.

( Gorka/Strategic Culture Foundation)

6 .GLOBAL ISSUES

i)Canada

The high prices for homes in Canada is coming to an end as the bubble burst.  This may present a huge problem for Canadian banks.

( zerohedge)

ii)G20 summary

The G20 event was really a nothing event.  They do reach a compromise on trade where the uSA agrees with the rest of them not to have protectionism.  However climate control is out of the question

( zero hedge)

7. OIL ISSUES

i)Oil tumbles back into the 43 dollar column.  Jawboning is having no effect

( zero hedge)

ii)The uSA inventory drop that the bulls were so excited is no real feat.  The oil was exported overseas

(courtesy zero hedge)

8. EMERGING MARKET

9.   PHYSICAL MARKETS

i)THE CRIME SCENE ON FRIDAY

(COURTESY RONAN MANLY/BULLIONSTAR)

ii)A must read from Avery Goodman.  Goodman a lawyer by trade, comments on why gold has been heading south these past few weeks and it is now ready for a major upward move. Two key points here: the uSA is engaging in huge number of gold swaps with the Bank of England and this is how gold is leaving England for Singapore and onto China.  The second point is the that he believes Trump has not gotten around to ending the executive order whereby this gold is authorized to the swapped in the first place..or the Goldman boys just have told him yet of this nefarious action’

( Avery Goodman/seeking alpha.)

iii)A key audio of Mike Gleeson interviewing Chris Powell

you must listen to this:

( GATA/ChrisPowell)

iv)This is what happens when you try and buy/sell paper gold/silver

( Bloomberg)

v)Silly!! what is ailing gold:  futures market rigging or newletter bullishness?

( GATA/Chris Powell)

vi)These guys have no chance as the gold and silver are unallocated.  The ABX system which uses the blockchain technology to track holdings and is backed 100% by physical gold and silver.  In other words, the ABX system is “bitcoin” backed by gold and silver

(Bloomberg/Eddie VanDer Walt)

vii)Why this one trader thinks that silver’s plunge is nearing completion. He states it is due to interest rates. I think it is near the end because the commercials have been going net long for the past 10 days while inducing the specs to go net short

( zero hedge)

viii)Gold is pouring into India with reckless abandon.  In the first half of this year, the total imports equates to 521 tonnes.  This puts it on course to bring in over 1000 tonnes and this does not include smuggling which is probably over 250 tonnes/yr.

(Andrew Topf, Mining.com)

10. USA Stories

i)A bombshell:  the leaking of Trump’s memos has been deemed to contain classified information.  The irony then is that Comey will face the identical potential charges as Hillary Clinton

( zero hedge)

ii)Trump responds: Comey has leaked classified information to the media and that is illegal

( zero hedge)

iii)Decimation in the bricks and mortar operations as Abercrombie failed to get one suitor for its once high flying retail apparel business

( zero hedge)

Let us head over to the comex:

The total gold comex open interest SURPRISINGLY ROSE BY 2,464 CONTRACTS up to an OI level of 475.205 DESPITE THE FALL and continual whacking  IN THE PRICE OF GOLD ($13.40 with FRIDAY’S trading). An open interest of around 390,000 to 400,000 is core and nothing will move these guys from their contracts. The gain in open interest probably means that some commercials got to cover some contracts but new speculators entered the market on the short side. The COT report on Friday reported just that: commercials going net long and the speculators going net short in the time period ended July 3.2107. If this is so then our Washington Generals (specs) are being set up for the kill.

We are now in the contract month of JULY and it is one of the POORER delivery months  of the year. .

The non active July contract GAINED 28 contract(s) to stand at 84 contracts. We had only 3 notices filed YESTERDAY morning, so we GAINED 31 contracts or an additional 3100 oz that will  stand in this non active month of July.  Thus 0 EFP notices were given which gives the long holder a fiat bonus plus a futures contract for delivery and most likely these are London based forwards.  The contracts are private so we do not get to see all the particulars. The next big active month is August and here the OI GAINED 1037 contracts UP to 284,770, as the bankers trying to keep this month down to manageable size. The next non active contract month is September and here they picked up another 129 contracts to stand at 459. The next active delivery month is October and here we gained 252 contracts up to 18,693.  October is the poorest of the active gold delivery months as most players move right to December.

We had 1 notice(s) filed upon today for 300 oz

For those keeping score: in the upcoming front delivery month of August:

On July 11.2016:  open interest for the front month: 415,860 contracts compared to July 10.2016:   284,770.

However last yr at this time we had a record OI in gold at 655,000 contract for the entire complex.

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And now for the wild silver comex results.  Total silver OI  ROSE BY  141 contracts FROM 207,805 UP TO 207,946 WITH FRIDAY’S  53 CENT LOSS AND CONSTANT TORMENT THESE PAST FEW WEEKS. 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.THEY MAY HAVE COVERED SOME SHORTS BUT THE ONLY EXPLANATION IS THAT NEW SPECULATORS ENTERED THE MARKET ON THE SHORT SIDE. IF SO AND THE COT REPORT SEEMS TO CONFIRM THIS, THEN THE SPECULATORS ARE BEING SET UP FOR THE KILL. 
THE OTHER BIG NEWS IS THE FACT THAT AS WE ENTERED FIRST DAY NOTICE AND BEYOND  WE HARDLY HAD ANY OBLITERATION OF OPEN INTEREST. THIS IS THE FIRST TIME THIS HAS HAPPENED IN OVER 2 YEARS.

We are now in the next big active month will be July and here the OI LOST 196 contracts DOWN to 270. We had 292 notices served  yesterday so we  gained 96 notices or an additional  480,000 oz will stand at the comex, and 0 EFP contracts were issued which entitles them to receive a fiat bonus and a future delivery contract (which no doubt is a London based forward).

The month of August, a non active month gained 217 contracts to stand at 682.  The next big active delivery month for silver will be September and here the OI already LOST  614 contracts up to 158,127.

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 JULY 2016:  12.370 million with the difference being EFP’s taking delivery in London.  Thus we are basically on par to what happened a year ago as to the total amount of silver ounces standing.

We had 61 notice(s) filed for 305,000 oz for the June 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 131,072 contracts which is fair/

Yesterday’s confirmed volume was 345,708 contracts  which is excellent

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for JULY
 July 10/2017.
Inventory movements not available today due to the length of time to cook the books
Gold Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  
 NOT AVAILABLE
Deposits to the Dealer Inventory in oz NIL  oz
Deposits to the Customer Inventory, in oz 
NIL oz
No of oz served (contracts) today
 
1 notice(s)
100 OZ
No of oz to be served (notices)
83 contracts
8300 oz
Total monthly oz gold served (contracts) so far this month
62 notices
6200 oz
.1928 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   3,279.402 oz
 Inventory movements not available today as the CME had problems cooking the books
Today we HAD  0 kilobar transaction(s)/ 
We had 0 deposit into the dealer:
total dealer deposits: NIL oz
We had NIL dealer withdrawals:
total dealer withdrawals:  NIL oz
we had no dealer deposits:
total dealer deposits:  nil oz
we had 0  customer deposit(s):
total customer deposits; NIL  oz
We had 0 customer withdrawal(s)
 we had 0 adjustment(s):
 
For JULY:

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

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To calculate the initial total number of gold ounces standing for the JULY. contract month, we take the total number of notices filed so far for the month (62) x 100 oz or 6,200 oz, to which we add the difference between the open interest for the front month of JUNE (84 contracts) minus the number of notices served upon today (1) x 100 oz per contract equals 14,500  oz, the number of ounces standing in this NON active month of JULY.
 
Thus the INITIAL standings for gold for the JULY contract month:
No of notices served so far (62) x 100 oz  or ounces + {(84)OI for the front month  minus the number of  notices served upon today (1) x 100 oz which equals 14,500 oz standing in this  active delivery month of JUNE  (0.4510 tonnes)
We GAINED 31 contracts or AN ADDITIONAL 3100 oz will  stand and 0 EFP contracts were issued as described as above.
.
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Total dealer inventory 827,122.459 or 25.72 tonnes  (dealer gold continues to disappear)
Total gold inventory (dealer and customer) = 8,613,422.571 or 267.91 tonnes 
 
Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 267.91 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 11 MONTHS  86 NET TONNES HAS LEFT THE COMEX.
end
And now for silver
Again inventory levels not available today as the CME had extreme trouble cooking the books
AND NOW THE June DELIVERY MONTH
 
JULY INITIAL standings
 July 10 2017
Silver Ounces
Withdrawals from Dealers Inventory  nil
Withdrawals from Customer Inventory
 N/A
Deposits to the Dealer Inventory
nil  oz
Deposits to the Customer Inventory 
 N/a
No of oz served today (contracts)
 61 CONTRACT(S)
(305,000 OZ)
No of oz to be served (notices)
211 contracts
( 1,055,000 oz)
Total monthly oz silver served (contracts) 2323 contracts (11,615,000 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 492,469.6 oz
today, we had  0 deposit(s) into the dealer account:
total dealer deposit: nil   oz
we had Nil dealer withdrawals:
total dealer withdrawals: nil oz
we had N/A customer withdrawal(s):
TOTAL CUSTOMER WITHDRAWALS:   n/a oz
We had n/a Customer deposit(s):
i
***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: n/a oz
 
 we had n/a adjustment(s)
The total number of notices filed today for the JULY. contract month is represented by 61 contract(s) for 305,000 oz. To calculate the number of silver ounces that will stand for delivery in JULY., we take the total number of notices filed for the month so far at 2323 x 5,000 oz  = 11,615,000 oz to which we add the difference between the open interest for the front month of JULY (270) and the number of notices served upon today (61) x 5000 oz equals the number of ounces standing
 

 

.
 
Thus the INITIAL standings for silver for the JULY contract month:  2323 (notices served so far)x 5000 oz  + OI for front month of JULY.(270 ) -number of notices served upon today (61)x 5000 oz  equals  12,670,000 oz  of silver standing for the JULY contract month.
We  gained 96 contracts for an additional 480,000 oz  that will stand at the comex and 0 EFP’s were issued. This is the first time in quite a while that we had both silver and gold ounces increasing in their amount standing in the front month and this was done during a raid!!
 
 
 
 
Volumes: for silver comex
Today the estimated volume was 69,571 which is huge
FRIDAY’s  confirmed volume was 165,003 contracts which is  HUGE
FRIDAY’S CONFIRMED VOLUME OF 165,003 CONTRACTS EQUATES TO 825 MILLION OZ OF SILVER OR 117% 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:  38.503 million (close to record low inventory  
Total number of dealer and customer silver:   211.859 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 5.8 percent to NAV usa funds and Negative .60% to NAV for Cdn funds!!!! 
Percentage of fund in gold 63.8%
Percentage of fund in silver:36.1%
cash .+0.1%( July 10/2017) 
2. Sprott silver fund (PSLV): STOCK   NAV  RISES TO +.93% (July 10/2017) 
3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.79% to NAV  (July 10/2017 )
Note: Sprott silver trust back  into POSITIVE territory at +0.593/Sprott physical gold trust is back into NEGATIVE/ territory at -0.79%/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

July 10/no changes in gold inventory at the GLD/inventory rests at 835.35 tonnes

July 7/a massive withdrawal of 5.32 tonnes of paper gold were removed and this was used in the attack today/inventory rests at 835.35 tonnes

July 6/no changes in tonnage at the GLD/Inventory rests at 840.67 tonnes

July 5/A MASSIVE 5.62 TONNES OF GOLD LEFT THE GLD AND NO DOUBT WAS USED IN THE RAID THIS MORNING/INVENTORY REST

July 3/ A MASSIVE 7.37 TONNES OF GOLD LEAVE THE GLD/INVENTORY RESTS AT 846.29 TONNES

June 30/no change in gold inventory at the GLD/Inventory rests at 853.66 tonnes

June 29/no change in inventory at the GLD/inventory rests at 853.66 tonnes

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

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July 10 /2017/ Inventory rests tonight at 835.35 tonnes
*IN LAST 186 TRADING DAYS: 111.78 NET TONNES HAVE BEEN REMOVED FROM THE GLD
*LAST 127 TRADING DAYS: A NET  15.65 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY.
*FROM FEB 1/2017: A NET  28.77 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory

July 10/ A HUGE INCREASE OF 2.931 MILLION OZ OF SILVER DESPITE THE EARLY HIT ON SILVER THIS MORNING/INVENTORY RESTS AT 344.662 MILLION OZ.

July 7/Strange: no change in inventory (compare that with gold) Inventory rests at 341.731 million oz

July 6/ANOTHER MASSIVE DEPOSIT OF 2.126 MILLION OZ INTO THE SLV INVENTORY/INVENTORY RESTS AT 341.731 MILLION OZ.

July 5/STRANGE! NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 339.605 MILLION OZ

July 3/strange! with the huge whacking of silver we got an increase of 379,000 oz into inventory.

June 30/no change in silver inventory at the SLV/Inventory rests at 339.226 million oz

June 29/no change in silver inventory at the SLV/Inventory rests at 339.226 million oz/

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

July 10.2017:
 Inventory 344.662  million oz
end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.09%
  • 12 Month MM GOFO
    + 1.40%
  • 30 day trend

end

Here is a review of the 3 latest comex waterfall (whacks) on gold and silver not including the current one we are undergoing.  I have taken the nadir of the gold price before it started to rise again and compared it to OI in both gold and silver with the OPEN INTEREST.  The OI readings are the following day but we are always one day behind so this compares exactly to the nadir price.
First waterfall ended Oct 6 2016/ Nadir price of gold at that date Oct 6 2016 : $1254.70 / OI for gold Oct 7/2016: 511,340//OI for silver/Oct 7.2016: 194,811
Second waterfall ended Dec 15.2016:Nadir Price of gold Dec 15.2016:      $1128.20              //OI for gold Dec 16/2016 401,798// OI for silver: Dec 16/16 161,570
Third waterfall ended May 10/2017: Nadir Price of gold May 10 2016:   $1220.95              //  OI for gold May 11: 425,252//  OI for silver May 11/17: 199,826
and for comparison while we are undergoing another waterfall these past several weeks
 Today’s price of gold $1210.0                                                                                                    OI for gold today: 475,295//Oi for silver  207,946
The first waterfall corresponds to a silver price of $17.30 on Oct 6
The second waterfall corresponds to a silver price of $15.90 on Dec 15
The third waterfall corresponds to a silver price of $17.37 on May 10
and today:  silver price of $15.42
Since the bottom of the second waterfall the price of gold at its nadir is about the same ($1220 and $1226), but the OI for gold is much higher along with silver OI also much higher. (425,252 and 477,641 OI for gold) accompanying  199,826 and 210,827 OI for silver)
It seems the data suggests power manipulation to control the price through paper!
end

Major gold/silver trading/commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

China, Russia Alliance Deepens Against American Overstretch

– China and Russia allied on Syria and North Korea
– Beijing & Moscow economic & monetary ties deepen
– Trump needs Russia in order to maintain balance of power in superpower triumvirate
– Sino-Russian relations currently in their “best time in history” says Chinese President ahead of G20

– China, Russia call for calm diplomacy on Syria, Korea
– China, Russia “fed up with Washington’s pursuit of hegemony”
– US is “biggest source of global strategic risks” according to China state media
– Important calm and diplomacy prevails to prevent nuclear war

‘Trump and Putin meet for the first time and the handshake wasn’t what you expected!’ read the headline on my in-flight entertainment newsfeed, on Friday afternoon.

I’m not sure what the Mirror website thought I was expecting the handshake between the US and Russian leader to be like, but by all accounts it was a relatively normal handshake given it was no doubt the most important diplomatic meeting of 2017.

The handshake between the US and Russian Presidents was always going to be newsworthy, no matter who was in power but not since the Cold War have the stakes been so high in a meeting between the two leaders.

The meeting was scheduled for 30 minutes, but went on for more than 2 hours. Both men continuously praising one another. One of the outcomes of the meeting was an announcement by Trump that the two countries would work together on cybersecurity.

This prompted much derision from senior politicians, Republican Senator Lindsey Graham said: “It’s not the dumbest idea I’ve ever heard, but it’s pretty close.”

The decision to work with Russia was described as a ‘significant’ accomplishment’ by Treasury Secretary Steve Mnuchin. Then, in classic Trump-style, the US president backtracked on the proposal to work with Russia tweeting “The fact that President Putin and I discussed a cybersecurity unit doesn’t mean I think it can happen. It can’t.”

This move by Trump is not uncommon. He has seemingly flip-flopped since his election campaign on working alongside or against the world’s two other superpowers, Russia and China. When it comes to Russia, Trump’s less-than-slick management of his special White House advisory team has meant that the US President has not got far with Putin.

Last week a UN report stated that nationalism, protectionism and attitudes of “my country first” posed threats to the United Nation’s global goals. It seems that now more than ever Trump must get relations with the super powers, onto an even keel.

Trump is aware that the US has similar issues with Russia and that it must get Putin on side to a degree or at least neutral in order to confront the more powerful China. The US needs to work with President Xi Jinping on globally important matters such as North Korea. But there are elephants in the room which also must be confronted, namely currency manipulation, trade, climate change and deepening tensions in the South China Sea.

As James Rickard’s writes, “one power in a three-power game, it is essential to have an alliance with the other power, or at least keep it neutral. The US needs a neutral or friendly Russia before it confronts China.”

But, at the beginning of last week observers were asking if Russia and China were perhaps getting too close for the United States’ liking or advantage. Perhaps the calamitous arrival of Trump and his new approach to diplomacy (i.e. tweet it) has opened up an opportunity for both Putin and Xi Jin-ping to push ahead with their alliance. The outcome of which may be a lesson in how the US must stop overreaching when it comes to geopolitics.

Sino–Russian relationship: Entente or alliance?

Ahead of the G20 meeting last week China’s President Xi Jin-ping met with President Putin in Moscow. This was Xi’s sixth visit to Russia since becoming president, and the third meeting between the two heads of states in the last six months. Neither country has ever referred to the other as an ally, but the meeting was strategic in terms of the Sino–Russian comprehensive relationship, both politically and economically.

During the two day meeting, the two countries signed deals which will allow Russia to bypass Western sanctions by China agreeing to fund investments in Russia worth billions of dollars. Both the Russian Direct Investment Fund (RDIF), a sovereign wealth fund and VEB, Russia’s state development bank are subject to US sanctions. But both have now signed deals with China Development Bank. The deals will will finance infrastructure and development projects as well as a new innovation fund.

The purpose of the US and Western sanctions was to cut Russia off from long term financing in the U.S. and EU. These new deals will be set up in Russia and China’s own currencies and are a demonstration to the West that Russia cannot be cut off from major trading partners and the global market place and the US no longer has the means or power to do so.

It is worth reminding readers at this point of Putin’s comments last year that both

“Russia and China need to secure their gold and foreign reserves.”

It’s unlikely Putin was speaking out of turn by mentioning China’s monetary policy. Both countries central banks continue to increase their gold reserves and are accumulating large gold in anticipation of currency wars reigniting in the coming months.

Concerns about systemic risk and the coming devaluation of the dollar, euro and other major currencies has led to ongoing diversification into gold bullion by large creditor nation central banks such as Russia and China.

Influential state media Chinese daily, the Global Times, reported last Monday that China and Russia have decided to deepen their ties because they are “fed up with Washington’s pursuit of hegemony.”

The US and other Western countries are yet to pass comment on these new deals. It is likely that they are each treading carefully, fully aware that they need Russia and China on side when it comes to more pressing matters such as Syria and North Korea.

Whilst neither Russia nor China mentioned the US in relation to the two countries’ meetings, nor were they mentioned in joint statements, it was easy enough to connect the dots in terms of where both Putin’s and Xi’s concerns lie.

“To strengthen global strategic stability’ is a new way of speaking to remind people of the US being the biggest source of global strategic risks,” explained the Global Times.

“The joint statements (show) both Beijing and Moscow are fed up with Washington’s pursuit of hegemony. Beijing and Moscow have confirmed that their relationship is not an alliance, and it is not aimed at a third party. The affirmation is not rhetoric, but their real deliberation.

A China-Russia alliance, which will bring a game-changing impact on world order, is not in the interests of either side. They are more willing to develop all-out diplomacy and maintain a normal relationship with the Western world. However, the US efforts to encroach on China and Russia’s strategic room has rendered an interdependence between Beijing and Moscow over some core interest issues.”

In the name of national sovereignty

Russia and China appear to be working together on the basis of preserving national sovereignty. For too long the US has used many means to advance its own goals of so-called democratisation around the world. One example is NGOs, both international and domestic. Even Colin Powell once spoke of the US advancing its own goals in terms of democratising authoritarian regimes and market economics.

“I have made it clear to my staff here and to all of our ambassadors around the world that I am serious about making sure we have the best relationship with the NGOs who are such a force multiplier for us, such an important part of our combat team.”

More recently the US has been exceptionally vocal about how it will ‘manage’ regimes with which it does not agree. This has seemingly been seen as an overstep too far especially as they have been far-reaching in who to blame for various issues.

Nikki Haley is one of the most prominent figures in this aggressive form of US ‘diplomacy’. The US ambassador to the United Nations followed a bizarre White House press release about a supposed Syrian gas attack with the following tweet

“Any further attacks done to the people of Syria will be blamed on Assad, but also on Russia & Iran who support him killing his own people.”

Haley has positioned herself as both judge and executioner, not only in regard to Syria but also the more powerful Russia and Iran. So far Haley remains in her position, with little criticism from the White House.

Meanwhile, it is clear that both Russia and China are resentful of America’s actions when it comes to Syria. Both are apparently suspicious that the U.S. is attempting to stir up trouble in the hope of eliminating unwanted political leaders.

Diplomacy lessons, from Russia and China

When Putin and Xi met last week, they expressed their mutual concerns regarding both Syria and North Korea not in a tweet or in a cloud of emotion but in a far more diplomatic fashion. They released joint-statements calling for calm.

“The sides emphasize that in matters of chemical weapons in Syria, all parties, with respect to Syrian sovereignty, must support the efforts of the Organization for the Prohibition of Chemical Weapons [OPCW] and relevant UN structures to conduct an independent and comprehensive investigation in order to obtain irrefutable evidence, establish genuine circumstances and draw conclusions that are capable of withstanding the verification by facts and time.”

Calling for calm heads and diplomacy the statement went on to state that both China and Russia ‘strongly condemn any use of chemical weapons anywhere and by anyone.’

Calm heads is the opposite of Nikki Haley who is about as subtle at diplomacy as Trump is with a blonde Irish reporter invited into the Oval office.

Any alliance (whether formal or otherwise) between two countries as powerful as Russia and China, in the Middle East is the last thing the US wants to be fighting against.

The call for calm will not only reverberate well throughout countries in the Middle East and North Africa which have been devastated by the ongoing wars in the region. It will also resonated well with European nations which are becoming destablised by the massive exodus of desperate people from destroyed states into the EU, creating a wave of populist backlash.

This call for calm and peace has been particularly reflected in the Qatar crisis. Last Monday China’s UN ambassador said the best way for the crisis to be resolved was to employ the radical solution of…letting the four countries sit down, talk diplomatically, negotiate and thereby sort it out themselves.

The power of China in the face of nuclear war

Both China and Russia are concerned and strongly opposed to the controversial US missile system known as the Terminal High Altitude Area Defense (THAAD) positioned in South Korea, to defend against North Korea.

Despite assurances to the contrary, China are concerned the missiles could be trained on China itself. Russia is also concerned about the positioning of the missiles and issued a joint-statement citing “strong opposition against the unilateral installation of anti-missile systems in Europe and Asia-Pacific by some specific countries at the expense of others’ security interests.”

When it comes to North Korea, no one is ignoring the real threat that exists. But, both Putin and Xi are calling for restraint on both sides. In the same joint statement, they called for ‘a mutual freeze on Pyongyang’s nuclear program and U.S.-South Korean military manoeuvres in the region.’

The US needs to tread carefully here as China is their only real hope when it comes to settling the North Korea crisis peacefully. China is all too aware of the amount of leverage it has over North Korea and, therefore, America. The People’s Republic of China accounts for over 75% of North Korean exports, this gives it a huge amount of power when it comes to sanctions on the country.

Not everyone is convinced that China’s help with North Korea is with the desire to reduce their nuclear power. Adam Mount, a senior fellow at the liberal Center for American Progress expressed concern over China and Russia’s joint approach, “I think we need to be aware of the possibility that China and Russia could take a step back from containing the regime and move towards increased diplomatic recognition, which could someday lead to their recognition of North Korea as a nuclear state.”

Will the triumvirate ever exist?

At the moment there are three main superpowers. Will they ever exist in a true triumvirate, or is the tussle of power too great and the outcomes desired too different?

At the moment it seems they all hold leverage over one another in various ways. But, for the first time in modern history the US isn’t able to bring the most amount of chips to the table.

For too long the US has believed that threats and sanctions alone will keep the Russia and China’s ideas of grandeur, in check. But the world has been changing for a while, with Sino-Russian relations taking advantage and preparing accordingly.

It seems the arrival of Trump and his erratic and badly managed team has exacerbated pre-existing trends and given Putin and Xi with the opportunity to further advance themselves as two emerging superpowers in a world which is moving from US hegemony to a multi polar world.

News and Commentary

Gold prices edge down on steady dollar, firmer stocks (India Times)

India imports more gold in H1 than all of 2016 (Mining.com)

Another Bullion Flash Crash Is Testing Traders (Bloomberg)

Gold Buyers Flee a Month After Their Most Bullish Bet of ’17 (Bloomberg)

Gold prices down a fifth week in a row; silver drops to lowest in over a year (Marketwatch)

Giant Metals Exchange Is Taking on the Gold Elite (Bloomberg)

Global Silver Mine Production Drops in 2016 for First Time in 14 Years (Silver Institute)

Silver Sinks In Market Mystery (Pound Sterling Live)

Where are Slavs on ‘Gold Reserve’ map of Europe (Slavorum)

Qatar’s hoard of $340 billion and gold bullion means it’s not worrying about the current boycott (CNBC)

Gold Prices (LBMA AM)

10 Jul: USD 1,207.55, GBP 938.63 & EUR 1,060.11 per ounce
07 Jul: USD 1,220.40, GBP 944.47 & EUR 1,068.95 per ounce
06 Jul: USD 1,224.30, GBP 946.14 & EUR 1,077.51 per ounce
05 Jul: USD 1,221.90, GBP 945.87 & EUR 1,078.45 per ounce
04 Jul: USD 1,224.25, GBP 947.32 & EUR 1,078.81 per ounce
03 Jul: USD 1,235.20, GBP 952.09 & EUR 1,085.00 per ounce
30 Jun: USD 1,243.25, GBP 957.43 & EUR 1,090.83 per ounce

Silver Prices (LBMA)

10 Jul: USD 15.22, GBP 11.82 & EUR 13.36 per ounce
07 Jul: USD 15.84, GBP 12.29 & EUR 13.88 per ounce
06 Jul: USD 16.01, GBP 12.36 & EUR 14.09 per ounce
05 Jul: USD 15.95, GBP 12.36 & EUR 14.09 per ounce
04 Jul: USD 16.15, GBP 12.48 & EUR 14.23 per ounce
03 Jul: USD 16.48, GBP 12.72 & EUR 14.49 per ounce
30 Jun: USD 16.47, GBP 12.69 & EUR 14.44 per ounce


Recent Market Updates

– Silver Prices Bounce Higher After Futures Manipulated 7% Lower In Minute
– Precious Metals Are “Best Defence” Against Bail-ins In Economic Crisis
– Buy Gold Near $1,200 “As Insurance” – UBS Wealth
– UK House Prices ‘On Brink’ Of Massive 40% Collapse
– Gold Up 8% In First Half 2017; Builds On 8.5% Gain In 2016
– Pensions Timebomb In America – “National Crisis” Cometh
– London Property Bubble Bursting? UK In Unchartered Territory On Brexit and Election Mess
– Shrinkflation – Real Inflation Much Higher Than Reported
– 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

END

THE CRIME SCENE ON FRIDAY

(COURTESY RONAN MANLY/BULLIONSTAR)

CME Stays Silent on Cause of COMEX Silver Flash Crash

BullionStar's picture

Submitted by Ronan Manly, BullionStar.com

Silver futures prices on the COMEX futures trading platform briefly plummeted at approximately 7:06am Singapore time yesterday, with the price for the front month (most active) September silver contract falling from a US$16.06 quote down to a low of US$14.34 all within  a 1 minute interval. The futures price then recovered nearly all of its losses in the subsequent 2-3 minute period. High to low, this COMEX silver futures contract saw its price fall by just over 10.7%, before rebounding nearly 11%.

During this time when the COMEX price crashed, there was nothing fundamentally happening in the wider financial markets, or indeed in the physical silver market, to justify these price gyrations in COMEX silver futures prices. Which all goes to show that the COMEX ‘paper’ futures silver prices is completely detached from the physical silver market, and that COMEX silver futures prices have no anchoring in the real silver market.

This price movement in the September 2017 silver futures contract (contract code SIU7 aka SIU17) can be seen in the below 1-minute tick candlestick chart from CME. Times in the chart are New York Time (NYT), which is 12 hours behind Singapore.

During this one minute period between 19:06 NYT and 19:07 NYT, the SIU7 contract saw trading volume of 4954 contracts (the 4.954K in the chart below), with the price falling from a high of 16.065 to a low of 14.34, before ending that minute period at US$ 14.68.

The COMEX SI silver futures contract, which is a deliverable contract but which in practice is rarely delivered; is a futures contract for 5000 troy ounces of silver. The 4954 contracts traded during the 1 minute period in theory represent 24.77 million ounces (770 tonnes) of silver and would be valued at $397.8 million at the opening price of US$ 16.06 at 19:06 NYT.

Overall within these 4 minutes, more than 8,300 September silver contracts were traded.

COMEX September Silver futures (SIU7): Flash crash at 19:06 NYT 6th July

Following this 1 minute flash crash, in the subsequent minute between 19:07 NYT and 19:08 NYT,  the SIU7 contract price rebounded sharply, rising from US$ 14.67 to US$ 15.62 on a trading volume of 1495 contracts. This rebound reflected in the below chart which also shows the opening and closing prices of each minute period. The price continues to rebound between 19:08 and 19:09 on volume of 936 contracts to close the minute at US$ 15.07, and then between 19:09 and 19:10, the price again closed higher at US$ 15.90 on volume of 932 contracts.

Overall, from the low quote of US$ 14.34, the price had rebound within the next 3 minutes to US$ 15.90, a rebound of 10.95%, and just 1% lower than the price had been (US$ 16.06) 4 minutes earlier.

COMEXSept Silver futures (SIU7): Rebound between 19:07 – 19:10 NYT 6th July

Note that the same price flash crash also affected the next most actively traded COMEX silver contract for December 2017 (code SIZ7). See COMEX silver futures summary table below, and notice the lows for the September 2017 and December 2017 contracts at US$ 14.34 and US$ 14.44, respectively.

CME Summary table of COMEX Silver Futures contract prices showing Highs and Lows

What caused this momentary price plummet in the COMEX silver futures is not clear. This is because the CME Group, operator of the COMEX futures platform, has provided no explanation for these price gyrations. Possible causes could include market illiquidity, deliberate manipulation, a trading error or errors, or algorithmic trading programs triggering stop losses or inducing abnormal trading patterns. The flash crash in silver at 19:06 NYT also rippled into COMEX gold trading during the same minute (19:06 NYT), causing the COMEX August 2017 gold futures (contract code GCQ7), which had been minding its own business trading in a tight band around US$1224, to stage its own sharp drop from which it didn’t recover through the remainder of the Asian day. Perhaps this was the intention, to get gold lower via its sidekick silver.

COMEXAugust Gold futures (GCQ7): 19:06 NYT on July 6

Until the CME Group releases a statement on this (which it probably won’t as it never does), the exact cause of this futures price flash crash remains unclear. What the CME did do yesterday however was as follows: At 19:06:38, the CME systems implemented a 10 second halt in the COMEX silver futures contracts. Within 20 minutes, CME made an announcement in a messaging broadcast that it was reviewing all SIU7 (September futures) trades that had taken place under US$ 15.84 and all SIZ7 (December futures) trades that had taken place under US$ 15.94. After another 20 minutes, CME announced in a messaging broadcast that for SIU7, any trades executed below US$ 15.54 would be adjusted up to US$ 15.54, while for SIZ7, all trades executed below 15.64 would be adjusted up to US$ 15.64.

These speedily introduced price adjustments would appear to suggest that the CME Group quickly determined that whatever caused the sharp price falls in the COMEX silver futures prices was not part of normal COMEX futures market trading, and that the CME made the call to back out and cancel at least some of the effects of this abnormal market trading. This would also seem to suggest the CME found evidence of something untoward, either price manipulation, or unfair algorithmic trading, or unjustified stop-loss triggering etc.

While these ‘paper’ trading markets in the form of the OTC London silver market and the COMEX futures market unfortunately do have a real impact on the international silver price that is inherited by physical silver markets, this latest pricing fiasco on the COMEX again demonstrates that COMEX trading of precious metals futures and London trading of fractionally-backed unallocated precious metals spot and forwards contracts are becoming more and more detached from the underlying reality of the physical gold and silver markets. In time, this may also have an adverse effect on investor sentiment in the paper markets which could a trigger a shift in gold and silver price discovery away from paper and towards physical.

This article originally appeared on the BullionStar website as “CME Stays Silent on Cause of COMEX Silver Price Glitch“.
end
 A must read from Avery Goodman.  Goodman a lawyer by trade, comments on why gold has been heading south these past few weeks and it is now ready for a major upward move. Two key points here: the uSA is engaging in huge number of gold swaps with the Bank of England and this is how gold is leaving England for Singapore and onto China.  The second point is the that he believes Trump has not gotten around to ending the executive order whereby this gold is authorizied to the swapped in the first place..or the Goldman boys just have told him yet of this nerfarious action’
(courtesy Avery Goodman/seeking alpha.)

RECENT GOLD PRICE DECLINES = THE CUSP OF A MAJOR UPWARD MOVE

July 8, 2017

I received an email from one of my readers on the July 4th holiday. He expressed dismay at the recent gold take-down that occurred at the end of June and on July 3rd. I am sure he is even more distressed, now, with the huge take down that happened on July 7th. He wondered how bankers can still have the power to pull off big reductions in gold prices whenever they choose? It is a question that is flowing through the minds of many people. They are still doing it, in spite of a relatively successful ongoing lawsuit against manipulation of the London gold fix, and in the face of a gold-friendly Presidential administration.

All I can say is that patience is a virtue that is always rewarded. The people who are orchestrating these market manipulations, in the gold market and elsewhere, are extraordinarily ruthless and well-connected. The bullion banks are deeply enmeshed with governments throughout the Western world, and they’ve been doing this for a long time.

On top of that, they receive an average of about 7 tons of new gold every single day from the mining companies. It can be used to fill the extra demand caused by their shenanigans in the very short term. Also, it seems likely that they will continue to draw gold out of the US Gold Reserve. The fact that the gold market is tight, however, as illustrated by backwardation between the futures and the physical gold price in London, does imply that their access to the US Gold Reserve is not unlimited.

The reason they get 7 tons of new gold to play with, every day, is that mining companies are foolish enough to sell to them, at whatever price is created by the London “fix.” Regardless of the outward trappings, and even when it is cured of whatever corruption recently went with it, the fix is largely determined by manipulations on the paper gold market in New York (a/k/a COMEX). If mining company executives developed a backbone and took joint action to reject the legitimacy of COMEX pricing, the power of the banks over the gold market would end. Miners could refuse to sell their product at a fake price. If they did that, everything would change.

Unfortunately, these same miners also rely on these same banks to finance their operations. The banks are a source of ready cash to pay executive salaries. In addition, a bad recommendation from a major bank’s research department torpedoes a mining company’s stock price and cuts into the personal wealth of mining executives who are paid in part by stock bonuses. Adding to the problem, many of the banks are directly or indirectly represented on mining company boards of directors. In other words, the mining companies are not likely to take a stand against the manipulating banks.

The game would also come to a screeching halt if the flow of sovereign gold from America dried up. The fact that the not-so-elusive “gold supplier of last resort” is the US government is so obvious that it is almost laughable. US Treasury is supplying a huge amount of gold into the world market. No other entity could do it. Someone is supplying the massive gap between supply and demand that has existed since gold prices were taken down from their equilibrium point between $1,500 and $1,600 in early 2013.

I don’t want to get into the details of the gap between supply and demand. Nor do I have space to describe in detail exactly how gold is manipulated. Doing so would make this article too long, and I’ve already done it. My past articles and the thriller novel, “The Synod”, provide the information you need. But, to put things in context, I will say this. The US government is supplying location swaps on gold stored inside the official US gold reserve to the Bank of England. The British central bank, in turn, is releasing gold bars into the market in London. Those gold bars do not belong to the UK. They belong to customers of the Bank of England. That’s why they need the location swaps.

The policy of occasionally using the US gold reserve to suppress gold prices is an old one, going as far back as the 1970s. There is documentation of a huge swap that happened between the US Treasury and Bank of England in 1980, just about a month before the collapse of gold prices from their height of $850. However, the huge gap between supply and demand since 2013 means that the policy was vastly expanded under Obama. Again, I can’t triple the size of this article by going into the specific details here, and you can read my past articles and The Synod to find out everything you need to know.

When the Trump administration finally gets around to reversing Obama’s secret executive order, which began authorizing this liberal gold swap policy in April 2013, the price of gold will soar. At the moment, it seems, that is not going to happen overnight. The attention of the Trump administration has been diverted into a myriad of squabbles. Key players, who might otherwise be active in reviewing matters that would bring an end to this short-sighted foolishness are too busy putting out petty political fires. An enormous flow of American treasure continues to flow out of the United States.

That said, the manipulating banks know that the game ends when US gold swaps end. That means they must allow prices to rise before that happens. Otherwise, they’ll be at risk of holding enormous short positions at the worst possible moment. Right now, they are continuing to make money by painting the tape and trading gold as non-connected people react to it. They are also very busy ridding themselves of legacy short positions. In other words, they are “making hay while the sun shines.” Plenty of money can be made by artificially inducing movements in the paper gold market.

Bullion bankers are getting rid of legacy short positions by carefully orchestrating their price attacks. The basic game is simple. Manipulators initially sell enough additional short positions to cause a price decline sufficient to trigger the stop-loss orders of leveraged speculators. They know the price points at which speculators have concentrated those orders. That’s because the speculators are either directly or indirectly (though a clearing broker) customers of the manipulating banks.

Once the first set of stop-loss orders is triggered, prices are catalytically dropped much further than the manipulators could achieve directly. The bigger fall in prices also catalyzes further drops because it causes more automated stop-loss selling, and finally the triggering of automated margin call selling. This adds to the downward pressure. Prices drop still further. That leads to more stop-loss selling, more declines, more margin call selling and, finally, after the process burns itself out, the tape ends up painted with a spectacular price drop.

The price instability causes panic among speculative long buyers in the futures markets. Secondarily and temporarily, it will also catalyze some physical buyers to lower their bids, in the hope of getting a cheap buy. That relieves some physical demand pressure ordinarily caused by a massive price drop, in the very short run. Meanwhile, in the midst of the chaos, the manipulating entities slowly and deliberately liquidate the new transient short positions and also get rid of huge numbers of the legacy short positions they may have been rolling over for years.

The most recent “Commitments of Traders” report, issued by the CFTC on July 7, 2017, proves that the bankers are doing exactly what I have described. By the end of trading on July 3rd (the date the data was collected) the so-called “commercials” (a/k/a bullion banks) had shed 10,176 and the swap dealers (divisions of those same bullion banks) had shed a whopping 27,701 short positions. That’s a total reduction of 37,877 short positions as of the end of trading on the July 3rd smack-down date!!

The price smash allowed bullion bankers to shed 3,787,700 troy ounces worth of bets that gold will decline. In other words, that one day of “playfulness” allows them to avoid losing more than $1.1 billion dollars on COMEX alone, assuming the price of gold rises by $300 by the end of the year. Indeed, we have no way of knowing what they were doing in the London market, because the information is kept secret. The over-the-counter leveraged forwards market is five times as big as the more visible COMEX. That means that the bullion banks probably avoided more than $6 billion dollars in losses by pulling their stunt on July 3rd.

It didn’t stop there. They did the same thing on July 7th. You can be absolutely sure that they shed tens of thousands of additional short positions on that day, too. That’s because the tape was painted again, in virtually the exact same manner, resulting in the same type of panic and forced liquidation among leveraged long speculators. The so-called “managed money” (a/k/a hedge fund managers) took on a lot of the short positions. Some of them are going to be called upon to deliver a lot of real gold come August. It is gold they don’t have, obviously.

Let’s take a look at the Commitments of Traders report…

The bullion bankers would not be shedding huge numbers of short positions if they thought the price was going to go down a lot further. They obviously know that prices are about to go up. Meanwhile, the hidden gold flow from America to the rest of the world keeps the scam in play. That hemorrhage of gold, from the USA, is partially illustrated by data that is publicly released. From January to April 2017, for example, a net 88 tons of gold flowed out of the USA, according to the US Geological Survey. If this pace continues, and it has been very steady month to month, a net excess of 264 tons of gold will leave the USA in 2017. That is more gold than all the mines in America will produce!

Note that the vast majority of gold exported from the USA is NOT in the form of gold ore or dore (gold that hasn’t been fully refined yet). Yet, a vast majority of the world’s refining companies are based in Switzerland, not the USA. In spite of that, the United States is mostly exporting pure gold bullion. I believe that part of that comes from deliveries on the COMEX exchange, which may be directly supplied by physical gold in the Federal Reserve’s basement vault in NYC. Once delivered on COMEX, apparently, that gold is probably being shipped overseas. Another part may be gold bars provided directly to big New York banks to fill orders by customers overseas.

At any rate, these statistics ONLY account for visible gold outflows in the form of bars of gold that are leaving the USA because they have been shipped directly to commercial buyers. “Monetary” physical gold transactions (gold passing between central banks) and gold “swaps” are not accounted for. Gold swaps, which are almost certainly the main method by which gold is delivered from the US Gold Reserve to the world market, via the Bank of England, are also absent from the statistics.

A “location swap” is an agreement to supply gold in one location in exchange for a lien on gold in another. The gold upon which the lien is placed is usually located in an inconvenient location (a/k/a Fort Knox, West Point, The Denver Mint etc.). Taking the gold directly out of the US holding areas would involve demobilization of army units, a public spectacle. The public nature would insure a huge political fight and the inability to keep the activity a secret. In contrast, at the Bank of England, gold bar movement can be kept entirely secret under British law, and its vaults are convenient because they are located in London, where all the bullion banks are headquartered.

The gold swaps are a proven fact. In 2009, in responding to a Freedom of Information Act request, the Federal Reserve admitted to having extensive gold swap records, but refused to provide them. It claimed that “exemption 5 of the FOIA” made them exempt “confidential communications with another federal agency.” No doubt, the “other agency” is the US Treasury, which actually owns the gold. In subsequent litigation, a final order was issued by a federal judge requiring the Fed to produce one document which did not directly relate to gold swaps.

The Fed’s successful resistance to the FOIA request does NOT mean that there are no gold swaps. On the contrary, it proves that there are gold swaps. The judge examined them, and the plaintiff’s attorney was not allowed to do so. Apparently, the need to keep the information secret is considered so important that the powers-that-be literally were willing “to make a federal case of it.” But, the bottom line is that the Great Game will end as soon as the very liberal Obama-era gold-swapping policy ends.

In my opinion, the big price drops in late June, July 3rd, and July 7th all revolve around a concerted and coordinated effort to reduce legacy short positions in the gold market. Something big is about to happen. There is panic within the banksters’ ranks. In response, they do what they always do. They launched a coordinated attack, sowed fear into the hearts of non-connected speculators and investors and succeeded in massively reducing their overall short position. Collusion to smash gold prices worked out beautifully. And, working hand in glove with deep state bureaucrats, no regulator will ever question what they did.

Keep in mind that the biggest banks in the world continue to gobble up gold. In June, for example, the Bank of Nova Scotia, one of the biggest bullion banks, bought a net 44,900 ounces or just under 1 and a half tons of pure gold bullion on COMEX alone. That adds to the huge quantities of physical gold already purchased by the likes of Goldman Sachs, JP Morgan Chase, HSBC and Scotia in the past.

CME, Inc., which runs the COMEX exchange, was also a big buyer, again. It bought just under 1/10th of a ton of gold this past June. That is a huge amount of gold for an exchange operator to buy. It is also bizarre for an exchange operator to be buying it. CME has made large purchases in virtually every major delivery month since June 2016. That is NOT normal activity. As recently as 2015, the CME didn’t purchase gold. There is no reason to buy it now because CME, Inc. is not an investor, a bank or a gold dealer. Clearly, the exchange is acting in a manner that implies that a major supply disruption is on the way. Major disruption will be the inevitable result of a cessation of US government sponsored gold swaps.

At the current price, supplying the gap between supply and demand, the “gold supplier of last resort” would have to spend something like 1,000 tons of gold to support the bankers. I don’t think the Trump administration is willing to do that. Even under the Obama administration, the physical market was tight. That implies, as I have said before, that access to the US Gold Reserve is not open-ended. When the American gold swaps finally end, we will start seeing a significant price spike.

From the standpoint of the foolish hedge fund managers who are taking on the short positions, difficult delivery months lie ahead. There will be a cash settlement of non-allocated claims in London. There will be a myriad of delivery defaults by dealers at COMEX. However, CME, Inc. is going to be using the gold it is now accumulating to backstop some of those failures. If they cover most of them, unfortunately, the dishonest price setting mechanism that is COMEX will retain its credibility.

Attempts to control the rising price of gold will periodically continue. “Shock and awe” campaigns facilitate short covering and gold accumulation by insiders. I continue to believe, however, that gold prices will go up this year until they reach the point of natural supply/demand equilibrium, which I estimate to be somewhere between $1,500 and $1,600.

The take-down style we’ve seen in the last two weeks tends to be followed by delivery of large quantities of physical gold to the banks in the subsequent delivery month. I expect some major fireworks by August even if the Trump administration still has not cut off the flow of American gold by then.

end

A key audio of Mike Gleeson interviewing Chris Powell

you must listen to this:

(courtesy GATA/ChrisPowell)

Is Manipulation Partly to Blame for Silver’s Plunges?

Chris Powell: Futures Markets Give High-Volume Trading Discounts to Governments

U.S. government is authorized to rig all markets, GATA secretary says

 Section: 

9:23a ET Saturday, July 8, 2017

Dear Friend of GATA and Gold:

Mike Gleason of Money Metals Exchange in Idaho this week interviewed your secretary/treasurer, who argued that market regulators in the United States are powerless against market rigging instigated by the U.S. government itself, which is fully authorized by federal law to rig markets in secret anywhere in the world. Financial institutions trading on the U.S. government’s behalf, your secretary/treasurer said, may share the government’s immunity in the scheme.

After all, responding to a federal lawsuit in New Orleans in 2003, Barrick Gold argued that, in borrowing gold from central banks and selling it into the market, the mining company became an agent of governments in controlling the gold price and should share their sovereign immunity from suit:

http://www.gata.org/node/1858

Since the gold price is related to the price of all major assets and financial instruments, your secretary/treasurer said in the Money Metals Exchange interview, rigging the gold market rigs the price of all major assets and essentially destroys the market economy and democracy throughout the world, which is the scheme’s greater offense, an offense against all humanity.

The interview is about 20 minutes long and can be heard and read at the Money Metals Exchange’s internet site here:

https://www.moneymetals.com/podcasts/2017/07/07/silver-breakdown-drag-go…

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

end

This is what happens when you try and buy/sell paper gold/silver

(courtesy Bloomberg)

Another bullion flash crash is testing traders

 Section: 

But not so much to cause them, or financial journalists, to pose critical questions to anyone.

* * *

Another Bullion Flash Crash Is Testing Traders

By Luzi-Ann Javier and Susanne Barton
Bloomberg News
Friday, July 7, 2017

After-hours surges and plunges that have whipsawed gold and silver prices over the past two weeks are unnerving traders. …

Such moves, which occurred at times when liquidity in these markets is generally lowest, are giving traders an additional headache at a time when investor sentiment is already turning bearish. Hedge funds are retreating, while exchange-traded fund investors are pulling out of gold, pushing the precious metal to the lowest in almost four months.

“All fundamental factors aside, it does tremendous technical damage to the market,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said by telephone. “There should be some effort to study this and come to some solution that will make for a more orderly trading pattern. This type of activity is not good for a fair playing field.”

Gold has lost about $47 since the session before that 1.8 million ounce-trade that many blamed on a “fat-finger” or erroneous trade. While O’Neill believes that trade may have been done in error, he said the precious metal struggled to bounce back from its low on June 26 because the transaction pushed the price below the 200-day moving average, triggering automated sell orders set by algorithmic traders, thereby sustaining the slump. …

“These so-called ‘flash crashes’ that occur periodically are frustrating to traders caught on the wrong side of the downdraft,” Jim Wyckoff, senior analyst at Kitco Metals Inc., a research company in Montreal, said in report. “It also makes many market watchers question the viability of futures markets, which are supposed to create more liquidity and better price discovery.”

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-07-07/another-bullion-flash…

end

Silly!! what is ailing gold:  futures market rigging or newletter bullishness?

(courtesy GATA/Chris Powell)

What’s ailing gold — futures market rigging or newsletter bullishness?

 Section: 

5:14p ET Saturday, July 8, 2017

Dear Friend of GATA and Gold:

Writing for the Daily Reckoning, fund manager and author James G. Rickards says supplies of real gold are tight, prices are being suppressed by manipulation of gold’s futures market, regulators have signaled that “this is a big boy’s market and players can do whatever they want as long as it’s not too blatant,” the June 26 flash crash in gold was probably undertaken to knock gold call options out of the money a day before expiration, and market manipulations always fail eventually.

Rickards does not say whether “eventually” will encompass the lifespan of any of his readers, nor whether, even if it does, it will benefit anyone much, insofar as the rigging of stock prices on the Berlin Bourse during the National Socialist regime in Germany ended only with the razing of the city and much of the rest of the country in May 1945:

http://www.boerse-berlin.com/index.php/Boerse_Berlin/History#1918

Rickards’ commentary is headlined “A Tale of Two Gold Markets” and it’s posted at the Daily Reckoning here:

https://dailyreckoning.com/tale-two-gold-markets/

Meanwhile MarketWatch financial writer Mark Hulbert argues that the gold price is being kept down not by manipulation of the futures market or by constant surreptitious intervention by central banks but by the excessive bullishness of gold newsletters, whose advice he has been monitoring for many years. But of course gold newsletter writers are always going to be disproportionately bullish, seeing the free trading of gold as they do: as the crucial mechanism of liberty, limited government, fair dealing among the nations, and the continued ascent of man.

Even so, sentiment in the monetary metals sector now couldn’t be lower, and if there was any chance that market sentiment meant more to the gold price than, say, the sentiment of central banks, to set a good example GATA Chairman Bill Murphy and your secretary/treasurer would have happily hanged themselves years ago.

Hulbert’s analysis is headlined “Here’s What is Holding Gold Back” and it’s posted at MarketWatch here:

https://dailyreckoning.com/tale-two-gold-markets/

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

end

These guys have no chance as the gold and silver are unallocated.  The ABX system which uses the blockchain technology to track holdings and is backed 100% by physical gold and silver.  In other words, the ABX system is “bitcoin” backed by gold and silver

(Bloomberg/Eddie VanDer Walt)

World’s biggest metals exchange takes on the gold elite

 Section: 

By Eddie Van Der Walt
Bloomberg News
Sunday, July 9, 2017

The world’s biggest industrial metals exchange is taking on the most powerful players in the gold market with the launch on Monday of its first futures contract for the commodity since the middle of the 1980s.

The London Metal Exchange and its partners aim to grab a piece of the action in a city where almost half the world’s gold changes hands. At stake are rival visions of how best to run the market, pitching the LME, Goldman Sachs Group Inc. and Morgan Stanley on one side and the London Bullion Market Association representing some of the biggest trading firms on the other.

Three years in the making, the gold contract, launched alongside another for silver, aims to draw investors from the off-exchange deals that currently dominate the city’s $5 trillion-a-year market. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-07-09/gold-elites-challenge…


END

Why this one trader thinks that silver’s plunge is nearing completion. He states it is due to interest rates. I think it is near the end because the commercials have been going net long for the past 10 days while inducing the specs to go net short

(courtesy zero hedge)

Why One Trader Thinks “Silver’s Plunge Is Nearing Completion”

Precious metals fans have had to content with a triple whammy this year: not only is the dollar weaker, not only have cryptocurrencies – seen by some as a natural alternative to safe PMs, especially among the younger generation – soared since the start of the year, blowing out all other asset classes including precious metals, but gold and silver have largely gone nowhere despite a year of political volatility and central bank confusion.

There is a ray of hope however: according to Bloomberg’s macro commentator Marc Cudmore, silver’s “justified” plunge – as gold and silver have a strong correlation with real rates – is finally nearing completion, as “we are approaching the point where both higher yields and lower yields have the potential to boost the asset class.”

The technicals are also turning: “In euro terms, silver is looking stretched to the downside based on its relative strength index, a momentum measure. It should also be supported by its 31-month upward trendline, which it’s testing now.” Finally, “Monday is the first day of silver and gold futures trading on the LME. That might provide a fresh source of excitement and buying interest.”

Finally, while there are “clear dangers involved when trying to catch a falling silver knife” Cudmore notes that “a risk-reward analysis makes an attempt appealing.”

His full Macro View take below:

“Silver’s Justified Plunge Is Nearing Completion”, by Mark Cudmore, a former FX trader who writes for Bloomberg

Silver is plunging and it’s even worse than it first appears when you consider that the dollar is having a bad year. In euro terms, the metal is down 24% from its April peak. Still, there are reasons to argue that the shift lower is mostly complete.

Gold and silver have a particularly strong correlation with real rates since the metals provide no yield, and hence demand is inversely related to the opportunity cost of speculation.

An environment in which global bond yields are rising in the absence of significant inflationary pressures is about as bad as it gets for speculative precious metals, so the move makes sense.

However, if the rise in global yields persists, then severe spillover effects in other asset markets could prompt a bid for precious metal havens again. So we are approaching the point where both higher yields and lower yields have the potential to boost the asset class.

Technicals also look potentially buoyant. In euro terms, silver is looking stretched to the downside based on its relative strength index, a momentum measure. It should also be supported by its 31-month upward trendline, which it’s testing now.

Another thing — Monday is the first day of silver and gold futures trading on the LME. That might provide a fresh source of excitement and buying interest.

There are clear dangers involved when trying to catch a falling silver knife, but a risk-reward analysis makes an attempt appealing

end

Gold is pouring into India with reckless abandon.  In the first half of this year, the total imports equates to 521 tonnes.  This puts it on course to bring in over 1000 tonnes and this does not include smuggling which is probably over 250 tonnes/yr.

http://www.mining.com/india-imports-gold-h1-2016/

(courtesyAndrew Topf, Mining.com)

India imports more gold in H1 than all of 2016

Lower gold prices, stocking in preparation for the new GST, cited as factors

Gold is once again pouring into India following the cratering of physical demand for the precious metal last year to a seven-year low.

A collapse in demand from India, the backbone of the global physical trade for decades, was behind the weakness, but Chinese appetite for gold also waned significantly in 2016; strength in the US dollar also crimped demand.

Quoting data from GFMS Thomson Reuters, Business Standard reports that India imported 521 tonnes of gold between January and June, versus 510 tonnes in all of 2016. However, physical demand for gold has been surging in India since January, following a plan by the Indian government last November to “demonetize” the equivalent of US$220 billion in large Indian bank notes – an astounding 86% of the circulating currency – which had a disastrous effect on the gold trade, and other sectors of the Indian economy that are reliant on cash transactions.

Quoting data from GFMS Thomson Reuters, Business Standard reports that India imported 521 tonnes of gold between January and June, versus 510 tonnes in all of 2016.

Value-wise, the H1 figure for gold imports was $22.2 billion versus $23 billion for 2016. If those numbers hold up, the annual total could surpass 900 tonnes, or $40 billion, which would be the strongest year since 2012, according to Business Standard. Over the past five years, the average amount of gold imported to India was 709 tonnes.

Business Standard cites lower gold prices and retailers stocking gold in preparation of a new good and services tax (GST), as the main reasons behind the pickup in gold demand. The long-awaited GST is India’s biggest tax overhaul since independence in 1947, and will replace a slew of federal and state levies when it’s rolled out in July. But the tax could be tough for small gold retailers to handle.

Gold imports in April, during the annual Hindu and Jain holy festival of Akshaya Tritiya, more than doubled from a year ago to 75 tonnes during a festival that prompts gold jewellery purchases, Reuters reported in May.

In 2015 Economic Times reported that the Indian public hold 20,000 tonnes of the yellow metal in jewellery, coins and gold bars.


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

 
 

1 Chinese yuan vs USA dollar/yuan  WEAKER 6.80460(DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES  WEAKER TO ONSHORE AT   6.8074/ Shanghai bourse CLOSED DOWN 5.3251 POINTS OR 0.17%  / HANG SANG CLOSED UP 159.21 POINTS OR 0.63% 

2. Nikkei closed UP 151.89 POINTS OR 0.76%   /USA: YEN RISES TO 114.11

3. Europe stocks OPENED MIXED TO RED      ( /USA dollar index RISES TO  96.16/Euro DOWN to 1.1386

3b Japan 10 year bond yield: RISES  TO  +.094%/ GOVERNMENT INTERVENTION    !!!!(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::  43.79 and Brent: 46.32

3f Gold UP/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.529%/Italian 10 yr bond yield DOWN  to 2.272%    

3j Greek 10 year bond yield FALLS to  : 5.416???  

3k Gold at $1211.25  silver at:15.32 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 7/100 in  roubles/dollar) 60.45-

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 SMALL SIZED DEVALUATION SOUTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 114.11 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  0.9671 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1013 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 FALLING to  +0.529%

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 2.3623% early this morning. Thirty year rate  at 2.9094% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Stocks Rise Amid Strong Economic Data; Yen Drops To 2 Month Low As Oil Resumes Slide

 

In a quiet overnight session, S&P 500 futures are fractionally in the green (2,426, +0.2%) with European and Asian stocks as oil drops second day after an initial ramp higher amid speculation that LIbya and Nigeria may be asked to cap their production. Nasdaq 100 Index are again higher, following the biggest daily advance in more than a week, up 0.4% as of 6:20 a.m. in New York.

With Friday’s jobs data seen as largely favorable, and the lack of wage growth expected to keep the Fed subdued, focus is turning to Janet Yellen’s semi-annual testimony on monetary policy and a meeting of Canada’s central bank on Wednesday for the latest policy signals from the world’s major central banks.  Over the past two weeks, markets have reassessed the outlook for tighter monetary policies from major central banks following a string of hawkish remarks. “We’ll see just how much substance there is to these comments on Wednesday, when the Bank of Canada announces its latest decision, with investors now expecting a 25 basis point increase,” said Craig Erlam, senior market analyst at OANDA. A rate rise from Canada’s central would be its first interest rate rise in nearly seven years

Global macro markets have traded with a cautiously positive tone as weekend’s G-20 meeting ended without market-moving surprises, while continued hawkish sentiment has pushed benchmark yields modestly higher. The yen slipped to fresh 2-month low against the dollar, trading at 114.22, after trade deficit data and BOJ Governor Haruhiko Kuroda reiterated that policy could be adjusted as needed. In Asia, stocks rose in Tokyo and Sydney, with the MSCI Asia Pacific Index rising 0.3% after hitting a five-week low Friday. MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4 percent while Japan’s Nikkei rose 0.8 percent to a one-week high helped by weakness in the Japanese currency; the Topix Index added 0.5% . Australia’s S&P/ASX 200 Index gained 0.4 percent. Hong Kong’s Hang Seng Index rose 0.7 percent, while shares on the mainland declined 0.2% after the PBOC drained net 30 billion yuan in liquidity after withholding open market operations for the 12th consecutive day even as the yuan strengthens for first time in six days. Dalian iron ore reverses early loss to gain for fourth day.

The big macro news overnight came out of China which reported inflation data, all of which was in line with expectations:

  • Chinese CPI (Jun) Y/Y 1.5% vs. Exp. 1.5% (Prey. 1.5%)
  • Chinese CPI (Jun) M/M -0.2% vs. Exp. -0.1% (Prey. -0.1%)
  • Chinese PPI (Jun) Y/Y 5.5% vs. Exp. 5.5% (Prey. 5.5%)

China’s PPI rose 5.5 percent in June from a year earlier, in line with the estimate in a Bloomberg survey as well as the reading in May – but well off the 7.8 percent reading four months earlier that increasingly looks like a peak. Economists forecast factory inflation at 5.3 percent at the end of this year and 2 percent at the end of 2018. As Bloomberg writes, rising factory prices in the world’s second-biggest economy had been touted as a possible circuit breaker for anemic global inflation, which continues to defy accelerating economic growth. The thinking was that higher costs in China would drive up the price of everything from footwear to electronics which in turn would help lift profits and wages. Yet those hopes appear to be fading. While China’s producer price index held up in June, much of the support came from higher commodity prices as companies restocked their inventories. That support is already fading as activity in the property and construction sectors remains soft and oil and raw materials prices decline, keeping factory prices lower.

A move by China’s regulators to curb risk in the financial system by targeting leverage will also act as a brake on the economy. So instead of spurring price gains China could become a source of global disinflation, according to Michael Every, head of financial markets research at Rabobank Group in Hong Kong. “It’s inevitable that PPI will go off of a cliff in the second half and into 2018,” Every said. This is a last hurrah before deflation raises its ugly head again.”

European stock markets followed Asia higher, with blue-chip stock markets in London, Paris and Frankfurt up 0.2 to 0.5 percent in early Monday trade. European bourses were led higher by real estate and food companies, following a similar advance across much of Asia. The Euro Stoxx 50 index was 0.3 percent higher as of 10:42 a.m. in London.

The dollar was steady against most major currencies and bond yields were little changed after a selloff last week. Oil retreated for a second day while gold and silver fell.

Brent trades near $46.40/bbl, torn between renewed growth in U.S. rig count and speculation that Libya and Nigeria may be asked to cap their production. WTI remains near $44/bbl.

“The big story here goes back to Friday and the rise in rig count,” says Jens Pedersen, senior analyst at Danske Bank. “We really don’t have enough evidence yet to put the break on the expansion of U.S. production” On Friday, Baker Hughes reported that U.S. rigs again rose +7 to 763, after falling by 2 in previous week, the first drop since January. The big oil weekend news came out of Kuwait which said that Libya and Nigeria may be asked to cap oil output, prompting an initial push higher in crude. Pedersen says Kuwait comments were slightly bullish, with market torn between those remarks and rig count in early trading Monday.

With global stocks close to all-time highs, investors continue to shrug off political uncertainty and Fed warnings about frothy risk levels, and are placing their faith in a continued earnings expansion on broadening global growth. Germany’s trade surplus was higher than estimated as May exports beat forecasts, while U.S. employers added the most jobs in four months in June. PepsiCo Inc, JPMorgan Chase & Co, Citigroup Inc. and Wells Fargo & Co are set to report results this week.

“Solid employment growth without inflation is the ‘not too hot, not too warm’ mix that keeps the Fed normalising policy ever so slowly, equity indices marching ever higher and the economic cycle able to trundle on with no recession in sight,” Kit Juckes, a strategist at Societe Generale SA, wrote in a note to clients. Meanwhile, over the weekend, the G-20 summit made little headway on dominant foreign policy issues such as North Korea’s escalation of tensions. Meetings between U.S. President Donald Trump and the leaders of South Korea, Japan and China ended without a clear consensus about how to curb North Korea’s nuclear ambitions.

In currencies, the dollar rose almost 0.4 percent to 114.29 yen, a two-month peak, while the dollar index — which measures the dollar’s value against a basket of other major currencies — was a touch firmer at 96.071.  “The solid jobs report gives us more reason to expect the Fed to announce that it’s prepared to start trimming its balance sheet,” said Mitsuo Imaizumi, Tokyo-based chief foreign exchange strategist for Daiwa Securities. The Bloomberg Dollar Spot Index was unchanged.  The pound retreated 0.2 percent to $1.2861 and the euro was little changed at $1.1387. The Yen dipped to a fresh 2 month low above 114.20.

In rates, the yield on 10-year Treasuries was steady at 2.37 percent after rising 23 basis points in the past two weeks.

In commodities, WTI crude dropped 1.1 percent to $43.76 a barrel following its 2.8 percent slide Friday; Gold dropped 0.4 percent to $1,207.55 an ounce after touching its lowest level since March. Silver fell 2.2 percent.

Economic data includes Consumer Credit for May. Helen of Troy and Barracuda are among companies reporting earnings.

Bulletin Headline summary from RanSquawk:

  • Asian equities have kicked the week off mostly higher with the Nikkei 225 lifted by a softer JPY. Chinese CPI prints in-line
  • UK Press attention has been placed on reports suggesting that PM May will seek opposition support in pushing through Brexit legislation
  • Looking ahead, highlights include Fed’s Williams

Market snapshot

  • S&P 500 futures up 0.2% to 2,426.25
  • Stoxx Europe 600 up 0.4% to 381.55
  • MXAP up 0.3% to 153.20
  • MXAPJ up 0.3% to 501.83
  • Nikkei up 0.8% to 20,080.98
  • Topix up 0.5% to 1,615.48
  • Hang Seng Index up 0.6% to 25,500.06
  • Shanghai Composite down 0.2% to 3,212.63
  • Sensex up 1.1% to 31,697.52
  • Australia S&P/ASX 200 up 0.4% to 5,724.44
  • Kospi up 0.09% to 2,382.10
  • German 10Y yield fell 2 bps to 0.553%
  • Euro little changed at 1.1395/USD
  • US 10Y yield down 2 bps to 2.37%
  • Italian 10Y yield rose 7 bps to 2.05%
  • Spanish 10Y yield fell 3 bps to 1.70%
  • WTI futures down 1.1% to $44.76/bbl
  • Brent futures down 0.4% to $46.35/bbl
  • Gold spot down 0.4% to $1,207.90
  • U.S. Dollar Index up 0.1% to 96.11

Top Overnight News

  • Villeroy says ECB likely to adapt policy intensity in the fall, winding down QE is not a present debate; Coeure says eurozone experiencing strong recovery; Knot says ’close to point’ where QE running for too long; Praet calls for patience, persistence in ECB monetary policy as underlying inflation pressures remain subdued
  • Merkel’s CDU/CSU bloc 38%, SPD 25%, Left Party 9%: Emnid poll in BamS
  • EU parliament may veto U.K. citizens’ rights offer: Guardian
  • China June CPI 1.5% vs 1.6% estimate; PPI 5.5% vs 5.5% estimate
  • Kuroda: Core CPI uptrend likely to continue, will adjust policy as needed
  • Japan PM Abe to keep Aso, Suga in August cabinet reshuffle: NHK
  • Sunac to Pay $9.3 Billion for Wanda Assets in Record Buy
  • ClubCorp Agrees to Be Bought by Apollo for $1.1 Billion
  • Norsk Hydro Agrees to Buy Out Orkla From Sapa Joint Venture
  • Bain, Cinven to Renew Stada Pursuit With $6.2 Billion Offer
  • Tesla Rolls Out Its First Model 3, and It’s Elon’s
  • China Takes Lead in Pacific Shipping After $6.3 Billion Deal
  • Cincinnati Bell Is Said Close to Deal for Hawaiian Telcom, OnX
  • Senate Health Bill Fails to Pick Up Support After Week of Recess
  • U.S. News Outlets Seek Rights to Bargain With Facebook, Google
  • Google, Amazon, Facebook Must Pay EU taxes, French Minister Says
  • Worldpay Is Unlikely to See a Counter Bid, Berenberg Says
  • Apple to Build Second Data Center in Denmark, Govt Says
  • Libya, Nigeria May Be Asked to Cap Oil Output, Kuwait Says
  • GE’s Baker Hughes CEO Says Oil Lower for Longer Is New Normal
  • Recent Bond Slide Isn’t ‘Start of Anything Big,’ BlackRock Says

The start of a new week saw Asian bourses broadly in the green with exception of China. Much of the positive tone stemmed from the firmer close on Wall Street, where equities were buoyed by Friday’s NFP release. Broad based gains in Australia led by financials and tech names kept the ASX 200 (+0.6%) in the green, while Japanese exporters benefitted from the softer JPY, which subsequently supported the Nikkei 225 (+0.7%). Chinese equities traded in a mixed fashion (Shanghai Comp -0.2%, Hang Seng +0.1%) with the latest inflation data holding no surprises as the release came largely in line with expectations and as such will unlikely have an impact on monetary policy. Additionally, the PBoC continued to skip open markets operations for a 12th consecutive session, resulting in a net drain of CNY 30bIn. In fixed income markets, JGB yields are ticking higher with the 10Y eying 0.1 % having inched higher by 0.3bps, while the curve is showing a steepening bias. Additionally, the JGB prices have been hampered by the risk tone with flow in equities. BoJ Governor Kuroda stated that economy is turning toward moderate expansion and will keep YCC as long as necessary, while also adjust as required. PBoC refrained from conducting open market operations for the 12th consecutive session and stated that liquidity in the banking system is moderate.

Overnight China reported inflation data, all of which was in line with expectations:

  • Chinese CPI (Jun) Y/Y 1.5% vs. Exp. 1.5% (Prey. 1.5%)
  • Chinese CPI (Jun) M/M -0.2% vs. Exp. -0.1% (Prey. -0.1%)
  • Chinese PPI (Jun) Y/Y 5.5% vs. Exp. 5.5% (Prey. 5.5%)

Top Asian News

  • Abu Dhabi’s Oil Producer May Sell Shares in Units to Expand
  • Seiko Epson to Replace Toshiba in Nikkei 225 Index on Aug. 1
  • Chinese Insurers Advance on Solid Earnings Growth Expectations
  • China Producer Price Inflation Steadies as Demand Remains Robust
  • Japan Stocks to Watch: Seiko Epson, Toshiba, Retailers, Shipping
  • Sovereign Wealth Fund GIC Warns Investors Aren’t Fearful Enough
  • NetLink NBN prices Singapore Public Offering at S$0.81/Unit
  • Iron Ore’s Set Fair Until Mills’ Profits Drop, Barclays Says
  • China Brokers Rally After June Earnings Surge From Month Earlier

European equity markets opened marginally higher amid the risk on tone, with 9/10 of the Stoxx 600 sectors trading in the green. Outperformance has been seen in the IT sector in early trade — a follow up to US trade, as the tech sector led into the US close on Friday. Fixed income markets have been dictated by the end of the belly of the curve, particularly German paper. Bunds have seen some buying early in the European session, breaking through the 160.84 level ahead of 161.00. Many analysts have stated that the recent bullish pressure is due to short covering, with 20k contracts traded over a five-minute period.

Top European News

  • Bernstein Said to Quote $150,000 for Basic Research Under MiFID
  • Bund Futures Jump as Friday’s High is Broken, Volumes Spike
  • Credit Suisse Names Michael De Guzman Philippines Country Head
  • Spanish Socialists Surge in Opinion Poll in Publico Survey

Currencies markets have followed the day’s subdued trade with the data slate light. JPY has been the noticeable mover over the weekend, with some volatility pulled into the Asian session following comments from BoJ’s Karoda highlighted overnight, stating that the BoJ will continue to tweak policy as needed. The USD has been under focus this European morning, with many stating the NFP report to be a `Goldilocks’, not too good, not too bad. The Greenback has seen gains against GBP and CAD this morning however marginally so, as NFP Monday trade is clear across markets. A brief attack on the 1.29 handle was evident as a result of the unification from the UK, however, the level continues to hold, with many still believing GBP still has some lower legs left. The concern of a lower GBP continues, and an attempt in protection from the BoE further supports this, August’s BoE will be the most watched in years, with a first hike in ten years now a firm possibility.

In commodities, light conditions have been evident in oil markets in early European trade, with an ‘air pocket’ seemingly forming in WTI, spiking the future contract 40 cents prior to the European cash open before WTI slid lower by 0.7%. Gold saw overnight selling pressure, as the yellow gold was weighed upon by the strong US and Canadian data, with hawkish central banks the clear theme of the summer. Precious metals re-found their tandem price action overnight, with silver and platinum following the bearish push seen in Gold.

Looking at the day ahead, we kickoff the week today in Germany where we got the latest trade data, which came at €20.3BN, in line with expectations, and up from €18.1BN. We also got the latest Sentix investor confidence reading for the Euro area, which dipped modestly from 28.4 to 28.3. It’s a typically quiet post-payrolls day for data in the US this afternoon with the June labour market conditions index and May consumer credit reading the only data due.

US Event Calendar

  • 10am: Labor Market Conditions Index Change, est. 2.5, prior 2.3
  • 3pm: Consumer Credit, est. $13.5b, prior $8.2b
  • 11:05pm: FRB’s Williams Gives Speech to Australian Business Economists

* * *

DB’s Jim Reid concludes the overnight wrap

Markets that were in perfect harmony just two weeks ago are certainly a little on edge at the momentIt will be fascinating to see whether Mrs Yellen chooses this week’s semi-annual testimony to Congress on Wednesday and the Senate on Thursday to reinforce the recent more hawkish global central bank speak or whether she tries to pull things back a little. DB expect her to reinforce the message from the June 14 post-FOMC press conference and continue to guide the market towards an announcement of the beginning of balance sheet normalisation at the September 20 meeting as well as a rate hike by year-end.

Friday’s employment report neatly sums up the same old issues for central bankers though. Decent employment growth (222k vs. 178k expected) but relatively subdued earnings growth (+0.2% mom vs. +0.3% mom expected). Central bankers are trying to talk things up of late but they’ll probably need earnings/inflation to firm for them to be able to follow through on this. For this week the most interesting evidence to add to this debate will likely come from US CPI (Friday) and US PPI (Thursday). We’ll also receive the final German and French CPI numbers (also Thursday) although they are expected to be a rubber stamp of the initial flash estimates. The other main release will likely be US retail sales on Friday which coincides with the first of the major US banks to report Q2 earnings. Full details of the week ahead at the end today.

Equity markets in the US finished last week on the front foot, choosing to focus on the solid payrolls print rather than some of the other mixed elements of the report. The S&P 500 closed +0.64% and actually nudged into a positive return for the week (+0.07%) with tech stocks leading the charge (Nasdaq +1.04%). In contrast to the moves over the two weeks prior, sovereign bond markets were a lot more subdued with 10y Treasury yields closing up a more modest 2bps at 2.386% – albeit nudging one step closer to the May highs. The Greenback firmed +0.22% while Gold (-1.04%) rolled over to the lowest since mid-March. Silver (-2.68%) also collapsed and was a down an impressive -6.12% over the week to the lowest since April last year. It was also a day to forget for Oil too with WTI (-2.83%) edging back down towards $44/bbl again having traded over $47/bbl at the start of the week.

Closer to home, European equity markets were a bit of a sideshow with the Stoxx 600 closing -0.07%. However for the week the index did end the five days slightly higher (+0.21%) and so snapping a run of four consecutive weekly declines. Bond markets were a bit more mixed. Bunds (+1.2bps to 0.570%) took a bit of a breather but the periphery was 6-9bps higher in yield, led by Portugal after pushing back a bond auction to this week.

Over the weekend much of the focus has been on the G20 meeting. While the joint communique appeared to be unanimously agreed between nations it appears that this masked what were much deeper divides between the US and other G20 members, particularly around trade and climate change. Trump also met with Putin which both leaders described as “constructive” while Trump also said that it was “time to move forward” with Russia although few details have been released about the meeting. Elsewhere talks between Trump and leaders from South Korea, Japan and China also ended without a conclusion on how to deal with North Korea’s nuclear ambitions.

There hasn’t been too much of a reaction in FX markets this morning following those headlines. After Friday’s move by the BoJ the spotlight has remained on 10y JGB’s instead where yields are currently hovering around 0.091% and trending back to that 0.100% upper limit, having closed at 0.082% on Friday. We haven’t seen the BoJ move to cap yields again but you’d have to imagine that it’s beginning to test their tolerance levels again.

Away from that the latest inflation data has been released in China. Both CPI (+1.5% yoy vs. +1.6% expected) and PPI (+5.5% yoy vs. +5.5% expected) held steady in June with the former one-tenth softer than expected. China bourses are mixed following that data with the CSI 300 (+0.22%) a shade higher, but the Shanghai Comp (-0.08%) ever so slightly in the red. The rest of Asia is generally stronger however. The Nikkei (+0.68%), Hang Seng (+0.99%), Kospi (+0.35%) and ASX (+0.65%) are all currently up as we go to print.

Wrapping up the remaining data on Friday, in the US the other components of the employment report included a one-tenth increase in the unemployment rate to 4.4% (expectations were for no change) while the U-6 rate rose two-tenths to 8.6%. That follows a slight nudge up in the participation rate to 62.8% (vs. 62.7% expected) while average weekly hours ticked up 0.1 hours to 34.5 hours. The Atlanta Fed’s Q2 GDP Now forecast remained at 2.7% however is likely to be updated today to reflect the employment report. It’s worth noting that in the US we also got a first look at the Fed’s Monetary Policy Report to Congress however it was a bit of a non-event suggesting that markets will be focusing on Yellen this week instead.

In Europe on Friday the focus was on the various May industrial production reports where the data was particularly upbeat for the Euro area. Germany (+1.2% mom vs. +0.2% expected), France (+1.9% mom vs. +0.6% expected) and Spain (+1.2% mom vs. +0.5% expected) all surprised to the upside which was in stark contrast to the soft release in the UK (-0.1% mom vs. +0.4% expected). The latter also released the May trade balance where a bigger than expected widening in the deficit was revealed. Sterling (-0.62%) finished back down below $1.290 following that data.

Looking at the full week ahead now. We’re kicking off the week today in Germany where first out the gate we’ll get the latest trade data. Following that this morning we are due to receive the latest Bank of France business sentiment reading and Sentix investor confidence reading for the Euro area. It’s a typically quiet post-payrolls day for data in the US this afternoon with the June labour market conditions index and May consumer credit reading the only data due. Tuesday looks equally quiet with no releases of note in Europe and just the NFIB small business optimism, JOLTS job openings and wholesale inventories data due in the US. Turning to Wednesday, the early data is due out of Japan where PPI will be released. In the UK we are due to receive the May and June employment data while Euro area industrial production for May will also be released. In the US the Fed’s Beige Book, due to be released in the evening, is all that is due. On Thursday we’re kicking off in China with the June trade data. In Europe the final June CPI reports in Germany and France will be due. The BoE will also release its latest credit conditions and bank liabilities survey. In the US on Thursday we’ll get June PPI, initial jobless claims and the June monthly budget statement. We end the week in Asia on Friday with May industrial production data. In Europe we’ll get the May trade balance for the Euro area before we finish the week in the US with June CPI, retail sales, industrial production, manufacturing, July University of Michigan consumer sentiment and May business inventories.

Away from the data this week the main Fedspeak of note is Fed Chair Yellen’s testimony to Congress on Wednesday and the Senate on Thursday. Away from that Williams and Brainard speak on Tuesday, George on Wednesday, Evans and Brainard on Thursday and Kaplan on Friday. The ECB’s Draghi, Coeure and Nouy are due to take part in a Eurogroup meeting today. The other key event for markets this week is the commencement of earnings season in the US with Citigroup, Wells Fargo and JP Morgan all reporting on Friday. Also of note this week is UK PM Theresa May presenting the repeal bill to Parliament today. The CBO will also release its analysis of President Trump’s FY 2018 budget on Thursday.

 END

3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed DOWN 5.3251 POINTS OR 0.17%   / /Hang Sang CLOSED UP 159.21 POINTS OR 0.63% The Nikkei closed UP 151.89 POINTS OR 0.76%/Australia’s all ordinaires CLOSED UP 0.23%/Chinese yuan (ONSHORE) closed DOWN at 6.8046/Oil DOWN to 43.79 dollars per barrel for WTI and 46.32 for Brent. Stocks in Europe OPENED MIXED LEANING TO  RED,,   Offshore yuan trades  6.80074 yuan to the dollar vs 6.7990 for onshore yuan. NOW THE OFFSHORE IS A TOUCH WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN  WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE STRONGER DOLLAR. CHINA IS NOT  HAPPY TODAY

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA

No doubt that the following is the correct solution to the North Korean situation

(courtesy Scott Adams)

Two B 1 B bombers hold live fire drills over the Korean peninsula.  North Korea is not happy

(courtesy zero hedge)

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

4. EUROPEAN AFFAIRS

Italy

Italy’s elite is outraged after Renzi has had enough with the migrant.  He now states that Italy which has been taking in the lions share has no moral duty to take on more migrants

(courtesy zero hedge)

Europe’s Liberal Elite Outraged After Renzi Says Italy Has “No Moral Duty To Take In Migrants”

The liberal facade behind Europe’s grand refugee acceptance experiment took a big hit on Friday, when Italy’s Former Prime Minister Matteo Renzi, and head of the ruling Democratic Party, said his country does not have “any moral duty to take in migrants“, sharply toughening his stance over surging numbers of asylum seekers.  His U-Turn follows that of Angela Merkel, who infamously accepted nearly 1 million mostly Syrian refugees in 2015, only to see a surge in terrorist attacks across Germany and Europe, and a plunge in her popularity as a result of an angry social backlash, prompting her to quietly but forcefully end Germany’s “open door” policy.

Now it’s Italy turn.

Recall that last week we discussed that with refugees arrivals in Italy up 20% over the same period last year, Rome threatened to close its ports to privately-funded aid boats – many of which are rumored to belong to Soros-linked organizations, or insist that funding be cut to EU countries which fail to help. Italy’s interior minister Marco Minniti was angry: “They are sailing under the flags of various European countries. If the only ports where refugees are taken to are Italian, something is not working. This is the heart of the question.”

One can see why Italy may be angry: with the Balkan corridor closed, Italy has emerged as the only port of entry into Europe. More than 600,000 migrants have reached Italy over the past four years, the vast majority arriving by boat from Libya. About 85,000 have come ashore this year alone, accounting for the vast majority of European migrant arrivals.

And Just like in Germany two years ago, the popular reaction is one of growing anger – especially since migrants don’t get to vote. However, the question has emerged: how does a “moral”, liberal Europe square up to what is a growing undercurrent of resentment toward migrants, something traditionally associated with various loathed (by the establishment) populist parties? After all, if the same establishment admitted that what the “populists” offer is the right course of action, then a political crisis would ensue.

That did not stop Italy’s former PM Matteo Renzi from saying that “we need to free ourselves from a sense of guilt. We do not have the moral duty to welcome into Italy people who are worse off than ourselves,” the Democratic Party leader wrote in new book, excerpts of which were released ahead of publication on the PD website.

“There has to be a fixed number of arrivals,” he said, adding that Italy should help migrants in their home countries, and sounding suspiciously close like Italy’s anti-immigrant parties.

Sure enough, underscoring the sensitivity of the issue – and just how hypocritical Europe’s liberal crown is – Renzi’s comments were swiftly removed from the website, but not before they had generated a backlash among some PD supporters, and glee in the right-wing camp.

As Reuters reports, the biggest winner from Renzi’s unexpected moments of honesty, was Matteo Salvini, leader of the anti-immigrant Northern League party, who posted the deleted text on his own Twitter account. “Thanks for all the work. We will take it,” Salvini wrote. “They (the PD) chatter and get embarrassed about it, while we can’t wait to actually do it.”

Meanwhile, Italy has found itself boxed in, with Brussels refusing to change its migrant policies even as rising popular anger means growing support for anti-establishment parties.

The upsurge in new arrivals, most of them from sub-Saharan Africa, has unsettled the Italian government, which has urged greater help from European allies in resettling the refugees.  Its requests have fallen largely on deaf ears and Renzi warned on Friday that Rome would look to curb funding to EU nations that had refused to offer help.

“They are shutting their doors. We will block their funds,” he said, sounding suspiciously like Turkey’s Erdogan who has so far prevented a new refugee crisis in Europe by gating some 2 million migrants inside Turkey’s borders.

Making matters worse, Italy’s migrant crisis is pushing the balance of power away from establishment parties: last month, Renzi’s PD party fared badly in local elections, losing control of 30 municipalities, including the traditional leftist stronghold of Genoa in northern Italy, with the migrant crisis increasingly weighing on the government.

Meanwhile, adding insult and injury to hypocrisy, Former European Commissioner for humanitarian affairs, Emma Bonino, caused embarrassment in PD ranks this week when she said that Renzi’s government had requested in 2014 that all the migrants leaving Libya be brought to Italy.  “At the beginning, we didn’t realize that this was a structural problem and not a passing phase. We shot ourselves in the foot,” said Bonino, a former Italian foreign minister. Oops.

Renzi of course denied her assertion on Friday, but said that in future, Italy should do more to encourage migrants to stay at home and develop their own economies.

We need to escape from our ‘do gooder’ mentality,” Renzi said.

To which we can only add that we are almost amazed at the speed with which Renzi, Merkel, and so much of Europe’s “do gooder” liberal elite flipped its outlook on the idealistic act of accepting “people who are worse off than ourselves” the second said act starting having negative consequences on Renzi, Merkel and Europe’s “do gooder” liberal slite. We would almost call this reversal glaringly hypocritical, but we are confident readers can make up their own minds.

END
Just look at the trouble that Merkel got herself into with respect to the migrants.  Now the “Chechen” sharia police are terrorizing Berlin:
see below
(courtesy SoerenKern/Gatestone Institute)

Merkel Migrant Blowback Begins: “Chechen Sharia Police Terrorize Berlin”

Authored by Soeren Kern via The Gatestone Institute,

  • Threats of violence against “errant” women are viewed as “acts of patriotism.”
  • “They have come to Germany because they wanted to live in Germany, but they keep trying to turn it into Chechnya with its medieval ways.” — Social worker interviewed by Meduza.
  • “Everyone’s attention is fixed on the Syrians, but the Chechens are the most dangerous group. We are not paying sufficient attention to this.” — Police in Frankfurt (Oder).

A hundred Islamists are now openly enforcing Sharia law on the streets of Berlinaccording to local police who are investigating a recent string of violent assaults in the German capital.

The self-appointed morality police involve Salafists from Chechnya, a predominantly Sunni Muslim region in Russia. The vigilantes are using threats of violence to discourage Chechen migrants from integrating into German society; they are also promoting the establishment of a parallel Islamic legal system in Germany. German authorities appear unable to stop them.

The Sharia patrol came to public light in May 2017, when Chechen Salafists released a video warning other Chechens in Germany that those who fail to comply with Islamic law and adat, a traditional Chechen code of behavior, will be killed. The video’s existence was reported by Meduza, a Russian-language independent media organization based in Latvia. The video, which circulated through WhatsApp, an online messaging service, showed a hooded man aiming a pistol at the camera. Speaking in Chechen, he declared:

Muslim brothers and sisters. Here, in Europe, certain Chechen women and men who look like women do unspeakable things. You know it; I know it; everybody knows it. This is why we hereby declare: For now, there are about 80 of us. More people are willing to join. Those who have lost their national identity, who flirt with men of other ethnic groups and marry them, Chechen women who have chosen the wrong path and those creatures who call themselves Chechen men — given half a chance, we will set all of them straight. Having sworn on the Koran, we go out onto the streets. This is our declaration of intent; do not say that you were not warned; do not say that you did not know. May Allah grant us peace and set our feet on the path towards justice.”

According to Meduza, the declaration was read by a representative of a Berlin-based gang of about one hundred members, headed by former henchmen of Dzhokhar Dudayev, the late Chechen separatist leader. All Berliners of Chechen origin who were interviewed by Meduza said they were aware of the gang’s existence.

The video surfaced after nude images of a 20-year-old Chechen woman who lives in Berlin were sent en masse from her stolen cellphone to every person on her contact list. Within an hour, the woman’s uncle demanded to speak with her parents. According to Meduza, they agreed to “resolve the issue” within the family by sending the woman back to Chechnya, where she would be killed to restore the family’s honor. German police intervened just hours before the woman was to board a plane bound for Russia.

After the woman was placed in protective police custody, her circumstance went from being a family issue to a communal one. According to Meduza, it is now the duty of any Chechen man, regardless of his ties to her or her family, to find and punish her. “It is none of their business, but it is an unwritten code of conduct,” said the woman, who has since cut her hair and now wears colored contact lenses in an effort to hide her identity. She said that she intends to change her name and undergo plastic surgery. “If you don’t change your name and your face, they will hunt you down and kill you,” she said. Although the woman graduated from a German high school, she hardly ever leaves her apartment because it is too dangerous. “I don’t want to be Chechen anymore,” she said.

According to Meduza, at least half of the population of single Chechen girls in Germany have enough compromising information on their cellphones to be considered guilty of violating adat:

“Associating with men of other nationalities, smoking, drinking alcohol, visiting hookah lounges, discotheques or even public swimming pools can cause communal wrath. A single photograph in a public WhatsApp chat can outcast an entire family and the rest of the community would be obliged to cease all communication with them. With everyone under suspicion and everyone responsible for one another, Chechen girls say they are sometimes approached by strangers in the street who chastise them for their appearance, including for wearing bright lipstick. The theft of a cellphone and the subsequent posting of compromising material is a hard blow; the dishonored person has no one to turn to and the one who posted the victim’s photos does not risk anything.”

Chechens interviewed by Meduza said that expectations for behavior are more rigid and strict in among Chechen emigrants in Germany than in Chechnya itself. This situation has been described as “a competition in righteousness” between Chechens living abroad and those in Chechnya who are loyal to Chechen leader Ramzan Kadyrov: each party is seeking to prove that they are the better Chechens, and threats of violence against “errant” women are viewed as “acts of patriotism.”


Chechens have said in interviews that expectations for behavior are more rigid and strict in among Chechen emigrants in Germany than in Chechnya itself — “a competition in righteousness.” Threats of violence against “errant” women are viewed as “acts of patriotism.” Pictured above: A volunteer tutor (left) instructs an asylum-applicant from Chechnya in a German-language class, on November 10, 2015, in Berlin, Germany. (Photo by Sean Gallup/Getty Images)

In one instance, a young Chechen woman was recorded on video while walking down a street in Berlin and conversing with a non-Chechen man. That same evening, a few dozen unknown Chechen men drove to her house in northern Berlin. The man she had been seen with was brutally beaten; almost all of his teeth were knocked out. The young woman managed to hide.

On July 4, the Berlin newspaper Tagesspiegel reported that several other women and men have been assaulted by the Sharia gang in recent weeks, and that the Berlin Criminal Police Office has now launched an investigation. A police spokesperson said that the investigation is being hampered by the fact that so far no victim has publicly dared to bring formal accusations against the gang. The victims are all, apparently, afraid of retribution.

According to Tagesspiegel, some members of the gang, which has grown to around a hundred members, are armed and many have combat experience from the Chechen wars with Russia. The gang members, who also come from Dagestan and Ingushetia, have attacked Muslims as well as non-Muslims, including Christian asylum seekers at migrant shelters in Berlin.

The gang is linked to several Salafist mosques in the German capital, including Fussilet 33, which once served as the headquarters of the so-called Berlin Caliphate. The mosque was shuttered by German authorities in February 2017, after they learned that Anis Amri, the Tunisian jihadist who carried out the suicide attack on a Berlin Christmas market, had sheltered there.

Around 60,000 Chechens live in Germany, according to official statistics, although the actual number is believed to be much higher. Nearly 40,000 Chechens have applied for asylum in Germany during just the past five years; many have crossed the border illegally from Poland.

An internal paper produced by the Federal Audit Office (Bundesrechnungshofesrevealed that “the majority of the unauthorized persons in Germany are Russian citizens of Chechen ethnicity, some of whom have been linked to the Islamic terrorist environment.”

The Chechen community in Germany is primarily based in Brandenburg and Berlin, where they are firmly entrenched in a parallel society. A social worker interviewed by Meduza said that the main obstacle to Chechen integration is their ultra-conservative moral code, the adat:

“They have come to Germany because they wanted to live in Germany, but they keep trying to turn it into Chechnya with its medieval ways. This inability and reluctance to integrate is extremely frustrating and typical of all migrants, not just Chechens. The only difference is that most other migrants come from the 20th century, not the times of feudalism.”

In an interview with Radio Berlin-Brandenburg, Maciej Falkowski, a Polish political scientist specializing in the Caucuses, said that many younger members of the Chechen diaspora are embracing radical Islam:

“The Chechen people are a very self-contained, homogenous nation. They resolve all problems among themselves. You will hardly find a Chechen, for example, who will seek remedy from a German court. Religion, of course, also plays an important role in the younger generation. Moreover, the Chechens have not had their own country for hundreds of years and therefore are not acquainted with the legal state (Rechtsstaat) in our sense of the concept.

“We are increasingly seeing a generational conflict among the Chechens. The elderly are rather skeptical of Salafism and radical Islam, while the younger ones are embracing it. They believe Salafism offers answers with regard to their identity. Here they find community and charismatic leaders. Salafism is now their dominant current.”

Heiko Homburg, an official at Ministry of the Interior of Brandenburg, the German federal state that encircles Berlin, said that most of the known Islamic extremists there are from Chechnya:

“Our problem in Brandenburg is that the Caucasian Emirate [a militant jihadist organization active in southwestern Russia], to which many Chechens feel committed, has submitted to the Islamic State. So, whether we want it or not, we have de facto Islamic State structures here in Brandenburg.”

German security officials estimate that 1,500 to 2,000 Chechens are currently fighting in Iraq and Syria. As the Islamic State nears its end, it is feared that many of those fighters will travel to Europe, through Ukraine and Poland with the help of pan-European, Chechen clan relations.

In Frankfurt (Oder), a German city on the border with Poland, police are warning that Chechen migration is a ticking time bomb:

“We have a serious and ever-growing problem with radical Chechens who are constantly traveling back and forth across the German-Polish border. Their families are building Europe-wide structures which they are using to finance the Islamic State with the proceeds of organized crime. Everyone’s attention is fixed on the Syrians, but the Chechens are the most dangerous group. We are not paying sufficient attention to this.”

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

MOSUL,IRAQ

Mosul is liberated from the ISIS

(courtesy zero hedge)

Iraqi Prime Minister Declares Mosul “Liberated” From The Islamic State

Iraqi Prime Minister Haider al-Abadi arrived in Mosul on Sunday to announce the city’s “liberation” from the Islamic State, and to congratulate the Iraqi armed forces and people on their “victory” in the city after nearly nine months of urban warfare, and bringing an end to jihadist rule in the city, the WSJ reported. As a reminder, Mosul is where the Islamic State achieved its greatest military victory when it captured the city in just four days on June 29, 2014 and handed the Iraqi military a humiliating defeat, sending shock waves through the region. Subsequent looting of Mosul’s central bank provided the Islamic State with over $400 million in “seed funding” which the terrorist organization promptly put to bad use.

The Iraqi PMI was expected to make an official victory announcement in the northern city later Sunday, after U.S.-backed Iraqi forces waged more than eight months of battle to reclaim it.

Troops have in recent days been fighting to clear the final Islamic State-occupied pockets of Mosul’s dense Old City, on the western bank of the Tigris river.

Loaders and other heavy machinery cleared paths for Iraqi soldiers, who appeared at ease ahead of the recapture, despite bursts of gunfire nearby.

At the same time, the U.S.-led coalition said Sunday it had carried out two strikes near Mosul that destroyed 21 Islamic State fighting positions. Reporting on location, the WSJ adds that Humvees patrolling the area rolled over downed electrical lines “in a stark indication of the toll the siege has taken on Mosul’s infrastructure and the likely high cost of rebuilding the city and resuming basic services there.”

The symbolic victory takes place three years after the Islamic State seized Mosul in a 2014 blitz that saw it capture one-third of Iraq’s territory, including the northern city. The battle for Mosul – by far the largest city to fall under the militants’ control – left large areas in ruins, killed thousands of civilians and displaced nearly one million people.

“The commander in chief of the armed forces (Prime Minister) Haider al-Abadi arrived in the liberated city of Mosul and congratulated the heroic fighters and Iraqi people for the great victory,” his office said in a statement.

As Reuters adds, Abadi met commanders in west Mosul who led the battle, but he has yet to issue a formal declaration that the entire city has been retaken for the group which is also known as ISIS. Still, French President Emmanuel Macron – whose country is part of the coalition that has conducted airstrikes and provided training and assistance to Iraqi forces on the battlefield, welcomed the defeat.

“Mosul liberated from ISIS: France pays homage to all those, who alongside our troops, contributed to this victory,” Macron said on Twitter.

Mossoul libérée de Daech : hommage de la France à tous ceux, avec nos troupes, qui ont contribué à cette victoire.

The Islamic State lost its administrative grip over Mosul in October, when government forces pushed it from the eastern half of the city, and its ultimate defeat here was all but a foregone conclusion. In its final days, the terrorist group mustered only a couple hundred fighters, cornered on a tiny patch of territory on the western bank of the Tigris River.

Source: ISW

The loss of Mosul, while largely expected, is a major blow for ISIS, which is also losing ground in its operational base in the Syrian city of Raqqa, where it has planned global attacks.  Amusingly, ISIS had group vowed to “fight to the death” in Mosul, but Iraqi military spokesman Brigadier General Yahya Rasool told state TV that 30 militants had been killed attempting to flee by swimming across the River Tigris that bisects the city. Cornered in a shrinking area, the militants have resorted to sending women suicide bombers among the thousands of civilians who are emerging from the battlefield wounded, malnourished and fearful, Iraqi army officers said.

That said, the Islamic State is far from vanquished in Iraq and elsewhere in the region It still controls small swaths of Iraq and large stretches of neighboring Syria. Its members and followers, more dispersed than ever, are likely to pose a terrorist threat in Baghdad, the Middle East and beyond for years to come. As the WSJ adds, “Islamic State’s defeat in Mosul would be a major military, psychological and political blow for the ruthless Sunni Muslim militant group.

A full timeline of the “rise and spread”, and now fall, of the Islamic State can be found here.

What happens next?

Aside from Mosul, across the border in Syria a battle is raging to dislodge IS from Raqqa, the second capital of its self-declared caliphate. Fighting will push down the Euphrates valley to Deir al-Zour, the jihadis’ last big urban stronghold.

But the fall of Mosul also exposes ethnic and sectarian fractures that have plagued Iraq for more than a decade.

The victory risks triggering new violence between Arabs and Kurds over disputed territories or between Sunnis and Shi’ites over claims to power, egged on by outside powers that have shaped Iraq’s future since the 2003 U.S.-led invasion toppled Saddam Hussein’s Sunni minority-rule and brought the Iran-backed Shi’ite majority to power.

For Iraq, stunned by the blitz on Mosul by Islamic State in 2014 and the collapse of its army, victory could thus turn out to be as big a problem as defeat. The federal model devised under the Anglo-American occupation and built on a power-sharing agreement between Sunnis, Shi’ites and Kurds collapsed into ethno-sectarian carnage spawned by the al Qaeda precursors of Islamic State.

In the three years since the jihadis swept across the border from Syria where they had regrouped in the chaos of the rebellion against Syrian President Bashar al-Assad’s rule, IS was the rallying point uniting a fractured Iraq.

But now that the group faces military defeat, the unity that held Iraq together is starting to come apart.

Read more on the challenges faced by post-ISIS Iraq here.

END

This is important:  Saudi Arabia seems to be wishing to change its only focus is on the USA as they now lean to Russia.

No doubt Russia and Saudi Arabia can develop LNG natural gas projects which will be against the Iran/Qatar LNG project.

(courtesy Gorka/Strategic Culture Foundation)

6 .GLOBAL ISSUES

The high prices for homes in Canada is coming to an end as the bubble burst.  This may present a huge problem for Canadian banks.

(courtesy zerohedge)

7. OIL ISSUES

Oil tumbles back into the 43 dollar column.  Jawboning is having no effect

(courtesy zero hedge)

WTI Tumbles Back To $43 Handle Despite Desperate OPEC Jawboning

Despite headlines from Kuwait’s oil minister that Nigeria and Libya had been asked to joing OPEC/NOPEC discussions with the view of agreeing to a production cap, crude prices are tumbling once again this morning, not helped by dramatic price targetr cuts by BNP and Macquarie.

As Bloomberg reports, oil fell from the lowest closing price in two weeks as talk of Libya and Nigeria being requested to cap their production failed to dispel doubts about the effectiveness of OPEC’s cut.

Futures were down over 1% in New York, extending last week’s 3.9 percent drop.

The two African producers, who were exempt from supply cuts because of internal strife but are now recovering, have been invited to a July 24 meeting in Russia to discuss whether their production has stabilized, Kuwait’s Oil Minister Issam Almarzooq said in Istanbul.

BNP Paribas SA sharply reduced its price forecasts for this year and next because supply growth elsewhere is diluting the impact of the OPEC-led curbs.

Brent 2H 2017 forecast reduced to $54.15/bbl from $58.75, analysts including Vikas Dwivedi at Macquarie Capital (USA) say in e-mailed note.

  • 2018 WTI forecast cut to $46.08/bbl from $52.50
  • 2018 Brent forecast reduced to $49.33/bbl from $55.75
  • 2019 WTI forecast at $48.75/bbl from $56.63
  • 2019 Brent forecast at $52.75/bbl from $60.63

Price forecasts cut as “there will be too much oil being produced, loaded, and marketed, around the world until 2020”

“Today our plain view is that there are too many active oil rigs in the U.S.,” says Bjarne Schieldrop, chief commodities analyst at SEB.

“Rigs keep flowing in and the only way to stop that is a lower oil price”

Additionally, Dennis Gartman notes,

The news over the weekend is rather bearishly inclined for as noted here last week there is an important meeting later this month… the 24th to be precise… in St. Petersburg, Russian of the OPEC-non-OPEC Ministerial Monitoring Committee as it is now called, where the current quota and the adherence to that quota by the member nations will be discussed.

However, yesterday, Mr. Barkindo, the Secretary- General of OPEC, said that there will be no discussion of further cuts in the current quota, noting that having such discussions are “premature.” Interestingly, Russia’ Oil Minister, Mr. Novak, has said that such discussions at the meeting are appropriate and that Moscow is prepared to consider such talks and further action.

While inventories to decline in 2H, a higher rig count and weaker longer-term supply outlook will continue to weigh on the energy complex.

end

The uSA inventory drop that the bulls were so excited is no real feat.  The oil was exported overseas

(courtesy zero hedge)

8. EMERGING MARKET

end

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

Euro/USA   1.1386 DOWN .0007/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RISING INTEREST RATES AGAIN/EUROPE BOURSES ALL mixed facing red

USA/JAPAN YEN 114.11 UP 0.283(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/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.2883 DOWN .0001 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2923 UP .0071 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS MONDAY morning in Europe, the Euro FELL by 7 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1412; 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 5.351 POINTS OR 0.17%     / Hang Sang  CLOSED UP 159.21 POINTS OR 0.63% /AUSTRALIA  CLOSED UP 0.33% / EUROPEAN BOURSES OPENED MIXED/TO 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 MONDAY morning CLOSED UP 151.89 POINTS OR 0.76%

Trading from Europe and Asia:
1. Europe stocks  OPENED MIXED:TO  RED 

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 159.21 POINTS OR 0.63%  / SHANGHAI CLOSED DOWN 5.325 POINTS OR 0.17%   /Australia BOURSE CLOSED UP 0.33% /Nikkei (Japan)CLOSED UP 151.89 POINTS OR 0.76%    / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1213.75

silver:$15.38

Early MONDAY morning USA 10 year bond yield: 2.3623% !!! DOWN 2 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.9094, DOWN 2  IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 96.16 UP 15  CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

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And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 3.1261%  DOWN 4 in basis point(s) yield from FRIDAY 

JAPANESE BOND YIELD: +.094%  UP 3/5  in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.671% DOWN 6  IN basis point yield from FRIDAY 

ITALIAN 10 YR BOND YIELD: 2.280 DOWN 6 POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 61 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.540% DOWN 3 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.1398 DOWN .0006 (Euro DOWN 6 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 114.13 UP  0.291 (Yen DOWN 29 basis points/ 

Great Britain/USA 1.2876 DOWN  0.0022( POUND DOWN 8 basis points) 

USA/Canada 1.2869 UP .0022 (Canadian dollar DOWN 22 basis points AS OIL FELL TO $44.23

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This afternoon, the Euro was DOWN  by 6 basis points to trade at 1.1398

The Yen FELL to 114.13 for a LOSS of 29  Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL BY 8  basis points, trading at 1.2876/ 

The Canadian dollar FELL by 22 basis points to 1.2882,  WITH WTI OIL FALLING TO :  $44.23

The USA/Yuan closed at 6.8036/
the 10 yr Japanese bond yield closed at +.094%  UP 3/5  IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 1 IN basis points from FRIDAY at 2.371% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.927  DOWN 1/2 in basis points on the day /

Your closing USA dollar index, 96.07  UP  6 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 MONDAY: 1:00 PM EST

London:  CLOSED UP 19.11 POINTS OR 0.26%
German Dax :CLOSED UP 57.24 POINTS OR 0.46%
Paris Cac  CLOSED UP 20.48 POINTS OR 0.40% 
Spain IBEX CLOSED UP 20.70 POINTS OR 0.20%

Italian MIB: CLOSED  UP 175.57 POINTS/OR 0.84%

The Dow closed DOWN 5.82 OR 0.03%

NASDAQ WAS closed UP 23.32 POINTS OR 0.38%  4.00 PM EST
WTI Oil price;  44.23 at 1:00 pm; 

Brent Oil: 46.99 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  60.24 DOWN 15/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 15 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +0.540%  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:$44.43

BRENT: $46.92

USA 10 YR BOND YIELD: 2.373%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.9281%

EURO/USA DOLLAR CROSS:  1.1398 UP .0005

USA/JAPANESE YEN:114.07  up 0.221

USA DOLLAR INDEX: 96.05  up 4  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2879 : down 6 POINTS FROM FRIDAY NIGHT  

Canadian dollar: 1.2891 DOWN  31 BASIS pts 

German 10 yr bond yield at 5 pm: +0.540%

END

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

TRADING IN GRAPH FORM FOR THE DAY

VVIX Signals Trouble Ahead Amid Retail Rout, Bond-Buying, & Gold Gains

Ignore the rout in retail, focus on FANG… and hope for some dovish cooing from Yellen…

Expectations for higher VIX uncertainty (VVIX – VIX of VIX) are at their highest relative to VIX since Dec 2006…

h/t @Schuldensuehner

Which just happened to mark the beginning of the end of the great moderation and the start of chaos in VIX…

Small Caps hovered near unch after ramping back from early losses but Nasdaq was exuberant…Everything weakened in the afternoon into the close…The Dow ended almost perfectly unch…

Everyone buying ahead of earnings… though we’re not sure why…

VIX was pushed back to down a 10 handle again, ramping Nasdaq above last Monday’s high stops…

With FANG stocks jumping above their 50DMA…

SNAP traded below its IPO price…

While tech outperformed, Retail stocks were dumped…

Tesla was higher pre-open, tumbled into and beyond the close, ripped back to close green

While stocks were positive, bonds were also bid today…the initial gains came when Europe opened…

The Dollar Index pumped overnight (again as Europe opened) and dumped as the US day session began, to end the day lower…

Crude was ugly early on Russia headlines then ramped back on nothing…

As Oil fell so gold was also smacked lower… but like everything else today it seems, was v-shaped recovery bid…

Silver had its best day in a month… after a few days of bloodbathery…

Some violent moves today.

Finally – it’s happening again – ‘Soft’ survey data is getting hopeful as ‘hard’ reality is stagnant… it never ended well for hope…

end

A bombshell:  the leaking of Trump’s memos has been deemed to contain classified information.  The irony then is that Comey will face the identical potential charges as Hillary Clinton

(courtesy zero hedge)

Comey Bombshell: FBI Director’s Leaked Trump Memos Contained Classified Information

Amid the constant media outrage over everything Trump, Trump, Trump, some might have forgotten that in the political rollercoaster over the past 12 months, there were numerous other high-profile individuals involved, including not only former DOJ head Loretta Lynch, whose every interaction with the Clinton campaign is about to be probed under a Congressional microscope, but the man who some say started it all: former FBI Director James Comey.

First loved by the Democrats when he personally absolved Hillary Clinton of any sins regarding her (ab)use of her personal email server, then furiously loathed when he reopened the FBI probe into Hillary Clinton one week before the election, then finally getting into a feud with President Trump which cost his him job, Comey ultimately admitted to leaking at least one memo which contained personal recollections of his conversations with the president, in hopes of launching a special probe into the president’s alleged Russian collusion.

There was just one problem: according to a blockbuster report from The Hill, in addition to the leaked memos, Comey also leaked classified information in gross and direct violation of FBI rules and regulations. And just like that Comey finds himself in trouble. Only not just any trouble, but the virtually same trouble that Hillary Clinton was in in the summer of 2016… and which James Comey was tasked to investigate.

We’ll repeat the above because it bears repeating: in the purest definition of irony, James Comey is about to be investigated for the exact same thing which he absolved Hillary Clinton of doing last summer. Almost as if neither Comey nor Clinton were aware of – or willing to abide by – the security protocol of the agency they were in charge of.

Aside from once again confirming that Trump may have been right all along in his accusation of the ex-FBI chief’s motives, this shocking revelation raises the possibility that Comey broke his own agency’s rules – by putting his own interests above those of his country – but far more grotesquely, ignored the same security protocol that he publicly criticized Hillary Clinton for in the waning days of the 2016 presidential election, in order to settle his vendetta with President Trump.

Amusingly, Comey’s alleged flagrant disregard for FBI regulations would explain why he also found Clinton’s email server transgressions to not be a material concern, contrary to what most Republicans claimed at the time. After all, if it was good – or rather not bad enough for Clinton, maybe it was the same with Comey’s own abuse of confidential data? The only problem is that while Comey was generous enough to let Hillary go, now that the ex-FBI chief is facing the president of the US as his adversary, he may not be quite so lucky.

Upon hearing of Comey’s alleged transgressions, the now former Chair of the House Oversight Committee said simply that “IF true, this is bombshell news.”

Incidentally, the first to warn of Comey’s imminent headaches, was Breitbart News, which on Friday reported that a new Senate report said recent leaks by former FBI Director James Comey’s leaking of memos could “potentially harm national security.” The report, released by the Senate Homeland Security and Governmental Affairs Committee on Thursday, found that there were 125 separate leaks in President Trump’s first 126 days that were potentially damaging to national security. The report said it included Comey’s leaking of his memos after he was fired by Trump in May.

* * *

Comey’s troubles started when he testified under oath last month that he considered the memos he prepared to be personal documents and that he shared at least one of them with a Columbia University lawyer friend. As Comey later disclosed, he asked that lawyer to leak information from one memo to the news media in hopes of increasing pressure to get a special prosecutor named in the Russia case after Comey was fired as FBI director.

The Hill recounts that particular exchange with Senator Roy Blunt:

“So you didn’t consider your memo or your sense of that conversation to be a government document?,” Sen. Roy Blunt (R-Mo.) asked Comey on June 8.  “You considered it to be, somehow, your own personal document that you could share to the media as you wanted through a friend?”

“Correct,” Comey answered. “I understood this to be my recollection recorded of my conversation with the president. As a private citizen, I thought it important to get it out.”

Comey insisted in his testimony he believed his personal memos were unclassified, though he hinted one or two documents he created might have been contained classified information. “I immediately prepared an unclassified memo of the conversation about Flynn and discussed the matter with FBI senior leadership,” he testified about the one memo he later leaked about former national security adviser Lt. Gen. Michael Flynn. Additionally, he added, “My view was that the content of those unclassified, memorialization of those conversations was my recollection recorded.”

That’s when the problems escalated, because according to The Hill – which for the first time disclosed that the total number of memos linked to Comey’s nine conversations with Trump – when the seven memos Comey wrote regarding his nine conversations with Trump about Russia earlier this year were shown to Congress in recent days, the FBI claimed all were, in fact, deemed to be government documents.

Oops.  As The Hill reveals, four, or more than half, of the seven memos had markings making clear they contained information classified at the “secret” or “confidential” level, according to officials directly familiar with the matter.

This is a major problem for Comey because FBI policy forbids any agent from releasing classified information or any information from ongoing investigations or sensitive operations without prior written permission, and mandates that all records created during official duties are considered to be government property.

“Unauthorized disclosure, misuse, or negligent handling of information contained in the files, electronic or paper, of the FBI or which I may acquire as an employee of the FBI could impair national security, place human life in jeopardy, result in the denial of due process, prevent the FBI from effectively discharging its responsibilities, or violate federal law,” states the agreement all FBI agents sign.

FBI policy further adds that “all information acquired by me in connection with my official duties with the FBI and all official material to which I have access remain the property of the United States of America” and that an agent “will not reveal, by any means, any information or material from or related to FBI files or any other information acquired by virtue of my official employment to any unauthorized recipient without prior official written authorization by the FBI.”

Comey indicated in his testimony the memos were in his possession when he left the bureau, leaving him in a position to leak one of them through his lawyer friend to the media. But he testified that he has since turned them over to Robert Mueller, a former FBI chief and now spearheading the investigation about possible collusion between the Trump campaign and Russia.  It is not clear whether Comey as director signed the same agreement as his agents, but the contract is considered the official policy of the bureau. It was also unclear when the documents were shown to Congress whether the information deemed “secret” or “confidential” was classified at the time Comey wrote the memos or determined so afterwards, the sources said.

Meanwhile, Congressional investigators have already begun examining whether Comey’s creation, storage and sharing of the memos violated FBI rules, but the revelation that four of the seven memos included some sort of classified information opens a new door of inquiry into whether classified information was mishandled, improperly stored or improperly shared.

Where things get especially ironic, is that this was the same issue the FBI – under Comey – investigated in 2015-16 about Clinton’s private email server, at the time the most sensitive and controversial issue of the Clinton campaign, where as secretary of State she and top aides moved classified information through insecure channels.

Ultimately, Comey concluded in July 2016 that Clinton’s email practices were reckless, but that he could not recommend prosecution because FBI agents had failed to find enough evidence that she intended to violate felony statutes prohibiting the transmission of classified information through insecure practices. While the news initially was loved by Democrats as it let Hillary get off scott-free from any potential criminal probe, Comey’s subsequent decision to restart the FBI probe into Clinton’s email server one week before the election is what eventually prompted both Hillary and John Podesta to claim that James Comey was one of the two factors that cost Clinton the presidency… along with the “Russian hacking” of course.

The only problem is that while there is yet no evidence of Russian hacking, suddenly with the factual emergence of Comey’s transgression, questions may emerge not only into the ex-FBI chief’s actions and motives, but whether the FBI’s clearance of Clinton’s use of an email server under Comey was proper after all…

* * *

So what happens next? According to The Hill, congressional investigators are likely to turn their attention to the same issues to determine if Comey mishandled any classified information in his personal memos.

In order to make an assessment, congressional investigators will have to tackle key questions, such as:

  • Where and how were the memos were created, such as whether they were written on an insecure computer or notepad.
  • Where and how the memos were stored, such as inside his home, his briefcase or an insecure laptop.
  • Were any memos shown to private individuals without a security clearance and did those memos contain any classified information
  • When was it determined by the government that the memos contained classified information, before Comey took them and shared one or after.

One avenue for answering those questions is for a panel like Senate Intelligence, House Intelligence or Senate Judiciary to refer the matter to the Justice Department’s internal watchdog, the inspector general, or to the Director of National Intelligence and its inspector general. One thing is certain: the near-future will see many more of Comey’s sworn Congressional testimonies, and the vendetta between Trump and Comey is about to not only be rekindled but escalate to previously unseen levels. For an appetizer of what’s to come, look closely at Trump’s twitter feed once the president learns the news of Comey’s alleged transgressions.

end

Trump responds: Comey has leaked classified information to the media and that is illegal

(courtesy zero hedge)

Trump: “Comey Leaked CLASSIFIED INFORMATION To The Media. This Is So Illegal”

When we discussed late Sunday’s blockbuster report by The Hill, according to which as part of his leak of personal recollections of his conversations with Trump in hopes of (successfully) launching a special probe into the president’s alleged Russian collusion, former FBI director James Comey also allegedly disclosed classified information in direct violation of FBI rules and regulations, we said “for an appetizer of what’s to come, look closely at Trump’s twitter feed once the president learns the news of Comey’s alleged transgressions.”

Roughly 8 hours later Trump finally caught up, and around 6am slammed Comey tweeting “James Comey leaked CLASSIFIED INFORMATION to the media. That is so illegal!”

James Comey leaked CLASSIFIED INFORMATION to the media. That is so illegal!

Trump also retweeted a Fox News report on The Hill’s article:

Report accuses material James Comey leaked to a friend contained top secret information

For those who missed it, officials familiar with the memos told The Hill that more than half of the documents contained classified information, raising the possibility that Comey broke FBI rules and ignored a security protocol in the days leading up to the 2016 presidential election. Even more ironic is that Comey allegedl violated the same protocol which Hillary Clinton was accused of breaching, and one which James Comey was tasked with investigating last summer, and ultimately found to be a non-event.

Judging by Trump’s tweet, as we expected, this is just the start of the next round of recriminations between the president and Comey. We look forward to an official statement from the former FBI chief next.

end

Trump Slams Congress On Obamacare Repeal As Senate Remains Deadlocked

Moments after taking aim at his nemesis, former FBI director James Comey, whom he accused of “illegally” leaking classified information ot the media, Trump took aim at Congress, and specifically the passage of Obamacare repeal, saying he did not expect Congress to leave for its summer recess without approving a “beautiful” new healthcare bill.

“I cannot imagine that Congress would dare to leave Washington without a beautiful new HealthCare bill fully approved and ready to go!”Trump tweeted.

I cannot imagine that Congress would dare to leave Washington without a beautiful new HealthCare bill fully approved and ready to go!

Trump has good reason to be skeptical: the legislation to repeal and replace ObamaCare has stalled in the Senate as GOP leaderships works on a new version of the bill. The first draft of the legislation was rejected by several Republican senators, forcing Mitch McConnell to delay a vote on the measure initially scheduled for the end of June.

As Reuters adds, Trump’s effort to roll back Obamacare are facing growing obstacles on Monday as Republicans who control the U.S. Senate remained sharply divided over how to keep down the costs of their healthcare bill and prevent millions from losing coverage. White House chief of staff Reince Priebus told “Fox News Sunday” that Trump, who made repeal and replacement of Obamacare a central plank of his 2016 campaign, still expected the Senate to pass a healthcare bill either before the scheduled start of Congress’ August recess “or maybe a little bit into” the recess.

Other Republicans voiced pessimism: over the weekend, Arizona Senator John McCain said that “my view is that it’s probably going to be dead, speaking of the healthcare legislation on the CBS program “Face the Nation.”

Furthermore, conservative senators, such as Ted Cruz of Texas and Rand Paul of Kentucky, have said they cannot support the proposal unless it goes further to repeal the 2010 Affordable Care Act, popularly known as Obamacare. As a result, McConnell warned at a luncheon in his home state of Kentucky last week that if Republicans were unable to pass their own replacement bill, they might need to work with Democrats to bolster the insurance markets created under Obamacare, according to the Associated Press.

Meanwhile, during a week-long recess last week that coincided with the Fourth of July holiday, liberal groups organized town halls and protests and ran ads criticizing the proposal. Most Republican senators kept a low profile on the issue, including McCain, who traveled to Afghanistan to visit troops, and Senator Jeff Flake, a fellow Arizonan who faces a tough re-election fight next year.

Last week, groups such as the state chapter of Planned Parenthood and Ability 360, an advocacy organization for disabled people, participated in events that spotlighted the Senate bill, including a town hall in Phoenix. At the Phoenix event, there were empty chairs on a stage with placards for McCain and Flake, who were invited but did not attend.

Arizonans such as Rosemary Dixon, who had a kidney transplant in 2015 and worries about how she will pay for her medication, spoke about the potential impact of the legislation.

As The Hill adds, GOP leaders are now debating a proposal from Sen. Ted Cruz that many have called a non-starter. His measure would permit insurance companies to sell any kind of coverage as long as they include at least one option that falls under the regulatory requirements of the Affordable Care Act.

Republican leaders have said they’re considering scrapping the August recess to wrap up work on the bill to repeal and replace ObamaCare and move forward with other priorities on their legislative agenda, like tax reform and passing a budget. We’ll believe it when we see it.

END

Decimation in the bricks and mortar operations as Abercrombie failed to get one suitor for its once high flying retail apparel business

(courtesy zero hedge)

Mall Stocks Hammered As Even Cheap Make-Up Fails To Lure Customers

This morning’s announcement of Abercrombie’s failed sale process served as a startling reminder of just how toxic mall-based retailers have become to investors in the post-Amazon era.  News that not a single suitor was willing to touch the once high-flying, teenage-catering, cologne-infused, mall-based wonderland has wreaked havoc, yet again, today on retail apparel chains, with Abercrombie down over 20% and several others plunging to new all-time lows.

Of course, it’s not just the specialty apparel stores that are getting crushed.  As we’ve noted several times in the past, the beloved anchor tenants of mall REITs have been among the hardest hit as a new generation shoppers have shunned over-priced department store products.

As the Wall Street Journal points out today, department stores like Macy’s, Sak’s and Lord & Taylor are even being forced to discount their last bastion of hope in order to lure customers into their dying stores: cosmetics.

Desperate to get shoppers in the door, department stores are discounting the one item they had long been able to sell at full price: cosmetics.

Last month, Lord & Taylor offered 15% off almost all cosmetics and fragrances. Bloomingdale’s gave members of its loyalty program a $25 reward card for every $100 beauty purchase. The moves followed a decision by Macy’s to offer 15% off cosmetics, which it touted in nationally televised advertisements this spring.

“We’ve seen our competitors start to discount items like cosmetics, and I’m sure they’re saying we’re doing it,” said Jerry Storch, the chief executive of Saks Fifth Avenue and Lord & Taylor parent Hudson’s Bay, on a conference call last month. “Once you get into that kind of a situation, everyone is fighting for every inch.”

A decade ago, shoppers would have been hard-pressed to find any Estée Lauder lipsticks, Bobbi Brown mascara or Shiseido blush on sale. These “prestige” brands are sold mainly at department and specialty stores and tend to be pricier than the so-called mass cosmetics sold at drugstores.

Meanwhile, today’s move isn’t really a new trend for the department stores…

Of course, as the former CEO of Bloomingdale’s notes, discounting the one product where you still make margin is just a “short-term” fix that will inevitbly speed up the ‘race to the bottom’ for mall-based retailers…

Some department-store industry executives say discounting is a short-term fix. While promotions initially encourage shoppers to buy, they can damage brands over the long term. And because shoppers soon become numb to the deals, retailers are forced to offer ever-deeper price cuts.

“Department stores shoot themselves in the foot when they do this,” said Michael Gould, a former CEO of Bloomingdale’s, who ran the upscale department store chain for 23 years until his retirement in 2014. “It’s like they’re putting themselves on drugs.”

…as it fails to address the underlying issue which is shifting consumer habits.

Sales of prestige makeup in the U.S. are growing, totaling $8 billion in the 12 months to May, an 11% increase over the same period a year ago, according to market-research firm NPD Group Inc.

But department stores’ share of the market fell to 19% in North America last year from 23% a decade ago, according to Euromonitor International data analyzed by Bernstein Research. Over the same period, specialty beauty retailers increased their share to 20% from 14%.

Make up

But perhaps nothing sums up why the mall-based retailers are doomed than the following comment from a former Lord & Taylor executive:

“It’s a disease that retailers have to discount more to make the sales numbers,” said Barbara Zinn Moore, who was Lord & Taylor’s vice president of cosmetics and fragrance from 2001 until last month. “But how else do you get the sales growth?”

Last we checked, profit per square foot is what generates returns for shareholders…not revenue per square foot…

end

We will see you TUESDAY night

.

Harvey.

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